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The Musicland Group, Inc.
and
Musicland Stores Corporation
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$150,000,000
9_% SENIOR SUBORDINATED NOTES DUE 2008
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INDENTURE
DATED AS OF APRIL 6, 1998
-------------------
BANK ONE, NA
Trustee
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TABLE OF CONTENTS
PAGE
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ARTICLE 1 DEFINITIONS AND INCORPORATION BY REFERENCE
SECTION 1.01. DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . .1
SECTION 1.02. OTHER DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . 20
SECTION 1.03. INCORPORATION BY REFERENCE OF TRUST INDENTURE ACT . . . . . . . . 20
SECTION 1.04. RULES OF CONSTRUCTION . . . . . . . . . . . . . . . . . . . . . . 21
ARTICLE 2 THE NOTES
SECTION 2.01. FORM AND DATING . . . . . . . . . . . . . . . . . . . . . . . . . 22
SECTION 2.02. EXECUTION AND AUTHENTICATION. . . . . . . . . . . . . . . . . . . 24
SECTION 2.03. REGISTRAR AND PAYING AGENT. . . . . . . . . . . . . . . . . . . . 25
SECTION 2.04. PAYING AGENT TO HOLD MONEY IN TRUST . . . . . . . . . . . . . . . 25
SECTION 2.05. HOLDER LISTS. . . . . . . . . . . . . . . . . . . . . . . . . . . 26
SECTION 2.06. TRANSFER AND EXCHANGE . . . . . . . . . . . . . . . . . . . . . . 26
SECTION 2.07. REPLACEMENT NOTES . . . . . . . . . . . . . . . . . . . . . . . . 36
SECTION 2.08. OUTSTANDING NOTES . . . . . . . . . . . . . . . . . . . . . . . . 36
SECTION 2.09. TREASURY NOTES. . . . . . . . . . . . . . . . . . . . . . . . . . 37
SECTION 2.10. TEMPORARY NOTES . . . . . . . . . . . . . . . . . . . . . . . . . 37
SECTION 2.11. CANCELLATION. . . . . . . . . . . . . . . . . . . . . . . . . . . 37
SECTION 2.12. DEFAULTED INTEREST. . . . . . . . . . . . . . . . . . . . . . . . 38
SECTION 2.13. RECORD DATE . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
SECTION 2.14. COMPUTATION OF INTEREST . . . . . . . . . . . . . . . . . . . . . 38
SECTION 2.15. CUSIP NUMBER. . . . . . . . . . . . . . . . . . . . . . . . . . . 38
ARTICLE 3 REDEMPTION AND PREPAYMENT
SECTION 3.01. NOTICES TO TRUSTEE. . . . . . . . . . . . . . . . . . . . . . . . 39
SECTION 3.02. SELECTION OF NOTES TO BE REDEEMED . . . . . . . . . . . . . . . . 39
SECTION 3.03. NOTICE OF REDEMPTION. . . . . . . . . . . . . . . . . . . . . . . 40
SECTION 3.04. EFFECT OF NOTICE OF REDEMPTION. . . . . . . . . . . . . . . . . . 41
SECTION 3.05. DEPOSIT OF REDEMPTION OR PURCHASE PRICE . . . . . . . . . . . . . 41
SECTION 3.06. NOTES REDEEMED IN PART. . . . . . . . . . . . . . . . . . . . . . 42
SECTION 3.07. OPTIONAL REDEMPTION . . . . . . . . . . . . . . . . . . . . . . . 42
SECTION 3.08. MANDATORY REDEMPTION. . . . . . . . . . . . . . . . . . . . . . . 43
SECTION 3.09. REPURCHASE OFFERS . . . . . . . . . . . . . . . . . . . . . . . . 43
ARTICLE 4 COVENANTS
i
SECTION 4.01. PAYMENT OF NOTES. . . . . . . . . . . . . . . . . . . . . . . . . 45
SECTION 4.02. MAINTENANCE OF OFFICE OR AGENCY . . . . . . . . . . . . . . . . . 46
SECTION 4.03. COMMISSION REPORTS. . . . . . . . . . . . . . . . . . . . . . . . 46
SECTION 4.04. COMPLIANCE CERTIFICATE. . . . . . . . . . . . . . . . . . . . . . 47
SECTION 4.05. TAXES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
SECTION 4.06. STAY, EXTENSION AND USURY LAWS. . . . . . . . . . . . . . . . . . 48
SECTION 4.07. RESTRICTED PAYMENTS . . . . . . . . . . . . . . . . . . . . . . . 49
SECTION 4.08. DIVIDENDS AND OTHER PAYMENT RESTRICTIONS AFFECTING
RESTRICTED SUBSIDIARIES . . . . . . . . . . . . . . . . . . . . . . . . . . 51
SECTION 4.09. INCURRENCE OF INDEBTEDNESS AND ISSUANCE OF PREFERRED
STOCK . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
SECTION 4.10. ASSET SALES . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
SECTION 4.11. TRANSACTIONS WITH AFFILIATES. . . . . . . . . . . . . . . . . . . 56
SECTION 4.12. LIENS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
SECTION 4.13. SALE AND LEASEBACK TRANSACTIONS . . . . . . . . . . . . . . . . . 57
SECTION 4.14. OFFER TO PURCHASE UPON CHANGE OF CONTROL. . . . . . . . . . . . . 58
SECTION 4.15. CORPORATE EXISTENCE . . . . . . . . . . . . . . . . . . . . . . . 59
SECTION 4.16. LIMITATION ON ISSUANCES OF CAPITAL STOCK OF WHOLLY OWNED
RESTRICTED SUBSIDIARIES . . . . . . . . . . . . . . . . . . . . . . . . . . 59
SECTION 4.17. LIMITATIONS ON ISSUANCES OF GUARANTEES OF INDEBTEDNESS. . . . . . 60
SECTION 4.18. BUSINESS ACTIVITIES . . . . . . . . . . . . . . . . . . . . . . . 60
SECTION 4.19. PAYMENT FOR CONSENTS. . . . . . . . . . . . . . . . . . . . . . . 61
SECTION 4.20. ANTI-LAYERING . . . . . . . . . . . . . . . . . . . . . . . . . . 61
SECTION 4.21. RESTRICTIVE COVENANT OF MSC . . . . . . . . . . . . . . . . . . . 61
ARTICLE 5 SUCCESSORS
SECTION 5.01. MERGER, CONSOLIDATION OR SALE OF ASSETS . . . . . . . . . . . . . 61
SECTION 5.02. SUCCESSOR CORPORATION SUBSTITUTED . . . . . . . . . . . . . . . . 62
ARTICLE 6 DEFAULTS AND REMEDIES
SECTION 6.01. EVENTS OF DEFAULT . . . . . . . . . . . . . . . . . . . . . . . . 63
SECTION 6.02. ACCELERATION. . . . . . . . . . . . . . . . . . . . . . . . . . . 65
SECTION 6.03. OTHER REMEDIES. . . . . . . . . . . . . . . . . . . . . . . . . . 66
SECTION 6.04. WAIVER OF PAST DEFAULTS . . . . . . . . . . . . . . . . . . . . . 66
SECTION 6.05. CONTROL BY MAJORITY . . . . . . . . . . . . . . . . . . . . . . . 66
SECTION 6.06. LIMITATION ON SUITS . . . . . . . . . . . . . . . . . . . . . . . 67
SECTION 6.07. RIGHTS OF HOLDERS OF NOTES TO RECEIVE PAYMENT . . . . . . . . . . 68
SECTION 6.08. COLLECTION SUIT BY TRUSTEE. . . . . . . . . . . . . . . . . . . . 68
SECTION 6.09. TRUSTEE MAY FILE PROOFS OF CLAIM. . . . . . . . . . . . . . . . . 68
ii
SECTION 6.10. PRIORITIES. . . . . . . . . . . . . . . . . . . . . . . . . . . . 69
SECTION 6.11. UNDERTAKING FOR COSTS . . . . . . . . . . . . . . . . . . . . . . 69
ARTICLE 7 TRUSTEE
SECTION 7.01. DUTIES OF TRUSTEE . . . . . . . . . . . . . . . . . . . . . . . . 70
SECTION 7.02. RIGHTS OF TRUSTEE . . . . . . . . . . . . . . . . . . . . . . . . 71
SECTION 7.03. INDIVIDUAL RIGHTS OF TRUSTEE. . . . . . . . . . . . . . . . . . . 72
SECTION 7.04. TRUSTEE'S DISCLAIMER. . . . . . . . . . . . . . . . . . . . . . . 72
SECTION 7.05. NOTICE OF DEFAULTS. . . . . . . . . . . . . . . . . . . . . . . . 72
SECTION 7.06. REPORTS BY TRUSTEE TO HOLDERS OF THE NOTES. . . . . . . . . . . . 73
SECTION 7.07. COMPENSATION AND INDEMNITY. . . . . . . . . . . . . . . . . . . . 73
SECTION 7.08. REPLACEMENT OF TRUSTEE. . . . . . . . . . . . . . . . . . . . . . 74
SECTION 7.09. SUCCESSOR TRUSTEE BY MERGER, ETC. . . . . . . . . . . . . . . . . 75
SECTION 7.10. ELIGIBILITY; DISQUALIFICATION . . . . . . . . . . . . . . . . . . 75
SECTION 7.11. PREFERENTIAL COLLECTION OF CLAIMS AGAINST THE COMPANY . . . . . . 76
ARTICLE 8 LEGAL DEFEASANCE AND COVENANT DEFEASANCE
SECTION 8.01. OPTION TO EFFECT LEGAL DEFEASANCE OR COVENANT DEFEASANCE. . . . . 76
SECTION 8.02. LEGAL DEFEASANCE AND DISCHARGE. . . . . . . . . . . . . . . . . . 76
SECTION 8.03. COVENANT DEFEASANCE . . . . . . . . . . . . . . . . . . . . . . . 77
SECTION 8.04. CONDITIONS TO LEGAL OR COVENANT DEFEASANCE. . . . . . . . . . . . 77
SECTION 8.05. DEPOSITED MONEY AND GOVERNMENT SECURITIES TO BE HELD IN
TRUST; OTHER MISCELLANEOUS PROVISIONS . . . . . . . . . . . . . . . . . . . 79
SECTION 8.06. REPAYMENT TO THE COMPANY. . . . . . . . . . . . . . . . . . . . . 80
SECTION 8.07. REINSTATEMENT . . . . . . . . . . . . . . . . . . . . . . . . . . 80
ARTICLE 9 AMENDMENT, SUPPLEMENT AND WAIVER
SECTION 9.01. WITHOUT CONSENT OF HOLDERS OF THE NOTES . . . . . . . . . . . . . 81
SECTION 9.02. WITH CONSENT OF HOLDERS OF NOTES. . . . . . . . . . . . . . . . . 81
SECTION 9.03. COMPLIANCE WITH TRUST INDENTURE ACT . . . . . . . . . . . . . . . 83
SECTION 9.04. REVOCATION AND EFFECT OF CONSENTS . . . . . . . . . . . . . . . . 83
SECTION 9.05. NOTATION ON OR EXCHANGE OF NOTES. . . . . . . . . . . . . . . . . 84
SECTION 9.06. TRUSTEE TO SIGN AMENDMENTS, ETC . . . . . . . . . . . . . . . . . 84
ARTICLE 10 SUBORDINATION
SECTION 10.01. AGREEMENT TO SUBORDINATE . . . . . . . . . . . . . . . . . . . . 84
iii
SECTION 10.02. LIQUIDATION; DISSOLUTION; BANKRUPTCY . . . . . . . . . . . . . . 85
SECTION 10.03. DEFAULT ON DESIGNATED SENIOR DEBT. . . . . . . . . . . . . . . . 85
SECTION 10.04. ACCELERATION OF NOTES. . . . . . . . . . . . . . . . . . . . . . 86
SECTION 10.05. WHEN DISTRIBUTION MUST BE PAID OVER. . . . . . . . . . . . . . . 86
SECTION 10.06. NOTICE BY THE COMPANY. . . . . . . . . . . . . . . . . . . . . . 87
SECTION 10.07. SUBROGATION. . . . . . . . . . . . . . . . . . . . . . . . . . . 87
SECTION 10.08. RELATIVE RIGHTS. . . . . . . . . . . . . . . . . . . . . . . . . 87
SECTION 10.09. SUBORDINATION MAY NOT BE IMPAIRED BY THE COMPANY . . . . . . . . 88
SECTION 10.10. DISTRIBUTION OR NOTICE TO REPRESENTATIVE . . . . . . . . . . . . 89
SECTION 10.11. RIGHTS OF TRUSTEE AND PAYING AGENT . . . . . . . . . . . . . . . 89
SECTION 10.12. AUTHORIZATION TO EFFECT SUBORDINATION. . . . . . . . . . . . . . 90
SECTION 10.13. AMENDMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . 90
ARTICLE 11 GUARANTEE OF NOTES
SECTION 11.01. NOTE GUARANTEE . . . . . . . . . . . . . . . . . . . . . . . . . 90
SECTION 11.02. EXECUTION AND DELIVERY OF NOTE GUARANTEE . . . . . . . . . . . . 92
SECTION 11.03. LIMITATION ON GUARANTOR LIABILITY. . . . . . . . . . . . . . . . 92
SECTION 11.04. "TRUSTEE" TO INCLUDE PAYING AGENT. . . . . . . . . . . . . . . . 93
ARTICLE 12 SUBORDINATION OF NOTE GUARANTEE
SECTION 12.01. AGREEMENT TO SUBORDINATE . . . . . . . . . . . . . . . . . . . . 93
SECTION 12.02. LIQUIDATION; DISSOLUTION; BANKRUPTCY . . . . . . . . . . . . . . 93
SECTION 12.03. DEFAULT ON DESIGNATED GUARANTOR SENIOR DEBT. . . . . . . . . . . 94
SECTION 12.04. ACCELERATION OF NOTE GUARANTEE . . . . . . . . . . . . . . . . . 95
SECTION 12.05. WHEN DISTRIBUTION MUST BE PAID OVER. . . . . . . . . . . . . . . 95
SECTION 12.06. NOTICE BY GUARANTOR. . . . . . . . . . . . . . . . . . . . . . . 95
SECTION 12.07. SUBROGATION. . . . . . . . . . . . . . . . . . . . . . . . . . . 96
SECTION 12.08. RELATIVE RIGHTS. . . . . . . . . . . . . . . . . . . . . . . . . 96
SECTION 12.09. SUBORDINATION MAY NOT BE IMPAIRED BY GUARANTOR . . . . . . . . . 96
SECTION 12.10. DISTRIBUTION OR NOTICE TO REPRESENTATIVE . . . . . . . . . . . . 98
SECTION 12.11. RIGHTS OF TRUSTEE AND PAYING AGENT . . . . . . . . . . . . . . . 98
SECTION 12.12. AUTHORIZATION TO EFFECT SUBORDINATION. . . . . . . . . . . . . . 98
SECTION 12.13. AMENDMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . 99
ARTICLE 13 MISCELLANEOUS
SECTION 13.01. TRUST INDENTURE ACT CONTROLS . . . . . . . . . . . . . . . . . . 99
SECTION 13.02. NOTICES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 99
SECTION 13.03. COMMUNICATION BY HOLDERS OF NOTES WITH OTHER HOLDERS OF
NOTES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .101
iv
SECTION 13.04. CERTIFICATE AND OPINION AS TO CONDITIONS PRECEDENT . . . . . . .101
SECTION 13.05. STATEMENTS REQUIRED IN CERTIFICATE OR OPINION. . . . . . . . . .102
SECTION 13.06. RULES BY TRUSTEE AND AGENTS. . . . . . . . . . . . . . . . . . .102
SECTION 13.07. NO PERSONAL LIABILITY OF DIRECTORS, OFFICERS, EMPLOYEES
AND STOCKHOLDERS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .102
SECTION 13.08. GOVERNING LAW. . . . . . . . . . . . . . . . . . . . . . . . . .103
SECTION 13.09. NO ADVERSE INTERPRETATION OF OTHER AGREEMENTS. . . . . . . . . .103
SECTION 13.10. SUCCESSORS . . . . . . . . . . . . . . . . . . . . . . . . . . .103
SECTION 13.11. SEVERABILITY . . . . . . . . . . . . . . . . . . . . . . . . . .103
SECTION 13.12. COUNTERPART ORIGINALS. . . . . . . . . . . . . . . . . . . . . .103
SECTION 13.13. TABLE OF CONTENTS, HEADINGS, ETC . . . . . . . . . . . . . . . .103
v
PAGE
EXHIBITS
Exhibit A FORM OF NOTE
Exhibit B FORM OF CERTIFICATE OF TRANSFEROR
Exhibit C FORM OF CERTIFICATE FROM ACQUIRING INSTITUTIONAL
ACCREDITED INVESTOR
Exhibit D FORM OF NOTE GUARANTEE
vi
Indenture, dated as of April 6, 1998 among The Musicland Group, Inc., a
Delaware corporation (the "COMPANY"), Musicland Stores Corporation, a
Delaware corporation (the "GUARANTOR" or "MSC") and Bank One, NA, as trustee
(the "TRUSTEE").
The Company, the Guarantor and the Trustee agree as follows for the
benefit of each other and for the equal and ratable benefit of the holders of
the Company's 9_% Senior Subordinated Notes due 2008 (the "SENIOR
SUBORDINATED NOTES") and the new 9_% Senior Subordinated Notes due 2008 (the
"NEW SENIOR SUBORDINATED NOTES" and, together with the Senior Subordinated
Notes, the "NOTES"):
ARTICLE 1
DEFINITIONS AND INCORPORATION BY REFERENCE
SECTION 1.1. DEFINITIONS.
"ACQUIRED DEBT" means, with respect to any specified Person, (i)
Indebtedness of any other Person existing at the time such other Person is
merged with or into or became a Subsidiary of such specified Person,
including, without limitation, Indebtedness incurred in connection with, or
in contemplation of, such other Person merging with or into or becoming a
Subsidiary of such specified Person, and (ii) Indebtedness secured by a Lien
encumbering any asset acquired by such specified Person.
"AFFILIATE" of any specified Person means any other Person directly or
indirectly controlling or controlled by or under direct or indirect common
control with such specified Person. For purposes of this definition,
"CONTROL" (including, with correlative meanings, the terms "CONTROLLING,"
"CONTROLLED BY" and "UNDER COMMON CONTROL WITH"), as used with respect to any
Person, shall mean the possession, directly or indirectly, of the power to
direct or cause the direction of the management or policies of such Person,
whether through the ownership of voting securities, by agreement or
otherwise; PROVIDED that beneficial ownership of 10% or more of the voting
securities of a Person shall be deemed to be control.
"AGENT" means any Registrar, Paying Agent or co-registrar.
"APPLICABLE PROCEDURES" means, with respect to any transfer or exchange
of beneficial interests in a Global Note, the rules and procedures of the
Depositary that apply to such transfer and exchange.
1
"ASSET SALE" means (i) the sale, lease, conveyance or other disposition
of any assets or rights (including, without limitation, by way of a sale and
leaseback) other than sales of inventory in the ordinary course of business
consistent with past practices (PROVIDED that the sale, lease, conveyance or
other disposition of all or substantially all of the assets of the Company
and its Restricted Subsidiaries taken as a whole will be governed by Section
4.14 and/or Article 5 hereof and not by the provisions of Section 4.10
hereof), and (ii) the issue or sale by the Company or any of its Restricted
Subsidiaries of Equity Interests of any of the Company's Restricted
Subsidiaries, in the case of either clause (i) or (ii), whether in a single
transaction or a series of related transactions (a) that have a fair market
value in excess of $2.0 million or (b) for net proceeds in excess of $2.0
million. Notwithstanding the foregoing, the following will not be deemed to
be Asset Sales: (i) a transfer of assets by the Company to a Wholly Owned
Restricted Subsidiary or by a Wholly Owned Restricted Subsidiary to the
Company or to another Wholly Owned Restricted Subsidiary, (ii) an issuance of
Equity Interests by a Wholly Owned Restricted Subsidiary to the Company or to
another Wholly Owned Restricted Subsidiary, and (iii) a Restricted Payment
that is permitted by Section 4.07 hereof.
"ATTRIBUTABLE DEBT" in respect of a sale and leaseback transaction
means, at the time of determination, the present value (discounted at the
rate of interest implicit in such transaction, determined in accordance with
GAAP) of the obligation of the lessee for net rental payments during the
remaining term of the lease included in such sale and leaseback transaction
(including any period for which such lease has been extended or may, at the
option of the lessor, be extended).
"BANKRUPTCY LAW" means Title 11, U.S. Code or any similar federal or
state law for the relief of debtors.
"BOARD OF DIRECTORS" means the board of directors of the Company or any
authorized committee of such board of directors.
"BUSINESS DAY" means any day other than a Legal Holiday.
"CAPITAL LEASE OBLIGATION" means, at the time any determination thereof
is to be made, the amount of the liability in respect of a capital lease that
would at such time be required to be capitalized on a balance sheet in
accordance with GAAP.
"CAPITAL STOCK" means (i) in the case of a corporation, corporate stock,
(ii) in the case of an association or business entity, any and all shares,
interests, participations, rights or other equivalents (however designated)
of corporate stock, (iii) in the case of a partnership or limited liability
company, partnership or membership interests (whether general or limited) and
(iv) any other interest or
2
participation that confers on a Person the right to receive a share of the
profits and losses of, or distributions of assets of, the issuing Person.
