EXHIBIT 10.1
EXECUTION COPY
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$60,000,000
CREDIT AGREEMENT
among
MUZAK HOLDINGS LLC,
as Parent Guarantor,
MUZAK LLC,
as Borrower,
The Several Lenders
from Time to Time Parties Hereto,
LEHMAN COMMERCIAL PAPER INC. and FLEET NATIONAL BANK,
as Co-Syndication Agents,
GENERAL ELECTRIC CAPITAL CORPORATION,
as Documentation Agent,
and
BEAR STEARNS CORPORATE LENDING INC.,
as Administrative Agent
Dated as of May 20, 2003
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BEAR, STEARNS & CO. INC. and LEHMAN BROTHERS INC., as Joint Lead Arrangers
and Joint Bookrunners
TABLE OF CONTENTS
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SECTION 1. DEFINITIONS........................................................1
1.1. Defined Terms......................................................1
1.2. Other Definitional Provisions.....................................28
SECTION 2. AMOUNT AND TERMS OF REVOLVING COMMITMENTS.........................29
2.1. Revolving Commitments.............................................29
2.2. Procedure for Loan Borrowing......................................29
2.3. Commitment Fees, etc..............................................29
2.4. Termination or Reduction of Revolving Commitments.................30
2.5. L/C Commitment....................................................30
2.6. Procedure for Issuance of Letter of Credit........................31
2.7. Fees and Other Charges............................................31
2.8. L/C Participations................................................32
2.9. Reimbursement Obligation of the Borrower..........................33
2.10. Obligations Absolute..............................................33
2.11. Letter of Credit Payments.........................................34
2.12. Applications......................................................34
SECTION 3. GENERAL PROVISIONS APPLICABLE TO LOANS AND LETTERS OF CREDIT......34
3.1. Optional Prepayments..............................................34
3.2. Mandatory Prepayments and Revolving Commitment Reductions.........34
3.3. Conversion and Continuation Options...............................35
3.4. Limitations on Eurodollar Tranches................................35
3.5. Interest Rates and Payment Dates..................................36
3.6. Computation of Interest and Fees..................................36
3.7. Inability to Determine Interest Rate..............................36
3.8. Pro Rata Treatment and Payments...................................37
3.9. Requirements of Law...............................................38
3.10. Taxes.............................................................39
3.11. Indemnity.........................................................41
3.12. Change of Lending Office..........................................42
3.13. Replacement of Lenders............................................42
3.14. Evidence of Debt..................................................43
3.15. Illegality........................................................43
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SECTION 4. REPRESENTATIONS AND WARRANTIES....................................43
4.1. Financial Condition...............................................43
4.2. No Change.........................................................44
4.3. Corporate Existence; Compliance with Law..........................44
4.4. Power; Authorization; Enforceable Obligations.....................45
4.5. No Legal Bar......................................................45
4.6. Litigation........................................................45
4.7. No Default........................................................45
4.8. Ownership of Property; Liens......................................45
4.9. Intellectual Property.............................................46
4.10. Taxes.............................................................46
4.11. Federal Regulations...............................................46
4.12. Labor Matters.....................................................46
4.13. ERISA.............................................................46
4.14. Investment Company Act; Other Regulations.........................47
4.15. Subsidiaries......................................................47
4.16. Use of Proceeds...................................................47
4.17. Environmental Matters.............................................47
4.18. Accuracy of Information, etc......................................48
4.19. Security Documents................................................49
4.20. Solvency..........................................................49
4.21. Senior Indebtedness...............................................50
4.22. Regulation H......................................................50
4.23. Certain Documents.................................................50
4.24. Holdings..........................................................50
SECTION 5. CONDITIONS PRECEDENT..............................................50
5.1. Conditions to Initial Extension of Credit.........................50
5.2. Conditions to Each Extension of Credit............................53
SECTION 6. AFFIRMATIVE COVENANTS.............................................54
6.1. Financial Statements..............................................54
6.2. Certificates; Other Information...................................55
6.3. Payment of Obligations............................................57
6.4. Maintenance of Existence; Compliance..............................57
6.5. Maintenance of Property; Insurance................................57
6.6. Inspection of Property; Books and Records; Discussions............57
6.7. Notices...........................................................58
6.8. Environmental Laws................................................58
6.9. Additional Collateral, etc........................................59
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6.10. Further Assurances................................................60
6.11. Post-Closing Obligations..........................................60
SECTION 7. NEGATIVE COVENANTS................................................61
7.1. Financial Condition Covenants.....................................61
7.2. Indebtedness......................................................63
7.3. Liens.............................................................66
7.4. Fundamental Changes...............................................68
7.5. Disposition of Property...........................................69
7.6. Restricted Payments...............................................69
7.7. Capital Expenditures..............................................72
7.8. Investments.......................................................73
7.9. Modifications of Certain Debt Instruments.........................74
7.10. Transactions with Affiliates......................................74
7.11. Sales and Leasebacks; Sale or Discount of Receivables.............75
7.12. Hedge Agreements..................................................75
7.13. Changes in Fiscal Periods.........................................75
7.14. Negative Pledge Clauses...........................................75
7.15. Clauses Restricting Subsidiary Distributions......................75
7.16. Lines of Business; Holdings.......................................76
7.17. Amendments to Certain Related Agreements..........................76
SECTION 8. EVENTS OF DEFAULT.................................................76
SECTION 9. THE AGENTS........................................................80
9.1. Appointment.......................................................80
9.2. Delegation of Duties..............................................80
9.3. Exculpatory Provisions............................................80
9.4. Reliance by Agents................................................80
9.5. Notice of Default.................................................81
9.6. Non-Reliance on Agents and Other Lenders..........................81
9.7. Indemnification...................................................82
9.8. Agent in Its Individual Capacity..................................82
9.9. Successor Administrative Agent....................................82
9.10. Agents Generally..................................................83
9.11. The Joint Lead Arrangers..........................................83
SECTION 10. MISCELLANEOUS.....................................................83
10.1. Amendments and Waivers............................................83
10.2. Notices...........................................................84
10.3. No Waiver; Cumulative Remedies....................................86
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10.4. Survival of Representations and Warranties........................87
10.5. Payment of Expenses and Taxes.....................................87
10.6. Successors and Assigns; Participations and Assignments............88
10.7. Adjustments; Set-off..............................................91
10.8. Counterparts......................................................92
10.9. Severability......................................................92
10.10. Integration.......................................................92
10.11. GOVERNING LAW.....................................................93
10.12. Submission to Jurisdiction; Waivers...............................93
10.13. Acknowledgments...................................................93
10.14. Releases of Guarantees and Liens..................................94
10.15. Confidentiality...................................................94
10.16. WAIVERS OF JURY TRIAL.............................................94
10.17. Delivery of Addenda...............................................95
10.18. Agreement Currency................................................95
10.19. Usury Savings Clause..............................................95
ANNEX:
A Pricing Grid
SCHEDULES:
1.1 Mortgaged Property
1.1(a) Fee and Leasehold Property
2.5(c) Existing Letters of Credit
4.4 Consents, Authorizations, Filings and Notices
4.6 Litigation
4.9 Intellectual Property
4.12 Labor Matters
4.15 Subsidiaries
4.19(a) UCC Filing Jurisdictions
4.19(b) Mortgage Filing Jurisdictions
7.2(d) Existing Indebtedness
7.3(f) Existing Liens
7.8(e) Existing Investments
EXHIBITS:
A Form of Guarantee and Collateral Agreement
B Form of Compliance Certificate
C Form of Closing Certificate
D Form of Mortgage
E Form of Assignment and Assumption
F-1 Form of Legal Opinion of Kirkland & Ellis
F-2 Form of Local Counsel Opinion
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G Form of Exemption Certificate
H Form of Note
I Form of Addendum
J Form of Permitted Sponsor Subordinated Debt Agreement
K Form of Solvency Certificate
L Form of Borrowing Notice
M Form of Conversion Notice
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CREDIT AGREEMENT, dated as of May 20, 2003, among MUZAK LLC, a
Delaware limited liability company (the "Borrower"), MUZAK HOLDINGS LLC, a
Delaware limited liability company ("Holdings"), the several banks and other
financial institutions or entities from time to time parties to this Agreement
(the "Lenders"), BEAR, STEARNS & CO. INC. and LEHMAN BROTHERS INC., as joint
lead arrangers and joint bookrunners (together with their successors and
assigns, collectively, the "Joint Lead Arrangers"), LEHMAN COMMERCIAL PAPER INC.
and FLEET NATIONAL BANK, as co-syndication agents (together with their
successors and assigns, in such capacity, collectively, the "Co-Syndication
Agents"), GENERAL ELECTRIC CAPITAL CORPORATION, as documentation agent (together
with its successors and assigns, in such capacity, the "Documentation Agent"),
and BEAR STEARNS CORPORATE LENDING INC., as administrative agent (together with
its successors and assigns, in such capacity, the "Administrative Agent").
The parties hereto hereby agree as follows:
SECTION 1. DEFINITIONS
1.1. Defined Terms. As used in this Agreement, the terms listed in
this Section 1.1 shall have the respective meanings set forth in this Section
1.1.
"Acquisition Subsidiary": an Included Subsidiary that is either
acquired in or formed simultaneously and in connection with, a Permitted
Acquisition.
"Addendum": an instrument, substantially in the form of Exhibit I, by
which a Lender becomes a party to this Agreement as of the Closing Date.
"Additional Related Agreements": collectively, the following: (i) any
agreements relating to Permitted Seller Debt and (ii) any agreements relating to
Holdings Preferred Stock.
"Additional Senior Notes": additional Senior Notes of the Borrower and
Muzak Finance to be issued pursuant to the Senior Notes Indenture.
"Additional Senior Subordinated Notes": additional Senior Subordinated
Notes of the Borrower and Muzak Finance to be issued pursuant to the Senior
Subordinated Notes Indenture.
"Adjustment Date": as defined in the Pricing Grid.
"Administrative Agent": as defined in the recitals to this Agreement.
"Affiliate": as to any Person, any other Person that, directly or
indirectly, is in control of, is controlled by, or is under common control with,
such Person. For purposes of this definition, "control" of a Person means the
power, directly or indirectly, either to (a) vote 10% or more of the securities
having ordinary voting power for the election of directors (or persons
performing similar functions) of such Person or (b) direct or cause the
direction of the management and policies of such Person, whether by contract or
otherwise.
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"Agents": the collective reference to the Co-Syndication Agents, the
Documentation Agent, the Joint Lead Arrangers and the Administrative Agent,
which term shall include, for purposes of Section 9 only, the Issuing Lender.
"Aggregate Exposure": with respect to any Lender at any time, an
amount equal to (a) until the Closing Date, the aggregate amount of such
Lender's Revolving Commitment at such time and (b) thereafter, the amount of
such Lender's Revolving Commitment then in effect or, if the Revolving
Commitments have been terminated, the amount of such Lender's Revolving
Extensions of Credit then outstanding.
"Aggregate Exposure Percentage": with respect to any Lender at any
time, the ratio (expressed as a percentage) of such Lender's Aggregate Exposure
at such time to the Aggregate Exposure of all Lenders at such time.
"Agreement": this Credit Agreement.
"Agreement Currency": as defined in Section 10.18.
"Applicable Margin": for each Type of Loan, the rate per annum set
forth under the relevant column heading below:
Eurodollar Loans Base Rate Loans
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4.00% 2.75%
; provided that, on and after the first Adjustment Date (as defined in the
Pricing Grid) occurring upon receipt of the Borrower's financial statements for
the two full fiscal quarters of the Borrower completed after the Closing Date,
the Applicable Margin with respect to Loans will be determined pursuant to the
Pricing Grid.
"Application": an application, in such form as the Issuing Lender may
specify from time to time, requesting the Issuing Lender to open a Letter of
Credit.
"Approved Fund": with respect to any Lender that is a fund that
invests in commercial loans, any other fund that invests in commercial loans and
is managed or advised by the same investment advisor as such Lender or by an
Affiliate of such investment advisor.
"Asset Sale": any Disposition of Property or series of related
Dispositions of Property (excluding any such Disposition permitted by clause
(a), (b), (c), (d), (f), (g) or (i) of Section 7.5) that yields gross proceeds
to any Group Member (valued at the initial principal amount thereof in the case
of non-cash proceeds consisting of notes or other debt securities and valued at
fair market value in the case of other non-cash proceeds) in excess of $500,000.
"Assignee": as defined in Section 10.6(b).
"Assignment and Assumption": an Assignment and Assumption,
substantially in the form of Exhibit E.
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"Available Revolving Commitment": as to any Revolving Lender at any
time, an amount equal to the excess, if any, of (a) such Lender's Revolving
Commitment then in effect over (b) such Lender's Revolving Extensions of Credit
then outstanding.
"Base Rate": for any day, a rate per annum (rounded upwards, if
necessary, to the next 1/16 of 1%) equal to the greater of (a) the Prime Rate in
effect on such day and (b) the Federal Funds Effective Rate in effect on such
day plus 0.50%. For purposes hereof: "Prime Rate" shall mean the rate of
interest per annum publicly announced from time to time by the Administrative
Agent as its prime rate in effect at its principal office in New York City (the
Prime Rate not being intended to be the lowest rate of interest charged by the
Administrative Agent in connection with extensions of credit to debtors). Any
change in the Base Rate due to a change in the Prime Rate or the Federal Funds
Effective Rate shall be effective as of the opening of business on the effective
day of such change in the Prime Rate or the Federal Funds Effective Rate,
respectively.
"Base Rate Loans": Loans the rate of interest applicable to which is
based upon the Base Rate.
"Benefitted Lender": as defined in Section 10.7(a).
"Board": the Board of Governors of the Federal Reserve System of the
United States (or any successor).
"Borrower": as defined in the preamble to this Agreement.
"Borrowing Date": any Business Day specified by the Borrower as a date
on which the Borrower requests the relevant Lenders to make Loans hereunder.
"Business": as defined in Section 4.17(b).
"Business Day": a day other than a Saturday, Sunday or other day on
which commercial banks in New York City are authorized or required by law to
close, provided, that with respect to notices and determinations in connection
with, and payments of principal and interest on, Eurodollar Loans, such day is
also a day for trading by and between banks in Dollar deposits in the London
interbank eurodollar market. With respect to any Letter of Credit denominated in
Yen, the term Business Day shall also exclude any day which is a legal holiday
under the laws of Japan or is a day on which banking institutions located in
Japan are authorized or required by law or other governmental action to close.
"Capital Expenditures": for any period, with respect to any Person,
the aggregate of all expenditures by such Person and its Included Subsidiaries
for the acquisition of fixed assets or additions to equipment (including
replacements, capitalized repairs and improvements during such period) that
should be capitalized under GAAP on a consolidated balance sheet of such Person
and its Included Subsidiaries; provided, however, that "Capital Expenditures"
shall exclude Capitalized Sales Commissions and expenditures for intangible
assets and capital leases.
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"Capital Lease Obligations": as to any Person, the obligations of such
Person to pay rent or other amounts under any lease of (or other arrangement
conveying the right to use) real or personal property, or a combination thereof,
which obligations are required to be classified and accounted for as capital
leases on a balance sheet of such Person under GAAP and, for the purposes of
this Agreement, the amount of such obligations at any time shall be the
capitalized amount thereof at such time determined in accordance with GAAP.
"Capital Stock": any and all shares, interests, participations or
other equivalents (however designated) of capital stock of a corporation, any
and all equivalent ownership interests in a Person (other than a corporation)
and any and all warrants, rights or options to purchase any of the foregoing.
"Capital Stock/Insurance Proceeds": (a) 100% of the aggregate net cash
proceeds received by Holdings from the issue or sale after the Closing Date of
Capital Stock, other than Disqualified Capital Stock or Capital Stock of
Holdings issued to any Subsidiary of Holdings, of Holdings or any Indebtedness
or other securities of Holdings issued after the Closing Date convertible into
or exercisable or exchangeable for Capital Stock, other than Disqualified
Capital Stock, of Holdings which have been so converted, exercised or exchanged,
as the case may be; (b) without duplication of any amounts included in clause
(a) above, 100% of the aggregate net proceeds (including the fair market value
of property other than cash) received by Holdings after the Closing Date from
any equity contribution from a holder of the Holdings' Capital Stock (other than
in respect of Disqualified Capital Stock); and (c) any cash proceeds received
from "key-man" life insurance policies which are used to make such redemptions
or repurchases.
"Capitalized Sales Commissions": as to any Person, the aggregate of
all sales commissions and bonuses paid by such Person and its Subsidiaries in
connection with subscriber contracts to the extent actually capitalized on the
balance sheet of such Person.
"Cash Equivalents": (a) marketable direct obligations issued by, or
unconditionally guaranteed by, the United States Government or issued by any
agency thereof and backed by the full faith and credit of the United States, in
each case maturing within one year from the date of acquisition; (b)
certificates of deposit, time deposits, eurodollar time deposits or overnight
bank deposits having maturities of six months or less from the date of
acquisition issued by any Lender or by any commercial bank organized under the
laws of the United States or any state thereof having combined capital and
surplus of not less than $500,000,000; (c) commercial paper of an issuer rated
at least A-1 by Standard & Poor's Ratings Services ("S&P") or P-1 by Moody's
Investors Service, Inc. ("Moody's"), or carrying an equivalent rating by a
nationally recognized rating agency, if both of the two named rating agencies
cease publishing ratings of commercial paper issuers generally, and maturing
within six months from the date of acquisition; (d) repurchase obligations of
any Lender or of any commercial bank satisfying the requirements of clause (b)
of this definition, having a term of not more than 30 days, with respect to
securities issued or fully guaranteed or insured by the United States
government; (e) securities with maturities of one year or less from the date of
acquisition issued or fully guaranteed by any state, commonwealth or territory
of the United States, by any political subdivision or taxing authority of any
such state, commonwealth or territory or by any foreign government, the
securities of which state, commonwealth, territory, political subdivision,
taxing authority or foreign government (as
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the case may be) are rated at least A by S&P or A by Moody's; (f) securities
with maturities of six months or less from the date of acquisition backed by
standby letters of credit issued by any Lender or any commercial bank satisfying
the requirements of clause (b) of this definition; or (g) shares of money market
mutual or similar funds which have at least 95% of their assets continuously
invested in assets satisfying the requirements of clauses (a) through (f) of
this definition or money market funds that (i) comply with the criteria set
forth in Securities and Exchange Commission Rule 2a-7 under the Investment
Company Act of 1940, as amended, (ii) are rated AAA by S&P and Aaa by Moody's
and (iii) have portfolio assets of at least $500,000,000.
"Closing Date": the date on which the conditions precedent set forth
in Section 5.1 shall have been satisfied, which date is May 20, 2003.
"Co-Syndication Agents": as defined in the preamble to this Agreement.
"Code": the Internal Revenue Code of 1986, as amended from time to
time.
"Collateral": all property of the Loan Parties, now owned or hereafter
acquired, upon which a Lien is purported to be created by any Security Document.
"Commitment Fee Rate": 0.50% per annum; provided that, on and after
the first Adjustment Date occurring after the receipt of the Borrower's
financial statements for the two full fiscal quarters of the Borrower completed
after the Closing Date, the Commitment Fee Rate will be determined pursuant to
the Pricing Grid.
"Commonly Controlled Entity": an entity, whether or not incorporated,
that is under common control with Holdings within the meaning of Section 4001 of
ERISA or is part of a group that includes Holdings and that is treated as a
single employer under Section 414 of the Code.
"Compliance Certificate": a certificate of one or more Loan Parties
duly executed on its or their behalf by a Responsible Officer substantially in
the form of Exhibit B.
"Conduit Lender": any special purpose entity organized and
administered by any Lender for the purpose of making Loans otherwise required to
be made by such Lender and designated by such Lender in a written instrument,
subject to the consent of the Administrative Agent and the Borrower (which
consent shall not be unreasonably withheld); provided, that the designation by
any Lender of a Conduit Lender shall not relieve the designating Lender of any
of its obligations to fund a Loan under this Agreement if, for any reason, its
Conduit Lender fails to fund any such Loan, and the designating Lender (and not
the Conduit Lender) shall have the sole right and responsibility to deliver all
consents and waivers required or requested under this Agreement with respect to
its Conduit Lender, and provided, further, that no Conduit Lender shall (a) be
entitled to receive any greater amount pursuant to Section 3.9, 3.10, 3.11 or
10.5 than the designating Lender would have been entitled to receive in respect
of the extensions of credit made by such Conduit Lender or (b) be deemed to have
any Revolving Commitment.
"Consolidated Cash Interest Expense": for any period, total cash
interest expense (including that attributable to Capital Lease Obligations) of
the Borrower and its Included Sub-
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sidiaries for such period with respect to all outstanding Indebtedness of the
Borrower and its Included Subsidiaries (including all commissions, discounts and
other fees and charges owed with respect to letters of credit and bankers'
acceptance financing and net costs under Hedge Agreements in respect of interest
rates, in each case, to the extent paid in cash during such period), but
excluding cash interest expense paid on the Permitted Sponsor Subordinated Debt
at the time of redemption or repayment of the principal of such Permitted
Sponsor Subordinated Debt.
"Consolidated EBITDA": for any period, Consolidated Net Income for
such period plus, without duplication and to the extent reflected as a charge in
the statement of such Consolidated Net Income for such period, the sum of (a)
income tax expense, (b) interest expense, amortization or write-off of debt
discount and debt issuance costs and commissions, discounts and other fees and
charges associated with Indebtedness (including the Loans), (c) depreciation and
amortization expense, (d) amortization of intangibles (including, but not
limited to, goodwill) and organization costs, (e) any extraordinary charges or
losses determined in accordance with GAAP, (f) non-cash compensation expenses
arising from the issuance or appreciation of capital stock, options to purchase
capital stock and capital stock appreciation rights to the management of such
Person and its Included Subsidiaries, (g) any other non-ordinary course non-cash
charges, non-cash expenses or non-cash losses of such Person or any of its
Included Subsidiaries for such period; provided, however, that cash payments in
respect of such non-ordinary course non-cash charges, expenses or losses made in
such period or in any future period in respect of such non-cash charges,
expenses or losses shall be subtracted from Consolidated Net Income in
calculating Consolidated EBITDA in the period when such payments are made, (h)
Deferred Management Fees; provided, however, that cash payments made in such
period or in any future period in respect of such Deferred Management Fees shall
be subtracted from Consolidated Net Income in calculating Consolidated EBITDA in
the period when such Deferred Management Fees are paid; provided, further, that
cash payments made from and after the Closing Date in respect of any Pre-Closing
Deferred Management Fees shall not be subtracted from Consolidated Net Income in
calculating Consolidated EBITDA in any period, and (i) amounts paid by the
Borrower in respect of license fees, interest thereon and any related penalties
paid or (to the extent that such amounts were expensed by the Borrower in such
period) to be paid by the Borrower in settlement of claims for past license fee
calculations for prior periods to copyright holders, performing rights
organizations and/or licensing collectives and associations, and accruals
therefor, provided that the aggregate amounts so included pursuant to this
clause (i) shall not exceed $5,000,000 from the Closing Date, and minus, to the
extent included in the statement of such Consolidated Net Income for such
period, the sum of (a) interest income, (b) any extraordinary income or gains
determined in accordance with GAAP and (c) any other non-cash income (excluding
any items that represent the reversal of any accrual of, or cash reserve for,
anticipated cash charges in any prior period that are described in the
parenthetical to clause (g) above), all as determined on a consolidated basis.
"Consolidated Fixed Charge Coverage Ratio": for any period, the ratio
of (a) Consolidated EBITDA for such period to (b) Consolidated Fixed Charges for
such period. For purposes of calculating the Consolidated Fixed Charge Ratio,
each of Consolidated EBITDA and Consolidated Fixed Charges shall be calculated
on a Pro Forma Basis.
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"Consolidated Fixed Charges": for any period, the sum (without
duplication) of (a) Consolidated Cash Interest Expense for such period, (b) any
provision for current taxes based on the income of the Borrower and its Included
Subsidiaries and payable in cash during such period, (c) scheduled payments made
during such period on account of principal of Indebtedness of the Borrower or
any of its Included Subsidiaries, (d) Capital Expenditures of the Borrower and
its Included Subsidiaries for such period and (e) Restricted Payments (other
than Restricted Payments made pursuant to Section 7.6 (f) (to the extent such
expenses are deducted in calculating Consolidated Net Income of the Borrower),
(h), (j), (l), (n) and (o)) to the extent payable in cash during such period.
"Consolidated Interest Coverage Ratio": for any period, the ratio of
(a) Consolidated EBITDA for such period to (b) Consolidated Cash Interest
Expense for such period. For purposes of calculating the Consolidated Interest
Coverage Ratio, each of Consolidated EBITDA and Consolidated Cash Interest
Expense shall be calculated on a Pro Forma Basis.
"Consolidated Leverage Ratio": as at the last day of any period, the
ratio of (a) (y) Consolidated Total Debt on such day less (z) cash and Cash
Equivalents on hand to the extent exceeding $5,000,000 on such day to (b) the
product of (y) Consolidated EBITDA for the fiscal quarter ended on such day and
(z) four (4). For purposes of calculating the Consolidated Leverage Ratio, each
of Consolidated Total Debt and Consolidated EBITDA shall be calculated on a Pro
Forma Basis.
"Consolidated Net Income": for any Person for any period, the
consolidated net income (or loss) of such Person and its Included Subsidiaries,
determined on a consolidated basis in accordance with GAAP; provided that there
shall be excluded (a) the income (or deficit) of any Person accrued prior to the
date it becomes an Included Subsidiary of such Person or is merged into or
consolidated with such Person or any of its Included Subsidiaries, (b) the
income (or deficit) of any Person (other than an Included Subsidiary of such
Person) in which such Person or any of its Included Subsidiaries has an
ownership interest, except to the extent that any such income is actually
received by such Person or such Included Subsidiary in the form of dividends or
similar distributions and (c) the undistributed earnings of any Included
Subsidiary of such Person to the extent that the declaration or payment of
dividends or similar distributions by such Included Subsidiary is not at the
time permitted by the terms of any Contractual Obligation (other than under any
Loan Document) or Requirement of Law applicable to such Included Subsidiary.
"Consolidated Senior Debt": all Consolidated Total Debt other than
Subordinated Indebtedness.
"Consolidated Senior Leverage Ratio": as at the last day of any
period, the ratio of (a) Consolidated Senior Debt on such day to (b) the product
of (x) Consolidated EBITDA for the fiscal quarter ended on such day and (y) four
(4). For purposes of calculating the Consolidated Senior Leverage Ratio, each of
Consolidated Senior Debt and Consolidated EBITDA shall be calculated on a Pro
Forma Basis.
"Consolidated Total Debt": at any date, the aggregate principal amount
of all Indebtedness of the Borrower and its Included Subsidiaries at such date,
determined on a consoli-
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dated basis in accordance with GAAP, excluding (a) any Permitted Sponsor
Subordinated Debt and (b) Deferred Management Fees.
"Continuing Managers": the managers of Holdings on the Closing Date,
after giving effect to the other transactions contemplated hereby, and each
other manager, if, in each case, such other manager's nomination for election to
the board of managers of Holdings is recommended by at least 66-2/3% of the then
Continuing Managers or such other manager receives the vote of the Permitted
Investors in his or her election by the members of Holdings.
"Contractual Obligation": as to any Person, any provision of any
written agreement, written instrument or other written undertaking to which such
Person is a party or by which it or any of its property is bound.
"Control Investment Affiliate": as to any Person, any other Person
that (a) directly or indirectly, is in control of, is controlled by, or is under
common control with, such Person and (b) is organized by such Person primarily
for the purpose of making equity or debt investments in one or more companies.
For purposes of this definition, "control" of a Person means the power, directly
or indirectly, to direct or cause the direction of the management and policies
of such Person whether by contract or otherwise.
"Default": any of the events specified in Section 8, whether or not
any requirement for the giving of notice, the lapse of time, or both, has been
satisfied.
"Deferred Management Fees": as defined in Section 7.6(h).
"Disqualified Capital Stock": any Capital Stock of a Person which, by
its terms, or by the terms of any security into which it is convertible or for
which it is exchangeable at the option of the holder, or upon the happening of
any event, matures or is mandatorily redeemable, pursuant to a sinking fund
obligation or otherwise, or is redeemable at the option of the holder thereof,
in whole or in part, on or prior to the maturity date of the Loans.
"Disposition": with respect to any Property, any sale, lease, sale and
leaseback, assignment, conveyance, transfer or other disposition thereof. The
terms "Dispose" and "Disposed of" shall have correlative meanings.
"Documentation Agent": as defined in the preamble to this Agreement.
"Dollar Equivalent": at any date of determination thereof with respect
to the face amount of any Letter of Credit issued in Yen or the obligation to
reimburse any amounts drawn under (or other amounts owing with respect to) any
such Letter of Credit in Yen, an amount in Dollars equivalent to such face
amount or the amount so drawn or owing, as applicable, calculated at the rate of
exchange quoted by Fleet National Bank two Business Days prior to such date of
determination (at the hour on such date at which it customarily makes such
determination) to prime banks in the interbank market where its foreign currency
exchange operations in respect of Yen are then being conducted for the spot
purchase of Yen with Dollars.
"Dollars" and "$": dollars in lawful currency of the United States.
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"Domestic Subsidiary": any Subsidiary of the Borrower organized under
the laws of any jurisdiction within the United States.
"Electro": Electro-Systems Corporation, a Florida corporation.
"Employment Agreement": the Amended and Restated Employment Agreement
dated as of March 16, 2001 between the Borrower and William A. Boyd, as amended,
supplemented, modified, revised or replaced from time to time.
"Environmental Laws": any and all foreign, Federal, state, local or
municipal laws, rules, orders, regulations, statutes, ordinances, codes,
decrees, requirements of any Governmental Authority or other Requirements of Law
(including common law) regulating, relating to or imposing liability or
standards of conduct concerning protection of human health or the environment,
as now or may at any time hereafter be in effect.
"Equity Capital": capital that was contributed to the Borrower by
Holdings in the form of cash or property in exchange for common membership
interests, or additional paid-in capital to, in the Borrower.
"ERISA": the Employee Retirement Income Security Act of 1974, as
amended from time to time.
"Eurocurrency Reserve Requirements": for any day as applied to a
Eurodollar Loan, the aggregate (without duplication) of the maximum rates
(expressed as a decimal fraction) of reserve requirements in effect on such day
(including basic, supplemental, marginal and emergency reserves under any
regulations of the Board or other Governmental Authority having jurisdiction
with respect thereto) dealing with reserve requirements prescribed for
eurocurrency funding (currently referred to as "Eurocurrency Liabilities" in
Regulation D of the Board) maintained by a member bank of the Federal Reserve
System.
"Eurodollar Base Rate": with respect to each day during each Interest
Period pertaining to a Eurodollar Loan, the rate per annum determined on the
basis of the rate for deposits in Dollars for a period equal to such Interest
Period commencing on the first day of such Interest Period appearing on Page
3750 of the Telerate screen as of 11:00 A.M., London time, two Business Days
prior to the beginning of such Interest Period. In the event that such rate does
not appear on Page 3750 of the Telerate screen (or otherwise on such screen),
the "Eurodollar Base Rate" shall be determined by reference to such other
comparable publicly available service for displaying eurodollar rates as may be
selected by the Administrative Agent or, in the absence of such availability, by
reference to the rate at which the Administrative Agent is offered Dollar
deposits at or about 11:00 A.M., New York City time, two Business Days prior to
the beginning of such Interest Period in the London interbank eurodollar market
where its eurodollar and foreign currency and exchange operations are then being
conducted for delivery on the first day of such Interest Period for the number
of days comprised therein.
"Eurodollar Loans": Loans the rate of interest applicable to which is
based upon the Eurodollar Rate.
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"Eurodollar Rate": with respect to each day during each Interest
Period pertaining to a Eurodollar Loan, a rate per annum determined for such day
in accordance with the following formula (rounded upward to the nearest 1/100th
of 1%):
Eurodollar Base Rate
----------------------------------------
1.00 - Eurocurrency Reserve Requirements
"Eurodollar Tranche": the collective reference to Eurodollar Loans
under the Facility the then current Interest Periods with respect to all of
which begin on the same date and end on the same later date (whether or not such
Loans shall originally have been made on the same day).
"Event of Default": any of the events specified in Section 8, provided
that any requirement for the giving of notice, the lapse of time, or both, has
been satisfied.
"Excluded Foreign Subsidiary": any Foreign Subsidiary in respect of
which either (a) the pledge of all of the Capital Stock of such Subsidiary as
Collateral or (b) the guaranteeing by such Subsidiary of the Obligations, would,
in the good faith judgment of the Borrower, result in adverse tax consequences
to the Borrower.
"Excluded Indebtedness": all Indebtedness permitted by Section 7.2.
"Existing Credit Facility": the Credit and Guaranty Agreement, dated
as of March 18, 1999, among the Borrower, Holdings, certain subsidiaries of the
Borrower, Goldman Sachs Credit Partners L.P., Canadian Imperial Bank of Commerce
and CIBC Oppenheimer Corp. ("CIBC"), as amended.
"Existing Letters of Credit": as defined in Section 2.5(c).
"Facility": the Revolving Commitments and the extensions of credit
made thereunder.
"Federal Funds Effective Rate": for any day, the weighted average of
the rates on overnight federal funds transactions with members of the Federal
Reserve System arranged by federal funds brokers, as published on the next
succeeding Business Day by the Federal Reserve Bank of New York, or, if such
rate is not so published for any day that is a Business Day, the average of the
quotations for the day of such transactions received by the Reference Lender
from three federal funds brokers of recognized standing selected by it.
"Foreign L/C Sublimit": the lesser of (i) $1,000,000 and (ii) the
aggregate unused amount of the Revolving Commitments then in effect.
"Foreign L/C Usage": at any date of determination, the sum of (i) the
maximum aggregate amount in the Dollar Equivalent (calculated as of the most
recent date set forth for such calculation in Section 2.5(d)) which is, or at
any time thereafter may become, available for drawing under all Letters of
Credit denominated in Yen then outstanding, and (ii) the aggregate amount in the
Dollar Equivalent (calculated as of the most recent date set forth for such
calcula-
-11-
tion in Section 2.5(d)) of all drawings under Letters of Credit denominated in
Yen honored by the Issuing Lender and not theretofore reimbursed by or on behalf
of the Borrower.
"Foreign Subsidiary": any Subsidiary of the Borrower that is not a
Domestic Subsidiary.
"Funding Office": the office of the Administrative Agent specified in
Section 10.2 or such other office as may be specified from time to time by the
Administrative Agent as its funding office by written notice to the Borrower and
the Lenders.
"GAAP": generally accepted accounting principles in the United States
as in effect from time to time except that for purposes of Section 7.1 (and any
calculations required for the purposes of the Pricing Grid set forth on Annex A
hereto), GAAP shall be determined on the basis of such principles in effect on
the date hereof and consistent with those used in the preparation of the most
recent audited financial statements referred to in Section 4.1(b). In the event
that any Accounting Change (as defined below) shall occur and such change
results in a change in the method of calculation of financial covenants,
standards or terms in this Agreement, then the Borrower and the Administrative
Agent agree to enter into negotiations in order to amend such provisions of this
Agreement so as to equitably reflect such Accounting Changes with the desired
result that the criteria for evaluating the Borrower's financial condition shall
be the same after such Accounting Changes as if such Accounting Changes had not
been made. Until such time as such an amendment shall have been executed and
delivered by the Borrower, the Administrative Agent and the Required Lenders,
all financial covenants, standards and terms in this Agreement shall continue to
be calculated or construed as if such Accounting Changes had not occurred.
"Accounting Changes" refers to changes in accounting principles required by the
promulgation of any rule, regulation, pronouncement or opinion by the Financial
Accounting Standards Board of the American Institute of Certified Public
Accountants or, if applicable, the SEC.
"Governmental Authority": any nation or government, any state or other
political subdivision thereof, any agency, authority, instrumentality,
regulatory body, court, central bank or other entity exercising executive,
legislative, judicial, taxing, regulatory or administrative functions of or
pertaining to government, any securities exchange and any self-regulatory
organization (including the National Association of Insurance Commissioners).
"Group Members": the collective reference to Holdings, the Borrower
and their respective Subsidiaries.
"Guarantee and Collateral Agreement": the Guarantee and Collateral
Agreement to be executed and delivered by Holdings, the Borrower and each
Subsidiary Guarantor, substantially in the form of Exhibit A.
"Guarantee Obligation": as to any Person (the "guaranteeing person"),
any obligation of (a) the guaranteeing person or (b) another Person (including
any bank under any letter of credit) to induce the creation of which the
guaranteeing person has issued a reimbursement, counterindemnity or similar
obligation, in either case guaranteeing or in effect guaranteeing any
Indebtedness, leases, dividends or other obligations (the "primary obligations")
of any other third
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Person (the "primary obligor") in any manner, whether directly or indirectly,
including any obligation of the guaranteeing person, whether or not contingent,
(i) to purchase any such primary obligation or any property constituting direct
or indirect security therefor, (ii) to advance or supply funds (1) for the
purchase or payment of any such primary obligation or (2) to maintain working
capital or equity capital of the primary obligor or otherwise to maintain the
net worth or solvency of the primary obligor, (iii) to purchase property,
securities or services primarily for the purpose of assuring the owner of any
such primary obligation of the ability of the primary obligor to make payment of
such primary obligation or (iv) otherwise to assure or hold harmless the owner
of any such primary obligation against loss in respect thereof; provided,
however, that the term Guarantee Obligation shall not include endorsements of
instruments for deposit or collection in the ordinary course of business. The
amount of any Guarantee Obligation of any guaranteeing person shall be deemed to
be the lower of (a) an amount equal to the stated or determinable amount of the
primary obligation in respect of which such Guarantee Obligation is made and (b)
the maximum amount for which such guaranteeing person may be liable pursuant to
the terms of the instrument embodying such Guarantee Obligation, unless such
primary obligation and the maximum amount for which such guaranteeing person may
be liable are not stated or determinable, in which case the amount of such
Guarantee Obligation shall be such guaranteeing person's maximum reasonably
anticipated liability in respect thereof as determined by the Borrower in good
faith.
"Guarantors": the collective reference to Holdings and the Subsidiary
Guarantors.
"Hedge Agreements": any agreement with respect to any swap, forward,
future or derivative transaction or option or similar agreement involving, or
settled by reference to, one or more rates, currencies, commodities, equity or
debt instruments or securities, or economic, financial or pricing indices or
measures of economic, financial or pricing risk or value or any similar
transaction or any combination of these transactions; provided that no phantom
stock or similar plan providing for payments only on account of services
provided by current or former directors, officers, employees or consultants of
the Borrower or the Subsidiaries shall be a Hedge Agreement.
"Highest Lawful Rate": the maximum lawful interest rate, if any, that
at any time or from time to time may be contracted for, charged or received
under the laws applicable to any Lender that are presently in effect or, to the
extent allowed by law, under such applicable laws that may hereafter be in
effect and that allow a higher maximum nonusurious interest rate than applicable
laws now allow.
"Holdings": as defined in the preamble to this Agreement.
"Holdings LLC Agreement": the Fourth Amended and Restated Limited
Liability Company Agreement of Holdings dated as of March 15, 2002, as amended,
restated, supplemented or otherwise modified from time to time to the extent
permitted under Section 7.17.
"Holdings Note Documents": (a) the Holdings Note Indenture, (b) the
Holdings Notes, (c) the purchase agreement dated as of March 12, 1999, by and
among Holdings, Muzak Holdings Finance, CIBC and Goldman, Sachs & Co. ("GSC"),
and (d) the registration rights
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agreement dated as of March 18, 1999 by and among Holdings, Muzak Holdings
Finance, CIBC and GSC.
"Holdings Note Indenture": the Indenture dated as of March 18, 1999,
by and among Holdings and Muzak Holdings Finance, as issuers, and State Street
Bank and Trust Co., as trustee.
"Holdings Notes": the $75,000,000 aggregate principal amount at
maturity of 13% Senior Discount Notes due 2010 of Holdings and Muzak Holdings
Finance issued pursuant to the Holdings Note Indenture.
"Holdings Preferred Stock": Preferred Stock of Holdings which
satisfies the requirements set forth in Section 7.2(o).
"Included Subsidiary": each Subsidiary of the Borrower other than
Electro for so long as Electro has outstanding any Indebtedness which prohibits
the guarantee of the Loans by Electro.
"Indebtedness": of any Person at any date, without duplication, (a)
all indebtedness of such Person for borrowed money, (b) all obligations of such
Person for the deferred purchase price of property or services (other than
current trade payables incurred in the ordinary course of such Person's
business), (c) all obligations of such Person evidenced by notes, bonds (other
than performance bonds), debentures or other similar instruments, (d) all
indebtedness created or arising under any conditional sale or other title
retention agreement with respect to property acquired by such Person (even
though the rights and remedies of the seller or lender under such agreement in
the event of default are limited to repossession or sale of such property), (e)
all Capital Lease Obligations of such Person, (f) all obligations of such
Person, contingent or otherwise, as an account party or applicant under or in
respect of acceptances, letters of credit, surety bonds or similar arrangements
(other than trade payables and contingent obligations for the acquisition of
inventory and fixed assets, in each case, incurred in the ordinary course of
such Person's business), (g) all Guarantee Obligations of such Person in respect
of obligations of the kind referred to in clauses (a) through (f) above, (h) all
obligations of the kind referred to in clauses (a) through (g) above secured by
(or for which the holder of such obligation has an existing right, contingent or
otherwise, to be secured by) any Lien on property (including accounts and
contract rights) owned by such Person, whether or not such Person has assumed or
become liable for the payment of such obligation, and (i) for the purposes of
Section 8(e) only, all obligations of such Person in respect of Hedge
Agreements. The Indebtedness of any Person shall include the Indebtedness of any
other entity (including any partnership in which such Person is a general
partner) to the extent such Person is liable therefor as a result of such
Person's ownership interest in or other relationship with such entity, except to
the extent the terms of such Indebtedness expressly provide that such Person is
not liable therefor.
"Insolvency": with respect to any Multiemployer Plan, the condition
that such Plan is insolvent within the meaning of Section 4245 of ERISA.
"Insolvent": pertaining to a condition of Insolvency.
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"Intellectual Property": the collective reference to all rights,
priorities and privileges relating to intellectual property, whether arising
under United States, multinational or foreign laws or otherwise, including
copyrights, copyright licenses, patents, patent licenses, trademarks, trademark
licenses, technology, know-how and processes, and all rights to sue at law or in
equity for any infringement or other impairment thereof, including the right to
receive all proceeds and damages therefrom.
"Interest Payment Date": (a) as to any Base Rate Loan, the last day of
each March, June, September and December to occur while such Loan is outstanding
and the final maturity date of such Loan, (b) as to any Eurodollar Loan having
an Interest Period of three months or less, the last day of such Interest
Period, (c) as to any Eurodollar Loan having an Interest Period longer than
three months, each day that is three months, or a whole multiple thereof, after
the first day of such Interest Period and the last day of such Interest Period
and (d) as to any Loan (other than any Base Rate Loan), the date of any
repayment or prepayment made in respect thereof.
"Interest Period": as to any Eurodollar Loan, (a) initially, the
period commencing on the borrowing or conversion date, as the case may be, with
respect to such Eurodollar Loan and ending one, two, three, six, nine or twelve
months thereafter, as selected by the Borrower in its notice of borrowing or
notice of conversion, as the case may be, given with respect thereto; and (b)
thereafter, each period commencing on the last day of the next preceding
Interest Period applicable to such Eurodollar Loan and ending one, two, three,
six, nine or twelve months thereafter, as selected by the Borrower by
irrevocable notice to the Administrative Agent no later than 11:00 A.M., New
York City time, on the date that is three Business Days prior to the last day of
the then current Interest Period with respect thereto; provided that all of the
foregoing provisions relating to Interest Periods are subject to the following:
(i) if any Interest Period would otherwise end on a day that is not a
Business Day, such Interest Period shall be extended to the next succeeding
Business Day unless the result of such extension would be to carry such
Interest Period into another calendar month in which event such Interest
Period shall end on the immediately preceding Business Day;
(ii) the Borrower may not select an Interest Period under the Facility
that would extend beyond the Revolving Termination Date; and
(iii) any Interest Period that begins on the last Business Day of a
calendar month (or on a day for which there is no numerically corresponding
day in the calendar month at the end of such Interest Period) shall end on
the last Business Day of a calendar month.
"Investment Securities Purchase Agreement": the Investment Securities
Purchase Agreement dated as of October 6, 1998, among Holdings, ABRY Broadcast
Partners III, L.P., Joseph Koff and David Unger, as amended, supplemented,
modified, revised or replaced from time to time in accordance with Section 7.17.
"Investments": as defined in Section 7.8.
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"Issuing Lender": (a) Fleet National Bank, in its capacity as issuer
of any Letter of Credit hereunder, together with its permitted successors and
assigns, and (b) any other Revolving Lender appointed by the Borrower and the
Administrative Agent, with the consent of such Revolving Lender, in its capacity
as issuer of Letters of Credit hereunder. Unless otherwise specified herein,
"Issuing Lender" shall be used as a collective reference to each Issuing Lender
specified in clauses (a) and (b) above or to any one Issuing Lender, as the
context requires.
"Joint Lead Arranger": as defined in the recitals to this Agreement.
"L/C Commitment": $10,000,000.
"L/C Fee Payment Date": the last day of each March, June, September
and December and the last day of the Revolving Commitment Period.
"L/C Obligations": at any time, an amount equal to the sum of (a) the
aggregate then undrawn and unexpired amount in Dollars and in the Dollar
Equivalent (calculated as of the most recent date set forth for such calculation
in Section 2.5(d)) of the then outstanding Letters of Credit and (b) the
aggregate amount in Dollars and in the Dollar Equivalent (calculated as of the
most recent date set forth for such calculation in Section 2.5(d)) of drawings
under Letters of Credit that have not then been reimbursed pursuant to Section
2.9.
"L/C Participants": the collective reference to all the Revolving
Lenders other than the Issuing Lender.
"Lender Counterparty": each Lender or any Affiliate thereof that is a
counterparty to a Specified Hedge Agreement.
"Lenders": as defined in the preamble hereto; provided, that unless
the context otherwise requires, each reference herein to the Lenders shall be
deemed to include any Conduit Lender.
"Letters of Credit": as defined in Section 2.5(a).
"Lien": any mortgage, pledge, hypothecation, assignment, deposit
arrangement, encumbrance, lien (statutory or other), charge or other security
interest or any preference, priority or other security agreement or preferential
arrangement of any kind or nature whatsoever (including any conditional sale or
other title retention agreement and any capital lease having substantially the
same economic effect as any of the foregoing) and, in the case of any investment
property or deposit account, any contract or other arrangement, express or
implied, under which any Person has the right to control such investment
property or deposit account.
"Loan": any loan made by any Lender pursuant to this Agreement.
"Loan Documents": this Agreement, the Security Documents and the
Notes.
"Loan Parties": each Group Member that is a party to a Loan Document.
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"Management Agreement": the Amended and Restated Management and
Consulting Services Agreement dated as of a date on March 18, 1999 between ABRY
Partners LLC (as successor to ABRY Partners, Inc.) and the Borrower, as amended,
restated, modified or supplemented from time to time to the extent permitted
under Section 7.17.
"Management Fees": management fees payable by the Borrower to ABRY
Partners LLC pursuant to the Management Agreement.
"Material Adverse Effect": a material adverse effect on (a) the
business, assets, property, condition (financial or otherwise), results of
operations or prospects of Holdings and its Subsidiaries taken as a whole or (b)
the validity or enforceability of this Agreement or any of the other Loan
Documents or the rights or remedies of the Agents or the Lenders hereunder or
thereunder.
"Materials of Environmental Concern": any gasoline or petroleum
(including crude oil or any fraction thereof) or petroleum products or any
hazardous or toxic substances, materials or wastes, defined or regulated as such
in or under any Environmental Law, including asbestos, polychlorinated biphenyls
and urea-formaldehyde insulation.
"Members Agreement": the Second Amended and Restated Members Agreement
dated as of the October 18, 2000 among Holdings, CMS Co-Investment
Subpartnership, CMS Diversified Partners, L.P., Joseph Koff and David Unger, as
amended, supplemented, modified, revised or replaced from time to time in
accordance with Section 7.17.
"Mortgaged Properties": the real properties listed on Schedule 1.1, as
to which the Administrative Agent for the benefit of the Secured Parties shall
be granted a Lien pursuant to the Mortgages, together with all other real
property with respect to which the Administrative Agent for the benefit of the
Secured Parties shall be granted a Lien pursuant to a Mortgage executed and
delivered pursuant to Section 6.11(a).
"Mortgages": each of the mortgages and deeds of trust made by any Loan
Party in favor of, or for the benefit of, the Administrative Agent for the
benefit of the Lenders, substantially in the form of Exhibit D (with such
changes thereto as shall be advisable in the reasonable discretion of the
Administrative Agent to comply with the law of the jurisdiction in which such
mortgage or deed of trust is to be recorded).
"Multiemployer Plan": a Plan that is a multiemployer plan as defined
in Section 4001(a)(3) of ERISA.
"Muzak Finance": Muzak Finance Corp., a Delaware corporation.
"Muzak Holdings Finance": Muzak Holdings Finance Corp., a Delaware
corporation.
"Muzak Heart & Soul": Muzak Heart & Soul Foundation, a Washington
nonprofit corporation.
-17-
"Muzak LLC Agreement": the Amended and Restated Limited Liability
Company Agreement of the Borrower dated as of March 18, 1999, as amended by the
First Amendment dated as of October 26, 1999, as it may be further amended,
restated, supplemented or otherwise modified from time to time to the extent
permitted under Section 7.17.
"Net Cash Proceeds": (a) in connection with any Asset Sale or any
Recovery Event, the proceeds thereof in the form of cash and Cash Equivalents
(including any such proceeds received by way of deferred payment of principal
pursuant to a note or installment receivable or purchase price adjustment
receivable or by the Disposition of any non-cash consideration received in
connection therewith or otherwise, but only as and when received) of such Asset
Sale or Recovery Event, net of attorneys' fees, accountants' fees, investment
banking fees, amounts required to be applied to the repayment of Indebtedness
(including interest, premiums and penalties payable in accordance with the terms
thereof) secured by a Lien expressly permitted hereunder on any asset that is
the subject of such Asset Sale or Recovery Event (other than any Lien pursuant
to a Security Document) and other customary costs, fees and expenses actually
incurred in connection therewith and net of taxes and related tax distributions
paid or reasonably estimated to be payable as a result thereof (after taking
into account any available tax credits or deductions and any tax sharing
arrangements related thereto) and (b) in connection with any incurrence of
Indebtedness, the cash proceeds received from such incurrence, net of attorneys'
fees, investment banking fees, accountants' fees, underwriting discounts and
commissions and other customary costs, fees and expenses actually incurred in
connection therewith.
"Non-Excluded Taxes": as defined in Section 3.10(a).
"Non-U.S. Lender": as defined in Section 3.10(d).
"Notes": the collective reference to any promissory note evidencing
Loans.
"Obligations": the unpaid principal of and interest on (including
interest accruing after the maturity of the Loans and Reimbursement Obligations
and interest accruing after the filing of any petition in bankruptcy, or the
commencement of any insolvency, reorganization or like proceeding, relating to
the Borrower, whether or not a claim for post-filing or post-petition interest
is allowed in such proceeding) the Loans and all other obligations and
liabilities of the Borrower to any Agent or to any Lender (or, in the case of
Specified Hedge Agreements, any affiliate of any Lender), whether direct or
indirect, absolute or contingent, due or to become due, or now existing or
hereafter incurred, which may arise under, out of, or in connection with, this
Agreement, any other Loan Document, the Letters of Credit, any Specified Hedge
Agreement or any other document made, delivered or given in connection herewith
or therewith, whether on account of principal, interest, reimbursement
obligations, fees, indemnities, costs, expenses (including all fees, charges and
disbursements of counsel to any Agent or to any Lender that are required to be
paid by the Borrower pursuant hereto) or otherwise; provided, that (i)
obligations of the Borrower or any Included Subsidiary under any Specified Hedge
Agreement shall be secured and guaranteed pursuant to the Security Documents
only to the extent that, and for so long as, the other Obligations are so
secured and guaranteed and (ii) any release of Collateral or Guarantors effected
in the manner permitted by this Agreement shall not require the consent of
holders of obligations under Specified Hedge Agreements.
-18-
"Other Senior Subordinated Notes": any senior subordinated notes that
shall (i) not be on financial and other terms that are more onerous than the
Senior Subordinated Notes and shall not have defaults, rights or remedies more
burdensome to the obligor than the Senior Subordinated Notes as determined by
the Administrative Agent in its reasonable discretion, (ii) not have a stated
maturity or weighted average life that is shorter than the Senior Subordinated
Notes, (iii) be at least as subordinate to the Obligations as the Senior
Subordinated Notes, (iv) be issued by the Borrower and Muzak Finance and (v)
otherwise be on terms and conditions reasonably acceptable to the Administrative
Agent.
"Other Taxes": any and all present or future stamp or documentary
taxes or any other excise or property taxes, charges or similar levies arising
from any payment made hereunder or from the execution, delivery or enforcement
of, or otherwise with respect to, this Agreement or any other Loan Document.
"Participant": as defined in Section 10.6(c).
"Payment Currency": as defined in Section 10.18.
"PBGC": the Pension Benefit Guaranty Corporation established pursuant
to Subtitle A of Title IV of ERISA (or any successor).
"Permitted Acquisition": any acquisition by the Borrower or any of its
Wholly Owned Subsidiary Guarantors, whether by purchase, merger or otherwise, of
all or substantially all of the assets of, all of the Capital Stock of, or a
business line or a division of, any Person; provided that:
(i) immediately prior to and after giving effect thereto, no Default
or Event of Default shall have occurred and be continuing or would result
therefrom;
(ii) all transactions in connection therewith shall be consummated in
accordance with all applicable laws and in conformity with all applicable
Requirements of Law;
(iii) in the case of the acquisition of Capital Stock, all of the
Capital Stock (except for any such securities in the nature of directors'
qualifying shares required pursuant to applicable law) acquired or
otherwise issued by such Person or any newly formed Subsidiary of the
Borrower in connection with such acquisition shall be owned 100% by the
Borrower or any of its Wholly Owned Subsidiary Guarantors, and the Borrower
shall have taken, or caused to be taken, as of the date such Person becomes
a Subsidiary of the Borrower, each of the actions set forth in Section
6.9(c);
(iv) the Borrower and its Subsidiaries shall be in compliance with the
covenants contained in Section 7.1, both immediately before and after
giving effect to such acquisition on a Pro Forma Basis as of the most
recently ended fiscal quarter for which a Compliance Certificate has been
delivered pursuant to Section 6.2;
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(v) the Borrower shall have delivered to the Administrative Agent (a)
at least five Business Days prior to such proposed acquisition a draft
certificate in the form of a Compliance Certificate and (b) on the date of
such acquisition a certificate in the form of a Compliance Certificate, in
each case evidencing such compliance with such Section, together with all
relevant financial information for such acquired assets, including, without
limitation, the aggregate consideration for such acquisition, the
Consolidated EBITDA for each acquired entity and the information required
pursuant to Section 7.1, if relevant, and such Compliance Certificate and
the contents thereof shall be reasonably satisfactory to the Administrative
Agent; and
(vi) any Person or assets or division as acquired in accordance
herewith shall be in primarily the same business or lines of business in
which the Borrower and/or its Subsidiaries are engaged as of the Closing
Date.
"Permitted Repurchases of Holdings Notes": as defined in Section
7.6(o).
"Permitted Investors": the collective reference to the Sponsors and
their respective Control Investment Affiliates.
"Permitted Refinancing": with respect to any Indebtedness, any
refinancing thereof; provided, however, that (x) no Default shall have occurred
and be continuing or would arise therefrom, (y) any such refinancing
Indebtedness shall (I) not be on financial and other terms that are more onerous
than the Indebtedness being refinanced and shall not have defaults, rights or
remedies more burdensome to the obligor than the Indebtedness being refinanced
as determined by the Administrative Agent in its reasonable discretion, (II) not
have a stated maturity or weighted average life that is shorter than the
Indebtedness being refinanced, (III) be at least as subordinate to the
Obligations as the Indebtedness being refinanced (and unsecured if the
refinanced Indebtedness is unsecured) as determined by the Administrative Agent,
provided that (x) the Borrower may issue Additional Senior Subordinated Notes
and/or Other Senior Subordinated Notes (and Holdings and the Subsidiary
Guarantors may incur Guarantee Obligations in respect thereof) to refinance all
or any portion of the principal amount of the Holdings Notes if the Borrower
shall be in compliance with the covenants contained in Section 7.1 on a Pro
Forma Basis as of the most recently ended fiscal quarter for which a Compliance
Certificate has been delivered pursuant to Section 6.2 and (y) the Borrower may
issue Additional Senior Notes (and Holdings and the Subsidiary Guarantors may
incur Guarantee Obligations in respect thereof) to refinance all or any portion
of the principal amount of the Senior Subordinated Notes and/or the Holdings
Notes if the Borrower shall be in compliance with the covenants contained in
Section 7.1 on a Pro Forma Basis as of the most recently ended fiscal quarter
for which a Compliance Certificate has been delivered pursuant to Section 6.2
and the Consolidated Senior Leverage Ratio of the Borrower determined on a Pro
Forma Basis as of the most recently ended fiscal quarter for which a Compliance
Certificate has been delivered pursuant to Section 6.2 would have been less than
2.75 to 1.00, and (IV) be in a principal amount that does not exceed the
principal amount so refinanced, plus the lesser of (1) the stated amount of any
premium or other payment required to be paid in connection with refinancing
pursuant to the terms of the Indebtedness being refinanced and (2) the amount of
premium or other payment actually paid at such time to refinance the
Indebtedness, plus, in either case, the amount of reasonable expenses of any
obligor
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thereunder incurred in connection with such refinancing, and (z) except to the
extent permitted by the proviso to clause (y)(III) above, the sole obligor on
such refinancing Indebtedness shall be the original obligor on such Indebtedness
being refinanced (with any guarantor on the Indebtedness being refinanced
permitted to guarantee the refinancing Indebtedness).
"Permitted Secured Seller Note": a promissory note that evidences
secured Permitted Seller Debt in form and substance satisfactory to the
Administrative Agent.
"Permitted Seller Debt": Indebtedness that (i) is issued by the
Borrower or any Included Subsidiary to a seller as part of the consideration for
a Permitted Acquisition and (ii) satisfies the requirements set forth in Section
7.2(n).
"Permitted Seller Debt Lien": a Lien securing Permitted Seller Debt
that (i) may be a first priority Lien, (ii) is incurred by an Acquisition
Subsidiary and (iii) satisfies the requirements set forth in Section 7.3(j).
"Permitted Seller Notes": Permitted Secured Seller Notes and Permitted
Unsecured Seller Notes.
"Permitted Sponsor Subordinated Debt": subordinated unsecured loans
from one or more Permitted Investors and/or CMS Co-Investment Subpartnership,
CMS Diversified Partners, L.P., Banc America Capital Investors I, L.P., New York
Life Capital Partners, L.P., AMFM Systems, Inc. and The Northwestern Mutual Life
Insurance Company to Holdings or the Borrower, provided (i) prior to the payment
in full in cash of all of the Obligations, no payment in respect of the
principal of or interest on such loans shall be required or made (unless
otherwise approved by the Required Lenders or permitted pursuant to Section
7.6(l)), (ii) no such loan shall mature earlier than May 20, 2009, (iii) if such
loans are to Holdings, the net proceeds thereof shall either be contributed as
Equity Capital to the Borrower or loaned to the Borrower on the terms described
in clauses (i), (ii) and (iv) hereof (and any such loan to the Borrower from
Holdings shall constitute "Permitted Sponsor Subordinated Debt") and (iv) each
such loan shall be made pursuant to (a) a Permitted Sponsor Debt Agreement that
is reasonably acceptable to the Administrative Agent and substantially in the
form of Exhibit J or otherwise reasonably acceptable to the Administrative Agent
or (b) another form of Permitted Sponsor Debt Agreement that provides that each
such loan is subordinated to all of the Obligations on terms and conditions
reasonably acceptable to the Required Lenders.
"Permitted Sponsor Subordinated Debt Agreement": any loan agreement
between one or more Permitted Investors, CMS Co-Investment Subpartnership, CMS
Diversified Partners, L.P., Banc America Capital Investors I, L.P., New York
Life Capital Partners, L.P., AMFM Systems, Inc. and The Northwestern Mutual Life
Insurance Company, on the one hand, and Holdings or the Borrower, on the other
hand, as applicable, evidencing the Permitted Sponsor Subordinated Debt, and
shall include any promissory note that is substantially in the form of Exhibit J
hereto.
"Permitted Unsecured Seller Note": a promissory note that evidences
unsecured Permitted Seller Debt in form and substance satisfactory to the
Administrative Agent.
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"Person": an individual, partnership, corporation, limited liability
company, business trust, joint stock company, trust, unincorporated association,
joint venture, Governmental Authority or other entity of whatever nature.
"Plan": at a particular time, any employee benefit plan (other than a
Multiemployer Plan) that is covered by ERISA and in respect of which the
Borrower or a Commonly Controlled Entity is (or, if such plan were terminated at
such time, would under Section 4069 of ERISA be deemed to be) an "employer" as
defined in Section 3(5) of ERISA.
"Pre-Closing Deferred Management Fees": an aggregate amount not in
excess of $1,800,000 in unpaid Management Fees and out-of-pocket expenses
accrued up to and including the Closing Date.
"Preferred Stock": any Capital Stock of a Person, however designated,
which entitles the holder thereof to a preference with respect to dividends,
distributions or liquidation proceeds of such Person over the holders of other
Capital Stock issued by such Person.
"Pricing Grid": the pricing grid attached hereto as Annex A.
"Pro Forma Balance Sheet": as defined in Section 4.1(a).
"Pro Forma Basis": with respect to determining compliance with the
Consolidated Fixed Charge Coverage Ratio, Consolidated Interest Coverage Ratio,
Consolidated Leverage Ratio or Consolidated Senior Leverage Ratio as at any date
or for any period under this Agreement, each such ratio and the financial
definitions used in determining such ratios shall be calculated after giving
effect on a pro forma basis to:
(a) the incurrence or repayment of any Indebtedness of such Person or
any of its Included Subsidiaries and the application of the proceeds
thereof giving rise to the need to make such calculation and any incurrence
or repayment of other Indebtedness, other than the incurrence or repayment
of Loans under this Agreement, occurring on or prior to the end of the
applicable quarterly fiscal period in the case of the determination of
compliance with Sections 7.1, 5.2(c) and 6.2 of this Agreement and Annex A
and in the case of any determination under this Agreement for the purposes
of the definition of Permitted Refinancing, Sections 7.2(f), 7.2(n),
7.6(j), 7.6(l) and 7.8(j), occurring on or prior to the date of the
consummation of the event giving rise to the requirement to calculate such
ratio, in each case, as if such incurrence or repayment or issuance or
redemption or other repayment, as the case may be, and the application of
the proceeds thereof occurred on the first day of the period for which such
ratio is being calculated (the "reference period"), provided all the
calculations referred to herein shall be in reasonable detail and shall be
in form and substance reasonably satisfactory to the Administrative Agent
in all respects; and
(b) any asset sales or asset acquisitions occurring on or prior to the
end of the applicable quarterly fiscal period in the case of the
determination of compliance with Section 7.1 of this Agreement and in the
case of any other determination under this Agreement, occurring on or prior
to the date of the consummation of the event giving rise
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to the requirement to calculate such ratio, in each case, as if such asset
sale or asset acquisition occurred on the first day of the reference period
as follows:
(x) with respect to asset sales, the Consolidated EBITDA
attributable to the assets which are the subject of asset sales that
occurred will be excluded; and
(y) with respect to asset acquisitions, the Consolidated EBITDA
attributable to the assets which are the subject of the applicable
asset acquisition will be included and the Borrower may take into
account the projected, quantifiable cost reductions expected to be
realized and non-recurring costs and expenses, in each case, in
connection with such asset acquisition and as a result of, in the case
of cost reductions, an established program of cost reductions adopted
in good faith by the board of managers of the Borrower, provided all
the calculations referred to herein shall be in reasonable detail and
shall be in form and substance reasonably satisfactory to the
Administrative Agent in all respects.
For purposes of the foregoing, cost reductions and non-recurring costs
and expenses, in each case, will be calculated on a pro forma basis as if such
cost reductions and non-recurring costs and expenses, in each case, had been
implemented at the beginning of such applicable reference period. Furthermore,
in determining compliance with such ratio amounts:
(i) interest on outstanding Indebtedness (other than the Loans under
this Agreement) determined on a fluctuating basis as of the date giving
rise to the requirement to calculate such ratio and which will continue to
be so determined thereafter will be deemed to have accrued at a fixed rate
per annum equal to the rate of interest on such Indebtedness in effect on
such date; and
(ii) if interest on any Indebtedness (other than the Loans under this
Agreement) actually incurred on such date may optionally be determined at
an interest rate based upon a factor of a prime or similar rate, a
eurocurrency interbank offered rate, or other rates, then the interest rate
in effect on such date will be deemed to have been in effect during the
entire reference period.
"Projections": as defined in Section 6.2(c).
"Properties": as defined in Section 4.17(a).
"Property": any right or interest in or to property of any kind
whatsoever, whether real, personal or mixed and whether tangible or intangible,
including, without limitation, Capital Stock.
"Recovery Event": any settlement of or payment in respect of any
property or casualty insurance claim or any condemnation proceeding relating to
any asset of any Group Member.
"Register": as defined in Section 10.6(b)(iv).
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"Registration Agreement": the Second Amended and Restated Registration
Agreement dated as of October 18, 2000 among Holdings, MEM Holdings, LLC, Joseph
Koff, David Unger, Music Holdings Corp. and AMFM Systems, Inc., BancAmerica
Capital Investors I, L.P., New York Life Capital Partners, L.P. and The
Northwestern Mutual Life Insurance Company, as amended, supplemented or
otherwise modified from time to time to the extent permitted under Section 7.17.
"Regulation U": Regulation U of the Board as in effect from time to
time.
"Reimbursement Obligation": the obligation of the Borrower to
reimburse the Issuing Lender pursuant to Section 2.9 for amounts drawn under
Letters of Credit.
"Reinvestment Deferred Amount": with respect to any Reinvestment
Event, the aggregate Net Cash Proceeds received by any Group Member in
connection therewith that are not applied to repay outstanding Loans pursuant to
Section 3.2(b) as a result of the delivery of a Reinvestment Notice.
"Reinvestment Event": any Asset Sale or Recovery Event in respect of
which the Borrower has delivered a Reinvestment Notice.
"Reinvestment Notice": a written notice executed on the Borrower's
behalf by a Responsible Officer stating that no Event of Default has occurred
and is continuing and that the Borrower (directly or indirectly through a
Subsidiary) intends and expects to use all or a specified portion of the Net
Cash Proceeds of an Asset Sale to acquire fixed or capital assets useful in its
business or a Recovery Event to repair or replace the assets which were the
subject of such Recovery Event, as applicable.
"Reinvestment Prepayment Amount": with respect to any Reinvestment
Event, the Reinvestment Deferred Amount relating thereto less any amount
expended prior to the relevant Reinvestment Prepayment Date to acquire fixed or
capital assets useful in the Borrower's business or repair or replace the assets
which were the subject of the relevant Recovery Event, as applicable.
"Reinvestment Prepayment Date": with respect to any Reinvestment
Event, the earlier of (a) the date occurring one year after such Reinvestment
Event and (b) the date on which the Borrower shall have determined not to, or
shall have otherwise ceased to, acquire or repair fixed or capital assets useful
in the Borrower's business or repair or replace the assets which were the
subject of the relevant Recovery Event, as applicable, with all or any portion
of the relevant Reinvestment Deferred Amount.
"Related Agreements": (a) the Holdings Note Documents, (b) any
Permitted Sponsor Subordinated Debt Agreements, (c) any Permitted Seller Notes,
(d) any Holdings Preferred Stock, (e) the Muzak LLC Agreement, (f) the Holdings
LLC Agreement, (g) the Management Agreement, (h) the Employment Agreement, (i)
the Members Agreement, (j) the Investment Securities Purchase Agreements, (k)
the Securityholders Agreement, (l) the Registration Agreement and (m) the
Securities Repurchase Agreements.
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"Reorganization": with respect to any Multiemployer Plan, the
condition that such plan is in reorganization within the meaning of Section 4241
of ERISA.
"Reportable Event": any of the events set forth in Section 4043(b) of
ERISA, other than those events as to which the thirty day notice period is
waived under subsections .24, .27, .28, .29, .30, .31, .32, .34 or .35 of PBGC
Reg.(S) 4043.
"Required Lenders": at any time, the holders of more than 50% of (a)
until the Closing Date, the Revolving Commitments then in effect and (b)
thereafter, the Total Revolving Commitments then in effect or, if the Revolving
Commitments have been terminated, the Total Revolving Extensions of Credit then
outstanding.
"Requirement of Law": as to any Person, the Certificate of
Incorporation and By-Laws or other organizational or governing documents of such
Person, and any law, treaty, rule or regulation or determination of an
arbitrator or a court or other Governmental Authority, in each case applicable
to or binding upon such Person or any of its property or to which such Person or
any of its property is subject.
"Responsible Officer": the chief executive officer, president, chief
operating officer or chief financial officer of the Borrower, but in any event,
with respect to financial matters, the chief financial officer of the Borrower.
"Restricted Payments": as defined in Section 7.6.
"Revolving Commitment": as to any Lender, the obligation of such
Lender, if any, to make Loans and participate in Letters of Credit in an
aggregate principal and/or face amount not to exceed the amount set forth under
the heading "Revolving Commitment" under such Lender's name on such Lender's
Addendum or in the Assignment and Assumption pursuant to which such Lender
became a party hereto, as the same may be changed from time to time pursuant to
the terms hereof. The original amount of the Total Revolving Commitments is
$60,000,000.
"Revolving Commitment Period": the period from and including the
Closing Date to the Revolving Termination Date.
"Revolving Extensions of Credit": as to any Revolving Lender at any
time, an amount equal to the sum of (a) the aggregate principal amount of all
Loans held by such Lender then outstanding and (b) such Lender's Revolving
Percentage of the L/C Obligations then outstanding.
"Revolving Lender": each Lender that has a Revolving Commitment or
that holds Loans.
"Revolving Percentage": as to any Revolving Lender at any time, the
percentage which such Lender's Revolving Commitment then constitutes of the
Total Revolving Commitments (or, at any time after the Revolving Commitments
shall have expired or terminated, the
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percentage which the aggregate principal amount of such Lender's Loans then
outstanding constitutes of the aggregate principal amount of the Loans then
outstanding).
"Revolving Termination Date": May 20, 2008.
"SEC": the Securities and Exchange Commission, any successor thereto
and any analogous Governmental Authority.
"Secured Parties": the collective reference to the Agents, the Lenders
and the Lender Counterparties.