"CASH EQUIVALENTS" means (i) United States dollars, (ii) securities
issued or directly and fully guaranteed or insured by the United States
government or any agency or instrumentality thereof having maturities of not
more than six months from the date of acquisition, (iii) certificates of
deposit and eurodollar time deposits with maturities of six months or less
from the date of acquisition, bankers' acceptances with maturities not
exceeding six months and overnight bank deposits, in each case with any
domestic commercial bank having capital and surplus in excess of $500
million, (iv) repurchase obligations with a term of not more than seven days
for underlying securities of the types described in clauses (ii) and (iii)
above entered into with any financial institution meeting the qualifications
specified in clause (iii) above, (v) commercial paper having the highest
rating obtainable from ▇▇▇▇▇'▇ Investors Service, Inc. or Standard & Poor's
Ratings Group and in each case maturing within six months after the date of
acquisition and (vi) any fund investing exclusively in investments of the
types described in clauses (i) through (v) above.
"CASH FLOW COVERAGE RATIO" means, for any given period and person, the
ratio of (i) Consolidated Cash Flow divided by (ii) Consolidated Interest
Expense (except dividends paid or payable in additional shares of Capital
Stock (other than Disqualified Stock)) in each case, without duplication;
provided, however, that if an acquisition or sale of a person, business or
asset or the issuance or repayment of Indebtedness occurred during the given
period or subsequent to such period on or prior to the date of calculation,
then such calculation for such period shall be made on a Pro Forma Basis.
"CEDEL" means Cedel Bank, societe anonyme.
"CHANGE OF CONTROL" means the occurrence of any of the following:
(i) the sale, lease, transfer, conveyance or other disposition (other than by
way of merger or consolidation), in one or a series of related transactions,
of all or substantially all of the assets of MSC taken as a whole to any
"PERSON" (as such term is used in Section 13(d)(3) of the Exchange Act) other
than the Principals or their Related Parties (as defined below), (ii) the
adoption of a plan relating to the liquidation or dissolution of MSC,
(iii) the consummation of any transaction (including, without limitation, any
merger or consolidation) the result of which is that any "PERSON" (as defined
above), other than the Principals and their Related Parties, becomes the
"BENEFICIAL OWNER" (as such term is defined in Rule 13d-3 and Rule 13d-5
under the Exchange Act, except that a person shall be deemed to have
"BENEFICIAL OWNERSHIP" of all securities that such person has the right to
acquire, whether such right is currently exercisable or is exercisable only
upon the occurrence of a subsequent condition), directly or indirectly, of
more than 50% of
3
the Voting Stock of MSC (measured by voting power rather than number of
shares), (iv) the first day on which a majority of the members of the Board
of Directors of MSC are not Continuing Directors or (v) MSC consolidates
with, or merges with or into, any Person or sells, assigns, conveys,
transfers, leases or otherwise disposes of all or substantially all of its
assets to any Person, or any Person consolidates with, or merges with or
into, MSC, in any such event pursuant to a transaction in which any of the
outstanding Voting Stock of MSC is converted into or exchanged for cash,
securities or other property, other than any such transaction where the
Voting Stock of MSC outstanding immediately prior to such transaction is
converted into or exchanged for Voting Stock (other than Disqualified Stock)
of the surviving or transferee Person constituting a majority of the
outstanding shares of such Voting Stock of such surviving or transferee
Person (immediately after giving effect to such issuance).
"COMMISSION" means the Securities and Exchange Commission.
"COMPANY" means The Musicland Group, Inc.
"CONSOLIDATED CASH FLOW" means, with respect to any Person for any
period, the Consolidated Net Income of such Person for such period plus (i)
an amount equal to any extraordinary loss plus any net loss realized in
connection with an Asset Sale (to the extent such losses were deducted in
computing such Consolidated Net Income), plus (ii) provision for taxes based
on income or profits of such Person and its Subsidiaries for such period, to
the extent that such provision for taxes was included in computing such
Consolidated Net Income, plus (iii) Consolidated Interest Expense of such
Person and its Subsidiaries for such period, to the extent deducted in
computing such Consolidated Net Income, plus (iv) depreciation, amortization
(including amortization of goodwill and other intangibles but excluding
amortization of prepaid cash expenses that were paid in a prior period) and
other non-cash expenses (excluding any such non-cash expense to the extent
that it represents an accrual of or reserve for cash expenses in any future
period or amortization of a prepaid cash expense that was paid in a prior
period) of such Person and its Subsidiaries for such period to the extent
that such depreciation, amortization and other non-cash expenses were
deducted in computing such Consolidated Net Income, minus (v) non-cash items
increasing such Consolidated Net Income for such period; provided, however,
that if an acquisition or sale of a person, business or asset or the
incurrence or repayment of Indebtedness occurred during the given period or
subsequent to such period and on or prior to the date of calculation, then
such calculation shall be made on a Pro Forma Basis. Notwithstanding the
foregoing, the provision for taxes on the income or profits of, and the
depreciation and amortization and other non-cash charges of, a Subsidiary of
the referent Person shall be added to Consolidated Net Income to compute
Consolidated Cash Flow only to the extent that a corresponding amount would
be permitted at the date of determination to be
4
dividended to the Company by such Subsidiary without prior governmental
approval (that has not been obtained), and without direct or indirect
restriction pursuant to the terms of its charter and all agreements,
instruments, judgments, decrees, orders, statutes, rules and governmental
regulations applicable to that Subsidiary or its stockholders.
"CONSOLIDATED INTEREST EXPENSE" means, for any given period and Person,
the aggregate of (i) the interest expense in respect of all Indebtedness of
such person and its Restricted Subsidiaries for such period, on a
consolidated basis, determined in accordance with GAAP (including, without
duplication, amortization of original issue discount on any such
Indebtedness, all non-cash interest payments, the interest portion of any
deferred payment obligation, the interest component of Capital Lease
Obligations, and amortization of deferred financing fees) and (ii) the
product of (a) all cash dividend payments (and, in the case of a Person that
is a Restricted Subsidiary, dividends paid or payable in additional shares of
Disqualified Stock) on any series of preferred stock of such Person and its
Restricted Subsidiaries payable to a party other than the Company or a wholly
owned Subsidiary, times (b) a fraction, the numerator of which is one and the
denominator of which is one minus the then current combined federal, state
and local statutory tax rate of such Person, expressed as a decimal, on a
consolidated basis and in accordance with GAAP; provided, however, that for
the purpose of the Cash Flow Coverage Ratio, Consolidated Interest Expense
shall be calculated on a Pro Forma Basis.
"CONSOLIDATED NET INCOME" means, with respect to any Person for any
period, the aggregate of the Net Income of such Person and its Restricted
Subsidiaries for such period, on a consolidated basis, determined in
accordance with GAAP; PROVIDED that (i) the Net Income (but not loss) of any
Person that is not a Restricted Subsidiary or that is accounted for by the
equity method of accounting shall be included only to the extent of the
amount of dividends or distributions paid in cash to the referent Person or a
Wholly Owned Restricted Subsidiary thereof, (ii) the Net Income of any
Restricted Subsidiary shall be excluded to the extent that the declaration or
payment of dividends or similar distributions by that Restricted Subsidiary
of that Net Income is not at the date of determination permitted without any
prior governmental approval (that has not been obtained) or, directly or
indirectly, by operation of the terms of its charter or any agreement,
instrument, judgment, decree, order, statute, rule or governmental regulation
applicable to that Subsidiary or its stockholders, (iii) the Net Income of
any Person acquired in a pooling of interests transaction for any period
prior to the date of such acquisition shall be excluded, (iv) the cumulative
effect of a change in accounting principles shall be excluded and (v) the Net
Income of any Unrestricted Subsidiary shall be excluded, whether or not
distributed to the Company or one of its Restricted Subsidiaries for purposes
of Section 4.09 hereof.
5
"CONTINUING DIRECTORS" means, as of any date of determination, any
member of the Board of Directors of MSC who (i) was a member of such Board of
Directors on the date of the original issuance of the Senior Subordinated
Notes, or (ii) was nominated for election to such Board of Directors with the
approval of, or whose election to the Board of Directors of MSC was ratified
by, at least a majority of the Continuing Directors who were members of such
Board of Directors at the time of such nomination or election.
"CORPORATE TRUST OFFICE OF THE TRUSTEE" shall be at the address of the
Trustee specified in Section 13.02 hereof or such other address as to which
the Trustee may give notice to the Company.
"CREDIT AGENT" means ▇▇▇▇▇▇ Guaranty Trust Company of New York, in its
capacity as Agent for the lenders party to the Credit Facility or any
successor thereto or any person otherwise appointed.
"CREDIT FACILITY" means (i) the Credit Agreement dated October 7, 1994
among the Company, MSC, the various lenders party thereto from time to time
and ▇▇▇▇▇▇ Guaranty Trust Company of New York, as Agent, as amended by an
Amendment No. 1 dated as of February 24, 1995, an Amendment No. 2 dated as of
April 9, 1996, an Amendment No. 3 dated as of October 18, 1996, an Amendment
No. 4 dated as of June 16, 1997 and an Amendment No. 5 effective as of the
closing of the Offering, together with the related documents thereto
(including any guarantee agreement and securing documents), and (ii) the Term
Loan Agreement dated as of June 16, 1997 among the Company, MSC, various
financial institutions and ▇▇▇▇▇▇ Guaranty Trust Company of New York, as
agent, together with the related documents thereto (including any guarantee
agreement and securing documents), in each case, as such agreements may be
amended (including any amendment and restatement thereof), supplemented or
otherwise modified or replaced (including with other lenders) from time to
time and including any agreement extending the maturity of, refinancing,
modifying, increasing, substituting for or otherwise restructuring
(including, but not limited to, the inclusion of additional or different or
substitute lenders or bank agents thereunder) all or any portion of the
Indebtedness, including changing the borrowing limits, under such agreement
or any successor or replacement agreement, regardless of whether the Credit
Facility or any portion thereof was outstanding or in effect at the time of
such replacement, refinancing, increase, substitution, extension,
restructuring, supplement or modification.
"DEFAULT" means any event that is or with the passage of time or the
giving of notice or both would be an Event of Default.
"DEFINITIVE NOTES" means Notes that are in the form of EXHIBIT A-1
attached hereto (but without including the text referred to in footnotes 1
and 3 thereto).
6
"DEPOSITARY" means, with respect to the Notes issuable or issued in
whole or in part in global form, the Person specified in Section 2.03 hereof
as the Depositary with respect to the Notes, until a successor shall have
been appointed and become such pursuant to Section 2.06 of this Indenture,
and, thereafter, "DEPOSITARY" shall mean or include such successor.
"DESIGNATED GUARANTOR SENIOR DEBT" means (i) any Indebtedness of the
Guarantor outstanding under the Credit Facility, including any Guarantee
thereof, and (ii) any other Guarantor Senior Debt permitted under the
Indenture the principal amount of which is $25.0 million or more and that has
been designated by the Guarantor as "DESIGNATED GUARANTOR SENIOR DEBT".
"DESIGNATED SENIOR DEBT" means (i) any Indebtedness outstanding under
the Credit Facility and (ii) any other Senior Debt permitted under the
Indenture the principal amount of which is $25.0 million or more and that has
been designated by the Company as "DESIGNATED SENIOR DEBT".
"DISQUALIFIED STOCK" means any Capital Stock that, by its terms (or by
the terms of any security into which it is convertible or for which it is
exchangeable), or upon the happening of any event, matures or is mandatorily
redeemable, pursuant to a sinking fund obligation or otherwise, or redeemable
at the option of the holder thereof, in whole or in part, on or prior to the
date that is 91 days after the date on which the Notes mature; PROVIDED,
HOWEVER, that any Capital Stock that would not qualify as Disqualified Stock
but for change of control provisions shall not constitute Disqualified Stock
if the provisions are not more favorable to the holders of such Capital Stock
than the provisions described under Section 4.14 hereof.
"DLJ" means ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ Securities Corporation.
"EQUITY INTERESTS" means Capital Stock and all warrants, options or
other rights to acquire Capital Stock (but excluding any debt security that
is convertible into, or exchangeable for, Capital Stock).
"EUROCLEAR" means ▇▇▇▇▇▇ Guaranty Trust Company of New York, the
Brussels office, as operator of the Euroclear system.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended.
"EXCHANGE OFFER" means the offer by the Company to Holders to exchange
Senior Subordinated Notes for New Senior Subordinated Notes.
"EXCHANGE OFFER REGISTRATION STATEMENT" has the meaning set forth in the
Registration Rights Agreement.
7
"EXISTING INDEBTEDNESS" means Indebtedness of the Company and its
Subsidiaries (other than Indebtedness under the Credit Facility) in existence
on the date of the Indenture, until such amounts are repaid.
"GAAP" means generally accepted accounting principles in the United
States of America as in effect from time to time set forth in the opinions
and pronouncements of the Accounting Principles Board and the American
Institute of Certified Public Accountants and the statements and
pronouncements of the Financial Accounting Standards Board, or in such other
statements by such other entity as may be in general use by significant
segments of the accounting profession, which are applicable to the
circumstances as of the date of determination; provided, however, that except
as otherwise provided, all calculations made for purposes of determining
compliance with the terms of the covenants set forth in Articles 4 and 5 and
other provisions of the Indenture shall utilize GAAP in effect at the date of
the Indenture.
"GLOBAL NOTES" means the Rule 144A Global Notes, the Regulation S
Temporary Global Notes and the Regulation S Permanent Global Notes.
"GOVERNMENT SECURITIES" means direct obligations of, or obligations
guaranteed by, the United States of America for the payment of which
guarantee or obligations the full faith and credit of the United States is
pledged.
"GUARANTEE" means a guarantee (other than by endorsement of negotiable
instruments for collection in the ordinary course of business), direct or
indirect, in any manner (including, without limitation, letters of credit and
reimbursement agreements in respect thereof), of all or any part of any
Indebtedness.
"GUARANTOR SENIOR DEBT" means (i) all Indebtedness of the Guarantor
outstanding under the Credit Facility, including any Guarantee thereof and
all Hedging Obligations with respect thereto, (ii) any other Indebtedness
permitted to be incurred by the Guarantor under the terms of the Indenture,
unless the instrument under which such Indebtedness is incurred expressly
provides that it is on a parity with or subordinated in right of payment to
the Note Guarantee, (iii) all Obligations with respect to the foregoing, and
(iv) all interest with respect to the foregoing clauses (i) and (ii) accruing
during the pendency of an Insolvency or Liquidation Proceeding, whether or
not allowed or allowable thereunder. Notwithstanding anything to the
contrary in the foregoing, Guarantor Senior Debt will not include (w) any
liability for federal, state, local or other taxes owed or owing by the
Guarantor, (x) any Indebtedness of the Guarantor to any of its Subsidiaries
or other Affiliates, (y) any trade payables or liability to trade creditors
or obligations with respect to consigned inventory arising in the ordinary
course of business (including guarantees thereof or instruments evidencing
such liabilities) or (z) any Indebtedness that is incurred in violation of
the Indenture.
8
"HEDGING OBLIGATIONS" means, with respect to any Person, the obligations
of such Person under (i) interest rate swap agreements, interest rate cap
agreements and interest rate collar agreements and (ii) other agreements or
arrangements designed to protect such Person against fluctuations in interest
rates or currency rates.
"HOLDER" means a Person in whose name a Note is registered.
"INDEBTEDNESS" means, with respect to any Person, any indebtedness of
such Person, whether or not contingent, in respect of borrowed money or
evidenced by bonds, notes, debentures or similar instruments or letters of
credit (or reimbursement agreements in respect thereof) or banker's
acceptances or representing Capital Lease Obligations or the balance deferred
and unpaid of the purchase price of any property or representing any Hedging
Obligations, except any such balance that constitutes an accrued expense or
trade payable or obligations with respect to consigned inventory, if and to
the extent any of the foregoing indebtedness (other than letters of credit
and Hedging Obligations) would appear as a liability upon a balance sheet of
such Person prepared in accordance with GAAP, as well as all indebtedness of
others secured by a Lien on any asset of such Person (whether or not such
indebtedness is assumed by such Person) and, to the extent not otherwise
included, the Guarantee by such Person of any indebtedness of any other
Person. The amount of any Indebtedness outstanding as of any date shall be
(i) the accreted value thereof, in the case of any Indebtedness that does not
require current payments of interest, and (ii) the principal amount thereof,
together with any interest thereon that is more than 30 days past due, in the
case of any other Indebtedness.
"INDENTURE" means this Indenture, as amended or supplemented from time
to time.
"INDIRECT PARTICIPANT" means a Person who holds an interest through a
Participant.
"INITIAL PURCHASERS" means ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ Securities
Corporation, BT Alex. ▇▇▇▇▇ Incorporated and NationsBanc ▇▇▇▇▇▇▇▇▇▇
Securities LLC.
"INSOLVENCY OR LIQUIDATION PROCEEDING" means (i) any insolvency or
bankruptcy case or proceeding, or any receivership, liquidation,
reorganization or other similar case or proceeding, relative to the Company
or to the creditors of the Company, as such, or to the assets of the Company,
or (ii) any liquidation, dissolution, reorganization or winding up of the
Company, whether voluntary or involuntary and involving insolvency or
bankruptcy, or (iii) any assignment for the benefit of creditors or any other
marshalling of assets and liabilities of the Company.
9
"INSTITUTIONAL ACCREDITED INVESTOR" means an "ACCREDITED INVESTOR" as
defined in Rule 501(a)(1), (2), (3) or (7) under the Securities Act.
"INVESTMENTS" means, with respect to any Person, all investments by such
Person in other Persons (including Affiliates) in the forms of direct or
indirect loans (including guarantees of Indebtedness or other obligations),
advances or capital contributions (excluding commission, travel and similar
advances to officers and employees made in the ordinary course of business),
purchases or other acquisitions for consideration of Indebtedness, Equity
Interests or other securities, together with all items that are or would be
classified as investments on a balance sheet prepared in accordance with
GAAP. If the Company or any Restricted Subsidiary of the Company sells or
otherwise disposes of any Equity Interests of any direct or indirect
Restricted Subsidiary of the Company such that, after giving effect to any
such sale or disposition, such Person is no longer a Restricted Subsidiary of
the Company, the Company shall be deemed to have made an Investment on the
date of any such sale or disposition equal to the fair market value of the
Equity Interests of such Restricted Subsidiary not sold or disposed of in an
amount determined as provided in the final paragraph of the covenant
described under Section 4.07 hereof.
"LEGAL HOLIDAY" means a Saturday, a Sunday or a day on which banking
institutions in the City of New York, the city in which the principal
Corporate Trust Office of the Trustee is located or at a place of payment are
authorized by law, regulation or executive order to remain closed. If a
payment date is a Legal Holiday at a place of payment, payment shall be made
at that place on the next succeeding day that is not a Legal Holiday, and no
interest shall accrue for the intervening period.
"LIEN" means, with respect to any asset, any mortgage, lien, pledge,
charge, security interest or encumbrance of any kind in respect of such
asset, whether or not filed, recorded or otherwise perfected under applicable
law (including any conditional sale or other title retention agreement, any
lease in the nature thereof, any option or other agreement to sell or give a
security interest in and any filing of or agreement to give any financing
statement under the Uniform Commercial Code (or equivalent statutes) of any
jurisdiction).
"LIQUIDATED DAMAGES" means all liquidated damages then owing pursuant to
Section 5 of the Registration Rights Agreement.
"NET INCOME" means, with respect to any Person, the net income (loss) of
such Person, determined in accordance with GAAP and before any reduction in
respect of preferred stock dividends, excluding, however, (i) any gain (but
not loss), together with any related provision for taxes on such gain (but
not loss), realized in connection with (a) any Asset Sale (including, without
limitation, dispositions pursuant to sale and leaseback transactions) or
(b) the disposition of
10
any securities by such Person or any of its Restricted Subsidiaries or the
extinguishment of any Indebtedness of such Person or any of its Restricted
Subsidiaries and (ii) any extraordinary or nonrecurring gain (but not loss),
together with any related provision for taxes on such extraordinary or
nonrecurring gain (but not loss).
"NET PROCEEDS" means the aggregate cash proceeds received by the Company
or any of its Restricted Subsidiaries in respect of any Asset Sale
(including, without limitation, any cash received upon the sale or other
disposition of any non-cash consideration received in any Asset Sale), net of
the direct costs relating to such Asset Sale (including, without limitation,
legal, accounting and investment banking fees, and sales commissions) and any
relocation expenses incurred as a result thereof, taxes paid or payable as a
result thereof (after taking into account any available tax credits or
deductions and any tax sharing arrangements), and any reserve for adjustment
in respect of the sale price of such asset or assets established in
accordance with GAAP.
"NEW SENIOR SUBORDINATED NOTES" means the Company's 9_% Senior
Subordinated Notes due 2008, which will be issued in exchange for the
Company's Senior Subordinated Notes.
"NON-RECOURSE DEBT" means Indebtedness (i) as to which neither the
Company nor any of its Restricted Subsidiaries (a) provides credit support of
any kind (including any undertaking, agreement or instrument that would
constitute Indebtedness), (b) is directly or indirectly liable (as a
guarantor or otherwise), or (c) constitutes the lender; (ii) no default with
respect to which (including any rights that the holders thereof may have to
take enforcement action against an Unrestricted Subsidiary) would permit
(upon notice, lapse of time or both) any holder of any other Indebtedness
(other than Holders of the Notes being offered hereby and lenders under the
Credit Facility) of the Company or any of its Restricted Subsidiaries to
declare a default on such other Indebtedness or cause the payment thereof to
be accelerated or payable prior to its stated maturity; and (iii) as to which
the lenders have been notified in writing that they will not have any
recourse to the stock or assets of the Company or any of its Restricted
Subsidiaries.
"NOTE CUSTODIAN" means the Trustee, when serving as custodian for the
Depositary with respect to the Notes in global form, or any successor entity
thereto.
"NOTE GUARANTEE" means any guarantee of the Guarantor under Article 11
and any guarantee of the Guarantor endorsed on a Note authenticated and
delivered pursuant to this Indenture.
11
"OBLIGATIONS" means any principal, interest, penalties, fees,
indemnifications, reimbursements, damages and other liabilities payable under
the documentation governing any Indebtedness.
"OFFERING" means the offer and sale of the Senior Subordinated Notes as
contemplated by the Offering Memorandum.
"OFFERING MEMORANDUM" means the Offering Memorandum, dated April 1,
1998, relating to the Company's offering and placement of the Senior
Subordinated Notes.
"OFFICER" means, with respect to any Person, the Chairman of the Board,
the Chief Executive Officer, the President, the Chief Operating Officer, the
Chief Financial Officer, the Treasurer, any Assistant Treasurer, the
Controller, the Secretary or any Vice-President of such Person.
"OFFICERS' CERTIFICATE" means a certificate signed on behalf of the
Company by two Officers of the Company, one of whom must be the principal
executive officer, the principal financial officer, the treasurer or the
principal accounting officer of the Company, that meets the requirements of
Section 13.05 hereof.
"OPINION OF COUNSEL" means an opinion from legal counsel who is
reasonably acceptable to the Trustee, that meets the requirements of Section
13.05 hereof. The counsel may be an employee of or counsel to the Company,
any Subsidiary of the Company or the Trustee.
"PARTICIPANT" means, with respect to DTC, Euroclear or Cedel, a Person
who has an account with DTC, Euroclear or Cedel, respectively (and, with
respect to DTC, shall include Euroclear and Cedel).
"PAYMENT IN FULL" (together with any correlative phrases E.G. "PAID IN
FULL" and "PAY IN FULL") means (i) with respect to any Senior Debt other
than Senior Debt under or in respect of the Credit Facility, payment in full
thereof or due provision for payment thereof (x) in accordance with the terms
of the agreement or instrument pursuant to which such Senior Debt was issued
or is governed or (y) otherwise to the reasonable satisfaction of the holders
of such Senior Debt, which shall include, in any Insolvency or Liquidation
Proceeding, approval by such holders individually or as a class, of the
provision for payment thereof, and (ii) with respect to Senior Debt under or
in respect of the Credit Facility, payment in full thereof in cash or Cash
Equivalents.
"PERMITTED BUSINESS" means any of the businesses and any other
businesses related to the businesses engaged in by the Company and its
respective Restricted Subsidiaries on the date of the Indenture.
12
"PERMITTED INVESTMENTS" means (a) any Investment in the Company or in a
Wholly Owned Restricted Subsidiary of the Company that is engaged in a
Permitted Business; (b) any Investment in Cash Equivalents; (c) any
Investment by the Company or any Restricted Subsidiary of the Company in a
Person, if as a result of such Investment (i) such Person becomes a Wholly
Owned Restricted Subsidiary of the Company that is engaged in a Permitted
Business or (ii) such Person is merged, consolidated or amalgamated with or
into, or transfers or conveys substantially all of its assets to, or is
liquidated into, the Company or a Wholly Owned Restricted Subsidiary of the
Company that is engaged in a Permitted Business; (d) any Restricted
Investment made as a result of the receipt of non-cash consideration from an
Asset Sale that was made pursuant to and in compliance with Section 4.10
hereof; (e) any acquisition of assets solely in exchange for the issuance of
Equity Interests (other than Disqualified Stock) of the Company or MSC; (f)
stock, obligations or securities received in satisfaction of judgement and
(g) Hedging Obligations entered into in the ordinary course of business and
otherwise permitted under the Indenture.
"PERMITTED REFINANCING INDEBTEDNESS" means any Indebtedness of the
Company or any of its Restricted Subsidiaries issued in exchange for, or the
net proceeds of which are used to extend, refinance, renew, replace, defease
or refund other Indebtedness of the Company or any of its Restricted
Subsidiaries; PROVIDED that: (i) the principal amount (or accreted value, if
applicable) of such Permitted Refinancing Indebtedness does not exceed the
principal amount of (or accreted value, if applicable), plus accrued interest
on, the Indebtedness so extended, refinanced, renewed, replaced, defeased or
refunded (plus the amount of reasonable expenses incurred in connection
therewith); (ii) such Permitted Refinancing Indebtedness has a final maturity
date later than the final maturity date of, and has a Weighted Average Life
to Maturity equal to or greater than the Weighted Average Life to Maturity
of, the Indebtedness being extended, refinanced, renewed, replaced, defeased
or refunded; (iii) if the Indebtedness being extended, refinanced, renewed,
replaced, defeased or refunded is subordinated in right of payment to the
Notes, such Permitted Refinancing Indebtedness has a final maturity date
later than the final maturity date of, and is subordinated in right of
payment to, the Notes on terms at least as favorable to the Holders of Notes
as those contained in the documentation governing the Indebtedness being
extended, refinanced, renewed, replaced, defeased or refunded; and (iv) such
Indebtedness is incurred either by the Restricted Subsidiary who is the
obligor on the Indebtedness being extended, refinanced, renewed, replaced,
defeased or refunded or by the Company.
"PERSON" means any individual, corporation, partnership, joint venture,
association, joint stock company, trust, unincorporated organization,
government or any agency or political subdivision thereof or any other
entity.
13
"PRINCIPALS" means Messrs. Eugster, Benson, ▇▇▇▇▇▇▇▇ and ▇▇▇▇.
"PRIVATE PLACEMENT LEGEND" means the legend initially set forth on the
Senior Subordinated Notes in the form set forth in Section 2.06(g) hereof.
"PRO FORMA BASIS" means, for purposes of determining Consolidated Net
Income in connection with the Cash Flow Coverage Ratio (including in
connection with the covenants described under Section 4.07 and Article 5 and
the incurrence of Indebtedness pursuant to the first sentence of the covenant
described under Section 4.09), giving pro forma effect to (x) any
acquisition, by way of merger, consolidation or otherwise, or sale of a
person, business or asset, related incurrence, repayment or financing of
Indebtedness or other related transactions, including any Restructuring
Charges which would otherwise be accounted for as an adjustment permitted by
Regulation S-X under the Securities Act or on a pro forma basis under GAAP,
or (y) any incurrence, repayment or refinancing of any Indebtedness and the
application of the proceeds therefrom; in each case, which occurred during
the relevant period or subsequent to such period and on or prior to the date
of calculation, as if such acquisition or sale and related transactions and
any Restructuring Charges, incurrence, repayment or refinancing were realized
on the first day of the relevant period permitted by Regulation S-X under the
Securities Act or on a pro forma basis under GAAP. For purposes of this
definition, whenever pro forma effect is to be given to an acquisition of a
person, business or asset, the amount of income or earnings relating thereto,
and the amount of Consolidated Interest Expense associated with any
Indebtedness issued in connection therewith, the pro forma calculations will
be determined in good faith by the chief financial officer of the Company as
specified in an Officers' Certificate of the Company delivered to the
Trustee. Furthermore, in calculating the Cash Flow Coverage Ratio,
(1) interest on outstanding Indebtedness determined on a fluctuating basis as
of the determination date and which will continue to be so determined
thereafter shall be deemed to have accrued at a fixed rate per annum equal to
the rate of interest on such Indebtedness in effect on the determination
date; (2) if interest on any Indebtedness actually incurred on the
determination 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 the determination
date will be deemed to have been in effect during the relevant period; and
(3) notwithstanding clause (1) above, interest on Indebtedness determined on
a fluctuating basis, to the extent such interest is covered by agreements
relating to interest rate swaps or similar interest rate protection Hedging
Obligations, shall be deemed to accrue at the rate per annum resulting after
giving effect to the operation of such agreements.
"PUBLIC EQUITY OFFERING" means a public offering of Equity Interests
(other than Disqualified Stock) of (i) the Company; or (ii) MSC to the extent
the net proceeds thereof are contributed to the Company as a capital
contribution,
14
that, in each case, results in the net proceeds to the Company of at least
$25.0 million.
"QIB" means a "QUALIFIED INSTITUTIONAL BUYER" as defined in Rule 144A
under the Securities Act.
"REGISTRATION RIGHTS AGREEMENT" means the A/B Exchange Registration
Rights Agreement, dated as of the date hereof, by and among the Company, the
Guarantor and the Initial Purchasers.
"REGULATION S" means Regulation S promulgated under the Securities Act.
"REGULATION S GLOBAL NOTES" means the Regulation S Temporary Global
Notes or the Regulation S Permanent Global Notes as applicable.
"REGULATION S PERMANENT GLOBAL NOTES" means the permanent global notes
that do not contain the paragraphs referred to in footnote 1 to the form of
the Note attached hereto as Exhibit A-2, and that are deposited with and
registered in the name of the Depositary or its nominee, representing a
series of Notes sold in reliance on Regulation S.
"REGULATION S TEMPORARY GLOBAL NOTES" means the temporary global notes
that contain the paragraphs referred to in footnote 1 to the form of the Note
attached hereto as Exhibit A-2, and that are deposited with and registered in
the name of the Depositary or its nominee, representing a series of Notes
sold in reliance on Regulation S.
"RELATED PARTY" with respect to any Principal means any spouse or
immediate family member or any controlled Affiliate of any such Principal,
any trusts for the benefit of any such Principal or such Principal's spouse
or immediate family or, in the event of the incompetence or death of any such
Principal, such Principal's estate, executor, administrator, committee or
other personal representative, in each case who will beneficially own or have
the right to acquire, directly or indirectly, Voting Stock of MSC.
"REPRESENTATIVE" means the trustee, agent or representative for any
Senior Debt.
"RESPONSIBLE OFFICER" when used with respect to the Trustee, means any
officer within the Corporate Trust Administration of the Trustee (or any
successor group of the Trustee) or any other officer of the trustee
customarily performing functions similar to those performed by any of the
above designated officers and also means, with respect to a particular
corporate trust matter, any other officer to
15
whom such matter is referred because of his knowledge of and familiarity with
the particular subject.
"RESTRICTED BENEFICIAL INTEREST" means any beneficial interest of a
Participant or Indirect Participant in the Rule 144A Global Note or the
Regulation S Global Note.
"RESTRICTED BROKER DEALER" has the meaning set forth in the Registration
Rights Agreement.
"RESTRICTED GLOBAL NOTES" means the Rule 144A Global Notes and the
Regulation S Global Notes, all of which shall bear the Private Placement
Legend.
"RESTRICTED INVESTMENT" means an Investment other than a Permitted
Investment.
"RESTRICTED SUBSIDIARY" of a Person means any Subsidiary of the referent
Person that is not an Unrestricted Subsidiary.
"RESTRUCTURING CHARGES" means any charges or expenses in respect of
restructuring or consolidating any business, operations or facilities, any
compensation or headcount reduction, or any other cost savings, of any
persons or businesses either alone or together with the Company or any
Restricted Subsidiary, as permitted by GAAP or Regulation S-X under the
Securities Act; provided that any cost savings of less than $10.0 million,
shall be evidenced by an Officers' Certificate delivered to the Trustee and
any cost savings of $10.0 million or more shall be evidenced by a resolution
of the Board of Directors set forth in an Officers' Certificate delivered to
the Trustee.
"RULE 144A" means Rule 144A promulgated under the Securities Act.
"RULE 144A GLOBAL NOTES" means the permanent global notes that contain
the paragraph referred to in footnote 1 and the additional schedule referred
to in footnote 3 to the form of the Note attached hereto as Exhibit A-1, and
that are deposited with and registered in the name of the Depositary or its
nominee, representing a series of Notes sold in reliance on Rule 144A.
"SECURITIES ACT" means the Securities Act of 1933, as amended.
"SENIOR DEBT" means (i) all Indebtedness outstanding under the Credit
Facility, including any Guarantee thereof and all Hedging Obligations with
respect thereto, (ii) any other Indebtedness permitted to be incurred by the
Company under the terms of the Indenture, unless the instrument under which
such Indebtedness is incurred expressly provides that it is on a parity with
or subordinated in right of payment to the Notes, (iii) all Obligations with
respect to
16
the foregoing, and (iv) all interest with respect to the foregoing clauses
(i) and (ii) accruing during the pendency of an Insolvency or Liquidation
Proceeding, whether or not allowed or allowable thereunder. Notwithstanding
anything to the contrary in the foregoing, Senior Debt will not include (w)
any liability for federal, state, local or other taxes owed or owing by the
Company, (x) any Indebtedness of the Company to any of its Subsidiaries or
other Affiliates, (y) any trade payables or liability to trade creditors or
obligations with respect to consigned inventory arising in the ordinary
course of business (including guarantees thereof or instruments evidencing
such liabilities) or (z) any Indebtedness that is incurred in violation of
the Indenture.
"SENIOR SUBORDINATED NOTES" means the Company's 9_% Senior Subordinated
Notes due 2008.
"SHELF REGISTRATION STATEMENT" means the Shelf Registration Statement as
defined in the Registration Rights Agreement.
"SIGNIFICANT SUBSIDIARY" means any Subsidiary that would be a
"significant subsidiary" as defined in Article 1, Rule 1-02 of Regulation
S-X, promulgated pursuant to the Securities Act, as such Regulation is in
effect on the date hereof.
"STATED MATURITY" means, with respect to any installment of interest or
principal on any series of Indebtedness, the date on which such payment of
interest or principal was scheduled to be paid in the original documentation
governing such Indebtedness, and shall not include any contingent obligations
to repay, redeem or repurchase any such interest or principal prior to the
date originally scheduled for the payment thereof.
"SUBSIDIARY" means, with respect to any Person, (i) any corporation,
association or other business entity of which more than 50% of the total
voting power of shares of Capital Stock entitled (without regard to the
occurrence of any contingency) to vote in the election of directors, managers
or trustees thereof is at the time owned or controlled, directly or
indirectly, by such Person or one or more of the other Subsidiaries of that
Person (or a combination thereof) and (ii) any partnership (a) the sole
general partner or the managing general partner of which is such Person or a
Subsidiary of such Person or (b) the only general partners of which are such
Person or of one or more Subsidiaries of such Person (or any combination
thereof).
"TIA" means the Trust Indenture Act of 1939 (15 U.S. Code Sections
77aaa-77bbbb), as amended, as in effect on the date hereof.
"TRANSFER RESTRICTED SECURITIES" means Notes or beneficial interests
therein that bear or are required to bear the Private Placement Legend.
17
"TRUSTEE" means Bank One, NA until a successor replaces it in accordance
with the applicable provisions of this Indenture, and thereafter means the
successor.
"UNRESTRICTED GLOBAL NOTES" means one or more Global Notes that do not
and are not required to bear the Private Placement Legend.
"UNRESTRICTED SUBSIDIARY" means any Subsidiary that is designated by the
Board of Directors as an Unrestricted Subsidiary pursuant to a resolution of
the Board of Directors; but only to the extent that such Subsidiary: (a) has
no Indebtedness other than Non-Recourse Debt; (b) is not party to any
agreement, contract, arrangement or understanding with the Company or any
Restricted Subsidiary of the Company unless the terms of any such agreement,
contract, arrangement or understanding are no less favorable to the Company
or such Restricted Subsidiary than those that might be obtained at the time
from Persons who are not Affiliates of the Company; (c) is a Person with
respect to which neither the Company nor any of its Restricted Subsidiaries
has any direct or indirect obligation (x) to subscribe for additional Equity
Interests or (y) to maintain or preserve such Person's financial condition or
to cause such Person to achieve any specified levels of operating results;
(d) has not guaranteed or otherwise directly or indirectly provided credit
support for any Indebtedness of the Company or any of its Restricted
Subsidiaries; and (e) has at least one director on its board of directors
that is not a director or executive officer of the Company or any of its
Restricted Subsidiaries and has at least one executive officer that is not a
director or executive officer of the Company or any of its Restricted
Subsidiaries. Any such designation by the Board of Directors shall be
evidenced to the Trustee by filing with the Trustee a certified copy of the
Board Resolution giving effect to such designation and an Officers'
Certificate certifying that such designation complied with the foregoing
conditions and was permitted by Section 4.07 hereof. If, at any time, any
Unrestricted Subsidiary would fail to meet the foregoing requirements as an
Unrestricted Subsidiary, it shall thereafter cease to be an Unrestricted
Subsidiary for purposes of the Indenture and any Indebtedness of such
Subsidiary shall be deemed to be incurred by a Restricted Subsidiary of the
Company as of such date (and, if such Indebtedness is not permitted to be
incurred as of such date under Section 4.09 hereof, the Company shall be in
default of such covenant). The Board of Directors of the Company may at any
time designate any Unrestricted Subsidiary to be a Restricted Subsidiary;
PROVIDED that such designation shall be deemed to be an incurrence of
Indebtedness by a Restricted Subsidiary of the Company of any outstanding
Indebtedness of such Unrestricted Subsidiary and such designation shall only
be permitted if (i) such Indebtedness is permitted under Section 4.09 hereof,
and (ii) no Default or Event of Default would be in existence following such
designation.
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"VOTING STOCK" of any Person as of any date means the Capital Stock of
such Person that is at the time entitled to vote in the election of the Board
of Directors of such Person.
"WEIGHTED AVERAGE LIFE TO MATURITY" means, when applied to any
Indebtedness at any date, the number of years obtained by dividing (i) the
sum of the products obtained by multiplying (a) the amount of each then
remaining installment, sinking fund, serial maturity or other required
payments of principal, including payment at final maturity, in respect
thereof, by (b) the number of years (calculated to the nearest one-twelfth)
that will elapse between such date and the making of such payment, by (ii)
the then outstanding principal amount of such Indebtedness.
"WHOLLY OWNED SUBSIDIARY" of any Person means a Subsidiary of such
Person all of the outstanding Capital Stock or other ownership interests of
which (other than directors' qualifying shares) shall at the time be owned by
such Person and/or by one or more Wholly Owned Subsidiaries of such Person.
"2003 INDENTURE" means the Indenture dated as of June 17, 1993, among
the Company, MSC and ▇▇▇▇▇▇ Trust Savings Bank, as Trustee, relating to the
2003 Notes, as amended from time to time.
"2003 NOTES" means the 9 1/4% Senior Subordinated Notes due 2003 of the
Company issued pursuant to the 2003 Indenture.
SECTION 1.2. OTHER DEFINITIONS.
TERM DEFINED IN SECTION
Affiliate Transaction 4.11
Asset Sale Offer 4.10
Change of Control Offer 4.14
Change of Control Payment 4.14
Change of Control Payment Date 4.14
Covenant Defeasance 8.03
Custodian 6.01
DTC 2.03
Event of Default 6.01
Excess Proceeds 4.10
incur 4.09
Legal Defeasance 8.02
Offer Amount 3.09
Offer Period 3.09
19
Paying Agent 2.03
Payment Default 6.01
Permitted Indebtedness 4.09
Purchase Date 3.09
▇▇▇▇▇▇▇▇▇ ▇.▇▇
▇▇▇▇▇▇▇▇▇▇ Offer 3.09
Restricted Payments 4.07
SECTION 1.3. INCORPORATION BY REFERENCE OF TRUST INDENTURE ACT.
Whenever this Indenture refers to a provision of the TIA, the provision
is incorporated by reference in, and made a part of, this Indenture.
The following TIA terms used in this Indenture have the following
meanings:
"INDENTURE SECURITIES" means the Notes;
"INDENTURE SECURITY HOLDER" means a Holder of a Note;
"INDENTURE TO BE QUALIFIED" means this Indenture;
"INDENTURE TRUSTEE" or "INSTITUTIONAL TRUSTEE" means the Trustee;
"OBLIGOR" on the Notes means the Company, the Guarantor and any
successor obligor upon the Notes.
All other terms used in this Indenture that are defined by the TIA,
defined by TIA reference to another statute or defined by the Commission rule
under the TIA have the meanings so assigned to them therein.
SECTION 1.4. RULES OF CONSTRUCTION.
Unless the context otherwise requires:
(1) a term has the meaning assigned to it herein;
(2) an accounting term not otherwise defined herein has the meaning
assigned to it in accordance with GAAP;
(3) "OR" is not exclusive;
(4) words in the singular include the plural, and in the plural include
the singular;
20
(5) provisions apply to successive events and transactions; and
(6) references to sections of or rules under the Securities Act shall
be deemed to include substitute, replacement or successor sections
or rules adopted by the Commission from time to time.
ARTICLE 2
The Notes
SECTION 2.1. FORM AND DATING.
The Notes and the Trustee's certificate of authentication shall be
substantially in the form of Exhibit A-1 or Exhibit A-2 attached hereto.
The Notes may have notations, legends or endorsements required by law, stock
exchange rule or usage. Each Note shall be dated the date of its
authentication. The Notes initially shall be issued in denominations of
$1,000 and integral multiples thereof.
The terms and provisions contained in the Notes shall constitute, and
are hereby expressly made, a part of this Indenture and the Company, the
Guarantor and the Trustee, by their execution and delivery of this Indenture,
expressly agree to such terms and provisions and to be bound thereby.
(a) GLOBAL NOTES. Notes offered and sold to QIBs in reliance on Rule
144A shall be issued initially in the form of Rule 144A Global Notes, which
shall be deposited on behalf of the purchasers of the Notes represented
thereby with a custodian of the Depositary, and registered in the name of the
Depositary or a nominee of the Depositary, duly executed by the Company and
authenticated by the Trustee as hereinafter provided. The aggregate
principal amount of the Rule 144A Global Notes may from time to time be
increased or decreased by adjustments made on the records of the Trustee and
the Depositary or its nominee as hereinafter provided.