"Securities Repurchase Agreements": the Securities Repurchase
Agreements, dated as of October 6, 1998, among Holdings and MEM Holdings, LLC,
on the one hand, and each of Joseph Koff, David Unger and other management
members, on the other hand, in each case, as amended, supplemented, modified,
revised or replaced from time to time in accordance with Section 7.17.
"Security Documents": the collective reference to the Guarantee and
Collateral Agreement, the Mortgages and all other security documents hereafter
delivered to the Administrative Agent granting a Lien on any property of any
Person to secure the obligations and liabilities of any Loan Party under any
Loan Document.
"Securityholders Agreement": the Second Amended and Restated
Securityholders Agreement dated as of March 15, 2002 among Holdings, MEM
Holdings, LLC and AMFM Systems, Inc., BancAmerica Capital Investors I, L.P., New
York Life Capital Partners, L.P. and The Northwestern Mutual Life Insurance
Company, as amended, supplemented, modified, revised or replaced from time to
time in accordance with Section 7.17.
"Senior Note Documents": (a) the Senior Note Indenture, (b) the Senior
Notes, (c) the Purchase Agreement dated as of May 20, 2003, by and among the
Borrower, Muzak Finance, the guarantors named therein, Bear, Stearns & Co. Inc.
("Bear") and Lehman Brothers Inc. ("Lehman"), and (d) the Registration Rights
Agreement dated as of May 20, 2003 by and among the Borrower, Muzak Finance, the
guarantors named therein, Bear and Lehman.
"Senior Note Indenture": the Indenture to be entered into by the
Borrower and Muzak Finance and the guarantors named therein in connection with
the issuance of the Senior Notes, together with all instruments and other
agreements entered into by the Borrower and Muzak Finance and such subsidiary
guarantors in connection therewith.
"Senior Notes": the $220,000,000 Senior Notes due 2009 of the Borrower
and Muzak Finance to be issued on the Closing Date pursuant to the Senior Note
Indenture.
"Senior Subordinated Note Documents": (a) the Senior Subordinated
Notes, (b) the Senior Subordinated Note Indenture, (c) the purchase agreement
dated as of March 12, 1999, by and among the Borrower, Muzak Finance, the
guarantors named therein, CIBC and GSC, and (d) the registration rights
agreement dated as of March 18, 1999 by and among the Borrower, Muzak Finance,
the guarantors named therein, CIBC and GSC.
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"Senior Subordinated Note Indenture": the Indenture dated as of March
18, 1999, by and among the Borrower and Muzak Finance, as issuers, and the
guarantors named therein, and State Street Bank and Trust Co., as trustee.
"Senior Subordinated Notes": the $115,000,000 aggregate principal
amount of 9 7/8% Senior Subordinated Notes due 2009 of the Borrower and Muzak
Finance issued pursuant to the Senior Subordinated Note Indenture.
"Single Employer Plan": any Plan that is covered by Title IV of ERISA,
but that is not a Multiemployer Plan.
"Solvent": when used with respect to any Person, means that, as of any
date of determination, (a) the amount of the "present fair saleable value" of
the assets of such Person will, as of such date, exceed the amount of all
"liabilities of such Person, contingent or otherwise", as of such date, as such
quoted terms are determined in accordance with applicable federal and state laws
governing determinations of the insolvency of debtors, (b) the present fair
saleable value of the assets of such Person will, as of such date, be greater
than the amount that will be required to pay the liability of such Person on its
debts as such debts become absolute and matured, (c) such Person will not have,
as of such date, an unreasonably small amount of capital with which to conduct
its business, and (d) such Person will be able to pay its debts as they mature.
For purposes of this definition, (i) "debt" means liability on a "claim", and
(ii) "claim" means any (x) right to payment, whether or not such a right is
reduced to judgment, liquidated, unliquidated, fixed, contingent, matured,
unmatured, disputed, undisputed, legal, equitable, secured or unsecured or (y)
right to an equitable remedy for breach of performance if such breach gives rise
to a right to payment, whether or not such right to an equitable remedy is
reduced to judgment, fixed, contingent, matured or unmatured, disputed,
undisputed, secured or unsecured.
"Specified Change of Control": a "Change of Control" (or any other
defined term having a similar purpose) as defined in the Holdings Note
Indenture, the Senior Subordinated Note Indenture, the Senior Note Indenture or
any Holdings Preferred Stock.
"Specified Hedge Agreement": any Hedge Agreement (a) entered into by
(i) the Borrower or any of its Subsidiaries and (ii) any Agent or Lender or any
affiliate thereof, as counterparty and (b) that has been designated by such
Agent or Lender, as the case may be, and the Borrower, by notice to the
Administrative Agent, as a Specified Hedge Agreement. The designation of any
Hedge Agreement as a Specified Hedge Agreement shall not create in favor of the
Agent, Lender or affiliate thereof that is a party thereto any rights in
connection with the management or release of any Collateral or of the
obligations of any Guarantor under the Guarantee and Collateral Agreement.
"Sponsor Note": that certain $10,000,000 aggregate principal amount
15% junior subordinated note of the Borrower due and payable to MEM Holdings,
LLC (plus approximately $1,900,000 of accrued interest as of the Closing Date).
"Sponsors": (a) ABRY Broadcast Partners II, L.P., (b) ABRY Broadcast
Partners III, L.P. and (c) MEM Holdings, LLC.
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"Subordinated Indebtedness": (a) Indebtedness of any Loan Party under
the Senior Subordinated Note Documents, (b) Indebtedness of any Loan Party under
any Permitted Sponsor Subordinated Debt Agreement, (c) Indebtedness of any Loan
Party constituting unsecured Permitted Seller Debt, and (d) Indebtedness of any
Loan Party under any other subordinated Indebtedness of any type.
"Subordinated Indenture": the Indenture pursuant to which any
Subordinated Indebtedness is issued.
"Subsidiary": as to any Person, a corporation, partnership, limited
liability company or other entity of which shares of stock or other ownership
interests having ordinary voting power (other than stock or such other ownership
interests having such power only by reason of the happening of a contingency) to
elect a majority of the board of directors or other managers of such
corporation, partnership or other entity are at the time owned, or the
management of which is otherwise controlled, directly or indirectly through one
or more intermediaries, or both, by such Person, provided that for the purposes
of this Agreement, Muzak Heart & Soul shall not constitute a "Subsidiary."
Unless otherwise qualified, all references to a "Subsidiary" or to
"Subsidiaries" in this Agreement shall refer to a Subsidiary or Subsidiaries of
the Borrower.
"Subsidiary Guarantor": each Included Subsidiary of the Borrower other
than any Excluded Foreign Subsidiary and Muzak Finance.
"Supermajority Lenders": at any time, the holders of more than 66 2/3%
of (a) until the Closing Date, the Revolving Commitments then in effect and (b)
thereafter, the Total Revolving Commitments then in effect or, if the Revolving
Commitments have been terminated, the Total Revolving Extensions of Credit then
outstanding.
"Syndication Date": the date on which the Co-Syndication Agents and
the Joint Lead Arrangers complete the syndication of the Facility and the
entities selected in such syndication process become parties to this Agreement.
"Tax Distributions": distributions by the Borrower to Holdings as its
sole member and by Holdings to each of its members in respect of the tax
liabilities of such members arising out of such members' ownership interests in
the Borrower or Holdings, as applicable, provided that, the amount of Tax
Distributions in respect of any fiscal year to which each such member shall be
entitled shall be such that, in the aggregate for such fiscal year and for all
prior fiscal years, such member has received an amount equal to the product of
(i) the amount of taxable income allocated to such member for such fiscal year
and for all prior fiscal years, reduced by the amount of taxable losses
allocated to such member for such fiscal year and for all prior fiscal years,
and (ii) the effective maximum combined marginal federal and Massachusetts state
income tax rates (after giving effect to any federal income tax deduction for
such state income taxes) applicable to taxpayers resident in Massachusetts in
respect of income recognized during such fiscal year.
"Total Revolving Commitments": at any time, the aggregate amount of
the Revolving Commitments then in effect.
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"Total Revolving Extensions of Credit": at any time, the aggregate
amount of the Revolving Extensions of Credit of the Revolving Lenders
outstanding at such time.
"Transferee": any Assignee or Participant.
"Type": as to any Loan, its nature as a Base Rate Loan or a Eurodollar
Loan.
"United States": the United States of America.
"Wholly Owned Subsidiary": as to any Person, any other Person all of
the Capital Stock of which (other than directors' qualifying shares required by
law) is owned by such Person directly and/or through other Wholly Owned
Subsidiaries.
"Wholly Owned Subsidiary Guarantor": any Subsidiary Guarantor that is
a Wholly Owned Subsidiary of the Borrower.
"Yen" or "(Y)": the lawful money of Japan.
1.2. Other Definitional Provisions(a) . (a) Unless otherwise specified
therein, all terms defined in this Agreement shall have the defined meanings
when used in the other Loan Documents or any certificate or other document made
or delivered pursuant hereto or thereto.
(b) As used herein and in the other Loan Documents, and any
certificate or other document made or delivered pursuant hereto or thereto, (i)
accounting terms relating to any Group Member not defined in Section 1.1 and
accounting terms partly defined in Section 1.1, to the extent not defined, shall
have the respective meanings given to them under GAAP, (ii) the words "include",
"includes" and "including" shall be deemed to be followed by the phrase "without
limitation", (iii) the word "incur" shall be construed to mean incur, create,
issue, assume, become liable in respect of or suffer to exist (and the words
"incurred" and "incurrence" shall have correlative meanings), (iv) the words
"asset" and "property" shall be construed to have the same meaning and effect
and to refer to any and all tangible and intangible assets and properties,
including cash, Capital Stock, securities, revenues, accounts, leasehold
interests and contract rights, and (v) references to agreements or other
Contractual Obligations shall, unless otherwise specified, be deemed to refer to
such agreements or Contractual Obligations as amended, supplemented, restated or
otherwise modified from time to time (subject to any applicable restrictions
hereunder).
(c) The words "hereof", "herein" and "hereunder" and words of similar
import when used in this Agreement shall refer to this Agreement as a whole and
not to any particular provision of this Agreement, and Section, Schedule and
Exhibit references are to this Agreement unless otherwise specified.
(d) The meanings given to terms defined herein shall be equally
applicable to both the singular and plural forms of such terms.
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SECTION 2. AMOUNT AND TERMS OF REVOLVING COMMITMENTS
2.1. Revolving Commitments. Subject to the terms and conditions
hereof, each Revolving Lender severally agrees to make revolving credit loans
("Loans") to the Borrower from time to time during the Revolving Commitment
Period in an aggregate principal amount at any one time outstanding which, when
added to such Lender's Revolving Percentage of the L/C Obligations then
outstanding, does not exceed the amount of such Lender's Revolving Commitment.
During the Revolving Commitment Period the Borrower may use the Revolving
Commitments by borrowing, prepaying and reborrowing the Loans in whole or in
part, all in accordance with the terms and conditions hereof. The Loans may from
time to time be Eurodollar Loans or Base Rate Loans, as determined by the
Borrower and notified to the Administrative Agent in accordance with Sections
2.2 and 3.3. The Borrower shall repay all outstanding Loans on the Revolving
Termination Date.
2.2. Procedure for Loan Borrowing. The Borrower may borrow under the
Revolving Commitments during the Revolving Commitment Period on any Business
Day, provided that the Borrower shall give the Administrative Agent an
irrevocable notice of borrowing in the form of Exhibit L hereto (which notice
must be received by the Administrative Agent prior to 12:00 Noon, New York City
time, (a) three Business Days prior to the requested Borrowing Date, in the case
of Eurodollar Loans, or (b) one Business Day prior to the requested Borrowing
Date, in the case of Base Rate Loans) (provided that any such notice of a
borrowing of Base Rate Loans to finance payments required to be made pursuant to
Section 2.3 may be given not later than 10:00 A.M., New York City time, on the
date of the proposed borrowing), specifying (i) the amount and Type of Loans to
be borrowed, (ii) the requested Borrowing Date and (iii) in the case of
Eurodollar Loans, the respective amounts of each such Type of Loan and the
respective lengths of the initial Interest Period therefor. Any Loans made on
the Closing Date shall initially be Base Rate Loans and, unless otherwise agreed
by the Administrative Agent in its sole discretion, no Loan may be made as,
converted into or continued as a Eurodollar Loan having an Interest Period in
excess of one month prior to the date that is three days after the Closing Date.
Each borrowing under the Revolving Commitments shall be in an amount equal to
(x) in the case of Base Rate Loans, $500,000 or a whole multiple of $100,000 in
excess thereof (or, if the then aggregate Available Revolving Commitments are
less than $500,000, such lesser amount) and (y) in the case of Eurodollar Loans,
$100,000 or a whole multiple of $100,000 in excess thereof. Upon receipt of any
such notice from the Borrower, the Administrative Agent shall promptly notify
each Revolving Lender thereof. Each Revolving Lender will make the amount of its
pro rata share of each borrowing available to the Administrative Agent for the
account of the Borrower at the Funding Office prior to 12:00 Noon, New York City
time, on the Borrowing Date requested by the Borrower in funds immediately
available to the Administrative Agent. Such borrowing will then be made
available to the Borrower by the Administrative Agent crediting the account of
the Borrower on the books of such office with the aggregate of the amounts made
available to the Administrative Agent by the Revolving Lenders and in like funds
as received by the Administrative Agent. Not more than $15,000,000 of Loans
shall be made on the Closing Date.
2.3. Commitment Fees, etc. (a) The Borrower agrees to pay to the
Administrative Agent for the account of each Revolving Lender a commitment fee
for the period from
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and including the Closing Date to the last day of the Revolving Commitment
Period, computed at the Commitment Fee Rate on the average daily amount of the
Available Revolving Commitment of such Lender during the period for which
payment is made, payable quarterly in arrears on the last day of each March,
June, September and December and on the Revolving Termination Date, commencing
on the first of such dates to occur after the date hereof.
(b) The Borrower agrees to pay to the Administrative Agent the fees in
the amounts and on the dates previously agreed to in writing by the Borrower and
the Administrative Agent.
(c) The Borrower agrees to pay to Lehman Brothers Inc. and Bear,
Stearns & Co. Inc. (on behalf of itself and General Electric Capital
Corporation) fees in the amounts and on the dates previously agreed to in
writing by the Borrower and Lehman Brothers Inc. and Bear, Stearns & Co. Inc.
2.4. Termination or Reduction of Revolving Commitments. The Borrower
shall have the right, upon not less than three Business Days' notice to the
Administrative Agent, to terminate the Revolving Commitments or, from time to
time, to reduce the amount of the Revolving Commitments; provided that no such
termination or reduction of Revolving Commitments shall be permitted if, after
giving effect thereto and to any prepayments of the Loans made on the effective
date thereof, the Total Revolving Extensions of Credit would exceed the Total
Revolving Commitments. Any such reduction shall be in an amount equal to
$1,000,000, or a whole multiple thereof, and shall reduce permanently the
Revolving Commitments then in effect.
2.5. L/C Commitment. (a) Subject to the terms and conditions hereof,
the Issuing Lender, in reliance on the agreements of the other Revolving Lenders
set forth in Section 2.8(a), agrees to issue letters of credit ("Letters of
Credit") for the account of the Borrower on any Business Day during the
Revolving Commitment Period in such form as may be approved from time to time by
the Issuing Lender; provided that the Issuing Lender shall have no obligation to
issue any Letter of Credit if, after giving effect to such issuance, (i) the L/C
Obligations would exceed the L/C Commitment or the Foreign L/C Usage would
exceed the Foreign L/C Sublimit or (ii) the aggregate amount of the Available
Revolving Commitments would be less than zero. Each Letter of Credit shall (i)
be denominated in Dollars or Yen; provided, however, that a Letter of Credit
will only be issued in Yen if, as of the proposed date of issuance of such
Letter of Credit, the Issuing Lender determines, in its reasonable judgment
(which shall be binding on all Revolving Lenders), that Yen are available in
sufficient amount, at a reasonable cost and are otherwise freely convertible and
exchangeable into Dollars, (ii) have a face amount of at least $50,000 or the
Dollar Equivalent thereof (unless otherwise agreed by the Issuing Lender) and
(iii) expire no later than the earlier of (x) the first anniversary of its date
of issuance and (y) the date that is five Business Days prior to the Revolving
Termination Date, provided that any Letter of Credit with a one-year term may
provide for the renewal thereof for additional one-year periods (which shall in
no event extend beyond the date referred to in clause (y) above).
(b) The Issuing Lender shall not at any time be obligated to issue any
Letter of Credit hereunder if such issuance would conflict with, or cause the
Issuing Lender or any L/C Participant to exceed any limits imposed by, any
applicable Requirement of Law.
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(c) Schedule 2.5(c) contains a description of all letters of credit
issued by any Lender pursuant to the Existing Credit Facility and which are to
remain outstanding on the Closing Date (collectively, the "Existing Letters of
Credit") and sets forth, with respect to each such letter of credit, (i) the
name of the issuing lender, (ii) the letter of credit number, (iii) the stated
amount, (iv) the name of the beneficiary and (v) the expiry date. Each such
letter of credit, including any extension thereof, shall constitute a "Letter of
Credit" under, as defined in, and for all purposes of, this Agreement and shall
be deemed issued on the Closing Date.
(d) Dollar Equivalent Calculation. For purposes of determining the
Total Revolving Extensions of Credit and the L/C Obligations, Fleet National
Bank shall determine the Dollar Equivalent of all issued and outstanding Letters
of Credit denominated in Yen (a) on the date any such Letter of Credit is
issued, (b) on any date any such Letter of Credit is drawn on, (c) on any
Borrowing Date, (d) on the last Business Day of each Fiscal Quarter, (e) at any
time a Default or Event of Default shall have occurred and be continuing and (f)
on any other date designated by Fleet National Bank. Each Dollar Equivalent
calculation shall remain in effect until recalculated by Fleet National Bank.
Fleet National Bank shall promptly notify the Administrative Agent and the
Borrower of each calculation of the Dollar Equivalent.
2.6. Procedure for Issuance of Letter of Credit. The Borrower may from
time to time request that the Issuing Lender issue a Letter of Credit by
delivering to the Issuing Lender at its address for notices specified herein an
Application therefor, completed to the satisfaction of the Issuing Lender, and
such other certificates, documents and other papers and information as the
Issuing Lender may request. Upon receipt of any Application, the Issuing Lender
will notify the Administrative Agent of the amount, the currency, the
beneficiary and the requested expiration of the requested Letter of Credit, and
upon receipt of confirmation from the Administrative Agent that after giving
effect to the requested issuance, the Available Revolving Commitments would not
be less than zero, the Issuing Lender will process such Application and the
certificates, documents and other papers and information delivered to it in
connection therewith in accordance with its customary procedures and shall
promptly issue the Letter of Credit requested thereby (but in no event shall the
Issuing Lender be required to issue any Letter of Credit earlier than three
Business Days after its receipt of the Application therefor and all such other
certificates, documents and other papers and information relating thereto) by
issuing the original of such Letter of Credit to the beneficiary thereof or as
otherwise may be agreed to by the Issuing Lender and the Borrower. The Issuing
Lender shall furnish a copy of such Letter of Credit to the Borrower (with a
copy to the Administrative Agent) promptly following the issuance thereof. The
Issuing Lender shall promptly furnish to the Administrative Agent, which shall
in turn promptly furnish to the Lenders, notice of the issuance of each Letter
of Credit (including the amount thereof).
2.7. Fees and Other Charges. (a) The Borrower will pay a fee on all
outstanding Letters of Credit at a per annum rate equal to the Applicable Margin
then in effect with respect to Eurodollar Loans under the Facility on the
aggregate amount of the undrawn and unexpired amount of each Letter of Credit,
shared ratably among the Revolving Lenders and payable quarterly in arrears on
each L/C Fee Payment Date after the issuance date. In addition, the Borrower
shall pay to the Issuing Lender through the Administrative Agent for its own
account a fronting fee which shall accrue at a rate of 0.250% per annum on the
aggregate amount (calcu-
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lated in Dollars using the Dollar Equivalent thereof in the calculation) of the
undrawn and unexpired amount of each Letter of Credit, payable quarterly in
arrears on each L/C Fee Payment Date after the Issuance Date.
(b) In addition to the foregoing fees, the Borrower shall pay or
reimburse the Issuing Lender through the Administrative Agent for such normal
and customary costs and expenses as are incurred or charged by the Issuing
Lender in issuing, negotiating, effecting payment under, amending or otherwise
administering any Letter of Credit.
2.8. L/C Participations. (a) The Issuing Lender irrevocably agrees to
grant and hereby grants to each L/C Participant, and, to induce the Issuing
Lender to issue Letters of Credit hereunder, each L/C Participant irrevocably
agrees to accept and purchase and hereby accepts and purchases from the Issuing
Lender, on the terms and conditions set forth below, for such L/C Participant's
own account and risk an undivided interest equal to such L/C Participant's
Revolving Percentage in the Issuing Lender's obligations and rights under and in
respect of each Letter of Credit issued hereunder and the amount of each draft
paid by the Issuing Lender thereunder. Each L/C Participant unconditionally and
irrevocably agrees with the Issuing Lender that, if a draft is paid under any
Letter of Credit for which the Issuing Lender is not reimbursed in full by the
Borrower in accordance with the terms of this Agreement, such L/C Participant
shall pay to the Administrative Agent upon demand of the Issuing Lender an
amount equal to such L/C Participant's Revolving Percentage of the amount of
such draft, or any part thereof, that is not so reimbursed. The Administrative
Agent shall promptly forward such amounts to the Issuing Lender.
(b) If any amount required to be paid by any L/C Participant to the
Administrative Agent for the account of the Issuing Lender pursuant to Section
2.8(a) in respect of any unreimbursed portion of any payment made by the Issuing
Lender under any Letter of Credit is paid to the Administrative Agent for the
account of the Issuing Lender within three Business Days after the date such
payment is due, such L/C Participant shall pay to the Administrative Agent for
the account of the Issuing Lender on demand an amount equal to the product of
(i) such amount, times (ii) the daily average Federal Funds Effective Rate
during the period from and including the date such payment is required to the
date on which such payment is immediately available to the Issuing Lender, times
(iii) a fraction the numerator of which is the number of days that elapse during
such period and the denominator of which is 360. If any such amount required to
be paid by any L/C Participant pursuant to Section 2.8(a) is not made available
to the Administrative Agent for the account of the Issuing Lender by such L/C
Participant within three Business Days after the date such payment is due, the
Issuing Lender shall be entitled to recover from such L/C Participant, on
demand, such amount with interest thereon calculated from such due date at the
rate per annum applicable to Base Rate Loans under the Facility. A certificate
of the Issuing Lender submitted to any L/C Participant with respect to any
amounts owing under this Section shall be conclusive in the absence of manifest
error.
(c) Whenever, at any time after the Issuing Lender has made payment
under any Letter of Credit and has received from any L/C Participant its pro
rata share of such payment in accordance with Section 2.8(a), the Administrative
Agent or the Issuing Lender receives any payment related to such Letter of
Credit (whether directly from the Borrower or otherwise, in-
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cluding proceeds of collateral applied thereto by the Issuing Lender), or any
payment of interest on account thereof, the Administrative Agent or the Issuing
Lender, as the case may be, will distribute to such L/C Participant its pro rata
share thereof; provided, however, that in the event that any such payment
received by the Administrative Agent or the Issuing Lender, as the case may be,
shall be required to be returned by the Administrative Agent or the Issuing
Lender, such L/C Participant shall return to the Administrative Agent for the
account of the Issuing Lender the portion thereof previously distributed by the
Administrative Agent or the Issuing Lender, as the case may be, to it.
2.9. Reimbursement Obligation of the Borrower. The Borrower agrees to
reimburse the Issuing Lender on the Business Day next succeeding the Business
Day on which the Issuing Lender notifies the Borrower of the date and amount of
a draft presented under any Letter of Credit and paid by the Issuing Lender for
the amount of (a) such draft so paid and (b) any taxes, fees, charges or other
costs or expenses incurred by the Issuing Lender in connection with such
payment. Each such payment shall be made to the Issuing Lender at its address
for notices referred to herein in Dollars and in immediately available funds.
Interest shall be payable on any such amounts from the date on which the
relevant draft is paid until payment in full at the rate set forth in (i) until
the Business Day next succeeding the date of the relevant notice, Section 3.5(b)
and (ii) thereafter, Section 3.5(c). Each drawing under any Letter of Credit
shall (unless an event of the type described in clause (i) or (ii) of Section
8(f) shall have occurred and be continuing with respect to the Borrower, in
which case the procedures specified in Section 2.8 for funding by L/C
Participants shall apply) constitute a request by the Borrower to the
Administrative Agent for a borrowing pursuant to Section 2.2 of Base Rate Loans
in the amount of such drawing. The Borrowing Date with respect to such borrowing
shall be the first date on which a borrowing of Loans could be made, pursuant to
Section 2.2, if the Administrative Agent had received a notice of such borrowing
at the time the Administrative Agent receives notice from the Issuing Lender of
such drawing under such Letter of Credit.
2.10. Obligations Absolute. The Borrower's obligations under Section
2.9 shall be absolute and unconditional under any and all circumstances and
irrespective of any setoff, counterclaim or defense to payment that the Borrower
may have or have had against the Issuing Lender, any beneficiary of a Letter of
Credit or any other Person. The Borrower also agrees with the Issuing Lender
that the Issuing Lender shall not be responsible for, and the Borrower's
Reimbursement Obligations under Section 2.9 shall not be affected by, among
other things, the validity or genuineness of documents or of any endorsements
thereon, even though such documents shall in fact prove to be invalid,
fraudulent or forged, or any dispute between or among the Borrower and any
beneficiary of any Letter of Credit or any other party to which such Letter of
Credit may be transferred or any claims whatsoever of the Borrower against any
beneficiary of such Letter of Credit or any such transferee. The Issuing Lender
shall not be liable for any error, omission, interruption or delay in
transmission, dispatch or delivery of any message or advice, however
transmitted, in connection with any Letter of Credit, except for errors or
omissions found by a final and nonappealable decision of a court of competent
jurisdiction to have resulted from the gross negligence or willful misconduct of
the Issuing Lender. The Borrower agrees that any action taken or omitted by the
Issuing Lender under or in connection with any Letter of Credit or the related
drafts or documents, if done in the absence of gross negligence or willful
misconduct and in accordance with the standards of care specified in the Uniform
Commercial
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Code of the State of New York, shall be binding on the Borrower and
shall not result in any liability of the Issuing Lender to the Borrower.
2.11. Letter of Credit Payments. If any draft shall be presented for
payment under any Letter of Credit, the Issuing Lender shall promptly notify the
Borrower of the date and amount thereof. The responsibility of the Issuing
Lender to the Borrower in connection with any draft presented for payment under
any Letter of Credit shall, in addition to any payment obligation expressly
provided for in such Letter of Credit, be limited to determining that the
documents (including each draft) delivered under such Letter of Credit in
connection with such presentment are substantially in conformity with such
Letter of Credit.
2.12. Applications. To the extent that any provision of any
Application related to any Letter of Credit is inconsistent with the provisions
of this Section 2, the provisions of this Section 2 shall apply.
SECTION 3. GENERAL PROVISIONS APPLICABLE TO LOANS AND LETTERS OF CREDIT
3.1. Optional Prepayments. The Borrower may at any time and from time
to time prepay the Loans, in whole or in part, without premium or penalty, upon
irrevocable notice delivered to the Administrative Agent no later than 11:00
A.M., New York City time, three Business Days prior thereto, in the case of
Eurodollar Loans, and no later than 11:00 A.M., New York City time, one Business
Day prior thereto, in the case of Base Rate Loans, which notice shall specify
the date and amount of prepayment and whether the prepayment is of Eurodollar
Loans or Base Rate Loans; provided that if a Eurodollar Loan is prepaid on any
day other than the last day of the Interest Period applicable thereto, the
Borrower shall also pay any amounts owing pursuant to Section 3.11. Upon receipt
of any such notice the Administrative Agent shall promptly notify each relevant
Lender thereof. If any such notice is given and the borrowing pursuant to such
notice has been made, the amount specified in such notice shall be due and
payable on the date specified therein, together with (except in the case of
Loans that are Base Rate Loans) accrued interest to such date on the amount
prepaid. Partial prepayments of Loans shall be in an aggregate principal amount
of $500,000 and whole multiples of $100,000 in excess thereof.
3.2. Mandatory Prepayments and Revolving Commitment Reductions. (a) If
any Indebtedness shall be issued or incurred by any Group Member other than
Excluded Indebtedness, an amount equal to 100% of the Net Cash Proceeds thereof
shall be applied on the date of such issuance or incurrence toward the repayment
of outstanding Loans and to the reduction of the Revolving Commitments by an
amount equal to 100% of such Net Cash Proceeds as set forth in Section 3.2(c).
(b) If on any date any Group Member shall receive Net Cash Proceeds
from any Asset Sale or Recovery Event then, unless a Reinvestment Notice shall
be delivered in respect thereof, 100% of such Net Cash Proceeds shall be applied
on such date toward the repayment of the Loans and the Revolving Commitments
shall be reduced by an amount equal to 25% of such Reinvestment Prepayment
Amount as set forth in Section 3.2(c).
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(c) Amounts to be applied in connection with commitment reductions
made pursuant to this Section 3.2 shall be applied to repay outstanding Loans to
the extent outstanding and to reduce permanently the Revolving Commitments to
the extent provided for in clauses (a) and (b) above, as applicable. Any such
reduction of the Revolving Commitments shall be accompanied by prepayment of the
Loans to the extent, if any, that the Total Revolving Extensions of Credit
exceed the amount of the Total Revolving Commitments as so reduced; provided
that if the aggregate principal amount of Loans then outstanding is less than
the amount of such excess (because L/C Obligations constitute a portion
thereof), the Borrower shall, to the extent of the balance of such excess,
replace outstanding Letters of Credit and/or deposit an amount in cash in a cash
collateral account established with the Administrative Agent for the benefit of
the Lenders on terms and conditions reasonably satisfactory to the
Administrative Agent. The application of any prepayment pursuant to Section 3.2
shall be made, first, to Base Rate Loans and, second, to Eurodollar Loans. Each
prepayment of the Loans under this Section 3.2 (except in the case of Loans that
are Base Rate Loans) shall be accompanied by accrued interest to the date of
such prepayment on the amount prepaid.
3.3. Conversion and Continuation Options. (a) The Borrower may elect
from time to time to convert Eurodollar Loans to Base Rate Loans by giving the
Administrative Agent prior irrevocable notice of such election in the form of
Exhibit M hereto no later than 11:00 A.M., New York City time, on the Business
Day preceding the proposed conversion date, provided that any such conversion of
Eurodollar Loans may only be made on the last day of an Interest Period with
respect thereto. The Borrower may elect from time to time to convert Base Rate
Loans to Eurodollar Loans by giving the Administrative Agent prior irrevocable
notice of such election no later than 11:00 A.M., New York City time, on the
Business Day preceding the proposed conversion date (which notice shall specify
the length of the initial Interest Period therefor), provided that no Base Rate
Loan under the Facility may be converted into a Eurodollar Loan when any Event
of Default has occurred and is continuing and the Administrative Agent or the
Required Lenders have determined in its or their sole discretion not to permit
such conversions. Upon receipt of any such notice the Administrative Agent shall
promptly notify each relevant Lender thereof.
(b) Any Eurodollar Loan may be continued as such upon the expiration
of the then current Interest Period with respect thereto by the Borrower giving
irrevocable notice to the Administrative Agent, in accordance with the
applicable provisions of the term "Interest Period" set forth in Section 1.1, of
the length of the next Interest Period to be applicable to such Loans, provided
that no Eurodollar Loan under the Facility may be continued as such when any
Event of Default has occurred and is continuing and the Administrative Agent has
or the Required Lenders have determined in its or their sole discretion not to
permit such continuations, and provided, further, that if the Borrower shall
fail to give any required notice as described above in this paragraph or if such
continuation is not permitted pursuant to the preceding proviso such Loans shall
be automatically converted to Base Rate Loans on the last day of such then
expiring Interest Period. Upon receipt of any such notice the Administrative
Agent shall promptly notify each relevant Lender thereof.
3.4. Limitations on Eurodollar Tranches. Notwithstanding anything to
the contrary in this Agreement, all borrowings, conversions and continuations of
Eurodollar Loans here-
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under and all selections of Interest Periods hereunder shall be in such amounts
and be made pursuant to such elections so that, (a) after giving effect thereto,
the aggregate principal amount of the Eurodollar Loans comprising each
Eurodollar Tranche shall be equal to $500,000 or a whole multiple of $100,000 in
excess thereof and (b) no more than twenty Eurodollar Tranches shall be
outstanding at any one time.
3.5. Interest Rates and Payment Dates. (a) Each Eurodollar Loan shall
bear interest for each day during each Interest Period with respect thereto at a
rate per annum equal to the Eurodollar Rate determined for such day plus the
Applicable Margin.
(b) Each Base Rate Loan shall bear interest at a rate per annum equal
to the Base Rate plus the Applicable Margin.
(c) (i) If all or a portion of the principal amount of any Loan or
Reimbursement Obligation shall not be paid when due (whether at the stated
maturity, by acceleration or otherwise), such overdue amount shall bear interest
at a rate per annum equal to (x) in the case of the Loans, the rate that would
otherwise be applicable thereto pursuant to the foregoing provisions of this
Section plus 2% or (y) in the case of Reimbursement Obligations, the rate
applicable to Base Rate Loans under the Facility plus 2%, and (ii) if all or a
portion of any interest payable on any Loan or Reimbursement Obligation or any
commitment fee or other amount payable hereunder shall not be paid when due
(whether at the stated maturity, by acceleration or otherwise), such overdue
amount shall bear interest at a rate per annum equal to the rate then applicable
to Base Rate Loans under the Facility plus 2% (or, in the case of any such other
amounts that do not relate to the Facility, the rate then applicable to Base
Rate Loans under the Facility plus 2%), in each case, with respect to clauses
(i) and (ii) above, from the date of such non-payment until such amount is paid
in full (as well after as before judgment).
3.6. Computation of Interest and Fees. Interest and fees payable
pursuant hereto shall be calculated on the basis of a 360-day year for the
actual days elapsed, except that, with respect to Base Rate Loans the rate of
interest on which is calculated on the basis of the Prime Rate, the interest
thereon shall be calculated on the basis of a 365- (or 366-, as the case may be)
day year for the actual days elapsed. The Administrative Agent shall as soon as
practicable notify the Borrower and the relevant Lenders of each determination
of a Eurodollar Rate. Any change in the interest rate on a Loan resulting from a
change in the Base Rate or the Eurocurrency Reserve Requirements shall become
effective as of the opening of business on the day on which such change becomes
effective. The Administrative Agent shall as soon as practicable notify the
Borrower and the relevant Lenders of the effective date and the amount of each
such change in interest rate. Each determination of an interest rate by the
Administrative Agent pursuant to any provision of this Agreement shall be
conclusive and binding on the Borrower and the Lenders in the absence of
manifest error. The Administrative Agent shall, at the request of the Borrower,
deliver to the Borrower a statement showing the quotations used by the
Administrative Agent in determining any interest rate pursuant to Section
3.5(a).
3.7. Inability to Determine Interest Rate. If prior to the first day
of any Interest Period:
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(a) the Administrative Agent shall have determined (which
determination shall be conclusive and binding upon the Borrower) that, by
reason of circumstances affecting the relevant market, adequate and
reasonable means do not exist for ascertaining the Eurodollar Rate for such
Interest Period, or
(b) the Administrative Agent shall have received notice from the
Required Lenders that the Eurodollar Rate determined or to be determined
for such Interest Period will not adequately and fairly reflect the cost to
such Lenders (as conclusively certified by such Lenders) of making or
maintaining their affected Loans during such Interest Period,
the Administrative Agent shall give telecopy or telephonic notice thereof to the
Borrower and the Lenders as soon as practicable thereafter. If such notice is
given (x) any Eurodollar Loans under the Facility requested to be made on the
first day of such Interest Period shall be made as Base Rate Loans, (y) any
Loans under the Facility that were to have been converted on the first day of
such Interest Period to Eurodollar Loans shall be continued as Base Rate Loans
and (z) any outstanding Eurodollar Loans under the Facility shall be converted,
on the last day of the then-current Interest Period, to Base Rate Loans. Until
such notice has been withdrawn by the Administrative Agent, no further
Eurodollar Loans under the Facility shall be made or continued as such, nor
shall the Borrower have the right to convert Loans under the Facility to
Eurodollar Loans.
3.8. Pro Rata Treatment and Payments. (a) Each borrowing by the
Borrower from the Lenders hereunder, each payment by the Borrower on account of
any commitment fee and any reduction of the Revolving Commitments of the Lenders
shall be made pro rata according to the Revolving Percentages of the Lenders.
(b) Each payment (including each prepayment) by the Borrower on
account of principal of and interest on the Loans shall be made pro rata
according to the respective outstanding principal amounts of the Loans then held
by the Revolving Lenders.
(c) All payments (including prepayments) to be made by the Borrower
hereunder, whether on account of principal, interest, fees or otherwise, shall
be made without setoff or counterclaim and shall be made prior to 12:00 Noon,
New York City time, on the due date thereof to the Administrative Agent, for the
account of the Lenders, at the Funding Office, in Dollars and in immediately
available funds. The Administrative Agent shall distribute such payments to the
Lenders promptly upon receipt in like funds as received. If any payment
hereunder (other than payments on the Eurodollar Loans) becomes due and payable
on a day other than a Business Day, such payment shall be extended to the next
succeeding Business Day. If any payment on a Eurodollar Loan becomes due and
payable on a day other than a Business Day, the maturity thereof shall be
extended to the next succeeding Business Day unless the result of such extension
would be to extend such payment into another calendar month, in which event such
payment shall be made on the immediately preceding Business Day. In the case of
any extension of any payment of principal pursuant to the preceding two
sentences, interest thereon shall be payable at the then applicable rate during
such extension.
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(d) Unless the Administrative Agent shall have been notified in
writing by any Lender prior to a borrowing that such Lender will not make the
amount that would constitute its share of such borrowing available to the
Administrative Agent, the Administrative Agent may assume that such Lender is
making such amount available to the Administrative Agent, and the Administrative
Agent may, in reliance upon such assumption, make available to the Borrower a
corresponding amount. If such amount is not made available to the Administrative
Agent by the required time on the Borrowing Date therefor, such Lender shall pay
to the Administrative Agent, on demand, such amount with interest thereon at a
rate equal to the greater of (i) the Federal Funds Effective Rate and (ii) a
rate determined by the Administrative Agent in accordance with banking industry
rules on interbank compensation for the period until such Lender makes such
amount immediately available to the Administrative Agent. A certificate of the
Administrative Agent submitted to any Lender with respect to any amounts owing
under this paragraph shall be conclusive in the absence of manifest error. If
such Lender's share of such borrowing is not made available to the
Administrative Agent by such Lender within three Business Days of such Borrowing
Date, the Administrative Agent shall also be entitled to recover such amount
with interest thereon at the rate per annum applicable to Base Rate Loans under
the Facility, on demand, from the Borrower.
(e) Unless the Administrative Agent shall have been notified in
writing by the Borrower prior to the date of any payment due to be made by the
Borrower hereunder that the Borrower will not make such payment to the
Administrative Agent, the Administrative Agent may assume that the Borrower is
making such payment, and the Administrative Agent may, but shall not be required
to, in reliance upon such assumption, make available to the Lenders their
respective pro rata shares of a corresponding amount. If such payment is not
made to the Administrative Agent by the Borrower within three Business Days
after such due date, the Administrative Agent shall be entitled to recover, on
demand, from each Lender to which any amount which was made available pursuant
to the preceding sentence, such amount with interest thereon at the rate per
annum equal to the daily average Federal Funds Effective Rate. Nothing herein
shall be deemed to limit the rights of the Administrative Agent or any Lender
against the Borrower.
3.9. Requirements of Law. (a) If the adoption of or any change in any
Requirement of Law or in the interpretation or application thereof or compliance
by any Lender with any request or directive (whether or not having the force of
law) from any central bank or other Governmental Authority made subsequent to
the date hereof:
(i) shall subject any Lender to any tax of any kind whatsoever with
respect to this Agreement, any Letter of Credit, any Application or any
Eurodollar Loan made by it, or change the basis of taxation of payments to
such Lender in respect thereof (except for Non-Excluded Taxes covered by
Section 3.10 and changes in the rate of tax on the overall net income of
such Lender);
(ii) shall impose, modify or hold applicable any reserve, special
deposit, compulsory loan or similar requirement against assets held by,
deposits or other liabilities in or for the account of, advances, loans or
other extensions of credit by, or any other acqui-
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sition of funds by, any office of such Lender that is not otherwise
included in the determination of the Eurodollar Rate hereunder; or
(iii) shall impose on such Lender any other condition;
and the result of any of the foregoing is to increase the cost to such Lender,
by an amount that such Lender deems to be material, of making, converting into,
continuing or maintaining Eurodollar Loans or issuing or participating in
Letters of Credit, or to reduce any amount receivable hereunder in respect
thereof, then, in any such case, the Borrower shall promptly pay such Lender,
upon its demand, any additional amounts necessary to compensate such Lender for
such increased cost or reduced amount receivable. If any Lender becomes entitled
to claim any additional amounts pursuant to this paragraph, it shall promptly
notify the Borrower (with a copy to the Administrative Agent) of the event by
reason of which it has become so entitled.
(b) If any Lender shall have determined that the adoption of or any
change in any Requirement of Law regarding capital adequacy or in the
interpretation or application thereof or compliance by such Lender or any
corporation controlling such Lender with any request or directive regarding
capital adequacy (whether or not having the force of law) from any Governmental
Authority made subsequent to the date hereof shall have the effect of reducing
the rate of return on such Lender's or such corporation's capital as a
consequence of its obligations hereunder or under or in respect of any Letter of
Credit to a level below that which such Lender or such corporation could have
achieved but for such adoption, change or compliance (taking into consideration
such Lender's or such corporation's policies with respect to capital adequacy)
by an amount deemed by such Lender to be material, then from time to time, after
submission by such Lender to the Borrower (with a copy to the Administrative
Agent) of a written request therefor, the Borrower shall pay to such Lender such
additional amount or amounts as will compensate such Lender or such corporation
for such reduction.
(c) A certificate as to any additional amounts payable pursuant to
this Section submitted by any Lender to the Borrower (with a copy to the
Administrative Agent) shall be conclusive in the absence of manifest error.
Notwithstanding anything to the contrary in this Section, the Borrower shall not
be required to compensate a Lender pursuant to this Section for any amounts
incurred more than six months prior to the date that such Lender notifies the
Borrower of such Lender's intention to claim compensation therefor; provided
that, if the circumstances giving rise to such claim have a retroactive effect,
then such six-month period shall be extended to include the period of such
retroactive effect. The obligations of the Borrower pursuant to this Section
shall survive the termination of this Agreement and the payment of the Loans and
all other amounts payable hereunder.
3.10. Taxes. (a) All payments made by the Borrower under this
Agreement shall be made free and clear of, and without deduction or withholding
for or on account of, any present or future income, stamp or other taxes,
levies, imposts, duties, charges, fees, deductions or withholdings, now or
hereafter imposed, levied, collected, withheld or assessed by any Governmental
Authority, excluding net income taxes and franchise taxes (imposed in lieu of
net income taxes) imposed on any Agent or any Lender as a result of a present or
former connection between such Agent or such Lender and the jurisdiction of the
Governmental Authority imposing
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such tax or any political subdivision or taxing authority thereof or therein
(other than any such connection arising solely from such Agent or such Lender
having executed, delivered or performed its obligations or received a payment
under, or enforced, this Agreement or any other Loan Document). If any such
non-excluded taxes, levies, imposts, duties, charges, fees, deductions or
withholdings ("Non-Excluded Taxes") or Other Taxes are required to be withheld
from any amounts payable to any Agent or any Lender hereunder, the amounts so
payable to such Agent or such Lender shall be increased to the extent necessary
to yield to such Agent or such Lender (after payment of all Non-Excluded Taxes
and Other Taxes) interest or any such other amounts payable hereunder at the
rates or in the amounts specified in this Agreement, provided, however, that the
Borrower shall not be required to increase any such amounts payable to any
Lender with respect to any Non-Excluded Taxes (i) that are attributable to such
Lender's failure to comply with the requirements of paragraph (d) or (e) of this
Section or (ii) that are United States withholding taxes imposed on amounts
payable to such Lender at the time such Lender becomes a party to this
Agreement, except to the extent that such Lender's assignor (if any) was
entitled, at the time of assignment, to receive additional amounts from the
Borrower with respect to such Non-Excluded Taxes pursuant to this paragraph.
(b) In addition, the Borrower shall pay any Other Taxes to the
relevant Governmental Authority in accordance with applicable law.
(c) Whenever any Non-Excluded Taxes or Other Taxes are payable by the
Borrower, as promptly as possible thereafter the Borrower shall send to the
Administrative Agent for its own account or for the account of the relevant
Agent or Lender, as the case may be, a certified copy of an original official
receipt received by the Borrower showing payment thereof. If the Borrower fails
to pay any Non-Excluded Taxes or Other Taxes when due to the appropriate taxing
authority or fails to remit to the Administrative Agent the required receipts or
other required documentary evidence, the Borrower shall indemnify the Agents and
the Lenders for any incremental taxes, interest or penalties that may become
payable by any Agent or any Lender as a result of any such failure.
(d) Each Lender (or Transferee) that is not a "U.S. Person" as defined
in Section 7701(a)(30) of the Code (a "Non-U.S. Lender") shall deliver to the
Borrower and the Administrative Agent (or, in the case of a Participant, to the
Lender from which the related participation shall have been purchased) two
copies of either U.S. Internal Revenue Service Form W-8BEN or Form W-8ECI, or,
in the case of a Non-U.S. Lender claiming exemption from U.S. federal
withholding tax under Section 871(h) or 881(c) of the Code with respect to
payments of "portfolio interest", a statement substantially in the form of
Exhibit G and a Form W-8BEN, or any subsequent versions thereof or successors
thereto, properly completed and duly executed by such Non-U.S. Lender claiming
complete exemption from U.S. federal withholding tax on all payments by the
Borrower under this Agreement and the other Loan Documents. Such forms shall be
delivered by each Non-U.S. Lender on or before the date it becomes a party to
this Agreement (or, in the case of any Participant, on or before the date such
Participant purchases the related participation). In addition, each Non-U.S.
Lender shall deliver such forms promptly upon the obsolescence or invalidity of
any form previously delivered by such Non-U.S. Lender. Each Non-U.S. Lender
shall promptly notify the Borrower at any time it determines that it is no
longer in a position to provide any previously delivered certificate to the
Borrower (or any other
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form of certification adopted by the U.S. taxing authorities for such purpose).
Notwithstanding any other provision of this paragraph, a Non-U.S. Lender shall
not be required to deliver any form pursuant to this paragraph that such
Non-U.S. Lender is not legally able to deliver.
(e) A Lender that is entitled to an exemption from or reduction of
non-U.S. withholding tax under the law of the jurisdiction in which the Borrower
is located, or any treaty to which such jurisdiction is a party, with respect to
payments under this Agreement shall deliver to the Borrower (with a copy to the
Administrative Agent), at the time or times prescribed by applicable law or
reasonably requested by the Borrower, such properly completed and executed
documentation prescribed by applicable law as will permit such payments to be
made without withholding or at a reduced rate; provided that such Lender is
legally entitled to complete, execute and deliver such documentation and in such
Lender's judgment such completion, execution or submission would not materially
prejudice the legal position of such Lender.
(f) If any Administrative Agent or any Lender determines, in its sole
discretion, that it has received a refund of any Non-Excluded Taxes or Other
Taxes as to which it has been indemnified by the Borrower or with respect to
which the Borrower has paid additional amounts pursuant to this Section 3.10, it
shall pay over such refund to the Borrower (but only to the extent of indemnity
payments made, or additional amounts paid, by the Borrower under this Section
3.10 with respect to the Non-Excluded Taxes or Other Taxes giving rise to such
refund), net of all out-of-pocket expenses of such Agent or such Lender and
without interest (other than any interest paid by the relevant Governmental
Authority with respect to such refund); provided, that the Borrower, upon the
request of such Agent or such Lender, agrees to repay the amount paid over to
the Borrower (plus any penalties, interest or other charges imposed by the
relevant Governmental Authority) to such Agent or such Lender in the event such
Agent or such Lender is required to repay such refund to such Governmental
Authority. This paragraph shall not be construed to require any Agent or any
Lender to make available its tax returns (or any other information relating to
its taxes which it deems confidential) to the Borrower or any other Person.
(g) The agreements in this Section shall survive the termination of
this Agreement and the payment of the Loans and all other amounts payable
hereunder.
3.11. Indemnity. The Borrower agrees to indemnify the Agents and the
Lenders (including their affiliates and their respective officers, directors,
employees, advisors and agents) and to hold the Agents and the Lenders harmless
from any loss or expense that such Agents or Lenders may sustain or incur as a
consequence of (a) default by the Borrower in making a borrowing of, conversion
into or continuation of Eurodollar Loans after the Borrower has given a notice
requesting the same in accordance with the provisions of this Agreement, (b)
default by the Borrower in making any prepayment of or conversion from
Eurodollar Loans after the Borrower has given a notice thereof in accordance
with the provisions of this Agreement or (c) the making of a prepayment of
Eurodollar Loans on a day that is not the last day of an Interest Period with
respect thereto. Such indemnification may include an amount equal to the excess,
if any, of (i) the amount of interest that would have accrued on the amount so
prepaid, or not so borrowed, converted or continued, for the period from the
date of such prepayment or of such failure to borrow, convert or continue to the
last day of such Interest Period (or, in the case of a failure to borrow,
convert or continue, the Interest Period that would have commenced on the
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date of such failure) in each case at the applicable rate of interest for such
Loans provided for herein (excluding, however, the Applicable Margin included
therein, if any) over (ii) the amount of interest (as reasonably determined by
such Agent or Lender) that would have accrued to such Agent or Lender on such
amount by placing such amount on deposit for a comparable period with leading
banks in the interbank eurodollar market. A certificate as to any amounts
payable pursuant to this Section submitted to the Borrower by any Agent or
Lender shall be conclusive in the absence of manifest error; provided, that such
default arising pursuant to clauses (a) and (b) above shall be cured upon
payment by the Borrower of such amounts set forth in such certificate. This
covenant shall survive the termination of this Agreement and the payment of the
Loans and all other amounts payable hereunder.
3.12. Change of Lending Office. Each Lender agrees that, upon the
occurrence of any event giving rise to the operation of Section 3.9 or 3.10(a)
with respect to such Lender, it will, if requested by the Borrower, use
reasonable efforts (subject to overall policy considerations of such Lender) to
designate another lending office for any Loans affected by such event with the
object of avoiding the consequences of such event; provided, that such
designation is made on terms that, in the sole judgment of such Lender, cause
such Lender and its lending office(s) to suffer no economic, legal or regulatory
disadvantage, and provided, further, that nothing in this Section shall affect
or postpone any of the obligations of the Borrower or the rights of any Lender
pursuant to Section 3.9 or 3.10(a).
3.13. Replacement of Lenders. The Borrower shall be permitted to
replace any Lender that (a) requests reimbursement for amounts owing pursuant to
Section 3.9 or 3.10(a), (b) defaults in its obligation to make Loans hereunder,
with a replacement financial institution or (c) withholds its consent in
connection with any proposed amendment, modification, termination, waiver or
consent with respect to any of the provisions hereof as contemplated by Section
10.1, where the consent of the Required Lenders would have been obtained but the
consent of one or more of such other Lenders whose consent is required shall not
have been obtained; provided that (i) such replacement does not conflict with
any Requirement of Law, (ii) no Event of Default shall have occurred and be
continuing at the time of such replacement, (iii) prior to any such replacement,
such Lender shall have taken no action under Section 3.12 so as to eliminate the
continued need for payment of amounts owing pursuant to Section 3.9 or 3.10(a),
(iv) the replacement financial institution shall purchase, at par, all Loans and
other amounts owing to such replaced Lender on or prior to the date of
replacement, (v) the Borrower shall be liable to such replaced Lender under
Section 3.11 if any Eurodollar Loan owing to such replaced Lender shall be
purchased other than on the last day of the Interest Period relating thereto,
(vi) the replacement financial institution, if not already a Lender, shall be
reasonably satisfactory to the Administrative Agent, (vii) the replaced Lender
shall be obligated to make such replacement in accordance with the provisions of
Section 10.6 (provided that the Borrower shall be obligated to pay the
registration and processing fee referred to therein), (viii) until such time as
such replacement shall be consummated, the Borrower shall pay all additional
amounts (if any) required pursuant to Section 3.9 or 3.10(a), as the case may
be, and (ix) any such replacement shall not be deemed to be a waiver of any
rights that the Borrower, the Administrative Agent or any other Lender shall
have against the replaced Lender.
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3.14. Evidence of Debt. (a) Each Lender shall maintain in accordance
with its usual practice an account or accounts evidencing indebtedness of the
Borrower to such Lender resulting from each Loan of such Lender from time to
time, including the amounts of principal and interest payable and paid to such
Lender from time to time under this Agreement.
(b) The Administrative Agent, on behalf of the Borrower, shall
maintain the Register pursuant to Section 10.6(b)(iv), and a subaccount therein
for each Lender, in which shall be recorded (i) the amount of each Loan made
hereunder and any Note evidencing such Loan, the Type of such Loan and each
Interest Period applicable thereto, (ii) the amount of any principal or interest
due and payable or to become due and payable from the Borrower to each Lender
hereunder and (iii) both the amount of any sum received by the Administrative
Agent hereunder from the Borrower and each Lender's share thereof.
(c) The entries made in the Register and the accounts of each Lender
maintained pursuant to Section 3.14(a) shall, to the extent permitted by
applicable law, be prima facie evidence of the existence and amounts of the
obligations of the Borrower therein recorded; provided, however, that the
failure of any Lender or the Administrative Agent to maintain the Register or
any such account, or any error therein, shall not in any manner affect the
obligation of the Borrower to repay (with applicable interest) the Loans made to
the Borrower by such Lender in accordance with the terms of this Agreement.
(d) The Borrower agrees that, upon the request to the Administrative
Agent by any Lender, the Borrower will execute and deliver to such Lender a
promissory note of the Borrower evidencing any Loans of such Lender,
substantially in the form of Exhibit H with appropriate insertions as to date
and principal amount.
3.15. Illegality. Notwithstanding any other provision herein, if the
adoption of or any change in any Requirement of Law or in the interpretation or
application thereof shall make it unlawful for any Lender to make or maintain
Eurodollar Loans as contemplated by this Agreement, (a) the commitment of such
Lender hereunder to make Eurodollar Loans, continue Eurodollar Loans as such and
convert Base Rate Loans to Eurodollar Loans shall forthwith be canceled and (b)
such Lender's Loans then outstanding as Eurodollar Loans, if any, shall be
converted automatically to Base Rate Loans on the respective last days of the
then current Interest Periods with respect to such Loans or within such earlier
period as required by law. If any such conversion of a Eurodollar Loan occurs on
a day which is not the last day of the then current Interest Period with respect
thereto, the Borrower shall pay to such Lender such amounts, if any, as may be
required pursuant to Section 3.11.
SECTION 4. REPRESENTATIONS AND WARRANTIES
To induce the Agents and the Lenders to enter into this Agreement and
to make the Loans and issue or participate in the Letters of Credit, Holdings
and the Borrower hereby jointly and severally represent and warrant to each
Agent and each Lender that:
4.1. Financial Condition. (a) The unaudited pro forma consolidated
balance sheets of each of Holdings and the Borrower and their respective
consolidated Subsidiaries as of March 31, 2003 (the "Pro Forma Balance Sheets"),
copies of which have heretofore been fur-
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nished to each Lender, have been prepared giving effect (as if such events had
occurred on such date) to (i) the Loans to be made and the Senior Notes to be
issued on the Closing Date and the use of proceeds thereof and (ii) the payment
of fees and expenses in connection with the foregoing. The Pro Forma Balance
Sheets have been prepared based on the best information available to Holdings
and the Borrower as of the date of delivery thereof, and present fairly on a Pro
Forma Basis the estimated financial position of Holdings and the Borrower and
their respective consolidated Subsidiaries as of March 31, 2003, assuming that
the events specified in the preceding sentence had actually occurred as of such
date.
(b) The audited consolidated balance sheets of each of Holdings and
the Borrower as of December 31, 2002 and December 31, 2001, and the related
consolidated statements of income and of cash flows for the fiscal years ended
on such dates, reported on by and accompanied by an unqualified reports from
PricewaterhouseCoopers LLP, present fairly the consolidated financial condition
of Holdings and the Borrower as of such dates, and the consolidated results of
their respective operations and consolidated cash flows for the respective
fiscal years then ended. The unaudited consolidated balance sheets of each of
Holdings and the Borrower as of March 31, 2003, and the related unaudited
consolidated statements of income and cash flows for the three-month period
ended on such date, present fairly the consolidated financial condition of each
of Holdings and the Borrower as of such date, and the consolidated results of
their respective operations and consolidated cash flows for the three-month
period then ended (subject to normal year-end audit adjustments). All such
financial statements, including the related schedules and notes thereto (if
any), have been prepared in accordance with GAAP applied consistently throughout
the periods involved (except as approved by the aforementioned firm of
accountants and disclosed therein and subject in the case of unaudited financial
statements to the absence of footnote disclosure). No Group Member has any
material Guarantee Obligations, contingent liabilities, liabilities for taxes,
any long-term leases or unusual forward or long-term commitments, including any
interest rate or foreign currency swap or exchange transaction or other
obligation in respect of derivatives, that are not reflected in the most recent
financial statements referred to in this paragraph. During the period from
December 31, 2002 to and including the date hereof there has been no Disposition
by Holdings or the Borrower or any of their respective Subsidiaries of any
material part of its business or property.
4.2. No Change. Since December 31, 2002, there has been no development
or event that has had or could reasonably be expected to have a Material Adverse
Effect.
4.3. Corporate Existence; Compliance with Law. Each Group Member (a)
is duly organized, validly existing and in good standing under the laws of the
jurisdiction of its organization (except as of the Closing Date only, to the
extent such failure to be in good standing could not reasonably be determined to
have a Material Adverse Effect), (b) has the requisite power and authority, and
all material licenses, permits and authorizations, to own and operate its
property, to lease the property it operates as lessee and to conduct the
business in which it is currently engaged, (c) is duly qualified and in good
standing under the laws of each jurisdiction where its ownership, lease or
operation of property or the conduct of its business requires such qualification
except in jurisdictions where the failure to be so qualified or in good standing
has not had, and could not reasonably be expected to have, a Material Adverse
Effect, and (d) is in
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compliance with all Requirements of Law except to the extent that the failure to
comply therewith could not, in the aggregate, reasonably be expected to have a
Material Adverse Effect.
4.4. Power; Authorization; Enforceable Obligations. Each Loan Party
has the requisite power and authority to enter into, deliver and perform the
Loan Documents to which it is a party, to carry out the transactions
contemplated thereby and, in the case of the Borrower, to obtain extensions of
credit hereunder. Each Loan Party has taken all necessary action to authorize
the execution, delivery and performance of the Loan Documents to which it is a
party and, in the case of the Borrower, to authorize the extensions of credit on
the terms and conditions of this Agreement. No consent or authorization of,
filing with, notice to or other act by or in respect of any Governmental
Authority or any other Person is required in connection with the transactions
contemplated hereby and the extensions of credit hereunder or with the
execution, delivery, performance, validity or enforceability of this Agreement
or any of the Loan Documents, except (i) consents, authorizations, filings and
notices described in Schedule 4.4, which consents, authorizations, filings and
notices have been obtained or made and are in full force and effect and (ii) the
filings referred to in Section 4.19. Each Loan Document has been duly executed
and delivered on behalf of each Loan Party that is a party thereto. This
Agreement constitutes, and each other Loan Document upon execution will
constitute, a legal, valid and binding obligation of each Loan Party that is a
party thereto, enforceable against each such Loan Party in accordance with its
respective terms, except as enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the
enforcement of creditors' rights generally and by general equitable principles
(whether enforcement is sought by proceedings in equity or at law).
4.5. No Legal Bar. The execution, delivery and performance of this
Agreement and the other Loan Documents, the issuance of Letters of Credit, the
borrowings hereunder and the use of the proceeds thereof will not violate any
Requirement of Law or any Contractual Obligation of any Group Member that is a
party thereto, except as could not reasonably be expected to have a Material
Adverse Effect, and will not result in, or require, the creation or imposition
of any Lien on any of its properties or revenues pursuant to any Requirement of
Law or any such Contractual Obligation (other than the Liens created by the
Security Documents).
4.6. Litigation. Except as set forth on Schedule 4.6, no litigation,
investigation or proceeding of or before any arbitrator or Governmental
Authority is pending or, to the knowledge of Holdings or the Borrower,
threatened by or against any Group Member or against any of its properties or
revenues (a) with respect to any of the Loan Documents or any of the
transactions contemplated hereby or thereby, or (b) that could reasonably be
expected to have a Material Adverse Effect.
4.7. No Default. No Group Member is in default under or with respect
to any of its Contractual Obligations in any respect that could reasonably be
expected to have a Material Adverse Effect. No Default or Event of Default has
occurred and is continuing.
4.8. Ownership of Property; Liens. Each Group Member has good,
sufficient and legal title in fee simple to, or a valid leasehold interest in,
all its real property, and good title to, or a valid leasehold interest in, all
its other property, and none of such property is subject to
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any Lien except as permitted by Section 7.3 and, in the case of each Mortgaged
Property, except as set forth in the title insurance policy delivered on the
Closing Date with respect to such Mortgaged Property.
4.9. Intellectual Property. Each Group Member owns, or is licensed to
use, all Intellectual Property necessary for the conduct of its business as
currently conducted; except as set forth on Schedule 4.9, no material claim has
been asserted and is pending by any Person challenging or questioning the use of
any Intellectual Property or the validity or effectiveness of any Intellectual
Property, nor does Holdings or the Borrower know of any valid basis for any such
claim; and to the knowledge of Holdings and the Borrower, the use of
Intellectual Property by each Group Member does not infringe on the rights of
any Person in any manner that could reasonably be expected to have a Material
Adverse Effect.
4.10. Taxes. Each Group Member has filed or caused to be filed all
Federal, state and other material tax returns that are required to be filed and
has paid all taxes shown to be due and payable on said returns or on any
assessments made against it or any of its property and all other taxes, fees or
other charges imposed on it or any of its property by any Governmental Authority
(other than any the amount or validity of that are currently being contested in
good faith by appropriate proceedings and with respect to which reserves in
conformity with GAAP have been provided on the books of Holdings, the Borrower
or its Subsidiaries, as the case may be); no tax Lien has been filed, and, to
the knowledge of Holdings and the Borrower, no claim is being asserted, with
respect to any such tax, fee or other charge.
4.11. Federal Regulations. No part of the proceeds of any Loans, and
no other extensions of credit hereunder, will be used for "buying" or "carrying"
any "margin stock" within the respective meanings of each of the quoted terms
under Regulation U as now and from time to time hereafter in effect or for any
purpose that violates the provisions of the Regulations of the Board. If
requested by any Lender or the Administrative Agent, Holdings and the Borrower
will furnish to the Administrative Agent and each Lender a statement to the
foregoing effect in conformity with the requirements of FR Form G-3 or FR Form
U-1, as applicable, referred to in Regulation U.
4.12. Labor Matters. Except as set forth on Schedule 4.12, and except
as, in the aggregate, could not reasonably be expected to have a Material
Adverse Effect: (a) there are no strikes or other labor disputes against any
Group Member pending or, to the knowledge of Holdings or the Borrower,
threatened; (b) hours worked by and payment made to employees of each Group
Member have not been in violation of the Fair Labor Standards Act or any other
applicable Requirement of Law dealing with such matters; and (c) all payments
due from any Group Member on account of employee health and welfare insurance
have been paid or accrued as a liability on the books of the relevant Group
Member.
4.13. ERISA. Except as, individually or in the aggregate, could not
reasonably be expected to have a Material Adverse Effect, (a) neither a
Reportable Event nor an "accumulated funding deficiency" (within the meaning of
Section 412 of the Code or Section 302 of ERISA) has occurred during the
five-year period prior to the date on which this representation is made or
deemed made with respect to any Plan, (b) each Plan has complied in all respects
with
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the applicable provisions of ERISA and the Code, (c) no termination of a Single
Employer Plan has occurred, and (d) all contributions required to be made to
Multiemployer Plans by the Borrower or any Commonly Controlled Entity have been
made. No Lien in favor of the PBGC or a Plan has arisen during such five-year
period. The present value of all accrued benefits under each Single Employer
Plan (based on those assumptions used to fund such Plans) did not, as of the
last annual valuation date prior to the date on which this representation is
made or deemed made, exceed the value of the assets of such Plan allocable to
such accrued benefits by a material amount. Neither Holdings nor any Commonly
Controlled Entity has had a complete or partial withdrawal from any
Multiemployer Plan that has resulted or could reasonably be expected to result
in a material liability under ERISA, and neither Holdings nor any Commonly
Controlled Entity would become subject to any material liability under ERISA if
the Borrower or any such Commonly Controlled Entity were to withdraw completely
from all Multiemployer Plans as of the valuation date most closely preceding the
date on which this representation is made or deemed made. No such Multiemployer
Plan is in Reorganization or Insolvent where such Reorganization or Insolvency
could reasonably be expected to result in a Material Adverse Effect.
4.14. Investment Company Act; Other Regulations. No Loan Party is an
"investment company", or a company "controlled" by an "investment company",
within the meaning of the Investment Company Act of 1940, as amended. No Loan
Party is subject to regulation under any Requirement of Law (other than
Regulation X of the Board) that limits its ability to incur Indebtedness.
4.15. Subsidiaries. (a) Schedule 4.15 sets forth the name and
jurisdiction of incorporation of each Subsidiary and, as to each such
Subsidiary, the percentage of each class of Capital Stock owned by any Loan
Party and (b) there are no outstanding subscriptions, options, warrants, calls,
rights or other agreements or commitments (other than stock options granted to
employees or directors and directors' qualifying shares) of any nature relating
to any Capital Stock of the Borrower or any Subsidiary, except as created by the
Loan Documents, in each case as of the Closing Date. The Borrower shall update
Schedule 4.15 from time to time as necessary for this representation and
warranty to continue to be accurate.
4.16. Use of Proceeds. The proceeds of the Loans made on the Closing
Date, together with the net proceeds of the Senior Notes, shall be used to repay
in full the Existing Credit Facility and the Sponsor Note, to repurchase
Holdings Notes and to pay related fees and expenses, and the proceeds of Loans
made thereafter shall be used, together with the proceeds of the Letters of
Credit, for working capital needs, for general corporate purposes of the
Borrower and its Subsidiaries in the ordinary course of business, including
Capital Expenditures and Permitted Acquisitions to the extent permitted by
Sections 7.7 and 7.8, respectively, and to make Permitted Repurchases of
Holdings Notes as provided in Section 7.6(o).
4.17. Environmental Matters. (a) The facilities and properties owned,
leased or operated by any Group Member (the "Properties") do not contain, and
have not previously contained, any Materials of Environmental Concern in amounts
or concentrations or under circumstances that constitute or constituted a
violation of, or give rise to liability under, any Environmental Law, except as,
in the aggregate, could not reasonably be expected to have a Material Adverse
Effect.
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(b) No Group Member has received or is aware of any written notice of
violation, alleged violation, non-compliance, liability or potential liability
regarding environmental matters or compliance with Environmental Laws with
regard to any of the Properties or the business operated by any Group Member
(the "Business"), nor does Holdings or the Borrower have knowledge or reason to
believe that any such notice will be received or is being threatened, except as,
in the aggregate, could not reasonably be expected to have a Material Adverse
Effect.
(c) Materials of Environmental Concern have not been transported or
disposed of from the Properties in violation of, or in a manner or to a location
that could give rise to liability under, any Environmental Law, nor have any
Materials of Environmental Concern been generated, treated, stored or disposed
of at, on or under any of the Properties in violation of, or in a manner that
give rise to liability under, any applicable Environmental Law, except as, in
the aggregate, could not reasonably be expected to have a Material Adverse
Effect.
(d) No judicial proceeding or governmental or administrative action is
pending or, to the knowledge of Holdings or the Borrower, threatened, with
respect to liabilities arising under any Environmental Law to which any Group
Member is or will be named as a party with respect to the Properties or the
Business, nor are there any consent decrees or other decrees, consent orders,
administrative orders or other orders, outstanding under any Environmental Law
with respect to the Properties or the Business, except as, in the aggregate,
could not reasonably be expected to have a Material Adverse Effect.
(e) There has been no release or threat of release of Materials of
Environmental Concern at or from the Properties, or arising from or related to
the operations of any Group Member in connection with the Properties or
otherwise in connection with the Business, in violation of or in amounts or in a
manner that could give rise to liability under Environmental Laws, except as, in
the aggregate, could not reasonably be expected to have a Material Adverse
Effect.
(f) The Properties and all operations at the Properties are in
compliance, and have in the last five years been in compliance, with all
applicable Environmental Laws, except for such non-compliance as could not
reasonably be expected to have a Material Adverse Effect.
(g) No Group Member has contractually or by operation of law assumed
any liability of any other Person under Environmental Laws, except as, in the
aggregate, could not reasonably be expected to have a Material Adverse Effect.
(h) This Section 4.17 sets forth the sole representations and
warranties of Holdings and the Borrower with respect to liabilities and
compliance with all applicable Environmental Laws, except as, in the aggregate,
could not reasonably be expected to have a Material Adverse Effect.
4.18. Accuracy of Information, etc. No statement or information
contained in this Agreement, any other Loan Document or any other document,
certificate or statement furnished by or on behalf of any Loan Party to the
Administrative Agent or the Lenders, or any of them, for use in connection with
the transactions contemplated by this Agreement or the other Loan Documents,
contained as of the date such statement, information, document or certificate
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was so furnished, any untrue statement of a material fact or omitted to state a
material fact necessary to make the statements contained herein or therein not
misleading. The projections and pro forma financial information contained in the
materials referenced above were, when prepared, based upon good faith estimates
and assumptions believed by management of the Borrower to be reasonable at the
time made, it being recognized by the Lenders that such financial information as
it relates to future events is not to be viewed as fact and that actual results
during the period or periods covered by such financial information may differ
from the projected results set forth therein by a material amount. As of the
date hereof, the representations and warranties of each Group Member contained
in the Senior Note Documents are true and correct in all material respects.
There is no fact known to any Loan Party that could reasonably be expected to
have a Material Adverse Effect that has not been expressly disclosed herein, in
the other Loan Documents or in any other documents, certificates and statements
furnished to the Administrative Agent and the Lenders for use in connection with
the transactions contemplated hereby and by the other Loan Documents.