Notes offered and sold in reliance on Regulation S shall be issued initially
in the form of the Regulation S Temporary Global Note, which shall be
deposited on behalf of the purchasers of the Notes represented thereby with
the Trustee, as custodian for the Depositary, and registered in the name of
the Depositary or the nominee of the Depositary for the accounts of
designated agents holding on behalf of Euroclear or Cedel, duly executed by
the Company and authenticated by the Trustee as hereinafter provided. The
"40-day restricted period" (as defined in Regulation S) shall be terminated
upon the receipt by the Trustee of (i) a written certificate from the
Depositary, together with copies of certificates from Euroclear
21
and Cedel certifying that they have received certification of non-United
States beneficial ownership of 100% of the aggregate principal amount of the
Regulation S Temporary Global Notes (except to the extent of any beneficial
owners thereof who acquired an interest therein pursuant to another exemption
from registration under the Securities Act and who will take delivery of a
beneficial ownership interest in a Rule 144A Global Note, all as contemplated
by Section 2.06(a)(ii) hereof), and (ii) an Officers' Certificate from the
Company certifying as to the same matters covered in clause (i) above.
Following the termination of the 40-day restricted period, beneficial
interests in the Regulation S Temporary Global Note shall be exchanged for
beneficial interests in Regulation S Permanent Global Notes pursuant to the
Applicable Procedures. Simultaneously with the authentication of Regulation
S Permanent Global Notes, the Trustee shall cancel the Regulation S Temporary
Global Notes. The aggregate principal amount of the Regulation S Temporary
Global Notes and the Regulation S Permanent Global Notes may from time to
time be increased or decreased by adjustments made on the records of the
Trustee and the Depositary or its nominee, as the case may be, in connection
with transfers of interest as hereinafter provided.
Each Global Note shall represent such of the outstanding Notes as shall
be specified therein and each shall provide that it shall represent the
aggregate amount of outstanding Notes from time to time endorsed thereon and
that the aggregate amount of outstanding Notes represented thereby may from
time to time be reduced or increased, as appropriate, to reflect exchanges,
redemptions and transfers of interests. Any endorsement of a Global Note to
reflect the amount of any increase or decrease in the amount of outstanding
Notes represented thereby shall be made by the Trustee or the Note Custodian,
at the direction of the Trustee, in accordance with instructions given by the
Holder thereof as required by Section 2.06 hereof.
The provisions of the "OPERATING PROCEDURES OF THE EUROCLEAR SYSTEM" and
"TERMS AND CONDITIONS GOVERNING USE OF EUROCLEAR" and the "MANAGEMENT
REGULATIONS" and "INSTRUCTIONS TO PARTICIPANTS" of Cedel shall be applicable
to interests in the Regulation S Temporary Global Notes and the Regulation S
Permanent Global Notes that are held by Participants through Euroclear or
Cedel. The Trustee shall have no obligation to notify Holders of any such
procedures or to monitor or enforce compliance with the same.
Except as set forth in Section 2.06 hereof, the Global Notes may be
transferred, in whole and not in part, only to another nominee of the
Depositary or to a successor of the Depositary or its nominee.
(b) BOOK-ENTRY PROVISIONS. This Section 2.01(b) shall apply only to
Rule 144A Global Notes and Regulation S Permanent Global Notes deposited with
or on behalf of the Depositary.
22
The Company shall execute and the Trustee shall, in accordance with this
Section 2.01(b), authenticate and deliver the Global Notes that (i) shall be
registered in the name of the Depositary or the nominee of the Depositary and
(ii) shall be delivered by the Trustee to the Depositary or pursuant to the
Depositary's instructions or held by the Trustee as custodian for the
Depositary.
Participants shall have no rights either under this Indenture with
respect to any Global Note held on their behalf by the Depositary or by the
Note Custodian as custodian for the Depositary or under such Global Note, and
the Depositary may be treated by the Company, the Trustee and any agent of
the Company or the Trustee as the absolute owner of such Global Note for all
purposes whatsoever. Notwithstanding the foregoing, nothing herein shall
prevent the Company, the Trustee or any agent of the Company or the Trustee
from giving effect to any written certification, proxy or other authorization
furnished by the Depositary or impair, as between the Depositary and its
Participants, the operation of customary practices of such Depositary
governing the exercise of the rights of an owner of a beneficial interest in
any Global Note.
(c) DEFINITIVE NOTES. Notes issued in certificated form shall be
substantially in the form of Exhibit A-1 attached hereto (but without
including the text referred to in footnotes 1 and 3 thereto).
SECTION 2.2. EXECUTION AND AUTHENTICATION.
An Officer shall sign the Notes for the Company by manual or facsimile
signature.
If an Officer whose signature is on a Note no longer holds that office
at the time a Note is authenticated, the Note shall nevertheless be valid.
A Note shall not be valid until authenticated by the manual signature of
the Trustee. The signature shall be conclusive evidence that the Note has
been authenticated under this Indenture. The form of Trustee's certificate
of authentication to be borne by the Notes shall be substantially as set
forth in Exhibit A-1 or Exhibit A-2 hereto.
The Trustee shall, upon a written order of the Company signed by an
Officer directing the Trustee to authenticate the Notes, authenticate Notes
for original issue up to the aggregate principal amount stated in paragraph 4
of the Notes. The Trustee shall, upon written order of the Company signed by
an Officer, authenticate New Senior Subordinated Notes for original issuance
in exchange for a like principal amount of Senior Subordinated Notes
exchanged in the Exchange Offer or otherwise exchanged for New Senior
Subordinated Notes pursuant to the terms of the Registration Rights
Agreement. The aggregate
23
principal amount of Notes outstanding at any time may not exceed such amount
except as provided in Section 2.07 hereof.
The Trustee may (at the Company's expense) appoint an authenticating agent
acceptable to the Company to authenticate Notes. An authenticating agent may
authenticate Notes whenever the Trustee may do so. Each reference in this
Indenture to authentication by the Trustee includes authentication by such
agent. An authenticating agent has the same rights as an Agent to deal with the
Company or an Affiliate of the Company.
SECTION 2.3. REGISTRAR AND PAYING AGENT.
The Company shall maintain (i) an office or agency where Notes may be
presented for registration of transfer or for exchange ("REGISTRAR") and (ii) an
office or agency where Notes may be presented for payment ("PAYING AGENT"). The
Registrar shall keep a register of the Notes and of their transfer and exchange.
The Company may appoint one or more additional paying agents. The term "PAYING
AGENT" includes any additional paying agent. The Company may change any Paying
Agent or Registrar without notice to any Holder. The Company shall notify the
Trustee in writing of the name and address of any Agent not a party to this
Indenture. If the Company fails to appoint or maintain another entity as
Registrar or Paying Agent, the Trustee shall act as such. The Company or any of
its Subsidiaries may act as Paying Agent or Registrar.
The Company initially appoints The Depository Trust Company ("DTC") to act
as Depositary with respect to the Global Notes.
The Company initially appoints the Trustee to act as the Registrar and
Paying Agent and to act as Note Custodian with respect to the Global Notes. The
Company initially appoints the Trustee to act as the Registrar and Paying Agent
with respect to the Definitive Notes.
SECTION 2.4. PAYING AGENT TO HOLD MONEY IN TRUST.
The Company shall require each Paying Agent other than the Trustee to agree
in writing that the Paying Agent shall hold in trust for the benefit of Holders
or the Trustee all money held by the Paying Agent for the payment of principal,
premium or Liquidated Damages, if any, or interest on the Notes, and shall
notify the Trustee of any default by the Company in making any such payment.
While any such default continues, the Trustee may require a Paying Agent to pay
all money held by it to the Trustee. The Company at any time may require a
Paying Agent to pay all money held by it to the Trustee. Upon payment over to
the Trustee, the Paying Agent (if other than the Company or a Subsidiary) shall
have no further liability for the money. If the Company or a Subsidiary acts as
Paying Agent, it shall segregate and hold in a separate trust fund for the
benefit of the
24
Holders all money held by it as Paying Agent. Upon the occurrence of events
specified in Section 6.01(vii) through (ix) hereof, the Trustee shall serve as
Paying Agent for the Notes.
SECTION 2.5. HOLDER LISTS.
The Trustee shall preserve in as current a form as is reasonably
practicable the most recent list available to it of the names and addresses of
all Holders and shall otherwise comply with TIA Section 312(a). If the Trustee
is not the Registrar, the Company and/or the Guarantor shall furnish to the
Trustee at least seven (7) Business Days before each interest payment date and
at such other times as the Trustee may request in writing, a list in such form
and as of such date as the Trustee may reasonably require of the names and
addresses of the Holders of Notes and the Company and the Guarantor shall
otherwise comply with TIA Section 312(a).
SECTION 2.6. TRANSFER AND EXCHANGE.
(a) TRANSFER AND EXCHANGE OF GLOBAL NOTES. The transfer and exchange of
Global Notes or beneficial interests therein shall be effected through the
Depositary, in accordance with this Indenture and the procedures of the
Depositary therefor, which shall include restrictions on transfer comparable to
those set forth herein to the extent required by the Securities Act. Beneficial
interests in a Global Note may be transferred to Persons who take delivery
thereof in the form of a beneficial interest in the same Global Note in
accordance with the transfer restrictions set forth in the legend in subsection
(g) of this Section 2.06. Transfers of beneficial interests in the Global Notes
to Persons required to take delivery thereof in the form of an interest in
another Global Note shall be permitted as follows:
(i) RULE 144A GLOBAL NOTE TO REGULATION S GLOBAL NOTE. If, at
any time, an owner of a beneficial interest in a Rule 144A Global Note
deposited with the Depositary (or the Trustee as custodian for the
Depositary) wishes to transfer its beneficial interest in such Rule 144A
Global Note to a Person who is required or permitted to take delivery
thereof in the form of an interest in a Regulation S Global Note, such
owner shall, subject to the Applicable Procedures, exchange or cause the
exchange of such interest for an equivalent beneficial interest in a
Regulation S Global Note as provided in this Section 2.06(a)(i). Upon
receipt by the Trustee of (1) instructions given in accordance with the
Applicable Procedures from a Participant directing the Trustee to credit or
cause to be credited a beneficial interest in the Regulation S Global Note
in an amount equal to the beneficial interest in the Rule 144A Global Note
to be exchanged, (2) a written order given in accordance with the
25
Applicable Procedures containing information regarding the Participant
account of the Depositary and the Euroclear or Cedel account to be credited
with such increase, and (3) a certificate in the form of Exhibit B-1 hereto
given by the owner of such beneficial interest stating that the transfer of
such interest has been made in compliance with the transfer restrictions
applicable to the Global Notes and pursuant to and in accordance with Rule
903 or Rule 904 of Regulation S, then the Trustee, as Registrar, shall
instruct the Depositary to reduce or cause to be reduced the aggregate
principal amount at maturity of the applicable Rule 144A Global Note and to
increase or cause to be increased the aggregate principal amount at
maturity of the applicable Regulation S Global Note by the principal amount
at maturity of the beneficial interest in the Rule 144A Global Note to be
exchanged or transferred, to credit or cause to be credited to the account
of the Person specified in such instructions, a beneficial interest in the
Regulation S Global Note equal to the reduction in the aggregate principal
amount at maturity of the Rule 144A Global Note, and to debit, or cause to
be debited, from the account of the Person making such exchange or transfer
the beneficial interest in the Rule 144A Global Note that is being
exchanged or transferred.
(ii) REGULATION S GLOBAL NOTE TO RULE 144A GLOBAL NOTE. If, at
any time, after the expiration of the 40-day restricted period, an owner of
a beneficial interest in a Regulation S Global Note deposited with the
Depositary or with the Trustee as custodian for the Depositary wishes to
transfer its beneficial interest in such Regulation S Global Note to a
Person who is required or permitted to take delivery thereof in the form of
an interest in a Rule 144A Global Note, such owner shall, subject to the
Applicable Procedures, exchange or cause the exchange of such interest for
an equivalent beneficial interest in a Rule 144A Global Note as provided in
this Section 2.06(a)(ii). Upon receipt by the Trustee of (1) instructions
from Euroclear or Cedel, if applicable, and the Depositary, directing the
Trustee, as Registrar, to credit or cause to be credited a beneficial
interest in the Rule 144A Global Note equal to the beneficial interest in
the Regulation S Global Note to be exchanged, such instructions to contain
information regarding the Participant account with the Depositary to be
credited with such increase, (2) a written order given in accordance with
the Applicable Procedures containing information regarding the participant
account of the Depositary and (3) a certificate in the form of Exhibit B-2
attached hereto given by the owner of such beneficial interest stating (A)
if the transfer is pursuant to Rule 144A, that the Person transferring such
interest in a Regulation S Global Note reasonably believes that the Person
acquiring such interest in a Rule 144A Global Note is a QIB and is
obtaining such beneficial interest in a transaction meeting the
requirements of Rule 144A and any applicable
26
blue sky or securities laws of any state of the United States, (B) that the
transfer complies with the requirements of Rule 144 under the Securities
Act, (C) if the transfer is to an Institutional Accredited Investor that
such transfer is in compliance with the Securities Act and a certificate in
the form of Exhibit C attached hereto and, if such transfer is in respect
of an aggregate principal amount of less than $100,000, an Opinion of
Counsel acceptable to the Company that such transfer is in compliance with
the Securities Act or (D) if the transfer is pursuant to any other
exemption from the registration requirements of the Securities Act, that
the transfer of such interest has been made in compliance with the transfer
restrictions applicable to the Global Notes and pursuant to and in
accordance with the requirements of the exemption claimed, such statement
to be supported by an Opinion of Counsel from the transferee or the
transferor in form reasonably acceptable to the Company and to the
Registrar and in each case, in accordance with any applicable securities
laws of any state of the United States or any other applicable
jurisdiction, then the Trustee, as Registrar, shall instruct the Depositary
to reduce or cause to be reduced the aggregate principal amount at maturity
of such Regulation S Global Note and to increase or cause to be increased
the aggregate principal amount at maturity of the applicable Rule 144A
Global Note by the principal amount at maturity of the beneficial interest
in the Regulation S Global Note to be exchanged or transferred, and the
Trustee, as Registrar, shall instruct the Depositary, concurrently with
such reduction, to credit or cause to be credited to the account of the
Person specified in such instructions a beneficial interest in the
applicable Rule 144A Global Note equal to the reduction in the aggregate
principal amount at maturity of such Regulation S Global Note and to debit
or cause to be debited from the account of the Person making such transfer
the beneficial interest in the Regulation S Global Note that is being
exchanged or transferred.
(b) TRANSFER AND EXCHANGE OF DEFINITIVE NOTES. When Definitive Notes are
presented by a Holder to the Registrar with a request to register the transfer
of the Definitive Notes or to exchange such Definitive Notes for an equal
principal amount of Definitive Notes of other authorized denominations, the
Registrar shall register the transfer or make the exchange as requested only if
the Definitive Notes are presented or surrendered for registration of transfer
or exchange, are endorsed and contain a signature guarantee or accompanied by a
written instrument of transfer in form satisfactory to the Registrar duly
executed by such Holder or by his attorney and contains a signature guarantee,
duly authorized in writing and the Registrar received the following
documentation (all of which may be submitted by facsimile):
27
(i) in the case of Definitive Notes that are Transfer Restricted
Securities, such request shall be accompanied by the following additional
information and documents, as applicable:
(A) if such Transfer Restricted Security is being delivered
to the Registrar by a Holder for registration in the name of such
Holder, without transfer, or such Transfer Restricted Security is
being transferred to the Company or any of its Subsidiaries, a
certification to that effect from such Holder (in substantially the
form of Exhibit B-3 hereto); or
(B) if such Transfer Restricted Security is being
transferred to a QIB in accordance with Rule 144A under the Securities
Act or pursuant to an exemption from registration in accordance with
Rule 144 under the Securities Act or pursuant to an effective
registration statement under the Securities Act, a certification to
that effect from such Holder (in substantially the form of Exhibit B-3
hereto); or
(C) if such Transfer Restricted Security is being
transferred to a Non-U.S. Person in an offshore transaction in
accordance with Rule 904 under the Securities Act, a certification to
that effect from such Holder (in substantially the form of Exhibit B-3
hereto);
(D) if such Transfer Restricted Security is being
transferred to an Institutional Accredited Investor in reliance on an
exemption from the registration requirements of the Securities Act
other than those listed in subparagraphs (B) and (C) above, a
certification to that effect from such Holder (in substantially the
form of Exhibit B-3 hereto), a certification substantially in the form
of Exhibit C hereto, and, if such transfer is in respect of an
aggregate principal amount of Notes of less than $100,000, an Opinion
of Counsel acceptable to the Company that such transfer is in
compliance with the Securities Act; or
(E) if such Transfer Restricted Security is being
transferred in reliance on any other exemption from the registration
requirements of the Securities Act, a certification to that effect
from such Holder (in substantially the form of Exhibit B-3 hereto) and
an Opinion of Counsel from such Holder or the transferee reasonably
acceptable to the Company and to the Registrar to the effect that such
transfer is in compliance with the Securities Act.
28
(c) TRANSFER OF A BENEFICIAL INTEREST IN A RULE 144A GLOBAL NOTE OR
REGULATION S PERMANENT GLOBAL NOTE FOR A DEFINITIVE NOTE.
(i) Any Person having a beneficial interest in a Rule 144A Global
Note or Regulation S Permanent Global Note may upon request, subject to the
Applicable Procedures, exchange such beneficial interest for a Definitive
Note. Upon receipt by the Trustee of written instructions or such other
form of instructions as is customary for the Depositary (or Euroclear or
Cedel, if applicable), from the Depositary or its nominee on behalf of any
Person having a beneficial interest in a Rule 144A Global Note or
Regulation S Permanent Global Note, and, in the case of a Transfer
Restricted Security, the following additional information and documents
(all of which may be submitted by facsimile):
(A) if such beneficial interest is being transferred to the
Person designated by the Depositary as being the beneficial owner, a
certification to that effect from such Person (in substantially the
form of Exhibit B-4 hereto);
(B) if such beneficial interest is being transferred to a
QIB in accordance with Rule 144A under the Securities Act or pursuant
to an exemption from registration in accordance with Rule 144 under
the Securities Act or pursuant to an effective registration statement
under the Securities Act, a certification to that effect from the
transferor (in substantially the form of Exhibit B-4 hereto);
(C) if such beneficial interest is being transferred to an
Institutional Accredited Investor, pursuant to a private placement
exemption from the registration requirements of the Securities Act
(and based on an opinion of counsel if the Company so requests), a
certification to that effect from such Holder (in substantially the
form of Exhibit B-4 hereto) and a certificate from the applicable
transferee (in substantially the form of Exhibit C hereto); or
(D) if such beneficial interest is being transferred in
reliance on any other exemption from the registration requirements of
the Securities Act, a certification to that effect from the transferor
(in substantially the form of Exhibit B-4 hereto) and an Opinion of
Counsel from the transferee or the transferor reasonably acceptable to
the Company and to the Registrar to the effect that such transfer is
in compliance with the Securities Act, in which case the Trustee or
the Note Custodian, at the direction of the Trustee, shall, in
accordance with the standing instructions and
29
procedures existing between the Depositary and the Note Custodian,
cause the aggregate principal amount of Rule 144A Global Notes or
Regulation S Permanent Global Notes, as applicable, to be reduced
accordingly and, following such reduction, the Company shall execute
and, the Trustee shall authenticate and deliver to the transferee a
Definitive Note in the appropriate principal amount.
(ii) Definitive Notes issued in exchange for a beneficial interest
in a Rule 144A Global Note or Regulation S Permanent Global Note, as
applicable, pursuant to this Section 2.06(c) shall be registered in such
names and in such authorized denominations as the Depositary, pursuant to
instructions from its direct or Indirect Participants or otherwise, shall
instruct the Trustee. The Trustee shall deliver such Definitive Notes to
the Persons in whose names such Notes are so registered. Following any
such issuance of Definitive Notes, the Trustee, as Registrar, shall
instruct the Depositary to reduce or cause to be reduced the aggregate
principal amount at maturity of the applicable Global Note to reflect the
transfer.
(d) RESTRICTIONS ON TRANSFER AND EXCHANGE OF GLOBAL NOTES.
Notwithstanding any other provision of this Indenture (other than the provisions
set forth in subsection (f) of this Section 2.06), a Global Note may not be
transferred as a whole except by the Depositary to a nominee of the Depositary
or by a nominee of the Depositary to the Depositary or another nominee of the
Depositary or by the Depositary or any such nominee to a successor Depositary or
a nominee of such successor Depositary.
(e) TRANSFER AND EXCHANGE OF A DEFINITIVE NOTE FOR A BENEFICIAL INTEREST
IN A GLOBAL NOTE. A definitive Note may not be transferred or exchanged for a
beneficial interest in a Global Note.
(f) AUTHENTICATION OF DEFINITIVE NOTES IN ABSENCE OF DEPOSITARY. If at
any time:
(i) the Depositary for the Notes notifies the Company that the
Depositary is unwilling or unable to continue as Depositary for the Global
Notes and a successor Depositary for the Global Notes is not appointed by
the Company within 90 days after delivery of such notice; or
(ii) the Company, at its sole discretion, notifies the Trustee in
writing that it elects to cause the issuance of Definitive Notes under this
Indenture, then the Company shall execute, and the Trustee shall, upon
receipt of an authentication order in accordance with Section 2.02 hereof,
authenticate and deliver, Definitive Notes in an aggregate principal
30
amount equal to the principal amount of the Global Notes in exchange for
such Global Notes.
(g) LEGENDS.
(i) Except as permitted by the following paragraphs (ii), (iii)
and (iv), each Note certificate evidencing Global Notes and Definitive
Notes (and all Notes issued in exchange therefor or substitution thereof)
shall bear the legend (the "PRIVATE PLACEMENT LEGEND") in substantially the
following form:
"THE SECURITY (OR ITS PREDECESSOR) EVIDENCED HEREBY WAS ORIGINALLY ISSUED
IN A TRANSACTION EXEMPT FROM REGISTRATION UNDER ▇▇▇▇▇▇▇ ▇ ▇▇ ▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇ SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND THE
SECURITY EVIDENCED HEREBY MAY NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED
IN THE ABSENCE OF SUCH REGISTRATION OR AN APPLICABLE EXEMPTION THEREFROM.
EACH PURCHASER OF THE SECURITY EVIDENCED HEREBY IS HEREBY NOTIFIED THAT THE
SELLER MAY BE RELYING ON THE EXEMPTION FROM THE PROVISIONS OF SECTION 5 OF
THE SECURITIES ACT PROVIDED BY RULE 144A THEREUNDER. THE HOLDER OF THE
SECURITY EVIDENCED HEREBY AGREES, FOR THE BENEFIT OF THE COMPANY, THAT (A)
SUCH SECURITY MAY BE RESOLD, PLEDGED OR OTHERWISE TRANSFERRED, ONLY (1)(a)
INSIDE THE UNITED STATES TO A PERSON WHO THE SELLER REASONABLY BELIEVES IS
A QUALIFIED INSTITUTIONAL BUYER (AS DEFINED IN RULE 144A UNDER THE
SECURITIES ACT) IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A,
(b) IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144 UNDER THE
SECURITIES ACT, (c) OUTSIDE THE UNITED STATES TO A FOREIGN PERSON IN A
TRANSACTION MEETING THE REQUIREMENTS OF RULE 903 OR RULE 904 OF REGULATION
S UNDER THE SECURITIES ACT, OR (d) IN ACCORDANCE WITH ANOTHER EXEMPTION
FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT (AND, IN THE CASE
OF CLAUSE (b), (c), OR (d), BASED UPON AN OPINION OF COUNSEL IF THE COMPANY
SO REQUESTS), (2) TO THE COMPANY OR (3) PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT AND, IN EACH CASE, IN ACCORDANCE WITH ANY APPLICABLE
SECURITIES LAWS OF ANY STATE OF THE UNITED STATES OR ANY OTHER APPLICABLE
JURISDICTION AND (B) THE HOLDER WILL, AND
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EACH SUBSEQUENT HOLDER IS REQUIRED TO, NOTIFY ANY PURCHASER FROM IT OF THE
SECURITY EVIDENCED HEREBY OF THE RESALE RESTRICTIONS SET FORTH IN
(A) ABOVE."
(ii) Upon any sale or transfer of a Transfer Restricted Security
(including any Transfer Restricted Security represented by a Global Note)
pursuant to Rule 144 under the Securities Act or pursuant to an effective
registration statement under the Securities Act:
(A) in the case of any Transfer Restricted Security that is
a Definitive Note, the Registrar shall permit the Holder thereof to
exchange such Transfer Restricted Security for a Definitive Note that
does not bear the legend set forth in (i) above and rescind any
restriction on the transfer of such Transfer Restricted Security upon
receipt of a certification from the transferring holder substantially
in the form of Exhibit B-4 hereto; and
(B) in the case of any Transfer Restricted Security
represented by a Global Note, such Transfer Restricted Security shall
not be required to bear the legend set forth in (i) above, but shall
continue to be subject to the provisions of Section 2.06(a) and (b)
hereof; PROVIDED, HOWEVER, that with respect to any request for an
exchange of a Transfer Restricted Security that is represented by a
Global Note for a Definitive Note that does not bear the legend set
forth in (i) above, which request is made in reliance upon Rule 144,
the Holder thereof shall certify in writing to the Registrar that such
request is being made pursuant to Rule 144 (such certification to be
substantially in the form of Exhibit B-4 hereto).
(iii) Upon any sale or transfer of a Transfer Restricted Security
(including any Transfer Restricted Security represented by a Global Note)
in reliance on any exemption from the registration requirements of the
Securities Act (other than exemptions pursuant to Rule 144A or Rule 144
under the Securities Act) in which the Holder or the transferee provides an
Opinion of Counsel to the Company and the Registrar in form and substance
reasonably acceptable to the Company and the Registrar (which Opinion of
Counsel shall also state that the transfer restrictions contained in the
legend are no longer applicable):
(A) in the case of any Transfer Restricted Security that is
a Definitive Note, the Registrar shall permit the Holder thereof to
exchange such Transfer Restricted Security for a Definitive Note that
does not bear the legend set forth in (i) above and rescind any
restriction on the transfer of such Transfer Restricted Security; and
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(B) in the case of any Transfer Restricted Security
represented by a Global Note, such Transfer Restricted Security shall
not be required to bear the legend set forth in (i) above, but shall
continue to be subject to the provisions of Section 2.06(a) and (b)
hereof.
(iv) Notwithstanding the foregoing, upon the consummation of the
Exchange Offer in accordance with the Registration Rights Agreement, the
Company shall issue and, upon receipt of an authentication order in
accordance with Section 2.02 hereof, the Trustee shall authenticate (i) one
or more Unrestricted Global Notes in aggregate principal amount equal to
the principal amount of the Restricted Beneficial Interests tendered for
acceptance by persons that are not (x) broker-dealers, (y) Persons
participating in the distribution of the Notes or (z) Persons who are
affiliates (as defined in Rule 144) of the Company and accepted for
exchange in the Exchange Offer and (ii) Definitive Notes that do not bear
the Private Placement Legend in an aggregate principal amount equal to the
principal amount of the Restricted Definitive Notes accepted for exchange
in the Exchange Offer. Concurrently with the issuance of such Notes, the
Trustee shall cause the aggregate principal amount of the applicable
Restricted Global Notes to be reduced accordingly and the Company shall
execute and the Trustee shall authenticate and deliver to the Persons
designated by the Holders of Definitive Notes so accepted Definitive Notes
in the appropriate principal amount.
(h) CANCELLATION AND/OR ADJUSTMENT OF GLOBAL NOTES. At such time as all
beneficial interests in Global Notes have been exchanged for Definitive Notes,
redeemed, repurchased or cancelled, all Global Notes shall be returned to or
retained and cancelled by the Trustee in accordance with Section 2.11 hereof.
At any time prior to such cancellation, if any beneficial interest in a Global
Note is exchanged for Definitive Notes, redeemed, repurchased or cancelled, the
principal amount of Notes represented by such Global Note shall be reduced
accordingly and an endorsement shall be made on such Global Note, by the Trustee
or the Notes Custodian, at the direction of the Trustee, to reflect such
reduction.
(i) GENERAL PROVISIONS RELATING TO TRANSFERS AND EXCHANGES.
(1) To permit registrations of transfers and exchanges, the
Company shall execute and the Trustee shall authenticate Global Notes
and Definitive Notes at the Registrar's request.
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(2) No service charge shall be made to a Holder for any
registration of transfer or exchange, but the Company may require
payment of a sum sufficient to cover any stamp or transfer tax or
similar governmental charge payable in connection therewith (other
than any such stamp or transfer taxes or similar governmental charge
payable upon exchange or transfer pursuant to Sections 2.10, 3.06,
4.10, 4.14 and 9.05 hereto).
(3) All Global Notes and Definitive Notes issued upon any
registration of transfer or exchange of Global Notes or Definitive
Notes shall be the valid obligations of the Company, evidencing the
same debt, and entitled to the same benefits under this Indenture, as
the Global Notes or Definitive Notes surrendered upon such
registration of transfer or exchange.
(4) The Registrar shall not be required:(A) to issue, to
register the transfer of or to exchange Notes during a period
beginning at the opening of fifteen (15) Business Days before the day
of any selection of Notes for redemption under Section 3.02 hereof and
ending at the close of business on the day of selection, (B) to
register the transfer of or to exchange any Note so selected for
redemption in whole or in part, except the unredeemed portion of any
Note being redeemed in part, or (C) to register the transfer of or to
exchange a Note between a record date and the next succeeding interest
payment date.
(5) Prior to due presentment for the registration of a
transfer of any Note, the Trustee, any Agent and the Company may deem
and treat the Person in whose name any Note is registered as the
absolute owner of such Note for the purpose of receiving payment of
principal of and interest on such Notes and for all other purposes,
and neither the Trustee, any Agent nor the Company shall be affected
by notice to the contrary.
(6) The Trustee shall authenticate Global Notes and
Definitive Notes in accordance with the provisions of Section 2.02
hereof.
SECTION 2.7. REPLACEMENT NOTES.
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If any mutilated Note is surrendered to the Trustee, or the Company and the
Trustee receives evidence to their satisfaction of the destruction, loss or
theft of any Note, the Company shall issue and the Trustee, upon the written
order of the Company signed by an Officer of the Company, shall authenticate a
replacement Note if the Trustee's requirements are met. If required by the
Trustee or the Company, an indemnity bond must be supplied by the Holder that is
sufficient in the judgment of the Trustee and the Company to protect the
Company, the Trustee, any Agent and any authenticating agent from any loss that
any of them may suffer if a Note is replaced. The Company and the Trustee may
charge for their expenses in replacing a Note.
Every replacement Note is an additional obligation of the Company and shall
be entitled to all of the benefits of this Indenture equally and proportionately
with all other Notes duly issued hereunder.
SECTION 2.8. OUTSTANDING NOTES.
The Notes outstanding at any time are all the Notes authenticated by the
Trustee except for those cancelled by it, those delivered to it for
cancellation, those reductions in the interest in a Global Note effected by the
Trustee in accordance with the provisions hereof, and those described in this
Section 2.08 as not outstanding. Except as set forth in Section 2.09 hereof, a
Note does not cease to be outstanding because the Company or the Guarantor or an
Affiliate of the Company or the Guarantor holds the Note.
If a Note is replaced pursuant to Section 2.07 hereof, it ceases to be
outstanding unless the Trustee receives proof satisfactory to it that the
replaced Note is held by a bona fide purchaser.
If the principal amount of any Note is considered paid under Section 4.01
hereof, it ceases to be outstanding and interest on it ceases to accrue.
If the Paying Agent (other than the Company, the Guarantor, a Subsidiary
or an Affiliate of any thereof) holds, on a redemption date or maturity date,
money sufficient to pay Notes payable on that date, then on and after that
date such Notes shall be deemed to be no longer outstanding and shall cease
to accrue interest.
SECTION 2.9. TREASURY NOTES.
In determining whether the Holders of the required principal amount of
Notes have concurred in any direction, waiver or consent, Notes owned by the
Company or the Guarantor, or by any Affiliate of the Company or the Guarantor
shall be considered as though not outstanding, except that for the purposes of
determining whether the Trustee shall be protected in relying on any such
direction, waiver or consent, only Notes shown on the Trustee's register as
being
35
so owned shall be so disregarded. Notwithstanding the foregoing, Notes that are
to be acquired by the Company or the Guarantor or an Affiliate of the Company or
the Guarantor pursuant to an exchange offer, tender offer or other agreement
shall not be deemed to be owned by such entity until legal title to such Notes
passes to such entity.
SECTION 2.10. TEMPORARY NOTES.
Until Definitive Notes are ready for delivery, the Company may prepare and
the Trustee shall authenticate temporary Notes upon a written order of the
Company signed by an Officer of the Company. Temporary Notes shall be
substantially in the form of Definitive Notes but may have variations that the
Company considers appropriate for temporary Notes. Without unreasonable delay,
the Company shall prepare and the Trustee shall upon receipt of a written order
of the Company signed by an Officer authenticate Definitive Notes in exchange
for temporary Notes.
Holders of temporary Notes shall be entitled to all of the benefits of this
Indenture.
SECTION 2.11. CANCELLATION.
The Company at any time may deliver to the Trustee for cancellation any
Notes previously authenticated and delivered hereunder or which the Company may
have acquired in any manner whatsoever, and all Notes so delivered shall be
promptly cancelled by the Trustee. All Notes surrendered for registration of
transfer, exchange or payment, if surrendered to any Person other than the
Trustee, shall be delivered to the Trustee. The Trustee and no one else shall
cancel all Notes surrendered for registration of transfer, exchange, payment,
replacement or cancellation. Subject to Section 2.07 hereof, the Company may
not issue new Notes to replace Notes that it has redeemed or paid or that have
been delivered to the Trustee for cancellation. All cancelled Notes held by the
Trustee shall be destroyed and certification of their destruction delivered to
the Company, unless by a written order, signed by an Officer of the Company, the
Company shall direct that cancelled Notes be returned to it.
SECTION 2.12. DEFAULTED INTEREST.
If the Company or the Guarantor defaults in a payment of interest on the
Notes, it shall pay the defaulted interest in any lawful manner plus, to the
extent lawful, interest payable on the defaulted interest, to the Persons who
are Holders on a subsequent special record date, which date shall be at the
earliest practicable date but in all events at least five (5) Business Days
prior to the payment date, in
36
each case at the rate provided in the Notes and in Section 4.01 hereof. The
Company shall fix or cause to be fixed each such special record date and payment
date, and shall promptly thereafter, notify the Trustee of any such date. At
least fifteen (15) days before the special record date, the Company (or the
Trustee, in the name and at the expense of the Company) shall mail or cause to
be mailed to Holders a notice that states the special record date, the related
payment date and the amount of such interest to be paid.
SECTION 2.13. RECORD DATE.
The record date for purposes of determining the identity of Holders of the
Notes entitled to vote or consent to any action by vote or consent authorized or
permitted under this Indenture shall be determined as provided for in TIA
Section 316(c).
SECTION 2.14. COMPUTATION OF INTEREST.
Interest on the Notes shall be computed on the basis of a 360-day year
comprised of twelve 30-day months.
SECTION 2.15. CUSIP NUMBER.
The Company in issuing the Notes may use a "CUSIP" number, and if it does
so, the Trustee shall use the CUSIP number in notices of redemption or exchange
as a convenience to Holders; PROVIDED that any such notice may state that no
representation is made as to the correctness or accuracy of the CUSIP number
printed in the notice or on the Notes and that reliance may be placed only on
the other identification numbers printed on the Notes. The Company shall
promptly notify the Trustee of any change in the CUSIP number.
ARTICLE 3
REDEMPTION AND PREPAYMENT
SECTION 3.1. NOTICES TO TRUSTEE.
If the Company elects to redeem Notes pursuant to the optional redemption
provisions of Section 3.07 hereof, it shall furnish to the Trustee, at least 30
days but not more than 60 days before a redemption date (unless a shorter period
is acceptable to the Trustee) an Officers' Certificate setting forth (i) the
Section of this Indenture pursuant to which the redemption shall occur, (ii) the
redemption date, (iii) the principal amount of Notes to be redeemed and (iv) the
redemption price.
37
If the Company is required to make an offer to purchase Notes pursuant to
Section 4.10 or 4.14 hereof, it shall furnish to the Trustee, at least 30 days
before the scheduled purchase date, an Officers' Certificate setting forth (i)
the section of this Indenture pursuant to which the offer to purchase shall
occur, (ii) the terms of the offer, (iii) the principal amount of Notes to be
purchased, (iv) the purchase price, (v) the purchase date and (vi) and further
setting forth a statement to the effect that (a) the Company or one its
Subsidiaries has affected an Asset Sale and there are Excess Proceeds
aggregating more than $5.0 million or (b) a Change of Control has occurred, as
applicable.
SECTION 3.2. SELECTION OF NOTES TO BE REDEEMED.
If less than all of the Notes are to be redeemed at any time, selection of
Notes for redemption will be made by the Trustee in compliance with the
requirements of the principal national securities exchange, if any, on which the
Notes are listed, or, if the Notes are not so listed, on a PRO RATA basis or by
lot; PROVIDED that no Notes of $1,000 or less shall be redeemed in part.
Notices of redemption shall be mailed by first class mail at least 30 but not
more than 60 days before the redemption date to each Holder of Notes to be
redeemed at its registered address. Notices of redemption may not be
conditional. If any Note is to be redeemed in part only, the notice of
redemption that relates to such Note shall state the portion of the principal
amount thereof to be redeemed. A new Note in principal amount equal to the
unredeemed portion thereof will be issued in the name of the Holder thereof upon
cancellation of the original Note. Notes called for redemption become due on
the date fixed for redemption. On and after the redemption date, interest
ceases to accrue on Notes or portions of them called for redemption.
SECTION 3.3. NOTICE OF REDEMPTION.
At least 30 days but not more than 60 days before a redemption date, the
Company shall mail or cause to be mailed by first class mail, a notice of
redemption to each Holder whose Notes are to be redeemed.
The notice shall identify the Notes to be redeemed and shall state:
(1) the redemption date;
(2) the redemption price for the Notes and accrued
interest, and Liquidated Damages, if any;
(3) if any Note is being redeemed in part, the portion of
the principal amount of such Notes to be redeemed and that, after the
redemption date, upon surrender of such Note, a new Note or Notes in
principal
38
amount equal to the unredeemed portion shall be issued upon surrender
of the original Note;
(4) the name and address of the Paying Agent;
(5) that Notes called for redemption must be surrendered to
the Paying Agent to collect the redemption price;
(6) that, unless the Company defaults in making such
redemption payment, interest and Liquidated Damages, if any, on Notes
called for redemption cease to accrue on and after the redemption
date;
(7) the paragraph of the Notes and/or Section of this
Indenture pursuant to which the Notes called for redemption are being
redeemed; and
(8) that no representation is made as to the correctness or
accuracy of the CUSIP number, if any, listed in such notice or printed
on the Notes.
At the Company's request, the Trustee shall give the notice of redemption
in the Company's name and at the Company's expense; PROVIDED, HOWEVER, that the
Company shall have delivered to the Trustee, at least 45 days prior to the
redemption date (or such shorter period as shall be acceptable to the Trustee),
an Officers' Certificate requesting that the Trustee give such notice and
setting forth the information to be stated in the notice as provided in the
preceding paragraph. The notice mailed in the manner herein provided shall be
conclusively presumed to have been duly given whether or not the Holder receives
such notice. In any case, failure to give such notice by mail or any defect in
the notice to the Holder of any Note shall not affect the validity of the
proceeding for the redemption of any other Note.
SECTION 3.4. EFFECT OF NOTICE OF REDEMPTION.
Once notice of redemption is mailed in accordance with Section 3.03 hereof,
Notes called for redemption become irrevocably due and payable on the redemption
date at the redemption price plus accrued and unpaid interest and Liquidated
Damages, if any, to such date. A notice of redemption may not be conditional.
SECTION 3.5. DEPOSIT OF REDEMPTION OR PURCHASE PRICE.
39
On or before 10:00 a.m. (New York City time) on each redemption date or the
date on which Notes must be accepted for purchase pursuant to Section 4.10 or
4.14, the Company shall deposit with the Trustee or with the Paying Agent in
immediately available funds money sufficient to pay the redemption or purchase
price of and accrued and unpaid interest and Liquidated Damages, if any, on all
Notes to be redeemed or purchased on that date. The Trustee or the Paying Agent
shall promptly return to the Company upon its written request any money
deposited with the Trustee or the Paying Agent by the Company in excess of the
amounts necessary to pay the redemption or purchase price of (including any
applicable premium) and accrued and unpaid interest and Liquidated Damages, if
any, on all Notes to be redeemed or purchased.
If Notes called for redemption or tendered in an Asset Sale Offer or Change
of Control Offer are paid or if the Company has deposited with the Trustee or
Paying Agent money sufficient to pay the redemption or purchase price of and
unpaid and accrued interest and Liquidated Damages, if any, on all Notes to be
redeemed or purchased, on and after the redemption or purchase date interest and
Liquidated Damages, if any, shall cease to accrue on the Notes or the portions
of Notes called for redemption or tendered and not withdrawn in an Asset Sale
Offer or Change of Control Offer (regardless of whether certificates for such
securities are actually surrendered). If a Note is redeemed or purchased on or
after an interest record date but on or prior to the related interest payment
date, then any accrued and unpaid interest and Liquidated Damages, if any, shall
be paid to the Person in whose name such Note was registered at the close of
business on such record date. If any Note called for redemption shall not be so
paid upon surrender for redemption because of the failure of the Company to
comply with the preceding paragraph, interest shall be paid on the unpaid
principal and Liquidated Damages, if any, from the redemption or purchase date
until such principal and Liquidated Damages, if any, is paid, and to the extent
lawful on any interest not paid on such unpaid principal, in each case, at the
rate provided in the Notes and in Section 4.01 hereof.
SECTION 3.6. NOTES REDEEMED IN PART.
Upon surrender of a Note that is redeemed in part, the Company shall issue
and, upon the Company's written request, the Trustee shall authenticate for the
Holder at the expense of the Company a new Note equal in principal amount to the
unredeemed portion of the Note surrendered.
SECTION 3.7. OPTIONAL REDEMPTION.
(a) Except as set forth in the next paragraph, the Notes will not be
redeemable at the Company's option prior to March 15, 2003. Thereafter, the
Notes will be subject to redemption at any time at the option of the Company, in
whole or in part, upon not less than 30 nor more than 60 days' notice, at the
40
redemption prices (expressed as percentages of principal amount) set forth below
plus accrued and unpaid interest and Liquidated Damages thereon, if any, to the
applicable redemption date, if redeemed during the twelve-month period beginning
on March 15 of the years indicated below:
YEAR PERCENTAGE
2003 104.938%
2004 103.292%
2005 101.646%
2006 and thereafter 100.000%
(b) Notwithstanding the foregoing, at any time prior to March 15, 2001,
the Company may redeem up to 40% of the original aggregate principal amount of
Notes at a redemption price of 109.875% of the principal amount thereof, plus
accrued and unpaid interest and Liquidated Damages thereon, if any, to the
redemption date, with the net cash proceeds of a Public Equity Offering;
PROVIDED that at least 60% of the original aggregate principal amount of Notes
remains outstanding immediately after the occurrence of each such redemption;
and PROVIDED, further, that such redemption shall occur within 45 days of the
date of the closing of such Public Equity Offering.