4.19. Security Documents. (a) The Guarantee and Collateral Agreement
is effective to create in favor of the Administrative Agent, for the benefit of
the Secured Parties, a legal, valid and enforceable security interest in the
Collateral described therein and proceeds thereof, subject to the following
sentence. In the case of the Pledged Stock described in the Guarantee and
Collateral Agreement, when stock certificates representing such Pledged Stock
are delivered to the Administrative Agent, and in the case of the other
Collateral described in the Guarantee and Collateral Agreement, when financing
statements and other filings in appropriate form are filed in the offices
specified on Schedule 4.19(a), the Guarantee and Collateral Agreement shall
constitute a fully perfected Lien on, and security interest in (if and to the
extent that a security interest may be so perfected under applicable laws by so
filing at the offices specified on Schedule 4.19(a)), all right, title and
interest of the Loan Parties in such Collateral and the proceeds thereof, as
security for the Obligations (as defined in the Guarantee and Collateral
Agreement), in each case prior and superior in right to any other Person
(except, in the case of Collateral, Liens permitted by Section 7.3).
(b) Each of the Mortgages is effective to create in favor of the
Administrative Agent, for the benefit of the Secured Parties, a legal, valid and
enforceable Lien on the Mortgaged Properties described therein and proceeds
thereof, and when the Mortgages are filed in the offices specified on Schedule
4.19(b), each such Mortgage shall constitute a fully perfected Lien on, and
security interest in, all right, title and interest of the Loan Parties in the
Mortgaged Properties and the proceeds thereof, as security for the Obligations
(as defined in the relevant Mortgage), in each case prior and superior in right
to any other Person. Schedule 1.1(a) lists, as of the Closing Date, each parcel
of owned real property and each leasehold interest in real property located in
the United States and held by the Borrower or any of its Subsidiaries that has a
value, in the reasonable opinion of the Borrower, in excess of $500,000.
4.20. Solvency. The Loan Parties, taken as a whole, and after giving
effect to the incurrence of all Indebtedness and obligations being incurred in
connection herewith and therewith will be and will continue to be, Solvent.
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4.21. Senior Indebtedness. The Obligations constitute "Senior
Indebtedness" and "Designated Senior Indebtedness" of the Borrower under and as
defined in the Senior Subordinated Note Indenture. The obligations of Holdings
and each Subsidiary Guarantor under the Guarantee and Collateral Agreement
constitute "Guarantor Senior Indebtedness" of Holdings and such Subsidiary
Guarantor under and as defined in the Senior Subordinated Note Indenture.
4.22. Regulation H. No Mortgage encumbers improved real property that
is located in an area that has been identified by the Secretary of Housing and
Urban Development as an area having special flood hazards and in which flood
insurance has been made available under the National Flood Insurance Act of
1968.
4.23. Certain Documents. The Borrower has delivered to the
Administrative Agent a complete and correct copy of the Senior Note Documents,
the Holdings Note Documents, the Senior Subordinated Note Documents and the
Permitted Sponsor Subordinated Debt Agreements, if any, and in each case, any
amendments, supplements or modifications with respect to any of the foregoing.
4.24. Holdings. On the Closing Date, Holdings (a) is the owner of all
of the outstanding Capital Stock of the Borrower and has not created or suffered
to exist any Lien upon any property or assets owned by it, including, without
limitation, the Capital Stock of the Borrower, other than the Liens created
under the Security Documents and (b) is not engaged in any business or activity
and does not own any assets or property other than the Capital Stock of the
Borrower and Muzak Holdings Finance and performing its obligations under the
Related Agreements and Additional Related Agreements to which it is a party.
SECTION 5. CONDITIONS PRECEDENT
5.1. Conditions to Initial Extension of Credit. The agreement of each
Lender to make the initial extension of credit requested to be made by it is
subject to the satisfaction, prior to or concurrently with the making of such
extension of credit on the Closing Date of the following conditions precedent:
(a) Loan Documents. The Administrative Agent shall have received (i)
this Agreement, or, in the case of the Lenders, an Addendum, executed and
delivered by each Agent, Holdings, the Borrower and each Person that is a
Lender as of the Closing Date, (ii) the Guarantee and Collateral Agreement,
executed and delivered by Holdings, the Borrower and each Subsidiary
Guarantor and (iii) an Acknowledgment and Consent in the form attached to
the Guarantee and Collateral Agreement, executed and delivered by each
Issuer (as defined therein), if any, that is not a Loan Party.
In the event that any one or more Persons have not executed and
delivered an Addendum on the date scheduled to be the Closing Date (each
such Person being referred to herein as a "Non-Executing Person"), the
condition referred to in clause (i) above shall nevertheless be deemed
satisfied if on such date the Borrower and the Administrative Agent shall
have designated one or more Persons (the "Designated Lenders") to assume,
in the aggregate, all of the Revolving Commitments that would have been
held by the
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Non-Executing Persons (subject to each such Designated Lender's consent and
its execution and delivery of an Addendum).
(b) Existing Credit Facility; Senior Notes. The following transactions
shall have been consummated, in each case on terms and conditions
reasonably satisfactory to each Agent and each Lender:
(i) the Borrower shall have received at least $218,869,000 in net
cash proceeds (net of original issue discount) from the issuance of
the Senior Notes on terms and conditions reasonably satisfactory to
the Joint Lead Arrangers and each of the Lenders; and
(ii) the Administrative Agent shall have received evidence that
the Existing Credit Facility shall have been terminated and all
amounts thereunder shall have been paid in full and arrangements shall
have been made for the termination of all Liens granted in connection
therewith, in each case on terms and conditions reasonably
satisfactory to the Joint Lead Arrangers and each of the Lenders.
(c) Pro Forma Balance Sheet; Financial Statements. The Lenders shall
have received (i) the Pro Forma Balance Sheets, (ii) audited consolidated
financial statements of Holdings and the Borrower for the 2002 and 2001
fiscal years and (iii) unaudited interim consolidated financial statements
of Holdings and the Borrower for each quarterly period ended subsequent to
the date of the latest applicable financial statements delivered pursuant
to clause (ii) of this paragraph as to which such financial statements are
available, and such financial statements shall not, in the reasonable
judgment of the Lenders, reflect any material adverse change in the
consolidated financial condition of Holdings and the Borrower as reflected
in such financial statements or projections provided to the Lenders.
(d) Approvals. All governmental and third party approvals (including
landlords' and other consents) necessary or, in the reasonable discretion
of the Administrative Agent, advisable in connection with the transactions
contemplated hereby, and the continuing operations of the Group Members and
the transactions contemplated hereby shall have been obtained and be in
full force and effect.
(e) Lien Searches. The Administrative Agent shall have received and
shall be reasonably satisfied with the results of a recent lien search in
each of the state and county jurisdictions where assets of the Loan Parties
are located and where any Loan Party's principal place of business is
located, and such search shall reveal no liens on any of the assets of the
Loan Parties except for liens permitted by Section 7.3 or discharged on or
prior to the Closing Date pursuant to documentation reasonably satisfactory
to the Administrative Agent.
(f) Fees and Expenses. The Lenders and the Agents shall have received
all fees required to be paid, and all expenses for which invoices have been
presented (including the reasonable fees and expenses of legal counsel), in
each case, required to be paid pursuant to this Agreement on or before the
Closing Date. All such amounts will be paid
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with proceeds of Loans made on the Closing Date and will be reflected in
the funding instructions given by the Borrower to the Administrative Agent
on or before the Closing Date.
(g) Closing Certificate. The Administrative Agent shall have received
(i) a certificate of each Loan Party, dated the Closing Date, substantially
in the form of Exhibit C, with appropriate insertions and attachments
including the certificate of incorporation or formation of each Loan Party
certified by the relevant authority of the jurisdiction of organization of
such Loan Party, and (ii) a long form good standing certificate for each
Loan Party from its jurisdiction of organization.
(h) Legal Opinions. The Administrative Agent shall have received the
executed legal opinion of Kirkland & Ellis, counsel to Holdings, the
Borrower and their respective Subsidiaries, substantially in the form of
Exhibit F-1. Such legal opinion shall cover such other matters incident to
the transactions contemplated by this Agreement as the Administrative Agent
may reasonably require.
(i) Pledged Stock; Stock Powers; Pledged Notes. The Administrative
Agent shall have received (i) the certificates representing the shares of
Capital Stock pledged pursuant to the Guarantee and Collateral Agreement,
together with an undated stock power for each such certificate executed in
blank by a duly authorized officer of the pledgor thereof and (ii) each
promissory note (if any) pledged to the Administrative Agent pursuant to
the Guarantee and Collateral Agreement endorsed (without recourse) in blank
(or accompanied by an executed transfer form in blank) by the pledgor
thereof.
(j) Filings, Registrations and Recordings. Each document (including
any Uniform Commercial Code financing statement) required by the Security
Documents or under law or reasonably requested by the Administrative Agent
to be filed, registered or recorded in order to create in favor of the
Administrative Agent, for the benefit of the Lenders, a perfected Lien on
the Collateral described therein, prior and superior in right to any other
Person (other than with respect to Liens expressly permitted by Section
7.3), shall be in proper form for filing, registration or recordation.
(k) Mortgages, etc. (i) The Administrative Agent shall have received a
Mortgage with respect to each owned Mortgaged Property set forth on
Schedule 1.1, executed and delivered by a duly authorized officer of each
party thereto.
(ii) The Administrative Agent shall have received, and the title
insurance company issuing the policy referred to in clause (iii) below (the
"Title Insurance Company") shall have received, any maps or plats of an
as-built survey of the sites of the owned Mortgaged Properties set forth on
Schedule 1.1 currently in the Borrower's possession.
(iii) The Administrative Agent shall have received in respect of each
owned Mortgaged Property set forth on Schedule 1.1 a mortgagee's title
insurance policy (or policies) or marked up unconditional binder for such
insurance. Each such policy shall (A) be in an amount reasonably
satisfactory to the Administrative Agent; (B) be issued at
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ordinary rates; (C) insure that the Mortgage insured thereby creates a
valid first Lien on such owned Mortgaged Property free and clear of all
defects and encumbrances, except as disclosed therein; (D) name the
Administrative Agent for the benefit of the Secured Parties as the insured
thereunder; (E) be in the form of ALTA Loan Policy - 1970 (Amended 10/17/70
and 10/17/84) (or such other form reasonably acceptable to the
Administrative Agent); (F) contain such endorsements and affirmative
coverage as the Administrative Agent may reasonably request; and (G) be
issued by title companies reasonably satisfactory to the Administrative
Agent (including any such title companies acting as co-insurers or
reinsurers, at the option of the Administrative Agent. The Administrative
Agent shall have received evidence reasonably satisfactory to it that all
premiums in respect of each such policy, all charges for mortgage recording
tax, and all related expenses, if any, have been paid.
(iv) The Administrative Agent shall have received (A) a policy of
flood insurance that (1) covers any parcel of improved real property that
is encumbered by any Mortgage in respect of each owned Mortgaged Property
set forth on Schedule 1.1, (2) is written in an amount not less than the
outstanding principal amount of the indebtedness secured by such Mortgage
that is reasonably allocable to such real property or the maximum limit of
coverage made available with respect to the particular type of property
under the National Flood Insurance Act of 1968, whichever is less, and (3)
has a term ending not later than the maturity of the Indebtedness secured
by such Mortgage and (B) confirmation that the Borrower has received the
notice required pursuant to Section 208(e)(3) of Regulation H of the Board.
(v) The Administrative Agent shall have received a copy of all
recorded documents referred to, or listed as exceptions to title in, the
title policy or policies referred to in clause (iii) above and a copy of
all other material documents affecting the owned Mortgaged Properties.
(l) Solvency Certificate. Each of the Lenders shall have received a
solvency certificate substantially in the form of Exhibit K executed by the
chief financial officer of and on behalf of Holdings, which shall document
the solvency of the Loan Parties, taken as a whole, on the Closing Date,
after giving effect to the financing contemplated hereby.
(m) Insurance. The Administrative Agent shall have received and shall
be reasonably satisfied with insurance certificates satisfying the
requirements of Section 5.2(b) of the Guarantee and Collateral Agreement.
(n) Business Plan. Each of the Lenders shall have received and shall
be reasonably satisfied with a business plan and financial projections
(including the applicable projected quarterly covenant compliance
calculations) for fiscal years 2003 through 2007 and shall have had an
opportunity to complete detailed discussions regarding the business and
prospects of the Borrower and its Subsidiaries for the applicable periods.
5.2. Conditions to Each Extension of Credit. The agreement of each
Lender to make any extension of credit requested to be made by it on any date
(including its initial extension of credit) is subject to the satisfaction of
the following conditions precedent:
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(a) No Default. No Default or Event of Default shall have occurred and
be continuing on such date or after giving effect to the extensions of
credit requested to be made on such date.
(b) Representations and Warranties. Each of the representations and
warranties made by any Loan Party in or pursuant to the Loan Documents to
which it is a party shall be true and correct in all material respects on
and as of such date as if made on and as of such date except that (x) any
representation and warranty that is qualified as to "materiality" or
"Material Adverse Effect" shall be true and correct in all respects and (y)
to the extent any representation and warranty specifically relates to an
earlier date, such representation and warranty shall have been true and
correct in all material respects on and as of such earlier date except that
any representation and warranty that is qualified as to "materiality" or
"Material Adverse Effect" shall be true and correct in all respects on and
as of such earlier date.
(c) Compliance with Consolidated Leverage Ratio. The Consolidated
Leverage Ratio, determined as of the last day of the most recent period for
which financial statements have been delivered pursuant to Section 6.1 on a
Pro Forma Basis after giving effect to the proposed borrowing, shall not
exceed the maximum ratio set forth in Section 7.1 for such period.
(d) Cash Balances. The cash balance on hand of the Borrower and its
Subsidiaries as of such date shall not exceed $10,000,000 (after giving
effect to such extension of credit and the application of proceeds of such
borrowing, which proceeds must be intended to be used within a reasonable
period of time).
Each borrowing by and issuance of a Letter of Credit on behalf of the Borrower
hereunder shall constitute a representation and warranty by the Borrower as of
the date of such extension of credit that the conditions contained in this
Section 5.2 have been satisfied.
SECTION 6. AFFIRMATIVE COVENANTS
Holdings and the Borrower hereby jointly and severally agree that, so
long as the Revolving Commitments remain in effect, any Letter of Credit remains
outstanding or any Loan or other amount is owing to any Lender or Agent
hereunder, each of Holdings and the Borrower shall and shall cause each of its
Subsidiaries to:
6.1. Financial Statements. Furnish to the Administrative Agent and
each Lender:
(a) as soon as available, but in any event within 90 days after the
end of each fiscal year of Holdings, (i) a copy of the audited consolidated
balance sheet of Holdings and its consolidated Subsidiaries as at the end
of such fiscal year and the related audited consolidated statements of
income and of cash flows for such fiscal year, setting forth in each case
in comparative form the figures for the previous fiscal year, reported on
without a "going concern" or like qualification or exception, or
qualification arising out of the scope of the audit, by
PricewaterhouseCoopers LLP or other independent certified public
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accountants of nationally recognized standing, and (ii) an unaudited
consolidating balance sheet of Holdings (or a footnote to the consolidated
balance sheet of Holdings and its consolidated Subsidiaries) setting forth
separately and in reasonable detail the financial condition of the Borrower
and its Subsidiaries as of the end of such fiscal year and the related
consolidating statements of income and cash flows for such fiscal year,
certified by a Responsible Officer on behalf of Holdings; and
(b) as soon as available, but in any event not later than 45 days
after the end of each of the first three fiscal quarterly periods of each
fiscal year of Holdings, (i) the unaudited consolidated balance sheet of
Holdings and its consolidated Subsidiaries as at the end of such fiscal
quarter and the related unaudited consolidated statements of income and of
cash flows for such fiscal quarter and the portion of the fiscal year
through the end of such fiscal quarter, setting forth in each case in
comparative form the figures for the corresponding periods of the previous
year as well as the Projections, certified by a Responsible Officer on
behalf of Holdings, as being fairly stated in all material respects
(subject to normal year-end audit adjustments); and (ii) an unaudited
consolidating balance sheet of Holdings (or a footnote to the consolidated
balance sheet of Holdings and its consolidated Subsidiaries) setting forth
separately and in reasonable detail the financial condition of the Borrower
and its Subsidiaries as of the end of such fiscal quarter and the related
consolidating statements of income and cash flows for such periods,
certified by a Responsible Officer on behalf of Holders and the Borrower.
All such financial statements shall be complete and correct in all material
respects and shall be prepared in reasonable detail and in accordance with GAAP
applied consistently throughout the periods reflected therein and with prior
periods (except as approved by such accountants or officer, as the case may be,
and disclosed therein and subject in the case of unaudited financial statements
to the absence of note disclosure).
6.2. Certificates; Other Information. Furnish to the Administrative
Agent and each Lender (or, in the case of clause (h), to the relevant Lender):
(a) concurrently with the delivery of the financial statements
referred to in Section 6.1(a), a certificate of the independent certified
public accountants reporting on such financial statements stating that in
making the examination necessary therefor no knowledge was obtained of any
Default or Event of Default, except as specified in such certificate;
(b) concurrently with the delivery of any financial statements
pursuant to Section 6.1, (i) a certificate of a Responsible Officer
executed on behalf of Holdings or the Borrower, as applicable, stating
that, to the best of each such Responsible Officer's knowledge, each Loan
Party during the period covered thereby has observed or performed all of
its covenants and other agreements, and satisfied in all material respects
every condition, contained in this Agreement and the other Loan Documents
to which it is a party to be observed, performed or satisfied by it, and
that such Responsible Officer has obtained no knowledge of any Default or
Event of Default except as specified in such certificate and (ii) in the
case of quarterly or annual financial statements, (x) a Compli-
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ance Certificate substantially in the form of Exhibit B hereto, containing
all information and calculations necessary for determining compliance by
each Group Member with the provisions of this Agreement referred to therein
as of the last day of the fiscal quarter or fiscal year of Holdings and the
Borrower, as the case may be, and, if applicable, for determining the
Applicable Margins and Commitment Fee Rate, and (y) to the extent not
previously disclosed to the Administrative Agent, a listing of any applied
for or registered Intellectual Property acquired by any Loan Party since
the date of the most recent list delivered pursuant to this clause (y) (or,
in the case of the first such list so delivered, since the Closing Date);
(c) as soon as available, and in any event no later than 45 days after
the end of each fiscal year of Holdings, a detailed consolidated quarterly
budget for the following fiscal year (including a projected consolidated
and consolidating balance sheet of Holdings and its Subsidiaries as of the
end of each fiscal year, the related consolidated and consolidating
statements of projected cash flow, projected balance sheet and projected
income and projected Consolidated Leverage Ratio, Consolidated Senior
Leverage Ratio, Consolidated Fixed Charge Coverage Ratio and Consolidated
Interest Coverage Ratio and a description of the underlying assumptions
applicable thereto), and, as soon as available, significant revisions, if
any, of such budget and projections with respect to such fiscal year
(collectively, the "Projections"), which Projections shall in each case be
accompanied by a certificate of a Responsible Officer executed on behalf of
Holdings and the Borrower stating that such Projections are based on
reasonable estimates, information and assumptions and that such Responsible
Officer has no reason to believe that such Projections are incorrect or
misleading in any material respect;
(d) if Holdings is not then a reporting company under the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), within 45 days after
the end of each fiscal quarter of Holdings (or 90 days, in the case of the
last fiscal quarter of any fiscal year), a narrative discussion and
analysis of the financial condition and results of operations of the
Borrower and its Subsidiaries, as applicable, for such fiscal quarter and
for the period from the beginning of the then current fiscal year to the
end of such fiscal quarter, as compared to the portion of the Projections
covering such periods and to the comparable periods of the previous year;
(e) no later than 5 Business Days prior to the effectiveness thereof,
copies of substantially final drafts of any proposed amendment, supplement,
waiver or other modification with respect to the Holdings Note Documents,
the Senior Note Documents, the Senior Subordinated Note Documents, any
Permitted Sponsor Subordinated Debt Agreement or any Subordinated
Indenture;
(f) within five Business Days after the same are sent, copies of all
financial statements and reports that Holdings or the Borrower sends to the
holders of any class of its debt securities or public equity securities
and, within five days after the same are filed, copies of all financial
statements and reports that Holdings or the Borrower may make to, or file
with, the SEC;
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(g) concurrently with the delivery of financial statements pursuant to
Sections 6.1(a) and (b), certifications by the chief executive officer and
the chief financial officer or others delivered under the Exchange Act, the
Sarbanes-Oxley Act of 2002, as amended, and/or the rules and regulations of
the Securities and Exchange Commission; and
(h) reasonably promptly, such additional financial and other
information as any Lender through the Administrative Agent may from time to
time reasonably request.
6.3. Payment of Obligations. Pay, discharge or otherwise satisfy at or
before maturity or before they become delinquent, as the case may be, all its
material obligations of whatever nature, except where (a) the amount or validity
thereof is currently being contested in good faith by appropriate proceedings
and reserves in conformity with GAAP with respect thereto have been provided on
the books of the relevant Group Member and (b) in the case of a claim which has
or may become a Lien against any of the Collateral, such contest proceedings
conclusively operate to stay the sale of any portion of the Collateral to
satisfy such claim.
6.4. Maintenance of Existence; Compliance. (a) (i) Preserve, renew and
keep in full force and effect its organizational existence and (ii) take all
reasonable action to maintain all rights, privileges and franchises necessary or
desirable in the ordinary conduct of its business, except, in each case, as
otherwise permitted by Section 7.4 and except, in the case of clause (ii) above,
to the extent that failure to do so could not reasonably be expected to have a
Material Adverse Effect; and (b) comply with all Contractual Obligations and
material Requirements of Law except to the extent that failure to comply
therewith could not, in the aggregate, reasonably be expected to have a Material
Adverse Effect.
6.5. Maintenance of Property; Insurance. (a) Keep all material
property useful and necessary in its business in good working order and
condition, ordinary wear and tear excepted, and (b) maintain with financially
sound and reputable insurance companies insurance on all its property in at
least such amounts and against at least such risks (but including in any event
public liability, product liability and business interruption) as may
customarily be carried or maintained under similar circumstances by companies
engaged in the same or a similar business.
The Borrower shall deliver to the Administrative Agent a report of a
reputable insurance broker with respect to insurance substantially concurrently
with each delivery of audited consolidated balance sheets of Holdings and its
consolidated Subsidiaries.
6.6. Inspection of Property; Books and Records; Discussions. (a) Keep
proper books or records and account in which full, true and correct entries in
conformity with GAAP and all Requirements of Law shall be made of all dealings
and transactions in relation to its business and activities and (b) permit
representatives designated by any Lender to visit and inspect any of its
properties and examine and make abstracts from any of its financial and
accounting records, including any of the Borrower's insurance policies specified
in Section 6.5 above, all upon reasonable notice and reasonable times during
normal business hours during the year and as often as may reasonably be
requested and to discuss the business, operations, properties and financial and
other condition of the Group Members with officers and employees of the Group
Members and with their independent certified public accountants.
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6.7. Notices. Promptly give notice to the Administrative Agent and
each Lender of:
(a) the occurrence of any Default or Event of Default;
(b) any (i) default or event of default under any Contractual
Obligation of any Group Member or (ii) litigation, investigation or
proceeding that may exist at any time between any Group Member and any
Governmental Authority, that in either case, if not cured or if adversely
determined, as the case may be, could reasonably be expected to have a
Material Adverse Effect;
(c) any litigation or proceeding affecting any Group Member (i) in
which the amount involved is $100,000 or more and not covered by insurance
and which could reasonably be expected to have a Material Adverse Effect,
(ii) in which injunctive or similar relief is sought or (iii) which relates
to any Loan Document;
(d) the following events, as soon as possible and in any event within
30 days after the Borrower knows or has reason to know thereof: (i) the
occurrence of any Reportable Event with respect to any Plan, a failure to
make any required contribution to a Plan or a Multiemployer Plan, the
creation of any Lien in favor of the PBGC or a Plan or any withdrawal from,
or the termination, Reorganization or Insolvency of, any Multiemployer Plan
or (ii) the institution of proceedings or the taking of any other action by
the PBGC or the Borrower or any Commonly Controlled Entity or any
Multiemployer Plan with respect to the withdrawal from, or the termination,
Reorganization or Insolvency of, any Plan or a Multiemployer Plan where the
event in (i) or (ii) has resulted or could reasonably be expected to result
in a liability to the Borrower or a Commonly Controlled Entity in excess of
$100,000; and
(e) any development or event that has had or could reasonably be
expected to have a Material Adverse Effect.
Each notice pursuant to this Section 6.7 shall be accompanied by a statement of
a Responsible Officer on behalf of the Borrower setting forth details of the
occurrence referred to therein and stating what action Holdings, the Borrower or
the relevant Subsidiary proposes to take with respect thereto.
6.8. Environmental Laws. (a) Comply in all material respects with, and
ensure compliance in all material respects by all tenants and subtenants, if
any, with, all applicable Environmental Laws, and obtain and comply in all
material respects with and maintain, and ensure that all tenants and subtenants
obtain and comply in all material respects with and maintain, any and all
licenses, approvals, notifications, registrations or permits required by
applicable Environmental Laws.
(b) Conduct and complete all investigations, studies, sampling and
testing and all remedial, removal and other actions required for purposes of
compliance in all material respects with Environmental Laws and promptly comply
in all material respects with all lawful orders and directives of all
Governmental Authorities regarding Environmental Laws.
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6.9. Additional Collateral, etc. (a) With respect to any property
acquired after the Closing Date by any Group Member (other than (x) any property
described in paragraph (b), (c) or (d) below, (y) any property subject to a Lien
expressly permitted by Section 7.3(g)(i) and (z) property acquired by any
Excluded Foreign Subsidiary) as to which the Administrative Agent, for the
benefit of the Secured Parties, does not have a perfected Lien, promptly (i)
execute and deliver to the Administrative Agent such amendments to the Guarantee
and Collateral Agreement or such other documents as the Administrative Agent
deems reasonably necessary or advisable to grant to the Administrative Agent,
for the benefit of the Secured Parties, a security interest in such property and
(ii) take all actions reasonably necessary or advisable to grant to the
Administrative Agent, for the benefit of the Secured Parties, a perfected first
priority security interest in such property if and to the extent that a security
interest may be perfected under applicable law, including the filing of Uniform
Commercial Code financing statements in such jurisdictions as may be required by
the Guarantee and Collateral Agreement or by law or as may be reasonably
requested by the Administrative Agent or the Documentation Agent.
(b) With respect to any fee interest in any real property having a
value (together with improvements thereof) of at least $500,000 acquired after
the Closing Date by any Group Member (other than (x) any such real property
subject to a Lien expressly permitted by Section 7.3(g) and (y) real property
acquired by any Excluded Foreign Subsidiary), promptly (i) execute and deliver a
first priority Mortgage, in favor of the Administrative Agent, for the benefit
of the Secured Parties, covering such real property, (ii) if requested by the
Administrative Agent or the Documentation Agent, provide the Secured Parties
with (x) title and extended coverage insurance covering such real property in an
amount at least equal to the purchase price of such real property (or such other
amount as shall be reasonably specified by the Administrative Agent or the
Documentation Agent ) and (y) any consents or estoppels reasonably deemed
necessary or advisable by the Administrative Agent or the Documentation Agent in
connection with such Mortgage, each of the foregoing in form and substance
reasonably satisfactory to the Administrative Agent or the Documentation Agent,
as applicable and (iii) if requested by the Administrative Agent or the
Documentation Agent, deliver to the Administrative Agent or the Documentation
Agent, as applicable, legal opinions relating to the matters described above,
which opinions shall be in form and substance, and from counsel, reasonably
satisfactory to the Administrative Agent or the Documentation Agent, as
applicable.
(c) With respect to any new Subsidiary (other than an Excluded Foreign
Subsidiary) created or acquired after the Closing Date by any Group Member
(which, for the purposes of this paragraph (c), shall include any existing
Subsidiary that ceases to be an Excluded Foreign Subsidiary), promptly (i)
execute and deliver to the Administrative Agent such amendments to the Guarantee
and Collateral Agreement as the Administrative Agent deems reasonably necessary
or advisable to grant to the Administrative Agent, for the benefit of the
Secured Parties, a perfected first priority security interest in the Capital
Stock of such new Subsidiary that is owned by any Group Member, (ii) deliver to
the Administrative Agent the certificates representing such Capital Stock,
together with undated stock powers, in blank, executed and delivered by a duly
authorized officer of the relevant Group Member, (iii) cause such new Subsidiary
(A) to become a party to the Guarantee and Collateral Agreement, (B) to take
such actions reasonably necessary or advisable to grant to the Administrative
Agent for the benefit of the Secured Parties a perfected first priority security
interest in the Collateral described in the Guarantee and Collat-
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eral Agreement with respect to such new Subsidiary if and to the extent that a
security interest may be perfected under applicable law, including the filing of
Uniform Commercial Code financing statements in such jurisdictions as may be
required by the Guarantee and Collateral Agreement or by law or as may be
reasonably requested by the Administrative Agent or the Documentation Agent and
(C) to deliver to the Administrative Agent a certificate of such Subsidiary,
substantially in the form of Exhibit C, with appropriate insertions and
attachments, and (iv) if requested by the Administrative Agent, deliver to the
Administrative Agent legal opinions relating to the matters described above,
which opinions shall be in form and substance, and from counsel, reasonably
satisfactory to the Administrative Agent.
(d) With respect to any new Excluded Foreign Subsidiary created or
acquired after the Closing Date by any Group Member (other than by any Group
Member that is an Excluded Foreign Subsidiary), promptly (i) execute and deliver
to the Administrative Agent such amendments to the Guarantee and Collateral
Agreement as the Administrative Agent deems reasonably necessary or advisable to
grant to the Administrative Agent, for the benefit of the Lenders, a perfected
first priority security interest in the Capital Stock of such new Subsidiary
that is owned by any such Group Member (provided that in no event shall more
than 65% of the total outstanding Capital Stock of any such new Subsidiary be
required to be so pledged), (ii) deliver to the Administrative Agent the
certificates representing such Capital Stock, together with undated stock
powers, in blank, executed and delivered by a duly authorized officer of the
relevant Group Member, as the case may be, and take such other action as may be
reasonably necessary or, in the opinion of the Administrative Agent, desirable
to perfect the Administrative Agent's security interest therein if and to the
extent that a security interest may be perfected under applicable law, and (iii)
if requested by the Administrative Agent, deliver to the Administrative Agent
legal opinions relating to the matters described above, which opinions shall be
in form and substance, and from counsel, reasonably satisfactory to the
Administrative Agent.
6.10. Further Assurances. From time to time execute and deliver, or
cause to be executed and delivered, such additional instruments, certificates or
documents, and take all such actions, as the Administrative Agent may reasonably
request for the purposes of implementing or effectuating the provisions of this
Agreement and the other Loan Documents, or of more fully perfecting or renewing
the rights of the Administrative Agent and the Secured Parties with respect to
the Collateral (or with respect to any additions thereto or replacements or
proceeds thereof or with respect to any other material property or material
assets hereafter acquired by the Borrower or any Subsidiary which may be deemed
to be part of the Collateral) pursuant hereto or thereto. Upon the exercise by
the Administrative Agent or any Secured Party of any power, right, privilege or
remedy pursuant to this Agreement or the other Loan Documents which requires any
consent, approval, recording qualification or authorization of any Governmental
Authority, the Borrower will execute and deliver, or will cause the execution
and delivery of, all applications, certifications, instruments and other
documents and papers that the Administrative Agent or such Secured Parties may
be required to obtain from the Borrower or any of its Subsidiaries for such
governmental consent, approval, recording, qualification or authorization.
6.11. Post-Closing Obligations. The Borrower shall, and shall cause
each of its Subsidiaries to, as expeditiously as possible, but in no event later
than the number of days after the Closing Date applicable to each item set forth
below:
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(a) Leasehold Mortgage. Within 45 days after the Closing Date unless
otherwise extended or waived by the Administrative Agent in its reasonable
discretion, use its commercially reasonable efforts to execute and deliver
a Mortgage encumbering the leasehold interest located at 3318 Lakemont
Boulevard, Fort Mill, SC 29708, duly executed and acknowledged by the
Borrower, and otherwise in form for recording in the recording office of
each political subdivision where such leasehold Mortgaged Property is
situated, together with such certificates, affidavits, questionnaires or
returns as shall be required in connection with the recording or filing
thereof to create a lien under applicable law, all of which shall be in
form and substance reasonably satisfactory to the Administrative Agent, and
any other instruments necessary to grant a mortgage lien under the laws of
the applicable jurisdiction, which Mortgage and financing statements and
other instruments shall when recorded be effective to create a first
priority Lien on such Mortgaged Property subordinate to no Liens other than
Prior Liens (as defined in the applicable Mortgage) and subject to no other
Liens except Liens expressly permitted by such Mortgage, together with each
other item and/or documentation required to be delivered with respect to
such Mortgaged Property pursuant to Section 5.1(k).
(b) Local Counsel Opinions. Within 30 days after the Closing Date
unless otherwise extended or waived by the Administrative Agent in its
reasonable discretion, cause to be executed and delivered the legal opinion
of local counsel in each of California, Delaware, Florida, Ohio, Texas and
Washington, substantially in the form of Exhibit F-2. Each such legal
opinion shall cover such other matters incident to the transactions
contemplated by this Agreement as the Administrative Agent may reasonably
require.
(c) Control Agreements. Within 30 days after the Closing Date, unless
otherwise extended or waived by the Administrative Agent in its reasonable
discretion, execute and deliver control agreements pursuant to Section 5.13
of the Guarantee and Collateral Agreement.
SECTION 7. NEGATIVE COVENANTS
Holdings and the Borrower hereby jointly and severally agree that, so
long as the Revolving Commitments remain in effect, any Letter of Credit remains
outstanding or any Loan or other amount is owing to any Lender or Agent
hereunder, each of Holdings and the Borrower shall not, and shall not permit any
of its respective Subsidiaries to, directly or indirectly:
7.1. Financial Condition Covenants.
(a) Consolidated Leverage Ratio. Permit the Consolidated Leverage
Ratio as at the last day of any fiscal quarter of the Borrower set forth below
to exceed the ratio set forth below opposite such fiscal quarter:
Fiscal Quarter Ended Consolidated Leverage Ratio
- -------------------------------------------------- ---------------------------
June 30, 2003 5.00 to 1.0
September 30, 2003 5.00 to 1.0
December 31, 2003 4.75 to 1.0
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Fiscal Quarter Ended Consolidated Leverage Ratio
- -------------------------------------------------- ---------------------------
March 31, 2004 4.75 to 1.0
June 30, 2004 4.50 to 1.0
September 30, 2004 4.25 to 1.0
December 31, 2004 4.25 to 1.0
March 31, 2005 4.25 to 1.0
June 30, 2005 4.00 to 1.0
September 30, 2005 4.00 to 1.0
December 31, 2005 4.00 to 1.0
March 31, 2006 3.75 to 1.0
June 30, 2006 3.75 to 1.0
September 30, 2006 3.50 to 1.0
December 31, 2006 3.50 to 1.0
March 31, 2007 3.25 to 1.0
June 30, 2007 3.25 to 1.0
September 30, 2007 3.00 to 1.0
December 31, 2007 and each fiscal quarter ended
thereafter 3.00 to 1.0
(b) Consolidated Interest Coverage Ratio. Permit the Consolidated
Interest Coverage Ratio for any period of four consecutive fiscal quarters of
the Borrower ending with any fiscal quarter set forth below to be less than the
ratio set forth below opposite such fiscal quarter:
Consolidated Interest
Fiscal Quarter Ended Coverage Ratio
- ------------------------------------------------------ ---------------------
June 30, 2003 and each fiscal quarter ended thereafter 2.00 to 1.0
(c) Consolidated Fixed Charge Coverage Ratio. Permit the Consolidated
Fixed Charge Coverage Ratio for any period of four consecutive fiscal quarters
of the Borrower ending with any fiscal quarter set forth below to be less than
the ratio set forth below opposite such fiscal quarter:
Consolidated Fixed
Fiscal Quarter Ended Charge Coverage Ratio
- ------------------------------------------------------ ---------------------
Fiscal quarter June 30, 2003 through fiscal quarter
ended June 30, 2006 1.00 to 1.0
Fiscal quarter September 30, 2006 through fiscal
quarter ended December 31, 2006 1.05 to 1.0
Fiscal quarter March 31, 2007 and each
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fiscal quarter ended thereafter 1.10 to 1.0
7.2. Indebtedness. Create, issue, incur, assume, become liable in
respect of or suffer to exist any Indebtedness or issue any Preferred Stock,
except:
(a) Indebtedness of any Loan Party pursuant to any Loan Document;
(b) Indebtedness (i) of the Borrower to any Wholly Owned Subsidiary
Guarantor and (ii) of any Subsidiary to the Borrower or any other Wholly
Owned Subsidiary Guarantor; provided that (A) all such Indebtedness shall
be evidenced by promissory notes and shall be subject to a first priority
lien pursuant to the Guarantee and Collateral Agreement, (B) all such
Indebtedness owed by the Borrower to any Wholly Owned Subsidiary Guarantor
shall be unsecured and subordinated in right of payment to the payment in
full of the Obligations pursuant to the terms of the applicable promissory
note or an intercompany subordination agreement that, in any such case, is
reasonably satisfactory to the Administrative Agent, and (C) all such
Indebtedness shall include provisions as to the waiver of any subrogation
rights until after the Obligations have been paid in full;
(c) Guarantee Obligations incurred in the ordinary course of business
by the Borrower or any of its Subsidiaries of obligations of the Borrower
or any Wholly Owned Subsidiary Guarantor;
(d) Indebtedness and Preferred Stock outstanding on the date hereof
and listed on Schedule 7.2(d) and any Permitted Refinancings thereof;
(e) Indebtedness (including, without limitation, Capital Lease
Obligations) secured by no Liens other than Liens permitted by Section
7.3(g) in an aggregate principal amount not to exceed $9,000,000 at any one
time outstanding;
(f) Indebtedness of the Borrower and Muzak Finance in respect of (i)
(x) the Senior Notes outstanding on the Closing Date in an aggregate
principal amount not to exceed $220,000,000 and (y) Additional Senior
Notes, Additional Senior Subordinated Notes and/or the Other Senior
Subordinated Notes issued after the Closing Date, provided that (I) the
Borrower shall be in compliance with the covenants contained in Section 7.1
on a Pro Forma Basis after giving effect to the issuance of such Additional
Senior Notes as of the most recently ended fiscal quarter for which a
Compliance Certificate has been delivered pursuant to Section 6.2 and (II)
in the case of Additional Senior Notes, the Borrower's Consolidated Senior
Leverage Ratio as of the most recently ended fiscal quarter for which a
Compliance Certificate has been delivered pursuant to Section 6.2
calculated on a Pro Forma Basis after giving effect to the issuance of such
Additional Senior Notes shall be no greater than the Consolidated Senior
Leverage Ratio immediately prior thereto, (ii) any Permitted Refinancings
of any Indebtedness described in clause (i) and (iii) Guarantee Obligations
of Holdings or any Subsidiary Guarantor in respect of such Indebtedness;
(g) Hedge Agreements permitted under Section 7.12;
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(h) additional unsecured Indebtedness of the Borrower or any of its
Subsidiaries in an aggregate principal amount (for the Borrower and all
Subsidiaries) not to exceed $3,000,000 at any one time outstanding;
provided that at no time shall such Indebtedness be held or beneficially
owned by any Affiliate of the Borrower other than a Subsidiary of the
Borrower;
(i) Deferred Management Fees, subject to Section 7.6(h);
(j) Indebtedness of Holdings or the Borrower in respect of Permitted
Sponsor Subordinated Debt;
(k) Indebtedness of Holdings consisting of the obligation to
repurchase membership interests of former officers and directors of
Holdings; provided that the aggregate amount of such Indebtedness incurred
by Holdings from the Closing Date shall not exceed the sum of (x)
$2,000,000 and (y) any Capital Stock/Insurance Proceeds;
(l) contingent obligations under guaranties in the ordinary course of
business of the obligations of suppliers, landlords, customers, franchisees
and licensees of the Borrower and its Subsidiaries in an aggregate amount
at any time not to exceed $1,000,000;
(m) contingent obligations of the Borrower or any of its Subsidiaries
arising from customary agreements providing for indemnification, adjustment
of purchase price or similar obligations of any such Person in connection
with Asset Sales or Permitted Acquisitions permitted pursuant to Sections
7.5 and 7.8;
(n) Indebtedness of the Borrower or any of its Included Subsidiaries
in respect of Permitted Seller Debt; provided that (i) the aggregate
outstanding principal amount of all such Permitted Seller Debt shall not
exceed $10,000,000 at any time, (ii) such Permitted Seller Debt shall be
unsecured unless it initially represents 80% or more of the aggregate
consideration for any Permitted Acquisition, (iii) if such Permitted Seller
Debt initially represents 80% or more of the aggregate consideration for
the applicable Permitted Acquisition and is secured, it shall (A) be
evidenced by a Permitted Secured Seller Note and (B) be issued by an
Acquisition Subsidiary, (iv) if such Permitted Seller Debt is unsecured, it
shall be evidenced by a Permitted Unsecured Seller Note, (v) no more than
ten Permitted Seller Notes shall be outstanding at any time, (vi) such
Permitted Seller Debt shall mature no earlier than five years from the date
of issuance thereof, (vii) no payment in respect of the principal of any
such Permitted Seller Debt shall be required or made prior to January 1,
2004, (viii) no payment in respect of the principal of any Permitted Seller
Debt shall be permitted to be made if such payment, together with all prior
payments in respect of the principal of such Permitted Seller Debt, would
exceed the aggregate amount of all payments that would have been made at or
prior to such time in respect of such Permitted Seller Debt pursuant to the
application of a straight line amortization schedule, (ix) payments in
respect of the principal of and interest on Permitted Seller Debt shall not
be payable more frequently than quarterly, (x) secured Permitted Seller
Debt shall not bear cash interest at a rate in excess of the then current
prime rate plus 2.0% per annum, (xi) unsecured Permitted Seller Debt shall
not bear cash interest at a rate in excess of the then current prime rate
plus 4.0% per annum, (xii) such Permitted
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Seller Debt shall be non-recourse to any Loan Party or any Loan Party's
assets (other than the Acquisition Subsidiary that is the obligor with
respect thereto), and no other Loan Party shall guarantee any Obligation or
otherwise incur any contingent obligation with respect to such Permitted
Seller Debt, (xiii) the Borrower shall be in compliance with the covenants
contained in Section 7.1 on a Pro Forma Basis as of the most recently ended
fiscal quarter for which a Compliance Certificate has been delivered
pursuant to Section 6.2, (xiv) the Borrower shall provide the
Administrative Agent with no less than five Business Days' prior written
notice of any proposed incurrence of Permitted Seller Debt, (xv) commencing
no less than five Business Days in advance of any proposed incurrence of
Permitted Seller Debt, the Borrower shall provide the Administrative Agent
with drafts of all agreements, documents and information in connection with
such proposed Permitted Seller Debt, including, without limitation, the
proposed purchase agreement for the applicable Permitted Acquisition, the
proposed Permitted Seller Note, and, if such Permitted Seller Debt is to be
secured, the proposed security agreement with respect to such security
interest, and each such agreement and document shall be in form and
substance reasonably satisfactory to the Administrative Agent, and shall
provide the Administrative Agent with a Compliance Certificate reasonably
satisfactory to the Administrative Agent supporting its calculations under
clause (xiii) above, and (xvi) the Borrower shall deliver to the
Administrative Agent execution copies of each Additional Related Agreement
that relates to any Permitted Seller Debt and all exhibits and schedules
thereto prior to or as of the date of execution thereof (including, without
limitation, copies of any opinions of counsel delivered to the parties in
connection with such transaction, accompanied by a letter from each such
counsel authorizing Lenders to rely upon such opinion to the same extent as
though it were addressed to Lenders, except in the case of any such legal
opinion rendered by counsel to any Person other than a Loan Party to the
extent such counsel has refused to deliver such a letter on the basis that
it is inconsistent with such counsel's internal policies);
(o) Holdings Preferred Stock; provided:
(i) (A) the terms of such Holdings Preferred Stock shall provide
that no cash dividends shall be payable or paid thereon on or prior to
May 20, 2006,
(B) such Holdings Preferred Stock shall not mature or provide for
any repurchase or redemption thereof, in whole or in part, contingent
or otherwise, on or prior to May 20, 2009 or upon the occurrence of an
event described in Section 8(k); provided that the Borrower shall not
be required to make any payments in respect thereof while any
Obligations remain outstanding; and
(C) to the extent issued after the Closing Date the terms and
conditions thereof shall be reasonably satisfactory to the
Administrative Agent;
(ii) Holdings shall contribute the proceeds of such Holdings
Preferred Stock to the Borrower as Equity Capital;
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(iii) Holdings shall provide the Administrative Agent with no
less than five Business Days' prior written notice of any proposed
issuance of Holdings Preferred Stock;
(iv) commencing no less than ten Business Days in advance of any
proposed issuance of Holdings Preferred Stock, Holdings shall provide
the Administrative Agent with drafts of all agreements, documents and
information in connection with such proposed Holdings Preferred Stock,
and each such proposed agreement and document shall be in form and
substance reasonably satisfactory to Administrative Agent; and
(v) Holdings shall deliver to the Administrative Agent execution
copies of each Additional Related Agreement that relates to the
Holdings Preferred Stock and all exhibits and schedules thereto prior
to or as of the date of execution thereof (including, without
limitation, copies of any opinions of counsel delivered to the parties
in connection with such transaction, accompanied by a letter from each
such counsel authorizing Lenders to rely upon such opinion to the same
extent as though it were addressed to Lenders, except in the case of
any such legal opinion rendered by counsel to any Person other than a
Loan Party to the extent such counsel has refused to deliver such a
letter on the basis that it is inconsistent with such counsel's
internal policies).
Notwithstanding the foregoing, Electro may only become and remain liable with
respect to Indebtedness if such Indebtedness is without recourse to any other
Loan Party or its assets and does not exceed an aggregate outstanding principal
amount of $2,200,000.
7.3. Liens. Create, incur, assume or suffer to exist any Lien upon any
of its property, whether now owned or hereafter acquired, except for:
(a) Liens for taxes, levy, import, duty, assessment, charge or fee not
yet due or that are being contested in good faith by appropriate
proceedings, provided that adequate reserves with respect thereto are
maintained on the books of the Borrower or its Subsidiaries, as the case
may be, in conformity with GAAP;
(b) statutory Liens of landlords, banks (and rights of set-off),
carriers', warehousemen's, mechanics', workmen's, materialmen's,
repairmen's or other similar Liens arising in the ordinary course of
business that are not overdue for a period of more than 30 days or that are
being contested in good faith by appropriate proceedings;
(c) pledges or deposits in connection with workers' compensation,
unemployment insurance and other social security legislation;
(d) deposits to secure the performance of tenders, government
contracts, bids, trade contracts (other than for borrowed money), leases,
statutory obligations, surety and appeal bonds, performance and return of
money bonds and other similar obligations incurred in the ordinary course
of business;
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(e) easements, rights-of-way, restrictions, encroachments and other
similar encumbrances incurred in the ordinary course of business and other
minor defects or irregularities in title, in each case that, in the
aggregate, are not substantial in amount and that do not in any case
materially detract from the value of the property subject thereto or
materially interfere with the ordinary conduct of the business of the
Borrower or any of its Subsidiaries;
(f) Liens in existence on the date hereof listed on Schedule 7.3(f),
securing Indebtedness permitted by Section 7.2(d), provided that no such
Lien is spread to cover any additional property after the Closing Date and
that the amount of Indebtedness secured thereby is not increased;
(g) Liens securing Indebtedness of the Borrower or any other
Subsidiary incurred pursuant to Section 7.2(e) to finance the acquisition
of fixed or capital assets, provided that (i) such Liens shall be created
substantially simultaneously with the acquisition of such fixed or capital
assets, (ii) such Liens do not at any time encumber any property other than
the property financed by such Indebtedness and (iii) the amount of
Indebtedness secured thereby is not increased;
(h) Liens created pursuant to the Security Documents;
(i) any interest or title of a lessor or a sublessor under any lease
entered into by the Borrower or any Subsidiary in the ordinary course of
its business and covering only the assets so leased;
(j) Permitted Seller Debt Liens incurred by an Acquisition Subsidiary
as security for Permitted Seller Debt; provided that (i) such Permitted
Seller Debt Liens shall only be permitted to the extent that such Liens
will secure Permitted Seller Debt that initially represents 80% or more of
the aggregate consideration of the applicable Permitted Acquisition, (ii)
such Permitted Seller Debt Liens shall not at any time cover or encumber
any assets or property other than the assets or property financed by the
applicable Permitted Seller Debt or Liens securing receivables and/or
inventory in the ordinary course of business in respect of such asset or
property acquired, except that such Permitted Seller Debt Liens may extend
to assets or properties that replace the original assets or properties so
financed, (iii) such Permitted Seller Debt Liens shall not at any time
cover or encumber any after-acquired property of the applicable Acquisition
Subsidiary, except as set forth in clause (ii) with respect to replacement
property, (iv) the Administrative Agent, for the benefit of the Lenders
shall have (A) a valid and perfected Lien covering all assets and property
transferred pursuant to a Permitted Acquisition in which Permitted Seller
Debt was incurred if and to the extent that a Lien covering such assets and
property may be perfected under applicable law and (B) a valid and
perfected Lien covering all other property of the applicable Acquisition
Subsidiary if and to the extent that a Lien covering such assets and
property may be perfected under applicable law, and each Lien described in
clauses (A) and (B) shall be prior to all Liens other than any Liens
permitted by this Section 7.3, and (v) the Borrower shall have delivered
drafts and execution copies of all agreements and documents governing the
terms and conditions of each such Permitted
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Seller Debt Lien as required by Section 7.2(n), and each such agreement and
document shall be in form and substance reasonably satisfactory to the
Administrative Agent;
(k) any building code, zoning or similar law or right reserved to or
vested in any governmental office or agency to control or regulate the use
of any real property;
(l) any attachment or judgment Lien not constituting a Default or
Event of Default pursuant to Section 8, so long as such Lien could not
reasonably be expected to have a Material Adverse Effect;
(m) Liens incurred in connection with the purchase or shipping of
goods or assets on the related assets and proceeds thereof in favor of the
seller or shipper of such goods or assets;
(n) Liens in favor of customs and revenue authorities arising as a
matter of law to secure payment of customs duties in connection with the
importation of goods;
(o) licenses of Intellectual Property granted by the Borrower or any
of its Subsidiaries in the ordinary course of business and not interfering
in any respect with the ordinary conduct of the business of the Borrower or
such Subsidiary;
(p) Liens not otherwise permitted by this Section so long as neither
(i) the aggregate outstanding principal amount of the obligations secured
thereby nor (ii) the aggregate fair market value (determined as of the date
such Lien is incurred) of the assets subject thereto exceeds (as to the
Borrower and all Subsidiaries) $250,000 at any one time;
(q) purchase price deposits made in connection with Permitted
Acquisitions; and
(r) matters that would be disclosed by an accurate survey or
inspection of the property which would not have a material adverse effect
on the operations, condition, value, occupancy or use of that property.
7.4. Fundamental Changes. Enter into any merger, consolidation or
amalgamation, or liquidate, wind up or dissolve itself (or suffer any
liquidation or dissolution), or Dispose of all or substantially all of its
property or business, except that:
(a) any Included Subsidiary of the Borrower may be merged or
consolidated with or into the Borrower (provided that the Borrower shall be
the continuing or surviving corporation) or with or into any Wholly Owned
Subsidiary Guarantor (provided that the Wholly Owned Subsidiary Guarantor
shall be the continuing or surviving corporation and provided further that
no Acquisition Subsidiary may merge or consolidate with or into the
Borrower); and
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(b) any Subsidiary of the Borrower may Dispose of any or all of its
assets (upon voluntary liquidation or otherwise) to the Borrower or any
Wholly Owned Subsidiary Guarantor.
7.5. Disposition of Property. Dispose of any of its property, whether
now owned or hereafter acquired, or, in the case of any Subsidiary, issue or
sell any shares of such Subsidiary's Capital Stock to any Person, except:
(a) the Disposition of obsolete or worn out property in the ordinary
course of business;
(b) the sale of inventory and the granting of licenses, in each case,
in the ordinary course of business;
(c) Dispositions permitted by Section 7.4(b);
(d) the sale or issuance of any Subsidiary's Capital Stock to the
Borrower or any Wholly Owned Subsidiary Guarantor;
(e) the Disposition of other property having a fair market value not
to exceed (i) $1,000,000 in the aggregate for any fiscal year of the
Borrower and (ii) $5,000,000 in the aggregate from the Closing Date;
(f) leases or subleases to other Persons of assets by the Borrower or
any of its Subsidiaries in the ordinary course of business;
(g) licenses to other Persons of Intellectual Property by the Borrower
or any Subsidiary thereof in the ordinary course of business;
(h) in connection with each Permitted Acquisition by the Borrower, the
sale of acquired accounts located in the "territory" or other similar
domain of a "Muzak" franchisee to such franchisee in accordance with, and
to the extent required by, the terms of such franchisee's franchise
agreement; and
(i) the Disposition or pledge of any Subsidiary's Capital Stock to
qualify directors to the extent required by applicable law.
7.6. Restricted Payments. (i) Declare or pay any dividend (other than
dividends payable solely in common stock of the Person making such dividend) on,
or make any payment on account of, or set apart assets for a sinking or other
analogous fund for, the purchase, redemption, defeasance, retirement or other
acquisition of, any Capital Stock of any Group Member, whether now or hereafter
outstanding, or make any other distribution in respect thereof, either directly
or indirectly, whether in cash or property or in obligations of Holdings, the
Borrower or any Subsidiary, (ii) make any payment or prepayment of principal of,
premium, if any, or interest on, or redeem, purchase, retire, or make any
payment in defeasance or repurchase of any Subordinated Indebtedness, Permitted
Seller Debt or the Holdings Notes, whether in cash, securities, property or
otherwise, or (iii) make any payment of any management, consulting, ad-
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visory or other similar fee and/or expense to any Affiliate of any Group Member
(collectively, "Restricted Payments"), except that:
(a) any Subsidiary may make Restricted Payments to the Borrower or any
Wholly Owned Subsidiary Guarantor;
(b) the Borrower may make regularly scheduled payments of interest in
respect of the Senior Subordinated Notes (and any Permitted Refinancing
thereof) in accordance with the terms of, and only to the extent required
by, and subject to the subordination provisions contained in, the Senior
Subordinated Note Indenture (or the agreement governing the terms of any
Permitted Refinancing thereof);
(c) beginning September 15, 2004, the Borrower may make Restricted
Payments to Holdings in an amount sufficient to permit Holdings to make
payments of interest on the Holdings Notes and any Permitted Refinancing
thereof; provided that (i) Holdings applies such amounts to the payment of
such interest, (ii) after giving effect to such payment, the Borrower shall
be in compliance with Section 7.1 on a Pro Forma Basis as of the most
recently ended fiscal quarter for which a Compliance Certificate has been
delivered pursuant to Section 6.2, and (iii) such payments may only be made
with respect to interest accruing on the Holdings Notes and any such
Permitted Refinancing on and after March 15, 2004;
(d) Holdings may make payments of interest on the Holdings Notes and
any Permitted Refinancing thereof with amounts received from the Borrower
as described in clause (c) above;
(e) for so long as either Holdings or the Borrower, as applicable, is
disregarded as an entity or is classified as a partnership under Treasury
Regulations Section 301.7701 (but not a publicly traded partnership (as
defined in Section 7704 of the Code) taxed as a corporation), in each case
for U.S. income tax purposes, then Holdings or the Borrower, as applicable,
may make Tax Distributions;
(f) the Borrower may make Restricted Payments to pay reasonable
out-of-pocket expenses in connection with the Management Agreement;
(g) the Borrower may make Restricted Payment to Holdings in an
aggregate amount not in excess of the sum of (x) $2,000,000 and (y) any
Capital Stock/Insurance Proceeds (measured on a cumulative basis from the
Closing Date) to permit Holdings to repurchase membership interests from
former officers, directors and employees of Holdings or any of its
Subsidiaries and Holdings may repurchase said membership interest with the
payments so received;
(h) (i) the Borrower may accrue Management Fees payable in an
aggregate not in excess of $300,000 multiplied by 1.05 raised to the power
obtained by subtracting 1998 from the number of the calendar year in
respect of each fiscal year, provided (A) the Borrower may not pay any such
accrued Management Fees, or any interest thereon, in respect of a fiscal
year unless and until the Borrower shall have delivered to the
Adminis-
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trative Agent and each Lender a Compliance Certificate, together with
consolidated audited financial statements, each in respect of such fiscal
year setting forth the Borrower's compliance with the terms hereof in
respect of, and as at the end of, such fiscal year, (B) prior to the
payment in full in cash of all of the Obligations, no payment in respect of
any such accrued Management Fees (or any interest thereon) that were not
payable as a result of clause (A) hereof or as a result of any Default or
Event of Default (collectively, "Deferred Management Fees") shall be
required or made unless the Required Lenders shall otherwise agree, and (C)
in all other respects Deferred Management Fees shall be subordinated to all
of the Obligations on terms and conditions reasonably acceptable to the
Required Lenders and (ii) the Borrower may pay in cash any Pre-Closing
Deferred Management Fees;
(i) the Borrower and any Included Subsidiary may make regularly
scheduled payments of interest and principal in respect of Permitted Seller
Debt to the extent permitted by Section 7.2(n) and in accordance with the
terms of, and only to the extent required by, and subject to the
subordination and other provisions contained in, the applicable Permitted
Seller Note, as any such Permitted Seller Note may be amended from time to
time to the extent permitted under Section 7.9;
(j) beginning in the sixth year following the issuance of such
Holdings Preferred Stock, the Borrower may make Restricted Payments to
Holdings in an amount sufficient to permit Holdings to make regularly
scheduled dividend payments on the Holdings Preferred Stock, in accordance
with the terms of, such Holdings Preferred Stock, provided that (i)
Holdings applies such amounts to the payment of such dividends, (ii) after
giving effect to such payment, the Borrower shall be in compliance with
Section 7.1 on a Pro Forma Basis as of the most recently ended fiscal
quarter for which a Compliance Certificate has been delivered pursuant to
Section 6.2 and, in the case of the Consolidated Leverage Ratio, shall be
in compliance by at least 0.25 to 1.0 on the same Pro Forma Basis, (iii) at
the time of and after giving effect to such Restricted Payment, there shall
be no Loans outstanding under this Agreement and the Borrower and its
Wholly Owned Subsidiary Guarantors shall have not less than $5,000,000 of
cash and Cash Equivalents on hand and (iv) such dividend payments may only
be made with respect to dividends accruing on the Holdings Preferred Stock
from and after the sixth year following the issue date of such Holdings
Preferred Stock;
(k) Holdings may make dividend payments on the Holdings Preferred
Stock with amounts received from the Borrower described in clause (j)
above;
(l) the Borrower may make Restricted Payments to (to the extent the
issuer thereof in the case of Permitted Sponsor Subordinated Debt), and may
make Restricted Payments to Holdings in an amount sufficient to permit
Holdings to, redeem, defease or otherwise retire either in whole or in part
Permitted Sponsor Subordinated Debt, Holdings Notes and Holdings Preferred
Stock (other than from the proceeds of a Permitted Refinancing thereof by
the Borrower, which shall be governed by clause (n) below), provided that
(i) Borrower or Holdings, as applicable, applies such amounts to such
redemption, defeasance or retirement, (ii) after giving effect to such
payment, the Borrower shall
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be in compliance with Section 7.1 on a Pro Forma Basis as of the most
recently ended fiscal quarter for which a Compliance Certificate has been
delivered pursuant to Section 6.2 and, in the case of the Consolidated
Leverage Ratio, shall be in compliance by at least 0.25 to 1.0 on the same
Pro Forma Basis and (iii) at the time of and after giving effect to such
Restricted Payment, there shall be no Loans outstanding under this
Agreement and the Borrower and its Wholly Owned Subsidiary Guarantors shall
have not less than $5,000,000 of cash and Cash Equivalents on hand;
(m) Holdings may redeem, defease or otherwise retire Holdings Notes,
Holdings Preferred Stock and any other Preferred Stock of Holdings with
amounts received from the Borrower described in clause (l) above;
(n) (i) the Borrower may make Restricted Payments to Holdings equal to
the net proceeds of any Additional Senior Notes and Additional Senior
Subordinated Notes which constitute a Permitted Refinancing of the Holdings
Notes and Holdings may redeem, defease or otherwise retire the Holdings
Notes with the proceeds of any such Permitted Refinancing and (ii) the
Borrower may redeem, defease or otherwise retire the Subordinated Notes
with the proceeds of any Permitted Refinancing thereof; and
(o) from and after the Closing Date, the Borrower may from time to
time make Restricted Payments to Holdings of not more than $2,000,000 in
the aggregate (whether or not from the proceeds of Loans) for the of
purpose of repurchasing Holdings Notes; provided that Holdings shall apply
such amounts to repurchase Holdings Notes with within a reasonable period
of time after receipt of such amounts ("Permitted Repurchases of Holdings
Notes").
7.7. Capital Expenditures. Make or commit to make any Capital
Expenditure, except (a) Capital Expenditures of the Borrower and its
Subsidiaries in the ordinary course of business not exceeding $40,000,000 in any
fiscal year; provided that, in connection with each Permitted Acquisition that
is permitted pursuant to Section 7.8 and consummated during any fiscal year, the
amount of permitted Capital Expenditures for such fiscal year and each
subsequent fiscal year shall be increased by an amount equal to the product of
(A) 3.5 and (B) the total monthly recurring revenue of such Permitted
Acquisition (which, in the case of any such acquisition consummated on or prior
to the fifteenth day of any month, shall be the total monthly recurring revenue
for the second prior month immediately preceding such acquisition and, in the
case of any acquisition consummated after such fifteenth day, shall be the total
monthly recurring revenue for the prior month immediately preceding such
acquisition) (the "Increased Expenditure Amount"); provided, further, that (x)
the Increased Expenditure Amount for the initial fiscal year shall be prorated
on an annualized basis from the date of each such acquisition for such fiscal
year, but the total Increased Expenditure Amount for such acquisition shall
increase the amount of permitted Capital Expenditures for each subsequent fiscal
year, and (y) in connection with each such Permitted Acquisition, the Compliance
Certificate delivered by the Borrower as set forth in the definition of
"Permitted Acquisition" shall set forth in reasonable detail the calculation of
the Increased Expenditure Amount for such Permitted Acquisition, and such
calculation shall be reasonably satisfactory to the Administrative Agent in all
respects.
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Except as permitted pursuant to Section 7.8(h), the Borrower and its
Subsidiaries shall not be permitted to make or incur any Capital Expenditures of
any kind in any fiscal year in respect of any Subsidiary other than a Wholly
Owned Subsidiary Guarantor. The aggregate annual amount of Capital Expenditures
made or incurred by Electro in any fiscal year shall not exceed $300,000.
7.8. Investments. Make any advance, loan, extension of credit (by way
of guaranty or otherwise) or capital contribution to, or purchase any Capital
Stock, bonds, notes, debentures or other debt securities of, or any assets
constituting a business unit of, or make any other investment in, any Person
(all of the foregoing, "Investments"), except:
(a) Investments in (i) accounts receivable arising and trade credit
granted in the ordinary course of business and in any securities received
in satisfaction or partial satisfaction thereof from financially troubled
account debtors and (ii) deposits, prepayments and other credits to
suppliers made in the ordinary course of business consistent with the past
practices of the Borrower and its Subsidiaries;
(b) Investments in Cash Equivalents;
(c) Guarantee Obligations permitted by Section 7.2;
(d) loans and advances to employees of Holdings, the Borrower or any
Subsidiary in the ordinary course of business (including for travel,
entertainment and relocation expenses) in an aggregate principal amount for
all such Persons not to exceed $500,000 at any one time outstanding;
(e) Investments existing on the Closing Date and set forth on Schedule
7.8(e);
(f) Investments in assets useful in the business of the Borrower and
its Subsidiaries made by the Borrower or any of its Subsidiaries with the
proceeds of any Reinvestment Deferred Amount;
(g) intercompany Investments (including intercompany loans pursuant to
Section 7.2(b)) by any Group Member in the Borrower or any Person that,
prior to such Investment, is a Wholly Owned Subsidiary Guarantor;
(h) Investments by the Borrower in Electro in an aggregate annual
amount not to exceed $300,000, provided that Electro shall apply the
proceeds of any such Investment to make or incur Capital Expenditures
permitted pursuant to Section 7.7;
(i) Capital Expenditures permitted by Section 7.7; and
(j) Permitted Acquisitions, provided that (i) (A) if the Consolidated
Leverage Ratio (determined on a Pro Forma Basis) as of the most recently
ended fiscal quarter for which a Compliance Certificate has been delivered
pursuant to Section 6.2 is equal to or greater than 3.50 to 1.00, then the
aggregate consideration for any single acquisition or group of related
acquisitions occurring in the current fiscal quarter shall not exceed
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$15,000,000 and the aggregate consideration for all acquisitions occurring
in such current fiscal quarter and the three fiscal quarters ending with
the fiscal quarter in respect of which such Compliance Certificate shall
have been delivered shall not exceed $25,000,000 and (B) if the
Consolidated Leverage Ratio (determined on a Pro Forma Basis) as of the
most recently ended fiscal quarter for which a Compliance Certificate has
been delivered pursuant to Section 6.2 is less than 3.50 to 1.00, then the
aggregate consideration for any single acquisition or group of related
acquisitions occurring in the current fiscal quarter and all acquisitions
occurring in such current fiscal quarter and the three fiscal quarters
ending with the fiscal quarter in respect of which such Compliance
Certificate shall have been delivered shall not exceed $35,000,000 and (ii)
immediately after giving effect to such Permitted Acquisitions, there shall
be at least $10,000,000 of any combination of cash, Cash Equivalents and/or
Loans available to be borrowed pursuant to Section 2.1 and the other
provisions of this Agreement.
7.9. Modifications of Certain Debt Instruments. (a) Amend, modify,
waive or otherwise change, or consent or agree to any amendment, modification,
waiver or other change to, any of the terms of the Senior Notes, the Holdings
Notes, the Senior Subordinated Notes or, in each case, any Permitted Refinancing
thereof, or the Permitted Sponsor Subordinated Notes, the Permitted Seller Notes
or any other Subordinated Indebtedness (other than any such amendment,
modification, waiver or other change that (i) would extend the maturity or
reduce the amount of any payment of principal thereof or reduce the rate or
extend any date for payment of interest thereon and (ii) does not involve the
payment of a consent fee); (b) amend, modify, waive or otherwise change, or
consent or agree to any amendment, modification, waiver or other change to, any
of the terms of any Capital Stock to the extent that such amendment,
modification, waiver, change, consent or agreement (i) would result in such
Capital Stock becoming Disqualified Capital Stock , (ii) would result in a
Default or Event of Default or (iii) would reasonably be expected to be
materially adverse to the rights of any Lender or Agent hereunder; or (c)
designate any Indebtedness (other than obligations of the Loan Parties pursuant
to the Loan Documents) as "Designated Senior Indebtedness" or its equivalent (or
any other defined term having a similar purpose) for the purposes of the Senior
Subordinated Note Indenture or any other Subordinated Indebtedness.
7.10. Transactions with Affiliates. Enter into any transaction,
including any purchase, sale, lease or exchange of property, the rendering of
any service or the payment of any management, advisory or similar fees, with any
Affiliate (other than the Borrower or any Wholly Owned Subsidiary Guarantor)
unless such transaction is (a) otherwise permitted under this Agreement, and (b)
upon fair and reasonable terms no less favorable to the relevant Group Member,
than it would obtain in a comparable arm's length transaction with a Person that
is not an Affiliate; provided, the foregoing restriction shall not apply,
subject to each other covenant contained herein, to (i) the payment of
Management Fees to the extent permitted by Section 7.6(h) and expense
reimbursement to the extent permitted by Section 7.6(f), (ii) reasonable and
customary fees paid to members of the board of managers (or similar governing
body) of the Borrower or Holdings and their respective Subsidiaries and (iii)
the repurchase of membership interests from former officers and directors of
Holdings to the extent permitted by Section 7.6(g).
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7.11. Sales and Leasebacks; Sale or Discount of Receivables. (a) Enter
into any arrangement with any Person providing for the leasing by any Group
Member of real or personal property that has been or is to be sold or
transferred by such Group Member to such Person or to any other Person to whom
funds have been or are to be advanced by such Person on the security of such
property or rental obligations of such Group Member, or (b) sell, directly or
indirectly, with recourse, or discount or otherwise sell for less than the face
value thereof, any of its notes or accounts receivable.
7.12. Hedge Agreements. Enter into any Hedge Agreement, except (a)
Hedge Agreements entered into to hedge or mitigate risks to which the Borrower
or any Subsidiary has actual exposure and (b) Hedge Agreements entered into in
order to effectively cap, collar or exchange interest rates (from fixed to
floating rates, from one floating rate to another floating rate or otherwise)
with respect to any interest-bearing liability or investment of the Borrower or
any Subsidiary.
7.13. Changes in Fiscal Periods. Permit the fiscal year of the
Borrower to end on a day other than December 31 or change the Borrower's method
of determining fiscal quarters.
7.14. Negative Pledge Clauses. Enter into or suffer to exist or become
effective any agreement that prohibits or limits the ability of any Group Member
to create, incur, assume or suffer to exist any Lien upon any of its property or
revenues, whether now owned or hereafter acquired, other than (a) pursuant to
and permitted by this Agreement and the other Loan Documents, (b) the Senior
Note Indenture, the Senior Subordinated Note Indenture, the Holdings Note
Indenture and any Holdings Preferred Stock, (c) any agreements governing any
purchase money Liens or Capital Lease Obligations otherwise permitted hereby (in
which case, any prohibition or limitation shall only be effective against the
assets financed thereby), (d) customary restrictions and conditions contained in
agreements related to Permitted Seller Debt; provided such restrictions and
conditions apply only to the Subsidiary or assets that are to be sold and such
sale is permitted under this agreement, and (e) customary provisions in leases
and other contracts restricting assignment thereof in existence on the date
hereof or entered into consistent with past practice.
7.15. Clauses Restricting Subsidiary Distributions. Enter into or
suffer to exist or become effective any consensual encumbrance or restriction on
the ability of any Subsidiary of the Borrower to (a) make Restricted Payments in
respect of any Capital Stock of such Subsidiary held by, or pay any Indebtedness
owed to, the Borrower or any other Subsidiary of the Borrower, (b) make loans or
advances to, or other Investments in, the Borrower or any other Subsidiary of
the Borrower, (c) transfer any of its assets to the Borrower or any other
Subsidiary of the Borrower, except for such encumbrances or restrictions
existing under or by reason of (i) any restrictions existing under the Loan
Documents and (ii) any restrictions with respect to a Subsidiary imposed
pursuant to an agreement that has been entered into in connection with the
Disposition of all or substantially all of the Capital Stock or assets of such
Subsidiary, or (d) as permitted by this Agreement and the other Loan Documents.
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7.16. Lines of Business; Holdings. (a) Enter into any business, either
directly or through any Subsidiary, except for those businesses in which the
Borrower and its Subsidiaries are engaged on the date of this Agreement or that
are reasonably related thereto or such other lines of business as may be
consented to by the Required Lenders.