SECTION 3.8. MANDATORY REDEMPTION.
Except as set forth under Sections 3.09, 4.10 and 4.14 hereof, the Company
shall not be required to make mandatory redemption or sinking fund payments with
respect to the Notes.
SECTION 3.9. REPURCHASE OFFERS.
In the event that the Company shall be required to commence an offer to all
Holders to repurchase Notes (a "REPURCHASE OFFER") pursuant to Section 4.10
hereof, an "ASSET SALE OFFER," or pursuant to Section 4.14 hereof, a "CHANGE OF
CONTROL OFFER," the Company shall follow the procedures specified below.
Within 30 days following any Change of Control or the date on which the
aggregate amount of Excess Proceeds exceeds $5 million pursuant to Section 4.10
hereof, the Company will mail a notice to each Holder describing the transaction
or transactions that constitute the Change of Control or give rise to the Asset
Sale Offer and offering to repurchase Notes as required by Section 4.10 hereof,
in the case of an Asset Sale Offer, or by Section 4.14 hereof, in the case of a
Change of Control Offer, on the date specified in such notice, which date shall
be no earlier than 30 days and no later than 60 days from the date such notice
is mailed (the "PURCHASE DATE"). A Repurchase Offer shall remain open for a
period of twenty (20) Business Days following its commencement and no longer,
except to the
41
extent that a longer period is required by applicable law (the "OFFER PERIOD").
On the Purchase Date, the Company shall purchase the principal amount of Notes
required to be purchased pursuant to Section 4.10 hereof, in the case of an
Asset Sale Offer, or 4.14 hereof, in the case of a Change of Control Offer (the
"OFFER AMOUNT") or, if less than the Offer Amount has been tendered, all Notes
tendered in response to the Repurchase Offer. Payment for any Notes so
purchased shall be made in the same manner as interest payments are made.
If the Purchase Date is on or after an interest record date and on or
before the related interest payment date, any accrued and unpaid interest and
Liquidated Damages, if any, shall be paid to the Person in whose name a Note is
registered at the close of business on such record date, and no additional
interest or Liquidated Damages, if any, shall be payable to Holders who tender
Notes pursuant to the Repurchase Offer.
Upon the commencement of a Repurchase Offer, the Company shall send, by
first class mail, a notice to the Trustee and each of the Holders. The notice
shall contain all instructions and materials necessary to enable such Holders to
tender Notes pursuant to such Repurchase Offer. The Repurchase Offer shall be
made to all Holders. The notice, which shall govern the terms of the Repurchase
Offer, shall describe the transaction or transactions that constitute the Change
of Control or gave rise to the Asset Sale Offer, as the case may be and shall
state:
(a) that the Repurchase Offer is being made pursuant to this Section 3.09
and Section 4.10 or 4.14 hereof, as the case may be, and the length of time the
Repurchase Offer shall remain open;
(b) the Offer Amount, the purchase price and the Purchase Date;
(c) that any Note not tendered or accepted for payment shall continue to
accrue interest;
(d) that, unless the Company defaults in making such payment, any Note
accepted for payment pursuant to the Repurchase Offer shall cease to accrue
interest and Liquidated Damages, if any, after the Purchase Date;
(e) that Holders electing to have a Note purchased pursuant to a
Repurchase Offer shall be required to surrender the Note, with the form entitled
"Option of Holder to Elect Purchase" on the reverse of the Note, duly completed,
or transfer by book-entry transfer, to the Company, the Depositary, or the
Paying Agent at the address specified in the notice not later than the close of
business on the last day of the Offer Period;
42
(f) that Holders shall be entitled to withdraw their election if the
Company, the Depositary or the Paying Agent, as the case may be, receives, not
later than the expiration of the Offer Period, a telegram, facsimile
transmission or letter setting forth the name of the Holder, the principal
amount of the Note the Holder delivered for purchase and a statement that such
Holder is withdrawing his election to have such Note purchased;
(g) that, if the aggregate principal amount of Notes surrendered by
Holders exceeds the Offer Amount, the Company shall select the Notes to be
purchased on a PRO RATA basis (with such adjustments as may be deemed
appropriate by the Company so that only Notes in denominations of $1,000, or
integral multiples thereof, shall be purchased); and
(h) that Holders whose Notes were purchased only in part shall be issued
new Notes equal in principal amount to the unpurchased portion of the Notes
surrendered (or transferred by book-entry transfer).
On the Purchase Date, the Company shall, to the extent lawful, (i) accept
for payment, on a PRO RATA basis to the extent necessary, the Offer Amount of
Notes or portions thereof tendered pursuant to the Repurchase Offer, or if less
than the Offer Amount has been tendered, all Notes tendered, (ii) deliver or
cause the Paying Agent or depository, as the case may be, to deliver to the
Trustee Notes so accepted and (iii) deliver to the Trustee an Officers'
Certificate stating that such Notes or portions thereof were accepted for
payment by the Company in accordance with the terms of this Section 3.09. The
Company, the Depositary or the Paying Agent, as the case may be, shall promptly
(but in any case not later than two (2) Business Days after the Purchase Date)
mail or deliver to each tendering Holder an amount equal to the purchase price
of the Notes tendered by such Holder and accepted by the Company for purchase,
plus any accrued and unpaid interest and Liquidated Damages, if any, thereon,
and the Company shall promptly issue a new Note, and the Trustee shall
authenticate and mail or deliver such new Note, to such Holder, equal in
principal amount to any unpurchased portion of such Holder's Notes surrendered.
Any Note not so accepted shall be promptly mailed or delivered by the Company to
the Holder thereof. The Company shall publicly announce in a newspaper of
general circulation or in a press release provided to a nationally recognized
financial wire service the results of the Repurchase Offer on the Purchase Date.
Other than as specifically provided in this Section 3.09, any purchase
pursuant to this Section 3.09 shall be made pursuant to the provisions of
Sections 3.01, 3.02, 3.05 and 3.06 hereof.
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ARTICLE 4
COVENANTS
SECTION 4.1. PAYMENT OF NOTES.
The Company shall pay or cause to be paid the principal of, premium, if
any, and interest on the Notes on the dates and in the manner provided in the
Notes. The Company shall pay all Liquidated Damages, if any, in the same
manner on the dates and in the amounts set forth in the Registration Rights
Agreement. Principal, premium and Liquidated Damages, if any, and interest,
shall be considered paid for all purposes hereunder on the date the Paying Agent
if other than the Company, the Guarantor or a Subsidiary thereof holds, as of
10:00 a.m. (New York City time) money deposited by the Company in immediately
available funds and designated for and sufficient to pay all such principal,
premium and Liquidated Damages, if any, and interest, then due.
The Company shall pay interest (including post-petition interest in any
proceeding under any Bankruptcy Law) on overdue principal at the rate equal to
1% per annum in excess of the then applicable interest rate on the Notes to the
extent lawful; it shall pay interest (including post-petition interest in any
proceeding under any Bankruptcy Law) on overdue installments of interest and
Liquidated Damages (without regard to any applicable grace period) at the same
rate to the extent lawful.
SECTION 4.2. MAINTENANCE OF OFFICE OR AGENCY.
The Company shall maintain in the Borough of Manhattan, the City of New
York an office or agency (which may be an office of the Trustee or an affiliate
of the Trustee or Registrar) where Notes may be surrendered for registration of
transfer or for exchange and where notices and demands to or upon the Company in
respect of the Notes and this Indenture may be served. The Company shall give
prompt written notice to the Trustee of the location, and any change in the
location, of such office or agency. If at any time the Company shall fail to
maintain any such required office or agency or shall fail to furnish the Trustee
with the address thereof, such presentations, surrenders, notices and demands
may be made or served at the Corporate Trust Office of the Trustee.
The Company may also from time to time designate one or more other offices
or agencies where the Notes may be presented or surrendered for any or all such
purposes and may from time to time rescind such designations; PROVIDED, HOWEVER,
that no such designation or rescission shall in any manner relieve the Company
of its obligation to maintain an office or agency in the Borough of Manhattan,
the City of New York for such purposes. The Company shall give
44
prompt written notice to the Trustee of any such designation or rescission and
of any change in the location of any such other office or agency.
The Company hereby designates the Corporate Trust Office of the Trustee as
one such office or agency of the Company in accordance with Section 2.03 hereof.
SECTION 4.3. COMMISSION REPORTS.
Whether or not required by the rules and regulations of the Commission, so
long as any Notes are outstanding, the Company (or MSC, as the case may be)
shall furnish to the Holders of Notes (i) all quarterly and annual financial
information that would be required to be contained in a filing with the
Commission on Forms 10-Q and 10-K if the Company (or MSC, as the case may be)
were required to file such Forms, including a "Management's Discussion and
Analysis of Financial Condition and Results of Operations" and, with respect to
the annual information only, a report thereon from certified independent
accountants and (ii) all current reports that would be required to be filed with
the Commission on Form 8-K if the Company (or MSC, as the case may be) were
required to file such reports. In addition, whether or not required by the
rules and regulations of the Commission, the Company (or MSC, as the case may
be) shall file a copy of all such information and reports with the Commission
for public availability (unless the Commission will not accept such a filing)
and make such information available to securities analysts and prospective
investors upon request. In addition, the Company and MSC shall furnish to the
Holders, and to securities analysts and prospective investors, upon their
request, the information required to be delivered pursuant to Rule 144A(d)(4)
under the Securities Act. The Company shall at all times comply with TIA Section
314(a).
The financial information to be distributed to Holders of Notes shall be
filed with the Trustee and mailed to the Holders at their addresses appearing in
the register of Notes maintained by the Registrar, within 15 days after the same
would be required to be filed with the Commission if the Company were required
to file the Forms containing such financial information.
The Company shall provide the Trustee with a sufficient number of copies of
all reports and other documents and information and, if requested by the
Company, the Trustee will deliver such reports to the Holders under this Section
4.03.
SECTION 4.4. COMPLIANCE CERTIFICATE.
The Company shall deliver to the Trustee, no later than the date year-end
financial statements are required to be filed with the Trustee and mailed to the
Holders under Section 4.03 hereof, an Officers' Certificate stating that a
review of
45
the activities of the Company and its Subsidiaries during the preceding fiscal
year has been made under the supervision of the signing Officers with a view to
determining whether each has kept, observed, performed and fulfilled its
obligations under this Indenture (including, with respect to any Restricted
Payments made during such year, the basis upon which the calculations required
by Section 4.07 hereof were computed, which calculations may be based on the
Company's latest available financial statements), and further stating, as to
each such Officer signing such certificate, that, to the best of his or her
knowledge, each entity has kept, observed, performed and fulfilled each and
every covenant contained in this Indenture and is not in default in the
performance or observance of any of the terms, provisions and conditions of this
Indenture (or, if a Default or Event of Default shall have occurred, describing
all such Defaults or Events of Default of which he or she may have knowledge and
what action the Company is taking or proposes to take with respect thereto) and
that, to the best of his or her knowledge, no event has occurred and remains in
existence by reason of which payments on account of the principal of, premium or
Liquidated Damages, if any, or interest on the Notes is prohibited or if such
event has occurred, a description of the event and what action the Company is
taking or proposes to take with respect thereto.
So long as not contrary to the then current recommendations of the American
Institute of Certified Public Accountants, in connection with the year-end
financial statements delivered pursuant to Section 4.03 hereof, the Company
shall use its best efforts to deliver a written statement of the Company's
independent public accountants (who shall be a firm of established national
reputation) that in making the examination necessary for certification of such
financial statements, nothing has come to their attention that would lead them
to believe that the Company has violated any provisions of Article Four or
Section 5.01 hereof or, if any such violation has occurred, specifying the
nature and period of existence thereof, it being understood that such
accountants shall not be liable directly or indirectly to any Person for any
failure to obtain knowledge of any such violation. In the event that such
written statement of the Company's independent public accountants cannot be
obtained, the Company shall deliver an Officers' Certificate certifying that it
has used its best efforts to obtain such statements and was unable to do so.
The Company shall, so long as any of the Notes are outstanding, deliver to
the Trustee, forthwith upon any Officer becoming aware of any Default or Event
of Default, an Officers' Certificate specifying such Default or Event of Default
and what action the Company is taking or proposes to take with respect thereto.
SECTION 4.5. TAXES.
46
Each of the Company and the Guarantor shall pay, and shall cause each of
its Subsidiaries to pay, prior to delinquency all material taxes, assessments
and governmental levies, except such as are contested in good faith and by
appropriate proceedings and with respect to which appropriate reserves have been
taken in accordance with GAAP.
SECTION 4.6. STAY, EXTENSION AND USURY LAWS.
Each of the Company and the Guarantor covenants (to the extent that it may
lawfully do so) that it shall not at any time insist upon, plead, or in any
manner whatsoever claim or take the benefit or advantage of, any stay, extension
or usury law wherever enacted, now or at any time hereafter in force, that may
affect the covenants or the performance of this Indenture; and each of the
Company and the Guarantor (to the extent that it may lawfully do so) hereby
expressly waives all benefit or advantage of any such law, and covenants that it
shall not, by resort to any such law, hinder, delay or impede the execution of
any power herein granted to the Trustee, but shall suffer and permit the
execution of every such power as though no such law has been enacted.
SECTION 4.7. RESTRICTED PAYMENTS.
From and after the date hereof the Company shall not, and shall not permit
any of its Subsidiaries to, directly or indirectly: (i) declare or pay any
dividend or make any other payment or distribution on account of the Company's
or any of its Restricted Subsidiaries' Equity Interests or to the direct or
indirect holders of the Company's or any of its Restricted Subsidiaries' Equity
Interests in their capacity as such (other than dividends or distributions
payable in Equity Interests (other than Disqualified Stock) of the Company);
(ii) purchase, redeem or otherwise acquire or retire for value any Equity
Interests of the Company or any direct or indirect parent of the Company; (iii)
make any payment on or with respect to, or purchase, redeem, defease or
otherwise acquire or retire for value any Indebtedness that is PARI PASSU with
or subordinated to the Notes (other than the Notes and the 2003 Notes), except a
payment of interest or principal at Stated Maturity; or (iv) make any Restricted
Investment (all such payments and other actions set forth in clauses (i) through
(iv) above being collectively referred to as "RESTRICTED PAYMENTS"), unless, at
the time of and after giving effect to such Restricted Payment:
(a) no Default or Event of Default shall have occurred and be continuing
or would occur as a consequence thereof; and
(b) the Company would, at the time of such Restricted Payment and after
giving pro forma effect thereto as if such Restricted Payment had been made at
the beginning of the applicable four-quarter period, have been permitted to
47
incur at least $1.00 of additional Indebtedness pursuant to the Cash Flow
Coverage Ratio test set forth in the first paragraph of Section 4.09 hereof; and
(c) such Restricted Payment, together with the aggregate amount of all
other Restricted Payments made by the Company and its Subsidiaries after the
date of the Indenture (excluding Restricted Payments permitted by clauses (ii)
and (iii) of the next succeeding paragraph), is less than the sum of (i) 50% of
the Consolidated Net Income of the Company for the period (taken as one
accounting period) from the beginning of the first fiscal quarter commencing
after the date of the Indenture to the end of the Company's most recently ended
fiscal quarter for which internal financial statements are available at the time
of such Restricted Payment (or, if such Consolidated Net Income for such period
is a deficit, less 100% of such deficit), plus (ii) 100% of the aggregate net
cash proceeds received by the Company from the issue or sale since the date of
the Indenture of Equity Interests of the Company or MSC (other than Disqualified
Stock) or of Disqualified Stock or debt securities of the Company or MSC that
have been converted into such Equity Interests (other than Equity Interests (or
Disqualified Stock or convertible debt securities) sold to a Subsidiary of the
Company and other than Disqualified Stock or convertible debt securities that
have been converted into Disqualified Stock), plus (iii) to the extent that any
Restricted Investment that was made after the date of the Indenture is sold for
cash or otherwise liquidated or repaid for cash, the lesser of (A) the cash
return of capital with respect to such Restricted Investment (less the cost of
disposition, if any) and (B) the initial amount of such Restricted Investment
plus (iv) if any Unrestricted Subsidiary (A) is redesignated as a Restricted
Subsidiary, the fair market value of such redesignated Subsidiary (as determined
in good faith by the Board of Directors) as of the date of its redesignation or
(B) pays any cash dividends or cash distributions to the Company or any of its
Restricted Subsidiaries, 50% of any such cash dividends or cash distributions
made after the date of the Indenture.
The foregoing provisions shall not prohibit (i) the payment of any dividend
within 60 days after the date of declaration thereof, if at said date of
declaration such payment would have complied with the provisions of the
Indenture; (ii) the redemption, repurchase, retirement, defeasance or other
acquisition of any PARI PASSU or subordinated Indebtedness or Equity Interests
of the Company or MSC in exchange for, or out of the net cash proceeds of the
substantially concurrent sale or issuance (other than to a Restricted Subsidiary
of the Company) of, other Equity Interests of the Company or MSC (other than any
Disqualified Stock); provided that the amount of any such net cash proceeds that
are utilized for any such redemption, repurchase, retirement, defeasance or
other acquisition shall be excluded from clause (c) (ii) of the preceding
paragraph; (iii) the defeasance, redemption, repurchase or other acquisition of
PARI PASSU or subordinated Indebtedness with the net cash proceeds from an
48
incurrence of Permitted Refinancing Indebtedness; (iv) the payment of any
dividend by a Restricted Subsidiary of the Company to the holders of its Equity
Interests on a pro rata basis; (v) any repurchase of Equity Interests of the
Company or MSC from present and former employees and directors of the Company or
its Subsidiaries or MSC in an aggregate amount not to exceed $5 million; (vi)
Permitted Investments; or (vii) other Restricted Payments in an aggregate amount
not to exceed $5 million.
The Board of Directors may designate any Restricted Subsidiary to be an
Unrestricted Subsidiary if such designation would not cause a Default. For
purposes of making such determination, all outstanding Investments by the
Company and its Restricted Subsidiaries (except to the extent repaid in cash) in
the Subsidiary so designated will be deemed to be Restricted Payments at the
time of such designation and will reduce the amount available for Restricted
Payments under the first paragraph of this covenant. All such outstanding
Investments will be deemed to constitute Investments in an amount equal to the
fair market value of such Investments at the time of such designation (as
determined in good faith by the Board of Directors). Such designation shall
only be permitted if such Restricted Payment would be permitted at such time and
if such Restricted Subsidiary otherwise meets the definition of an Unrestricted
Subsidiary.
The amount of all Restricted Payments (other than cash) shall be the fair
market value on the date of the Restricted Payment of the asset(s) or securities
proposed to be transferred or issued by the Company or such Subsidiary, as the
case may be, pursuant to the Restricted Payment. The fair market value of any
non-cash Restricted Payment shall be determined in good faith by the Board of
Directors whose resolution with respect thereto shall be delivered to the
Trustee, such determination to be based upon an opinion or appraisal issued by
an accounting, appraisal or investment banking firm of national standing if such
fair market value exceeds $10.0 million. Not later than the date of making any
Restricted Payment, the Company shall deliver to the Trustee an Officers'
Certificate stating that such Restricted Payment is permitted and setting forth
the basis upon which the calculations required by this covenant were computed,
together with a copy of any fairness opinion or appraisal required by the
Indenture.
SECTION 4.8. DIVIDENDS AND OTHER PAYMENT RESTRICTIONS AFFECTING RESTRICTED
SUBSIDIARIES.
The Company shall not, and shall not permit any of its Restricted
Subsidiaries to, directly or indirectly, create or otherwise cause or suffer to
exist or become effective any encumbrance or restriction on the ability of any
Restricted Subsidiary to (i)(a) pay dividends or make any other distributions to
the
49
Company or any of its Restricted Subsidiaries (1) on its Capital Stock or (2)
with respect to any other interest or participation in, or measured by, its
profits, or (b) pay any indebtedness owed to the Company or any of its
Restricted Subsidiaries, (ii) make loans or advances to the Company or any of
its Restricted Subsidiaries or (iii) transfer any of its properties or assets to
the Company or any of its Restricted Subsidiaries, except for such encumbrances
or restrictions existing under or by reason of (a) Existing Indebtedness as in
effect on the date of the Indenture, (b) the Credit Facility as in effect as of
the date of the Indenture, and any amendments, modifications, restatements,
renewals, increases, supplements, refundings, replacements or refinancings
thereof, provided that such amendments, modifications, restatements, renewals,
increases, supplements, refundings, replacement or refinancings are no more
restrictive in the aggregate (as determined by the Board of Directors in good
faith) with respect to such dividend and other payment restrictions than those
contained in the Credit Facility as in effect on the date of the Indenture,
(c) the Indenture and the Notes and the 2003 Indenture and the 2003 Notes,
(d) any applicable law, rule, regulation or order, (e) any instrument governing
Indebtedness or Capital Stock of a Person acquired by the Company or any of its
Restricted Subsidiaries as in effect at the time of such acquisition (except to
the extent such Indebtedness was incurred in connection with or in contemplation
of such acquisition), which encumbrance or restriction is not applicable to any
Person, or the properties or assets of any Person, other than the Person, or the
property or assets of the Person, so acquired, provided that, in the case of
Indebtedness, such Indebtedness was permitted by the terms of the Indenture to
be incurred, (f) by reason of customary non-assignment provisions in leases
entered into in the ordinary course of business and consistent with past
practices, (g) Capital Lease Obligations, mortgage financings and purchase money
obligations for property acquired in the ordinary course of business that impose
restrictions of the nature described in clause (iii) above on the property so
acquired, (h) Permitted Refinancing Indebtedness, provided that the material
restrictions contained in the agreements governing such Permitted Refinancing
Indebtedness are no more restrictive than those contained in the agreements
governing the Indebtedness being refinanced, (i) contracts for the sale of
assets, including without limitation customary restrictions with respect to a
Subsidiary pursuant to an agreement that has been entered into for the sale or
disposition of all or substantially all of the Capital Stock or assets of such
Subsidiary, and (j) any other agreement or instrument evidencing or relating to
secured Indebtedness of the Company or any Restricted Subsidiary otherwise
permitted to be issued pursuant to Section 4.09 and Section 4.12 that limit the
right of the debtor to dispose of the property or assets securing such
Indebtedness.