(b) Permit Holdings to (i) create or suffer to exist any Lien upon any
property or assets now owned or hereafter acquired by it other than the Liens
created by the Security Documents to which it is a party or permitted pursuant
to Section 7.3; (ii) engage in any business or activity or own any assets other
than holding 100% of the Capital Stock of the Borrower and Muzak Holdings
Finance and performing its obligations under the Loan Documents and, to the
extent not inconsistent therewith, the Related Agreements and the Additional
Related Agreements to which it is a party; (iii) consolidate with or merge with
or into, or convey, transfer or lease all or substantially all its assets to,
any Person; (iv) sell or otherwise dispose of any Capital Stock of any of its
Subsidiaries; (v) create or acquire any Subsidiary or make or own any Investment
in any Person other than the Borrower or Muzak Holdings Finance; or (vi) fail to
hold itself out to the public as a legal entity separate and distinct from any
other Person.
7.17. Amendments to Certain Related Agreements. Amend, supplement or
otherwise modify (pursuant to a waiver or otherwise) the terms and conditions of
the Related Agreements or any Additional Related Agreement (other than the
Employment Agreement) except for any such amendment, supplement or modification
that becomes effective after the Closing Date and could not reasonably be
expected to have a Material Adverse Effect.
SECTION 8. EVENTS OF DEFAULT
If any of the following events shall occur and be continuing:
(a) the Borrower shall fail to pay any installment of principal of any
Loan or Reimbursement Obligation when due in accordance with the terms
hereof; or the Borrower shall fail to pay any interest on any Loan or
Reimbursement Obligation, or any other amount payable hereunder or under
any other Loan Document, within five days after any such interest or other
amount becomes due in accordance with the terms hereof; or
(b) any representation or warranty made or deemed made by any Loan
Party herein or in any other Loan Document or that is contained in any
certificate, document or financial or other statement furnished by it at
any time under or in connection with this Agreement or any such other Loan
Document shall prove to have been inaccurate in any material respect on or
as of the date made or deemed made; or
(c) (i) any Loan Party shall default in the observance or performance
of any agreement contained in clause (i) or (ii) of Section 6.4(a) (with
respect to Holdings and the Borrower only), Section 6.7(a) or Section 7 of
this Agreement or Sections 5.5 and 5.7(b) of the Guarantee and Collateral
Agreement or (ii) an "Event of Default" under and as defined in any
Mortgage shall have occurred and be continuing; or
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(d) any Loan Party shall default in the observance or performance of
any other agreement contained in this Agreement or any other Loan Document
(other than as provided in paragraphs (a) through (c) of this Section), and
such default shall continue unremedied for a period of 30 days after notice
to the Borrower from the Administrative Agent or the Required Lenders; or
(e) any Group Member (i) defaults in making any payment of any
installment principal of any Indebtedness (including any Guarantee
Obligation, but excluding the Loans) on the scheduled or original due date
with respect thereto; or (ii) defaults in making any payment of any
interest on any such Indebtedness beyond the period of grace, if any,
provided in the instrument or agreement under which such Indebtedness was
created; or (iii) defaults in the observance or performance of any other
agreement or condition relating to any such Indebtedness or contained in
any instrument or agreement evidencing, securing or relating thereto, or
any other event shall occur or condition exist, the effect of which default
or other event or condition is to cause, or to permit the holder or
beneficiary of such Indebtedness (or a trustee or agent on behalf of such
holder or beneficiary) to cause, with the giving of notice if required,
such Indebtedness to become due prior to its stated maturity or to become
subject to a mandatory offer to purchase by the obligor thereunder or (in
the case of any such Indebtedness constituting a Guarantee Obligation) to
become payable; provided, that a default, event or condition described in
clause (i), (ii) or (iii) of this paragraph (e) shall not at any time
constitute an Event of Default unless, at such time, one or more defaults,
events or conditions of the type described in clauses (i), (ii) and (iii)
of this paragraph (e) shall have occurred and be continuing with respect to
Indebtedness the outstanding principal amount of which exceeds in the
aggregate $4,000,000; or
(f) (i) any Group Member shall commence any case, proceeding or other
action (A) under any existing or future law of any jurisdiction, domestic
or foreign, relating to bankruptcy, insolvency, reorganization or relief of
debtors, seeking to have an order for relief entered with respect to it, or
seeking to adjudicate it a bankrupt or insolvent, or seeking
reorganization, arrangement, adjustment, winding-up, liquidation,
dissolution, composition or other relief with respect to it or its debts,
or (B) seeking appointment of a receiver, trustee, custodian, conservator
or other similar official for it or for all or any substantial part of its
assets, or any Group Member shall make a general assignment for the benefit
of its creditors; or (ii) there shall be commenced against any Group Member
any case, proceeding or other action of a nature referred to in clause (i)
above that (A) results in the entry of an order for relief or any such
adjudication or appointment or (B) remains undismissed, undischarged or
unbonded for a period of 60 days; or (iii) there shall be commenced against
any Group Member any case, proceeding or other action seeking issuance of a
warrant of attachment, execution, distraint or similar process against all
or any substantial part of its assets that results in the entry of an order
for any such relief that shall not have been vacated, discharged, or stayed
or bonded pending appeal within 60 days from the entry thereof; or (iv) any
Group Member shall take any action in furtherance of, or indicating its
consent to, approval of, or acquiescence in, any of the acts set forth in
clause (i), (ii), or (iii) above; or (v) any Group Member shall generally
not, or
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shall be unable to, or shall admit in writing its inability to, pay its
debts as they become due; or
(g) (i) any Person shall engage in any "prohibited transaction" (as
defined in Section 406 of ERISA or Section 4975 of the Code) involving any
Plan, (ii) any "accumulated funding deficiency" (as defined in Section 302
of ERISA), whether or not waived, shall exist with respect to any Plan or
any Lien in favor of the PBGC or a Plan shall arise on the assets of any
Group Member or any Commonly Controlled Entity, (iii) a Reportable Event
shall occur with respect to, or proceedings shall commence to have a
trustee appointed, or a trustee shall be appointed, to administer or to
terminate, any Single Employer Plan, which Reportable Event or commencement
of proceedings or appointment of a trustee is, in the reasonable opinion of
the Required Lenders, likely to result in the termination of such Plan for
purposes of Title IV of ERISA, (iv) any Single Employer Plan shall
terminate for purposes of Title IV of ERISA, (v) any Group Member or any
Commonly Controlled Entity shall, or in the reasonable opinion of the
Required Lenders is likely to, incur any liability in connection with a
withdrawal from, or the Insolvency or Reorganization of, a Multiemployer
Plan or (vi) any other event or condition shall occur or exist with respect
to a Plan; and in each case in clauses (i) through (vi) above, such event
or condition, together with all other such events or conditions, if any,
could reasonably be expected to have a Material Adverse Effect; or
(h) one or more judgments or decrees shall be entered against any
Group Member involving in the aggregate a liability (not paid or fully
covered by insurance as to which the relevant insurance company has
acknowledged coverage) of $4,000,000 or more, and all such judgments or
decrees shall not have been vacated, discharged, stayed or bonded pending
appeal within 30 days from the entry thereof; or
(i) any of the Security Documents shall cease, for any reason, to be
in full force and effect, or any Loan Party or any Affiliate of any Loan
Party shall so assert, or any Lien (other than by reason of a release of
Collateral in accordance with the terms thereof or the satisfaction in full
of the Obligations in accordance with the terms hereof) created by any of
the Security Documents shall cease to be enforceable and of the same effect
and priority purported to be created thereby; or
(j) the guarantee contained in Section 2 of the Guarantee and
Collateral Agreement shall cease, for any reason, other than satisfaction
in full of all Obligations, to be in full force and effect (other than in
accordance with its terms) or any Loan Party or any Affiliate of any Loan
Party shall so assert; or
(k) (i) the Permitted Investors shall cease to have the power to vote
or direct the voting of securities having a majority of the voting power of
the outstanding membership interests entitled to vote for the election of
directors of Holdings (determined on a fully diluted basis); (ii) the
managers of Holdings shall cease to consist of a majority of Continuing
Managers; (iii) Holdings shall cease to own and control, of record and
beneficially, directly, 100% of each class of outstanding Capital Stock of
the Borrower; or (iv) a Specified Change of Control shall occur; or
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(l) Holdings shall (i) conduct, transact or otherwise engage in, or
commit to conduct, transact or otherwise engage in, any business or
operations other than those incidental to its ownership of the Capital
Stock of the Borrower, (ii) incur, create, assume or suffer to exist any
Indebtedness or other liabilities or financial obligations, except (x)
nonconsensual obligations imposed by operation of law, (y) pursuant to the
Loan Documents to which it is a party and (z) obligations with respect to
its Capital Stock, or (iii) own, lease, manage or otherwise operate any
properties or assets (including cash (other than cash received in
connection with dividends made by the Borrower in accordance with Section
7.6 pending application in the manner contemplated by said Section) and
Cash Equivalents) other than the ownership of shares of Capital Stock of
the Borrower; or
(m) any Subordinated Indebtedness or the guarantees thereof shall
cease, for any reason, to be validly subordinated to the Obligations or the
obligations of the Subsidiary Guarantors under the Guarantee and Collateral
Agreement, as the case may be, as provided in any Subordinated Indenture,
or any Loan Party, any Affiliate of any Loan Party, the trustee in respect
of any Subordinated Indebtedness or the holders of at least 25% in
aggregate principal amount of such Subordinated Indebtedness shall so
assert;
then, and in any such event, (A) if such event is an Event of Default specified
in clause (i) or (ii) of paragraph (f) above with respect to the Borrower,
automatically the Revolving Commitments shall immediately terminate and the
Loans hereunder (with accrued interest thereon) and all other amounts owing
under this Agreement and the other Loan Documents (including all amounts of L/C
Obligations, whether or not the beneficiaries of the then outstanding Letters of
Credit shall have presented the documents required thereunder) shall immediately
become due and payable, and (B) if such event is any other Event of Default,
either or both of the following actions may be taken: (i) with the consent of
the Required Lenders, the Administrative Agent may, or upon the request of the
Required Lenders, the Administrative Agent shall, by notice to the Borrower
declare the Revolving Commitments to be terminated forthwith, whereupon the
Revolving Commitments shall immediately terminate; and (ii) with the consent of
the Required Lenders, the Administrative Agent may, or upon the request of the
Required Lenders, the Administrative Agent shall, by notice to the Borrower,
declare the Loans hereunder (with accrued interest thereon) and all other
amounts owing under this Agreement and the other Loan Documents (including all
amounts of L/C Obligations, whether or not the beneficiaries of the then
outstanding Letters of Credit shall have presented the documents required
thereunder) to be due and payable forthwith, whereupon the same shall
immediately become due and payable. With respect to all Letters of Credit with
respect to which presentment for honor shall not have occurred at the time of an
acceleration pursuant to this paragraph, the Borrower shall at such time deposit
in a cash collateral account opened by the Administrative Agent an amount equal
to the aggregate then undrawn and unexpired amount of such Letters of Credit.
Amounts held in such cash collateral account shall be applied by the
Administrative Agent to the payment of drafts drawn under such Letters of
Credit, and the unused portion thereof after all such Letters of Credit shall
have expired or been fully drawn upon, if any, shall be applied to repay other
obligations of the Borrower hereunder and under the other Loan Documents. After
all such Letters of Credit shall have expired or been fully drawn upon, all
Reimbursement Obligations shall have been satisfied and all other obligations of
the Borrower hereunder and under the other Loan Documents
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shall have been paid in full, the balance, if any, in such cash collateral
account shall be returned to the Borrower (or such other Person as may be
lawfully entitled thereto). Except as expressly provided above in this Section,
presentment, demand, protest and all other notices of any kind are hereby
expressly waived by the Borrower.
SECTION 9. THE AGENTS
9.1. Appointment. Each Lender hereby irrevocably designates and
appoints each Agent as the agent of such Lender under this Agreement and the
other Loan Documents, and each such Lender irrevocably authorizes such Agent, in
such capacity, to take such action on its behalf under the provisions of this
Agreement and the other Loan Documents and to exercise such powers and perform
such duties as are expressly delegated to such Agent by the terms of this
Agreement and the other Loan Documents, together with such other powers as are
reasonably incidental thereto. Notwithstanding any provision to the contrary
elsewhere in this Agreement, no Agent shall have any duties or responsibilities,
except those expressly set forth herein, or any fiduciary relationship with any
Lender, and no implied covenants, functions, responsibilities, duties,
obligations or liabilities shall be read into this Agreement or any other Loan
Document or otherwise exist against any Agent.
9.2. Delegation of Duties. Each Agent may execute any of its duties
under this Agreement and the other Loan Documents by or through agents or
attorneys-in-fact and shall be entitled to advice of counsel concerning all
matters pertaining to such duties. No Agent shall be responsible for the
negligence or misconduct of any agents or attorneys-in-fact selected by it with
reasonable care.
9.3. Exculpatory Provisions. Neither any Agent nor any of its
officers, directors, employees, agents, attorneys-in-fact or affiliates shall be
(i) liable for any action lawfully taken or omitted to be taken by it or such
Person under or in connection with this Agreement or any other Loan Document
(except to the extent that any of the foregoing are found by a final and
nonappealable decision of a court of competent jurisdiction to have resulted
from its or such Person's own gross negligence or willful misconduct) or (ii)
responsible in any manner to any of the Lenders for any recitals, statements,
representations or warranties made by any Loan Party or any officer thereof
contained in this Agreement or any other Loan Document or in any certificate,
report, statement or other document referred to or provided for in, or received
by the Agents under or in connection with, this Agreement or any other Loan
Document or for the value, validity, effectiveness, genuineness, enforceability
or sufficiency of this Agreement or any other Loan Document or for any failure
of any Loan Party a party thereto to perform its obligations hereunder or
thereunder. The Agents shall not be under any obligation to any Lender to
ascertain or to inquire as to the observance or performance of any of the
agreements contained in, or conditions of, this Agreement or any other Loan
Document, or to inspect the properties, books or records of any Loan Party.
9.4. Reliance by Agents. Each Agent shall be entitled to rely, and
shall be fully protected in relying, upon any instrument, writing, resolution,
notice, consent, certificate, affidavit, letter, telecopy, telex or teletype
message, statement, order or other document or conversation believed by it to be
genuine and correct and to have been signed, sent or made by the
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proper Person or Persons and upon advice and statements of legal counsel
(including counsel to Holdings or the Borrower), independent accountants and
other experts selected by such Agent. The Administrative Agent may deem and
treat the payee of any Note as the owner thereof for all purposes unless a
written notice of assignment, negotiation or transfer thereof shall have been
filed with the Administrative Agent. Each Agent shall be fully justified in
failing or refusing to take any action under this Agreement or any other Loan
Document unless it shall first receive such advice or concurrence of the
Required Lenders (or, if so specified by this Agreement, all Lenders) as it
deems appropriate or it shall first be indemnified to its satisfaction by the
Lenders against any and all liability and expense that may be incurred by it by
reason of taking or continuing to take any such action. The Agents shall in all
cases be fully protected in acting, or in refraining from acting, under this
Agreement and the other Loan Documents in accordance with a request of the
Required Lenders (or, if so specified by this Agreement, all Lenders), and such
request and any action taken or failure to act pursuant thereto shall be binding
upon all the Lenders and all future holders of the Loans.
9.5. Notice of Default. No Agent shall be deemed to have knowledge or
notice of the occurrence of any Default or Event of Default hereunder unless
such Agent has received notice from a Lender, Holdings or the Borrower referring
to this Agreement, describing such Default or Event of Default and stating that
such notice is a "notice of default". In the event that the Administrative Agent
receives such a notice from a Lender, the Administrative Agent shall give notice
thereof to the Lenders, Holdings and the Borrower. The Administrative Agent
shall take such action with respect to such Default or Event of Default as shall
be reasonably directed by the Required Lenders (or, if so specified by this
Agreement, all Lenders or any other instructing group of Lenders specified by
this Agreement); provided that unless and until the Administrative Agent shall
have received such directions, the Administrative Agent may (but shall not be
obligated to) take such action, or refrain from taking such action, with respect
to such Default or Event of Default as it shall deem advisable in the best
interests of the Lenders.
9.6. Non-Reliance on Agents and Other Lenders. Each Lender expressly
acknowledges that neither the Agents nor any of their respective officers,
directors, employees, agents, attorneys-in-fact or affiliates have made any
representations or warranties to it and that no act by any Agent hereafter
taken, including any review of the affairs of a Loan Party or any affiliate of a
Loan Party, shall be deemed to constitute any representation or warranty by any
Agent to any Lender. Each Lender represents to the Agents that it has,
independently and without reliance upon any Agent or any other Lender, and based
on such documents and information as it has deemed appropriate, made its own
appraisal of and investigation into the business, operations, property,
financial and other condition and creditworthiness of the Loan Parties and their
affiliates and made its own decision to make its Loans hereunder and enter into
this Agreement. Each Lender also represents that it will, independently and
without reliance upon any Agent or any other Lender, and based on such documents
and information as it shall deem appropriate at the time, continue to make its
own credit analysis, appraisals and decisions in taking or not taking action
under this Agreement and the other Loan Documents, and to make such
investigation as it deems necessary to inform itself as to the business,
operations, property, financial and other condition and creditworthiness of the
Loan Parties and their affiliates. Except for notices, reports and other
documents expressly required to be furnished to the Lenders by the
Administrative Agent hereunder, the Administrative Agent shall not have any duty
or responsi-
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bility to provide any Lender with any credit or other information concerning the
business, operations, property, condition (financial or otherwise), prospects or
creditworthiness of any Loan Party or any affiliate of a Loan Party that may
come into the possession of the Administrative Agent or any of its officers,
directors, employees, agents, attorneys-in-fact or affiliates.
9.7. Indemnification. The Lenders agree to indemnify each Agent in its
capacity as such (to the extent not reimbursed by Holdings or the Borrower and
without limiting the obligation of Holdings or the Borrower to do so), ratably
according to its respective Aggregate Exposure Percentage in effect on the date
on which indemnification is sought under this Section (or, if indemnification is
sought after the date upon which the Revolving Commitments shall have terminated
and the Loans shall have been paid in full, ratably in accordance with such
Aggregate Exposure Percentage immediately prior to such date), from and against
any and all liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, expenses or disbursements of any kind whatsoever that
may at any time (whether before or after the payment of the Loans) be imposed
on, incurred by or asserted against such Agent in any way relating to or arising
out of the Revolving Commitments, this Agreement, any of the other Loan
Documents or any documents contemplated by or referred to herein or therein or
the transactions contemplated hereby or thereby or any action taken or omitted
by such Agent under or in connection with any of the foregoing; provided that no
Lender shall be liable for the payment of any portion of such liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses or disbursements that are found by a final and nonappealable decision
of a court of competent jurisdiction to have resulted from such Agent's gross
negligence or willful misconduct. The agreements in this Section shall survive
the payment of the Loans and all other amounts payable hereunder.
9.8. Agent in Its Individual Capacity. Each Agent and its affiliates
may make loans to, accept deposits from and generally engage in any kind of
business with any Loan Party as though such Agent were not an Agent. With
respect to its Loans made or renewed by it and with respect to any Letter of
Credit issued or participated in by it, each Agent shall have the same rights
and powers under this Agreement and the other Loan Documents as any Lender and
may exercise the same as though it were not an Agent, and the terms "Lender" and
"Lenders" shall include each Agent in its individual capacity.
9.9. Successor Administrative Agent. The Administrative Agent may
resign as Administrative Agent upon 30 days' notice to the Lenders and the
Borrower. If the Administrative Agent shall resign as Administrative Agent under
this Agreement and the other Loan Documents, then the Required Lenders shall
appoint upon five Business Days notice to the Borrower from among the Lenders a
successor agent for the Lenders, which successor agent shall (unless an Event of
Default under Section 8(a) or Section 8(f) with respect to the Borrower shall
have occurred and be continuing) be subject to approval by the Borrower (which
approval shall not be unreasonably withheld or delayed), whereupon such
successor agent shall succeed to the rights, powers and duties of the
Administrative Agent, and the term "Administrative Agent" shall mean such
successor agent effective upon such appointment and approval, and the former
Administrative Agent's rights, powers and duties as Administrative Agent shall
be terminated, without any other or further act or deed on the part of such
former Administrative Agent or any of the parties to this Agreement or any
holders of the Loans. If no successor agent has accepted appointment
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as Administrative Agent by the date that is 10 days following a retiring
Administrative Agent's notice of resignation, the retiring Administrative
Agent's resignation shall nevertheless thereupon become effective and the
Lenders shall assume and perform all of the duties of the Administrative Agent
hereunder until such time, if any, as the Required Lenders appoint a successor
agent as provided for above. Either Co-Syndication Agent may, at any time, by
notice to the Lenders and the Administrative Agent, resign as a Co-Syndication
Agent hereunder, whereupon the duties, rights, obligations and responsibilities
of such Co-Syndication Agent hereunder shall automatically be assumed by, and
inure to the benefit of, the Administrative Agent, without any further act by
such Co-Syndication Agent, the Administrative Agent or any Lender. After any
retiring Administrative Agent's resignation as Administrative Agent, the
provisions of this Section 9 shall inure to its benefit as to any actions taken
or omitted to be taken by it while it was Administrative Agent under this
Agreement and the other Loan Documents.
9.10. Agents Generally. Except as expressly set forth herein, no Agent
shall have any duties or responsibilities hereunder in its capacity as such.
9.11. The Joint Lead Arrangers. The Joint Lead Arrangers, in their
capacity as such, shall have no duties or responsibilities, and shall incur no
liability, under this Agreement and other Loan Documents.
SECTION 10. MISCELLANEOUS
10.1. Amendments and Waivers. Neither this Agreement, any other Loan
Document nor any terms hereof or thereof may be amended, supplemented or
modified except in accordance with the provisions of this Section 10.1. The
Required Lenders and each Loan Party party to the relevant Loan Document may,
or, with the written consent of the Required Lenders, the Administrative Agent
and each Loan Party party to the relevant Loan Document may, from time to time,
(a) enter into written amendments, supplements or modifications hereto and to
the other Loan Documents for the purpose of adding any provisions to this
Agreement or the other Loan Documents or changing in any manner the rights of
the Lenders or of the Loan Parties hereunder or thereunder or (b) waive, on such
terms and conditions as the Required Lenders or the Administrative Agent, as the
case may be, may specify in such instrument, any of the requirements of this
Agreement or the other Loan Documents or any Default or Event of Default and its
consequences; provided, however, that no such waiver and no such amendment,
supplement or modification shall (i) forgive the principal amount or extend the
final scheduled date of maturity of any Loan, reduce the stated rate of any
interest or fee payable hereunder (except that any amendment or modification of
defined terms used in the financial covenants in this Agreement shall not
constitute a reduction in the rate of interest or fees for purposes of this
clause (i)) or extend the scheduled date of any payment thereof, or increase the
amount or extend the expiration date of any Lender's Revolving Commitment, in
each case without the written consent of each Lender directly affected thereby;
(ii) eliminate or reduce the voting rights of any Lender under this Section 10.1
without the written consent of such Lender; (iii) reduce any percentage
specified in the definition of Required Lenders, consent to the assignment or
transfer by the Borrower of any of its rights and obligations under this
Agreement and the other Loan Documents, release all or substantially all of the
Collateral or release all or substantially all of the Subsidiary Guarantors from
their obligations under the Guarantee and Collateral Agreement, in each case
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without the written consent of all Lenders; (iv) amend, modify or waive any
provision of Section 8 without the written consent of each Agent adversely
affected thereby; (v) amend, modify or waive any provision of Sections 2.5 to
2.12 without the written consent of the Issuing Lender; (vi) amend, modify or
waive any provision of Section 10.6 without the written consent of each Lender
adversely affected thereby; (vii) amend, modify or waive any provisions of
Section 7.2 or 7.3 to permit the incurrence of any Indebtedness secured by a
Lien on any property or assets of Holdings or any of its Subsidiaries other than
to the extent the incurrence of such Indebtedness and the incurrence of such
Lien is permitted in accordance with the terms of such Sections as in effect on
the Closing Date without the written consent of each Lender; or (viii) so long
as Bear Stearns Corporate Lending Inc. and Lehman Commercial Paper Inc. and
their respective Affiliates hold in the aggregate more than 50% of the Total
Revolving Commitments then in effect or, if the Revolving Commitments have been
terminated, the Total Revolving Extensions of Credit then outstanding, amend,
modify or waive any provision of Section 7.7 without the written consent of the
Supermajority Lenders. Any such waiver and any such amendment, supplement or
modification shall apply equally to each of the Lenders and shall be binding
upon the Loan Parties, the Lenders, the Agents and all future holders of the
Loans. In the case of any waiver, the Loan Parties, the Lenders and the Agents
shall be restored to their former position and rights hereunder and under the
other Loan Documents, and any Default or Event of Default waived shall be deemed
to be cured and not continuing; but no such waiver shall extend to any
subsequent or other Default or Event of Default, or impair any right consequent
thereon.
10.2. Notices. All notices, requests and demands to or upon the
respective parties hereto to be effective shall be in writing (including by
telecopy), and, unless otherwise expressly provided herein, shall be deemed to
have been duly given or made when delivered, or three Business Days after being
deposited in the mail, postage prepaid, or, in the case of telecopy notice, when
received, addressed as follows in the case of Holdings, the Borrower and the
Agents, and as set forth in an administrative questionnaire delivered to the
Administrative Agent in the case of the Lenders, or to such other address as may
be hereafter notified by the respective parties hereto:
Holdings: Muzak Holdings LLC
3318 Lakemont Boulevard
Fort Mill, South Carolina 29708
Attention: General Counsel
Telecopy: (803) 396-3357
Telephone: (803) 396-3000
with a copy to ABRY Partners, LLC
111 Huntington Avenue, 30th Floor
Boston, Massachusetts 02199
Attention: Peni Garber
Telecopy: (617) 859-7205
Telephone: (617) 859-2959
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with a copy to: Kirkland & Ellis
Citigroup Center
153 East 53rd Street
New York, New York 10022-4611
Attention: Lisa Anastos, Esq.
Telecopy: (212) 446-4900
Telephone: (212) 446-4761
The Borrower: Muzak LLC
3318 Lakemont Boulevard
Fort Mill, South Carolina 29708
Attention: General Counsel
Telecopy: (803) 396-3357
Telephone: (803) 396-3000
with a copy to ABRY Partners, LLC
111 Huntington Avenue, 30th Floor
Boston, Massachusetts 02199
Attention: Peni Garber
Telecopy: (617) 859-7205
Telephone: (617) 859-2959
with a copy to: Kirkland & Ellis
Citigroup Center
153 East 53rd Street
New York, New York 10022-4611
Attention: Lisa Anastos, Esq.
Telecopy: (212) 446-4900
Telephone: (212) 446-4761
The Administrative Agent: Bear Stearns Corporate Lending Inc.
383 Madison Avenue, 8th Floor
New York, New York 10167
Attention: Kevin Cullen
Telecopy: (212) 272-9184
Telephone: (212) 272-5724
with a copy to: Cahill Gordon & Reindel LLP
80 Pine Street
New York, New York 10005
Attention: John Papachristos, Esq.
Telecopy: (212) 269-5420
Telephone: (212) 701-3000
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The Co Syndication Agents: Lehman Commercial Paper Inc.
Loan Portfolio Group
745 Seventh Avenue
New York, New York 10019
Attention: Robert Berzins, Managing Director
Telephone: (212) 526-3712
Email: rberzins@lehman.com
and to:
Fleet National Bank
Medial & Entertainment Group
100 Federal Street, 9th Floor
MA DE 10009D
Boston, Massachusetts 02110
Attention: Karen M. Kirley
Telecopy: (617) 434-8426
Telephone: (617) 434-2781
The Documentation Agent: General Electric Capital Corporation
120 Long Ridge Road
Stamford, Connecticut 06927
Attention: Manager, Telecom Portfolio
Telecopy: (203) 961-2194
Telephone: (203) 357-6859
provided that any notice, request or demand to or upon any Agent, the Issuing
Lender or the Lenders shall not be effective until received.
Notices and other communications to the Lenders hereunder may be
delivered or furnished by electronic communications pursuant to procedures
approved by the Administrative Agent; provided that the foregoing shall not
apply to notices pursuant to Section 2 unless otherwise agreed by the
Administrative Agent and the applicable Lender. The Administrative Agent or the
Borrower may, in its discretion, agree to accept notices and other
communications to it hereunder by electronic communications pursuant to
procedures approved by it; provided that approval of such procedures may be
limited to particular notices or communications.
10.3. No Waiver; Cumulative Remedies. No failure to exercise and no
delay in exercising, on the part of any Agent or any Lender, any right, remedy,
power or privilege hereunder or under the other Loan Documents shall operate as
a waiver thereof; nor shall any single or partial exercise of any right, remedy,
power or privilege hereunder preclude any other or further exercise thereof or
the exercise of any other right, remedy, power or privilege. The rights,
remedies, powers and privileges herein provided are cumulative and not exclusive
of any rights, remedies, powers and privileges provided by law.
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10.4. Survival of Representations and Warranties. All representations
and warranties made hereunder, in the other Loan Documents and in any document,
certificate or statement delivered pursuant hereto or in connection herewith
shall survive the execution and delivery of this Agreement and the making of the
Loans and other extensions of credit hereunder.
10.5. Payment of Expenses and Taxes. The Borrower agrees (a) to pay or
reimburse each Agent and each Issuing Lender for all its actual and reasonable
out-of-pocket costs and expenses incurred in connection with the preparation and
execution of, and any amendment, supplement or modification to, this Agreement
and the other Loan Documents and any other documents prepared in connection
herewith or therewith, and the consummation and administration of the
transactions contemplated hereby and thereby, including the fees and
disbursements of counsel to such Agent or such Issuing Lender and filing and
recording fees and expenses, with statements with respect to the foregoing to be
submitted to the Borrower prior to the Closing Date (in the case of amounts to
be paid on the Closing Date) and from time to time thereafter on a quarterly
basis or such other periodic basis as such Agent or such Issuing Lender shall
deem appropriate, (b) to pay or reimburse each Lender and Agent for all its
actual and reasonable costs and expenses incurred in connection with the
enforcement or preservation of any rights under this Agreement, the other Loan
Documents and any such other documents, including the fees and disbursements of
counsel (including the allocated fees and expenses of in-house counsel) to each
Lender and of counsel to such Agent, (c) to pay, indemnify and hold each Lender
and Agent harmless from any and all recording and filing fees and any and all
liabilities with respect to, or resulting from any delay in paying, stamp,
excise and other taxes, if any, that may be payable or determined to be payable
in connection with the execution and delivery of, or consummation or
administration of any of the transactions contemplated by, or any amendment,
supplement or modification of, or any waiver or consent under or in respect of,
this Agreement, the other Loan Documents and any such other documents, and (d)
to pay, indemnify and hold each Lender and Agent and their respective officers,
directors, employees, affiliates, agents and controlling persons (each, an
"Indemnitee") harmless from and against any and all other liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses or disbursements of any kind or nature whatsoever with respect to the
execution, delivery, enforcement, performance and administration of this
Agreement, the other Loan Documents and any such other documents, including any
of the foregoing relating to the use of proceeds of the Loans or the violation
of, noncompliance with or liability under, any Environmental Law applicable to
the operations of any Group Member or any of the Properties and the reasonable
fees and expenses of legal counsel in connection with claims, actions or
proceedings by any Indemnitee against any Loan Party under any Loan Document
(all the foregoing in this clause (d), collectively, the "Indemnified
Liabilities"), provided, that the Borrower shall have no obligation hereunder to
any Indemnitee with respect to Indemnified Liabilities to the extent such
Indemnified Liabilities are found by a final and nonappealable decision of a
court of competent jurisdiction to have resulted from the gross negligence or
willful misconduct of such Indemnitee. Without limiting the foregoing, and to
the extent permitted by applicable law, the Borrower agrees not to assert and to
cause its Subsidiaries not to assert, and hereby waives and agrees to cause its
Subsidiaries to waive, all rights for contribution or any other rights of
recovery with respect to all claims, demands, penalties, fines, liabilities,
settlements, damages, costs and expenses of whatever kind or nature, under or
related to Environmental Laws, that any of them might have by statute or
otherwise against any Indemnitee. All amounts due under this Section 10.5 shall
be payable not later than 10 days after writ-
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ten demand therefor. Statements payable by the Borrower pursuant to this Section
10.5 shall be submitted to the attention of: General Counsel (Telephone No.
(803) 396-3000) (Telecopy No. (803) 396-3357), at the address of the Borrower
set forth in Section 10.2, or to such other Person or address as may be
hereafter designated by the Borrower in a written notice to the Administrative
Agent. The agreements in this Section 10.5 shall survive repayment of the Loans
and all other amounts payable hereunder.
10.6. Successors and Assigns; Participations and Assignments. (a) The
provisions of this Agreement shall be binding upon and inure to the benefit of
the parties hereto and their respective successors and assigns permitted hereby
(including any affiliate of the Issuing Lender that issues any Letter of
Credit), except that (i) the Borrower may not assign or otherwise transfer any
of its rights or obligations hereunder without the prior written consent of each
Lender (and any attempted assignment or transfer by the Borrower without such
consent shall be null and void) and (ii) no Lender may assign or otherwise
transfer its rights or obligations hereunder except in accordance with this
Section (and any attempted assignment or transfer by any Lender not in
accordance with this Section shall be null and void).
(b) (i) Subject to the conditions set forth in paragraph (b)(ii)
below, any Lender may assign to one or more assignees (each, an "Assignee") all
or a portion of its rights and obligations under this Agreement (including all
or a portion of its Revolving Commitments and the Loans at the time owing to it)
with the prior written consent (such consent not to be unreasonably withheld)
of:
(A) the Borrower, provided that no consent of the Borrower shall be
required for (x) an assignment to any other Lender or an Affiliate of a
Lender or, if an Event of Default has occurred and is continuing, any other
Person, in each case without regard to minimum amount of the assignment, or
(y) an assignment in a minimum amount of $1,000,000 to an Approved Fund (as
defined below);
(B) the Administrative Agent, provided that no consent of the
Administrative Agent shall be required for (x) an assignment to an Assignee
that is a Lender immediately prior to giving effect to such assignment or
any Affiliate of such Lender, in each case, without regard to the minimum
amount of the assignment, or (y) any assignment by the Administrative Agent
(or its Affiliates); and
(C) the Issuing Lender, provided that no consent of the Issuing Lender
shall be required for an assignment to an Assignee that is a Lender
immediately prior to giving effect to such assignment or any Affiliate of
such Lender, in each case, without regard to the minimum amount of the
assignment.
(ii) Assignments shall be subject to the following additional
conditions:
(A) except in the case of an assignment to a Lender, an Affiliate of a
Lender or an Approved Fund or an assignment of the entire remaining amount
of the assigning Lender's Revolving Commitments or Loans under the
Facility, the amount of the Revolving Commitments or Loans of the assigning
Lender subject to each such assignment (determined as of the date the
Assignment and Assumption with respect to such assignment
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is delivered to the Administrative Agent) shall not be less than $1,000,000
unless each of the Borrower and the Administrative Agent otherwise
consents, provided that (1) no such consent of the Borrower shall be
required if an Event of Default has occurred and is continuing and (2) such
amounts shall be aggregated in respect of each Lender and its Affiliates or
Approved Funds, if any;
(B) the parties to each assignment shall execute and deliver to the
Administrative Agent an Assignment and Assumption, together with a
processing and recordation fee of $3,500; provided that assignments from a
Lender to another Lender or an affiliate of a Lender shall have a
processing and recordation fee of $1,500;
(C) the Assignee, if it shall not be a Lender, shall deliver to the
Administrative Agent an administrative questionnaire; and
(D) in the case of an assignment to a CLO (as defined below), the
assigning Lender shall retain the sole right to approve any amendment,
modification or waiver of any provision of this Agreement and the other
Loan Documents, provided that the Assignment and Assumption between such
Lender and such CLO may provide that such Lender will not, without the
consent of such CLO, agree to any amendment, modification or waiver that
(1) requires the consent of each Lender directly affected thereby pursuant
to the proviso to the second sentence of Section 9.1 and (2) directly
affects such CLO.
For the purposes of this Section 10.6, the terms "Approved Fund" and
"CLO" have the following meanings:
"Approved Fund" means (a) a CLO and (b) with respect to any Lender
that is a fund which invests in bank loans and similar extensions of
credit, any other fund that invests in bank loans and similar extensions of
credit and is managed by the same investment advisor as such Lender or by
an Affiliate of such investment advisor.
"CLO" means any entity (whether a corporation, partnership, trust or
otherwise) that is engaged in making, purchasing, holding or otherwise
investing in bank loans and similar extensions of credit in the ordinary
course of its business and is administered or managed by a Lender or an
Affiliate of such Lender.
Each Lender, upon execution and delivery hereof or upon executing and
delivering an Assignment and Assumption, as the case may be, represents and
warrants as of the Closing Date or as of the applicable effective date of such
Assignment and Assumption, as applicable, that (i) it has experience and
expertise in the making of commitments or investing in loans such as the
Revolving Commitments and the Loans, as the case may be; and (ii) it will make
or invest in, as the case may be, its Revolving Commitments or Loans for its own
account in the ordinary course of its business and without a view to
distribution of such Revolving Commitments or Loans within the meaning of the
Securities Act or the Exchange Act or other federal securities laws (it being
understood that, subject to the provisions of this Section 10.6, the disposition
of such Revolving Commitments or Loans or any interests therein shall at all
times remain within its exclusive control).
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(iii) Subject to acceptance and recording thereof pursuant to
paragraph (b)(iv) below and compliance with the terms and conditions set forth
in this Section, from and after the effective date specified in each Assignment
and Assumption the Assignee thereunder shall be a party hereto and, to the
extent of the rights and obligations assigned by such Assignment and Assumption,
have the rights and obligations of a Lender under this Agreement, and the
assigning Lender thereunder shall, to the extent of the rights and obligations
assigned by such Assignment and Assumption, be released from its obligations
under this Agreement (and, in the case of an Assignment and Assumption covering
all of the assigning Lender's rights and obligations under this Agreement, such
Lender shall cease to be a party hereto but shall continue to be entitled to the
benefits of Sections 2.7, 3.10, 3.11 and 10.5). Any assignment or transfer by a
Lender of rights or obligations under this Agreement that does not comply with
this Section 10.6 shall be treated for purposes of this Agreement as a sale by
such Lender of a participation in such rights and obligations in accordance with
paragraph (c) of this Section.
(iv) The Administrative Agent, acting for this purpose as an agent of
the Borrower, shall maintain at one of its offices a copy of each Assignment and
Assumption delivered to it and a register for the recordation of the names and
addresses of the Lenders, and the Revolving Commitments of, and principal amount
of the Loans and L/C Obligations owing to, each Lender pursuant to the terms
hereof from time to time (the "Register"). The entries in the Register shall be
conclusive, and the Borrower, the Administrative Agent, the Issuing Lender and
the Lenders may treat each Person whose name is recorded in the Register
pursuant to the terms hereof as a Lender hereunder for all purposes of this
Agreement, notwithstanding notice to the contrary. The Register shall be
available for inspection by the Borrower, the Issuing Lender and any Lender, at
any reasonable time and from time to time upon reasonable prior notice.
(v) Upon its receipt of a duly completed Assignment and Assumption
executed by an assigning Lender and an Assignee, the Assignee's completed
administrative questionnaire (unless the Assignee shall already be a Lender
hereunder), the processing and recordation fee referred to in paragraph (b) of
this Section and any written consent to such assignment required by paragraph
(b) of this Section, the Administrative Agent shall accept such Assignment and
Assumption and record the information contained therein in the Register, and the
Administrative Agent shall give prompt notice to the Borrower thereof. No
assignment shall be effective for purposes of this Agreement unless it has been
recorded in the Register as provided in this paragraph.
(c) (i) Any Lender may, without the consent of the Borrower or the
Administrative Agent, sell participations to one or more banks or other entities
(a "Participant") in all or a portion of such Lender's rights and obligations
under this Agreement (including all or a portion of its Revolving Commitments
and the Loans owing to it); provided that (A) such Lender's obligations under
this Agreement shall remain unchanged, (B) such Lender shall remain solely
responsible to the other parties hereto for the performance of such obligations
and (C) the Borrower, the Administrative Agent, the Issuing Lender and the other
Lenders shall continue to deal solely and directly with such Lender in
connection with such Lender's rights and obligations under this Agreement. Any
agreement pursuant to which a Lender sells such a participation shall provide
that such Lender shall retain the sole right to enforce this Agreement and to
approve any amendment, modification or waiver of any provision of this
Agreement; provided that such
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agreement may provide that such Lender will not, without the consent of the
Participant, agree to any amendment, modification or waiver that (1) requires
the consent of each Lender directly affected thereby pursuant to the proviso to
the second sentence of Section 10.1 and (2) directly affects such Participant.
Subject to paragraph (c)(ii) of this Section, the Borrower agrees that each
Participant shall be entitled to the benefits of Sections 2.7, 3.10 and 3.11 to
the same extent as if it were a Lender and had acquired its interest by
assignment pursuant to paragraph (b) of this Section. To the extent permitted by
law, each Participant also shall be entitled to the benefits of Section 10.7(b)
as though it were a Lender, provided such Participant shall be subject to
Section 10.7(a) as though it were a Lender.
(ii) A Participant shall not be entitled to receive any greater
payment under Section 2.7 or 3.10 than the applicable Lender would have been
entitled to receive with respect to the participation sold to such Participant,
unless the sale of the participation to such Participant is made with the
Borrower's prior written consent. Any Participant that is a Non-U.S. Lender
shall not be entitled to the benefits of Section 3.10 unless such Participant
complies with Section 3.10(d).
(d) Any Lender may at any time pledge or assign a security interest in
all or any portion of its rights under this Agreement to secure obligations of
such Lender, including any pledge or assignment to secure obligations to a
Federal Reserve Bank, and this Section shall not apply to any such pledge or
assignment of a security interest; provided that no such pledge or assignment of
a security interest shall release a Lender from any of its obligations hereunder
or substitute any such pledgee or Assignee for such Lender as a party hereto.
(e) The Borrower, upon receipt of written notice from the relevant
Lender, agrees to issue Notes to any Lender requiring Notes to facilitate
transactions of the type described in paragraph (d) above.
(f) Notwithstanding the foregoing, any Conduit Lender may assign any
or all of the Loans it may have funded hereunder to its designating Lender
without the consent of the Borrower or the Administrative Agent and without
regard to the limitations set forth in Section 10.6(b). Each of Holdings, the
Borrower, each Lender and the Administrative Agent hereby confirms that it will
not institute against a Conduit Lender or join any other Person in instituting
against a Conduit Lender any bankruptcy, reorganization, arrangement, insolvency
or liquidation proceeding under any state bankruptcy or similar law, for one
year and one day after the payment in full of the latest maturing commercial
paper note issued by such Conduit Lender; provided, however, that each Lender
designating any Conduit Lender hereby agrees to indemnify, save and hold
harmless each other party hereto for any loss, cost, damage or expense arising
out of its inability to institute such a proceeding against such Conduit Lender
during such period of forbearance.
10.7. Adjustments; Set-off. (a) Except to the extent that this
Agreement expressly provides for payments to be allocated to a particular Lender
or to the Lenders under the Facility, if any Lender (a "Benefitted Lender")
shall, at any time after the Loans and other amounts payable hereunder shall
immediately become due and payable pursuant to Section 8, receive any payment of
all or part of the Obligations owing to it, or receive any collateral in re-
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spect thereof (whether voluntarily or involuntarily, by set-off, pursuant to
events or proceedings of the nature referred to in Section 8(f), or otherwise),
in a greater proportion than any such payment to or collateral received by any
other Lender, if any, in respect of the Obligations owing to such other Lender,
such Benefitted Lender shall purchase for cash from the other Lenders a
participating interest in such portion of the Obligations owing to each such
other Lender, or shall provide such other Lenders with the benefits of any such
collateral, as shall be necessary to cause such Benefitted Lender to share the
excess payment or benefits of such collateral ratably with each of the Lenders;
provided, however, that if all or any portion of such excess payment or benefits
is thereafter recovered from such Benefitted Lender, such purchase shall be
rescinded, and the purchase price and benefits returned, to the extent of such
recovery, but without interest.
(b) In addition to any rights and remedies of the Lenders provided by
law, each Lender shall have the right, without prior notice to Holdings or the
Borrower, any such notice being expressly waived by Holdings and the Borrower to
the extent permitted by applicable law, upon any amount becoming due and payable
by Holdings or the Borrower hereunder (whether at the stated maturity, by
acceleration or otherwise), to set off and appropriate and apply against such
amount any and all deposits (general or special, time or demand, provisional or
final, but not including trust accounts), in any currency, and any other
credits, indebtedness or claims, in any currency, in each case whether direct or
indirect, absolute or contingent, matured or unmatured, at any time held or
owing by such Lender or any branch or agency thereof to or for the credit or the
account of Holdings or the Borrower, as the case may be. Each Lender agrees
promptly to notify the Borrower and the Administrative Agent after any such
set-off and application made by such Lender, provided that the failure to give
such notice shall not affect the validity of such set-off and application.
10.8. Counterparts. This Agreement may be executed by one or more of
the parties to this Agreement on any number of separate counterparts, and all of
said counterparts taken together shall be deemed to constitute one and the same
instrument. Delivery of an executed signature page of this Agreement by
facsimile transmission shall be effective as delivery of a manually executed
counterpart hereof. A set of the copies of this Agreement signed by all the
parties shall be lodged with the Borrower and the Administrative Agent.
10.9. Severability. Any provision of this Agreement that is prohibited
or unenforceable in any jurisdiction shall, as to such jurisdiction, be
ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
10.10. Integration. This Agreement and the other Loan Documents
represent the entire agreement of Holdings, the Borrower, the Agents and the
Lenders with respect to the subject matter hereof and thereof, and there are no
promises, undertakings, representations or warranties by any Agent or any Lender
relative to subject matter hereof not expressly set forth or referred to herein
or in the other Loan Documents. Notwithstanding the foregoing, any letter
agreements by and between Holdings and/or the Borrower and the Agents and/or
Lenders shall survive and be in full force and effect.
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10.11. GOVERNING LAW. THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF
THE PARTIES UNDER THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED AND
INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK, WITHOUT REGARD
TO CONFLICT OF LAWS PRINCIPLES THEREOF.
10.12. Submission to Jurisdiction; Waivers. Each of Holdings and the
Borrower hereby irrevocably and unconditionally:
(a) submits for itself and its property in any legal action or
proceeding relating to this Agreement and the other Loan Documents to which
it is a party, or for recognition and enforcement of any judgment in
respect thereof, to the non-exclusive general jurisdiction of the courts of
the State of New York, the courts of the United States for the Southern
District of New York, and appellate courts from any thereof;
(b) consents that any such action or proceeding may be brought in such
courts and waives any objection that it may now or hereafter have to the
venue of any such action or proceeding in any such court or that such
action or proceeding was brought in an inconvenient court and agrees not to
plead or claim the same;
(c) agrees that service of process in any such action or proceeding
may be effected by mailing a copy thereof by registered or certified mail
(or any substantially similar form of mail), postage prepaid, to Holdings
or the Borrower, as the case may be at its address set forth in Section
10.2 or at such other address of which the Administrative Agent shall have
been notified pursuant thereto;
(d) agrees that nothing herein shall affect the right to effect
service of process in any other manner permitted by law or shall limit the
right to sue in any other jurisdiction; and
(e) waives, to the maximum extent not prohibited by law, any right it
may have to claim or recover in any legal action or proceeding referred to
in this Section any special, exemplary, punitive or consequential damages.
10.13. Acknowledgments. Each of Holdings and the Borrower hereby
acknowledges that:
(a) it has been advised by counsel in the negotiation, execution and
delivery of this Agreement and the other Loan Documents;
(b) no Agent or Lender has any fiduciary relationship with or duty to
Holdings or the Borrower arising out of or in connection with this
Agreement or any of the other Loan Documents, and the relationship between
the Agents and Lenders, on one hand, and Holdings and the Borrower, on the
other hand, in connection herewith or therewith is solely that of debtor
and creditor; and
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(c) no joint venture is created hereby or by the other Loan Documents
or otherwise exists by virtue of the transactions contemplated hereby among
the Lenders or among Holdings, the Borrower and the Lenders.
10.14. Releases of Guarantees and Liens. (a) Notwithstanding anything
to the contrary contained herein or in any other Loan Document, the
Administrative Agent is hereby irrevocably authorized by each Lender (without
requirement of notice to or consent of any Lender except as expressly required
by Section 10.1) to take any action requested by the Borrower having the effect
of releasing any Collateral or Guarantee Obligations (i) to the extent necessary
to permit consummation of any transaction not prohibited by any Loan Document or
that has been consented to in accordance with Section 10.1 or (ii) under the
circumstances described in paragraph (b) below.
(b) At such time as the Loans, the Reimbursement Obligations and the
other obligations under the Loan Documents (other than obligations under or in
respect of Hedge Agreements) shall have been paid in full, the Revolving
Commitments have been terminated and no Letters of Credit shall be outstanding,
the Collateral shall be released from the Liens created by the Security
Documents, and the Security Documents and all obligations (other than those
expressly stated to survive such termination) of the Administrative Agent and
each Loan Party under the Security Documents shall terminate, all without
delivery of any instrument or performance of any act by any Person.
10.15. Confidentiality. Each Agent and each Lender agrees to keep
confidential all non-public information provided to it by any Loan Party
pursuant to this Agreement that is designated by such Loan Party as
confidential; provided that nothing herein shall prevent any Agent or any Lender
from disclosing any such information (a) to any Agent, any other Lender or any
Lender Affiliate, (b) subject to an agreement to comply with the provisions of
this Section, to any actual or prospective Transferee or any direct or indirect
counterparty to any Hedge Agreement (or any professional advisor to such
counterparty), (c) to its employees, directors, agents, attorneys, accountants
and other professional advisors or those of any of its affiliates, (d) upon the
request or demand of any Governmental Authority (notice of which shall be
provided to the Borrower), (e) in response to any order of any court or other
Governmental Authority or as may otherwise be required pursuant to any
Requirement of Law (notice of which shall be provided to the Borrower), (f) if
requested or required to do so in connection with any litigation or similar
proceeding, (g) that has been publicly disclosed, (h) to the National
Association of Insurance Commissioners or any similar organization or any
nationally recognized rating agency that requires access to information about a
Lender's investment portfolio in connection with ratings issued with respect to
such Lender, or (i) in connection with the exercise of any remedy hereunder or
under any other Loan Document.
10.16. WAIVERS OF JURY TRIAL. HOLDINGS, THE BORROWER, THE AGENTS AND
THE LENDERS HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVE TRIAL BY JURY IN ANY
LEGAL ACTION OR PROCEEDING RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT
AND FOR ANY COUNTERCLAIM THEREIN.
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10.17. Delivery of Addenda. Each initial Lender shall become a party
to this Agreement by delivering to the Administrative Agent an Addendum duly
executed by such Lender.
10.18. Agreement Currency. The obligation of each Loan Party under
this Agreement to make payments hereunder in United States Dollars (the
"Agreement Currency") shall not be discharged or satisfied by payment, including
any tender or recovery pursuant to any judgment expressed in or converted into
any other currency (the "Payment Currency") except to the extent that such
payment, tender or recovery of the Payment Currency results in the effective
receipt by Lenders and the relevant Issuing Banks, as the case may be, of the
full amount of the Agreement Currency payable under this Agreement and each Loan
Party agrees to indemnify Lenders and the relevant Issuing Lender, as the case
may be (and Lenders and the relevant Issuing Lender, as the case may be, shall
have an additional legal claim), for any difference between such full amount and
the amount effectively received by such Lenders and such Issuing Lender, as the
case may be, pursuant to any such payment, tender or recovery. Each Lender's and
Issuing Lender's determination of amounts effectively received by such Lender or
Issuing Lender shall be presumed correct absent manifest error. The obligations
of each Loan Party under this subsection shall survive the termination of this
Agreement and the payment of the Loans, the cancellation or expiration of the
Letters of Credit and the reimbursement of any amounts drawn thereunder, and the
termination is hereof.
10.19. Usury Savings Clause. Notwithstanding any other provision
herein, the aggregate interest rate charged with respect to any of the
Obligations, including all charges or fees in connection therewith deemed in the
nature of interest under applicable law, shall not exceed the Highest Lawful
Rate. If the rate of interest (determined without regard to the preceding
sentence) under this Agreement at any time exceeds the Highest Lawful Rate, the
outstanding amount of the Loans made hereunder shall bear interest at the
Highest Lawful Rate until the total amount of interest due hereunder equals the
amount of interest which would have been due hereunder if the stated rates of
interest set forth in this Agreement had at all times been in effect. In
addition, if when the Loans made hereunder are repaid in full the total interest
due hereunder (taking into account the increase provided for above) is less than
the total amount of interest which would have been due hereunder if the stated
rates of interest set forth in this Agreement had at all times been in effect,
then to the extent permitted by law, the Borrower shall pay to the
Administrative Agent an amount equal to the difference between the amount of
interest paid and the amount of interest which would have been paid if the
Highest Lawful Rate had at all times been in effect. Notwithstanding the
foregoing, it is the intention of the Lenders and the Borrower to conform
strictly to any applicable usury laws. Accordingly, if any Lender contracts for,
charges or receives any consideration which constitutes interest in excess of
the Highest Lawful Rate, then any such excess shall be cancelled automatically
and, if previously paid, shall at such Lender's option be applied to the
outstanding amount of the Loans made hereunder or be refunded to the Borrower.
[Signature Pages Follow]
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed and delivered by their proper and duly authorized officers as
of the day and year first above written.
MUZAK LLC
By: /s/ Michael F. Zendan II
--------------------------------------
Name: Michael F. Zendan II
Title: Vice President
MUZAK HOLDINGS LLC
By: /s/ Michael F. Zendan II
--------------------------------------
Name: Michael F. Zendan II
Title: Vice President
BEAR, STEARNS & CO. INC., as Joint Lead
Arranger and Joint Bookrunner
By: /s/ Keith C. Barnish
--------------------------------------
Name: Keith C. Barnish
Title: Senior Managing Director
LEHMAN BROTHERS INC., as Joint Lead
Arranger and Joint Bookrunner
By: /s/ G. Robert Berzins
--------------------------------------
Name: G. Robert Berzins
Title: Managing Director
LEHMAN COMMERCIAL PAPER INC., as Co-
Syndication Agent
By: /s/ Alex Sade
--------------------------------------
Name: Alex Sade
Title: Managing Director
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FLEET NATIONAL BANK, as Co-Syndication
Agent
By: /s/ Manuel Burgueno
--------------------------------------
Name: Manuel Burgueno
Title: Director
BEAR STEARNS CORPORATE LENDING INC.,
as Administrative Agent
By: /s/ Richard Bram Smith
--------------------------------------
Name: Richard Bram Smith
Title: Vice President
GENERAL ELECTRIC CAPITAL
CORPORATION, as Documentation Agent
By: /s/ Molly S. Fergusson
--------------------------------------
Name: Molly S. Fergusson
Title: Manager, Operations
Annex A
PRICING GRID FOR REVOLVING LOANS AND COMMITMENT FEES
===============================================================================
Applicable Margin
for Eurodollar Applicable Margin for
Pricing Level Loans Base Rate Loans Commitment Fee Rate
- -------------------------------------------------------------------------------
I 4.00% 2.75% 0.50%
- -------------------------------------------------------------------------------
II 3.75% 2.50% 0.50%
- -------------------------------------------------------------------------------
III 3.50% 2.25% 0.50%
- -------------------------------------------------------------------------------
IV 3.25% 2.00% 0.375%
===============================================================================
The Applicable Margin for Loans and the Commitment Fee Rate shall be adjusted,
on and after the first Adjustment Date (as defined below) occurring upon receipt
of the Borrower's financial statements for the two full fiscal quarters of the
Borrower after the Closing Date, based on changes in the Consolidated Leverage
Ratio, with such adjustments to become effective on the date (the "Adjustment
Date") that is three Business Days after the date on which the relevant
financial statements are delivered to the Lenders pursuant to Section 6.1 and to
remain in effect until the next adjustment to be effected pursuant to this
paragraph. If any financial statements referred to above are not delivered
within the time periods specified in Section 6.1, then, until the date that is
three Business Days after the date on which such financial statements are
delivered, the highest rate set forth in each column of the Pricing Grid shall
apply. On each Adjustment Date, the Applicable Margin for Loans and the
Commitment Fee Rate shall be adjusted to be equal to the Applicable Margins and
Commitment Fee Rate opposite the Pricing Level determined to exist on such
Adjustment Date from the financial statements relating to such Adjustment Date.
As used herein, the following rules shall govern the determination of
Pricing Levels on each Adjustment Date:
"Pricing Level I" shall exist on an Adjustment Date if the
Consolidated Leverage Ratio for the relevant period is greater than or equal to
4.25 to 1.00.
"Pricing Level II" shall exist on an Adjustment Date if the
Consolidated Leverage Ratio for the relevant period is less than 4.25 to 1.00
but greater than or equal to 3.75 to 1.00.
"Pricing Level III" shall exist on an Adjustment Date if the
Consolidated Leverage Ratio for the relevant period is less than 3.75 to 1.00
but greater than or equal to 3.25 to 1.00.
"Pricing Level IV" shall exist on an Adjustment Date if the
Consolidated Leverage Ratio for the relevant period is less than 3.25 to 1.00.
A-1
SCHEDULE 1.1 TO CREDIT AGREEMENT
Mortgaged Property
SCHEDULE 1.1(a) TO CREDIT AGREEMENT
Fee and Leasehold Property
SCHEDULE 2.5(c) TO CREDIT AGREEMENT
Existing Letters of Credit:
SCHEDULE 4.4 TO CREDIT AGREEMENT
Consents, Authorizations, Filings and Notices:
None.
SCHEDULE 4.6 TO CREDIT AGREEMENT
Litigation:
SCHEDULE 4.9 TO CREDIT AGREEMENT
Intellectual Property Claims:
SCHEDULE 4.12 TO CREDIT AGREEMENT
Labor Matters:
SCHEDULE 4.15 TO CREDIT AGREEMENT
Subsidiaries:
SCHEDULE 4.19(b) TO CREDIT AGREEMENT
Mortgage Filing Jurisdictions:
SCHEDULE 7.2(d) TO CREDIT AGREEMENT
Existing Indebtedness:
SCHEDULE 7.3(f) TO CREDIT AGREEMENT
Existing Liens:
SCHEDULE 7.8(e) TO CREDIT AGREEMENT
Existing Investments:
EXHIBIT A
[FORM OF]
GUARANTEE AND COLLATERAL AGREEMENT
[provided under separate cover]
GUARANTEE AND COLLATERAL AGREEMENT
made by
MUZAK HOLDINGS LLC
MUZAK LLC
and certain of its Subsidiaries
in favor of
BEAR STEARNS CORPORATE LENDING INC.,
as Administrative Agent
Dated as of May 20, 2003
TABLE OF CONTENTS
Page
----
SECTION 1. DEFINED TERMS......................................................... 1
1.1 Definitions........................................................... 1
1.2 Other Definitional Provisions......................................... 5
SECTION 2. GUARANTEE............................................................. 6
2.1 Guarantee............................................................. 6
2.2 Right of Contribution................................................. 6
2.3 No Subrogation........................................................ 7
2.4 Amendments, etc. with Respect to the Borrower Obligations............. 7
2.5 Guarantee Absolute and Unconditional.................................. 8
2.6 Reinstatement......................................................... 8
2.7 Payments.............................................................. 9
2.8 Discharge of Guarantee Upon Sale of Guarantor......................... 9
SECTION 3. GRANT OF SECURITY INTEREST............................................ 9
SECTION 4. REPRESENTATIONS AND WARRANTIES........................................ 11
4.1 Title; No Other Liens................................................. 11
4.2 Perfected First Priority Liens........................................ 11
4.3 Jurisdiction of Organization, Corporate Names......................... 11
4.4 Current Locations; Inventory and Equipment............................ 12
4.5 Condition and Maintenance of Equipment................................ 12
4.6 Farm Products......................................................... 12
4.7 Investment Property................................................... 12
4.8 Receivables........................................................... 13
4.9 Contracts............................................................. 13
4.10 Intellectual Property................................................. 14
4.11 Deposit Accounts, Securities Accounts................................. 14
4.12 Collateral............................................................ 14
SECTION 5. COVENANTS............................................................. 14
5.1 Delivery of Instruments, Certificated Securities and Chattel Paper.... 14
5.2 Maintenance of Insurance.............................................. 15
5.3 Payment of Obligations................................................ 15
5.4 Maintenance of Perfected Security Interest; Further Documentation..... 15
5.5 Changes in Locations, Name, etc....................................... 16
5.6 Notices............................................................... 16
5.7 Investment Property................................................... 16
5.8 Uncertificated Investment Property.................................... 18
-i-
5.9 Receivables......................................................... 18
5.10 Contracts........................................................... 19
5.11 Intellectual Property............................................... 19
5.12 Commercial Tort Claims.............................................. 20
5.13 Deposit Accounts, Securities Accounts............................... 21
SECTION 6. REMEDIAL PROVISIONS................................................. 21
6.1 Certain Matters Relating to Receivables............................. 21
6.2 Communications with Obligors; Grantors Remain Liable................ 22
6.3 Pledged Stock....................................................... 22
6.4 Intellectual Property; Grant of License............................. 23
6.5 Intellectual Property Litigation.................................... 24
6.6 Proceeds to Be Turned Over to Administrative Agent.................. 24
6.7 Application of Proceeds............................................. 24
6.8 Code and Other Remedies............................................. 25
6.9 Registration Rights................................................. 26
6.10 Deficiency.......................................................... 27
SECTION 7. THE ADMINISTRATIVE AGENT............................................ 27
7.1 Administrative Agent's Appointment as Attorney-in-Fact, etc......... 27
7.2 Duty of Administrative Agent........................................ 29
7.3 Execution of Financing Statements................................... 29
7.4 Authority of Administrative Agent................................... 29
7.5 Access to Collateral, Books and Records; Other Information.......... 30
SECTION 8. MISCELLANEOUS....................................................... 30
8.1 Amendments in Writing............................................... 30
8.2 Notices............................................................. 30
8.3 No Waiver by Course of Conduct; Cumulative Remedies................. 30
8.4 Enforcement Expenses; Indemnification............................... 31
8.5 Successors and Assigns.............................................. 31
8.6 Set-Off............................................................. 31
8.7 Counterparts........................................................ 32
8.8 Severability........................................................ 32
8.9 Section Headings.................................................... 32
8.10 Integration......................................................... 32
8.11 GOVERNING LAW....................................................... 32
8.12 Submission To Jurisdiction; Waivers................................. 32
8.13 Acknowledgements.................................................... 33
8.14 Additional Grantors................................................. 33
8.15 Releases............................................................ 33
8.16 WAIVER OF JURY TRIAL................................................ 34
-ii-
SCHEDULES
Schedule 4.2 Filing Locations
Schedule 4.3(a) Legal Names; Jurisdiction of Organization
Schedule 4.3(b) Historical Organizational Names/Other Trade Names
Schedule 4.4(a) Chief Executive Offices/Locations of Books and Records
Schedule 4.4(b) Additional Locations of Equipment and Inventory etc.
Schedule 4.7(a) Pledged Stock
Schedule 4.7(c) Pledged Notes
Schedule 4.10(a) Copyrights, Copyright Licenses, Trademarks, Trademark
Licenses, Patents and Patent Licenses
Schedule 4.10(b) Exceptions
Schedule 4.10(c) Judgments
Schedule 4.10(d) No Proceedings
Schedule 4.11 Deposit Accounts and Securities Accounts
Schedule 8.2 Notice Information
ANNEXES
Annex I-A Form of Securities Account Control Agreement
Annex I-B Form of Deposit Account Control Agreement
Annex II Form of Issuer Acknowledgement
Annex III Form of Assumption Agreement
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GUARANTEE AND COLLATERAL AGREEMENT
GUARANTEE AND COLLATERAL AGREEMENT, dated as of May 20, 2003, made by
each of the signatories hereto (together with any other entity that may become a
party hereto as provided herein, the "Grantors"), in favor of Bear Stearns
Corporate Lending Inc., as administrative agent (together with its successors
and assigns, in such capacity, the "Administrative Agent") for the banks and
other financial institutions or entities (the "Lenders") from time to time
parties to the Credit Agreement, dated as of May 20, 2003 (as amended,
supplemented or otherwise modified from time to time, the "Credit Agreement"),
among Muzak Holdings LLC ("Holdings"), Muzak LLC (the "Borrower"), the Lenders,
Bear, Stearns & Co. Inc. and Lehman Brothers Inc., as joint lead arrangers and
joint bookrunners (together with their successors and assigns, collectively, the
"Joint Lead Arrangers"), Lehman Commercial Paper Inc. and Fleet National Bank,
as co-syndication agents (together with their successors and assigns, in such
capacity, collectively, the "Co-Syndication Agents"), General Electric Capital
Corporation, as documentation agent (together with its successors and assigns,
in such capacity, the "Documentation Agent") and the Administrative Agent
(together with the Joint Lead Arrangers, the Co-Syndication Agents and the
Documentation Agent, the "Agents").
W I T N E S S E T H :
- - - - - - - - - -
WHEREAS, pursuant to the Credit Agreement, the Lenders have severally
agreed to make extensions of credit to the Borrower upon the terms and subject
to the conditions set forth therein;
WHEREAS, the Borrower is a member of an affiliated group of companies
that includes each other Grantor;
WHEREAS, the Borrower and the other Grantors are engaged in related
businesses; and
WHEREAS, it is a condition precedent to the obligation of the Lenders
to make their respective extensions of credit to the Borrower under the Credit
Agreement that the Grantors shall have executed and delivered this Agreement to
the Administrative Agent for the ratable benefit of the Lenders, the Agents and
the Lender Counterparties (collectively, the "Secured Parties");
NOW, THEREFORE, in consideration of the premises and to induce the
Secured Parties to enter into the Credit Agreement and to induce the Lenders to
make their respective extensions of credit to the Borrower thereunder, each
Grantor hereby agrees with the Administrative Agent, for the ratable benefit of
the Secured Parties, as follows:
SECTION 1. DEFINED TERMS
1.1 Definitions. (a) Unless otherwise defined herein, terms defined
in the Credit Agreement and used herein shall have the meanings given to them in
the Credit
Agreement, and the following terms are used herein as defined in the New York
UCC: Accounts, Certificated Security, Chattel Paper, Commercial Tort Claims,
Documents, Equipment, Farm Products, Fixtures, General Intangibles, Goods,
Instruments, Inventory, Letter-of-Credit Rights, Registered Organization,
Securities Account and Supporting Obligations.
(b) The following terms shall have the following meanings:
"Agents": as defined in the preamble.
"Agreement": this Guarantee and Collateral Agreement, as the same
may be amended, supplemented or otherwise modified from time to time.
"Borrower Obligations": the collective reference to the unpaid
principal of and interest on the Loans and all other obligations and liabilities
of the Borrower (including, without limitation, interest accruing at the then
applicable rate provided in the Credit Agreement after the maturity of the Loans
and interest accruing at the then applicable rate provided in the Credit
Agreement after the filing of any petition in bankruptcy, or the commencement of
any insolvency, reorganization or like proceeding, relating to the Borrower,
whether or not a claim for post-filing or post-petition interest is allowed in
such proceeding) to any Secured Party, whether direct or indirect, absolute or
contingent, due or to become due, or now existing or hereafter incurred, which
may arise under, out of, or in connection with, the Credit Agreement, this
Agreement, the other Loan Documents, any Letter of Credit, any Specified Hedge
Agreement or any other document made, delivered or given in connection with any
of the foregoing, in each case whether on account of principal, interest,
reimbursement obligations, fees, indemnities, costs, expenses or otherwise
(including, without limitation, all fees and disbursements of counsel to the
Secured Parties that are required to be paid by the Borrower pursuant to the
terms of any of the foregoing agreements).
"Collateral": as defined in Section 3.
"Collateral Account": any collateral account established by the
Administrative Agent as provided in Section 6.1 or 6.6.
"Collateral Account Funds" shall mean, collectively, the following
from time to time on deposit in the Collateral Account: all funds (including,
without limitation, all trust monies), investments (including, without
limitation, all Cash Equivalents) and all certificates and instruments from time
to time representing or evidencing such investments; all notes, certificates of
deposit, checks and other instruments from time to time hereafter delivered to
or otherwise possessed by the Administrative Agent for or on behalf of any
Grantor in substitution for, or in addition to, any or all of the Collateral;
and all interest, dividends, cash, instruments and other property from time to
time received, receivable or otherwise distributed in respect of or in exchange
for any or all of the items constituting Collateral.
"Contracts" shall mean, collectively, with respect to each Grantor,
all sale, service, performance, equipment or property lease contracts,
agreements and grants and all other contracts, agreements or grants (in each
case, whether written or oral, or third party or inter-
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company), between such Grantor and third parties, and all assignments,
amendments, restatements, supplements, extensions, renewals, replacements or
modifications thereof.
"Copyrights": (i) all copyrights arising under the laws of the
United States, any other country or any political subdivision thereof, whether
registered or unregistered and whether published or unpublished (including,
without limitation, those listed in Schedule 4.10(a)), all registrations and
recordings thereof, and all applications in connection therewith, including,
without limitation, all registrations, recordings and applications in the United
States Copyright Office, and (ii) the right to obtain all renewals thereof.
"Copyright Licenses": any written agreement naming any Grantor as
licensor or licensee (including, without limitation, those listed in Schedule
4.10(a)), granting any right under any Copyright, including, without limitation,
any grant of rights to manufacture, distribute, exploit and sell materials
derived from any Copyright.
"Deposit Account": as defined in the Uniform Commercial Code of any
applicable jurisdiction and, in any event, including, without limitation, any
demand, time, savings, passbook or like account maintained with a depositary
institution.
"Foreign Subsidiary": any Subsidiary organized under the laws of
any jurisdiction outside the United States of America.
"Foreign Subsidiary Voting Stock": the voting Capital Stock of any
Foreign Subsidiary.
"Grantors": as defined in the preamble hereto.
"Guarantor Obligations": with respect to any Guarantor, all
obligations and liabilities of such Guarantor which may arise under or in
connection with this Agreement (including, without limitation, Section 2) or any
other Loan Document to which such Guarantor is a party, in each case whether on
account of guarantee obligations, reimbursement obligations, fees, indemnities,
costs, expenses or otherwise (including, without limitation, all fees and
disbursements of counsel to the Secured Parties that are required to be paid by
such Guarantor pursuant to the terms of this Agreement or any other Loan
Document).
"Guarantors": the collective reference to each Grantor other than
the Borrower.
"Intellectual Property": the collective reference to all rights,
priorities and privileges relating to intellectual property, whether arising
under United States, multinational or foreign laws or otherwise, including,
without limitation, the Copyrights, the Copyright Licenses, the Patents, the
Patent Licenses, the Trademarks and the Trademark Licenses, and all rights to
sue at law or in equity for any infringement or other impairment thereof,
including the right to receive all proceeds and damages therefrom.