SECTION 4.9. INCURRENCE OF INDEBTEDNESS AND ISSUANCE OF PREFERRED STOCK.
50
The Company shall not, and shall not permit any of its Subsidiaries to,
directly or indirectly, create, incur, issue, assume, guarantee or otherwise
become directly or indirectly liable, contingently or otherwise, with respect to
(collectively, "INCUR") any Indebtedness (including Acquired Debt) and the
Company will not issue any Disqualified Stock and will not permit any of its
Subsidiaries to issue any shares of preferred stock; provided, however, that the
Company may incur Indebtedness (including Acquired Debt) or issue shares of
Disqualified Stock if the Cash Flow Coverage Ratio for the Company's most
recently ended four full fiscal quarters for which internal financial statements
are available immediately preceding the date on which such additional
Indebtedness is incurred or such Disqualified Stock is issued would have been at
least 2.0 to 1, determined on a Pro Forma Basis.
The provisions of the first paragraph of this covenant will not apply to
the incurrence of any of the following items of Indebtedness (collectively,
"PERMITTED INDEBTEDNESS"):
(i) the incurrence by the Company of Indebtedness under the
Credit Facility in an aggregate principal amount not to exceed
$182.0 million outstanding at any time;
(ii) the incurrence by the Company and its Restricted Subsidiaries
of the Existing Indebtedness;
(iii) the incurrence by the Company of Indebtedness represented by
the Notes;
(iv) the incurrence by the Company or any of its Restricted
Subsidiaries of Indebtedness represented by Capital Lease Obligations,
mortgage financings, purchase money obligations and Attributable Debt in an
aggregate principal amount not to exceed $15 million in any one year;
(v) the incurrence by the Company or any of its Restricted
Subsidiaries of Indebtedness in connection with the acquisition of assets
or a new Restricted Subsidiary; provided that such Indebtedness was
incurred by the prior owner of such assets or such Restricted Subsidiary
prior to such acquisition by the Company or one of its Subsidiaries and was
not incurred in connection with, or in contemplation of, such acquisition
by the Company or one of its Subsidiaries; PROVIDED FURTHER that the
principal amount (or accreted value, as applicable) of such Indebtedness,
together with any other outstanding Indebtedness incurred pursuant to this
clause (v), does not exceed $5 million;
51
(vi) the incurrence by the Company or any of its Restricted
Subsidiaries of Permitted Refinancing Indebtedness in exchange for, or the
net proceeds of which are used to refund, refinance or replace,
Indebtedness that was permitted by the Indenture to be incurred;
(vii) the incurrence by the Company or any of its Restricted
Subsidiaries of intercompany Indebtedness between or among the Company and
any of its Wholly Owned Restricted Subsidiaries; provided, however, that
(i) if the Company is the obligor on such Indebtedness, such Indebtedness
is expressly subordinated to the prior payment in full in cash of all
Obligations with respect to the Notes and (ii)(A) any subsequent issuance
or transfer of Equity Interests that results in any such Indebtedness being
held by a Person other than the Company or a Wholly Owned Restricted
Subsidiary and (B) any sale or other transfer of any such Indebtedness to a
Person that is not either the Company or a Wholly Owned Restricted
Subsidiary shall be deemed, in each case, to constitute an incurrence of
such Indebtedness by the Company or such Restricted Subsidiary, as the case
may be;
(viii) the incurrence by the Company or any of its Restricted
Subsidiaries of Hedging Obligations that are incurred for the purpose of
fixing or hedging currency risk or interest rate risk with respect to any
floating rate Indebtedness that is permitted by the terms of this Indenture
to be outstanding;
(ix) the guarantee by the Company or any of its Restricted
Subsidiaries of Indebtedness of a Restricted Subsidiary of the Company that
was permitted to be incurred by another provision of this covenant and the
guarantee by Subsidiaries of Senior Debt of the Company;
(x) the incurrence by the Company's Unrestricted Subsidiaries of
Non-Recourse Debt, provided, however, that if any such Indebtedness ceases
to be Non-Recourse Debt of an Unrestricted Subsidiary, such event shall be
deemed to constitute an incurrence of Indebtedness by a Restricted
Subsidiary of the Company;
(xi) Indebtedness incurred by the Company or any of its Restricted
Subsidiaries constituting reimbursement obligations with respect to letters
of credit issued in the ordinary course of business, including without
limitation letters of credit in respect to workers' compensation claims or
self-insurance, or other Indebtedness with respect to reimbursement type
obligations regarding workers' compensation claims; provided, however, that
upon the drawing of such letters of credit
52
or the incurrence of such Indebtedness, such obligations are reimbursed
within 30 days following such drawing or incurrence;
(xii) obligations in respect of performance and surety bonds and
completion guarantees provided by the Company or any Restricted Subsidiary
in the ordinary course of business; and
(xiii) the incurrence by the Company or any of its Restricted
Subsidiaries of additional Indebtedness, including Attributable Debt
incurred after the date of the Indenture, in an aggregate principal amount
(or accreted value, as applicable) at any time outstanding, including all
Permitted Refinancing Indebtedness incurred to refund, refinance or replace
any other Indebtedness incurred pursuant to this clause (xiii), not to
exceed $5 million.
For purposes of determining compliance with this covenant, in the event
that an item of Indebtedness meets the criteria of more than one of the
categories of Permitted Debt described in clauses (i) through (xiii) above or is
entitled to be incurred pursuant to the first paragraph of this covenant, the
Company shall, in its sole discretion, classify such item of Indebtedness in any
manner that complies with this covenant and such item of Indebtedness will be
treated as having been incurred pursuant to only one of such clauses or pursuant
to the first paragraph hereof. The amount of Indebtedness issued at a price
which is less than the principal amount thereof shall be equal to the amount of
the liability in respect thereof determined in accordance with GAAP. Neither the
accrual of interest nor the issuance of additional Indebtedness in the form of
additional promissory notes or otherwise in lieu of the payment of interest nor
the accretion of accreted value will be deemed to be an incurrence of
Indebtedness for purposes of this covenant.
SECTION 4.10. ASSET SALES.
The Company shall not, and shall not permit any of its Restricted
Subsidiaries to, consummate an Asset Sale unless (i) the Company (or the
Restricted Subsidiary, as the case may be) receives consideration at the time of
such Asset Sale at least equal to the fair market value (evidenced by a
resolution of the Board of Directors set forth in an Officers' Certificate
delivered to the Trustee) of the assets or Equity Interests issued or sold or
otherwise disposed of and (ii) at least 80% of the consideration therefor
received by the Company or such Restricted Subsidiary is in the form of cash;
PROVIDED that the amount of (x) any liabilities (as shown on the Company's or
such Restricted Subsidiary's most recent balance sheet) of the Company or any
Restricted Subsidiary (other than contingent liabilities and liabilities that
are by their terms subordinated to the Notes or any Guarantee thereof) that are
assumed by the transferee of any such assets pursuant to a customary novation
agreement that releases the Company or
53
such Restricted Subsidiary from further liability and (y) any securities, notes
or other obligations received by the Company or any such Restricted Subsidiary
from such transferee that are converted by the Company or such Restricted
Subsidiary into cash within 90 days (to the extent of the cash received), shall
be deemed to be cash for purposes of this provision.
Within 360 days after the receipt of any Net Proceeds from an Asset Sale,
the Company may apply such Net Proceeds, at its option, (a) to permanently repay
Senior Debt (and to correspondingly reduce commitments with respect thereto in
the case of revolving borrowings) or existing 2003 Notes, or (b) to the
acquisition of a controlling interest in another business, the making of a
capital expenditure or the acquisition of other long-term assets, in each case,
in a Permitted Business. Pending the final application of any such Net
Proceeds, the Company may temporarily reduce the revolving Indebtedness under
the Credit Facility or otherwise invest such Net Proceeds in any manner that is
not prohibited by this Indenture. Any Net Proceeds from Asset Sales that are
not applied or invested as provided in the first sentence of this paragraph will
be deemed to constitute "EXCESS PROCEEDS." When the aggregate amount of Excess
Proceeds exceeds $5.0 million, the Company will be required to make an offer to
all Holders of Notes (an "ASSET SALE OFFER") to purchase the maximum principal
amount of Notes that may be purchased out of the Excess Proceeds, at an offer
price in cash in an amount equal to 100% of the principal amount thereof plus
accrued and unpaid interest and Liquidated Damages thereon, if any, to the date
of purchase, in accordance with the procedures set forth in Section 3.09 hereof.
To the extent that the aggregate amount of Notes tendered pursuant to an Asset
Sale Offer is less than the Excess Proceeds, the Company may use any remaining
Excess Proceeds for general corporate purposes. If the aggregate principal
amount of Notes surrendered by Holders thereof exceeds the amount of Excess
Proceeds, the Trustee shall select the Notes to be purchased on a PRO RATA
basis. Upon completion of such offer to purchase, the amount of Excess Proceeds
shall be reset at zero.
SECTION 4.11. TRANSACTIONS WITH AFFILIATES.
The Company shall not, and shall not permit any of its Subsidiaries to,
make any payment to, or sell, lease, transfer or otherwise dispose of any of its
properties or assets to, or purchase any property or assets from, or enter into
or make or amend any transaction, contract, agreement, understanding, loan,
advance or guarantee with, or for the benefit of, any Affiliate (each of the
foregoing, an "AFFILIATE TRANSACTION") unless (i) such Affiliate Transaction is
entered into in good faith and on terms that are no less favorable to the
Company or the relevant Restricted Subsidiary than those that would have been
obtained in a comparable transaction by the Company or such Restricted
Subsidiary with an unrelated Person and (ii) the Company delivers to the Trustee
(a) with respect to any
54
Affiliate Transaction or series of related Affiliate Transactions involving
aggregate consideration in excess of $5 million, a resolution of the Board of
Directors set forth in an Officers' Certificate certifying that such Affiliate
Transaction complies with clause (i) above and that such Affiliate Transaction
has been approved by a majority of the disinterested members of the Board of
Directors and (b) with respect to any Affiliate Transaction or series of related
Affiliate Transactions involving aggregate consideration in excess of $10
million, an opinion as to the fairness to the Holders of such Affiliate
Transaction from a financial point of view issued by an accounting, appraisal or
investment banking firm of national standing; PROVIDED that the following shall
not be deemed Affiliate Transactions: (q) any employment agreement entered into
by the Company or any of its Restricted Subsidiaries in the ordinary course of
business and consistent with the past practice of the Company or such Restricted
Subsidiary, (r) transactions between or among the Company and/or its Restricted
Subsidiaries, (s) Permitted Investments and Restricted Payments that are
permitted by the provisions of Section 4.07 hereof, (t) customary loans,
advances, fees and compensation paid to, and indemnity provided on behalf of,
officers, directors, employees or consultants of the Company or any of its
Restricted Subsidiaries, (u) consulting and other advisory fees paid to MSC not
to exceed $250,000 in any one year, and (v) transactions pursuant to any
contract or agreement in effect on the date hereof as the same may be amended,
modified or replaced from time to time so long as any such amendment,
modification or replacement is no less favorable to the Company and its
Restricted Subsidiaries than the contract or agreement as in effect on the date
hereof or is approved by a majority of the disinterested directors of the
Company.
SECTION 4.12. LIENS.
The Company shall not and shall not permit any of its Subsidiaries to,
directly or indirectly, create, incur, assume or otherwise cause or suffer to
exist any Lien that secures obligations under any PARI PASSU Indebtedness or
subordinated Indebtedness on any asset or property now owned or hereafter
acquired by the Company or any of its Subsidiaries, or any income or profits
therefrom or assign or convey any right to receive income therefrom, unless the
Notes are equally and ratably secured with the obligations so secured until such
time as such obligations are no longer secured by a Lien; PROVIDED, that in any
case involving a Lien securing subordinated Indebtedness, such Lien is
subordinated to the Lien securing the Notes to the same extent that such
subordinated Indebtedness is subordinated to the Notes.
SECTION 4.13. SALE AND LEASEBACK TRANSACTIONS.
The Company shall not, and shall not permit any of its Restricted
Subsidiaries to, enter into any sale and leaseback transaction; PROVIDED that
the
55
Company may enter into a sale and leaseback transaction if (i) the Company could
have (a) incurred Indebtedness in an amount equal to the Attributable Debt
relating to such sale and leaseback transaction pursuant to Section 4.09 hereof
and (b) incurred a Lien to secure such Indebtedness pursuant to Section 4.12
hereof, (ii) the gross cash proceeds of such sale and leaseback transaction are
at least equal to the fair market value (as determined in good faith by the
Board of Directors and set forth in an Officers' Certificate delivered to the
Trustee) of the property that is the subject of such sale and leaseback
transaction and (iii) the transfer of assets in such sale and leaseback
transaction is permitted by, and the Company applies the proceeds of such
transaction in compliance with, Section 4.10 hereof.
SECTION 4.14. OFFER TO PURCHASE UPON CHANGE OF CONTROL.
Upon the occurrence of a Change of Control, each Holder of Notes will have
the right to require the Company to repurchase all or any part (equal to $1,000
or an integral multiple thereof) of such Holder's Notes pursuant to the offer
described below (the "CHANGE OF CONTROL OFFER") at an offer price in cash equal
to 101% of the aggregate principal amount thereof plus accrued and unpaid
interest and Liquidated Damages thereon, if any, to the date of purchase (the
"CHANGE OF CONTROL PAYMENT"). Within 30 days following any Change of Control,
the Company will mail a notice to each Holder describing the transaction or
transactions that constitute the Change of Control and offering to repurchase
Notes on the date specified in such notice, which date shall be no earlier than
30 days and no later than 60 days from the date such notice is mailed (the
"CHANGE OF CONTROL PAYMENT DATE"), pursuant to the procedures required by
Section 3.09 hereof and described in such notice. The Company shall comply with
the requirements of Rule 14e-1 under the Exchange Act and any other securities
laws and regulations thereunder to the extent such laws and regulations are
applicable in connection with the repurchase of the Notes as a result of a
Change of Control.
On the Change of Control Payment Date, the Company shall, to the extent
lawful, (1) accept for payment all Notes or portions thereof properly tendered
pursuant to the Change of Control Offer, (2) deposit with the Paying Agent an
amount equal to the Change of Control Payment in respect of all Notes or
portions thereof so tendered and (3) deliver or cause to be delivered to the
Trustee the Notes so accepted together with an Officers' Certificate stating the
aggregate principal amount of Notes or portions thereof being purchased by the
Company. The Paying Agent will promptly mail to each Holder of Notes so
tendered the Change of Control Payment for such Notes, and the Trustee will
promptly authenticate and mail (or cause to be transferred by book entry) to
each Holder a new Note equal in principal amount to any unpurchased portion of
the Notes surrendered, if any; PROVIDED that each such new Note will be in a
principal
56
amount of $1,000 or an integral multiple thereof. Prior to complying with the
provisions of this Section 4.14, but in any event within 30 days following a
Change of Control, the Company shall either repay all outstanding Indebtedness
under the Credit Facility and terminate the commitments thereunder or obtain the
requisite consents under the Credit Facility to permit the repurchase of Notes
required by this Section 4.14. The Company shall publicly announce the results
of the Change of Control Offer on or as soon as practicable after the Change of
Control Payment Date.
The Change of Control provisions described above will be applicable whether
or not any other provisions of this Indenture are applicable. Except as
described above with respect to a Change of Control, this Indenture does not
contain provisions that permit the Holders of the Notes to require that the
Company repurchase or redeem the Notes in the event of a takeover,
recapitalization or similar transaction.
SECTION 4.15. CORPORATE EXISTENCE.
Subject to Section 4.14 and Article 5 hereof, as the case may be, each of
the Company and the Guarantor shall do or cause to be done all things necessary
to preserve and keep in full force and effect its corporate existence and the
corporate, partnership or other existence of each of its Subsidiaries in
accordance with the respective organizational documents (as the same may be
amended from time to time) of the Guarantor, the Company or any such Subsidiary
and the rights (charter and statutory), licenses and franchises of the
Guarantor, the Company and its Subsidiaries; PROVIDED that neither the Guarantor
nor the Company shall be required to preserve any such right, license or
franchise, or the corporate, partnership or other existence of the Guarantor or
any Subsidiaries, if the Board of Directors of the Company or the Guarantor
shall determine that the preservation thereof is no longer desirable in the
conduct of the business of the Guarantor, the Company and its Subsidiaries,
taken as a whole, and that the loss thereof is not adverse in any material
respect to the Holders of the Notes.
SECTION 4.16. LIMITATION ON ISSUANCES OF CAPITAL STOCK OF WHOLLY OWNED
RESTRICTED SUBSIDIARIES.
The Company (i) shall not, and shall not permit any Wholly Owned Restricted
Subsidiary of the Company to, transfer, convey, sell, lease or otherwise dispose
of any Capital Stock of any Wholly Owned Subsidiary of the Company to any Person
(other than the Company or a Wholly Owned Restricted Subsidiary of the Company),
unless (a) such transfer, conveyance, sale, lease or other disposition is of all
the Capital Stock of such Wholly Owned Restricted Subsidiary and (b) the cash
Net Proceeds from such transfer, conveyance, sale, lease or other disposition
are applied in accordance with Section 4.10 hereof, and (ii) will not permit any
Wholly Owned Restricted Subsidiary of the Company to
57
issue any of its Equity Interests (other than, if necessary, shares of its
Capital Stock constituting directors' qualifying shares) to any Person other
than to the Company or a Wholly Owned Restricted Subsidiary of the Company
except that a Wholly Owned Restricted Subsidiary of the Company may issue shares
of common stock with no preferences or special rights or privileges and with no
redemption or prepayment provisions provided the cash Net Proceeds from such
issuance of such common stock are applied in accordance with Section 4.10
hereof.
SECTION 4.17. LIMITATIONS ON ISSUANCES OF GUARANTEES OF INDEBTEDNESS.
The Company shall not permit any Restricted Subsidiary, directly or
indirectly, to Guarantee any Indebtedness of the Company which is PARI PASSU
with or subordinate in right of payment to the Notes ("GUARANTEED
INDEBTEDNESS"), unless (i) such Restricted Subsidiary simultaneously executes
and delivers a supplemental indenture to the Indenture providing for a Guarantee
(a "SUBSIDIARY GUARANTEE") of payment of the Notes by such Restricted
Subsidiary and (ii) such Restricted Subsidiary waives and will not in any manner
whatsoever claim or take the benefit or advantage of, any rights of
reimbursement, indemnity or subrogation or any other rights against the Company
or any other Restricted Subsidiary as a result of any payment by such Restricted
Subsidiary under its Subsidiary Guarantee; provided that this paragraph shall
not be applicable to any Guarantee of any Restricted Subsidiary that existed at
the time such Person became a Restricted Subsidiary and was not incurred in
connection with, or in contemplation of, such Person becoming a Restricted
Subsidiary. If the Guaranteed Indebtedness is (A) PARI PASSU with the Notes,
then the Guarantee of such Guaranteed Indebtedness shall be PARI PASSU with, or
subordinated to, the Subsidiary Guarantee or (B) subordinated to the Notes, then
the Guarantee of such Guaranteed Indebtedness shall be subordinated to the
Subsidiary Guarantee at least to the extent that the Guaranteed Indebtedness is
subordinated to the Notes.
Notwithstanding the foregoing, any such Subsidiary Guarantee by a
Restricted Subsidiary may provide by its terms that it shall be automatically
and unconditionally released and discharged upon (i) any sale, exchange or
transfer, to any Person not an Affiliate of the Company, of all of the Company's
and each Restricted Subsidiary's Capital Stock in, or all or substantially all
the assets of, such Restricted Subsidiary (which sale, exchange or transfer is
not prohibited by the Indenture) or (ii) the release or discharge of the
Guarantee which resulted in the creation of such Subsidiary Guarantee, except a
discharge or release by or as a result of payment under such Guarantee.
SECTION 4.18. BUSINESS ACTIVITIES.
The Company shall not, and shall not permit any Restricted Subsidiary to,
engage in any business other than Permitted Businesses, except to such extent as
58
would not be material to the Company and its Restricted Subsidiaries taken as a
whole.
SECTION 4.19. PAYMENT FOR CONSENTS.
Neither the Company nor any of its Subsidiaries shall, directly or
indirectly, pay or cause to be paid any consideration, whether by way of
interest, fee or otherwise, to any Holder of any Notes for or as an inducement
to any consent, waiver or amendment of any of the terms or provisions hereof or
the Notes unless such consideration is offered to be paid or is paid to all
Holders of the Notes that consent, waive or agree to amend in the time frame set
forth in the solicitation documents relating to such consent, waiver or
agreement.
SECTION 4.20. ANTI-LAYERING.
The Company shall not, and the Company will not permit any of its
Subsidiaries to, incur, create, issue, assume, guarantee or otherwise become
liable for any Indebtedness that is both (a) subordinate or junior in right of
payment to any Senior Debt and (b) senior in any respect in right of payment to
the Notes; and the Guarantor shall not incur, create, issue, assume, guarantee
or otherwise become liable for any Indebtedness that is both (a) subordinate or
junior in right of payment to its Guarantor Senior Debt and (b) senior in right
of payment to its Note Guarantee.
SECTION 4.21. RESTRICTIVE COVENANT OF MSC.
MSC shall not engage in any activities other than holding 100% of the
Capital Stock of the Company and providing services to and management of the
Company and it will not incur any liabilities other than any liabilities
relating to the Guarantee of the Company's obligations pursuant to the Credit
Facility, the Guarantee of the Notes, the Guarantee of the 2003 Notes, the
Guarantee of any Indebtedness permitted by Section 4.09 and any other
obligations or liabilities incidental to holding 100% of the Capital Stock of
the Company.
ARTICLE 5
SUCCESSORS
SECTION 5.1. MERGER, CONSOLIDATION OR SALE OF ASSETS.
The Company shall not consolidate or merge with or into (whether or not the
Company is the surviving corporation), or sell, assign, transfer, lease, convey
or otherwise dispose of all or substantially all of its properties or assets in
one or
59
more related transactions, to another corporation, Person or entity unless (i)
the Company is the surviving corporation or the entity or the Person formed by
or surviving any such consolidation or merger (if other than the Company) or to
which such sale, assignment, transfer, lease, conveyance or other disposition
shall have been made is a corporation organized or existing under the laws of
the United States, any state thereof or the District of Columbia; (ii) the
entity or Person formed by or surviving any such consolidation or merger (if
other than the Company) or the entity or Person to which such sale, assignment,
transfer, lease, conveyance or other disposition shall have been made assumes
all the obligations of the Company under the Notes and this Indenture pursuant
to a supplemental indenture in a form reasonably satisfactory to the Trustee;
(iii) immediately after such transaction no Default or Event of Default exists;
(iv) except in the case of a merger of the Company with or into MSC or a Wholly
Owned Restricted Subsidiary of the Company, the Company or the entity or Person
formed by or surviving any such consolidation or merger (if other than the
Company), or to which such sale, assignment, transfer, lease, conveyance or
other disposition shall have been made will, at the time of such transaction and
determined on a Pro Forma Basis, be permitted to incur at least $1.00 of
additional Indebtedness pursuant to the Cash Flow Coverage Ratio test set forth
in the first paragraph of Section 4.09 hereof.
SECTION 5.2. SUCCESSOR CORPORATION SUBSTITUTED.
Upon any consolidation or merger, or any sale, assignment, transfer, lease,
conveyance or other disposition of all or substantially all of the assets, of
the Company in accordance with Section 5.01 hereof, the successor entity or
Person formed by such consolidation or into or with which the Company is merged
or to which such sale, assignment, transfer, lease, conveyance or other
disposition is made shall succeed to, and be substituted for (so that from and
after the date of such consolidation, merger, sale, assignment, transfer, lease,
conveyance or other disposition, the provisions of this Indenture referring to
the "COMPANY" shall refer instead to the successor entity or Person and not to
the Company), and shall exercise every right and power of, the Company under
this Indenture with the same effect as if such successor entity or Person had
been named as the Company herein; PROVIDED, that, (i) solely for the purposes of
computing Consolidated Net Income for purposes of clause (c) of the first
paragraph of Section 4.07 hereof, the Consolidated Net Income of any person
other than the Company and its Subsidiaries shall be included only for periods
subsequent to the effective time of such merger, consolidation, sale,
assignment, transfer, lease, conveyance or other disposition; and (ii) in the
case of any sale, assignment, transfer, lease, conveyance or other disposition
of less than all of the assets of the predecessor Company, the predecessor
Company shall not be released or discharged from the obligation to pay the
principal of or interest and Liquidated Damages, if any, on the Notes.
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ARTICLE 6
DEFAULTS AND REMEDIES
SECTION 6.1. EVENTS OF DEFAULT.
Each of the following constitutes an "EVENT OF DEFAULT":
(i) default for 30 days in the payment when due of interest on,
or Liquidated Damages with respect to, the Notes (whether or not prohibited
by the Subordination provisions of the Indenture);
(ii) default in payment when due of principal of or premium, if
any, on the Notes (whether or not prohibited by the Subordination
provisions of the Indenture);
(iii) failure by the Company to comply with the provisions
described under Sections 4.10 or 4.14 or Article 5 hereof;
(iv) failure by the Company for 30 days after notice from the
Trustee or the Holders of at least 25% in principal amount of the Notes
then outstanding to comply with the provisions described under Section 4.07
or 4.09 hereof;
(v) failure by the Company for 60 days after notice from the
Trustee or the Holders of at least 25% in principal amount of the Notes
then outstanding to comply with any of its other agreements in this
Indenture or the Notes;
(vi) default under any mortgage, indenture or instrument under
which there may be issued or by which there may be secured or evidenced any
Indebtedness for money borrowed by the Company or any of its Restricted
Subsidiaries (or the payment of which is guaranteed by the Company or any
of its Restricted Subsidiaries) whether such Indebtedness or Guarantee now
exists, or is created after the date hereof, which default (a) is caused by
a failure to pay principal of or premium, if any, or interest on such
Indebtedness prior to the expiration of the grace period provided in such
Indebtedness on the date of such default (a "PAYMENT DEFAULT") or
(b) results in the acceleration of such Indebtedness prior to its express
maturity and, in each case, the principal amount of any such Indebtedness,
together with the principal amount of any other such Indebtedness under
which there has been a Payment Default or the maturity of which has been so
accelerated, aggregates $15.0 million or more;
61
(vii) failure by the Company or any of its Restricted Subsidiaries
to pay final judgments aggregating in excess of $15.0 million, which
judgments are not paid, discharged or stayed for a period of 60 days;
(viii) the Company or any of its Significant Subsidiaries or any
group of Subsidiaries that, taken as a whole, would constitute a
Significant Subsidiary, pursuant to or within the meaning of Bankruptcy
Law:
(A) commences a voluntary case,
(B) consents to the entry of an order for relief against it
in an involuntary case,
(C) consents to the appointment of a Custodian of it or for
all or substantially all of its property,
(D) makes a general assignment for the benefit of its
creditors, or
(E) generally is not paying its debts as they become
due; or
(ix) a court of competent jurisdiction enters an order or decree
under any Bankruptcy Law that:
(A) is for relief against the Company or any of its
Significant Subsidiaries or any group of Subsidiaries that, taken as a
whole, would constitute a Significant Subsidiary in an involuntary
case;
(B) appoints a Custodian of the Company or any of its
Significant Subsidiaries or any group of Subsidiaries that, taken as a
whole, would constitute a Significant Subsidiary or for all or
substantially all of the property of the Company or any of its
Significant Subsidiaries or any group of Subsidiaries that, taken as a
whole, would constitute a Significant Subsidiary; or
(C) orders the liquidation of the Company or any of its
Significant Subsidiaries or any group of Subsidiaries that, taken as a
whole, would constitute a Significant Subsidiary;
and the order or decree remains unstayed and in effect for 60
consecutive days.
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The term "CUSTODIAN" means any receiver, trustee, assignee, liquidator or
similar official under any Bankruptcy Law.
SECTION 6.2. ACCELERATION.
If any Event of Default occurs and is continuing, the Trustee or the
Holders of at least 25% in principal amount of the then outstanding Notes may
declare all the Notes to be due and payable immediately; PROVIDED, HOWEVER, that
if any Indebtedness or Obligation is outstanding pursuant to the Credit
Facility, upon a declaration of acceleration by the Holders of the Notes or the
Trustee, all principal and interest under this Indenture shall be due and
payable upon the earlier of (x) the day which is five Business Days after the
provision to the Company, the Credit Agent and the Trustee of such written
notice of acceleration or (y) the date of acceleration of any Indebtedness under
the Credit Facility; and PROVIDED, FURTHER, that in the event of an acceleration
based upon an Event of Default set forth in clause (vi) of Section 6.01 hereof,
such declaration of acceleration shall be automatically annulled if the holders
of Indebtedness which is the subject of such acceleration have rescinded their
declaration of acceleration in respect of such Indebtedness or such Payment
Default shall have been cured or waived within 30 days thereof and no other
Event of Default has occurred during such 30-day period which has not been
cured, paid or waived. Notwithstanding the foregoing, in the case of an Event
of Default as described in clause (viii) or (ix) of Section 6.01 hereof, all
outstanding Notes will become due and payable without further action or notice.
Holders of the Notes may not enforce this Indenture or the Notes except as
provided in this Indenture.
In the case of any Event of Default occurring by reason of any willful
action (or inaction) taken (or not taken) by or on behalf of the Company with
the intention of avoiding payment of the premium that the Company would have had
to pay if the Company then had elected to redeem the Notes pursuant to the
optional redemption provisions of Section 3.07(a) hereof, an equivalent premium
shall also become and be immediately due and payable to the extent permitted by
law upon the acceleration of the Notes. If an Event of Default occurs prior to
March 15, 2003 by reason of any willful action (or inaction) taken (or not
taken) by or on behalf of the Company with the intention of avoiding the
prohibition on redemption of the Notes prior to March 15, 2003, then, to the
extent permitted by law, the amount payable in respect of such Notes for
purposes of this paragraph for each of the twelve-month periods beginning on
March 15 of the years indicated below shall be set forth below, expressed as
percentages of the principal amount that would otherwise be due but for the
provisions of this sentence, plus accrued and unpaid interest and Liquidated
Damages, if any, to the date of payment:
YEAR PERCENTAGE
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1998 109.875%
1999 108.888%
2000 107.900%
2001 106.913%
2002 105.925%
SECTION 6.3. OTHER REMEDIES.
If an Event of Default occurs and is continuing, the Trustee may pursue any
available remedy to collect the payment of principal, premium, if any, interest
and Liquidated Damages, if any, on the Notes or to enforce the performance of
any provision of the Notes or this Indenture.
The Trustee may maintain a proceeding even if it does not possess any of
the Notes or does not produce any of them in the proceeding. A delay or
omission by the Trustee or any Holder of a Note in exercising any right or
remedy accruing upon an Event of Default shall not impair the right or remedy or
constitute a waiver of or acquiescence in the Event of Default. All remedies
are cumulative to the extent permitted by law.
The Company is required to deliver to the Trustee annually a statement
regarding compliance with the Indenture, and the Company is required upon
becoming aware of any Default or Event of Default, to deliver to the Trustee a
statement specifying such Default or Event of Default.
SECTION 6.4. WAIVER OF PAST DEFAULTS.
The Holders of a majority in aggregate principal amount of the Notes then
outstanding by notice to the Trustee may on behalf of the Holders of all of the
Notes waive any existing Default or Event of Default and its consequences under
this Indenture (including any acceleration (other than an automatic acceleration
resulting from an Event of Default under clause (viii) or (ix) of Section 6.01
hereof) except a continuing Default or Event of Default in the payment of
interest on, or the principal of, the Notes (other than as a result of an
acceleration), which shall require the consent of all of the Holders of the
Notes then outstanding.
SECTION 6.5. CONTROL BY MAJORITY.
The Holders of a majority in principal amount of the then outstanding Notes
may direct the time, method and place of conducting any proceeding for
exercising any remedy available to the Trustee or exercising any trust power
conferred on it. However, (i) the Trustee may refuse to follow any direction
that conflicts with law or this Indenture, that the Trustee determines may be
unduly
64
prejudicial to the rights of other Holders of Notes or that may involve the
Trustee in personal liability, and (ii) the Trustee may take any other action
deemed proper by the Trustee which is not inconsistent with such direction. In
case an Event of Default shall occur (which shall not be cured), the Trustee
will be required, in the exercise of its power, to use the degree of care of a
prudent man in the conduct of his own affairs. Notwithstanding any provision to
the contrary in this Indenture, the Trustee is under no obligation to exercise
any of its rights or powers under this Indenture at the request of any Holder of
Notes, unless such Holder shall offer to the Trustee security and indemnity
satisfactory to it against any loss, liability or expense.
SECTION 6.6. LIMITATION ON SUITS.
A Holder of a Note may pursue a remedy with respect to this Indenture, the
Note Guarantee or the Notes only if:
(a) the Holder of a Note gives to the Trustee written notice of a
continuing Event of Default or the Trustee receives such notice from the
Company;
(b) the Holders of at least 25% in principal amount of the then
outstanding Notes make a written request to the Trustee to pursue the remedy;
(c) such Holder of a Note or Holders of Notes offer and, if requested,
provide to the Trustee indemnity satisfactory to the Trustee against any loss,
liability or expense;
(d) the Trustee does not comply with the request within 60 days after
receipt of the request and the offer and, if requested, the provision of
indemnity; and
(e) during such 60-day period the Holders of a majority in principal
amount of the then outstanding Notes do not give the Trustee a direction
inconsistent with the request.
A Holder of a Note may not use this Indenture to prejudice the rights of
another Holder of a Note or to obtain a preference or priority over another
Holder of a Note.
SECTION 6.7. RIGHTS OF HOLDERS OF NOTES TO RECEIVE PAYMENT.
Notwithstanding any other provision of this Indenture, the right of any
Holder of a Note to receive payment of principal, premium, if any, interest, and
Liquidated Damages, if any, on the Note, on or after the respective due dates
expressed in the Note (including in connection with an offer to purchase), or to
65
bring suit for the enforcement of any such payment on or after such respective
dates, shall not be impaired or affected without the consent of such Holder.
SECTION 6.8. COLLECTION SUIT BY TRUSTEE.
If an Event of Default specified in Section 6.01(i) or (ii) hereof occurs
and is continuing, the Trustee is authorized to recover judgment in its own name
and as trustee of an express trust against the Company for the whole amount of
principal of, premium and Liquidated Damages, if any, and interest remaining
unpaid on the Notes and interest on overdue principal and, to the extent lawful,
interest and such further amount as shall be sufficient to cover the costs and
expenses of collection, including the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel.
SECTION 6.9. TRUSTEE MAY FILE PROOFS OF CLAIM.
The Trustee is authorized to file such proofs of claim and other papers or
documents as may be necessary or advisable in order to have the claims of the
Trustee (including any claim for the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel) and the
Holders of the Notes allowed in any judicial proceedings relative to the Company
(or any other obligor upon the Notes), its creditors or its property and shall
be entitled and empowered to collect, receive and distribute any money or other
securities or property payable or deliverable upon the conversion or exchange of
the Notes or on any such claims and any Custodian in any such judicial
proceeding is hereby authorized by each Holder to make such payments to the
Trustee, and in the event that the Trustee shall consent to the making of such
payments directly to the Holders, to pay to the Trustee any amount due to it for
the reasonable compensation, expenses, disbursements and advances of the
Trustee, its agents and counsel, and any other amounts due the Trustee under
Section 7.07 hereof. To the extent that the payment of any such compensation,
expenses, disbursements and advances of the Trustee, its agents and counsel, and
any other amounts due the Trustee under Section 7.07 hereof out of the estate in
any such proceeding, shall be denied for any reason, payment of the same shall
be secured by a Lien on, and shall be paid out of, any and all distributions,
dividends, money, securities and other properties that the Holders may be
entitled to receive in such proceeding whether in liquidation or under any plan
of reorganization or arrangement or otherwise. Nothing herein contained shall
be deemed to authorize the Trustee to authorize or consent to or accept or adopt
on behalf of any Holder any plan of reorganization, arrangement, adjustment or
composition affecting the Notes or the rights of any Holder, or to authorize the
Trustee to vote in respect of the claim of any Holder in any such proceeding.
SECTION 6.10. PRIORITIES.
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If the Trustee collects any money pursuant to this Article 6, it shall pay
out the money in the following order:
FIRST: to the Trustee, its agents and attorneys for amounts due under
Section 7.07 hereof, including payment of all compensation, expense and
liabilities incurred, and all advances made, by the Trustee and the costs and
expenses of collection;
SECOND: to Holders of Notes for amounts due and unpaid on the Notes for
principal, premium, if any, interest, and Liquidated Damages, if any, ratably,
without preference or priority of any kind, according to the amounts due and
payable on the Notes for principal, premium, if any, interest, and Liquidated
Damages, if any, respectively;
THIRD: without duplication, to the Holders for any other Obligations owing
to the Holders under this Indenture and the Notes; and
FOURTH: to the Company or to such party as a court of competent
jurisdiction shall direct.
The Trustee may fix a record date and payment date for any payment to
Holders of Notes pursuant to this Section 6.10.
SECTION 6.11. UNDERTAKING FOR COSTS.
In any suit for the enforcement of any right or remedy under this Indenture
or in any suit against the Trustee for any action taken or omitted by it as a
Trustee, a court in its discretion may require the filing by any party litigant
in the suit of an undertaking to pay the costs of the suit, and the court in its
discretion may assess reasonable costs, including reasonable attorneys' fees,
against any party litigant in the suit, having due regard to the merits and good
faith of the claims or defenses made by the party litigant. This Section 6.11
does not apply to a suit by the Trustee, a suit by a Holder of a Note pursuant
to Section 6.07 hereof, or a suit by Holders of more than 10% in principal
amount of the then outstanding Notes.
ARTICLE 7
TRUSTEE
SECTION 7.1. DUTIES OF TRUSTEE.
(a) If an Event of Default has occurred and is continuing of which a
Responsible Officer of the Trustee has knowledge, the Trustee shall exercise
such of the rights and powers vested in it by this Indenture and use the same
degree of
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care and skill in its exercise, as a prudent man would exercise or use under the
circumstances in the conduct of his own affairs.
(b) Except during the continuance of an Event of Default:
(i) the duties of the Trustee shall be determined solely by the
express provisions of this Indenture or the TIA and the Trustee need
perform only those duties that are specifically set forth in this Indenture
or the TIA and no others, and no implied covenants or obligations shall be
read into this Indenture against the Trustee; and
(ii) in the absence of bad faith on its part, the Trustee may
conclusively rely, as to the truth of the statements and the correctness of
the opinions expressed therein, upon certificates or opinions furnished to
the Trustee and conforming to the requirements of this Indenture. However,
the Trustee shall examine the certificates and opinions to determine
whether or not they conform to the requirements of this Indenture.
(c) The Trustee may not be relieved from liabilities for its own negligent
action, its own negligent failure to act, or its own willful misconduct, except
that:
(i) this paragraph does not limit the effect of paragraph (b) of
this Section 7.01;
(ii) the Trustee shall not be liable for any error of judgment
made in good faith by a Responsible Officer, unless it is proved that the
Trustee was negligent in ascertaining the pertinent facts; and
(iii) the Trustee shall not be liable with respect to any action it
takes or omits to take in good faith in accordance with a direction
received by it pursuant to Section 6.05 hereof.
(d) Whether or not therein expressly so provided, every provision of this
Indenture that in any way relates to the Trustee is subject to paragraphs (a),
(b) and (c) of this Section 7.01.
(e) No provision of this Indenture shall require the Trustee to expend or
risk its own funds or incur any liability. The Trustee shall be under no
obligation to exercise any of its rights and powers under this Indenture at the
request of any Holders, unless such Holder shall have offered to the Trustee
security and indemnity satisfactory to it against any loss, liability or
expense.
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(f) The Trustee shall not be liable for interest on any money received by
it except as the Trustee may agree in writing with the Company. Money held in
trust by the Trustee need not be segregated from other funds except to the
extent required by law.
SECTION 7.2. RIGHTS OF TRUSTEE.
(a) The Trustee may conclusively rely on the truth of the statements and
correctness of the opinions contained in, and shall be protected from acting or
refraining from acting upon, any document believed by it to be genuine and to
have been signed or presented by the proper Person. The Trustee need not
investigate any fact or matter stated in the document.
(b) Before the Trustee acts or refrains from acting, it may require an
Officers' Certificate or an Opinion of Counsel or both. The Trustee shall not
be liable for any action it takes or omits to take in good faith in reliance on
such Officers' Certificate or Opinion of Counsel. Prior to taking, suffering or
admitting any action, the Trustee may consult with counsel of the Trustee's own
choosing and the written advice of such counsel or any Opinion of Counsel shall
be full and complete authorization and protection from liability in respect of
any action taken, suffered or omitted by it hereunder in good faith and in
reliance thereon.
(c) The Trustee may act through its attorneys and agents and shall not be
responsible for the misconduct or negligence of any agent appointed with due
care.
(d) The Trustee shall not be liable for any action it takes or omits to
take in good faith that it believes to be authorized or within the rights or
powers conferred upon it by this Indenture.
(e) Unless otherwise specifically provided in this Indenture, any demand,
request, direction or notice from the Company or the Guarantor shall be
sufficient if signed by an Officer of the Company or the Guarantor, as
applicable.
(f) The Trustee shall be under no obligation to exercise any of the rights
or powers vested in it by this Indenture at the request or direction of any of
the Holders unless such Holders shall have offered to the Trustee reasonable
security or indemnity satisfactory to the Trustee against the costs, expenses
and liabilities that might be incurred by it in compliance with such request or
direction.
SECTION 7.3. INDIVIDUAL RIGHTS OF TRUSTEE.
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The Trustee in its individual or any other capacity may become the owner of
Notes and may otherwise deal with the Company, the Guarantor or any Affiliate of
the Company or the Guarantor with the same rights it would have if it were not
Trustee. However, in the event that the Trustee acquires any conflicting
interest it must eliminate such conflict within 90 days, apply to the Commission
for permission to continue as Trustee or resign. Any Agent may do the same with
like rights and duties. The Trustee is also subject to Sections 7.10 and 7.11
hereof.
SECTION 7.4. TRUSTEE'S DISCLAIMER.
The Trustee shall not be responsible for and makes no representation as to
the validity or adequacy of this Indenture, the Note Guarantee or the Notes, it
shall not be accountable for the Company's use of the proceeds from the Notes or
any money paid to the Company or upon the Company's direction under any
provision of this Indenture, it shall not be responsible for the use or
application of any money received by any Paying Agent other than the Trustee,
and it shall not be responsible for any statement or recital herein or any
statement in the Notes or any other document in connection with the sale of the