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"Intercompany Note": any promissory note evidencing loans made by
any Grantor to Holdings or any of its Subsidiaries.
"Investment Property": the collective reference to (i) all
"investment property," as such term is defined in Section 9-102(a)(49) of the
New York UCC (other than any Foreign Subsidiary Voting Stock excluded from the
definition of "Pledged Stock") and (ii) whether or not constituting "investment
property" as so defined, all Pledged Notes and all Pledged Stock.
"Issuers": the collective reference to each issuer of any
Investment Property.
"Lender Counterparties": as defined in the Credit Agreement.
"Material Contract": any contract or other arrangement to which any
Grantor is a party (other than the Loan Documents) for which breach,
nonperformance, cancellation or failure to renew could reasonably be expected to
have a Material Adverse Effect (as defined in the Credit Agreement); provided,
however, that no franchise contract or arrangement or license contract or
arrangement entered into by the Borrower or any of its Subsidiaries in the
ordinary course of business shall be considered a Material Contract unless it
involves aggregate annual consideration payable or receivable by the Borrower or
such Subsidiary of not less than $2,500,000.
"Mortgaged Property" means each parcel of real property and the
improvements thereto owned by a Grantor and identified on Schedule 1.1 of the
Credit Agreement.
"New York UCC": the Uniform Commercial Code as from time to time in
effect in the State of New York.
"Obligations": (i) in the case of the Borrower, the Borrower
Obligations, and (ii) in the case of each Guarantor, its Guarantor Obligations.
"Patents": (i) all letters patent of the United States, any other
country or any political subdivision thereof, all reissues and extensions
thereof, including, without limitation, any of the foregoing referred to in
Schedule 4.10(a), (ii) all applications for letters patent of the United States
or any other country and all divisions, continuations and continuations-in-part
thereof, including, without limitation, any of the foregoing referred to in
Schedule 4.10(a) and (iii) all rights to obtain any reissues or extensions of
the foregoing.
"Patent License": all agreements, whether written or oral,
providing for the grant by or to any Grantor of any right to manufacture, use or
sell any invention covered in whole or in part by a Patent, including, without
limitation, any of the foregoing referred to in Schedule 4.10(a).
"Pledged Notes": all promissory notes listed on Schedule 4.7(c),
all Intercompany Notes at any time issued to any Grantor and all other
promissory notes issued to or held
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by any Grantor (other than promissory notes issued in connection with extensions
of trade credit by any Grantor in the ordinary course of business).
"Pledged Stock": the shares of Capital Stock listed on Schedule
4.7(a), together with any other shares, stock certificates, options, interests
or rights of any nature whatsoever in respect of the Capital Stock of any Person
that may be issued or granted to, or held by, any Grantor while this Agreement
is in effect (other than such other shares, stock certificates, options,
interests or rights, the fair market value of which shall not exceed $50,000 in
the aggregate); provided that in no event shall more than 65% of the total
outstanding Foreign Subsidiary Voting Stock of any Foreign Subsidiary be
required to be pledged hereunder.
"Proceeds": all "proceeds," as such term is defined in Section
9-102(a)(64) of the New York UCC and, in any event, shall include, without
limitation, all dividends or other income from the Investment Property,
collections thereon or distributions or payments with respect thereto.
"Receivable": any right to payment for goods sold or leased or for
services rendered, whether or not such right is evidenced by an Instrument or
Chattel Paper and whether or not it has been earned by performance (including,
without limitation, any Account).
"Securities Act": the Securities Act of 1933, as amended.
"Trademarks": (i) all trademarks, trade names, corporate names,
company names, business names, fictitious business names, trade styles, service
marks, logos and other source or business identifiers, and all goodwill
associated therewith, now existing or hereafter adopted or acquired, all
registrations and recordings thereof, and all applications in connection
therewith, whether in the United States Patent and Trademark Office or in any
similar office or agency of the United States, any State thereof or any other
country or any political subdivision thereof, or otherwise, and all common-law
rights related thereto, including, without limitation, any of the foregoing
referred to in Schedule 4.10(a), and (ii) the right to obtain all renewals
thereof.
"Trademark License": any agreement, whether written or oral,
providing for the grant by or to any Grantor of any right to use any Trademark,
including, without limitation, any of the foregoing referred to in Schedule
4.10(a).
1.2 Other Definitional Provisions. (a) The words "hereof,"
"herein," "hereto" and "hereunder" and words of similar import when used in this
Agreement shall refer to this Agreement as a whole and not to any particular
provision of this Agreement, and Section and Schedule references are to this
Agreement unless otherwise specified.
(b) The meanings given to terms defined herein shall be equally
applicable to both the singular and plural forms of such terms.
-5-
(c) Where the context requires, terms relating to the Collateral or
any part thereof, when used in relation to a Grantor, shall refer to such
Grantor's Collateral or the relevant part thereof.
SECTION 2. GUARANTEE
2.1 Guarantee. (a) Each of the Guarantors hereby, jointly and
severally, unconditionally and irrevocably, guarantees to the Administrative
Agent, for the ratable benefit of the Secured Parties, the prompt and complete
payment and performance by the Borrower when due (whether at the stated
maturity, by acceleration or otherwise) of the Borrower Obligations.
(b) Anything herein or in any other Loan Document to the contrary
notwithstanding, the maximum liability of each Guarantor hereunder and under the
other Loan Documents shall in no event exceed the amount which can be guaranteed
by such Guarantor under applicable federal and state laws relating to the
insolvency of debtors (after giving effect to the right of contribution
established in Section 2.2).
(c) Each Guarantor agrees that the Borrower Obligations may at any
time and from time to time exceed the amount of the liability of such Guarantor
hereunder without impairing the guarantee contained in this Section 2 or
affecting the rights and remedies of any Secured Party hereunder.
(d) The guarantee contained in this Section 2 shall remain in full
force and effect until all the Borrower Obligations and the obligations of each
Guarantor under the guarantee contained in this Section 2 shall have been
satisfied by payment in full, no Letter of Credit shall be outstanding and the
Commitments shall be terminated, notwithstanding that from time to time during
the term of the Credit Agreement the Borrower may be free from any Borrower
Obligations.
(e) No payment made by the Borrower, any of the Guarantors, any
other guarantor or any other Person or received or collected by any Secured
Party from the Borrower, any of the Guarantors, any other guarantor or any other
Person by virtue of any action or proceeding or any set-off or appropriation or
application at any time or from time to time in reduction of or in payment of
the Borrower Obligations shall be deemed to modify, reduce, release or otherwise
affect the liability of any Guarantor hereunder which shall, notwithstanding any
such payment (other than any payment made by such Guarantor in respect of the
Borrower Obligations or any payment received or collected from such Guarantor in
respect of the Borrower Obligations), remain liable for the Borrower Obligations
up to the maximum liability of such Guarantor hereunder until the Borrower
Obligations are paid in full, no Letter of Credit shall be outstanding and the
Commitments are terminated.
2.2 Right of Contribution. The Subsidiary Guarantors desire to
allocate among themselves in a fair and equitable manner their obligations under
this Agreement. Accordingly, each Subsidiary Guarantor hereby agrees that to the
extent that a Subsidiary Guar-
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antor shall have paid more than its proportionate share of any payment made
hereunder, such Subsidiary Guarantor shall be entitled to seek and receive
contribution from and against any other Subsidiary Guarantor hereunder which has
not paid its proportionate share of such payment. Each Subsidiary Guarantor's
right of contribution shall be subject to the terms and conditions of Section
2.3. The provisions of this Section 2.2 shall in no respect limit the
obligations and liabilities of any Subsidiary Guarantor to the Secured Parties,
and each Subsidiary Guarantor shall remain liable to the Secured Parties for the
full amount guaranteed by such Subsidiary Guarantor hereunder.
2.3 No Subrogation. Notwithstanding any payment made by any Guarantor
hereunder or any set-off or application of funds of any Guarantor by any Secured
Party, no Guarantor shall be entitled to be subrogated to any of the rights of
any Secured Party against the Borrower or any other Guarantor or any collateral
security or guarantee or right of offset held by any Secured Party for the
payment of the Borrower Obligations, nor shall any Guarantor seek or be entitled
to seek any contribution or reimbursement from the Borrower or any other
Guarantor in respect of payments made by such Guarantor hereunder, until all
amounts owing to the Secured Parties by the Borrower on account of the Borrower
Obligations are paid in full, no Letter of Credit shall be outstanding and the
Commitments are terminated. If any amount shall be paid to any Guarantor on
account of such subrogation rights at any time when all of the Borrower
Obligations shall not have been paid in full, such amount shall be held by such
Guarantor in trust for the Secured Parties, segregated from other funds of such
Guarantor, and shall, forthwith upon receipt by such Guarantor, be turned over
to the Administrative Agent (duly indorsed by such Guarantor to the
Administrative Agent, if required), to be credited and applied against the
Borrower Obligations, whether matured or unmatured, in such order as the
Administrative Agent may determine pursuant to this Agreement.
2.4 Amendments, etc. with Respect to the Borrower Obligations. Each
Guarantor shall remain obligated hereunder notwithstanding that, without any
reservation of rights against any Guarantor and without notice to or further
assent by any Guarantor, any demand for payment of any of the Borrower
Obligations made by any Secured Party may be rescinded by such Secured Party and
any of the Borrower Obligations continued, and the Borrower Obligations, or the
liability of any other Person upon or for any part thereof, or any collateral
security or guarantee therefor or right of offset with respect thereto, may,
from time to time, in whole or in part, be renewed, extended, amended, modified,
accelerated, compromised, waived, surrendered or released by any Secured Party,
and the Credit Agreement and the other Loan Documents and any other documents
executed and delivered in connection therewith may be amended, modified,
supplemented or terminated, in whole or in part, as the Administrative Agent (or
the Required Lenders or all Lenders, as the case may be) may deem advisable from
time to time, and any collateral security, guarantee or right of offset at any
time held by any Secured Party for the payment of the Borrower Obligations may
be sold, exchanged, waived, surrendered or released. No Secured Party shall have
any obligation to protect, secure, perfect or insure any Lien at any time held
by it as security for the Borrower Obligations or for the guarantee contained in
this Section 2 or any property subject thereto.
-7-
2.5 Guarantee Absolute and Unconditional. Each Guarantor waives any
and all notice of the creation, renewal, extension or accrual of any of the
Borrower Obligations and notice of or proof of reliance by any Secured Party
upon the guarantee contained in this Section 2 or acceptance of the guarantee
contained in this Section 2; the Borrower Obligations, and any of them, shall
conclusively be deemed to have been created, contracted or incurred, or renewed,
extended, amended or waived, in reliance upon the guarantee contained in this
Section 2; and all dealings between the Borrower and any of the Guarantors, on
the one hand, and the Secured Parties, on the other hand, likewise shall be
conclusively presumed to have been had or consummated in reliance upon the
guarantee contained in this Section 2. Each Guarantor waives diligence,
presentment, protest, demand for payment and notice of default or nonpayment to
or upon the Borrower or any of the Guarantors with respect to the Borrower
Obligations. Each Guarantor understands and agrees that the guarantee contained
in this Section 2 shall be construed as a continuing, absolute and unconditional
guarantee of payment without regard to (a) the validity or enforceability of the
Credit Agreement or any other Loan Document, any of the Borrower Obligations or
any other collateral security therefor or guarantee or right of offset with
respect thereto at any time or from time to time held by any Secured Party, (b)
any defense, set-off or counterclaim (other than a defense of payment or
performance) which may at any time be available to or be asserted by the
Borrower or any other Person against any Secured Party, or (c) any other
circumstance whatsoever (with or without notice to or knowledge of the Borrower
or such Guarantor) which constitutes, or might be construed to constitute, an
equitable or legal discharge of the Borrower for the Borrower Obligations, or of
such Guarantor under the guarantee contained in this Section 2, in bankruptcy or
in any other instance. When making any demand hereunder or otherwise pursuing
its rights and remedies hereunder against any Guarantor, any Secured Party may,
but shall be under no obligation to, make a similar demand on or otherwise
pursue such rights and remedies as it may have against the Borrower, any other
Guarantor or any other Person or against any collateral security or guarantee
for the Borrower Obligations or any right of offset with respect thereto, and
any failure by any Secured Party to make any such demand, to pursue such other
rights or remedies or to collect any payments from the Borrower, any other
Guarantor or any other Person or to realize upon any such collateral security or
guarantee or to exercise any such right of offset, or any release of the
Borrower, any other Guarantor or any other Person or any such collateral
security, guarantee or right of offset, shall not relieve any Guarantor of any
obligation or liability hereunder, and shall not impair or affect the rights and
remedies, whether express, implied or available as a matter of law, of any
Secured Party against any Guarantor. For the purposes hereof "demand" shall
include the commencement and continuance of any legal proceedings.
2.6 Reinstatement. The guarantee contained in this Section 2 shall
continue to be effective, or be reinstated, as the case may be, if at any time
payment, or any part thereof, of any of the Borrower Obligations is rescinded or
must otherwise be restored or returned by any Secured Party upon the insolvency,
bankruptcy, dissolution, liquidation or reorganization of the Borrower or any
Guarantor, or upon or as a result of the appointment of a receiver, intervenor
or conservator of, or trustee or similar officer for, the Borrower or any
Guarantor or any substantial part of its property, or otherwise, all as though
such payments had not been made.
-8-
2.7 Payments. Each Guarantor hereby guarantees that payments hereunder
will be paid to the Administrative Agent without set-off or counterclaim in
Dollars at the Funding Office.
2.8 Discharge of Guarantee Upon Sale of Guarantor. If all of the
Capital Stock of any Guarantor or any of its successors in interest hereunder
shall be sold or otherwise disposed of (including by merger or consolidation) in
accordance with the terms and conditions of the Credit Agreement, the guarantee
by such Guarantor or such successor in interest, as the case may be, hereunder
shall automatically be discharged and released without any further action,
effective as of the time of such Asset Sale (as defined in the Credit
Agreement); provided, as a condition precedent to such discharge and release,
the Administrative Agent shall have received evidence satisfactory to it that
arrangements satisfactory to it have been made for delivery to Administrative
Agent of the applicable Net Cash Proceeds (as defined in the Credit Agreement)
of such disposition pursuant to Section 3.2 of the Credit Agreement.
SECTION 3. GRANT OF SECURITY INTEREST
Each Grantor hereby pledges, assigns and grants to the Administrative
Agent for the ratable benefit of the Secured Parties, a lien on and security
interest in, all of the following property now owned or at any time hereafter
acquired by such Grantor or in which such Grantor now has or at any time in the
future may acquire any right, title or interest (collectively, the
"Collateral"), as collateral security for the prompt and complete payment and
performance when due (whether at the stated maturity, by acceleration or
otherwise) of such Grantor's Obligations:
(a) all Accounts;
(b) all Chattel Paper;
(c) all Collateral Accounts and all Collateral Account Funds;
(d) all Commercial Tort Claims;
(e) all Contracts;
(f) all Deposit Accounts;
(g) all Documents (other than title documents with respect to
vehicles);
(h) all Equipment;
(i) all Fixtures;
(j) all General Intangibles;
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(k) all Goods;
(l) all Instruments;
(m) all Intellectual Property;
(n) all Inventory;
(o) all Investment Property;
(p) all Letter-of-Credit Rights;
(q) all other property not otherwise described above, whether
tangible or intangible;
(r) all books and records pertaining to the Collateral; and
(s) to the extent not otherwise included, all Proceeds, Supporting
Obligations and products of any and all of the foregoing and all collateral
security and guarantees given by any Person with respect to any of the
foregoing;
provided, however, that notwithstanding any of the other provisions set forth in
this Section 3, this Agreement shall not constitute a grant of a security
interest in any property to the extent that such grant of a security interest is
(i) prohibited by any Requirements of Law of a Governmental Authority, requires
a consent not obtained of any Governmental Authority pursuant to such
Requirement of Law or (ii) prohibited by, or constitutes a breach or default
under or results in the termination of or requires any consent not obtained
under (x) any contract, license, agreement, instrument or other document
evidencing or giving rise to such property, or (y) in the case of any Investment
Property, Pledged Stock or Pledged Note, any applicable shareholder or similar
agreement, except in each case to the extent that such Requirement of Law or the
term in such contract, license, agreement, instrument or other document or
shareholder or similar agreement providing for such prohibition, breach, default
or termination or requiring such consent is ineffective under applicable law,
except, in any case described by clauses (i) and (ii) above, the grant of a
security interest shall only be prohibited to the extent and for so long as such
Requirement of Law, contract, license, agreement, Pledged Stock, Pledged Note or
other instrument or agreement applicable thereto validly prohibits the creation
of a Lien on such property in favor of the Administrative Agent and, upon the
termination of such prohibition (howsoever occurring), such property shall
become Collateral under this Agreement;
provided, further, that from and after the Closing Date, no Grantor shall permit
to become effective in any document creating, governing or providing for any
permit, lease or license, a provision that would prohibit the creation of a Lien
on such permit, lease or license in favor of the Administrative Agent unless
such Grantor believes, in its reasonable judgment, that such prohibition is
usual and customary in transactions of such type.
-10-
SECTION 4. REPRESENTATIONS AND WARRANTIES
To induce the Secured Parties to enter into the Credit Agreement and
to induce the Lenders to make their respective extensions of credit to the
Borrower thereunder, each Grantor hereby represents and warrants to each Secured
Party that:
4.1 Title; No Other Liens. Except for the security interest granted to
the Administrative Agent for the ratable benefit of the Secured Parties pursuant
to this Agreement and the other Liens permitted to exist on the Collateral by
the Credit Agreement, such Grantor owns each item of the Collateral free and
clear of any and all Liens or claims of others. No effective financing statement
or other public notice with respect to all or any part of the Collateral is on
file or of record in any public office, except (i) such as have been filed in
favor of the Administrative Agent, for the ratable benefit of the Secured
Parties pursuant to this Agreement or as are permitted by the Credit Agreement,
(ii) financing statements for which proper termination statements have been
delivered to the Administrative Agent for filing and (iii) financing statements
filed in connection with Liens permitted by the Credit Agreement. For the
avoidance of doubt, it is understood and agreed that any Grantor may, as part of
its business, grant licenses to third parties to use Intellectual Property owned
or developed by a Grantor. For purposes of this Agreement and the other Loan
Documents, such licensing activity shall not constitute a "Lien" on such
Intellectual Property. Each Secured Party understands that any such licenses may
be exclusive to the applicable licensees, and such exclusivity provisions may
limit the ability of the Administrative Agent to utilize, sell, lease or
transfer the related Intellectual Property or otherwise realize value from such
Intellectual Property pursuant hereto.
4.2 Perfected First Priority Liens. The security interests granted
pursuant to this Agreement (a) upon completion of the filings of the financing
statements naming such grantor as "debtor" and the Administrative Agent as
"secured party" and describing the Collateral in the filing offices set forth on
Schedule 4.2 (which, in the case of all filings and other documents referred to
on said Schedule, have been duly completed and delivered to the Administrative
Agent) and such other actions as specified on Schedule 4.2, (to the extent, in
the case of unregistered Intellectull Property constituting Collateral, that a
security interest may be perfected in such unregistered Intellectual Property)
will constitute valid perfected security interests in all of the Collateral in
favor of the Administrative Agent, for the ratable benefit of the Secured
Parties, as collateral security for such Grantor's Obligations, enforceable in
accordance with the terms hereof against all creditors of such Grantor and any
Persons purporting to purchase any Collateral from such Grantor and (b) are
prior to all other unrecorded Liens on the Collateral in existence on the date
hereof except for Liens permitted by the Credit Agreement which have priority
over the Liens on the Collateral by operation of law. Each Grantor represents
and warrants that the Administrative Agent has a perfected first priority
security interest in all uncertificated Investment Property, Pledged Stock or
Pledged Note pledged by it hereunder that is in existence on the date hereof.
4.3 Jurisdiction of Organization, Corporate Names. (a) Set forth on
Schedule 4.3(a) are (i) the exact legal names of each Grantor, as such names
appear in their
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respective certificates of incorporation or any other organizational
documents and (ii) the organizational identification numbers, if any, of each
Grantor that is a Registered Organization, the Federal Taxpayer Identification
Numbers of such Grantor and the state of formation of each Grantor. Each Grantor
is (i) the type of entity disclosed next to its name on Schedule 4.3(a) and (ii)
a Registered Organization except to the extent disclosed on Schedule 4.3(a).
(b) Set forth on Schedule 4.3(b) are (i) the corporate or
organizational names that each Grantor has had in the past five years and (ii) a
list of all other names (including trade names or fictitious business names)
used by such Grantor, now or at any time during the past five years. Such
Grantor has furnished to the Administrative Agent a certified charter,
certificate of incorporation or other organizational document and a long-form
good standing certificate as of a date which is recent to the date hereof.
4.4 Current Locations; Inventory and Equipment. Set forth on Schedule
4.4(a) are (i) the chief executive offices of each Grantor and (ii) all
locations where each Grantor maintains any books or records relating to any
Collateral.
(b) Set forth on Schedule 4.4(b) are (i) all of the jurisdictions
where each Grantor maintains any of the Collateral consisting of Inventory or
Equipment not identified above and (ii) the names and addresses of all persons
or entities other than any Grantor, such as lessees, consignees, warehousemen or
purchasers of chattel paper, which have possession or are intended to have
possession of any of the Collateral consisting of Instruments, Chattel Paper,
Inventory or Equipment.
4.5 Condition and Maintenance of Equipment. The Equipment of such
Grantor is in good repair, working order and condition, reasonable wear and tear
excepted in accordance with such Grantor's past practices. Each Grantor shall
cause the Equipment to be maintained and preserved in good repair, working order
and condition, reasonable wear and tear excepted, in accordance with such
Grantor's past practices, and shall as quickly as commercially practicable make
or cause to be made all repairs, replacements and other improvements which are
necessary or appropriate in the conduct of such Grantor's business.
4.6 Farm Products. None of the Collateral constitutes, or is the
Proceeds of, Farm Products.
4.7 Investment Property. (a) Set forth on Schedule 4.7(a) is a true
and correct list of all of the issued and outstanding Pledged Stock of each
Grantor. The shares of Pledged Stock pledged by such Grantor hereunder
constitute all the issued and outstanding shares of all classes of the Capital
Stock of each Issuer owned by such Grantor or, in the case of Foreign Subsidiary
Voting Stock, if less, 65% of the outstanding Foreign Subsidiary Voting Stock of
each relevant Issuer.
(b) All the shares of the Pledged Stock have been duly authorized and
validly issued and are fully paid and nonassessable.
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(c) Set forth on Schedule 4.7(c) is a true and correct list of all
Pledged Notes of each Grantor. Each of the Pledge Notes constitute the legal,
valid and binding obligation of the obligor with respect thereto, enforceable in
accordance with its terms, subject to the effects of bankruptcy, insolvency,
fraudulent conveyance, reorganization, moratorium and other similar laws
relating to or affecting creditors' rights generally, general equitable
principles (whether considered in a proceeding in equity or at law) and an
implied covenant of good faith and fair dealing.
(d) Such Grantor is the record and beneficial owner of, and has good
and marketable title to, the Investment Property pledged by it hereunder, free
of any and all Liens or options in favor of, or claims of, any other Person,
except the security interest created by this Agreement and Liens permitted by
Section 7.3 of the Credit Agreement.
4.8 Receivables. (a) No amount payable to such Grantor under or in
connection with any Receivable is evidenced by any Instrument in the form of a
note or Chattel Paper which has not been delivered to the Administrative Agent.
(b) The amounts represented by such Grantor to the Secured Parties
from time to time as owing to such Grantor in respect of the Receivables will at
such times be accurate.
4.9 Contracts. (a) No consent of any party (other than such Grantor)
to any Contract is required in connection with the execution, delivery and
performance of this Agreement, except as has been obtained in all material
respects.
(b) Each Material Contract is in full force and effect and constitutes
a valid and legally enforceable obligation of the parties thereto, subject to
the effects of bankruptcy, insolvency, fraudulent conveyance, reorganization,
moratorium and other similar laws relating to or affecting creditors' rights
generally, general equitable principles (whether considered in a proceeding in
equity or at law) and an implied covenant of good faith and fair dealing.
(c) No consent or authorization of, filing with or other act by or in
respect of any Governmental Authority is required in connection with the
execution, delivery, performance, validity or enforceability of any of the
Material Contracts by any party thereto other than those which have been duly
obtained, made or performed, are in full force and effect and do not subject the
scope of any such Material Contract to any material adverse limitation, either
specific or general in nature.
(d) Neither such Grantor nor (to such Grantor's knowledge) any of the
other parties to the Material Contracts is in default in the performance or
observance of any of the terms thereof.
(e) Such Grantor has delivered to the Administrative Agent a complete
and correct copy of each Material Contract, including all amendments,
supplements and other modifications thereto.
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(f) No amount payable to such Grantor under or in connection with any
Material Contract is evidenced by any Instrument or Chattel Paper which has not
been delivered to the Administrative Agent.
4.10 Intellectual Property. (a) Schedule 4.10(a) lists all registered
Copyrights, registered and material unregistered Trademarks, issued Patents and
applications for the foregoing and all material written Copyright Licenses,
Patent Licenses and Trademark Licenses.
(b) Except as set forth on Schedule 4.10(b), to the knowledge of such
Grantor on the date hereof, all material Intellectual Property is valid,
subsisting, unexpired and enforceable, has not been abandoned and, to the
knowledge of such Grantor, does not infringe the intellectual property rights of
any other Person.
(c) Except as set forth on Schedule 4.10(c), to the knowledge of such
Grantor, no holding, decision or judgment has been rendered by any Governmental
Authority which would limit, cancel or question the validity of, or such
Grantor's rights in, any Intellectual Property in any respect that could
reasonably be expected to have a Material Adverse Effect.
(d) Except as set forth on Schedule 4.10(d), no action or proceeding
is pending, or, to the knowledge of such Grantor, threatened, on the date hereof
(i) seeking to limit, cancel or question the validity of any Intellectual
Property of such Grantor or such Grantor's ownership interest therein, or (ii)
which, if adversely determined, would have a material adverse effect on the
value of any Intellectual Property.
4.11 Deposit Accounts, Securities Accounts. Schedule 4.11 sets forth
each Deposit Account or Securities Account in which any Grantor has any interest
on the date hereof.
4.12 Collateral. All information set forth herein, including the
schedules annexed hereto, and all information contained in any documents,
schedules and lists heretofore delivered to any Secured Party in connection with
this Agreement, in each case, relating to the Collateral, is accurate and
complete in all material respects.
SECTION 5. COVENANTS
Each Grantor covenants and agrees with the Secured Parties that, from
and after the date of this Agreement until the Obligations (other than
contingent obligations not due and payable) shall have been paid in full, no
Letter of Credit shall be outstanding and the Commitments shall have terminated:
5.1 Delivery of Instruments, Certificated Securities and Chattel
Paper. If any amount payable under or in connection with any of the Collateral
shall be or become evidenced by any Instrument, Certificated Security or Chattel
Paper, such Instrument, Certificated Security or Chattel Paper, in each case,
with a stated value, face value or fair market
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value equal to or exceeding $10,000, shall be promptly delivered to the
Administrative Agent, duly indorsed in a manner satisfactory to the
Administrative Agent, to be held as Collateral pursuant to this Agreement.
5.2 Maintenance of Insurance. (a) Such Grantor will maintain, with
financially sound and reputable companies, insurance policies (i) insuring the
Inventory and Equipment against loss by fire, explosion, theft and such other
casualties as may be reasonably satisfactory to the Administrative Agent and
(ii) to the extent requested by the Administrative Agent, insuring such Grantor
against liability for personal injury and property damage relating to such
Inventory and Equipment, such policies to be in such form and amounts and having
such coverage as may be reasonably satisfactory to the Administrative Agent.
(b) All such insurance shall (i) provide that no cancellation,
material reduction in amount or material change in coverage thereof shall be
effective unless the insurer gives at least 30 days notice to the Administrative
Agent, (ii) name the Administrative Agent as insured party or loss payee, as
applicable, and (iii) be reasonably satisfactory in all other respects to the
Administrative Agent.
(c) The Borrower shall deliver to the Administrative Agent a report
of a reputable insurance broker with respect to such insurance substantially
concurrently with each delivery of the Borrower's audited annual financial
statements and such supplemental reports with respect thereto as the
Administrative Agent may from time to time reasonably request.
5.3 Payment of Obligations. Such Grantor will pay and discharge or
otherwise satisfy at or before maturity or before they become delinquent, as the
case may be, all taxes, assessments and governmental charges or levies imposed
upon the Collateral or in respect of income or profits therefrom, as well as all
material claims of any kind (including, without limitation, claims for labor,
materials and supplies) against or with respect to the Collateral, except that
none of the foregoing need be paid if the amount or validity thereof could not
reasonably be expected to result in the sale, forfeiture or loss of any material
portion of the Collateral or any interest therein.
5.4 Maintenance of Perfected Security Interest; Further
Documentation. (a) Such Grantor shall maintain the security interest created by
this Agreement as a perfected security interest having at least the priority
described in Section 4.2 to the extent that such security interest may be
perfected under applicable law, and upon the written request of the
Administrative Agent, shall defend such security interest against the claims and
demands of all Persons whomsoever, subject to the rights of such Grantor under
the Loan Documents to dispose of the Collateral.
(b) Such Grantor will furnish to the Administrative Agent from time
to time statements and schedules further identifying and describing the assets
and property of such Grantor and such other reports in connection therewith as
the Administrative Agent may reasonably request in writing, all in reasonable
detail.
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(c) At any time and from time to time, upon the written request of
the Administrative Agent, and at the sole expense of such Grantor, such Grantor
will promptly and duly execute and deliver, and have recorded, such further
instruments and documents and take such further actions as the Administrative
Agent may reasonably request for the purpose of obtaining or preserving the full
benefits of this Agreement and of the rights and powers herein granted,
including, without limitation, (i) filing any financing or continuation
statements under the Uniform Commercial Code (or other similar laws) in effect
in any jurisdiction with respect to the security interests created hereby and
(ii) in the case of Investment Property, Deposit Accounts, Securities Accounts,
Letter-of-Credit Rights and any other relevant Collateral, taking any actions
necessary to enable the Administrative Agent to obtain "control" (within the
meaning of the applicable Uniform Commercial Code) with respect thereto.
(d) Such Grantor will not establish any additional Deposit Accounts
or Securities Accounts having a balance greater than $10,000 individually or
$25,000 in the aggregate without executing and delivering, concurrently with the
establishment of such account, a control agreement substantially in the form
attached hereto as Annex I-A or I-B, as applicable, or as reasonably
satisfactory to the Administrative Agent and the related depositary bank or
securities intermediary, as the case may be, in order to perfect the security
interest of the Administrative Agent in such account under the Uniform
Commercial Code.
5.5 Changes in Locations, Name, etc. Such Grantor will not, except
upon 15 days' prior written notice to the Administrative Agent and delivery to
the Administrative Agent of all additional executed financing statements and
other documents reasonably requested by the Administrative Agent to maintain the
validity, perfection and priority of the security interests provided for herein:
(i) change its jurisdiction of organization or the location of its
chief executive office or sole place of business or principal residence
from that referred to in Section 4.3; or
(ii) change its name.
5.6 Notices. Such Grantor will advise the Administrative Agent
promptly, in reasonable detail (which notice shall specify that it is being
delivered pursuant to this Section), of:
(a) any Lien (other than security interests created hereby or Liens
permitted under the Credit Agreement) on any of the Collateral which would
adversely affect the ability of the Administrative Agent to exercise any of
its remedies hereunder; and
(b) the occurrence of any other event, upon its becoming aware
thereof, which could reasonably be expected to have a material adverse effect on
the aggregate value of the Collateral or on the security interests created
hereby.
5.7 Investment Property.
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(a) If such Grantor shall become entitled to receive or shall
receive any certificate (including, without limitation, any certificate
representing a dividend or a distribution in connection with any
reclassification, increase or reduction of capital or any certificate issued in
connection with any reorganization), option or rights in respect of the Capital
Stock of any Issuer, whether in addition to, in substitution of, as a conversion
of, or in exchange for, any shares of the Pledged Stock, or otherwise in respect
thereof, such Grantor shall accept the same as the agent of the Secured Parties,
hold the same in trust for the Secured Parties and deliver the same forthwith to
the Administrative Agent in the exact form received, duly indorsed by such
Grantor to the Administrative Agent, if required, together with an undated stock
power covering such certificate duly executed in blank by such Grantor and with,
if the Administrative Agent so requests, signature guaranteed, to be held by the
Administrative Agent, subject to the terms hereof, as additional collateral
security for the Obligations. Any sums paid upon or in respect of the Investment
Property upon the liquidation or dissolution of any Issuer shall be paid over to
the Administrative Agent to be held by it hereunder as additional collateral
security for the Obligations, and in case any distribution of capital shall be
made on or in respect of the Investment Property or any property shall be
distributed upon or with respect to the Investment Property pursuant to the
recapitalization or reclassification of the capital of any Issuer or pursuant to
the reorganization thereof, the property so distributed shall, unless otherwise
subject to a perfected security interest in favor of the Administrative Agent,
be delivered to the Administrative Agent to be held by it hereunder as
additional collateral security for the Obligations. If any sums of money or
property so paid or distributed in respect of the Investment Property shall be
received by such Grantor, such Grantor shall, until such money or property is
paid or delivered to the Administrative Agent, hold such money or property in
trust for the Secured Parties, segregated from other funds of such Grantor, as
additional collateral security for the Obligations.
(b) Without the prior written consent of the Administrative Agent,
such Grantor will not (i) vote to enable, or take any other action to permit,
any Issuer to issue any Capital Stock of any nature or to issue any other
securities convertible into or granting the right to purchase or exchange for
any Capital Stock of any nature of any Issuer, except to the extent permitted by
this Agreement or the Credit Agreement, (ii) sell, assign, transfer, exchange,
or otherwise dispose of, or grant any option with respect to, the Investment
Property or Proceeds thereof (except pursuant to a transaction expressly
permitted by the Credit Agreement), (iii) create, incur or permit to exist any
Lien or option in favor of, or any claim of any Person with respect to, any of
the Investment Property or Proceeds thereof, or any interest therein, except for
the security interests created by this Agreement and the Liens permitted by the
Credit Agreement or (iv) enter into any agreement or undertaking restricting the
right or ability of such Grantor or the Administrative Agent to sell, assign or
transfer any of the Investment Property or Proceeds thereof.
(c) In the case of each Grantor which is an Issuer, such Issuer
agrees that (i) it will be bound by the terms of this Agreement relating to the
Investment Property issued by it and will comply with such terms insofar as such
terms are applicable to it, (ii) it will notify the Administrative Agent
promptly in writing of the occurrence of any of the events described in Section
5.7(a) with respect to the Investment Property issued by it and (iii) the
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terms of Sections 6.3(c) and 6.9 shall apply to it, mutatis mutandis, with
respect to all actions that may be required of it pursuant to Section 6.3(c) or
6.9 with respect to the Investment Property issued by it.
5.8 Uncertificated Investment Property. Each Grantor hereby agrees
that if any issuer of Pledged Notes or Pledged Stock is organized in a
jurisdiction which does not permit the use of certificates to evidence equity
ownership, or if any of the Pledged Notes or Pledged Stock are at any time not
evidenced by certificates of ownership, then each applicable Grantor shall, to
the extent permitted by applicable law, record such pledge on the register or
the books of the issuer, cause the issuer to execute and deliver to the
Administrative Agent an acknowledgment of the pledge of such Pledged Notes or
Pledged Stock substantially in the form of Annex II hereto, execute any
customary pledge forms or other documents necessary or appropriate to complete
the pledge and give the Administrative Agent the right to transfer such Pledged
Notes or Pledged Stock under the terms hereof and, if required by the
Administrative Agent, provide to the Administrative Agent an opinion of counsel,
in form and substance satisfactory to the Administrative Agent, confirming such
pledge and perfection thereof.
5.9 Receivables. (a) Other than in the ordinary course of business
substantially consistent with its past practice, such Grantor will not (i) grant
any extension of the time of payment of any Receivable, (ii) compromise or
settle any Receivable for less than the full amount thereof, (iii) release,
wholly or partially, any Person liable for the payment of any Receivable, (iv)
allow any credit or discount whatsoever on any Receivable or (v) amend,
supplement or modify any Receivable in any manner that could reasonably be
expected to adversely affect the value thereof.
(b) Maintenance of Records. Each Grantor shall keep and maintain at
its own cost and expense complete records of each Receivable, in a manner
consistent with prudent business practice, including, without limitation,
records of all payments received, all credits granted thereon, all merchandise
returned and all other documentation relating thereto.
(c) Legend. Each Grantor shall legend, at the request of the
Administrative Agent made at any time after the occurrence of any Event of
Default which is continuing and in form and manner reasonably satisfactory to
the Administrative Agent, the Receivables and the other books, records and
documents of such Grantor evidencing or pertaining to the Receivables with an
appropriate reference to the fact that the Receivables have been assigned to the
Administrative Agent for the benefit of the Secured Parties and that the
Administrative Agent has a security interest therein. Modification of Terms,
etc. No Grantor shall rescind or cancel any indebtedness evidenced by any
Receivable or modify any term thereof or make any adjustment with respect
thereto except in the ordinary course of business substantially consistent with
prudent business practice, or extend or renew any such indebtedness except in
the ordinary course of business consistent with prudent business practice or
compromise or settle any dispute, claim, suit or legal proceeding relating
thereto or sell any Receivable or interest therein except in the ordinary course
of business substantially consistent with prudent business practice without the
prior written consent of the Administrative Agent. Collection.
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Each Grantor shall cause to be collected from the account debtor of each of the
Receivables, as and when due in the ordinary course of business consistent with
prudent business practice (including, without limitation, Receivables that are
delinquent, such Receivables to be collected in accordance with generally
accepted commercial collection procedures), any and all amounts owing under or
on account of such Receivable, and apply forthwith upon receipt thereof all such
amounts as are so collected to the outstanding balance of such Receivable,
except that any Grantor may, with respect to an Receivable, allow in the
ordinary course of business (i) a refund or credit due in the ordinary course of
business and (ii) such extensions of time to pay amounts due in respect of
Receivables and such other modifications of payment terms or settlements in
respect of Receivables as shall be commercially reasonable in the circumstances,
all in accordance with such Grantor's ordinary course of business substantially
consistent with its collection practices as in effect from time to time. The
costs and expenses (including, without limitation, attorneys' fees) of
collection, in any case, whether incurred by any Grantor, the Administrative
Agent or any Secured Party, shall be paid by the Grantors. Evidence of Doubtful
Receivables. Such Grantor will deliver to the Administrative Agent a copy of
each material written demand, notice or document received by it that questions
or calls into doubt the validity or enforceability of more than 5% of the
aggregate amount of the then outstanding Receivables.5.10 Contracts. (a) Such
Grantor will perform and comply in all material respects with all its
obligations under the Material Contracts.
(b) Such Grantor will deliver to the Administrative Agent a copy of
each material written demand, notice or document received by it relating in any
way to any Material Contract that questions the validity or enforceability of
such Material Contract.
5.11 Intellectual Property. Except with regard to the following
subsections (a) through (h) to the extent any Grantor reasonably determines that
any Intellectual Property is no longer used or useful in or material to its
business, (a) such Grantor (either itself or through licensees) will (i)
continue to use commercially each material Trademark in order to maintain such
registered Trademarks in full force free from any claim of abandonment for
non-use, (ii) maintain as in the past the quality of products and services
offered under such Trademark, (iii) use such registered Trademarks with the
appropriate notice of registration and all other notices and legends required by
applicable Requirements of Law, and (iv) not (and not permit any licensee or
sublicensee thereof to) perform any act or knowingly omit to perform any act
whereby such Trademark may become invalidated or impaired in any way.
(b) Such Grantor (either itself or through licensees) will not
perform any act, or omit to perform any act, whereby any material Patent may
become forfeited, abandoned or dedicated to the public.
(c) Such Grantor (either itself or through licensees) (i) will
employ each material Copyright and (ii) will not (and will not permit any
licensee or sublicensee thereof to) perform any act or knowingly omit to perform
any act whereby any material portion of the Copyrights may become invalidated or
otherwise impaired. Such Grantor will not (either itself or through licensees)
perform any act whereby any material portion of the Copyrights may fall into the
public domain.
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(d) Such Grantor will not perform any act that knowingly uses any
material Intellectual Property to infringe the intellectual property rights of
any other Person.
(e) Such Grantor will notify the Administrative Agent immediately if
it knows, or has reason to know, that any application or registration relating
to any material Intellectual Property may become forfeited, abandoned or
dedicated to the public, or of any final or non-appealable adverse determination
or development (including, without limitation, any proceeding in the United
States Patent and Trademark Office, the United States Copyright Office or any
court or tribunal in any country) regarding such Grantor's ownership of, or the
validity of, any material Intellectual Property or such Grantor's right to
register the same or to own and maintain the same.
(f) Whenever such Grantor, either by itself or through any agent,
employee, licensee or designee, shall file an application for the registration
of any Intellectual Property with the United States Patent and Trademark Office,
the United States Copyright Office or any similar office or agency in any other
country or any political subdivision thereof, such Grantor shall report such
filing to the Administrative Agent within 30 calendar days after the last day of
the fiscal quarter in which such filing occurs. Upon request of the
Administrative Agent, such Grantor shall execute and deliver, and have recorded,
any and all agreements, instruments, documents, and papers as the Administrative
Agent may request to evidence the Administrative Agent's security interest in
any Copyright, Patent or Trademark and the goodwill and general intangibles of
such Grantor relating thereto or represented thereby.
(g) Such Grantor will take all reasonable and necessary steps,
including, without limitation, in any proceeding before the United States Patent
and Trademark Office, the United States Copyright Office or any similar office
or agency in any other country or any political subdivision thereof, to maintain
and pursue each application (and to obtain the relevant registration) and to
maintain each registration of the material Intellectual Property, including,
without limitation, filing of applications for renewal, affidavits of use and
affidavits of incontestability.
(h) In the event that any material Intellectual Property is
infringed, misappropriated or diluted by a third party, such Grantor shall upon
its becoming aware thereof, (i) take such actions as such Grantor shall
reasonably deem appropriate under the circumstances to protect such Intellectual
Property and (ii) if such Intellectual Property is of material economic value,
promptly notify the Administrative Agent and at the request of the
Administrative Agent, sue for infringement, misappropriation or dilution, to
seek appropriate relief and to recover any and all damages for such
infringement, misappropriation or dilution.
5.12 Commercial Tort Claims. Such Grantor shall advise the
Administrative Agent and the Lenders promptly of any Commercial Tort Claim held
by such Grantor individually or in the aggregate in excess of $500,000 and shall
promptly execute a supplement to this Agreement in form and substance reasonably
satisfactory to the Administrative Agent to
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grant a security interest in such Commercial Tort Claim to the Administrative
Agent for the benefit of the Secured Parties.
5.13 Deposit Accounts, Securities Accounts. Within 30 days of the
Closing Date, unless otherwise extended or waived by the Administrative Agent,
each Grantor shall deliver to the Administrative Agent a control agreement,
executed by all parties thereto, for each Deposit Account or Securities Account
listed on Schedule 4.11 in which any Grantor has an interest on the date hereof.
Notwithstanding the foregoing, no Deposit Account or Securities Account of any
Grantor will exist on the Closing Date for which such Grantor has not delivered
to the Administrative Agent a control agreement executed by all parties thereto,
provided that the Grantors shall not be required to enter into control
agreements with respect to any Deposit Account or Securities Account having a
balance of less than $10,000 individually or $25,000 in the aggregate; provided
further that the Administrative Agent shall not (i) have "control" (as defined
in Section 9-104 of the UCC) of any Deposit Account or Securities Account nor
(ii) be authorized to give any instructions directing the disposition of funds
from any Deposit Account or Securities Account, as applicable, or withhold any
withdrawal rights from such Grantor with respect to funds from time to time
credited to any Deposit Account or Securities Account, as applicable, unless an
Event of Default (as defined in the Credit Agreement) has occurred and is
continuing, or after giving effect to any withdrawal, any Event of Default would
occur.
SECTION 6. REMEDIAL PROVISIONS
6.1 Certain Matters Relating to Receivables. (a) After an Event of
Default has occurred and is continuing, the Administrative Agent shall have the
right to make test verifications of the Receivables in any manner and through
any medium that it reasonably considers advisable, and each Grantor shall
furnish all such assistance and information as the Administrative Agent may
require in connection with such test verifications.
(b) The Administrative Agent hereby authorizes each Grantor to
collect such Grantor's Receivables. The Administrative Agent may curtail or
terminate said authority at any time after the occurrence and during the
continuance of an Event of Default. If required by the Administrative Agent at
any time after the occurrence and during the continuance of an Event of Default,
any payments of Receivables, when collected by any Grantor, (i) shall be
forthwith (and, in any event, within two Business Days) deposited by such
Grantor in the exact form received, duly indorsed by such Grantor to the
Administrative Agent if required, in a Collateral Account maintained under the
sole dominion and control of the Administrative Agent, subject to withdrawal by
the Administrative Agent for the account of the Secured Parties only as provided
in Section 6.7 hereof, and (ii) until so turned over, shall be held by such
Grantor in trust for the Secured Parties, segregated from other funds of such
Grantor. Each such deposit of Proceeds of Receivables shall be accompanied by a
report identifying in reasonable detail the nature and source of the payments
included in the deposit.
(c) At the Administrative Agent's request, upon the occurrence and
during the continuance of an Event of Default, each Grantor shall deliver to the
Administrative Agent
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all original and other documents evidencing, and relating to, the agreements and
transactions which gave rise to the Receivables, including, without limitation,
all original orders, invoices and shipping receipts.
6.2 Communications with Obligors; Grantors Remain Liable. (a) The
Administrative Agent in its own name or in the name of the Secured Parties may
at any time after the occurrence and during the continuance of an Event of
Default and after prior written notice to the Grantors communicate with obligors
under the Receivables and parties to the Contracts to verify with them to the
Administrative Agent's satisfaction the existence, amount and terms of any
Receivables or Contracts.
(b) After the occurrence and during the continuance of an Event of
Default, the Administrative Agent in its own name or in the name of the Secured
Parties may, and upon the request of the Administrative Agent each Grantor
shall, notify obligors on the Receivables and parties to the Contracts that the
Receivables and the Contracts have been assigned to the Administrative Agent for
the ratable benefit of the Secured Parties and that payments in respect thereof
shall be made directly to the Administrative Agent.
(c) Anything herein to the contrary notwithstanding, each Grantor
shall remain liable under each of the Receivables and Contracts to observe and
perform all the conditions and obligations to be observed and performed by it
thereunder, all in accordance with the terms of any agreement giving rise
thereto. No Secured Party shall have any obligation or liability under any
Receivable (or any agreement giving rise thereto) or Contract by reason of or
arising out of this Agreement or the receipt by any Secured Party of any payment
relating thereto, nor shall any Secured Party be obligated in any manner to
perform any of the obligations of any Grantor under or pursuant to any
Receivable (or any agreement giving rise thereto) or Contract, to make any
payment, to make any inquiry as to the nature or the sufficiency of any payment
received by it or as to the sufficiency of any performance by any party
thereunder, to present or file any claim, to take any action to enforce any
performance or to collect the payment of any amounts which may have been
assigned to it or to which it may be entitled at any time or times.
6.3 Pledged Stock. (a) Unless an Event of Default shall have
occurred and be continuing and the Administrative Agent shall have given written
notice to the relevant Grantor of the Administrative Agent's intent to exercise
its corresponding rights pursuant to Section 6.3(b) hereof, each Grantor shall
be permitted to receive all cash dividends paid in respect of the Pledged Stock
and all payments made in respect of the Pledged Notes, in each case paid in the
normal course of business of the relevant Issuer and consistent with past
practice, to the extent permitted in this Agreement or the Credit Agreement, and
to exercise all voting and corporate or other organizational rights with respect
to the Investment Property; provided, however, that no vote shall be cast or
corporate or other organizational right exercised or other action taken which,
in the Administrative Agent's reasonable judgment, would result in any violation
of any provision of the Credit Agreement, this Agreement or any other Loan
Document. The Administrative Agent shall promptly execute and deliver (or cause
to be executed and delivered) to such Grantor all such proxies, dividend
payments orders and
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other instruments as such Grantor may from time to time reasonably request for
the purpose of enabling such Grantor to exercise the voting and other consensual
rights when and to the extent which it is entitled to exercise pursuant to this
clause (a) and to receive dividends, principal or interest payments which is
authorized to receive and retain pursuant to this clause (a).
(b) If an Event of Default shall occur and be continuing and the
Administrative Agent shall give written notice of its intent to exercise such
rights to the relevant Grantor or Grantors, (i) the Administrative Agent shall
have the right to receive any and all cash dividends, payments or other Proceeds
paid in respect of the Investment Property and make application thereof to the
Obligations in such order as the Administrative Agent may determine, and (ii)
any or all of the Investment Property shall be registered in the name of the
Administrative Agent or its nominee, and the Administrative Agent or its nominee
may thereafter exercise (x) all voting, corporate and other rights pertaining to
such Investment Property at any meeting of shareholders of the relevant Issuer
or Issuers or otherwise and (y) any and all rights of conversion, exchange and
subscription and any other rights, privileges or options pertaining to such
Investment Property as if it were the absolute owner thereof (including, without
limitation, the right to exchange at its discretion any and all of the
Investment Property upon the merger, consolidation, reorganization,
recapitalization or other fundamental change in the corporate or other
organizational structure of any Issuer, or upon the exercise by any Grantor or
the Administrative Agent of any right, privilege or option pertaining to such
Investment Property, and in connection therewith, the right to deposit and
deliver any and all of the Investment Property with any committee, depositary,
transfer agent, registrar or other designated agency upon such terms and
conditions as the Administrative Agent may determine), all without liability
except to account for property actually received by it, but the Administrative
Agent shall have no duty to any Grantor to exercise any such right, privilege or
option and shall not be responsible for any failure to do so or delay in so
doing.
(c) Each Grantor hereby authorizes and instructs each Issuer of any
Investment Property pledged by such Grantor hereunder to (i) comply with any
instruction received by it from the Administrative Agent in writing that (x)
states that an Event of Default has occurred and is continuing and (y) is
otherwise in accordance with the terms of this Agreement, without any other or
further instructions from such Grantor, and each Grantor agrees that each Issuer
shall be fully protected in so complying, and (ii) upon delivery of any notice
to such effect pursuant to Section 6.3(a) hereof, pay any dividends or other
payments with respect to the Investment Property directly to the Administrative
Agent while an Event of Default has occurred and is continuing.
6.4 Intellectual Property; Grant of License. For the purpose of
enabling the Administrative Agent, effective upon the occurrence and during the
continuance of an Event of Default, to exercise rights and remedies under this
Section 6 at such time as the Administrative Agent shall be lawfully entitled to
exercise such rights and remedies, and for no other purpose, each Grantor hereby
grants to the Administrative Agent upon the occurrence and during the
continuance of an Event of Default, to the extent assignable, an irrevocable,
non-exclusive license (exercisable without payment of royalty or other
compensation to such Grantor) to use, assign, license or sublicense any of the
Intellectual Property now owned or
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hereafter acquired by such Grantor, wherever the same may be located, including
in such license access to all media in which any of the licensed items may be
recorded or stored and to all computer programs used for the compilation or
printout hereof.
6.5 Intellectual Property Litigation. Upon the occurrence and during
the continuance of any Event of Default, the Administrative Agent shall have the
right but shall in no way be obligated to file applications for protection of
the Intellectual Property and/or bring suit in the name of any Grantor, the
Administrative Agent or the Secured Parties to enforce the Intellectual Property
and any license thereunder. In the event of such suit, each Grantor shall, at
the reasonable request of the Administrative Agent, do any and all lawful acts
and execute any and all documents requested by the Administrative Agent in aid
of such enforcement and the Grantors shall promptly reimburse and indemnify the
Administrative Agent, as the case may be, for all costs and expenses incurred by
the Administrative Agent in the exercise of its rights under this Section 6.5 in
accordance with Section 8.4 hereof. In the event that the Administrative Agent
shall elect not to bring suit to enforce the Intellectual Property, each Grantor
agrees, at the reasonable request of the Administrative Agent, to take all
commercially reasonable actions necessary, whether by suit, proceeding or other
action, to prevent the infringement, counterfeiting, unfair competition,
dilution, diminution in value of or other damage to any of the Intellectual
Property by others and for that purpose agrees to diligently maintain any suit,
proceeding or other action against any Person so infringing necessary to prevent
such infringement.
6.6 Proceeds to Be Turned Over to Administrative Agent. In addition
to the rights of the Secured Parties specified in Section 6.1 with respect to
payments of Receivables, if an Event of Default shall occur and be continuing,
all Proceeds received by any Grantor consisting of cash, checks and other
near-cash items shall be held by such Grantor in trust for the Secured Parties,
segregated from other funds of such Grantor, and shall, forthwith upon receipt
by such Grantor, be turned over to the Administrative Agent in the exact form
received by such Grantor (duly indorsed by such Grantor to the Administrative
Agent, if required). Upon the occurrence and during the continuance of an Event
of Default, all Proceeds received by the Administrative Agent hereunder shall be
held by the Administrative Agent in a Collateral Account maintained under its
sole dominion and control and while held by the Administrative Agent in a
Collateral Account (or by such Grantor in trust for the Secured Parties) shall
continue to be held as collateral security for all the Obligations and shall not
constitute payment thereof until applied as provided in Section 6.7.
6.7 Application of Proceeds. At such intervals as may be agreed upon
by the Borrower and the Administrative Agent, or, if an Event of Default shall
have occurred and be continuing, at any time at the Administrative Agent's
election, the Administrative Agent may apply all or any part of Proceeds
constituting Collateral, whether or not held in any Collateral Account, and any
proceeds of the guarantee set forth in Section 2 and any proceeds, awards or
rents of any Mortgaged Property or other Collateral, in payment of the
Obligations in the following order:
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First, to pay incurred and unpaid fees and expenses of the
Administrative Agent under the Loan Documents;
Second, to the Administrative Agent, for application by it towards
payment of amounts then due and owing and remaining unpaid in respect of
the Obligations, pro rata among the parties to which such Obligations are
then due and owing based on the respective amounts thereof;
Third (this clause being applicable only if an Event of Default shall
have occurred and be continuing), to the Administrative Agent, for
application by it towards prepayment of the Obligations, pro rata among the
parties holding such Obligations based on the respective amounts thereof;
and
Fourth, any balance of such Proceeds remaining after the Obligations
shall have been paid in full, no Letters of Credit shall be outstanding and
the Commitments shall have terminated shall be paid over to the Borrower or
as otherwise may be required by applicable law.
6.8 Code and Other Remedies. If an Event of Default shall occur and
be continuing, the Administrative Agent, on behalf of the Secured Parties, may
exercise, in addition to all other rights and remedies granted to them in this
Agreement and in any other instrument or agreement securing, evidencing or
relating to the Obligations, all rights and remedies of a secured party under
the New York UCC or any other applicable law. Without limiting the generality of
the foregoing upon the occurrence and during the continuance of an Event of
Default, the Administrative Agent, without demand of performance or other
demand, presentment, protest, advertisement or notice of any kind (except any
notice required by law referred to below) to or upon any Grantor or any other
Person (all and each of which demands, defenses, advertisements and notices are
hereby waived to the extent permitted by applicable law), may in such
circumstances forthwith collect, receive, appropriate and realize upon the
Collateral, or any part thereof, and/or may forthwith sell, lease, assign, give
option or options to purchase, or otherwise dispose of and deliver the
Collateral or any part thereof (or contract to perform any of the foregoing), in
one or more parcels at public or private sale or sales, at any exchange,
broker's board or office of any Secured Party or elsewhere upon such terms and
conditions as it may deem advisable and at such prices as it may deem best, for
cash or on credit or for future delivery without assumption of any credit risk.
Any Secured Party shall have the right upon any such public sale or sales, and,
to the extent permitted by law, upon any such private sale or sales, to purchase
the whole or any part of the Collateral so sold, free of any right or equity of
redemption in any Grantor, which right or equity is hereby waived and released.
Each Grantor further agrees, at the Administrative Agent's written request, to
assemble the Collateral and make it available to the Administrative Agent at
places which the Administrative Agent shall reasonably select, whether at such
Grantor's premises or elsewhere. The Administrative Agent shall apply the net
proceeds of any action taken by it pursuant to this Section 6.8, after deducting
all reasonable costs and expenses of every kind incurred in connection therewith
or incidental to the care or safekeeping of any of the Collateral or in any way
relating to the Collateral or the rights of the Secured Parties here-
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under, including, without limitation, reasonable attorneys' fees and
disbursements, to the payment in whole or in part of the Obligations, in such
order as the Administrative Agent may elect, and only after such application and
after the payment by the Administrative Agent of any other amount required by
any provision of law, including, without limitation, Section 9-615(a)(3) of the
New York UCC, need the Administrative Agent account for the surplus, if any, to
any Grantor. To the extent permitted by applicable law, each Grantor waives all
claims, damages and demands it may acquire against the Secured Parties arising
out of the exercise by them of any rights hereunder. If any notice of a proposed
sale or other disposition of Collateral shall be required by law, such notice
shall be deemed reasonable and proper if given at least 10 days before such sale
or other disposition.
6.9 Registration Rights. (a) If the Administrative Agent shall
determine to exercise its right to sell any or all of the Pledged Stock pursuant
to Section 6.8 hereof, and if in the opinion of the Administrative Agent it is
necessary or advisable to have the Pledged Stock, or that portion thereof to be
sold, registered under the provisions of the Securities Act, the relevant
Grantor will cause the Issuer thereof to (i) execute and deliver, and cause the
directors and officers of such Issuer to execute and deliver, all such
instruments and documents, and perform or cause to be performed all such other
acts as may be, in the opinion of the Administrative Agent, necessary or
advisable to register the Pledged Stock, or that portion thereof to be sold,
under the provisions of the Securities Act, (ii) use its reasonable best efforts
to cause the registration statement relating thereto to become effective and to
remain effective for a period of one year from the date of the first public
offering of the Pledged Stock, or that portion thereof to be sold, and (iii)
make all amendments thereto and/or to the related prospectus which, in the
opinion of the Administrative Agent, are necessary or advisable, all in
conformity with the requirements of the Securities Act and the rules and
regulations of the Securities and Exchange Commission applicable thereto. In
connection with the foregoing clauses (i) through (iv) inclusive, each Grantor
agrees to cause such Issuer to comply with the provisions of the securities or
"Blue Sky" laws of any and all jurisdictions which the Administrative Agent
shall designate and to make available to its security holders, as soon as
practicable, an earnings statement (which need not be audited) which will
satisfy the provisions of Section 11(a) of the Securities Act.
(b) Each Grantor recognizes that the Administrative Agent may be
unable to effect a public sale of any or all the Pledged Stock pursuant to
Section 6.8 hereof, by reason of certain prohibitions contained in the
Securities Act and applicable state securities laws or otherwise, and may be
compelled to resort to one or more private sales thereof to a restricted group
of purchasers which will be obliged to agree, among other things, to acquire
such securities for their own account for investment and not with a view to the
distribution or resale thereof. Each Grantor acknowledges and agrees that any
such private sale may result in prices and other terms less favorable than if
such sale were a public sale and, notwithstanding such circumstances, agrees
that any such private sale shall be deemed to have been made in a commercially
reasonable manner. The Administrative Agent shall be under no obligation to
delay a sale of any of the Pledged Stock pursuant to Section 6.8 hereof for the
period of time necessary to permit the Issuer thereof to register such
securities for public sale under the Se-
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curities Act, or under applicable state securities laws, even if such Issuer
would agree to do so.
(c) Each Grantor agrees to use its reasonable best efforts to
perform or cause to be performed all such other acts as may be necessary to make
such sale or sales of all or any portion of the Pledged Stock pursuant to this
Section 6.9 valid and binding and in compliance with any and all other
applicable Requirements of Law. Each Grantor further agrees that a breach of any
of the covenants contained in this Section 6.9 will cause irreparable injury to
the Secured Parties, that the Secured Parties have no adequate remedy at law in
respect of such breach and, as a consequence, that each and every covenant
contained in this Section 6.9 shall be specifically enforceable against such
Grantor, and such Grantor hereby waives (to the extent permitted by law) and
agrees not to assert any defenses against an action for specific performance of
such covenants except for a defense that no Event of Default has occurred and is
continuing under the Credit Agreement.
6.10 Deficiency. Each Grantor shall remain liable for any deficiency
if the proceeds of any sale or other disposition of the Collateral are
insufficient to pay its Obligations and the fees and disbursements of any
attorneys employed by any Secured Party to collect such deficiency.
SECTION 7. THE ADMINISTRATIVE AGENT
7.1 Administrative Agent's Appointment as Attorney-in-Fact, etc. (a)
Each Grantor hereby irrevocably appoints the Administrative Agent and any
authorized officer or agent thereof, with full power of substitution, as its
lawful attorney-in-fact with full irrevocable power and authority in the place
and stead of such Grantor and in the name of such Grantor or in its own name,
for the purpose of carrying out the terms of this Agreement, to take any and all
appropriate action and to execute any and all documents and instruments which
may be necessary or desirable to accomplish the purposes of this Agreement, and,
without limiting the generality of the foregoing, each Grantor hereby gives the
Administrative Agent the power and right, on behalf of such Grantor, without
assent by such Grantor, to perform any or all of the following acts:
(i) in the name of such Grantor or its own name, or otherwise, take
possession of and indorse and collect any checks, drafts, notes,
acceptances or other instruments for the payment of moneys due under any
Receivable or Contract or with respect to any other Collateral and file any
claim or take any other action or proceeding in any court of law or equity
or otherwise deemed appropriate by the Administrative Agent for the purpose
of collecting any and all such moneys due under any Receivable or Contract
or with respect to any other Collateral whenever payable;
(ii) in the case of any Intellectual Property, execute and deliver,
and have recorded, any and all agreements, instruments, documents and
papers as the Administrative Agent may reasonably request to evidence the
Administrative Agent's security
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interest in such Intellectual Property (and the associated goodwill) and
general intangibles of such Grantor relating thereto or represented
thereby;
(iii) pay or discharge taxes and Liens levied or placed on or
threatened against the Collateral, effect any repairs or any insurance
called for by the terms of this Agreement and pay all or any part of the
premiums therefor and the costs thereof;
(iv) execute, in connection with any sale provided for in Section
6.8 or 6.9, any endorsements, assignments or other instruments of
conveyance or transfer with respect to the Collateral; and
(v) (1) direct any party liable for any payment under any of the
Collateral to make payment of any and all moneys due or to become due
thereunder directly to the Administrative Agent or as the Administrative
Agent shall direct; (2) ask or demand for, collect, and receive payment of
and receipt for, any and all moneys, claims and other amounts due or to
become due at any time in respect of or arising out of any Collateral; (3)
sign and indorse any invoices, freight or express bills, bills of lading,
storage or warehouse receipts, drafts against debtors, assignments,
verifications, notices and other documents in connection with any of the
Collateral; (4) commence and prosecute any suits, actions or proceedings at
law or in equity in any court of competent jurisdiction to collect the
Collateral or any portion thereof and to enforce any other right in respect
of any Collateral; (5) defend any suit, action or proceeding brought
against such Grantor with respect to any Collateral; (6) settle, compromise
or adjust any such suit, action or proceeding and, in connection therewith,
give such discharges or releases as the Administrative Agent may deem
appropriate; (7) assign any Copyright, Patent or Trademark (along with the
goodwill of the business to which any such Copyright, Patent or Trademark
pertains), throughout the world for such term or terms, on such conditions,
and in such manner, as the Administrative Agent shall in its sole
discretion determine; and (8) generally, sell, transfer, pledge and make
any agreement with respect to or otherwise deal with any of the Collateral
as fully and completely as though the Administrative Agent were the
absolute owner thereof for all purposes, and do, at the Administrative
Agent's option and such Grantor's expense, at any time, or from time to
time, all acts and things which the Administrative Agent deems reasonably
necessary to protect, preserve or realize upon the Collateral and
Administrative Agent's security interests therein and to effect the intent
of this Agreement, all as fully and effectively as such Grantor might do.
Anything in this Section 7.1(a) to the contrary notwithstanding, the
Administrative Agent agrees that it will not exercise any rights under the power
of attorney provided for in this Section 7.1(a) unless an Event of Default shall
have occurred and be continuing.
(b) If any Grantor fails to perform or comply with any of its
agreements contained herein, the Administrative Agent, at its option, but
without any obligation so to do, may perform or comply, or otherwise cause
performance or compliance, with such agreement.
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(c) The reasonable expenses of the Administrative Agent incurred in
connection with actions undertaken as provided in this Section 7.1, together
with interest thereon at the rate applicable hereto under Section 3.11 of the
Credit Agreement, from the date of payment by the Administrative Agent to the
date reimbursed by the relevant Grantor, shall be payable by such Grantor to the
Administrative Agent in accordance with Section 10.5 of the Credit Agreement.
(d) Each Grantor hereby ratifies all acts that said attorneys shall
lawfully perform or cause to be performed by virtue hereof. All powers,
authorizations and agencies contained in this Agreement are coupled with an
interest and are irrevocable until this Agreement is terminated and the security
interests created hereby are released.
7.2 Duty of Administrative Agent. Except for the exercise of
reasonable care in the custody of any Collateral in its possession and the
accounting for moneys actually received by it hereunder, the Administrative
Agent's sole duty with respect to the custody, safekeeping and physical
preservation of the Collateral in its possession, under Section 9-207 of the New
York UCC or otherwise, shall be to deal with it in the same manner as the
Administrative Agent deals with similar property for its own account. No Secured
Party nor any of its officers, directors, employees or agents shall be liable
for failure to demand, collect or realize upon any of the Collateral or for any
delay in doing so or shall be under any obligation to sell or otherwise dispose
of any Collateral upon the request of any Grantor or any other Person or to take
any other action whatsoever with regard to the Collateral or any part thereof.
The powers conferred on the Administrative Agent and the Secured Parties
hereunder are solely to protect the Secured Parties' interests in the Collateral
and shall not impose any duty upon the Administrative Agent or any Secured Party
to exercise any such powers. The Secured Parties shall be accountable only for
amounts that they actually receive as a result of the exercise of such powers,
and neither they nor any of their officers, directors, employees or agents shall
be responsible to any Grantor for any act or failure to act hereunder, except
for their own gross negligence or willful misconduct.
7.3 Execution of Financing Statements. Pursuant to any applicable
law, each Grantor authorizes the Administrative Agent to file or record
financing statements and other filing or recording documents or instruments with
respect to the Collateral without the signature of such Grantor in such form and
in such offices as the Administrative Agent determines appropriate to perfect
the security interests of the Administrative Agent under this Agreement. Each
Grantor authorizes the Administrative Agent to use the collateral description
"all personal property" in any such financing statement. Each Grantor hereby
ratifies and authorizes the filing by the Administrative Agent of any financing
statement with respect to the Collateral made prior to the date hereof.
7.4 Authority of Administrative Agent. Each Grantor acknowledges
that the rights and responsibilities of the Administrative Agent under this
Agreement with respect to any action taken by the Administrative Agent or the
exercise or non-exercise by the Administrative Agent of any option, voting
right, request, judgment or other right or remedy provided for herein or
resulting or arising out of this Agreement shall, as between the Administrative
Agent and the other Secured Parties, be governed by the Credit Agreement and by
such other agreements with respect thereto as may exist from time to time among
them, but, as between the Admin-
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istrative Agent and the Grantors, the Administrative Agent shall be conclusively
presumed to be acting as agent for the Secured Parties with full and valid
authority so to act or refrain from acting, and no Grantor shall be under any
obligation, or entitlement, to make any inquiry respecting such authority.
7.5 Access to Collateral, Books and Records; Other Information. Upon
reasonable request to each Grantor, the Administrative Agent, its agents,
accountants and attorneys shall have full and free access to visit and inspect,
as applicable, during normal business hours and such other reasonable times as
may be requested by the Administrative Agent all of the Collateral including,
without limitation, all of the books, correspondence and records of such Grantor
relating thereto. The Administrative Agent and its representatives may examine
the same, take extracts therefrom and make photocopies thereof, and such Grantor
agrees to render to the Administrative Agent, at such Grantor's cost and
expense, such clerical and other assistance as may be reasonably requested by
the Administrative Agent with regard thereto. Such Grantor shall, at any and all
times, within a reasonable time after written request by the Administrative
Agent, furnish or cause to be furnished to the Administrative Agent, in such
manner and in such detail as may be reasonably requested by the Administrative
Agent, additional information with respect to the Collateral.
SECTION 8. MISCELLANEOUS
8.1 Amendments in Writing. None of the terms or provisions of this
Agreement may be waived, amended, supplemented or otherwise modified except in
accordance with Section 10.1 of the Credit Agreement.
8.2 Notices. All notices, requests and demands to or upon the
Administrative Agent or any Grantor hereunder shall be effected in the manner
provided for in Section 10.2 of the Credit Agreement; provided that any such
notice, request or demand to or upon any Guarantor shall be addressed to such
Guarantor at its notice address set forth on Schedule 8.2 or such other address
specified in writing to the Administrative Agent in accordance with such
Section.
8.3 No Waiver by Course of Conduct; Cumulative Remedies. No Secured
Party shall by any act (except by a written instrument pursuant to Section 8.1),
delay, indulgence, omission or otherwise be deemed to have waived any right or
remedy hereunder or to have acquiesced in any Default or Event of Default. No
failure to exercise, nor any delay in exercising, on the part of any Secured
Party, any right, power or privilege hereunder shall operate as a waiver
thereof. No single or partial exercise of any right, power or privilege
hereunder shall preclude any other or further exercise thereof or the exercise
of any other right, power or privilege. A waiver by any Secured Party of any
right or remedy hereunder on any one occasion shall not be construed as a bar to
any right or remedy which such Secured Party would otherwise have on any future
occasion. The rights and remedies herein provided are
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cumulative, may be exercised singly or concurrently and are not exclusive of any
other rights or remedies provided by law.
8.4 Enforcement Expenses; Indemnification. (a) Each Guarantor agrees
to pay or reimburse each Secured Party for all its costs and expenses incurred
in collecting against such Guarantor under the guarantee contained in Section 2
or otherwise enforcing or preserving any rights under this Agreement and the
other Loan Documents to which such Guarantor is a party, including, without
limitation, the fees and disbursements of counsel (including the allocated fees
and expenses of in-house counsel) to each Secured Party.
(b) Each Guarantor agrees to pay, and to save the Secured Parties
harmless from, any and all liabilities with respect to, or resulting from any
delay in paying, any and all stamp, excise, sales or other taxes which may be
payable or determined to be payable with respect to any of the Collateral or in
connection with any of the transactions contemplated by this Agreement.
(c) Each Guarantor agrees to pay, and to save the Secured Parties
harmless from, any and all liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, expenses or disbursements of any kind or
nature whatsoever with respect to the execution, delivery, enforcement,
performance and administration of this Agreement to the extent the Borrower
would be required to do so pursuant to Section 10.5 of the Credit Agreement.
(d) The agreements in this Section 8.4 shall survive repayment of
the Obligations and all other amounts payable under the Credit Agreement and the
other Loan Documents.
8.5 Successors and Assigns. This Agreement shall be binding upon the
successors and assigns of each Grantor and shall inure to the benefit of the
Secured Parties and their successors and assigns; provided that no Grantor may
assign, transfer or delegate any of its rights or obligations under this
Agreement without the prior written consent of the Administrative Agent.
8.6 Set-Off. Each Grantor hereby irrevocably authorizes each Secured
Party at any time and from time to time, without notice to such Grantor or any
other Grantor, any such notice being expressly waived by each Grantor, to
set-off and appropriate and apply any and all deposits (general or special, time
or demand, provisional or final), in any currency, and any other credits,
indebtedness or claims, in any currency, in each case whether direct or
indirect, absolute or contingent, matured or unmatured, at any time held or
owing by such Secured Party to or for the credit or the account of such Grantor,
or any part thereof in such amounts as such Secured Party may elect, against and
on account of the obligations and liabilities of such Grantor to such Secured
Party hereunder and claims of every nature and description of such Secured Party
against such Grantor, in any currency, whether arising hereunder, under the
Credit Agreement, any other Loan Document or otherwise, as such Secured Party
may elect, whether or not any Secured Party has made any demand for payment and
although such obligations, liabilities and claims may be contingent or
unmatured. Each Secured
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Party shall notify such Grantor promptly of any such set-off and the application
made by such Secured Party of the proceeds thereof, provided that the failure to
give such notice shall not affect the validity of such set-off and application.
The rights of each Secured Party under this Section 8.6 are in addition to other
rights and remedies (including, without limitation, other rights of set-off)
which such Secured Party may have.
8.7 Counterparts. This Agreement may be executed by one or more of
the parties to this Agreement on any number of separate counterparts (including
by telecopy in which case, when so delivered shall be deemed an original), and
all of said counterparts taken together shall be deemed to constitute one and
the same instrument.
8.8 Severability. Any provision of this Agreement which is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
8.9 Section Headings. The Section headings used in this Agreement
are for convenience of reference only and are not to affect the construction
hereof or be taken into consideration in the interpretation hereof.
8.10 Integration. This Agreement and the other Loan Documents
represent the agreement of the Grantors, the Secured Parties with respect to the
subject matter hereof and thereof, and there are no promises, undertakings,
representations or warranties by any Secured Party relative to subject matter
hereof and thereof not expressly set forth or referred to herein or in the other
Loan Documents.
8.11 GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND
CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK
WITHOUT REGARD TO CONFLICT OF LAWS PRINCIPLES. EXCEPT TO THE EXTENT THAT THE
UNIFORM COMMERCIAL CODE PROVIDES THAT PERFECTION OF THE SECURITY INTEREST
HEREUNDER, OR REMEDIES HEREUNDER IN RESPECT OF ANY PARTICULAR COLLATERAL ARE
GOVERNED BY THE LAWS OF THE JURISDICTION OTHER THAN THE STATE OF NEW YORK.
8.12 Submission To Jurisdiction; Waivers. Each Grantor hereby
irrevocably and unconditionally:
(a) submits for itself and its property in any legal action or
proceeding relating to this Agreement and the other Loan Documents to which
it is a party, or for recognition and enforcement of any judgment in
respect thereof, to the non-exclusive general jurisdiction of the courts of
the State of New York, the courts of the United States of America for the
Southern District of New York, and appellate courts from any thereof;
-32-
(b) consents that any such action or proceeding may be brought in
such courts and waives any objection that it may now or hereafter have to
the venue of any such action or proceeding in any such court or that such
action or proceeding was brought in an inconvenient court and agrees not to
plead or claim the same;
(c) agrees that service of process in any such action or proceeding
may be effected by mailing a copy thereof by registered or certified mail
(or any substantially similar form of mail), postage prepaid, to such
Grantor at its address referred to in Section 8.2 or at such other address
of which the Administrative Agent shall have been notified pursuant
thereto;
(d) agrees that nothing herein shall affect the right to effect
service of process in any other manner permitted by law or shall limit the
right to sue in any other jurisdiction; and
(e) waives, to the maximum extent not prohibited by law, any right
it may have to claim or recover in any legal action or proceeding referred
to in this Section any special, exemplary, punitive or consequential
damages.
8.13 Acknowledgements. Each Grantor hereby acknowledges that:
(a) it has been advised by counsel in the negotiation, execution and
delivery of this Agreement and the other Loan Documents to which it is a
party;
(b) no Secured Party has any fiduciary relationship with or duty to
any Grantor arising out of or in connection with this Agreement or any of
the other Loan Documents, and the relationship between the Grantors, on the
one hand, and the Secured Parties, on the other hand, in connection
herewith or therewith is solely that of debtor and creditor; and
(c) no joint venture is created hereby or by the other Loan
Documents or otherwise exists by virtue of the transactions contemplated
hereby among the Secured Parties or among the Grantors and the Secured
Parties.
8.14 Additional Grantors. Each Subsidiary of the Borrower that is
required to become a party to this Agreement pursuant to Section 6.9 of the
Credit Agreement shall become a Grantor for all purposes of this Agreement upon
execution and delivery by such Subsidiary of an Assumption Agreement in the form
of Annex III hereto.
8.15 Releases. (a) At such time as the Loans and the other
Obligations (other than Obligations in respect of Specified Hedge Agreements)
shall have been paid in full and the Commitments have been terminated, the
Collateral shall be released from the Liens created hereby, and this Agreement
and all obligations (other than those expressly stated to survive such
termination) of the Administrative Agent and each Grantor hereunder shall
terminate, all without delivery of any instrument or performance of any act by
any party, and all rights to the Collateral shall revert to the Grantors. At the
request and sole expense of
-33-
any Grantor following any such termination, the Administrative Agent shall
promptly deliver to such Grantor any Collateral held by the Administrative Agent
hereunder, and promptly execute and deliver to such Grantor such documents as
such Grantor shall reasonably request to evidence such termination.
(b) If any of the Collateral shall be sold, transferred or otherwise
disposed of by any Grantor (except where such sale, transfer or disposal is to
another Grantor) in a transaction permitted by the Credit Agreement, then the
Administrative Agent, at the request and sole expense of such Grantor, shall
execute and deliver to such Grantor all releases or other documents reasonably
necessary or desirable for the release of the Liens created hereby on such
Collateral. At the request and sole expense of the Borrower, a Subsidiary
Guarantor shall be released from its obligations hereunder in the event that all
the Capital Stock of such Subsidiary Guarantor shall be sold, transferred or
otherwise disposed of in a transaction permitted by the Credit Agreement;
provided that the Borrower shall have delivered to the Administrative Agent, at
least ten Business Days prior to the date of the proposed release, a written
request for release identifying the relevant Subsidiary Guarantor and the terms
of the sale or other disposition in reasonable detail, including the price
thereof and any expenses in connection therewith, together with a certification
by the Borrower stating that such transaction is in compliance with the Credit
Agreement and the other Loan Documents.
8.16 WAIVER OF JURY TRIAL. EACH GRANTOR AND, BY ITS ACCEPTANCE OF THE
BENEFITS HEREOF, EACH SECURED PARTY HEREBY IRREVOCABLY AND UNCONDITIONALLY
WAIVES TRIAL BY JURY IN ANY LEGAL ACTION OR PROCEEDING RELATING TO THIS
AGREEMENT OR ANY OTHER LOAN DOCUMENT AND FOR ANY COUNTERCLAIM THEREIN.
[Signature pages follow]
-34-
IN WITNESS WHEREOF, each of the undersigned has caused this Guarantee
and Collateral Agreement to be duly executed and delivered as of the date first
above written.
MUZAK HOLDINGS LLC
By: ___________________________
Name:
Title:
MUZAK LLC
By: ___________________________
Name:
Title:
AUDIO ENVIRONMENTS, INC.
By: ___________________________
Name:
Title:
BACKGROUND MUSIC BROADCASTERS,
INC.
By: ___________________________
Name:
Title:
BI ACQUISITION, LLC
By: ___________________________
Name:
Title:
BUSINESS SOUND, INC.
By: ___________________________
Name:
Title:
-35-
MLP ENVIRONMENTAL MUSIC, LLC
By: ___________________________
Name:
Title:
MUSIC INCORPORATED
By: ___________________________
Name:
Title:
MUZAK CAPITAL CORPORATION
By: ___________________________
Name:
Title:
MUZAK HOUSTON, INC.
By: ___________________________
Name:
Title:
TELEPHONE AUDIO PRODUCTIONS,
INC.
By: ___________________________
Name:
Title:
VORTEX SOUND COMMUNICATIONS
COMPANY, INC.
By: ___________________________
Name:
Title:
-36-
ANNEX I-A
[FORM OF]
SECURITIES ACCOUNT CONTROL AGREEMENT
[provided under separate cover]
ANNEX I-B
[FORM OF]
DEPOSIT ACCOUNT CONTROL AGREEMENT
[provided under separate cover]
ANNEX II
[FORM OF]
ISSUER ACKNOWLEDGMENT
The undersigned hereby (i) acknowledges receipt of a copy of that
certain guarantee and collateral agreement (as amended, amended and restated,
supplemented or otherwise modified from time to time, the "Guarantee and
Collateral Agreement"; capitalized terms used but not otherwise defined herein
shall have the meanings assigned to such terms in the Guarantee and Collateral
Agreement), dated as of May 20, 2003, among Muzak LLC (the "Borrower"), the
Guarantors from time to time party thereto, and Bear Stearns Corporate Lending
Inc., as Administrative Agent (in such capacity and together with any successors
in such capacity, the "Administrative Agent"), (ii) agrees promptly to note on
its books the security interests granted to the Administrative Agent and
confirmed under the Guarantee and Collateral Agreement, (iii) agrees that it
will comply with instructions of the Administrative Agent with respect to the
applicable Investment Property without further consent by the applicable
Grantor, (iv) agrees to notify the Administrative Agent upon obtaining knowledge
of any interest in favor of any Person in the applicable Investment Property
that is adverse to the interest of the Administrative Agent therein and (v)
waives any right or requirement at any time hereafter to receive a copy of the
Guarantee and Collateral Agreement in connection with the registration of any
Investment Property thereunder in the name of the Administrative Agent or its
nominee or the exercise of Voting rights by the Administrative Agent or its
nominee.
[ ]
By: ___________________________
Name:
Title:
ANNEX III
[FORM OF]
ASSUMPTION AGREEMENT
[provided under separate cover]
EXHIBIT B
[FORM OF]
COMPLIANCE CERTIFICATE
To: Each of the Lenders (as defined below) and Bear Stearns Cor-
porate Lending Inc., as Administrative Agent for such Lenders
c/o Bear Stearns Corporate Lending Inc.
383 Madison Avenue
New York, NY 10179
Muzak LLC
Ladies and Gentlemen:
This Compliance Certificate is being delivered pursuant to Section 6.2(b)
of the Credit Agreement dated as of May 20, 2003 (as amended, supplemented,
amended and restated or otherwise modified from time to time, the "Credit
Agreement"), among MUZAK LLC, a Delaware limited liability company (the
"Borrower"), MUZAK HOLDINGS LLC, a Delaware limited liability company
("Holdings"), the several banks and other financial institutions or entities
from time to time parties to this Agreement (the "Lenders"), BEAR, STEARNS & CO.
INC. and LEHMAN BROTHERS INC., as joint lead arrangers and joint bookrunners
(together with their successors and assigns, collectively, the "Joint Lead
Arrangers"), LEHMAN COMMERCIAL PAPER INC. and FLEET NATIONAL BANK, as
co-syndication agents (together with their successors and assigns, in such
capacity, collectively, the "Co-Syndication Agents"), GENERAL ELECTRIC CAPITAL
CORPORATION, as documentation agent (together with its successors and assigns,
in such capacity, the "Documentation Agent"), and BEAR STEARNS CORPORATE LENDING
INC., as administrative agent (together with its successors and assigns, in such
capacity, the "Administrative Agent"). Capitalized terms used herein without
definition shall have the meanings assigned to such terms in the Credit
Agreement.
The Borrower hereby certifies, represents and warrants that as of [ ]
(the "Test Date"):
(a) The Consolidated Leverage Ratio was __:1.0, as computed on Attachment
1 hereto and such ratio [complies] [does not comply] with the provisions of
Section 7.1(a) of the Credit Agreement;
(b) The Consolidated Interest Coverage Ratio was __:1.0, as computed on
Attachment 2 hereto and such amount [complies] [does not comply] with the
provisions of Section 7.1(b) of the Credit Agreement;
-2-
(c) The Consolidated Fixed Charge Coverage Ratio was __:1.0, as computed
on Attachment 3 hereto and such ratio [complies] [does not comply] with the
provisions of Section 7.1(c) of the Credit Agreement or such other amount as
modified pursuant to the terms of Section 7.7, which calculation are set forth
in Attachment 4 hereto;/1/
(d) The Capital Expenditures were ______________, and such expenditures
[exceed] [do not exceed] the base amount set forth in Section 7.7 of the Credit
Agreement;/2/
(e) No Default or Event of Default has occurred and is continuing [other
than as follows:].
[Signature Page Follows]
- ------------------------
/1/ The first Test Period for the Fixed Charge Coverage Ratio shall be March
31, 2004.
/2/ The first Test Period for Capital Expenditures shall be the period from the
Effective Date through December 31, 2003.
S-1
Compliance Certificate
IN WITNESS WHEREOF, the Borrower has caused this Compliance Certificate to
be executed and delivered by its duly Authorized Officer as of this ___ day of
________.
MUZAK LLC
By: _____________________________________
Name:
Title: [Financial Officer]
Compliance Certificate
ATTACHMENT 1
1. CONSOLIDATED LEVERAGE
RATIO/3/
A. "Consolidated Total Debt": at any date, the aggregate
principal amount of all Indebtedness of the Borrower
and its Included Subsidiaries at such date, determined
on a consolidated basis in accordance with GAAP,
excluding (a) any Permitted Sponsor Subordinated Debt
and (b) Deferred Management Fees........................ $___________
B. Cash and Cash Equivalents on hand to the extent
exceeding $5,000,000 on such day........................ $___________
C. "Consolidated EBITDA": for any period, Consolidated
Net Income for such period plus, without duplication
and to the extent reflected as a charge in the
statement of such Consolidated Net Income for such
period, the sum of (a) income tax expense, (b)
interest expense, amortization or write-off of debt
discount and debt issuance costs and commissions,
discounts and other fees and charges associated with
Indebtedness (including the Loans), (c) depreciation
and amortization expense, (d) amortization of
intangibles (including, but not limited to, goodwill)
and organization costs, (e) any extraordinary charges
or losses determined in accordance with GAAP, (f)
non-cash compensation expenses arising from the
issuance or appreciation of capital stock, options to
purchase capital stock and capital stock appreciation
rights to the management of such Person and its
Included Subsidiaries, (g) any other non-ordinary
course non-cash charges, non-cash expenses or non-cash
losses of such Person or any of its Included
Subsidiaries for such period; provided, however, that
cash payments in respect of such non-ordinary course
non-cash charges, expenses or losses made in such
period or in any future period in respect of such
non-cash charges, expenses or losses shall be
subtracted from Consolidated Net Income in calculating
Consolidated EBITDA in the period when such payments
are made, (h) Deferred Management Fees; provided,
however, that cash payments made in such period or in
any future period in respect of such Deferred
Management Fees shall be subtracted from Consolidated
Net Income in calculating Consolidated EBITDA in the
- ----------------------
/3/ For purposes of calculating the Consolidated Leverage Ratio, each of
Consolidated Total Debt and Consolidated EBITDA shall be calculated on a
Pro Forma Basis.
-2-
period when such Deferred Management Fees are paid;
provided, further, that cash payments made from and
after the Closing Date in respect of any Pre-Closing
Deferred Management Fees shall not be subtracted from
Consolidated Net Income in calculating Consolidated
EBITDA in any period, and (i) amounts paid by the
Borrower in respect of license fees, interest thereon
and any related penalties paid or (to the extent that
such amounts were expensed by the Borrower in such
period) to be paid by the Borrower in settlement of
claims for past license fee calculations for prior
periods to copyright holders, performing rights
organizations and/or licensing collectives and
associations, and accruals therefor, provided that the
aggregate amounts so included pursuant to this clause
(i) shall not exceed $5,000,000 from the Closing Date,
and minus, to the extent included in the statement of
such Consolidated Net Income for such period, the sum
of (a) interest income, (b) any extraordinary income
or gains determined in accordance with GAAP and (c)
any other non-cash income (excluding any items that
represent the reversal of any accrual of, or cash
reserve for, anticipated cash charges in any prior
period that are described in the parenthetical to
clause (g) above), all as determined on a consolidated
basis................................................... $___________
D. CONSOLIDATED LEVERAGE RATIO: The ratio of Item 1.A.
less Item 1.B to the product of Item 1.C and four
(4)..................................................... ________:1.0
ATTACHMENT 2
2. CONSOLIDATED INTEREST
COVERAGE RATIO:
A. "Consolidated EBITDA": for any period, Consolidated
Net Income for such period plus, without duplication
and to the extent reflected as a charge in the
statement of such Consolidated Net Income for such
period, the sum of (a) income tax expense, (b)
interest expense, amortization or write-off of debt
discount and debt issuance costs and commissions,
discounts and other fees and charges associated with
Indebtedness (including the Loans), (c) depreciation
and amortization expense, (d) amortization of
intangibles (including, but not limited to, goodwill)
and organization costs, (e) any extraordinary charges
or losses determined in accordance with GAAP, (f)
non-cash compensation expenses arising from the
issuance or appreciation of capital stock, options to
purchase capital stock and capital stock appreciation
rights to the management of such Person and its
Included Subsidiaries, (g) any other non-ordinary
course non-cash charges, non-cash expenses or non-cash
losses of such Person or any of its Included
Subsidiaries for such period; provided, however, that
cash payments in respect of such non-ordinary course
non-cash charges, expenses or losses made in such
period or in any future period in respect of such
non-cash charges, expenses or losses shall be
subtracted from Consolidated Net Income in calculating
Consolidated EBITDA in the period when such payments
are made, (h) Deferred Management Fees; provided,
however, that cash payments made in such period or in
any future period in respect of such Deferred
Management Fees shall be subtracted from Consolidated
Net Income in calculating Consolidated EBITDA in the
period when such Deferred Management Fees are paid;
provided, further, that cash payments made from and
after the Closing Date in respect of any Pre-Closing
Deferred Management Fees shall not be subtracted from
Consolidated Net Income in calculating Consolidated
EBITDA in any period, and (i) amounts paid by the
Borrower in respect of license fees, interest thereon
and any related penalties paid or (to the extent that
such amounts were expensed by the Borrower in such
period) to be paid by the Borrower in settlement of
claims for past license fee calculations for prior
-2-
periods to copyright holders, performing rights
organizations and/or licensing collectives and
associations, and accruals therefor, provided that the
aggregate amounts so included pursuant to this clause
(i) shall not exceed $5,000,000 from the Closing Date,
and minus, to the extent included in the statement of
such Consolidated Net Income for such period, the sum
of (a) interest income, (b) any extraordinary income
or gains determined in accordance with GAAP and (c)
any other non-cash income (excluding any items that
represent the reversal of any accrual of, or cash
reserve for, anticipated cash charges in any prior
period that are described in the parenthetical to
clause (g) above), all as determined on a consolidated
basis................................................... $___________
B. "Consolidated Cash Interest Expense": for any period,
total cash interest expense (including that
attributable to Capital Lease Obligations) of the
Borrower and its Included Subsidiaries for such period
with respect to all outstanding Indebtedness of the
Borrower and its Included Subsidiaries (including all
commissions, discounts and other fees and charges owed
with respect to letters of credit and bankers'
acceptance financing and net costs under Hedge
Agreements in respect of interest rates, in each case,
to the extent paid in cash during such period), but
excluding cash interest expense paid on the Permitted
Sponsor Subordinated Debt at the time of redemption or
repayment of the principal of such Permitted Sponsor
Subordinated Debt....................................... $___________
C. CONSOLIDATED INTEREST COVERAGE RATIO:
The ratio of Item 2.A to Item 2.B ...................... :1.0
============
ATTACHMENT 3
3. CONSOLIDATED FIXED CHARGE COVERAGE RATIO:
A. "Consolidated EBITDA": for any period, Consolidated
Net Income for such period plus, without duplication
and to the extent reflected as a charge in the
statement of such Consolidated Net Income for such
period, the sum of (a) income tax expense, (b)
interest expense, amortization or write-off of debt
discount and debt issuance costs and commissions,
discounts and other fees and charges associated with
Indebtedness (including the Loans), (c) depreciation
and amortization expense, (d) amortization of
intangibles (including, but not limited to, goodwill)
and organization costs, (e) any extraordinary charges
or losses determined in accordance with GAAP, (f)
non-cash compensation expenses arising from the
issuance or appreciation of capital stock, options to
purchase capital stock and capital stock appreciation
rights to the management of such Person and its
Included Subsidiaries, (g) any other non-ordinary
course non-cash charges, non-cash expenses or non-cash
losses of such Person or any of its Included
Subsidiaries for such period; provided, however, that
cash payments in respect of such non-ordinary course
non-cash charges, expenses or losses made in such
period or in any future period in respect of such
non-cash charges, expenses or losses shall be
subtracted from Consolidated Net Income in calculating
Consolidated EBITDA in the period when such payments
are made, (h) Deferred Management Fees; provided,
however, that cash payments made in such period or in
any future period in respect of such Deferred
Management Fees shall be subtracted from Consolidated
Net Income in calculating Consolidated EBITDA in the
period when such Deferred Management Fees are paid;
provided, further, that cash payments made from and
after the Closing Date in respect of any Pre-Closing
Deferred Management Fees shall not be subtracted from
Consolidated Net Income in calculating Consolidated
EBITDA in any period, and (i) amounts paid by the
Borrower in respect of license fees, interest thereon
and any related penalties paid or (to the extent that
such amounts were expensed by the Borrower in such
period) to be paid by the Borrower in settlement of
claims for past license fee calculations for prior
-2-
periods to copyright holders, performing rights
organizations and/or licensing collectives and
associations, and accruals therefor, provided that the
aggregate amounts so included pursuant to this clause
(i) shall not exceed $5,000,000 from the Closing Date,
and minus, to the extent included in the statement of
such Consolidated Net Income for such period, the sum
of (a) interest income, (b) any extraordinary income
or gains determined in accordance with GAAP and (c)
any other non-cash income (excluding any items that
represent the reversal of any accrual of, or cash
reserve for, anticipated cash charges in any prior
period that are described in the parenthetical to
clause (g) above), all as determined on a consolidated
basis................................................... $___________
B. "Consolidated Fixed Charges": for any period, the sum
(without duplication) of (a) Consolidated Cash
Interest Expense for such period, (b) any provision
for current taxes based on the income of the Borrower
and its Included Subsidiaries and payable in cash
during such period, (c) scheduled payments made during
such period on account of principal of Indebtedness of
the Borrower or any of its Included Subsidiaries, (d)
Capital Expenditures of the Borrower and its Included
Subsidiaries for such period and (e) Restricted
Payments (other than Restricted Payments made pursuant
to Section 7.6 (f) (to the extent such expenses are
deducted in calculating Consolidated Net Income of the
Borrower), (h), (j), (l), (n) and (o)) to the extent
payable in cash during such period...................... $___________
C. CONSOLIDATED FIXED CHARGE COVERAGE RATIO: The ratio of
Item 3.A to Item 3.B.................................... ________:1.0
ATTACHMENT 4
3. CAPITAL EXPENDITURES:
A. Capital Expenditure/4/ amount pursuant to Section 7.7
for the fiscal year ended December 31, 2003........... $40,000,000.00
B. Increased Expenditure Amount/5/ for fiscal year ended
December 31, 200[4][5][6][7][8]/6/ (if any)........... $_____________
C. PERMITTED CAPITAL EXPENDITURES: The sum of Item 4.A
and Item 4.B.......................................... $_____________
- --------------------------
/4/ "Capital Expenditures": for any period, with respect to any Person, the
aggregate of all expenditures by such Person and its Subsidiaries for the
acquisition of fixed assets or additions to equipment (including
replacements, capitalized repairs and improvements during such period) that
should be capitalized under GAAP on a consolidated balance sheet of such
Person and its Subsidiaries; provided, however, that "Capital Expenditures"
shall exclude capitalized sales commissions and expenditures for intangible
assets and capital leases
/5/ Any acquisition that is permitted pursuant to Section 7.8 and consummated
during any fiscal year shall increase the amount of permitted Capital
Expenditures for such fiscal year and each subsequent fiscal year, in an
amount equal to the product of (A) 3.5 and (B) the total monthly recurring
revenue of such acquisition (which in the case of any such acquisition
consummated on or prior to the fifteenth day of any month, shall be the
total monthly recurring revenue for the second prior month immediately
preceding such acquisition) (the "Increased Expenditure Amount"); provided,
further that (x) the Increased Expenditure Amount for the initial fiscal
year shall be prorated on an annualized basis from the date of each such
acquisition for such fiscal year, but the total Increased Expenditure
Amount for such acquisition shall increase the amount of permitted Capital
Expenditures for each subsequent fiscal year, and (y) in connection with
each such Permitted Acquisition, the Compliance Certificate delivered by
the Borrower as set forth in the definition of "Permitted Acquisition"
shall set forth in reasonable detail the calculation of the Increased
Expenditure Amount for such Permitted Acquisition, and such calculation
shall be satisfactory to the Administrative Agent in all respects.
/6/ For each subsequent fiscal year, break out amount of Increased Capital
Expenditures.
EXHIBIT C
[FORM OF]
LOAN PARTY CLOSING CERTIFICATE
Reference is hereby made to the Credit Agreement dated as of May 20, 2003
(as amended, supplemented, amended and restated or otherwise modified from time
to time, the "Credit Agreement"), among MUZAK LLC, a Delaware limited liability
company (the "Borrower"), MUZAK HOLDINGS LLC, a Delaware limited liability
company ("Holdings"), the several banks and other financial institutions or
entities from time to time parties to this Agreement (the "Lenders"), BEAR,
STEARNS & CO. INC. and LEHMAN BROTHERS INC., as joint lead arrangers and joint
bookrunners (together with their successors and assigns, collectively, the
"Joint Lead Arrangers"), LEHMAN COMMERCIAL PAPER INC. and FLEET NATIONAL BANK,
as co-syndication agents (together with their successors and assigns, in such
capacity, collectively, the "Co-Syndication Agents"), GENERAL ELECTRIC CAPITAL
CORPORATION, as documentation agent (together with its successors and assigns,
in such capacity, the "Documentation Agent"), and BEAR STEARNS CORPORATE LENDING
INC., as administrative agent (together with its successors and assigns, in such
capacity, the "Administrative Agent"). Capitalized terms used herein without
definition shall have the meanings assigned to such terms in the Credit
Agreement.
Pursuant to subsection 5.1(g) of the Credit Agreement, the undersigned
Corporate Secretary of the Company hereby certifies as follows:
1. The representations and warranties of the Company in or pursuant to
the Loan Documents to which it is a party are true and correct in all material
respects on and as of the date hereof with the same effect as if made on the
date hereof, except that (x) any representation and warranty that is qualified
as to "materiality" or "Material Adverse Effect" is true and correct in all
respects and (y) to the extent any representation and warranty specifically
relates to an earlier date, such representation and warranty is true and correct
in all material respects on and as of such earlier date, except that any
representation and warranty that is qualified as to "materiality" or "Material
Adverse Effect" is true and correct in all respects.
2. [ ] is the duly elected and qualified [Corporate Secretary]
of the Company and the signature set forth for such officer below is such
officer's true and genuine signature.
3. After giving effect to the extensions of credit made on the date
hereof, no Default or Event of Default has occurred and is continuing.
-2-
4. Each of the conditions precedent contained in Section 5.1 of the
Credit Agreement have been satisfied (or waived in accordance with Section 10.1
of the Credit Agreement).
5. [After giving effect to the initial extension of credit and the
application of proceeds thereof, the cash balance on hand of the Borrower and
its Subsidiaries on the date hereof does not exceed $10,000,000]./7/
6. The Company is a corporation duly [incorporated][organized], validly
existing and in good standing under the laws of the jurisdiction of its
organization.
7. Attached hereto as Annex 1 is a true and complete copy of the
resolutions duly adopted by the Board of [Directors][Managers] of the Company on
May [ ], 2003; such resolutions have not in any way been amended, modified,
revoked or rescinded, have been in full force and effect since their adoption to
and including the date hereof and are now in full force and effect and are the
only corporate proceedings of the Company now in force relating to or affecting
the matters referred to therein.
8. Attached hereto as Annex 2 is a true and complete copy of the
Certificate of [Formation][Incorporation] of the Company, as in effect on the
date hereof, and such certificate has not been amended, repealed, modified or
restated.
9. Attached hereto as Annex 3 is a true and complete copy of the
[By-Laws] [Limited Liability Company Agreement] of the Company as in effect on
the date hereof, and such [by-laws] [agreement] has not in any way been amended,
modified, revoked or rescinded.
10. Attached hereto as Annex 4 is a long form good standing certificate of
the Company, dated as of May ___, 2003.
11. The following persons are now duly elected and qualified officers of
the Company holding the offices indicated next to their respective names below,
and such officers have held such offices with the Company at all times since the
date indicated next to their respective titles to and including the date hereof,
and the signatures appearing opposite their respective names below are the true
and genuine signatures of such officers, and each of such officers is duly
authorized to execute and deliver on behalf of the Company each of the Loan
Documents to which it is a party and any certificate or other document to be
delivered by the Company pursuant to the Loan Documents to which it is a party:
- ----------------------------
/7/ Insert in the Borrower's Closing Certificate only.
-3-
Name Office Date Signature
---- ------ ---- ---------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
IN WITNESS WHEREOF, the undersigned have hereunto set our names as of the date
set forth below.
By:____________________________
Name:
Title:
Date: May _____, 2003
EXHIBIT D
Form of Mortgage
THE MAXIMUM AMOUNT SECURED HEREBY
SHALL NOT EXCEED $647,000
MORTGAGE, SECURITY AGREEMENT, ASSIGNMENT OF RENTS
AND LEASES AND FIXTURE FILING
(NEW YORK)
by and from
MUZAK LLC, a Delaware limited liability company
"Mortgagor"
to
BEAR STEARNS CORPORATE LENDING INC.
as Administrative Agent,
"Mortgagee"
Dated as of May 20, 2003
Location: 2216 Kensington Avenue
Municipality: Amherst
County: Erie
State: New York
THE SECURED PARTY (MORTGAGEE) DESIRES THIS FIXTURE FILING
TO BE INDEXED AGAINST THE RECORD OWNER OF THE REAL ESTATE
DESCRIBED HEREIN
PREPARED BY, RECORDING REQUESTED BY,
AND WHEN RECORDED MAIL TO:
Cahill Gordon & Reindel LLP
80 Pine Street
New York, New York 10005
Attention: Athy A. Mobilia, Esq.
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MORTGAGE, SECURITY AGREEMENT, ASSIGNMENT OF RENTS AND
LEASES AND FIXTURE FILING (NEW YORK)
This MORTGAGE, SECURITY AGREEMENT, ASSIGNMENT OF RENTS AND LEASES AND
FIXTURE FILING (NEW YORK), dated as of May 20, 2003 (this "Mortgage"), by and
from MUZAK LLC, a Delaware limited liability company ("Mortgagor"), having an
address at 3318 Lakemont Boulevard, Fort Mill, South Carolina 29708 to BEAR
STEARNS CORPORATE LENDING INC., as administrative agent for the Secured Parties
(as hereinafter defined) (in such capacity, "Mortgagee"), having an address at
383 Madison Avenue, New York, NY 10179.
RECITALS:
WHEREAS, Mortgagor is a party to the Credit Agreement, dated as of May 20,
2003 (as it may be from time to time amended, restated, supplemented or
otherwise modified, the "Credit Agreement"), by and among Mortgagor, Muzak
Holdings LLC, a Delaware limited liability company, various Lenders, Bear,
Stearns & Co. Inc. and Lehman Brothers Inc., as Joint Lead Arrangers, Lehman
Commercial Paper Inc. and Fleet National Bank, as Co-Syndication Agents, General
Electric Capital Corporation, as Documentation Agent, and Bear Stearns Corporate
Lending Inc., as Administrative Agent;
WHEREAS, subject to the terms and conditions of the Credit Agreement,
Mortgagor may enter into one or more Specified Hedge Agreements with one or more
Lender Counterparties; and
WHEREAS, in consideration of the extensions of credit and other
accommodations of Lenders and Lender Counterparties as set forth in the Credit
Agreement and the Specified Hedge Agreements, respectively, Mortgagor has
agreed, subject to the terms and conditions hereof and of each other Loan
Document and each of the Specified Hedge Agreements, to secure Mortgagor's
obligations under the Loan Documents and the Specified Hedge Agreements as set
forth herein.
NOW, THEREFORE, in consideration of the premises and the agreements,
provisions and covenants herein contained, Mortgagee and Mortgagor agree as
follows:
DEFINITIONS
Definitions. Capitalized terms used herein (including the recitals
hereto) and not otherwise defined herein shall have the meanings ascribed
thereto in the Credit Agreement. In addition, as used herein, the following
terms shall have the following meanings:
"Indebtedness" means all obligations and liabilities of every nature of
Mortgagor now or hereafter existing under or arising out of or in connection
with the Credit Agreement and the other Loan Documents, any Letter of Credit (as
defined in the Credit Agreement) and any Specified Hedge Agreement or any other
document made, delivered or given in connection with any of
the foregoing, in each case, together with all extensions or renewals thereof,
whether for principal, interest (including, without limitation, interest that,
but for the filing of a petition in bankruptcy with respect to Mortgagor, would
accrue on such obligations, whether or not a claim is allowed against Mortgagor
for such interest in the related bankruptcy proceeding), payments for early
termination of Specified Hedge Agreements, reimbursement obligations fees,
expenses, indemnities, costs or otherwise (including, without limitation, all
fees and disbursements of counsel to the Secured Parties that are required to be
paid by the Mortgagor pursuant to the terms of any of the foregoing agreements),
whether voluntary or involuntary, direct or indirect, absolute or contingent,
liquidated or unliquidated, whether or not jointly owed with others, and whether
or not from time to time decreased or extinguished and later increased, created
or incurred, and all or any portion of such obligations or liabilities that are
paid, to the extent all or any part of such payment is avoided or recovered
directly or indirectly from Mortgagor or any Secured Party as a preference,
fraudulent transfer or otherwise, and all obligations of every nature of
Mortgagor now or hereafter existing under this Mortgage. The Credit Agreement
contains a revolving credit facility which permits Mortgagor to borrow certain
principal amounts, repay all or a portion of such principal amounts, and
reborrow the amounts previously paid to the Mortgagee or Lenders, all upon
satisfaction of certain conditions stated in the Credit Agreement. This Mortgage
secures all advances and re-advances under the revolving credit feature of the
Credit Agreement.
"Mortgaged Property" means all of Mortgagor's interest in the real property
described in Exhibit A, together with any greater estate therein as hereafter
may be acquired by Mortgagor (the "Land"); all improvements now owned or
hereafter acquired by Mortgagor, now or at any time situated, placed or
constructed upon the Land (the "Improvements"); all materials, supplies,
equipment, apparatus and other items of personal property now owned or hereafter
acquired by Mortgagor and now or hereafter attached to, installed in or used in
connection with any of the Improvements or the Land, and water, gas, electrical,
telephone, storm and sanitary sewer facilities and all other utilities whether
or not situated in easements (the "Fixtures"); all leases, licenses,
concessions, occupancy agreements or other agreements (written or oral, now or
at any time in effect) which grant to any Person (other than Mortgagor) a
possessory interest in, or the right to use, all or any part of the Mortgaged
Property, together with all related security and other deposits (the "Leases");
all of the rents, revenues, royalties, income, proceeds, profits, security and
other types of deposits, and other benefits paid or payable by parties to the
Leases for using, leasing, licensing possessing, operating from, residing in,
selling or otherwise enjoying the Mortgaged Property (the "Rents"), all other
agreements, such as construction contracts, architects' agreements, engineers'
contracts, utility contracts, maintenance agreements, management agreements,
service contracts, listing agreements, guaranties, warranties, permits,
licenses, certificates and entitlements in any way relating to the construction,
use, occupancy, operation, maintenance, enjoyment or ownership of the Mortgaged
Property (the "Property Agreements"); all rights, privileges, tenements,
hereditaments, rights-of-way, easements, appendages and appurtenances
appertaining to the foregoing; all property tax refunds (the "Tax Refunds"); all
accessions, replacements and substitutions for any of the foregoing and all
proceeds thereof (the "Proceeds"); all insurance policies, unearned premiums
therefor and proceeds from such policies covering any of the above property now
or hereafter acquired by Mortgagor (the "Insurance"); and all of Mortgagor's
right, title and interest in and to any awards, damages, remunerations,
reimburse-
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ments, settlements or compensation heretofore made or hereafter to be made by
any governmental authority pertaining to the Land, Improvements or Fixtures (the
"Condemnation Awards"). As used in this Mortgage, the term "Mortgaged Property"
shall mean all or, where the context permits or requires, any portion of the
above or any interest therein.
"Obligations" means all of the agreements, covenants, conditions,
warranties, representations and other obligations of Mortgagor (including,
without limitation, the obligation to repay the Indebtedness) under the Credit
Agreement, this Mortgage, any other Loan Documents, any Letter of Credit or any
of the Specified Hedge Agreements or any other document made, delivered or given
in connection with any of the foregoing.
"UCC" means the Uniform Commercial Code of New York or, if the creation,
perfection and enforcement of any security interest herein granted is governed
by the laws of a state other than New York, then, as to the matter in question,
the Uniform Commercial Code in effect in that state.
"Secured Parties" shall have the meaning ascribed thereto in the Credit
Agreement.
Interpretation. References to "Sections" shall be to Sections of this
Mortgage unless otherwise specifically provided. Section headings in this
Mortgage are included herein for convenience of reference only and shall not
constitute a part of this Mortgage for any other purpose or be given any
substantive effect. The rules of construction set forth in Section 1.2 (other
than subsection (a) thereof) of the Credit Agreement shall be applicable to this
Mortgage mutatis mutandis. If any conflict or inconsistency exists between this
Mortgage and the Credit Agreement, the Credit Agreement shall govern.
GRANT
To secure the full and timely payment of the Indebtedness and the full and
timely performance of the Obligations, Mortgagor MORTGAGES, GRANTS, BARGAINS,
ASSIGNS, SELLS and CONVEYS, to Mortgagee the Mortgaged Property, subject,
however, to the Liens permitted to exist on the Mortgaged Property by the Credit
Agreement (such Liens, the "Permitted Liens"), TO HAVE AND TO HOLD the Mortgaged
Property to Mortgagee, and Mortgagor does hereby bind itself, its successors and
assigns to WARRANT AND FOREVER DEFEND the title to the Mortgaged Property unto
Mortgagee.
WARRANTIES, REPRESENTATIONS AND COVENANTS
Title. Mortgagor represents and warrants to Mortgagee that (i)
Mortgagor owns the Mortgaged Property free and clear of any liens, claims or
interests, except the Permitted Liens, and (ii) this Mortgage creates valid,
enforceable first priority liens and security interests against the Mortgaged
Property, subject to Permitted Liens.
First Lien Status. Subject to Permitted Liens, Mortgagor shall
preserve and protect the first lien and security interest status of this
Mortgage and the other Credit Documents. If
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any lien or security interest other than a Permitted Lien is asserted against
the Mortgaged Property, Mortgagor shall promptly, and at its expense, (i) give
Mortgagee a detailed written notice of such lien or security interest (including
origin, amount and other terms), and (ii) at Mortgagor's election, pay the
underlying claim in full or take such other action so as to cause it to be
released or contest the same in good faith by appropriate proceedings, cause
reserves in conformity with GAAP with respect thereto to have been provided on
the books of Mortgagor and such proceedings could not reasonably be expected to
result in the sale, forfeiture or loss of the Mortgaged Property.
Payment and Performance. Mortgagor shall pay the Indebtedness when due
under the Loan Documents and shall perform the Obligations in full when they are
required to be performed as required under the Loan Documents.
Replacement of Fixtures. Mortgagor shall not, without the prior
written consent of Mortgagee and subject to the Loan of the Credit Agreement,
permit any of the Fixtures to be removed at any time from the Land or
Improvements, unless the removed item is removed temporarily for maintenance and
repair or, if removed permanently, is obsolete and is replaced by an article of
equal or better suitability and value, owned by Mortgagor subject to the liens
and security interests of this Mortgage and the other Loan Documents, and free
and clear of any other lien or security interest except such as may be permitted
under the Credit Agreement or first approved in writing by Mortgagee.
Inspection. Mortgagor shall permit Mortgagee, and Mortgagee's agents,
representatives and employees, upon reasonable prior notice to Mortgagor, and
subject to the provisions of the Credit Agreement, to inspect the Mortgaged
Property and all books and records of Mortgagor located thereon.
Covenants Running with the Land. All Obligations contained in this
Mortgage are intended by Mortgagor and Mortgagee to be, and shall be construed
as, covenants running with the Mortgaged Property. As used herein, "Mortgagor"
shall refer to the party named in the first paragraph of this Mortgage and to
any subsequent owner of all or any portion of the Mortgaged Property. All
Persons who may have or acquire an interest in the Mortgaged Property shall be
deemed to have notice of, and be bound by, the terms of the Credit Agreement and
the other Loan Documents; however, no such party shall be entitled to any rights
thereunder without the prior written consent of Mortgagee. In addition, all of
the covenants of Mortgagor in any Loan Document party thereto are incorporated
herein by reference and, together with covenants in this Section, shall be
covenants running with the land.
Condemnation Awards and Insurance Proceeds. Mortgagor (i) assigns all
awards and compensation to which it is entitled for any condemnation or other
taking, or any purchase in lieu thereof, to Mortgagee and authorizes Mortgagee
to collect and receive such awards and compensation and to give proper receipts
and acquittances therefor, subject to the terms of the Credit Agreement, (ii)
assigns to Mortgagee all proceeds of any insurance policies insuring against
loss or damage to the Mortgaged Property, (iii) authorizes Mortgagee to collect
and re-
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ceive such proceeds and authorizes and directs the issuer of each of such
insurance policies to make payment for all such losses directly to Mortgagee,
instead of to Mortgagor and Mortgagee jointly.
Change in Tax Law. Upon the enactment of or change in (including,
without limitation, a change in interpretation of) any applicable law (i)
deducting or allowing Mortgagor to deduct from the value of the Mortgaged
Property for the purpose of taxation any lien or security interest thereon or
(ii) subjecting Mortgagee or any of the Secured Parties to any tax or changing
the basis of taxation of mortgages, deeds of trust, or other liens or debts
secured thereby, or the manner of collection of such taxes, in each such case,
so as to affect this Mortgage, the Indebtedness or Mortgagee, and the result is
to increase the taxes imposed upon or the cost to Mortgagee of maintaining the
Indebtedness, or to reduce the amount of any payments receivable hereunder,
that, and in any such event, Mortgagor shall, on demand, pay to Mortgagee and
the Secured Parties additional amounts to compensate for such increased costs or
reduced amounts, provided that if any such payment or reimbursement shall be
unlawful, or taxable to Mortgagee, or would constitute usury or render the
Indebtedness wholly or partially usurious under applicable law, then Mortgagor
shall pay or reimburse Mortgagee or the Secured Parties for payment of the
lawful and non-usurious portion thereof.
Mortgage Tax. Mortgagor shall (i) pay when due any tax imposed upon it
or upon Mortgagee or any Secured Party pursuant to the tax law of the state in
which the Mortgaged Property is located in connection with the execution,
delivery and recordation of this Mortgage and any of the other Loan Documents,
and (ii) execute and cause to be filed any form required to be executed and
filed in connection therewith.
Reduction Of Secured Amount. In the event that the amount secured by
this Mortgage is less than the Indebtedness, then the amount secured shall be
reduced only by the last and final sums that Mortgagor or Borrower repays with
respect to the Indebtedness and shall not be reduced by any intervening
repayments of the Indebtedness unless arising from the Mortgaged Property. So
long as the balance of the Indebtedness exceeds the amount secured, any payments
of the Indebtedness shall not be deemed to be applied against, or to reduce, the
portion of the Indebtedness secured by this Mortgage. Such payments shall
instead be deemed to reduce only such portions of the Indebtedness as are
secured by other collateral located outside of the state in which the Mortgaged
Property is located or as are unsecured.
DEFAULT AND FORECLOSURE
Remedies. If an Event of Default exists, Mortgagee may at Mortgagee's
election, exercise any or all of the following rights, remedies and recourses
(which are in addition to all rights and remedies available under the Credit
Agreement and the Guarantee and Collateral Agreement): (i) declare the
Indebtedness to be immediately due and payable, pursuant to and in accordance
with the Credit Agreement without further notice, presentment, protest, notice
of intent to accelerate, notice of acceleration, demand or action of any nature
whatsoever (each of which hereby is expressly waived by Mortgagor), whereupon
the same shall become immediately
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due and payable; (ii) enter the Mortgaged Property and take exclusive possession
thereof and of all books, records and accounts relating thereto or located
thereon; (iii) if Mortgagor remains in possession of the Mortgaged Property
after an Event of Default and without Mortgagee's prior written consent,
Mortgagee may invoke any legal remedies to dispossess Mortgagor; (iv) hold,
lease, develop, manage, operate or otherwise use the Mortgaged Property upon
such terms and conditions as Mortgagee may deem reasonable under the
circumstances (making such repairs, alterations, additions and improvements and
taking other actions, from time to time, as Mortgagee deems necessary or
desirable), and apply all Rents and other amounts collected by Mortgagee in
connection therewith in accordance with the provisions hereof; and (v) institute
proceedings for the complete foreclosure of this Mortgage, either by judicial
action or by power of sale, in which case the Mortgaged Property may be sold for
cash or credit in one or more parcels. With respect to any notices required or
permitted under the UCC, Mortgagor agrees that ten (10) days' prior written
notice shall be deemed commercially reasonable. At any such sale by virtue of
any judicial proceedings, power of sale, or any other legal right, remedy or
recourse, the title to and right of possession of any such property shall pass
to the purchaser thereof, and to the fullest extent permitted by law, Mortgagor
shall be completely and irrevocably divested of all of its right, title,
interest, claim, equity, equity of redemption, and demand whatsoever, either at
law or in equity, in and to the property sold and such sale shall be a perpetual
bar both at law and in equity against Mortgagor, and against all other Persons
claiming or to claim the property sold or any part thereof, by, through or under
Mortgagor. Mortgagee maybe a purchaser at such sale and if Mortgagee is the
highest bidder, Mortgagee may credit the portion of the purchase price that
would be distributed to Mortgagee against the Indebtedness in lieu of paying
cash. In the event this Mortgage is foreclosed by judicial action, appraisement
of the Mortgaged Property is waived and Mortgagee may make application to a
court of competent jurisdiction for, and obtain from such court as a matter of
strict right and without notice to Mortgagor or regard to the adequacy of the
Mortgaged Property for the repayment of the Indebtedness, the appointment of a
receiver of the Mortgaged Property, and Mortgagor irrevocably consents to such
appointment. Any such receiver shall have all the usual powers and duties of
receivers in similar cases, including the full power to rent, maintain and
otherwise operate the Mortgaged Property upon such terms as may be approved by
the court, and shall apply such Rents in accordance with the provisions hereof;
and/or exercise all other rights, remedies and recourses granted under the Loan
Documents or otherwise available at law or in equity.
Separate Sales. The Mortgaged Property may be sold in one or more
parcels and in such manner and order as Mortgagee in its sole discretion may
elect; the right of sale arising out of any Event of Default shall not be
exhausted by any one or more sales.
Remedies Cumulative, Concurrent and Nonexclusive. Mortgagee shall have
all rights, remedies and recourses granted in the Loan Documents and available
at law or equity (including the UCC), which rights (i) shall be cumulated and
concurrent, (ii) may be pursued separately, successively or concurrently against
Mortgagor or others obligated under the Loan Documents, or against the Mortgaged
Property, or against any one or more of them, at the sole discretion of
Mortgagee, (iii) may be exercised as often as occasion therefor shall arise, and
the exercise or failure to exercise any of them shall not be construed as a
waiver or release thereof or of
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any other right, remedy or recourse, and (iv) are intended to be, and shall be,
nonexclusive. No action by Mortgagee in the enforcement of any rights, remedies
or recourses under the Loan Documents or otherwise at law or equity shall be
deemed to cure any Event of Default.
Release of and Resort to Collateral. Mortgagee may release, regardless
of consideration and without the necessity for any notice to or consent by the
holder of any subordinate lien on the Mortgaged Property, any part of the
Mortgaged Property without, as to the remainder, in any way impairing,
affecting, subordinating or releasing the lien or security interest created in
or evidenced by the Loan Documents or their status as a first and prior lien and
security interest in and to the Mortgaged Property. For payment of the
Indebtedness, Mortgagee may resort to any other security in such order and
manner as Mortgagee may elect.
Waiver of Redemption, Notice and Marshalling of Assets. To the fullest
extent permitted by law, Mortgagor hereby irrevocably and unconditionally waives
and releases all benefit that might accrue to Mortgagor by virtue of any present
or future statute of limitations or law or judicial decision exempting the
Mortgaged Property from attachment, levy or sale on execution or providing for
any stay of execution, exemption from civil process, redemption or extension of
time for payment, all notices of any Event of Default or of Mortgagee's election
to exercise or the actual exercise of any right, remedy or recourse provided for
under the Loan Documents, and any right to a marshalling of assets or a sale in
inverse order of alienation.
Discontinuance of Proceedings. If Mortgagee shall have proceeded to
invoke any right, remedy or recourse permitted under the Loan Documents and
shall thereafter elect to discontinue or abandon it for any reason, Mortgagee
shall have the unqualified right to do so and, in such an event, Mortgagor and
Mortgagee shall be restored to their former positions with respect to the
Indebtedness, the Obligations, the Loan Documents, the Mortgaged Property and
otherwise, and the rights, remedies, recourses and powers of Mortgagee shall
continue as if the right, remedy or recourse had never been invoked, but no such
discontinuance or abandonment shall waive any Event of Default which may then
exist or the right of Mortgagee thereafter to exercise any right, remedy or
recourse under the Loan Documents for such Event of Default.
Application of Proceeds. The proceeds of any sale of, and the Rents
and other amounts generated by the holding, leasing, management, operation or
other use of the Mortgaged Property, shall be applied by Mortgagee (or the
receiver, if one is appointed) in the following order unless otherwise required
by applicable law: first, to the payment of the actual out of pocket costs and
expenses of taking possession of the Mortgaged Property and of holding, using
leasing, repairing, improving and selling the same, including, without
limitation receiver's fees and expenses, including the repayment of the amounts
evidenced by any receiver's certificates, court costs, reasonable attorneys' and
accountants' fees and expenses, and costs of advertisement; and second, as
provided in Section 6.7 of the Guarantee and Collateral Agreement.
Occupancy After Foreclosure. Any sale of the Mortgaged Property or any
part thereof will divest all right, title and interest of Mortgagor in and to
the property sold. Subject to applicable law, any purchaser at a foreclosure
sale will receive immediate possession of the
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property purchased. If Mortgagor retains possession of such property or any part
thereof subsequent to such sale, Mortgagor will be considered a tenant at
sufferance of the purchaser, and will, if Mortgagor remains in possession after
demand to remove, be subject to eviction and removal, forcible or otherwise,
with or without process of law.
Additional Advances and Disbursements; Costs of Enforcement. If any
Event of Default exists, Mortgagee shall have the right, but not the obligation,
to cure such Event of Default in the name and on behalf of Mortgagor. All sums
advanced and expenses incurred at any time by Mortgagee under this Section, or
otherwise under this Mortgage or any of the other Loan Documents or applicable
law, shall bear interest from the date that such sum is advanced or expense
incurred, to and including the date of reimbursement, computed at the rate or
rates at which interest is then computed on the Indebtedness, and all such sums,
together with interest thereon, shall be secured by this Mortgage. Mortgagor
shall pay all reasonable out of pocket expenses (including reasonable attorneys'
fees and expenses) of or incidental to the perfection and enforcement of this
Mortgage and the other Loan Documents, or the enforcement, compromise or
settlement of the Indebtedness or any claim under this Mortgage and the other
Loan Documents, and for the curing thereof, or for defending or asserting the
rights and claims of Mortgagee in respect thereof, by litigation or otherwise.
No Mortgagee in Possession. Neither the enforcement of any of the
remedies under this Section, the assignment of the Rents and Leases under
Section 5, the security interests under Section 6, nor any other remedies
afforded to Mortgagee under the Loan Documents, at law or in equity shall cause
Mortgagee to be deemed or construed to be a mortgagee in possession of the
Mortgaged Property, to obligate Mortgagee to lease the Mortgaged Property or
attempt to do so, or to take any action, incur any expense, or perform or
discharge any obligation, duty or liability whatsoever under any of the Leases
or otherwise.
Waiver of Stay, Moratorium and Similar Rights. Mortgagor agrees, to
the full extent that it may lawfully do so, that it will not at any time insist
upon or plead or in any way take advantage of any stay, marshalling of assets,
extension, redemption or moratorium law now or hereafter in force and effect so
as to prevent or hinder the enforcement of the provisions of this Mortgage or
the Indebtedness secured hereby, or any agreement between Mortgagor and
Mortgagee or any rights or remedies of Mortgagee.
ASSIGNMENT OF RENTS AND LEASES
Assignment. In furtherance of and in addition to the assignment made
by Mortgagor herein, Mortgagor hereby absolutely and unconditionally assigns,
sells, transfers and conveys to Mortgagee all of its right, title and interest
in and to all Leases, whether now existing or hereafter entered into, and all of
its right, title and interest in and to all Rents. This assignment is an
absolute assignment and not an assignment for additional security only. So long
as no Event of Default shall have occurred and be continuing, Mortgagor shall
have a revocable license from Mortgagee to exercise all rights extended to the
landlord under the Leases, including the right to receive and collect all Rents
and to otherwise use the same. The foregoing license is granted sub-
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ject to the conditional limitation that no Event of Default shall have occurred
and be continuing. Upon the occurrence and during the continuance of an Event of
Default, whether or not legal proceedings have commenced, and without regard to
waste, adequacy of security for the Obligations or solvency of Mortgagor, the
license herein granted shall automatically expire and terminate, without notice
by Mortgagee (any such notice being hereby expressly waived by Mortgagor).
Perfection Upon Recordation. Mortgagor acknowledges that Mortgagee has
taken all actions necessary to obtain, and that upon recordation of this
Mortgage Mortgagee shall have, to the extent permitted under applicable law and
subject to Permitted Liens, a valid and fully perfected, first priority, present
assignment of the Rents arising out of the Leases and all security for such
Leases. Mortgagor acknowledges and agrees that upon recordation of this Mortgage
Mortgagee's interest in the Rents shall be deemed to be fully perfected,
"choate" and enforced as to Mortgagor and all third parties, including, without
limitation, any subsequently appointed trustee in any case under Title 11 of the
United States Code (the "Bankruptcy Code"), without the necessity of commencing
a foreclosure action with respect to this Mortgage, making formal demand for the
Rents, obtaining the appointment of a receiver or taking any other affirmative
action.
Bankruptcy Provisions. Without limitation of the absolute nature of
the assignment of the Rents hereunder, Mortgagor and Mortgagee agree that (i)
this Mortgage shall constitute a "security agreement" for purposes of Section
552(b) of the Bankruptcy Code, (ii) the security interest created by this
Mortgage extends to property of Mortgagor acquired before the commencement of a
case in bankruptcy and to all amounts paid as Rents, and (iii) such security
interest shall extend to all Rents acquired by the estate after the commencement
of any case in bankruptcy.
No Merger of Estates. So long as any part of the Indebtedness or the
Obligations secured hereby remain unpaid and undischarged, the fee and leasehold
estates to the Mortgaged Property shall not merge, but shall remain separate and
distinct, notwithstanding the union of such estates either in Mortgagor,
Mortgagee, any tenant or any third party by purchase or otherwise.
SECURITY AGREEMENT
Security Interest. This Mortgage constitutes a "security agreement" on
personal property within the meaning of the UCC and other applicable law and
with respect to the Fixtures, Leases, Rents, Property Agreements, Tax Refunds,
Proceeds, Insurance and Condemnation Awards. To this end, Mortgagor grants to
Mortgagee a first and prior security interest in the Fixtures, Leases, Rents,
Property Agreements, Tax Refunds, Proceeds, Insurance, Condemnation Awards to
secure the payment of the Indebtedness and performance of the Obligations, and
agrees that Mortgagee shall have all the rights and remedies of a secured party
under the UCC with respect to such property. Any notice of sale, disposition or
other intended action by Mortgagee with respect to the Fixtures, Leases, Rents,
Property Agreements, Tax Refunds, Proceeds,
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Insurance and Condemnation Awards sent to Mortgagor at least ten (10) days prior
to any action under the UCC shall constitute reasonable notice to Mortgagor.
Financing Statements. Mortgagor shall execute and deliver to
Mortgagee, in form and substance satisfactory to Mortgagee, such financing
statements and such further assurances as Mortgagee may, from time to time,
reasonably consider necessary to create, perfect and preserve Mortgagee's
security interest hereunder and Mortgagee may cause such statements and
assurances to be recorded and filed, at such times and places as may be required
or permitted by law to so create, perfect and preserve such security interest.
Mortgagor's chief executive office is at the address set forth in the first
paragraph of this Mortgage.
Fixture Filing. This Mortgage shall also constitute a "fixture filing"
for the purposes of the UCC against all of the Mortgaged Property which is or is
to become fixtures. Information concerning the security interest herein granted
may be obtained at the addresses of Debtor (Mortgagor) and Secured Party
(Mortgagee) as set forth in the first paragraph of this Mortgage.
ATTORNEY-IN-FACT
Mortgagor hereby irrevocably appoints Mortgagee and its successors and
assigns, as its attorney-in-fact, which agency is coupled with an interest and
with full power of substitution, (i) to execute and/or record any notices of
completion, cessation of labor or any other notices that Mortgagee deems
appropriate to protect Mortgagee's interest, if Mortgagor shall fail to do so
within ten (10) days after written request by Mortgagee, (ii) upon the issuance
of a deed pursuant to the foreclosure of this Mortgage or the delivery of a deed
in lieu of foreclosure, to execute all instruments of assignment, conveyance or
further assurance with respect to the Leases, Rents, Fixtures, Property
Agreements, Tax Refunds, Proceeds, Insurance and Condemnation Awards in favor of
the grantee of any such deed and as may be necessary or desirable for such
purpose, (iii) to prepare, execute and file or record financing statements,
continuation statements, applications for registration and like papers necessary
to create, perfect or preserve Mortgagee's security interests and rights in or
to any of the Mortgaged Property and (iv) while any Event of Default exists, to
perform any obligation of Mortgagor hereunder, provided, (a) Mortgagee shall not
under any circumstances be obligated to perform any obligation of Mortgagor; (b)
any sums advanced by Mortgagee in such performance shall be added to and
included in the Indebtedness and shall bear interest at the rate or rates at
which interest is then computed on the Indebtedness; (c) Mortgagee as such
attorney-in-fact shall only be accountable for such funds as are actually
received by Mortgagee; and (d) Mortgagee shall not be liable to Mortgagor or any
other person or entity for any failure to take any action which it is empowered
to take under this Section.
MORTGAGEE AS AGENT
Mortgagee has been appointed to act as Mortgagee hereunder by the Secured
Parties. Mortgagee shall be obligated, and shall have the right hereunder, to
make demands, to give notices, to exercise or refrain from exercising any
rights, and to take or refrain from taking any action (including the release or
substitution of Mortgaged Property), solely in accordance with this
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Mortgage, the Credit Agreement and the Guarantee and Collateral Agreement;
provided, Mortgagee shall exercise, or refrain from exercising, any remedies
provided for herein in accordance with the instructions of Required Lenders. In
furtherance of the foregoing provisions of this Section, each Secured Party, by
its acceptance of the benefits hereof, agrees that it shall have no right
individually to realize upon any of the Mortgaged Property, it being understood
and agreed by such Secured Party that all rights and remedies hereunder may be
exercised solely by Mortgagee for the benefit of Secured Parties in accordance
with the terms of this Section. Mortgagee shall at all times be the same Person
that is Administrative Agent under the Credit Agreement. Written notice of
resignation by Administrative Agent pursuant to terms of the Credit Agreement
shall also constitute notice of resignation as Mortgagee under this Mortgage;
removal of Administrative Agent pursuant to the terms of the Credit Agreement
shall also constitute removal as Mortgagee under this Mortgage; and appointment
of a successor Administrative Agent pursuant to the terms of the Credit
Agreement shall also constitute appointment of a successor Mortgagee under this
Mortgage. Upon the acceptance of any appointment as Administrative Agent under
the terms of the Credit Agreement by a successor Administrative Agent, that
successor Administrative Agent shall thereupon succeed to and become vested with
all the rights, powers, privileges and duties of the retiring or removed
Mortgagee under this Mortgage, and the retiring or removed Mortgagee under this
Mortgage shall promptly (i) transfer to such successor Mortgagee all sums,
securities and other items of Mortgaged Property held hereunder, together with
all records and other documents necessary or appropriate in connection with the
performance of the duties of the successor Mortgagee under this Mortgage, and
(ii) execute and deliver to such successor Mortgagee such amendments to
financing statements, and take such other actions, as may be necessary or
appropriate in connection with the assignment to such successor Mortgagee of the
security interests created hereunder, whereupon such retiring or removed
Mortgagee shall be discharged from its duties and obligations under this
Mortgage. After any retiring or removed Administrative Agent's resignation or
removal hereunder as Mortgagee, the provisions of this Mortgage shall inure to
its benefit as to any actions taken or omitted to be taken by it under this
Mortgage while it was Mortgagee hereunder.
LOCAL LAW PROVISIONS
Maximum Principal Sum. The parties hereto intend that this Mortgage
shall secure unpaid balances of the indebtedness secured hereby whether incurred
by Mortgagor at the date hereof or after this Mortgage is delivered for
recordation in the official records of the county in which the Mortgaged
Property is located. The maximum principal amount of indebtedness which is or
under any contingency may be secured at the date of execution hereof or at any
time thereafter by this Mortgage is $647,000.
Trust Fund for Advances. In compliance with Section 13 of the Lien Law
of the State of New York, the Mortgagor will receive the advances secured by
this Mortgage and will hold the right to receive such advances as a trust fund
to be applied first for the purpose of paying the cost of the building(s) and
other improvements located on the Mortgaged Property before using any part of
the total of the same for any other purpose. Mortgagor will indemnify and hold
Mortgagee harmless against any loss, liability, cost or expense, including any
judgments, attor-
-11-
neys' fees, costs of appeal bonds or printing costs, arising out of or relating
to any proceedings instituted by any claimant alleging a violation by the
Mortgagor of Article 3-A of the New York Lien Law.
New York Real Property Law Article 4-A. If this Mortgage shall be
deemed to constitute a "mortgage investment" as defined by New York Real
Property Law (S) 125, then this Mortgage shall and hereby does (i) confer upon
the Mortgagee the powers and (ii) impose upon the Mortgagee the duties of
trustees set forth in New York Real Property Law (S)126.
Statement in Accordance with Section 253.1a(a) of the New York Tax
Law. This Mortgage does not cover real property principally improved or to be
improved by one or more structures containing in the aggregate not more than six
(6) residential dwelling units, each having separate cooking facilities.
Statement in Accordance with Section 274-a of the New York Real
Property Law. The Mortgagee shall, within fifteen (15) days after written
request, provide the Mortgagor with the statement required by Section 274-a of
the New York Real Property Law.
Section 291-f of New York Real Property Law. Mortgagee shall have all
of the rights set forth in Section 291-f of the Real Property Law of New York.
For purposes of Section 291-f of the New York Real Property Law, all existing
tenants and every tenant or subtenant who after the recording of this Mortgage,
enters into a Lease upon the premises of any of the Mortgaged Property or who
acquires by instrument of assignment or by operation of law a leasehold estate
upon the Mortgaged Property is hereby notified that Mortgagor shall not, without
obtaining Mortgagee's prior consent in each instance, cancel, abridge or
otherwise modify any Leases or accept prepayments for more than thirty (30) days
of installments of rent to become due with respect to any Lease thereof having
an unexpired term on the date of this Mortgage of five (5) years or more, except
as expressly permitted under this Mortgage or the Assignment, and that any such
cancellation, abridgement, modification or prepayment made by any such tenant or
subtenant without either being expressly permitted under this Mortgage or
receiving Mortgagee's prior consent shall be voidable by Mortgagee at its
option.
Sections 254, 271, 272 and 291-f of New York Real Property Law. All
covenants of the Mortgagor herein contained shall be construed as affording to
Mortgagee rights additional to and not exclusive of the rights conferred under
the provisions of Sections 254, 271, 272 and 291-f of the Real Property Law of
New York.
Real Property Law. The provisions hereof shall be construed according
to subdivision 4 of Section 254 of the New York Real Property Law as amended by
Chapter 886 of the Laws of 1945 but not as amended by Chapter 830 of the Laws of
1965 or as otherwise thereafter amended.
RPAPL. If an Event of Default shall occur and be continuing, Mortgagee
may elect to sell (and, in the case of any default of any purchaser, resell) the
Mortgaged Property or any part thereof by exercise of the power of foreclosure
or of sale granted to Mortgagee by Arti-
-12-
cles 13 or 14 of the New York Real Property Actions and Proceedings Law (the
"RPAPL"). In such case. Mortgagee may commence a civil action to foreclose this
Mortgage pursuant to Article 13 of the RPAPL, or it may proceed and sell the
Mortgaged Property pursuant to Article 14 of the RPAPL to satisfy all amounts
secured hereby.
MISCELLANEOUS
Any notice required or permitted to be given under this Mortgage shall be
given in accordance with Section 10.2 of the Credit Agreement. No failure or
delay on the part of Mortgagee in the exercise of any power, right or privilege
hereunder or under any other Loan Document shall impair such power, right or
privilege or be construed to be a waiver of any default or acquiescence therein,
nor shall any single or partial exercise of any such power, right or privilege
preclude other or further exercise thereof or of any other power, right or
privilege. All rights and remedies existing under this Mortgage and the other
Loan Documents are cumulative to, and not exclusive of, any rights or remedies
otherwise available. In case any provision in or obligation under this Mortgage
shall be invalid, illegal or unenforceable in any jurisdiction, the validity,
legality and enforceability of the remaining provisions or obligations, or of
such provision or obligation in any other jurisdiction, shall not in any way be
affected or impaired thereby. Subject to the provisions of the Credit Agreement,
all covenants hereunder shall be given independent effect so that if a
particular action or condition is not permitted by any of such covenants, the
fact that it would be permitted by an exception to, or would otherwise be within
the limitations of, another covenant shall not avoid the occurrence of a Default
or an Event of Default if such action is taken or condition exists. This
Mortgage shall be binding upon and inure to the benefit of Mortgagee and
Mortgagor and their respective successors and assigns. Mortgagor shall not,
without the prior written consent of Mortgagee, assign any rights, duties or
obligations hereunder. Upon payment in full of the Indebtedness and performance
in full of the Obligations (other than inchoate indemnification obligations with
respect to claims, losses or liabilities which have not yet arisen and are not
yet due and payable), Mortgagee, at Mortgagor's expense, shall release the liens
and security interests created by this Mortgage or reconvey the Mortgaged
Property to Mortgagor. This Mortgage and the other Loan Documents embody the
entire agreement and understanding between Mortgagee and Mortgagor and supersede
all prior agreements and understandings between such parties relating to the
subject matter hereof and thereof. Accordingly, the Loan Documents may not be
contradicted by evidence of prior, contemporaneous or subsequent oral agreements
of the parties. There are no unwritten oral agreements between the parties.
THE PROVISIONS OF THIS MORTGAGE REGARDING THE CREATION, PERFECTION AND
ENFORCEMENT OF THE LIENS AND SECURITY INTERESTS HEREIN GRANTED SHALL BE GOVERNED
BY AND CONSTRUED UNDER THE LAWS OF THE STATE IN WHICH THE MORTGAGED PROPERTY IS
LOCATED. ALL OTHER PROVISIONS OF THIS MORTGAGE AND THE RIGHTS AND OBLIGATIONS OF
MORTGAGOR AND MORTGAGEE SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED AND
ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF
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NEW YORK, WITHOUT REGARD TO THE CONFLICT OF LAWS PRINCIPLES THEREOF.
-14-
IN WITNESS WHEREOF, the undersigned, by its duly elected officer and
pursuant to proper has duly executed, sealed, acknowledged and delivered this
instrument as of the day and year first above written.
MORTGAGOR:
MUZAK LLC, a Delaware limited liability
company
By:____________________________________
Name:
Title:
-15-
STATE OF NEW YORK )
) ss.
COUNTY OF NEW YORK )
On the ___ day of May in the year 2003 before me, the undersigned, a
notary public in and for said state, personally appeared ___________________,
personally known to me or proved to me on the basis of satisfactory evidence to
be the individual whose name is subscribed to the within instrument and
acknowledged to me that he/she/they executed the same in his/her/their capacity,
and that by his/her/their signature on the instrument, the individual, or the
person upon behalf of which the individual acted, executed the instrument.
___________________________________
Notary Public
Notary Seal My commission expires:
Exhibit A
PARCEL A
ALL THAT TRACT OR PARCEL OF LAND, situate in the Town of Amherst,
County of Erie and State of New York, being part of Lot No. 39, Township 11,
Range 7 of the Holland Land Company's Survey and according to map filed in the
Erie County Clerk's Office under Cover No. 1279, is known as Subdivision Lot No.
226.
PARCEL B
ALL THAT TRACT OR PARCEL OF LAND, situate in the Town of Amherst,
County of Erie and State of New York, being part of Lot No. 39, Township 11,
Range 7 of the Holland Land Company's Survey and according to Map filed in the
Erie County Clerk's Office under Cover No. 1279 is known as Subdivision Lot No.
139, the easterly 16 feet of Subdivision Lot No. 138 and the easterly 54 feet of
the southerly 25 feet of Subdivision Lot No. 140, being 54 feet of the southerly
25 feet of Subdivision Lot No. 140, being 54 feet front and rear by 125.19 feet
in depth, situate on the north side of Saratoga Road, commencing 100 feet east
of Darwin Drive.
PARCEL C
ALL THAT TRACT OR PARCEL OF LAND, situate in the Town of Amherst,
County of Erie and State of New York, being part of Lot No. 39, Township 11,
Range 7 of the Holland Land Company's Survey, bounded and described as follows:
Beginning at a point in an easterly line of Subdivision Lot No. 140 as
shown on a Subdivision Map of "Audubon Terrace South" filed in the Erie County
Clerk's Office under Cover No. 1279, which point is 25 feet north of the
southeast comer of said Subdivision Lot No. 140 and which point is also the
westerly line of Subdivision Lot No. 226 as shown on said map; thence northerly
along the said easterly line of Subdivision Lot No. 140 a distance of 15.0 feet
to the southerly line of Subdivision Lot No. 225 as shown on said Map; thence
westerly along the southerly line of said Subdivision Lot No. 225 a distance of
19.0 feet to the southwest comer of said Subdivision Lot No. 225, which point is
also an easterly corner of said Subdivision Lot No. 140, being a point in an
easterly line of said Subdivision Lot No. 140; thence southerly along the
extension of said easterly line a distance of 15.0 feet to a point in a north
line of lands conveyed to Comcast Sound Communications, Inc. by deed recorded in
Liber 9474 of Deeds at page 64; thence easterly along said north line a distance
of 19.0 feet to the point of beginning.
-2-
TOGETHER with easements set forth in instrument recorded in Liber 6667
of Deeds at page 267 and in Liber 6276 of Deeds at page 437.
EXHIBIT E
[FORM OF]
ASSIGNMENT AND ASSUMPTION
Reference is hereby made to the Credit Agreement dated as of May 20,
2003 (as amended, supplemented, amended and restated or otherwise modified from
time to time, the "Credit Agreement"), among MUZAK LLC, a Delaware limited
liability company (the "Borrower"), MUZAK HOLDINGS LLC, a Delaware limited
liability company ("Holdings"), the several banks and other financial
institutions or entities from time to time parties to this Agreement (the
"Lenders"), BEAR, STEARNS & CO. INC. and LEHMAN BROTHERS INC., as joint lead
arrangers and joint bookrunners (together with their successors and assigns,
collectively, the "Joint Lead Arrangers"), LEHMAN COMMERCIAL PAPER INC. and
FLEET NATIONAL BANK, as co-syndication agents (together with their successors
and assigns, in such capacity, collectively, the "Co-Syndication Agents"),
GENERAL ELECTRIC CAPITAL CORPORATION, as documentation agent (together with its
successors and assigns, in such capacity, the "Documentation Agent"), and BEAR
STEARNS CORPORATE LENDING INC., as administrative agent (together with its
successors and assigns, in such capacity, the "Administrative Agent").
Capitalized terms used herein without definition shall have the meanings
assigned to such terms in the Credit Agreement.
1. The Assignor hereby sells and assigns, without recourse, to the
Assignee, and the Assignee hereby purchases and assumes, without recourse, from
the Assignor, effective as of the Assignment Date set forth below, the interests
set forth below (the "Assigned Interest") in the Assignor's rights and
obligations under the Credit Agreement, including, without limitation, the
interests set forth below in the Revolving Commitment of the Assignor on the
Assignment Date and the Revolving Loans owing to the Assignor which are
outstanding on the Assignment Date, but excluding accrued interest and fees to
and excluding the Assignment Date. Each of the Assignor and the Assignee hereby
makes and agrees to be bound by all the representations, warranties and
agreements set forth in Section 10.6 of the Credit Agreement, a copy of which
has been received by each such party. From and after the Assignment Date (i) the
Assignee shall be a party to and be bound by the provisions of the Credit
Agreement and, to the extent of the interests assigned by this Assignment and
Assumption, have the rights and obligations of a Lender thereunder and under the
other Loan Documents and (ii) the Assignor shall, to the extent of the interests
assigned by this Assignment and Assumption, relinquish its rights and be
released from its obligations under the Credit Agreement.
2. This Assignment and Assumption is being delivered to the
Administrative Agent together with (i) if the Assignee is organized under the
laws of a jurisdiction outside the United States, the forms specified in Section
3.10 of the Credit Agreement, duly completed and executed by such Assignee, (ii)
if the Assignee is not already a Lender under the Credit
-2-
Agreement, an administrative questionnaire pursuant to Section 10.6(b)(ii)(C) of
the Credit Agreement and (iii) a processing and recordation fee equal to $3,500;
provided that in connection with assignments from a Lender to another Lender or
an affiliate of a Lender, the processing and recordation fee shall be $1,500.
3. This Assignment and Assumption and the rights and obligations of
the parties under this Assignment and Assumption shall be governed by, and
construed and interpreted in accordance with, the law of the State of New York,
without regard to conflict of laws principles thereof.
Date of Assignment: [ ]
Legal Name of Assignor: [ ]
Legal Name of Assignee: [ ]
Assignee's Address for Notices:
Assignment Date: ______________, 2003
Percentage Assigned of
aggregate Commitments (set
forth, to at least 8
decimals, as a percentage
of the aggregate
Principal Revolving Commitments
Amount of all Lenders
Assigned thereunder)
- ----------- ----------------- --------------------------
Revolving Commitment Assigned: $ %
Revolving Loans:
4. This Assignment and Assumption shall become effective when
counterparts hereof have been executed on behalf of each of the parties required
pursuant to Section 10.6 of the Credit Agreement.
[signature page follows]
-3-
The terms set forth above and on the reverse side hereof are hereby agreed to:
[ ],
as Assignor
By:___________________________
Name:
Title:
[ ],
as Assignee
By:___________________________
Name:
Title:
Accepted:*
BEAR STEARNS CORPORATE LENDING INC.,
as Administrative Agent
By:___________________________
Name:
Title:
[ISSUING LENDER],
as Issuing Lender
By:___________________________
Name:
Title:
-4-
MUZAK LLC,
as Borrower
By:___________________________
Name:
Title:
______________________________
* To be completed only if Administrative Agent, Issuing Lender and/or
Borrower consents are required under Section 10.6 of the Credit Agreement.
[LETTERHEAD OF KIRKLAND & ELLIS]
EXHIBIT F-1
[FORM OF]
OPINION OF KIRKLAND & ELLIS
May 20, 2003
Page 9
The financial institutions named on
Schedule H attached hereto
and
Bear Stearns Corporate Lending Inc.,
as Administrative Agent for the Lenders
Ladies and Gentlemen:
We are issuing this opinion letter in our capacity as special legal
counsel to Muzak LLC, a Delaware limited liability company ("Borrower"), Muzak
Holdings LLC, a Delaware limited liability company ("Holdings") and each
Subsidiary Guarantor (collectively, the "Subsidiary Guarantors" and, together
with the Borrower and Holdings, collectively, the "Credit Parties" and each a
"Credit Party"), in response to the requirement in Section 5.1(h)(i) of the
Credit Agreement, dated as of May 20, 2003, by and among Borrower, Holdings, the
banks and other financial institutions party thereto (the "Lenders"), Bear,
Stearns & Co., Inc. as joint lead arranger and joint bookrunner, and Lehman
Brothers Inc., as joint lead arranger and joint bookrunner (the "Joint Lead
Arrangers"), Lehman Commercial Paper Inc. and Fleet National Bank, as
co-syndication agents (the "Syndication Agent"), General Electric Capital
Corporation, as documentation agent (the "Documentation Agent") and Bear Stearns
Corporate Lending Inc., as administrative agent (the "Administrative Agent")
(the "Credit Agreement"). The Administrative Agent, the Documentation Agent, the
Syndication Agent, the Joint Lead Arrangers and the Lenders are herein
collectively referred to as "you." The term "Delaware Parties" whenever it is
used in this letter means collectively the Borrower, Holdings, BI Acquisition,
LLC, a Delaware limited liability company ("BI Acquisition"), Muzak Capital
Corporation, a Delaware corporation ("Capital Corp."), Music Incorporated, a
Delaware corporation ("Music Inc.") and Vortex Sound Communications Company,
Inc., a Delaware corporation ("Vortex Sound"), and each of the Borrower,
KIRKLAND & ELLIS
May 20, 2003
Page 6
Holdings, BI Acquisition, Capital Corp., Music Inc. and Vortex Sound may
hereinafter be referred to as a "Delaware Party." Unless otherwise indicated,
capitalized terms used herein but not otherwise defined herein have the
respective meanings set forth in the Credit Agreement.
We have reviewed executed counterparts of the Credit Agreement and each
of the other documents and instruments identified on Schedule E (the "Collateral
Documents"), each in the form executed and delivered on this date. For purposes
of this letter, the Credit Agreement, the Notes and the Collateral Documents,
each in the form reviewed by us for purposes of this letter, are referred to
herein, collectively, as the "Transaction Documents." We have also reviewed the
unfiled Uniform Commercial Code financing statements (form UCC-1) delivered on
the date of this letter by a representative of each respective Delaware Party
naming such Delaware Party, as debtor, and Bear Stearns Corporate Lending Inc.,
as Administrative Agent, as secured party, copies of which are attached hereto
as Annex A, to be filed in the office of the Secretary of State of the State of
Delaware (such filing office, the "Delaware Filing Office" and such financing
statements, the "Delaware Financing Statements").
Subject to the assumptions, qualifications, exclusions and other
limitations which are identified in this letter and in the schedules attached to
this letter, we advise you, and with respect to each legal issue addressed in
this letter, it is our opinion, that:
1. Borrower, Holdings and BI Acquisition are limited liability
companies existing and in good standing under the Limited Liability
Company Act of the State of Delaware, and Capital Corp., Music Inc. and
Vortex Sound are Delaware corporations existing and in good standing
under the General Corporation Law of the State of Delaware. For
purposes of the foregoing opinions in this paragraph, we have relied
exclusively upon the certificates issued by the governmental
authorities of the State of Delaware, and such opinions are not
intended to provide any conclusion or assurance beyond that conveyed by
such certificates.
2. Each Delaware Party has the limited liability company or
corporate power, as applicable, to execute and deliver each of the
Transaction Documents to which it is a party, to perform its
obligations under each of the Transaction Documents to which it is a
party and to deliver the Delaware Financing Statements on which it is
named the debtor.
3. The board of directors or the board of managers, as
applicable, of each Delaware Party has adopted by requisite vote the
resolutions necessary to authorize such Delaware Party's execution and
delivery of the Transaction Documents to which it is a party, the
performance of its obligations under each of the Transaction Documents
to
KIRKLAND & ELLIS
May 20, 2003
Page 7
which it is a party and the delivery of the Delaware Financing
Statements on which it is named the debtor.
4. Each Delaware Party has duly executed and delivered the
Transaction Documents to which it is a party and delivered the Delaware
Financing Statements on which it is named debtor.
5. Each of the Transaction Documents (other than the Mortgages
as to which we express no opinion) executed by any Credit Party is a
valid and binding obligation of each Credit Party that is a party
thereto and enforceable against such Credit Party in accordance with
its terms.
6. The execution and delivery by each Credit Party of the
Transaction Documents to which it is a party and the performance on the
date hereof of its respective obligations under the Transaction
Documents to which it is a party, will not (a) in the case of any
Delaware Party, violate any provisions of such Delaware Party's
articles or certificate of incorporation or formation or bylaws or
limited liability company agreement, as applicable, or (b) constitute a
violation by such Credit Party of any applicable provision of existing
State of New York or United States statutory law or governmental
regulation applicable to any Credit Party covered by this letter, (c)
result in the creation or imposition of any lien, charge or encumbrance
on the property of any such Credit Party (except in favor of the
Administrative Agent for the benefit of the Secured Parties) or (d)
violate any existing order, writ, injunction or decree applicable to
any Credit Party of which we are aware of any court or governmental
instrumentality.
7. No Credit Party is presently required to obtain any
material consent, approval, permit, authorization or order of, or make
any filings or registrations with, or give notice to, any United States
federal or State of New York court, governmental body, authority or
agency in order to obtain the right to (a) execute and deliver the
Transaction Documents to which it is a party and (b) to perform its
obligations under the Transaction Documents to which it is a party,
except for: (i) such material consents, approvals, permits,
authorizations, orders, filings or registrations as have been obtained
or made prior to the date hereof, (ii) filings necessary to perfect
liens and security interests granted under the Transaction Documents
and to release liens existing prior to the date hereof, (iii) actions
or filings required in connection with ordinary course conduct of its
business and ownership or operation of its assets or (iv) actions and
filings required under any of the laws, regulations or governmental
requirements set forth on Schedule C hereto (as to which we express no
opinion).
KIRKLAND & ELLIS
May 20, 2003
Page 8
8. With respect to each Credit Party, the Guarantee and
Collateral Agreement creates valid security interests in favor of the
Administrative Agent in such Credit Party's collateral therein with
respect to which such Credit Party has rights (the "Collateral") and
which constitutes property in which a security interest can be granted
under Article 9 of the Uniform Commercial Code as enacted in the State
of New York (the "New York UCC"). Such Collateral is referred to herein
as the "Code Collateral."
9. Under the New York UCC, the perfection of the
Administrative Agent's security interests in the Code Collateral (i)
will, as a general matter and except as otherwise provided in Sections
9-301 through 9-307 of the New York UCC, be governed by the local law
of the jurisdiction in which the applicable grantor is located (which
in the case of (A) a registered organization (as defined in the New
York UCC) such as a corporation or a limited liability company that is
organized under the laws of a State (as defined in the New York UCC) is
the State under whose laws such registered organization is organized,
or (B) an organization that is not a registered organization, at its
place of business if it has only one place of business or at its chief
executive office if it has more than one place of business, (ii) will,
in the case of a possessory security interest, generally be governed by
the local law of the jurisdiction in which the collateral is located,
(iii) which constitutes certificated securities will be governed by the
local law of the jurisdiction in which the security certificates are
located (other than perfection by filing, which is governed by the
local law of the jurisdiction in which the applicable grantor is
located) as specified in Section 9-305(a)(1) of the New York UCC, (iv)
which constitutes uncertificated securities will be governed by the
local law of the issuer's jurisdiction as specified in Section 8-110(d)
of the New York UCC pursuant to Section 9-305(a)(2) of the New York UCC
(other than perfection by filing, which is governed by the local law of
the jurisdiction in which the applicable grantor is located), (v) which
constitutes a security entitlement or a securities account will be
governed by the local law of the securities intermediary's jurisdiction
as specified in Section 8-110(e) of the New York UCC pursuant to
Section 9-305(a)(3) of the New York UCC (other than perfection by
filing, which is governed by the local law of the jurisdiction in which
the applicable grantor is located), (vi) which constitutes goods
covered by a certificate of title will be governed by the local law of
the jurisdiction under whose certificate of title the goods are covered
as specified in Section 9-303 of the New York UCC, (vii) which
constitutes deposit accounts will be governed by the local law of the
depositary bank's jurisdiction as specified in Section 9-304 of the New
York UCC, (viii) which constitutes letter-of-credit rights will
generally be governed by the local law of the issuer's or nominated
person's jurisdiction as specified in Section 9-306 of the New York
UCC, and (ix) which constitutes other cate-
KIRKLAND & ELLIS
May 20, 2003
Page 9
gories will be governed by the laws of the jurisdiction or
jurisdictions specified in Sections 9-301 through 9-307 of the New York
UCC.
10. Under the principles described in the preceding
subparagraph (a)(i) and, with respect to perfection by filing, in the
preceding subparagraph (a)(iii), (a)(iv) and (a)(v) of this paragraph
9, the perfection of the Administrative Agent's security interests in
certain of the Code Collateral (the "Filing Code Collateral") is
governed by the laws of the jurisdiction of organization of the
relevant Credit Party as set forth on Schedule F attached hereto. We
have reviewed the provisions of the Uniform Commercial Code as in
effect on the date hereof in the State of Delaware as set forth in the
Commerce Clearing House, Inc. Secured Transactions Guide as
supplemented through April 22, 2003 (the "Guide"). Based solely on such
review, we advise you (but express no opinion) that when the Delaware
Financing Statements naming the applicable Delaware Party as debtor are
duly filed in the Delaware Filing Office, then with respect to each
Delaware Party, security interests granted to the Administrative Agent
under the Collateral Documents in the Filing Code Collateral of such
Delaware Party will be perfected to the extent both (i) such Filing
Code Collateral is also described in such Delaware Financing Statements
(which description for purposes of such Delaware Financing Statements
may be a generic description such as "all assets" or "all personal
property" if such generic description is in fact an accurate
description of the Collateral described in the Collateral Documents or
the use of such generic description for purposes of the Delaware
Financing Statements is specifically authorized by the debtor in the
Collateral Documents) and (ii) such security interest can be perfected
by the filing of Uniform Commercial Code financing statements in such
jurisdictions.
11. Assuming (in addition to all other assumptions upon which
this letter is based) that the Administrative Agent has taken and is
retaining possession in the State of New York of the certificates
representing the securities which are certificated and pledged pursuant
to the Collateral Documents as identified on Schedule G attached hereto
(the "Pledged Securities"), duly endorsed to the Administrative Agent
or in blank, the security interest in favor of the Administrative Agent
in such Pledged Securities is perfected under the New York UCC; and
assuming further (in addition to all other assumptions upon which this
letter is based) that the Administrative Agent has taken possession of
such Pledged Securities and such accompanying endorsements without
notice (actual or constructive), at or prior to the time of the
delivery of such Pledged Securities and endorsements to the
Administrative Agent, of any adverse claim within the meaning of
Section
KIRKLAND & ELLIS
May 20, 2003
Page 10
8-102(a)(1) of the New York UCC, the Administrative Agent has acquired
its security interest in such pledged securities free of any such
adverse claims.
12. To the best of our actual knowledge, no legal or
governmental proceedings are pending or overtly threatened to which any
Credit Party is a party or to which its property or assets is subject
that seeks to restrain, enjoin or prevent the consummation on the date
of this letter of any of the transactions contemplated by the
Transaction Documents.
13. We do not have actual knowledge that any provision in any
Court Order would be breached or otherwise violated by any Credit
Party's execution or delivery of the Transaction Documents to which it
is a party or by any Credit Party's performance of any of its
respective obligations in such Transaction Documents. For purposes of
this letter, the term "Court Order" means a court or administrative
order, writ, judgment or decree that names a Credit Party and is
specifically directed to such Credit Party or its property. For
purposes of this letter, our Designated Transaction Lawyers (as defined
below) have not undertaken any investigation to identify Court Orders
to which any Credit Party may be subject or reviewed any Court Orders
about the existence of which they may have actual knowledge.
14. The payment of interest by the Borrower on indebtedness
required pursuant to the terms of Notes under the Credit Agreement in
the manner set forth in the Credit Agreement will not be limited under
applicable usury laws of the State of New York in force on the date
hereof; provided however that we express no opinion as to the laws of
any other jurisdiction insofar as the same limits rates of interest
which may be charged or collected under the Notes other than with
respect to the State of New York.
15. None of the Credit Parties is (a) an "investment company"
within the meaning of the Investment Company Act of 1940, as amended or
(b) a "holding company" or a "subsidiary company" of a "holding
company" within the meaning of the Public Utility Holding Company Act
of 1935, as amended.
Assuming application of the proceeds of the Loans as contemplated by
the Credit Agreement and that none of such proceeds will be used for the purpose
of purchasing or carrying "margin securities" (within the meaning of Regulations
U and X of the Board of Governors of the Federal Reserve System), the borrowings
by the Borrower on the date of this letter under the Credit Agreement will not,
in and of themselves, result in a violation of Regulation U or X of the Board of
Governors of the Federal Reserve System.
KIRKLAND & ELLIS
May 20, 2003
Page 11
Each opinion in this letter is subject to the General Qualifications
that are recited in Schedule A to this letter to the extent relevant to that
opinion. In preparing this letter, we have relied without any independent
verification (except as expressly set forth herein) upon the assumptions recited
in Schedule B to this letter and upon: (i) information contained in certificates
obtained from governmental authorities; (ii) factual information represented in
the Credit Agreement and the other Transaction Documents to be true; (iii)
factual information provided to us in a support certificate executed by each
Credit Party; and (iv) factual information we have obtained from such other
sources as we have deemed reasonable. We have examined the originals or copies
certified to our satisfaction, of such other corporate and limited liability
company records of the Credit Parties as we deem necessary for or relevant to
this letter, certificates of public officials and other officers of the Credit
Parties and we have assumed without investigation that there has been no
relevant change or development between the dates as of which the information
cited in the preceding sentence was given and the date of this letter and that
the information upon which we have relied is accurate and does not omit
disclosures necessary to prevent such information from being misleading.
While we have not conducted any independent investigation to determine
facts upon which our opinions are based or to obtain information about which
this letter advises you, we confirm that we do not have any actual knowledge
which has caused us to conclude that our reliance and assumptions cited in the
preceding paragraph are unwarranted or that any information supplied to us in
connection with the preparation of this letter is wrong. The terms "knowledge,"
"actual knowledge" or "aware" whenever used in this letter with respect to our
firm mean conscious awareness at the time this letter is delivered on the date
it bears by the following Kirkland & Ellis lawyers who have had significant
involvement with the negotiation or preparation of the Transaction Documents
(herein called "our Designated Transaction Lawyers"): John L. Kuehn, Lisa M.
Anastos and Jason A. Gottlieb.
Our advice on every legal issue addressed in this letter is based
exclusively on the internal laws of the State of New York or the federal law of
the United States which, in each case, is in our experience normally applicable
to general business organizations not engaged in regulated business activities
and to transactions of the type contemplated between the Credit Parties, on the
one hand, and you, on the other hand, in the Transaction Documents on the date
hereof (but without our having made any special investigation as to any other
laws), except that (i) our advice in opinion paragraphs 1 through 3 and 6(a) is
based on the General Corporation Law of the State of Delaware and the Limited
Liability Company Act of the State of Delaware, (ii) our advice in opinion
paragraph 9(b) with respect to the laws of the State of Delaware is based
exclusively on our review of the Guide (without regard to judicial
interpretation thereof or regulations
KIRKLAND & ELLIS
May 20, 2003
Page 12
promulgated thereunder) and on the assumption that such statutory provisions are
given the same interpretation and application in such state as the corresponding
provisions of the New York UCC are given in the State of New York and (iii) we
express no opinion or advice as to any law (a) to which the Credit Parties may
be subject as a result of your legal or regulatory status, your sale or transfer
of any Loans or other Obligations or interests therein or your involvement in
the transactions contemplated by the Transaction Documents or (b) identified on
Schedule C. With respect to our opinions based on the general business corporate
and limited liability company statutes of the State of Delaware, we advise you
that we do not practice law under such states, and, with your permission, we
have rendered such opinions based exclusively on our review of the statutory
provisions of such statutes as published by Aspen Law & Business, as
supplemented through October 15, 2002, without regard to any regulations
promulgated thereunder or any judicial or administrative interpretations
thereof. For purposes of each opinion in paragraph 1, we have relied exclusively
upon certificates issued by a governmental authority in each relevant
jurisdiction and such opinions are not intended to provide any conclusion or
assurance beyond that conveyed by such certificates. Further, we express no
opinion or advice as to any law to which any Credit Party may be subject as a
result of your legal or regulatory status, your sale or transfer of any Loans or
other obligations incurred under the Credit Agreement or interests therein or
your (as opposed to any other lender's) involvement in the transactions
contemplated by the Transaction Documents. We advise you that issues addressed
by this letter may be governed in whole or in part by other laws, but we express
no opinion as to whether any relevant difference exists between the laws upon
which our opinions are based and any other laws which may actually govern. Our
opinions are subject to all qualifications in Schedule A and do not cover or
otherwise address any law or legal issue which is identified in the attached
Schedule C or any provision in the Credit Agreement or any of the other
Transaction Documents of any type identified in Schedule D. Provisions in the
Transaction Documents which are not excluded by Schedule D or any other part of
this letter or its attachments are called the "Relevant Agreement Terms."
Our advice on each legal issue addressed in this letter represents our
opinion as to how that issue would be resolved were it to be considered by the
highest court of the jurisdiction upon whose law our opinion on that issue is
based. The manner in which any particular issue would be treated in any actual
court case would depend in part on facts and circumstances particular to the
case, and this letter is not intended to guarantee the outcome of any legal
dispute which may arise in the future. It is possible that some Relevant
Agreement Terms contained in the Transaction Documents may not prove enforceable
for reasons other than those cited in this letter should an actual enforcement
action be brought, but (subject to all the exceptions, qualifications,
exclusions and other limitations contained in this letter) such unenforceability
would not in our opinion pre-
KIRKLAND & ELLIS
May 20, 2003
Page 13
vent you from realizing the principal benefits purported to be provided by the
Relevant Agreement Terms contained in the Transaction Documents.
This letter speaks as of the time of its delivery on the date it bears.
We do not assume any obligation to provide you with any subsequent opinion or
advice by reason of any fact about which our Designated Transaction Lawyers did
not have actual knowledge at that time, by reason of any change subsequent to
that time in any law covered by any of our opinions, or for any other reason.
The attached schedules are an integral part of this letter, and any term defined
in this letter or any schedule has that defined meaning wherever it is used in
this letter or in any schedule to this letter.
You may rely upon this letter only for the purpose served by the
provision in the Credit Agreement cited in the initial paragraph of this letter
in response to which it has been delivered. Without our written consent: (i)
subject to the immediately succeeding sentence, no person other than you may
rely on this letter for any purpose; (ii) this letter may not be cited or quoted
in any financial statement, prospectus, private placement memorandum or other
similar document; (iii) this letter may not be cited or quoted in any other
document or communication which might encourage reliance upon this letter by any
person or for any purpose excluded by the restrictions in this paragraph; and
(iv) copies of this letter may not be furnished to anyone for purposes of
encouraging such reliance. Notwithstanding the foregoing, financial institutions
who are or who subsequently become a Lender in accordance with the terms of the
Credit Agreement may be provided with a copy of, and rely on, this letter as of
the time of its delivery on the date hereof as if this letter were addressed to
them.
Sincerely,
Kirkland & Ellis
Schedule A
General Qualifications
All of our opinions ("our opinions") in the letter to which this Schedule is
attached ("our letter") are subject to each of the qualifications set forth in
this Schedule.
BANKRUPTCY AND INSOLVENCY EXCEPTION. EACH OF OUR OPINIONS IN OUR LETTER AS TO
THE VALIDITY, BINDING EFFECT OR ENFORCEABILITY OF ANY TRANSACTION DOCUMENT
OR TO THE AVAILABILITY OF INJUNCTIVE RELIEF AND OTHER EQUITABLE REMEDIES
(THE "SPECIFIED OPINIONS") IS SUBJECT TO THE EFFECT OF BANKRUPTCY,
INSOLVENCY, REORGANIZATION, RECEIVERSHIP, MORATORIUM AND OTHER SIMILAR LAWS
RELATING TO OR AFFECTING CREDITOR'S RIGHTS. THIS EXCEPTION INCLUDES:
the federal Bankruptcy Code and thus comprehends, among others, matters of
turn-over, automatic stay, avoiding powers, fraudulent transfer,
preference, discharge, conversion of a non-recourse obligation into a
recourse claim, limitations on ipso facto and anti-assignment clauses
and the coverage of pre-petition security agreements applicable to
property acquired after a petition is filed;
all other federal and state bankruptcy, insolvency, reorganization,
receivership, moratorium, arrangement and assignment for the benefit
of creditors laws that affect the rights of creditors generally or
that have reference to or affect only creditors of specific types of
debtors;
state fraudulent transfer and conveyance laws; and
judicially developed doctrines in this area, such as substantive
consolidation of entities and equitable subordination.
EQUITABLE PRINCIPLES LIMITATION. EACH SPECIFIED OPINION IS SUBJECT TO THE EFFECT
OF GENERAL PRINCIPLES OF EQUITY, WHETHER APPLIED BY A COURT OF LAW OR
EQUITY. THIS LIMITATION INCLUDES PRINCIPLES:
governing the availability of specific performance, injunctive relief or
other equitable remedies, which generally place the award of such
remedies, subject to certain guidelines, in the discretion of the
court to which application for such relief is made;
affording equitable defenses (e.g., waiver, laches and estoppel) against a
party seeking enforcement;
requiring good faith and fair dealing in the performance and enforcement of
a contract by the party seeking its enforcement;
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requiring reasonableness in the performance and enforcement of an agreement
by the party seeking enforcement of the contract;
requiring consideration of the materiality of (i) a breach and (ii) the
consequences of the breach to the party seeking enforcement;
requiring consideration of the impracticability or impossibility of
performance at the time of attempted enforcement; and
affordingdefenses based upon the unconscionability of the enforcing party's
conduct after the parties have entered into the contract.
OTHER COMMON QUALIFICATIONS. EACH OF THE SPECIFIED OPINIONS IS SUBJECT TO THE
EFFECT OF RULES OF LAW THAT:
limit or affect the enforcement of provisions of a contract that purport to
waive, or to require waiver of, the obligations of good faith, fair
dealing, diligence and reasonableness;
provide that forum selection clauses in contracts are not necessarily
binding on the court(s) in the forum selected;
limit the availability of a remedy under certain circumstances where
another remedy has been elected;
provide a time limitation after which a remedy may not be enforced;
limit the right of a creditor to use force or cause a breach of the peace
in enforcing rights;
relate to the sale or disposition of collateral or the requirements of a
commercially reasonable sale;
limit the enforceability of provisions releasing, exculpating or exempting
a party from, or requiring indemnification of a party for, liability
for its own action or inaction, to the extent the action or inaction
involves negligence, bad faith, recklessness, willful misconduct,
unlawful conduct, or violation of public policy, for strict product
liability, for liabilities arising under any securities laws, or for
litigation against another party determined adversely to such party;
may, where less than all of a contract may be unenforceable, limit the
enforceability of the balance of the contract to circumstances in
which the unenforceable portion is not an essential part of the
agreed exchange;
govern and afford judicial discretion regarding the determination of
damages and entitlement to attorneys' fees and other costs;
A-2
may permit a party that has materially failed to render or offer
performance required by the contract to cure that failure unless (i)
permitting a cure would unreasonably hinder the aggrieved party from
making substitute arrangements for performance, or (ii) it was
important in the circumstances to the aggrieved party that
performance occur by the date stated in the contract;
may, in the absence of a waiver or consent by the guarantor, render
guarantees or other similar instruments or agreements unenforceable
under circumstances where your actions, failures to act or waivers,
amendments or replacement of the Transaction Documents evidencing or
relating to the guaranteed obligation (i) so radically change the
essential nature of the terms and conditions of the guaranteed
obligations and the related transactions that, in effect, a new
relationship has arisen between you and the Credit Parties which is
substantially and materially different from that presently
contemplated by the Transaction Documents or (ii) impair the
guarantor's recourse against the primary obligor; and
limit the eforceability of requirements in the Transaction Documents that
provisions therein may only be waived or amended in writing, to the
extent that an oral agreement or an implied agreement by trade
practice or course of conduct has been created modifying any such
provision.
REFERENCED PROVISION QUALIFICATION. EACH OPINION REGARDING THE VALIDITY, BINDING
EFFECT OR ENFORCEABILITY OF A PROVISION (THE "FIRST PROVISION") IN ANY OF
THE TRANSACTION DOCUMENTS REQUIRING ANY CREDIT PARTY TO PERFORM ITS
OBLIGATIONS UNDER, OR TO CAUSE ANY OTHER PERSON TO PERFORM ITS OBLIGATIONS
UNDER, ANY OTHER PROVISION (A "SECOND PROVISION") OF ANY TRANSACTION
DOCUMENT, OR STATING THAT ANY ACTION WILL BE TAKEN AS PROVIDED IN OR IN
ACCORDANCE WITH ANY SECOND PROVISION, ARE SUBJECT TO THE SAME
QUALIFICATIONS AS THE CORRESPONDING OPINION IN THIS LETTER RELATING TO THE
VALIDITY, BINDING EFFECT AND ENFORCEABILITY OF SUCH SECOND PROVISION.
REQUIREMENTS IN THE TRANSACTION DOCUMENTS THAT PROVISIONS THEREIN MAY ONLY
BE WAIVED OR AMENDED IN WRITING MAY NOT BE ENFORCEABLE TO THE EXTENT THAT
AN ORAL AGREEMENT OR AN IMPLIED AGREEMENT BY TRADE PRACTICE OR COURSE OF
CONDUCT HAS BEEN CREATED MODIFYING ANY SUCH PROVISION.
COLLATERAL QUALIFICATIONS. THE OPINIONS AND ADVICE CONTAINED IN OPINION
PARAGRAPHS 8, 9 AND 10 IN OUR LETTER ARE SUBJECT TO THE FOLLOWING ADVICE
(TERMS USED HEREIN WHICH ARE DEFINED IN THE NEW YORK UCC OR ANY OTHER
APPLICABLE UNIFORM COMMERCIAL CODE HAVING THE SAME MEANINGS FOR PURPOSES
HEREOF GIVEN TO THEM THEREIN):
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We express no opinion regarding the creation, attachment, perfection,
effect of perfection or enforceability of any security interest
created under Section 3(q) of the Guarantee and Collateral Agreement;
certain rights of debtors and obligors and duties of secured parties
referred to in Sections 1-102(3) and 9-602 of the New York UCC (and
the corresponding sections of any other applicable Uniform Commercial
Code) may not be waived, released, varied or disclaimed by agreement
prior to a default and our opinions regarding any such waivers,
releases, variations and disclaimers are limited accordingly;
our opinions regarding the creation and perfection of security interests
are subject to the effect of (i) the limitations on the existence and
perfection of security interests in proceeds resulting from the
operation of Section 9-315 of any applicable Uniform Commercial Code;
(ii) the limitations in favor of buyers, licensees and lessees
imposed by Sections 9-320, 9-321 and 9-323 of any applicable Uniform
Commercial Code; (iii) the limitations with respect to securities
imposed by Section 9-331 and Section 8-303 of any applicable Uniform
Commercial Code; (iv) other rights of persons in possession of money,
instruments and proceeds constituting certificated or uncertificated
securities; and (v) Section 547 of the Bankruptcy Code with respect
to preferential transfers and Section 552 of the Bankruptcy Code with
respect to any Collateral acquired by any Credit Party subsequent to
the commencement of a case against or by any Credit Party under the
Bankruptcy Code;
Article 9 of each applicable Uniform Commercial Code requires the filing of
continuation statements within specified periods in order to maintain
the effectiveness of the filings referred to in our letter;
additional filings or actions may be necessary if any Credit Party changes
its name, identity or corporate or organizational structure or the
jurisdiction in which it is organized or in which any Collateral
referred to in opinion paragraph 10 is located;
we express no opinion regarding the perfection of any lien or security
interest in any property (whether real, personal or mixed, and
whether such perfection be accomplished or purport to be accomplished
by filing, by possession, by control or otherwise), except as
specifically set forth in our letter or regarding the continued
perfection of any possessory security interest in any Collateral (or
other security interest the perfection of which depends upon the
location of such Collateral) upon or following the removal of such
Collateral to another jurisdiction; we express no opinion regarding
the perfection of any security interests in deposit accounts, money
or letter of credit rights or regarding the perfection of any
possessory security interests in Collateral in possession of a person
other than the secured party; we express no opinion with respect to
the perfection by filing of any security interests and with respect
to Collateral as to which the filing of a Financing Statement has not
been authorized by the debtor either in an authenticated record
pursuant to Section 9-509(a) or pursuant to Section 9-509(b) or (c)
of the applicable Uniform Commercial Code; and except as expressly
set forth in opinion
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paragraph 10 (regarding certain security interests being acquired free
of adverse claims), we express no opinion regarding the priority of
any lien or security interest;
the assignment of or creation of a security interest in any contract,lease,
license, permit or other general intangible or account, chattel paper
or promissory note may require the approval of the issuer thereof or
the other parties thereto, except to the extent that restrictions on
the creation attachment, perfection or enforcement of a security
interest therein are unenforceable under Sections 9-406 and 9-408 of
the New York UCC;
we express no opinion with respect to any self-help remedies with respect
to Collateral to the extent they vary from those available under the
New York UCC or other applicable Uniform Commercial Code or with
respect to any remedies otherwise inconsistent with the New York UCC
(to the extent that the New York UCC is applicable thereto) or other
applicable law (including, without limitation, any other applicable
Uniform Commercial Code);
a substantial body of case law treats guarantors as "debtors" under the New
York UCC, thereby according guarantors rights and remedies of debtors
established by the New York UCC;
we express no opinion as to whether a guaranty would remain enforceable if
you release the primary obligor either directly or by electing a
remedy which precludes you from proceeding directly against the
primary obligor;
we express no opinion with respect to (1) the creation, perfection or
enforceability of agricultural liens or (2) the creation, perfection
or enforceability of security interests in: property in which it is
illegal or violative of governmental rules or regulations to grant a
security interest (such as, for example, governmental permits and
licenses); general intangibles which terminate or become terminable if
a security interest is granted therein; property subject to negative
pledge clauses of which you have knowledge; vehicles, ships, vessels,
barges, boats, railroad cars, locomotives and other rolling stock,
aircraft, aircraft engines, propellers and related parts, and other
property for which a state or federal statute or treaty (including
without limitation any applicable Uniform Commercial Code) provides
for registration or certification of title or specifies a place of
filing different from that specified in Section 9-501 of any
applicable Uniform Commercial Code; commercial tort claims; crops,
farm products, equipment used in farming operations and accounts or
general intangibles arising from or relating to the sale of farm
products by a farmer; timber to be cut; fixtures; "as-extracted
collateral" (including without limitation oil, gas or other minerals
and accounts arising out of the sale at the wellhead or minehead of
oil, gas or other minerals); consumer goods; property identified to a
contract with, or in the possession of, the United States of America
or any state, county, city, municipality or other governmental body or
agency; goods for which a negotiable document of title has been
issued; and copyrights, patents and trade-
A-5
marks, other intellectual property rights, service marks, know-how,
processes, trade secrets, undocumented computer software, unrecorded
and unwritten data and information, and rights and licenses
thereunder;
we express no opinion with respect to the enforceability of any security
interest in any accounts, chattel paper, documents, instruments or
general intangibles with respect to which the account debtor or
obligor is the United States of America, any state, county, city,
municipality or other governmental body, or any department, agency or
instrumentality thereof;
we express no opinion regarding the enforceability of any provision of any
Transaction Document which purports to authorize you to file financing
statements or other documents without the signature of the debtor
under circumstances not authorized under the applicable Uniform
Commercial Code;
we express no opinion with respect to the enforceability of any provision
of any Transaction Document which purports to authorize you to
purchase at a private sale Collateral which is not subject to widely
distributed standard price quotations or sold on a recognized market;
we note that the remedies under the Collateral Documents with regard to the
sale of any securities subject to any security interest are subject to
compliance with applicable state and federal securities laws;
we express no opinion regarding the enforceability of any pre-default
waiver of notification of disposition of Collateral, mandatory
disposition of Collateral, or redemption rights;
we express no opinion regarding the enforceability of any provisions
asserting that Collateral is owned by or is property of a secured
party prior to such secured party's foreclosure of such Collateral in
accordance with the applicable Uniform Commercial Code or, in the case
of cash Collateral, the application of such cash Collateral in payment
of the secured obligations;
we express no opinion regarding any Credit Party's right in or title to its
properties, including without limitation, any of the Collateral;
we note that our opinions as to the validity, binding effect and
enforceability of any Transaction Documents do not constitute opinions
as to the creation, perfection effect of perfection or priority of any
lien or security interest purported to be granted thereunder; opinions
as to the creation, perfection, effect of perfection or priority of
any lien or security interest are given, if any at all, only in
opinion paragraphs 8, 9 and 10 and are subject to the assumptions,
qualifications and limitations applicable to such opinions set forth
in this letter;
we express no opinion as to the enforceability of cumulativen remedies to
the extent such cumulative remedies purport to or would have the
effect of compensating the
A-6
party entitled to the benefits thereof in amounts in excess of the
actual loss suffered by such party or would violate applicable laws
concerning real estate or mixed collateral foreclosures or elections
of remedies (we call your attention to the fact that acceptance of
collateral in full or partial satisfaction of obligations secured
thereby under the New York UCC may limit or eliminate any right to
seek a deficiency judgment that might otherwise be available);
we express no opinion regarding the characterization of a transaction as
one involving the creation of a lien on real property, the
characterization of a contract as one in a form sufficient to create a
lien or a security interest in real property, the creation,
perfection, priority or enforcement of a lien on real property or
matters involving ownership or title to any real property;
we express no opinion with regard to the effectiveness, validity, or
enforceability of Section 3 of the Guarantee and Collateral Agreement,
nor with regard to the creation, attachment, perfection, effect of
perfection or priority of any security interest, to the extent any
purported grant of a security interest may be invalid, unenforceable,
or unperfected because of any failure to reasonably describe the
collateral as required by the applicable Uniform Commercial Code,
including by reason of the use therein of a supergeneric description
of the collateral;
we note that the perfection of any security interest may be terminated as
to Collateral otherwise disposed of by any Credit Party if such
disposition is authorized in the Transaction Documents or otherwise by
the requisite Lenders.
LENDER'S REGULATORY QUALIFICATION. WE EXPRESS NO OPINION WITH RESPECT TO, AND
ALL OUR OPINIONS ARE SUBJECT TO, THE EFFECT OF THE COMPLIANCE OR
NONCOMPLIANCE OF YOU WITH ANY STATE OR FEDERAL LAWS OR REGULATIONS
APPLICABLE TO YOU BECAUSE OF YOUR LEGAL OR REGULATORY STATUS OR THE NATURE
OF YOUR BUSINESS OR REQUIRING YOU TO QUALIFY TO CONDUCT BUSINESS IN ANY
JURISDICTION.
USURY QUALIFICATION. WE EXPRESS NO OPINION WITH REGARD TO USURY OR OTHER LAWS
LIMITING OR REGULATING THE MAXIMUM AMOUNT OF INTEREST THAT MAY BE CHARGED,
COLLECTED, RECEIVED OR CONTRACTED FOR OTHER THAN THE INTERNAL LAWS OF THE
STATE OF NEW YORK, AND, WITHOUT LIMITING THE FOREGOING, WE EXPRESSLY
DISCLAIM ANY OPINION AS TO THE USURY OR OTHER SUCH LAWS OF ANY OTHER
JURISDICTION (INCLUDING LAWS OF OTHER STATES MADE APPLICABLE THROUGH
PRINCIPLES OF FEDERAL PREEMPTION OR OTHERWISE) WHICH MAY BE APPLICABLE TO
THE TRANSACTIONS CONTEMPLATED BY THE TRANSACTION DOCUMENTS.
TELECOMMUNICATIONS AND REGULATORY QUALIFICATION. WE NOTE FOR YOUR INFORMATION
THAT WE ARE NOT TELECOMMUNICATIONS OR
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REGULATORY COUNSEL TO THE CREDIT PARTIES, AND WE EXPRESS NO OPINION
REGARDING (AND EXPRESSLY EXCLUDE FROM ANY OPINIONS SET FORTH IN THIS LETTER
THE EFFECT OF) THE COMMUNICATIONS ACT OF 1934, AS AMENDED, THE
TELECOMMUNICATIONS ACT OF 1996, AS AMENDED, ALL RULES AND REGULATIONS
PROMULGATED UNDER ANY OF THE FOREGOING STATUTES, THE RULES, REGULATIONS AND
POLICIES OF THE FEDERAL COMMUNICATIONS COMMISSION AND ANY STATE REGULATORY
AUTHORITY, AND ALL OTHER FEDERAL, STATE AND LOCAL LAWS, ORDERS,
REGULATIONS, LICENSING REQUIREMENTS AND POLICIES RELATING TO THE OWNERSHIP,
OPERATION AND PROVISION OF, OR OTHERWISE REGULATING, CABLE AND
TELECOMMUNICATION SERVICES (AND INCLUDING WITHOUT LIMITATION ANY
REQUIREMENT UNDER ANY SUCH FEDERAL OR STATE LAW OR REGULATION THAT ANY
CREDIT PARTY OBTAIN ANY CONSENT, APPROVAL, AUTHORIZATION OR ORDER IN ORDER
TO ENTER INTO THE TRANSACTION DOCUMENTS AND PERFORM THE TRANSACTIONS
CONTEMPLATED THEREBY OR EFFECT OF ANY FAILURE TO OBTAIN ANY SUCH CONSENT,
APPROVAL, AUTHORIZATION OR ORDER).
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Schedule B
Assumptions
For purposes of our letter, we have relied, without investigation, upon each of
the following assumptions:
EACH CREDIT PARTY (OTHER THAN THE DELAWARE PARTIES) IS EXISTING AND IN GOOD
STANDING IN ITS JURISDICTION OF ORGANIZATION.
YOU ARE EXISTING AND IN GOOD STANDING IN YOUR JURISDICTION OF ORGANIZATION.
EACH CREDIT PARTY (OTHER THAN THE DELAWARE PARTIES) HAS THE FULL CORPORATE POWER
AND AUTHORITY (INCLUDING, WITHOUT LIMITATION, UNDER THE LAWS OF
JURISDICTION OF ORGANIZATION OF SUCH ENTITIES) TO EXECUTE, DELIVER AND TO
PERFORM EACH OF ITS RESPECTIVE OBLIGATIONS UNDER EACH OF THE TRANSACTION
DOCUMENTS TO WHICH IT IS A PARTY AND EACH OF THE TRANSACTION DOCUMENTS TO
WHICH IT IS A PARTY HAS BEEN DULY AUTHORIZED BY ALL NECESSARY ACTION AND
HAS BEEN DULY EXECUTED AND DELIVERED BY EACH CREDIT PARTY (OTHER THAN THE
DELAWARE PARTIES).
YOU HAVE THE CORPORATE POWER OR, IF YOU ARE NOT A CORPORATION, OTHER REQUISITE
POWER (INCLUDING WITHOUT LIMITATION UNDER THE LAWS OF YOUR JURISDICTION OF
ORGANIZATION) TO EXECUTE, DELIVER AND TO PERFORM YOUR OBLIGATIONS UNDER
EACH OF THE TRANSACTION DOCUMENTS TO WHICH YOU ARE A PARTY, AND EACH OF THE
TRANSACTION DOCUMENTS TO WHICH YOU ARE A PARTY HAS BEEN DULY AUTHORIZED BY
ALL NECESSARY ACTION ON YOUR PART AND, TO THE EXTENT YOU ARE A PARTY, HAS
BEEN DULY EXECUTED AND DULY DELIVERED BY YOU.
THE TRANSACTION DOCUMENTS TO WHICH YOU ARE A PARTY CONSTITUTE VALID AND BINDING
OBLIGATIONS OF YOURS AND ARE ENFORCEABLE AGAINST YOU IN ACCORDANCE WITH
THEIR TERMS (SUBJECT TO QUALIFICATIONS, EXCLUSIONS AND OTHER LIMITATIONS
SIMILAR TO THOSE APPLICABLE TO OUR LETTER).
YOU HAVE SATISFIED THOSE LEGAL REQUIREMENTS THAT ARE APPLICABLE TO YOU TO THE
EXTENT NECESSARY TO MAKE THE TRANSACTION DOCUMENTS ENFORCEABLE AGAINST YOU.
YOU HAVE COMPLIED WITH ALL LEGAL REQUIREMENTS PERTAINING TO YOUR STATUS AS SUCH
STATUS RELATES TO YOUR RIGHTS TO ENFORCE THE TRANSACTION DOCUMENTS AGAINST
ANY CREDIT PARTY.
B-1
EACH DOCUMENT SUBMITTED TO US FOR REVIEW IS ACCURATE AND COMPLETE, EACH SUCH
DOCUMENT THAT IS AN ORIGINAL IS AUTHENTIC, EACH SUCH DOCUMENT THAT IS A
COPY CONFORMS TO AN AUTHENTIC ORIGINAL, AND ALL SIGNATURES ON EACH SUCH
DOCUMENT ARE GENUINE.
ALL PARTIES TO THE TRANSACTION DOCUMENTS WILL ACT IN ACCORDANCE WITH, AND WILL
REFRAIN FROM TAKING ANY ACTION THAT IS FORBIDDEN BY, THE TERMS AND
CONDITIONS OF THE TRANSACTION DOCUMENTS.
THERE HAS NOT BEEN ANY MUTUAL MISTAKE OF FACT OR MISUNDERSTANDING, FRAUD, DURESS
OR UNDUE INFLUENCE.
THE CONDUCT OF THE PARTIES TO THE TRANSACTION DOCUMENTS HAS COMPLIED WITH ANY
REQUIREMENT OF GOOD FAITH, FAIR DEALING AND CONSCIONABILITY.
YOU HAVE ACTED IN GOOD FAITH AND WITHOUT NOTICE OF ANY DEFENSE AGAINST THE
ENFORCEMENT OF ANY RIGHTS CREATED BY, OR ADVERSE CLAIM TO ANY PROPERTY OR
SECURITY INTEREST TRANSFERRED OR CREATED AS PART OF, THE TRANSACTIONS
EFFECTED UNDER THE TRANSACTION DOCUMENTS (HEREIN CALLED THE
"TRANSACTIONS").
THERE ARE NO AGREEMENTS OR UNDERSTANDINGS AMONG THE PARTIES, WRITTEN OR ORAL
(OTHER THAN THE TRANSACTION DOCUMENTS), AND THERE IS NO USAGE OF TRADE OR
COURSE OF PRIOR DEALING AMONG THE PARTIES THAT WOULD, IN EITHER CASE,
DEFINE, SUPPLEMENT OR QUALIFY THE TERMS OF THE CREDIT AGREEMENT OR ANY OF
THE OTHER TRANSACTION DOCUMENTS.
NO CREDIT PARTY WILL IN THE FUTURE TAKE ANY DISCRETIONARY ACTION (INCLUDING A
DECISION NOT TO ACT) PERMITTED UNDER THE TRANSACTION DOCUMENTS THAT WOULD
RESULT IN A VIOLATION OF LAW OR CONSTITUTE A BREACH OR DEFAULT UNDER ANY
OTHER AGREEMENTS OR COURT ORDERS TO WHICH SUCH CREDIT PARTY MAY BE SUBJECT.
EACH NATURAL PERSON WHO IS EXECUTING ANY TRANSACTION DOCUMENT ON BEHALF OF ANY
CREDIT PARTY HAS SUFFICIENT LEGAL CAPACITY TO ENTER INTO SUCH TRANSACTION
DOCUMENT, AND WE HAVE NO ACTUAL KNOWLEDGE OF ANY SUCH INCAPACITY.
EACH CERTIFICATE OBTAINED FROM A GOVERNMENTAL AUTHORITY RELIED ON BY US IS
ACCURATE, COMPLETE AND AUTHENTIC AND ALL RELEVANT OFFICIAL PUBLIC RECORDS
TO WHICH EACH SUCH CERTIFICATE RELATES ARE ACCURATE AND COMPLETE
B-2
EACH CREDIT PARTY WILL IN THE FUTURE OBTAIN ALL PERMITS AND GOVERNMENTAL
APPROVALS REQUIRED, AND WILL IN THE FUTURE TAKE ALL ACTIONS REQUIRED,
RELEVANT TO THE CONSUMMATION OF THE TRANSACTIONS OR PERFORMANCE OF THE
TRANSACTION DOCUMENTS.
THE CONSTITUTIONALITY OR VALIDITY OF A RELEVANT STATUTE, RULE, REGULATION OR
AGENCY ACTION IS NOT IN ISSUE.
ALL AGREEMENTS OTHER THAN THE TRANSACTION DOCUMENTS (IF ANY) WITH RESPECT TO
WHICH WE HAVE PROVIDED ADVICE IN OUR LETTER OR REVIEWED IN CONNECTION WITH
OUR LETTER WOULD BE ENFORCED AS WRITTEN.
ANY INFORMATION REQUIRED TO BE DISCLOSED TO THE CREDIT PARTIES OR THEIR
GOVERNING BODIES IN CONNECTION WITH ANY MATTER RELEVANT TO ANY LEGAL ISSUE
COVERED BY OUR OPINIONS HAS BEEN FULLY AND FAIRLY DISCLOSED TO SUCH PERSONS
AND NO SUCH DISCLOSURE CONTAINS ANY RELEVANT ERROR OR OMISSION.
NO LENDER IS SUBJECT TO REGULATION T OF THE BOARD OF GOVERNORS OF THE FEDERAL
RESERVE SYSTEM; AND NO PROCEEDS OF THE LOANS WILL BE USED FOR ANY PURPOSE
WHICH WOULD VIOLATE OR BE INCONSISTENT WITH THE CREDIT AGREEMENT.
EACH CREDIT PARTY'S CERTIFICATE OF INCORPORATION (OR EQUIVALENT GOVERNING
INSTRUMENT), ALL AMENDMENTS TO THAT INSTRUMENT, ALL RESOLUTIONS ADOPTED
ESTABLISHING CLASSES OR SERIES OF STOCK OR OTHER EQUITY INTERESTS UNDER
THAT INSTRUMENT, EACH CREDIT PARTY'S BYLAWS (OR EQUIVALENT GOVERNING
INSTRUMENT) AND ALL AMENDMENTS TO ITS BYLAWS (OR EQUIVALENT GOVERNING
INSTRUMENT) HAVE BEEN ADOPTED IN ACCORDANCE WITH ALL APPLICABLE LEGAL
REQUIREMENTS.
EACH PERSON WHO HAS TAKEN ANY ACTION RELEVANT TO ANY OF OUR OPINIONS IN THE
CAPACITY OF DIRECTOR OR OFFICER WAS DULY ELECTED TO THAT DIRECTOR OR
OFFICER POSITION AND HELD THAT POSITION WHEN SUCH ACTION WAS TAKEN.
THE TRANSACTIONS CONTEMPLATED BY THE TRANSACTION DOCUMENTS ARE DIRECTLY OR
INDIRECTLY RELATED TO THE BUSINESS INTERESTS OF EACH CREDIT PARTY PARTY
THERETO AND THE TRANSACTIONS WERE FAIR AND REASONABLE TO EACH SUCH ENTITY
AT THE TIME EACH SUCH TRANSACTION WAS AUTHORIZED BY SUCH CREDIT PARTY.
EACH OF THE CREDIT PARTIES (OTHER THAN THE DELAWARE PARTIES) IS IN GOOD STANDING
OR EQUIVALENT CONCEPT UNDER THE LAWS OF ITS
B-3
JURISDICTION OF ORGANIZATION, HAS THE FULL POWER AND AUTHORITY (INCLUDING,
WITHOUT LIMITATION, UNDER ITS ORGANIZATION DOCUMENTS AND THE LAWS OF ITS
JURISDICTION OF ORGANIZATION) TO EXECUTE AND DELIVER THE TRANSACTION
DOCUMENTS TO WHICH IT IS A PARTY AND TO PERFORM ITS OBLIGATIONS UNDER THE
TRANSACTION DOCUMENTS TO WHICH IT IS A PARTY AND HAS DULY AUTHORIZED,
EXECUTED AND DELIVERED THE TRANSACTION DOCUMENTS TO WHICH IT IS A PARTY.
COLLATERAL ASSUMPTIONS. THE OPINIONS AND ADVICE CONTAINED IN OUR LETTER ARE
SUBJECT TO THE FOLLOWING ASSUMPTIONS:
Each applicable Credit Party (i) has the requisite title and rights to any
property involved in the Transactions including, without limiting the
generality of the foregoing, each item of Collateral existing on the
date hereof and (ii) will have the requisite title and right to each
item of Collateral arising after the date hereof.
The descriptions of Collateral in the Transaction Documents and the
Financing Statements reasonably describe the property intended to be
described as Collateral.
Value (as defined in Section 1-201(44) of the New York UCC) has been given
by you to the Credit Parties for the security interests and other
rights in and assignments of Collateral described in or contemplated
by the Transaction Documents.
Each of the Credit Parties which grants or purports to grant any lien or
security interest in any property or Collateral (i) has the requisite
title and rights to any property involved in the Transactions
including without limiting the generality of the foregoing, each item
of Collateral existing on the date hereof and (ii) will have the
requisite title and rights to each item of Collateral arising after
the date hereof.
The representations made by each Credit Party in the Transaction Documents
to which it is a party with respect to its chief executive office are
true and correct.
The information regarding the secured party listed on the Delaware
Financing Statements is accurate and complete in all respects.
B-4
Schedule C
Excluded Law and Legal Issues
None of the opinions or advice contained in this letter covers or otherwise
addresses any of the following laws, regulations or other governmental
requirements or legal issues:
EXCEPT AS EXPRESSED IN PARAGRAPH 14 OF OUR LETTER, FEDERAL SECURITIES LAWS AND
REGULATIONS (INCLUDING ALL OTHER LAWS AND REGULATIONS ADMINISTERED BY THE
UNITED STATES SECURITIES AND EXCHANGE COMMISSION), STATE "BLUE SKY" LAWS
AND REGULATIONS, AND LAWS AND REGULATIONS RELATING TO COMMODITY (AND OTHER)
FUTURES AND INDICES AND OTHER SIMILAR INSTRUMENTS;
PENSION AND EMPLOYEE BENEFIT LAWS AND REGULATIONS (E.G., ERISA);
FEDERAL AND STATE LAWS AND REGULATIONS CONCERNING FILING AND NOTICE REQUIREMENTS
OTHER THAN REQUIREMENTS APPLICABLE TO CHARTER-RELATED DOCUMENTS SUCH AS A
CERTIFICATE OF MERGER;
FEDERAL AND STATE ANTITRUST AND UNFAIR COMPETITION LAWS AND REGULATIONS;
COMPLIANCE WITH FIDUCIARY DUTY REQUIREMENTS;
THE STATUTES AND ORDINANCES, THE ADMINISTRATIVE DECISIONS AND THE RULES AND
REGULATIONS OF COUNTIES, TOWNS, MUNICIPALITIES AND SPECIAL POLITICAL
SUBDIVISIONS AND JUDICIAL DECISIONS TO THE EXTENT THAT THEY DEAL WITH ANY
OF THE FOREGOING;
FEDERAL PATENT, TRADEMARK AND COPYRIGHT, STATE TRADEMARK, AND OTHER FEDERAL AND
STATE INTELLECTUAL PROPERTY LAWS AND REGULATIONS; FEDERAL AND STATE LAWS,
REGULATIONS;
FEDERAL AND STATE LAWS, REGULATIONS AND POLICIES CONCERNING (I) NATIONAL AND
LOCAL EMERGENCY, (II) POSSIBLE JUDICIAL DEFERENCE TO ACTS OF SOVEREIGN
STATES, AND (III) CRIMINAL AND CIVIL FORFEITURE LAWS;
FRAUDULENT TRANSFER AND FRAUDULENT CONVEYANCE LAWS;
FEDERAL AND STATE ENVIRONMENTAL, LAND USE AND SUBDIVISION, TAX, RACKETEERING
(E.G., RICO), HEALTH AND SAFETY (E.G., OSHA), AND LABOR LAWS AND
REGULATIONS;
C-1
OTHER FEDERAL AND STATE STATUTES OF GENERAL APPLICATION TO THE EXTENT THEY
PROVIDE FOR CRIMINAL PROSECUTION (E.G., MAIL FRAUD AND WIRE FRAUD
STATUTES);
ANY LAWS, REGULATIONS, DIRECTIVES AND EXECUTIVE ORDERS THAT PROHIBIT OR LIMIT
THE ENFORCEABILITY OF OBLIGATIONS BASED ON ATTRIBUTES OF THE PARTY SEEKING
ENFORCEMENT (E.G., THE TRADING WITH THE ENEMY ACT AND THE INTERNATIONAL
EMERGENCY ECONOMIC POWERS ACT);
THE COMMUNICATIONS ACT OF 1934, AS AMENDED, THE TELECOMMUNICATIONS ACT OF 1996,
AS AMENDED, ALL RULES AND REGULATIONS PROMULGATED UNDER ANY OF THE
FOREGOING STATUTES, THE RULES, REGULATIONS AND POLICIES OF THE FEDERAL
COMMUNICATIONS COMMISSION AND ANY STATE REGULATORY AUTHORITY, AND ALL OTHER
FEDERAL, STATE AND LOCAL LAWS, ORDERS, REGULATIONS, LICENSING REQUIREMENTS
AND POLICIES RELATING TO THE OWNERSHIP, OPERATION AND PROVISION OF, OR
OTHERWISE REGULATING, CABLE AND TELECOMMUNICATION SERVICES (AND INCLUDING
WITHOUT LIMITATION ANY REQUIREMENT UNDER ANY SUCH FEDERAL OR STATE LAW OR
REGULATION THAT ANY CREDIT PARTY OBTAIN ANY CONSENT, APPROVAL,
AUTHORIZATION OR ORDER IN ORDER TO ENTER INTO THE TRANSACTION DOCUMENTS AND
PERFORM THE TRANSACTIONS CONTEMPLATED THEREBY OR EFFECT OF ANY FAILURE TO
OBTAIN ANY SUCH CONSENT, APPROVAL, AUTHORIZATION OR ORDER);
THE ANTI-TERRORISM ORDER, AS AMENDED, ALL RULES AND REGULATIONS PROMULGATED
THEREUNDER AND ALL FEDERAL, STATE AND LOCAL LAWS, STATUTES, ORDINANCES,
ORDERS, GOVERNMENTAL RULES, REGULATIONS, LICENSING REQUIREMENTS AND
POLICIES RELATING TO THE ANTI-TERRORISM ORDER (INCLUDING WITHOUT LIMITATION
THE EXECUTIVE ORDER OF SEPTEMBER 23, 2001 BLOCKING PROPERTY AND PROHIBITING
TRANSACTIONS WITH PERSONS WHO COMMIT AND THREATEN TO COMMIT OR SUPPORT
TERRORISM) AND THE OWNERSHIP AND OPERATION OF, OR OTHERWISE REGULATION OF,
COMPANIES WHICH CONDUCT, OPERATE OR OTHERWISE PURSUE THE BUSINESS OR
BUSINESSES NOW AND IN THE FUTURE CONDUCTED, OPERATED OR OTHERWISE PURSUED
BY ANY OF THE CREDIT PARTIES INCLUDING, WITHOUT LIMITATION, THE
IMPORTATION, TRANSPORTATION, MANUFACTURING, DEALING, PURCHASE, USE OR
STORAGE OF EXPLOSIVE MATERIALS;
THE USA PATRIOT ACT OF 2001 AND THE RULES, REGULATIONS AND POLICIES PROMULGATED
THEREUNDER AND ANY FOREIGN ASSETS CONTROL REGULATIONS OF THE UNITED STATES
TREASURY DEPARTMENT OR ANY ENABLING LEGISLATION OR ORDERS RELATINg thereto;
C-2
THE EFFECT OF ANY LAW, REGULATION OR ORDER WHICH HEREAFTER IS ENACTED,
PROMULGATED OR ISSUED;
EXCEPT AS EXPRESSED IN PARAGRAPH 15 OF OUR LETTER, FEDERAL RESERVE BOARD MARGIN
REGULATIONS;
APPLICABLE ZONING AND BUILDING LAWS, ORDINANCES, CODES, RULES OR REGULATIONS;
AND
FEDERAL, STATE AND LOCAL LAWS, REGULATIONS, LICENSING REQUIREMENTS, AND POLICIES
RELATING TO HEALTH CARE, MEDICARE, MEDICAID OR CHAMPUS (INCLUDING THOSE OF
ANY STATE REGULATORY AGENCY OR THE HEALTH CARE FINANCING ADMINISTRATION).
We have not undertaken any research for purposes of determining whether any
Credit Party or any of the Transactions which may occur in connection with the
Credit Agreement or any of the other Transaction Documents is subject to any law
or other governmental requirement other than to those laws and requirements
which in our experience would generally be recognized as applicable to
transactions of the type contemplated by the Transaction Documents to occur on
the date hereof, and none of our opinions covers any such law or other
requirement unless (i) one of our Designated Transaction Lawyers had actual
knowledge of its applicability at the time our letter was delivered on the date
it bears and (ii) it is not excluded from coverage by other provisions in our
letter or in any Schedule to our letter.
C-3
Schedule D
Excluded Provisions
None of the opinions in the letter to which this Schedule D is attached covers
or otherwise addresses any of the following types of provisions which may be
contained in the Transaction Documents:
CHOICE OF LAW PROVISIONS, OTHER THAN THE SELECTION OF NEW YORK LAW UNDER THE
CHOICE OF LAW RULES OF THE STATE OF NEW YORK.
INDEMNIFICATION FOR NEGLIGENCE, WILLFUL MISCONDUCT OR OTHER WRONGDOING OR STRICT
PRODUCT LIABILITY FOR ANY INDEMNIFICATION FOR LIABILITIES ARISING UNDER
SECURITIES LAWS.
PROVISIONS MANDATING CONTRIBUTION TOWARDS JUDGMENTS OR SETTLEMENTS AMONG VARIOUS
PARTIES.
WAIVERS OF (I) LEGAL OR EQUITABLE DEFENSES, (II) RIGHTS TO DAMAGES, (III) RIGHTS
TO COUNTER CLAIM OR SET OFF, (IV) STATUTES OF LIMITATIONS, (V) RIGHTS TO
NOTICE, (VI) THE BENEFITS OF STATUTORY, REGULATORY, OR CONSTITUTIONAL
RIGHTS, UNLESS AND TO THE EXTENT THE STATUTE, REGULATION, OR CONSTITUTION
EXPLICITLY ALLOWS WAIVER, (VII) TRIALS BY JURY, (VIII) BROADLY OR VAGUELY
STATED RIGHTS, AND (IX) OTHER BENEFITS TO THE EXTENT THEY CANNOT BE WAIVED
UNDER APPLICABLE LAW.
PROVISIONS PROVIDING FOR FORFEITURES OR THE RECOVERY OF AMOUNTS DEEMED TO
CONSTITUTE PENALTIES, OR FOR LIQUIDATED DAMAGES, ACCELERATION OF FUTURE
AMOUNTS DUE (OTHER THAN PRINCIPAL) WITHOUT APPROPRIATE DISCOUNT TO PRESENT
VALUE, LATE CHARGES, PREPAYMENT CHARGES, AND INTEREST UPON DEFAULT
INTEREST.
TIME-IS-OF-THE-ESSENCE CLAUSES.
PROVISIONS WHICH PROVIDE A TIME LIMITATION AFTER WHICH A REMEDY MAY NOT BE
ENFORCED.
AGREEMENTS TO SUBMIT TO THE JURISDICTION OF ANY PARTICULAR COURT OR OTHER
GOVERNMENTAL AUTHORITY (EITHER AS TO PERSONAL JURISDICTION OR SUBJECT
MATTER JURISDICTION); PROVISIONS RESTRICTING ACCESS TO COURTS; WAIVER OF
THE RIGHT TO JURY TRIAL; WAIVER OF SERVICE OF PROCESS REQUIREMENTS WHICH
WOULD OTHERWISE BE APPLICABLE; AND PROVISIONS OTHERWISE PURPORTING TO
AFFECT THE JURISDICTION AND VENUE OF COURTS.
D-1
PROVISIONS APPOINTING ONE PARTY AS AN ATTORNEY-IN-FACT FOR AN ADVERSE PARTY OR
PROVIDING THAT THE DECISION OF ANY PARTICULAR PERSON WILL BE CONCLUSIVE OR
BINDING ON OTHERS.
PROVISIONS PURPORTING TO LIMIT RIGHTS OF THIRD PARTIES WHO HAVE NOT CONSENTED
THERETO OR PURPORTING TO GRANT RIGHTS TO THIRD PARTIES.
PROVISIONS WHICH PURPORT TO AWARD ATTORNEYS' FEES SOLELY TO ONE PARTY.
PROVISIONS PURPORTING TO CREATE A TRUST OR CONSTRUCTIVE TRUST WITHOUT COMPLIANCE
WITH APPLICABLE TRUST LAW.
PROVISIONS OR AGREEMENTS REGARDING PROXIES, SHAREHOLDERS AGREEMENTS, SHAREHOLDER
VOTING RIGHTS, VOTING TRUSTS, AND THE LIKE.
PROVISIONS IN ANY OF THE TRANSACTION DOCUMENTS REQUIRING ANY CREDIT PARTY TO
PERFORM ITS OBLIGATIONS UNDER, OR TO CAUSE ANY OTHER PERSON TO PERFORM ITS
OBLIGATIONS UNDER, OR STATING THAT ANY ACTION WILL BE TAKEN AS PROVIDED IN
OR IN ACCORDANCE WITH, ANY AGREEMENT OR OTHER DOCUMENT THAT IS NOT A
TRANSACTION DOCUMENT.
PROVISIONS, IF ANY, WHICH ARE CONTRARY TO THE PUBLIC POLICY OF ANY JURISDICTION
COVERED BY OUR OPINIONS.
PROVISIONS OF THE TRANSACTION DOCUMENTS INSOFAR AS THEY AUTHORIZE YOU OR YOUR
AFFILIATES TO SET OFF AND APPLY ANY DEPOSITS AT ANY TIME HELD, AND ANY
OTHER INDEBTEDNESS AT ANY TIME OWING, BY YOU TO OR FOR THE ACCOUNT OF ANY
CREDIT PARTY.
CONFESSION OF JUDGMENT CLAUSES.
CONFIDENTIALITY AGREEMENTS.
PROVISIONS THAT PROVIDE FOR A POWER OF SALE OR OTHER NON-JUDICIAL REMEDY.
PROVISIONS THAT ATTEMPT TO CHANGE OR WAIVE RULES OF EVIDENCE OR FIX THE METHOD
OR QUANTUM OF PROOF TO BE APPLIED IN LITIGATION OR SIMILAR PROCEEDINGS.
ARBITRATION AGREEMENTS.
D-2
PROVISIONS RELATING TO THE APPLICATION OF INSURANCE PROCEEDS AND CONDEMNATION
AWARDS.
PROVISIONS THAT PROVIDE FOR THE APPOINTMENT OF A RECEIVER.
D-3
Schedule E
Collateral Documents
Guarantee and Collateral Agreement
Mortgage, Security Agreement, Assignment of Rents and Leases and Fixture Filing,
dated as of May 20, 2003, by and from Borrower to Administrative Agent for
the property located in Amherst, New York (the "New York Mortgage").
Mortgage, Security Agreement, Assignment of Rents and Leases and Fixture Filing,
dated as of May 20, 2003, by and from Borrower to Administrative Agent for
the property located in Irving, Texas (the "Texas Mortgage" and together
with the New York Mortgage, the "Mortgages").
E-1
Schedule F
Jurisdiction of Organization
Credit Party Jurisdiction of Organization
------------ ----------------------------
Borrower Delaware
Holdings Delaware
BI Acquisition Delaware
Capital Corp. Delaware
Music Inc. Delaware
Vortex Sound Delaware
F-1
Schedule G
Pledged Securities
Subsidiary Pledged Shares/Membership Interests Pledgor
---------- ----------------------------------- -------
Muzak LLC 100 common units Holdings
Business Sound, Inc. 210,000 common shares Borrower
Electro-Systems Corporation 11,007 common shares Borrower
Capital Corp. 100 common shares Borrower
Audio Environments, Inc. 7,500 common shares Borrower
Muzak Houston, Inc. 2,928 common shares Borrower
Background Music Broadcasters, Inc. 10,000 common shares Borrower
Vortex Sound. 2,850 common shares Borrower
Telephone Audio Productions, Inc. 1,000,000 common shares Borrower
MLP Environmental Music, LLC 1,000 common units Borrower
BI Acquisition 100 common units Borrower
Music Inc. (t/k/a CISUM Incorporated) 1 common share Vortex Sound.
G-1
Schedule H
Financial Institutions
Bear Stearns Corporate Lending Inc.
383 Madison Avenue, 8th Floor
New York, New York 10167
Attention: Kevin Cullen
Telecopy: (212) 272-9184
Telephone: (212) 272-5724
Lehman Commercial Paper Inc.
Loan Portfolio Group
745 Seventh Avenue
New York, New York 10019
Attention: Robert Berzins, Managing Director
Telephone: (212) 526-3712
Email: rberzins@lehman.com
Fleet National Bank
Medial & Entertainment Group
100 Federal Street, 9th Floor
MA DE 10009D
Boston, Massachusetts 02110
Attention: Karen M. Kirley
Telecopy: (617) 434-8426
Telephone: (617) 434-2781
General Electric Capital Corporation
120 Long Ridge Road
Stamford, Connecticut 06927
Attention: Manager, Telecom Portfolio
Telecopy: (203) 961-2194
Telephone: (203) 357-6859
H-1
Annex A
Delaware Financing Statements
(See attached)
EXHIBIT F-2
[FORM OF]
OPINION OF LOCAL COUNSEL
May [ ], 2003
BEAR STEARNS CORPORATE LENDING INC.,
as Administrative Agent and
The Lenders Party to the Credit
Agreement Referred to Below
Ladies and Gentlemen:
We have acted as special counsel in the State of _______________ ( the
"State") to Muzak LLC, a Delaware limited liability corporation (the "Company")
and _______________, a _______________ ("Subsidiary[ies]," together with
Company, collectively, the "Pledgors"), in connection with the execution and
delivery today of and the consummation of the transactions contemplated by (i)
that certain credit agreement dated as of May [ ], 2003 (as at any time amended,
amended and restated, supplemented or otherwise modified from time to time, the
"Credit Agreement"; capitalized terms used herein and not defined have the
meanings assigned to such terms in the Credit Agreement), among Company, the
Lenders from time to time party thereto (the "Lenders"), Bear Stearns Corporate
Lending Inc., as administrative agent, General Electric Capital Corporation, as
documentation agent, Lehman Commercial Paper Inc., as syndication agent and
Bear, Stearns & Co. Inc. and Lehman Brothers Inc., as joint lead arrangers and
joint bookrunners and (ii) each of the Security Documents, including, without
limitation, the UCC-1 financing statements (collectively, the "Financing
Statements") relating to the Collateral naming the applicable Pledgor as debtor
thereunder and Bear Stearns Corporate Lending Inc., as administrative agent and
secured party thereunder (the "Administrative Agent").
In rendering the opinions hereinafter set forth, we have reviewed final
forms of the following documents (collectively, the "Documents")/8/:
I. THE CREDIT AGREEMENT;
- ------------------
/8/ To the extent any Pledgor is organized in the State, add Notes and other
corporate documents.
-2-
II. A GUARANTEE AND COLLATERAL AGREEMENT, DATED AS OF THE DATE HEREOF (AS
AT ANY TIME AMENDED, THE "GUARANTEE AND COLLATERAL AGREEMENT"), MADE
BY THE COMPANY AND THE SUBSIDIARY[IES] IN FAVOR OF THE ADMINISTRATIVE
AGENT;
III. [A MORTGAGE, ASSIGNMENT OF LEASES AND RENTS, SECURITY AGREEMENT AND
FIXTURE FILING, DATED AS OF THE DATE HEREOF (AS AT ANY TIME AMENDED,
THE "MORTGAGE"), MADE BY THE COMPANY OR THE APPLICABLE SUBSIDIARY IN
FAVOR OF THE ADMINISTRATIVE AGENT];/9/
IV. UCC-1 FINANCING STATEMENTS IDENTIFIED IN SCHEDULE A ATTACHED HERETO
(COLLECTIVELY, THE "FINANCING STATEMENTS") RELATING TO [THE MORTGAGES
AND] THE GUARANTEE AND COLLATERAL AGREEMENT; AND
V. THE OTHER FILINGS IDENTIFIED IN SCHEDULE A ATTACHED HERETO
(COLLECTIVELY, THE "OTHER FILINGS") RELATING TO [THE MORTGAGES AND]
THE GUARANTEE AND COLLATERAL AGREEMENT.
We have reviewed the Documents and such other instruments, documents and
agreements as we have deemed necessary or appropriate to enable us to render the
opinions hereinafter set forth. We are rendering this opinion to you at the
request of our clients pursuant to Section 5.1(h)(ii) of the Credit Agreement.
In rendering the opinions hereinafter set forth, we have assumed that
(i) there has occurred due execution and delivery of the Documents and all
documentation in connection therewith10 and (ii) each of the Company and/or the
Subsidiary[ies] owns the Collateral (as defined in the Guarantee and Collateral
Agreement) and the Mortgaged Property (as defined in the Mortgage) pledged by
it.
In addition, the opinions contained in Paragraphs 1 and 2 below are
qualified to the extent that enforceability of [the Mortgage and] the Guarantee
and Collateral Agreement may be limited by (i) bankruptcy, insolvency,
moratorium, reorganization or other laws relating to
- -----------------------
/9/ Insert to the extent applicable.
/10/ To the extent the Company and/or the Subsidiary[ies] is organized in the
State, delete assumption (i) and incorporate the opinions set forth in
Exhibit A attached hereto.
-3-
creditors' rights generally and (ii) general principles of equity, whether
considered in an action at law or in equity.
Subject to the foregoing assumptions and qualifications, we are of the
opinion that:
A. [Mortgage.]/11/ (a) The Mortgage (i) is enforceable against the
mortgagor named therein in accordance with its terms, (ii) is in proper form
under applicable laws of the State to be accepted for recording by the County
Recorder[s] identified in Schedule A attached hereto and (iii) creates and
constitutes (A) a valid mortgage lien on that portion of the Mortgaged Property
that constitutes real property ("Real Property"), (B) a valid security interest
in such of the Mortgaged Property (as defined in the Mortgage) (the "UCC
Property") as is subject to the provisions of Article 9 of the Uniform
Commercial Code as in effect in the State of _______________ (the "UCC") and (C)
a valid common law lien on or pledge of such of the Mortgaged Property as is not
UCC Property or Real Property (such property, together with the UCC Property,
the "Personal Property") in favor of the Administrative Agent for the benefit of
the Secured Parties (as defined in the Mortgage) securing the Secured
Obligations (as defined in the Mortgage).
1. The recording of the Mortgage with the County Recorder[s]
identified in Schedule A attached hereto is the only filing or recording
necessary to give constructive notice of the lien created by the Mortgage to
subsequent purchasers and mortgagees of the Real Property. No other recordings,
filings, re-recordings or refilings other than those identified in Schedule A
are necessary in order to maintain the validity or priority of the lien created
by the Mortgage.
2. Assuming that the Financing Statements relating to the Mortgage
have been properly filed with the offices identified in Schedule A attached
hereto, the security interest, lien or pledge created by the Mortgage in that
portion of the Mortgaged Property which constitutes fixtures and are subject to
the provisions of Article 9 of the UCC is duly perfected. Such Financing
Statements adequately identify such Mortgaged Property described therein to
provide sufficient notice to third parties of the security interest referenced
therein.
3. The priority of the mortgage lien on the Real Property created
by the Mortgage with respect to any extension of credit or other amount (each, a
"Future Advance") secured thereby made or deemed to have been made after the
date of recording of the Mortgage will be the same as the priority of the
Mortgage applicable on such date of recording and such priority will not be
affected by the rights in and to the Real Property of any third party whose
interest in the Real Property attached thereto after the date of such recording
but prior to the date of such Future Advance.]
- ---------------
/11/ Opinion to be delivered to the extent any Loan Party is entering into the
Mortgage by virtue of having real property in the State.
-4-
B. Guarantee and Collateral Agreement. (a) Assuming that the
Guarantee and Collateral Agreement is governed by the laws of the State for the
purpose of rendering the opinion set forth in this subparagraph (a), the
Guarantee and Collateral Agreement is in proper form under the applicable laws
of the State to (i) create and constitute a valid security interest in, lien on
or pledge of the Collateral described therein and (ii) be enforceable against
each pledgor named therein in accordance with its terms.
1. Assuming that the Financing Statements and Other Filings
relating to the Guarantee and Collateral Agreement have been properly filed with
the offices identified in Schedule A attached hereto, the security interest,
lien or pledge created by the Guarantee and Collateral Agreement on the
Collateral is duly perfected, except that a security interest in or pledge of
[specify collateral]/12/ cannot be perfected by filing Financing Statements or
Other Filings, but must be perfected by taking physical possession thereof. The
Financing Statements adequately identify the Collateral described therein to
provide sufficient notice to third parties of the security interest referenced
therein.
2. The filing of the Financing Statements and Other Filings in the
offices identified in Schedule A attached hereto are the only actions,
recordings or filings necessary to publish notice and protect the validity of
and to establish of record the rights of the parties under the Guarantee and
Collateral Agreement, except that continuation statements under the UCC are
required to be filed within ____ months prior to the expiration of ____ years
from the date of filing of the Financing Statements.
3. Subject to appropriate continuation of perfection under the UCC
as set forth in subparagraph 1(c) above, the priority of the security interest
in, lien on or pledge of the Collateral created by the Guarantee and Collateral
Agreement with respect to any Future Advance secured thereby made or deemed to
have been made after the date of execution and delivery of the Guarantee and
Collateral Agreement will be the same as the priority of the Guarantee and
Collateral Agreement applicable on the date of execution and delivery thereof
and such priority will not be affected by the rights in and to the Collateral of
any third party whose interest in the Collateral attached thereto after the date
of such execution and delivery but prior to the date of such Future
Advance.]/13/
- -------------------------
/12/ To the extent the laws of the State govern perfection of Collateral of the
type perfected by possession or control under the UCC, appropriate
enforceability, creation and perfection opinions must be included. Counsel
in the State in which Collateral will be possessed [New York] should opine
on perfection of security interests in possessory collateral (e.g., stock
certificates, intercompany notes) and the Guarantee and Collateral
Agreement.
/13/ The opinion set forth in Exhibit B attached hereto must be delivered by
counsel in the jurisdiction where the certificates representing the Pledged
Stock and Pledged Notes will be held by the Administrative Agent in New
York.
-15-
C. No Taxes etc. No taxes or other charges, including, without
limitation, intangible or documentary stamp taxes, recording taxes, transfer
taxes or similar charges, are payable to the State or to any jurisdiction
therein on account of the execution and delivery of the Documents or the
creation of the indebtedness evidenced or secured by any of the Documents or the
recording or filing of the Financing Statements or Other Filings, except for
nominal filing or recording fees.
D. Concerning Administrative Agent. (a) The execution, delivery,
recordation and performance by the Administrative Agent, the Lenders or the
Company and/or the Subsidiary[ies] of the Documents to which each is a party (i)
will not violate any existing law, governmental rule or regulation of the State
and (ii) do not require any license, permit, authorization, consent or other
approval of, any exemption by, or any registration, recording or filing with,
any court, administrative agency or other governmental authority of the State,
except for the recordings and the filings set forth in Schedule A attached
hereto.
1. Neither the Administrative Agent nor any of the Lenders is
required (i) to be qualified to transact business, file any designation for
service of process, file any reports or pay any taxes in the State or (ii) to
comply with any statutory or regulatory requirement applicable only to financial
institutions chartered or qualified to do business in the State, in each case,
solely by reason of the execution and delivery of any of the Documents or by
reason of the participation in any of the transactions under or contemplated by
the Documents including, without limitation, the making and receipt of payments
pursuant thereto and the exercise of any remedy thereunder. If it were
determined that any such qualification and filing were required, the validity of
the Documents would not be affected thereby, but if the Administrative Agent or
the Lenders were not qualified, the Administrative Agent, or the Lenders in the
event they institute remedies without the Administrative Agent, as the case may
be, would be precluded from enforcing their respective rights in the courts of
the State until such time as they are qualified to transact business in the
State. However, the lack of qualification would not result in any waiver of
rights or remedies pending such qualification.
2. Neither the Administrative Agent nor any of the Lenders shall
be liable for any loss, cost, expense or liability (including, without
limitation, clean-up, corrective action or response costs, penalties, fines or
other impositions of governmental agencies and judgments of private or public
litigants) in respect of any matter arising out of or relating to or under any
Environmental Laws of the State by reason of the execution and delivery of or
participation in any of the transactions under or contemplated by any of the
Documents, including, without limitation, the making and receipt of payments
pursuant thereto and the exercise
-6-
of any remedy under any of the Documents. The laws of the State do not
provide for a statutory or regulatory lien in favor of any governmental entity
for liability under the Environmental Laws of the State.
E. Usury. Assuming that the Documents are governed by the laws of
the State for the purpose of rendering the opinion set forth in this paragraph,
none of the provisions of the Documents (including, without limitation, the
Secured Obligations as defined in each Security Document) will violate any law,
statute or regulation of the State relating to usury.
F. Remedies. (a) The Administrative Agent is permitted under the
laws of the State without naming all of the Lenders in any applicable legal
proceeding to exercise remedies under the Security Documents for the realization
of any of the Collateral in its own name, as Administrative Agent.
(b) The transfer of all or any portion of the Collateral in connection
with the exercise of any remedy under the Mortgage, including, without
limitation, by way of judicial foreclosure, will not restrict, affect or impair
the liability of the Pledgors with respect to the indebtedness secured thereby
or the beneficiary's rights or remedies to the foreclosure or enforcement of any
other security interest or liens securing such indebtedness. The laws of the
State do not require a lienholder to elect to pursue its remedies either against
mortgaged real property or personal property where such lienholder holds
security interests and liens on both real and personal property of debtor.
G. Choice of Law. A state or Federal court in the State applying
the State's choice of law principles will give effect to the provisions in the
Documents which select the laws of the State of New York as the governing law
thereof and will apply such laws, rather than the laws of the State, to the
enforceability, construction and application thereof except as otherwise
indicated in the Guarantee and Collateral Agreement.
We are admitted to practice in the State. We express no opinion as to
matters under or involving the laws of any jurisdiction other than the laws of
the United States and the State and its political subdivisions.
The foregoing opinions may be relied on by each of you, by any successors
and assigns of the Administrative Agent and by any participant, assignee or
successor to interests of the Lenders under the Documents.
Very truly yours,
Schedule A
Financing Statements relating to the Mortgage
[List all Financing Statements relating to the Mortgage[s] to be filed,
including filing locations]
Financing Statements relating to the Guarantee and Collateral Agreement
[List all Financing Statements relating to the Guarantee and Collateral
Agreement to be filed, including filing locations]
Other Filings
[List all other necessary filings relating to the Collateral to be filed,
including filing locations (e.g. United States Patent and Trademark Office
or United States Copyright Office)]
Exhibit A
H. Corporation Existence; Due Authorization. (a) Each of [Insert
Company and/or Subsidiary[ies]] (the "[State] Company and/or Subsidiary[ies]")
has the requisite corporate or other organizational power and authority, and has
taken all necessary corporate or other organizational action, to duly authorize
the execution and delivery of each of the Documents to which it is a party and
the performance by it of the transactions contemplated therein. Each of the
Documents has been duly executed and delivered by each [State] Company and/or
Subsidiary[ies] which is a party thereto and constitutes the legal, valid and
binding obligation of each such [State] Company and/or Subsidiary[ies].
1. Neither the execution, delivery or performance by any [State]
Company and/or Subsidiary[ies] of the Documents to which it is a party, nor
compliance with the terms and provisions thereof, nor the consummation of the
transactions contemplated therein (i) will contravene any applicable provision
of any law, statute, rule or regulation of [State] governmental authority or any
order, writ, injunction or decree of any [State] governmental authority or (ii)
will violate any provision of the certificate of incorporation, operating
agreement or by-laws of any [State] Company and/or Subsidiary[ies].
2. No order, consent, approval, license, authorization, or
validation of, or filing, recording or registration with, or exemption by, any
[State] governmental authority (other than those which have previously been
obtained or made and except for filings to perfect security interests granted
pursuant to the Documents) is required to authorize or is required in connection
with (i) the execution, delivery and performance of any Document or the
transactions contemplated therein or (ii) the legality, validity, binding effect
or enforceability of any Document.
-2-
Exhibit B
(e) After giving effect to the delivery of the certificates representing
(i) the Pledged Stock (as defined in the Guarantee and Collateral Agreement)
listed on Schedule 2 to the Guarantee and Collateral Agreement, together with
undated stock powers and/or interest powers, as applicable,, duly endorsed in
blank and (ii) the Pledged Notes (as defined in the Guarantee and Collateral
Agreement) listed on Schedule 2 to the Guarantee and Collateral Agreement,
together with undated endorsements, duly endorsed in blank, and assuming the
continued possession and control by the Administrative Agent of such Pledged
Stock and Pledged Notes in the State of [New York], the security interests
created in favor of the Administrative Agent under the Guarantee and Collateral
Agreement constitutes a valid and perfected security interest in such Pledged
Stock and Pledged Notes in favor of the Administrative Agent, and no filings or
recordings in the State of [New York] are required to perfect (or maintain
perfection of) such security interests.
EXHIBIT G
[FORM OF]
EXEMPTION CERTIFICATE
Reference is hereby made to the Credit Agreement dated as of May 20, 2003
(as amended, supplemented, amended and restated or otherwise modified from time
to time, the "Credit Agreement"), among MUZAK LLC, a Delaware limited liability
company (the "Borrower"), MUZAK HOLDINGS LLC, a Delaware limited liability
company ("Holdings"), the several banks and other financial institutions or
entities from time to time parties to this Agreement (the "Lenders"), BEAR,
STEARNS & CO. INC. and LEHMAN BROTHERS INC., as joint lead arrangers and joint
bookrunners (together with their successors and assigns, collectively, the
"Joint Lead Arrangers"), LEHMAN COMMERCIAL PAPER INC. and FLEET NATIONAL BANK,
as co-syndication agents (together with their successors and assigns, in such
capacity, collectively, the "Co-Syndication Agents"), GENERAL ELECTRIC CAPITAL
CORPORATION, as documentation agent (together with its successors and assigns,
in such capacity, the "Documentation Agent"), and BEAR STEARNS CORPORATE LENDING
INC., as administrative agent (together with its successors and assigns, in such
capacity, the "Administrative Agent"). Capitalized terms used herein without
definition shall have the meanings assigned to such terms in the Credit
Agreement.
Pursuant to the provisions of Section 3.10(d) of the Credit Agreement, the
undersigned hereby certifies that (x) the undersigned is and at all times will
be the beneficial owner of the Loan and Note registered in the undersigned's
name, (y) the income on such Loan and Note is not effectively connected with the
conduct of a trade or business within the United States, and (z) the undersigned
is not (i) a "bank" as such term is used in Section 881(c)(3)(A) of the Internal
Revenue Code of 1986, as amended (the "Code"), (ii) a controlled foreign
corporation related (within the meaning of Section 864(d)(4) of the Code) to the
Borrower, or (iii) a 10 percent shareholder (within the meaning of Section
871(h)(3)(B) of the Code) of the Borrower.
[NAME OF LENDER]
By:
--------------------------------
Name:
Title:
Date:
--------------------------------
EXHIBIT H
[FORM OF]
NOTE
New York, New York
[insert date]
FOR VALUE RECEIVED, the undersigned, MUZAK LLC, a Delaware limited
liability company (the "Borrower"), hereby unconditionally promises to pay to
the order of [Lender] (the "Lender"), at the office of [Lender] at [Address], on
the Revolving Termination Date (capitalized terms used without definition shall
have the meanings assigned to such terms in that certain Credit Agreement dated
as of May 20, 2003 (as amended, supplemented, amended and restated or otherwise
modified from time to time, the "Credit Agreement"), among MUZAK LLC, a Delaware
limited liability company (the "Borrower"), MUZAK HOLDINGS LLC, a Delaware
limited liability company ("Holdings"), the several banks and other financial
institutions or entities from time to time parties to this Agreement (the
"Lenders"), BEAR, STEARNS & CO. INC. and LEHMAN BROTHERS INC., as joint lead
arrangers and joint bookrunners (together with their successors and assigns,
collectively, the "Joint Lead Arrangers"), LEHMAN COMMERCIAL PAPER INC. and
FLEET NATIONAL BANK, as co-syndication agents (together with their successors
and assigns, in such capacity, collectively, the "Co-Syndication Agents"),
GENERAL ELECTRIC CAPITAL CORPORATION, as documentation agent (together with its
successors and assigns, in such capacity, the "Documentation Agent"), and BEAR
STEARNS CORPORATE LENDING INC., as administrative agent (together with its
successors and assigns, in such capacity, the "Administrative Agent"), the
aggregate unpaid principal amount of all Revolving Loans made by the Lender to
the Borrower pursuant to Section 2.1 of the Credit Agreement, such payment or
payments to be in immediately available funds in Dollars, and to pay interest
from the date hereof on such principal amount from time to time outstanding, in
like funds, at said office, at a rate or rates per annum and payable on such
dates as are determined pursuant to the Credit Agreement.
The Borrower promises to pay interest, on demand, on any overdue principal
of and, to the extent permitted by law, overdue interest on the Revolving Loans
from their due dates at a rate or rates determined as set forth in the Credit
Agreement.
The Borrower hereby waives diligence, presentment, demand, protest and
notice of any kind whatsoever. The nonexercise by the holder of any of its
rights hereunder in any particular instance shall not constitute a waiver
thereof in that or any subsequent instance.
-2-
All Revolving Loans evidenced by this Note and all payments and prepayments
of the principal hereof and interest hereon and the respective dates thereof
shall be endorsed by the holder hereof on the schedule attached hereto and made
a part hereof, or on a continuation thereof which shall be attached hereto and
made a part hereof, or otherwise recorded by such holder in its internal
records; provided, however, that any failure of the holder hereof to make such a
notation or any error in such notation shall not in any manner affect the
obligation of the Borrower to make payments of principal and interest in
accordance with the terms of this Note and the Credit Agreement.
[Signature page follows.]
-3-
This Note evidences Revolving Loans referred to in the Credit Agreement
which, among other things, contains provisions for the acceleration of the
maturity hereof upon the happening of certain events, for optional and mandatory
prepayment of the principal hereof prior to the maturity hereof and for the
amendment or waiver of certain provisions of the Credit Agreement, all upon the
terms and conditions therein specified. This Note is entitled to the benefit of
the Credit Agreement, including the guarantees thereunder. THIS NOTE AND THE
RIGHTS AND OBLIGATIONS OF THE PARTIES UNDER THIS NOTE SHALL BE GOVERNED BY, AND
CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK,
WITHOUT REGARD TO CONFLICT OF LAWS PRINCIPLES THEREOF.
MUZAK LLC
By:
-------------------------------------
Name:
Title:
-4-
Loans and Payments
Payments
--------------------------
Amount and Unpaid Principal Name of Person
Type of Loan Maturity Date Principal Interest Balance of Note Making Notation
- -------------- --------------- ------------ ------------- ------------------ ----------------
EXHIBIT I
[FORM OF]
LENDER ADDENDUM
Reference is hereby made to the Credit Agreement dated as of May 20, 2003
(as amended, supplemented, amended and restated or otherwise modified from time
to time, the "Credit Agreement"), among MUZAK LLC, a Delaware limited liability
company (the "Borrower"), MUZAK HOLDINGS LLC, a Delaware limited liability
company ("Holdings"), the several banks and other financial institutions or
entities from time to time parties to this Agreement (the "Lenders"), BEAR,
STEARNS & CO. INC. and LEHMAN BROTHERS INC., as joint lead arrangers and joint
bookrunners (together with their successors and assigns, collectively, the
"Joint Lead Arrangers"), LEHMAN COMMERCIAL PAPER INC. and FLEET NATIONAL BANK,
as co-syndication agents (together with their successors and assigns, in such
capacity, collectively, the "Co-Syndication Agents"), GENERAL ELECTRIC CAPITAL
CORPORATION, as documentation agent (together with its successors and assigns,
in such capacity, the "Documentation Agent"), and BEAR STEARNS CORPORATE LENDING
INC., as administrative agent (together with its successors and assigns, in such
capacity, the "Administrative Agent"). Capitalized terms used herein without
definition shall have the meanings assigned to such terms in the Credit
Agreement.
Upon execution and delivery of this Lender Addendum by the parties hereto
as provided in Section 5.1(a) of the Credit Agreement, the undersigned hereby
becomes a Lender thereunder having the Revolving Commitment set forth in
Schedule 1 hereto, effective as of the Closing Date.
THIS LENDER ADDENDUM AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES UNDER
THIS LENDER ADDENDUM SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN
ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK, WITHOUT REGARD TO CONFLICT OF
LAWS PRINCIPLES THEREOF.
This Lender Addendum may be executed by one or more of the parties hereto
on any number of separate counterparts, and all of said counterparts taken
together shall be deemed to constitute one and the same instrument. Delivery of
an executed signature page hereof by facsimile transmission shall be effective
as delivery of a manually executed counterpart hereof.
IN WITNESS WHEREOF, the parties hereto have caused this Lender Addendum to
be duly executed and delivered by their proper and duly authorized officers as
of this [ ] day of [ ], 200[ ].
[Name of Lender]
-2-
By:______________________________
Name:
Title:
-3-
Accepted and agreed:
MUZAK LLC
By:_____________________________
Name:
Title:
BEAR STEARNS CORPORATE LENDING INC., as
Administrative Agent
By:______________________________
Name:
Title:
-4-
Schedule 1
COMMITMENTS AND NOTICE ADDRESS
3. Name of Lender: _______________________
Notice Address: _______________________
_______________________
_______________________
Attention: _______________________
Telephone: _______________________
Facsimile: _______________________
4. Commitment: _______________________
EXHIBIT J
[FORM OF]
PERMITTED SPONSOR SUBORDINATED DEBT AGREEMENT
THIS JUNIOR SUBORDINATED UNSECURED CONVERTIBLE PROMISSORY NOTE (THIS
"SUBORDINATED NOTE") WAS ORIGINALLY ISSUED ON [ ], 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 [MUZAK HOLDINGS LLC]
15% JUNIOR SUBORDINATED UNSECURED CONVERTIBLE
PROMISSORY NOTE DUE [ ]
[Issue date] $[ ]
MUZAK LLC [MUZAK HOLDINGS LLC], a Delaware limited liability company (the
"Company"), for value received, hereby promises to pay, in immediately available
funds, to the Subordinated Payee (as defined herein), the principal amount of [
] Dollars ($[ ]) (such amount, the "Original Principal Amount"), on
[date after May 20, 2009] (the "Maturity Date") together with interest thereon
calculated from the date hereof in accordance with the provisions contained
herein. The initial Subordinated Payee is [ ].
PAYMENT OF PRINCIPAL. SUBJECT TO THE PROVISIONS OF SECTION 10:
Scheduled Payment. The Company will pay the entire unpaid principal
amount of this Subordinated Note on the Maturity Date.
Optional Prepayment. Subject to the terms of the Credit Agreement,
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.
-6-
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 365/366-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 OR THE CONVERSION OF THIS SUBORDINATED NOTE PURSUANT TO
SECTION 16 HEREOF, 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.
EVENTS OF DEFAULT.
Definition. An "Event of Default" will be deemed to have occurred if:
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
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.
Consequences of Events of Default.
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.
-7-
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.
DEFINITIONS. FOR PURPOSES OF THIS SUBORDINATED NOTE, THE FOLLOWING
CAPITALIZED TERMS HAVE THE FOLLOWING MEANINGS:
"Business Day" means any day other than a Saturday, Sunday or a legal
holiday under the laws of the State of New York.
"Class A Units" means Holdings' Class A-2 Units (as such term is defined in
the LLC Agreement).
"Credit Party" means each Person (other than any agent or lender or any
other representative thereof) from time to time party to the Senior Credit
Agreement.
"distribution" (a) means any distribution of any kind or character,
including, without limitation, (i) a payment, purchase, redemption or other
acquisition or retirement for cash, property or securities, (ii) by way of
cancellation, forgiveness or offset of the indebtedness evidenced by this
Subordinated Note against any indebtedness owed by the Subordinated Payee to the
Company or (iii) payable or deliverable by reason of the payment of any other
indebtedness of the Company being subordinated to the payment of this
Subordinated Note, except a conversion of this Subordinated Note pursuant to
Section 16 hereof, and (b) may consist of cash, securities, or other property.
"Holdings" means Muzak Holdings LLC, a Delaware limited liability company,
and, as of the date hereof, the owner of all of the issued and outstanding
equity securities of the Company.
["Holdings Debt Default" shall have the meaning given to the term "Default"
in the Holdings Debt Indenture.
"Holdings Debt Event of Default" shall have the meaning given to the term
"Event of Default" in the Holdings Debt Indenture.
"Holdings Debt Indebtedness" means all Obligations under or in respect of
the Holdings Debt Indenture.
-8-
"Holdings Debt Indenture" means the indenture, dated as of March 18, 1999,
pursuant to which the Holdings Debt Notes are issued, as the same may from time
to time be amended, renewed, supplemented or otherwise modified.
"Holdings Debt Notes" means the $75,000,000 in aggregate principal amount
at maturity of 13% Senior Discount Notes due 2010 of Holdings and Muzak Holdings
Finance Corp. issued pursuant to the Holdings Debt Indenture.]/14/
"indefeasible payment and satisfaction in full" or similar words mean (i)
all amounts due or to become due on or in respect of the Senior Indebtedness
shall have been previously paid in full in cash and shall not be subject to
avoidance under any bankruptcy, insolvency, receivership, fraudulent conveyance
or similar law, (ii) all commitments to lend under the Senior Indebtedness shall
have been terminated, (iii) all letters of credit shall have been cancelled or
otherwise terminated, (iv) all guarantees constituting Senior Indebtedness shall
have been terminated and (v) all lender guarantees constituting Senior
Indebtedness shall have been permanently reduced to zero.
"LLC Agreement" means the Fourth Amended and Restated Limited Liability
Company Agreement of Holdings, dated as of March 15, 2002, as amended from time
to time.
"Obligations" means all obligations for principal, premium, interest
(including, but not limited to, interest accruing at the legal rate on or after
the filing of any Bankruptcy Proceeding (as herein defined), and any additional
interest that would have accrued thereon but for the commencement of such
proceeding, whether or not a claim for such is allowed in any such proceeding),
penalties, charges, fees, fees and expenses of counsel (including, without
limitation, any expenses in connection with claims and litigation), commissions,
indemnitees, reimbursement obligations, damages, rescission costs, guarantees,
claims and other amounts and liabilities payable under the documentation
governing any indebtedness, secured or unsecured, contingent or otherwise, or
otherwise arising in respect of such indebtedness.
"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.
"property" of any Person means all types of real, personal, tangible,
intangible or mixed property owned by such Person whether or not included in the
most recent consolidated
- --------------
/14/ Holdings defined terms and related references to be added to the extent
debt is issued at Holdings.
-9-
balance sheet of such Person and its subsidiaries under generally accepted
accounting principles as in effect in the United States from time to time.
"Securityholders Agreements" means the Amended and Restated Securityholders
Agreement, dated as of October 18, 2000, by and among Holdings, MEM Holdings,
LLC, AMFM Systems, Inc., BancAmerica Capital Investors I, L.P., New York Life
Capital Partners, L.P. and The Northwestern Mutual Life Insurance Company, as
amended from time to time.
"Senior Agent" means Bear Stearns Corporate Lending Inc., as Administrative
Agent for the Lenders, the Lender Counterparties and the Indemnitees under the
Senior Credit Agreement, and its successors in such capacity, or if there is
then no acting Administrative Agent under any Senior Credit Agreement, the
holders of a majority in principal amount of the outstanding Senior
Indebtedness.
"Senior Credit Agreement" means one or more credit agreements, loan
agreements or similar agreements providing for working capital advances, term
loans, letter of credit facilities or similar advances, loans, or facilities to
the Company or any of its subsidiaries, including the Credit Agreement, dated as
of May 20, 2003, by and among the Company, Holdings and certain subsidiaries of
the Company, various lenders from time to time party thereto, Bear, Stearns &
Co. Inc. and Lehman Brothers Inc., as joint lead arrangers and joint
bookrunners, Lehman Commercial Paper Inc. and Fleet National Bank, as
co-syndication agents, General Electric Capital Corporation, as documentation
agent, and Bear Stearns Corporate Lending Inc., as administrative agent,
initially providing for revolving credit facilities and including any related
notes, guarantees, security or pledge agreements, collateral documents,
instruments and agreements executed in connection therewith, in each case as
such credit facilities and/or related documents may be further amended,
restated, supplemented, renewed, refunded, refinanced, replaced, restructured,
in whole or in part, or otherwise modified from time to time, whether or not
with the same agents, trustee, representative lenders or group of lenders or
holders, and irrespective of any changes in the terms and conditions thereof.
Without limiting the generality of the foregoing, the term "Senior Credit
Agreement" shall include agreements in respect of interest rate agreements and
hedging obligations with lenders party to any Senior Credit Agreement and their
affiliates and shall also include any amendment, amendment and restatement,
renewal, extension, restructuring, supplement or modification to any Senior
Credit Agreement and any and all refundings, refinancings (in whole or in part)
and replacements of any Senior Credit Agreement, whether by the same or any
other agents, trustee, representative lenders or group of lenders or holders and
irrespective of any changes in the terms and conditions thereof, including one
or more agreements (i) extending the maturity of, or increasing the amount of,
any indebtedness incurred thereunder or contemplated thereby, or (ii) adding or
deleting borrowers or guarantors thereunder, so long as borrowers and issuers
include one or more of the Company and its subsidiaries and their respective
successors and assigns.
-10-
"Senior Debt Default" shall have the meaning given to the term "Default" in
the Senior Debt Indenture.
"Senior Debt Event of Default" shall have the meaning given to the term
"Event of Default" in the Senior Debt Indenture.
"Senior Debt Indebtedness" means all Obligations under or in respect of the
Senior Debt Indenture.
"Senior Debt Indenture" means the indenture, dated as of May 20, 2003,
pursuant to which the Senior Debt Notes are issued, as the same may from time to
time be amended, renewed, supplemented or otherwise modified.
"Senior Debt Notes" means the $220,000,000 in aggregate principal amount of
108% Senior Notes due 2009 of the Company and Muzak Finance Corp. issued
pursuant to the Senior Debt Indenture.
"Senior Indebtedness" means (i) the indebtedness outstanding or arising
under the Senior Credit Agreement, (ii) all Obligations incurred by or owing to
the Senior Agent, the holders of such indebtedness or any other agent or
representative thereof outstanding or arising under any Senior Credit Agreement,
whether now or hereafter incurred, made or created, whether absolute or
contingent, liquidated or unliquidated, whether due or not due, including,
without limitation, and (iii) all obligations of the Company or any other Credit
Party in respect of all interest rate agreements and hedging obligations arising
in connection therewith with any party to the Senior Credit Agreement or any of
its affiliates.
"Sub Debt Default" shall have the meaning given to the term "Default" in
the Sub Debt Indenture.
"Sub Debt Event of Default" shall have the meaning given to the term "Event
of Default" in the Sub Debt Indenture.
"Sub Debt Indebtedness" means all Obligations under or in respect of the
Sub Debt Indenture.
"Sub Debt Indenture" means the indenture, dated as of March 18, 1999,
pursuant to which the Sub Debt Notes are issued, as the same may from time to
time be amended, renewed, supplemented or otherwise modified.
"Sub Debt Notes" means the $115,000,000 in aggregate principal amount of
9-7/8% Senior Subordinated Notes due 2009 of the Company and Muzak Finance Corp.
issued pursuant to the Sub Debt Indenture.
-11-
"Subordinated Payee" means [ ], 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.
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.
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.
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.
GENERAL. THIS SUBORDINATED NOTE, THE SUB DEBT INDENTURE, THE SENIOR DEBT
INDENTURE, [THE HOLDING DEBT INDENTURE] AND THE SENIOR 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.
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
-12-
VALIDITY, PROTECTION, INTERPRETATION, COLLECTION OR ENFORCEMENT HEREOF.
SUBORDINATION.
Extent of Subordination to Senior Indebtedness. The Company covenants and
agrees, and the Subordinated Payee, by accepting this Subordinated Note,
covenants and agrees, that, to the extent and in the manner hereinafter set
forth in this Section 10, the indebtedness represented by this Subordinated
Note, whether for principal of, premium, if any, interest on, this Subordinated
Note, and any other Obligation under or in respect hereof and all rights or
claims arising out of or associated with such indebtedness (collectively, the
"Subordinated Obligations"), are hereby expressly made junior and subordinate in
right of payment as provided in this Section 10 to the prior indefeasible
payment and satisfaction in full in cash of all Obligations in respect of all
Senior Indebtedness (including post-petition interest thereon).
Any provision of this Subordinated Note to the contrary notwithstanding,
the Company shall not make and the Subordinated Payee shall not accept, any
distribution or payment of any kind whatsoever with respect to the Subordinated
Obligations at any time when any of the Senior Indebtedness remains outstanding.
In no event shall the Subordinated Payee commence any action or proceeding to
contest or otherwise contest the enforceability of the provisions of this
Subordinated Note, the validity, perfection or priority of any security
interests or other liens granted to secure the Senior Indebtedness by the
Company or any other Person, the rights of the Senior Agent or any holders of
Senior Indebtedness or the enforceability of the Senior Credit Agreement.
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 Subordinated Obligations, on any property or assets, whether
now existing or hereafter acquired, of the Company or any other Credit Party or
(ii) any guarantee, of any nature whatsoever, by the Company or any other Credit
Party, of any Subordinated Obligations.
The Subordinated Payee acknowledges and agrees that the subordination
provisions herein are, and are intended to be, an inducement and a consideration
to each holder of any Senior Indebtedness, whether such Senior Indebtedness was
created or acquired before or after the issuance of this Subordinated Note, to
acquire and continue to hold, or to continue to hold such Senior Indebtedness.
To the extent that any payment of or distribution in respect of Senior
Indebtedness (whether by or on behalf of the Company, 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
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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 that 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.
Distributions and Liquidation, Dissolution, Bankruptcy. In the event of (i)
any distribution of assets of the Company, (ii) any insolvency, or bankruptcy,
case or proceeding, or any receivership, liquidation, reorganization,
arrangement, adjustment, action for the relief of debtors, or other similar case
or proceeding in connection therewith, relative to the Company, its debts, its
operations or to its creditors, as such, or to its assets, or (iii) any
liquidation, dissolution or other winding-up of the Company and whether or not
involving insolvency or bankruptcy, or (iv) any assignment for the benefit of
creditors or any other marshaling of assets or liabilities of the Company, in
each case whether voluntary or involuntary, including, without limitation, the
filing of any petition or the taking of any action to commence any of the
foregoing under any law, foreign or domestic, federal or state (clauses (ii)
through (iv) are referred to as a "Bankruptcy Proceeding"), then and in any such
event:
The Senior Agent and the holders of Senior Indebtedness shall be
entitled to receive indefeasible payment and satisfaction in full in cash
of all amounts due on or in respect of all Senior Indebtedness (including,
but not limited to, interest accruing at the legal rate on or after the
filing of any Bankruptcy Proceeding, and any additional interest that would
have accrued thereon but for the commencement of such proceeding, whether
or not a claim for such is allowed in such proceeding), before the
Subordinated Payee is entitled to receive or retain any payment or
distribution of any kind or character on account of this Subordinated Note
or any Subordinated Obligations on this Subordinated Note;
any payment or distribution of assets of the Company of any kind
or character, whether in cash, property or securities, by set-off or
otherwise, to which the Subordinated Payee would be entitled but for the
provisions of this Section 10 shall be paid by the Company, a liquidating
trustee or agent or other Person making such payment or distribution,
whether a trustee in bankruptcy, a receiver or liquidating trustee or
otherwise, directly to the Senior Agent or the holders of Senior In-
-14-
debtedness, ratably according to the aggregate amounts remaining unpaid on
account of the Senior Indebtedness held or represented by each to the
extent necessary to make indefeasible payment and satisfaction in full in
cash of all Senior Indebtedness remaining unpaid, after giving effect to
any concurrent payment or distribution to the Senior Agent or the holders
of such Senior Indebtedness; and
in the event that, notwithstanding the foregoing provisions of
this Section 10(b), the Subordinated Payee shall have received any payment
or distribution of assets of the Company of any kind or character, whether
in cash, or property or securities, including, without limitation, by way
of set-off or otherwise, in respect of principal of, premium, if any,
interest or any Subordinated Obligations on this Subordinated Note before
all Senior Indebtedness is indefeasibly paid in full in cash, then and in
such event payment or distribution shall be held in trust for the benefit
of and shall be paid over or delivered forthwith to the trustee in
bankruptcy, receiver, liquidating trustee, custodian, assignee, agent or
other Person making payment or distribution of assets of the Company for
application to the payment of all Senior Indebtedness remaining unpaid, to
the extent necessary to indefeasibly pay and satisfy all Senior
Indebtedness in full in cash, after giving effect to any concurrent payment
or distribution to or for the holders of the Senior Indebtedness.
No Payments with Respect to Subordinated Obligations. Unless Section
10(b) shall be applicable, no payment or distribution of any kind or character
(including, without limitation, cash, property and any payment or distribution
which may be payable or deliverable by reason of the payment of any other
indebtedness of the Company being subordinated to the payment of this
Subordinated Note) may be made by or on behalf of the Company or accepted by the
Subordinated Payee, including, without limitation, by way of set-off or
otherwise, for or on account of this Subordinated Note or of any Subordinated
Obligations under this Subordinated Note, or for or on account of the purchase,
redemption or other acquisition of this Subordinated Note, and the Subordinated
Payee shall not take or receive from the Company, directly or indirectly in any
manner, payment in respect of all or any portion of this Subordinated Note or of
any Subordinated Obligations under this Subordinated Note, or for or on account
of the purchase, redemption or other acquisition of this Subordinated Note until
the indefeasible payment and satisfaction in full in cash of all Senior
Indebtedness.
When Distribution Must Be Paid Over. In the event that notwithstanding
these provisions, the Subordinated Payee receives any payment or distribution of
assets of the Company of any kind, whether in cash, property or securities,
including, without limitation, by way of set-off or otherwise, in respect of
this Subordinated Note or any Subordinated Obligations under this Subordinated
Note, that the Subordinated Payee is not entitled to receive or retain under the
provisions of this Subordinated Note, then such payment or distribution shall be
held by the Subordinated Payee in trust for the benefit of the Senior Agent and
the Subordinated Payees of Senior Indebtedness, (segregated from other assets
held by the Subordinated
-15-
Payee) and shall be immediately paid over or delivered to the Senior Agent in
the form received (with any necessary endorsement) to the extent necessary to
make indefeasible payment and satisfaction in full in cash of all Senior
Indebtedness remaining unpaid, after giving effect to any concurrent payment or
distribution to or for the holders of Senior Indebtedness. In the event of the
failure of the Subordinated Payee to endorse or assign any such payment or
distribution, the Senior Agent is hereby irrevocably authorized to endorse or
assign the same.
Exercise of Remedies. Until the indefeasible payment and satisfaction
in full in cash of all Senior Indebtedness, the Subordinated Payee (solely in
its capacity as a holder of this Subordinated Note) shall not exercise any
rights or remedies with respect to this Subordinated Note, including, without
limitation, any administrative, legal, equitable or other action (i) to demand
or sue for collection of amounts payable hereunder, (ii) to accelerate the
principal of this Subordinated Note, (iii) to commence or join with any other
creditor in commencing any proceeding in connection with or premised on the
occurrence of a Bankruptcy Proceeding, or (iv) to take, obtain or hold (or to
permit anyone acting on its behalf to take, obtain or hold) any assets of the
Company.
Rights. The provisions of this Section 10 are for the benefit of, and
shall be enforceable directly by, the Senior Agent and the holders of Senior
Indebtedness (and their successors and assigns), the Senior Agent and each
holder of Senior Indebtedness is made an obligee hereunder, and the Senior Agent
and each holder of Senior Indebtedness, whether now outstanding or hereafter
created, incurred, assumed, or guaranteed shall be deemed conclusively to have
acquired or to continue to hold such Senior Indebtedness in reliance upon the
covenants and provisions contained in this Subordinated Note. The Subordinated
Payee acknowledges and agrees that any breach of the provisions of this Section
10 will cause irreparable harm of which the payment of monetary damages may be
inadequate. For this reason, the Subordinated Payee agrees that, in addition to
any remedies at law or in equity to which the Senior Agent or a Subordinated
Payee of the Senior Indebtedness may be entitled, the Senior Agent or a holder
of the Senior Indebtedness will be entitled to an injunction or other equitable
relief to prevent breaches of the provisions of this Section 10 and to compel
specific performance of such provisions.
The provisions of this Section 10 are and are intended solely for the
purpose of defining the relative rights of the Subordinated Payee on the one
hand and the Senior Agent and the holders of Senior Indebtedness on the other
hand. Nothing contained in this Section 10 or elsewhere in this Subordinated
Note is intended to or shall impair, as among the Company its creditors other
than the holders of Senior Indebtedness and the Subordinated Payee, the
obligation of the Company, which is absolute and unconditional, to pay to the
Subordinated Payee the principal of, premium, if any, and interest on this
Subordinated Note as and when the same shall become due and payable in
accordance with its terms.
-16-
Acceleration of Payment of Subordinated Note. If this Subordinated
Note is declared due and payable prior to the Maturity Date, no direct or
indirect payment that is due solely by reason of such declaration shall be made,
nor shall application be made of any distribution of assets of the Company to
the payment, purchase or other acquisition or retirement of this Subordinated
Note, unless, in either case, all Senior Indebtedness shall have been previously
indefeasibly paid and satisfied in full in cash.
Voting Rights; Authorization to Effect Subordination. The Senior Agent
shall be entitled to file and prove all claims and to exercise any right to vote
of the Subordinated Payee in respect of this Subordinated Note in connection
with a Bankruptcy Proceeding. Notwithstanding the foregoing, in the event that
the Senior Agent shall allow the Subordinated Payee to retain the right to vote
and otherwise act in a Bankruptcy 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
the Senior Agent, (y) the relative rights and duties of the Senior Agent or the
holders of the Senior Indebtedness established in the Senior Credit Agreement
with respect to such liens and security interests or (z) the enforceability of
the Senior Credit Agreement or these subordination provisions.
The Subordinated Payee hereby irrevocably authorizes, directs and empowers
the Senior Agent, and hereby appoints the Senior Agent to act as its
attorney-in-fact, for any and all of the following purposes, (i) to demand, sue
for, collect and receive all payments and distributions under the terms of this
Subordinated Note, (ii) to file and prove all claims and to exercise any right
to vote in any Bankruptcy Proceeding as set forth above, and (iii) to take any
and all other actions in the name of the Subordinated Payee (solely in its
capacity as a holder of this Subordinated Note), as the Senior Agent determines
in its sole discretion to be necessary or appropriate for the enforcement of the
subordination provisions in this Section 10. 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 Senior Agent, including, without limitation, executing
and delivering any additional powers of attorney, assignments or proofs of
claims or other instruments and supplying any information and documents, to
enable the Senior Agent to take any of the foregoing actions.
Each right, power and remedy of the Senior Agent provided for in this
Subordinated Note or the Senior Credit Agreement, whether now existing or
hereafter available at law or in equity or by statute or otherwise, shall be
cumulative and concurrent and shall be in addition to every other such right,
power or remedy. The exercise or beginning of the exercise by the Senior Agent
of any one or more of such rights, powers or remedies shall not preclude the
simultaneous or later exercise of all other such rights, powers or remedies, and
no course of dealing or failure or delay on the part of any party hereto in
exercising any such right, power,
-17-
or remedy shall operate as a waiver thereof or otherwise prejudice its rights,
powers or remedies.
Subrogation. Upon the indefeasible payment and satisfaction in full in
cash of all Senior Indebtedness, the Subordinated Payee shall be subrogated to
the rights of the holders of such Senior Indebtedness to receive payments and
distributions of cash, property and securities applicable to the Senior
Indebtedness until the principal of, premium, if any, and interest on this
Subordinated Note shall be paid in full. For purposes of such subrogation, no
payments or distributions to the holders of Senior Indebtedness of any cash,
property or securities to which the Subordinated Payee would be entitled except
for the provisions of this Section 10, and no payments over pursuant to the
provisions of this Section 10 to the Senior Agent or the holders of Senior
Indebtedness by the Subordinated Payee shall, as among the Company, its
creditors other than the Senior Agent or the holders of Senior Indebtedness, and
the Subordinated Payee be deemed to be a payment or distribution by the Company
to or on account of the Senior Indebtedness.
If any payment or distribution to which the Subordinated Payee would
otherwise have been entitled but for the provisions of this Section 10 shall
have been applied, pursuant to the provisions of this Section 10, to the payment
of all amounts payable under the Senior Indebtedness, then and in such case the
Subordinated Payee shall be entitled to receive from the Senior Agent or the
holders of such Senior Indebtedness at the time outstanding any payments or
distributions received by such holders of such Senior Indebtedness in excess of
the amount sufficient to indefeasibly pay and satisfy all amounts payable under
or in respect of such Senior Indebtedness in full in cash.
Waivers and Consents. 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 to be applied in
any particular order to discharge such Senior Indebtedness. The Subordinated
Payee expressly waives the right to require the Senior Agent or the 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 the power of the Senior Agent or any such holder 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 (i)
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 the Senior Agent or any holder of Senior Indebtedness; (ii) the Senior
Agent or 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 (iii) the discharge of the Company,
-18-
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 the Senior Agent or any holder of Senior Indebtedness. Any vote by the Senior
Agent or any holder of Senior Indebtedness 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 receipt by the Senior Agent or
any holder of Senior Indebtedness receipt on account of all or part of any
Senior Indebtedness of any cash, property or securities distributed in any
Bankruptcy Proceeding, shall not discharge, exonerate or reduce the obligations
of the Subordinated Payee hereunder to the Senior Agent and the holders of
Senior Indebtedness.
No right of the Senior Agent or any present or future holder of any
Senior Indebtedness to enforce the provisions herein shall at any time in any
way be prejudiced or impaired or affected by (i) any act or failure to act on
the part of the Company or by any act or failure to act by the Senior Agent or
any such holder, (ii) any non-compliance by the Company with the terms,
provisions and covenants of this Subordinated Note or the Senior Credit
Agreement, or (iii) 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, regardless in any case of any knowledge thereof of the Senior Agent or
any such holder may have or be otherwise charged with.
Without limiting the generality of the foregoing, the Senior Agent and
the holders of Senior Indebtedness may, at any time and from time to time,
without the consent of or notice to or knowledge of the Subordinated Payee,
without incurring responsibility to the Subordinated Payee and without impairing
or releasing the provisions herein or the obligations hereunder of the
Subordinated Payee to the Senior Agent and the holders of Senior Indebtedness,
do any one or more of the following: (i) change the manner, place or terms of
payment or extend the time of payment of, or renew, alter, compromise or waive
any Senior Indebtedness or otherwise amend, modify or supplement in any manner
any Senior Indebtedness or any instrument evidencing the same or any agreement
under which any Senior Indebtedness is outstanding; (ii) sell, exchange, release
or otherwise deal with any property pledged, mortgaged or otherwise securing any
Senior Indebtedness; (iii) release any Person liable in any manner for the
collection or payment of any Senior Indebtedness; (iv) exercise or refrain from
exercising any rights against the Company or any other Person; and (v) fail to
perfect a security interest in any collateral for the payment of the Senior
Indebtedness.
The Subordinated Payee waives all rights and defenses arising out of an
election of remedies by the Senior Agent or any holder of Senior Indebtedness,
even though that election of remedies, including, without limitation, any
nonjudicial foreclosure with respect to collateral for such Senior Indebtedness,
has impaired the value of the Subordinated Payee's rights of subrogation,
reimbursement or contribution against the Company, any guarantor of any Senior
Indebtedness or any other Person. The Subordinated Payee expressly waives any
rights
-19-
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.
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 the Senior Agent or
any holder of Senior Indebtedness may be rescinded in whole or in part by the
Senior Agent or any 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 Person 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
Senior Agent or any holder 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.
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 the Senior Agent or any holder of Senior Indebtedness upon the
provisions of this Section 10. The Subordinated Payee waives presentment,
protest and demand for payment.
To the maximum extent permitted by law, the Subordinated Payee waives
any claim it might have against the Senior Agent or 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 the Senior Agent or any such holder
of Senior Indebtedness or any requirement on the part of the Senior Agent or any
such holder of Senior Indebtedness to mitigate damages resulting from any
default under such Senior Indebtedness, any error of judgment, negligence or
mistake or oversight whatsoever on the part of the Senior Agent or any such
holder of Senior Indebtedness or its respective directors, officers, employees
or agents with respect to any exercise of rights or remedies under the
agreements governing or relating to such Senior Indebtedness.
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 the Senior Agent or 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. Neither the Senior Agent nor any holder of
Senior Indebtedness is under any duty or obligation, and the Subordinated Payee
hereby waives any right it may have to compel the Senior Agent or any holder of
Senior Indebted-
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ness, 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.
The Subordinated Payee hereby waives and releases all rights which a
guarantor or surety with respect to any Senior Indebtedness could exercise.
The Subordinated Payee hereby waives any duty on the part of the Senior
Agent or any holder of Senior Indebtedness to disclose to it any fact known or
hereafter known by it relating to the operation or financial condition of the
Company or any guarantor of such Senior Indebtedness or their respective
businesses or assets.
The Subordinated Payee unconditionally waives (i) notice of any of the
matters referred to in this Section 10, (ii) 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 the Senior Agent or any holder of any Senior
Indebtedness against the Company, including, without limitation, any demand,
presentment, protest and default, proof of notice of nonpayment under any Senior
Indebtedness and notice of any failure on the part of the Company or any other
Credit Party to perform and comply with any covenant, agreement, term or
condition of the Senior Indebtedness, (iii) any right to the enforcement,
assertion or exercise by the Senior Agent or any holder of any Senior
Indebtedness of any right, power, privilege or remedy conferred in such Senior
Indebtedness or otherwise, and (iv) any notice of any sale, transfer or other
disposition of any Senior Indebtedness by any holder thereof.
Subordination to the Sub Debt Indebtedness, Senior Debt Indebtedness
[and Holdings Debt Indebtedness]. The Company covenants and agrees, and the
Subordination Payee by accepting this Subordinated Note covenants and agrees,
that so long as any Sub Debt Default or Sub Debt Event of Default, Senior Debt
Default or Senior Debt Event of Default [or Holdings Debt Default or Holdings
Debt Event of Default] shall have occurred and be continuing, no payment of
principal of (and premium, if any) or interest on, or any other payment
obligations with respect to, this Subordinated Note or any judgment with respect
hereto shall be made by or on behalf of the Company or any other Credit Party.
Conversion of this Subordinated Note. Notwithstanding anything
contained herein to the contrary, nothing contained in this Section 10 shall
prevent any conversion of this Subordinated Note in accordance with the
provisions of Section 16 hereof.
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
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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 OF THIS SUBORDINATED NOTE AND SECTION 13 OF THE
SECURITYHOLDERS AGREEMENT, 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.
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.
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
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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.
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.
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.
CONVERSION.
Conversion Procedure.
Voluntary Conversion; Automatic Conversion. At any time after the
date hereof and prior to the payment of this Subordinated Note in full, the
then Subordinated Payee may convert this Subordinated Note into a number of
Class A Units determined by dividing (x) the then Convertible Amount (as
herein defined) by (y)
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$1,600 (the "Conversion Price"). Notwithstanding anything contained herein
to the contrary, if as of [18 months from issue date] this Subordinated
Note has not been paid in full, then this Subordinated Note shall
automatically be converted into a number of Class A Units in accordance
with the formula contained in the first sentence of this Section 16(a)(i).
In addition, this Subordinated Note is subject to mandatory conversion
pursuant to the terms of Section 13 of the Securityholders Agreement. If
the Subordinated Payee is not a Member (as such term is defined in the LLC
Agreement) at the time of a conversion of this Subordinated Note, then, at
the time of such conversion of this Subordinated Note, such Subordinated
Payee agrees to deliver to the Secretary of Holdings an executed joinder to
the LLC Agreement and any other documentation necessary in accordance with
the requirements of the LLC Agreement or any of the Related Agreements (as
such term is defined in the LLC Agreement). For purposes of this
Subordinated Note, the "Convertible Amount" at any time shall equal (x) the
then outstanding principal amount of this Subordinated Note plus (y) the
interest which has then accrued in accordance with the provisions contained
herein and which is then unpaid, in each case, at such time.
Effect of Conversion. A conversion of this Subordinated Note will
be deemed to have been effected as of the close of business on the date on
which this Subordinated Note has been surrendered for conversion by the
then Subordinated Payee to the Secretary of Holdings; provided, that in the
event of an automatic conversion of this Subordinated Note, such automatic
conversion will be deemed to have been effected as of the close of business
on the date of such automatic conversion. At such time as such conversion
has been effected, the rights of the then Subordinated Payee (as well as
any and all prior Subordinated Payees and any other former or current
holder of this Subordinated Note) under this Subordinated Note will cease,
the Company shall thereafter have no obligation to make any principal,
interest or other payments under this Subordinated Note and such
Subordinated Payee shall be deemed to be the record holder of the
applicable Class A Units which this Subordinated Note shall have then been
converted into. If this Subordinated Note is converted pursuant to this
Section 16, no principal amount of, accrued interest on or any other amount
pursuant to this Subordinated Note will be payable at any time as of or
after such conversion.
Subdivision or Combination of Class A Units. If Holdings at any time
subdivides (by any unit split, unit distribution or otherwise) the Class A Units
into a greater number of units, then the Conversion Price in effect immediately
prior to such subdivision will be proportionately reduced. If Holdings at any
time combines (by reverse unit split or otherwise) the Class A Units into a
smaller number of units, then the Conversion Price in effect immediately prior
to such combination will be proportionately increased.
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Organic Change.
Organic Change Defined. Any recapitalization, reorganization,
reclassification, consolidation or merger of Holdings, which in each case
is effected in such a manner that holders of the Class A Units are entitled
to receive stock or any other securities or property with respect to or in
exchange for such Class A Units is referred to herein as an "Organic
Change."
Provisions for Organic Change. Prior to the consummation of any
Organic Change, Holdings' Board of Directors will, in good faith, make
lawful and adequate provision to insure that the Subordinated Payee will
thereafter have the right to acquire and receive, in lieu of or addition to
(as the case may be) the Class A Units immediately theretofore acquirable
and receivable upon the conversion of this Subordinated Note, such shares
of stock and/or such securities or property as may be issued or payable
with respect to or in exchange for the Class A Units immediately
theretofore acquirable and receivable upon conversion of this Subordinated
Note had such Organic Change not taken place.
Pre-Emptive Rights. The Company and the Subordinated Payee acknowledge
and agree to comply with the pre-emptive rights of its equityholders, if any, in
connection with any conversion of this Note pursuant to this Section 16.
SEVERABILITY. IF THE PROVISIONS OF THIS SUBORDINATED NOTE, OR THE
APPLICATION OF SUCH PROVISION TO ANY PERSON OR CIRCUMSTANCE, SHALL BE HELD
INVALID, ILLEGAL OR UNENFORCEABLE IN ANY JURISDICTION, THE VALIDITY, LEGALITY
AND ENFORCEABILITY OF THE REMAINING PROVISIONS IN THIS SUBORDINATED NOTE, OR THE
APPLICATION OF SUCH PROVISION IN JURISDICTIONS OR TO PERSONS OR CIRCUMSTANCES
OTHER THAN TO THOSE TO WHICH IT IS HELD INVALID, ILLEGAL OR UNENFORCEABLE SHALL
NOT BE AFFECTED THEREBY.
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IN WITNESS WHEREOF, the Company has executed and delivered this Junior
Subordinated Unsecured Convertible Promissory Note on the date specified above.
MUZAK [HOLDINGS] LLC
By:_______________________________
Name:
Title:
[Muzak Holdings LLC hereby
agrees to comply with the
provisions of Section 16 hereof:
MUZAK HOLDINGS LLC
By:_________________________
Name:
Title:]
Accepted and Agreed to:
[SUBORDINATED PAYEE]
By:_________________________
Name:
Title:
EXHIBIT K
SOLVENCY CERTIFICATE
OF
MUZAK HOLDINGS LLC
To the Administrative Agent and each of the Lenders party to the Credit
Agreement referred to below:
This Solvency Certificate is being delivered pursuant to Section 5.1(l)
of the Credit Agreement dated as of May 20, 2003 (as amended, supplemented,
amended and restated or otherwise modified from time to time, the "Credit
Agreement"), among MUZAK LLC, a Delaware limited liability company (the
"Borrower"), MUZAK HOLDINGS LLC, a Delaware limited liability company
("Holdings"), the several banks and other financial institutions or entities
from time to time parties to this Agreement (the "Lenders"), BEAR, STEARNS & CO.
INC. and LEHMAN BROTHERS INC., as joint lead arrangers and joint bookrunners
(together with their successors and assigns, collectively, the "Joint Lead
Arrangers"), LEHMAN COMMERCIAL PAPER INC. and FLEET NATIONAL BANK, as
co-syndication agents (together with their successors and assigns, in such
capacity, collectively, the "Co-Syndication Agents"), GENERAL ELECTRIC CAPITAL
CORPORATION, as documentation agent (together with its successors and assigns,
in such capacity, the "Documentation Agent"), and BEAR STEARNS CORPORATE LENDING
INC., as administrative agent (together with its successors and assigns, in such
capacity, the "Administrative Agent"). Capitalized terms used herein without
definition shall have the meanings assigned to such terms in the Credit
Agreement.
I, Steve Villa, solely in my capacity as Chief Financial Officer of
Holdings, and not individually, am providing this Certificate pursuant to
Section 5.1(l) of the Credit Agreement.
Solely in my capacity as Chief Financial Officer of Holdings, I hereby
certify that:
(a) I am familiar with the historical and current financial
condition of Holdings and its Subsidiaries;
(b) For purposes of this Certificate, I have reviewed the
financial information previously provided to the Lenders, including (i)
the audited consolidated balance sheet of the Borrower and its
consolidated Subsidiaries as of December 31, 2001 and December 31,
2002, and the related consolidated income statements and statements of
cash flows for the fiscal years ended on such dates and consolidating
balance sheets of Holdings breaking out the Borrower and its
Subsidiaries as of the end of such fiscal years and corresponding
consolidating statements of income and cash flows, (ii) the
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unaudited consolidated balance sheet of Holdings and its consolidated
Subsidiaries for the quarter ended March 31, 2003, and the related
unaudited consolidated statements of income and of cash flows for the
quarter ended March 31, 2002 and a consolidating balance sheet of
Holdings breaking out the Borrower and its Subsidiaries as of the end
of such fiscal quarter and corresponding consolidating statements of
income and cash flows and (iii) the Pro Forma Balance Sheets; and
(c) In addition to such review, I am familiar with and have
considered information regarding the fair market value of the assets of
Holdings and its Subsidiaries and the liabilities and obligations of
Holdings and its Subsidiaries (contingent or otherwise) to creditors
and in each case after giving effect to the Transactions contemplated
by the Credit Agreement and the financing to be provided thereunder,
and I have made a reasonable inquiry with respect to, and made
reasonable estimate of, the contingent liabilities of Holdings and its
Subsidiaries.
Based upon the foregoing and solely in my capacity as Chief Financial
Officer of Holdings, and based on facts available to me on the date hereof, I
certify on behalf of Holdings that to the best of my knowledge, after due
inquiry, as of the date hereof and upon giving effect to the transactions
contemplated by the Credit Agreement and the financing to be provided
thereunder:
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(d) The Pro Forma Balance Sheets have been prepared in good
faith based upon assumptions and expectations believed by Holdings to
be reasonable;
(e) Immediately after giving effect to the transactions
contemplated by the Credit Agreement and the financing to be provided
thereunder, (a) the amount of the "present fair saleable value" of the
assets of Holdings and its consolidated Subsidiaries, taken as a whole,
exceeds the amount of all "liabilities of Holdings and its consolidated
Subsidiaries, taken as a whole, contingent or otherwise", as such
quoted terms are determined in accordance with applicable federal and
state laws governing determinations of the insolvency of debtors, (b)
the present fair saleable value of the assets of Holdings and its
consolidated Subsidiaries, taken as a whole is be greater than the
amount that will be required to pay the liability of Holdings and its
consolidated Subsidiaries, taken as a whole, on their debts as such
debts become absolute and matured, (c) Holdings and its consolidated
Subsidiaries, taken as a whole, do not have an unreasonably small
amount of capital with which to conduct their business, and (d)
Holdings and its consolidated Subsidiaries, taken as a whole, are able
to pay their debts as they mature.
For purposes of this definition, (i) "debt" means liability
on a "claim", and (ii) "claim" means any (x) right to payment, whether
or not such a right is reduced to judgment, liquidated, unliquidated,
fixed, contingent, matured, unmatured, disputed, undisputed, legal,
equitable, secured or unsecured or (y) right to an equitable remedy for
breach of performance if such breach gives rise to a right to payment,
whether or not such right to an equitable remedy is reduced to
judgment, fixed, contingent, matured or unmatured, disputed,
undisputed, secured or unsecured.
[Signature Page Follows]
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IN WITNESS WHEREOF, I have executed this Certificate on behalf of
Holdings this [_] day of May, 2003.
MUZAK HOLDINGS LLC
By: _______________________________
Name: Steve Villa
Title: Chief Financial Officer
EXHIBIT L
[FORM OF]
BORROWING NOTICE
To: BEAR STEARNS CORPORATE LENDING INC.
as Administrative Agent for the Lenders
383 Madison Avenue
New York, NY 10179
Attention: [ ]
[Date]
Ladies and Gentlemen:
Reference is hereby made to the Credit Agreement dated as of May 20,
2003 (as amended, supplemented, amended and restated or otherwise modified from
time to time, the "Credit Agreement"), among MUZAK LLC, a Delaware limited
liability company (the "Borrower"), MUZAK HOLDINGS LLC, a Delaware limited
liability company ("Holdings"), the several banks and other financial
institutions or entities from time to time parties to this Agreement (the
"Lenders"), BEAR, STEARNS & CO. INC. and LEHMAN BROTHERS INC., as joint lead
arrangers and joint bookrunners (together with their successors and assigns,
collectively, the "Joint Lead Arrangers"), LEHMAN COMMERCIAL PAPER INC. and
FLEET NATIONAL BANK, as co-syndication agents (together with their successors
and assigns, in such capacity, collectively, the "Co-Syndication Agents"),
GENERAL ELECTRIC CAPITAL CORPORATION, as documentation agent (together with its
successors and assigns, in such capacity, the "Documentation Agent"), and BEAR
STEARNS CORPORATE LENDING INC., as administrative agent (together with its
successors and assigns, in such capacity, the "Administrative Agent").
Capitalized terms used herein without definition shall have the meanings
assigned to such terms in the Credit Agreement.
Pursuant to Section 2.2, the Borrower hereby gives you notice that it
requests a borrowing under the Credit Agreement, and in that connection sets
forth below the terms on which such borrowing is requested to be made:
(A) Class of borrowing Revolver
(B) Date of borrowing
(which is a Business Day) _______________________
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(C) Principal amount of borrowing /15/ ______________________________
(D) Type of borrowing /16/ [Base Rate][Eurodollar Rate]
(E) For a Eurodollar Rate borrowing,
the Interest Period and the last
day thereof /17/ ______________________________
(F) Funds are requested to be disbursed
to the following account(s) of
the Borrower /18/ ______________________________
Upon acceptance of any or all of the Loans offered by the Lenders in
response to this request, the Borrower shall be deemed to have represented and
warranted that the conditions to lending specified in Sections 5.2(a), (b), (c)
and (d) of the Credit Agreement have been satisfied.
[Signature Page Follows]
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/15/ Each borrowing shall be in a minimum aggregate principal amount equal to
(x) in the case of Base Rate Loans, $500,000 or a whole multiple of
$100,000 in excess thereof (or, if the then aggregate Available Revolving
Commitments are less than $500,000, such lesser amount) and (y) in the
case of Eurodollar Loans, $100,000 or a whole multiple of $100,000 in
excess thereof.
/16/ Specify Base Rate borrowing or Eurodollar borrowing.
/17/ Shall be subject to the definition of "Interest Period" in the Credit
Agreement.
/18/ Specify the location and number of the Borrower's account to which funds
are to be disbursed, which shall comply with the requirements of the
Credit Agreement.
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MUZAK LLC
By:______________________________
Name:
Title:
EXHIBIT M
[FORM OF]
CONVERSION NOTICE
To: BEAR STEARNS CORPORATE LENDING INC.
as Administrative Agent for the Lenders
383 Madison Avenue
New York, NY 10179
Attention: [ ]
[Date]
Ladies and Gentlemen:
This Conversion Notice is delivered to you pursuant to Section 3.3 of
the Credit Agreement dated as of May 20, 2003 (as amended, supplemented, amended
and restated or otherwise modified from time to time, the "Credit Agreement"),
among MUZAK LLC, a Delaware limited liability company (the "Borrower"), MUZAK
HOLDINGS LLC, a Delaware limited liability company ("Holdings"), the several
banks and other financial institutions or entities from time to time parties to
this Agreement (the "Lenders"), BEAR, STEARNS & CO. INC. and LEHMAN BROTHERS
INC., as joint lead arrangers and joint bookrunners (together with their
successors and assigns, collectively, the "Joint Lead Arrangers"), LEHMAN
COMMERCIAL PAPER INC. and FLEET NATIONAL BANK, as co-syndication agents
(together with their successors and assigns, in such capacity, collectively, the
"Co-Syndication Agents"), GENERAL ELECTRIC CAPITAL CORPORATION, as documentation
agent (together with its successors and assigns, in such capacity, the
"Documentation Agent"), and BEAR STEARNS CORPORATE LENDING INC., as
administrative agent (together with its successors and assigns, in such
capacity, the "Administrative Agent"). Capitalized terms used herein without
definition shall have the meanings assigned to such terms in the Credit
Agreement.
The Borrower hereby requests that on [__________]/19/ (the
"Conversion/Continuation Date"),
- ----------
/19/ Shall be at least one Business Day prior to the proposed date of a
conversion into/continuation of Base Rate Loans to Eurodollar Loans and
Eurodollar Loans to Base Rate Loans, in each case to the extent this
Conversion Notice is delivered to the Administrative Agent prior to
11:00 a.m. (New York time) on such initial Business Day, except any
Loans made on the Closing Date shall initially be Base Rate Loans and,
unless otherwise agreed by the Administrative Agent in its sole
discretion, no Loan may be made as, converted into or continued as a
Eurodollar Loan having an Interest Period in excess of one month prior
to the date that is three days after the Closing Date.
1. $[__________] of the presently outstanding principal amount
of the Loans originally made on [__________],
2. and all presently being maintained as [Base Rate Loans]
[Eurodollar Loans],
3. be [converted into] [continued as],
4. [Eurodollar Loans having an Interest Period of
[one/two/three/six/nine/twelve months] [Base Rate Loans].
The undersigned hereby certifies that the following statements are true
on the date hereof, and will be true on the proposed Conversion/Continuation
Date, both before and after giving effect thereto and to the application of the
proceeds therefrom:
(a) the foregoing [conversion] [continuation] complies with the
terms and conditions of the Credit Agreement (including, without
limitation, Section 3.3 of the Credit Agreement);
(b) no Default or Event of Default has occurred and is
continuing, or would result from such proposed [conversion]
[continuation].
[Signature Page Follows]
The Borrower has caused this Conversion Notice to be executed and
delivered by its duly authorized officer this __th day of _____________, 20___.
MUZAK LLC
By:______________________________
Name:
Title: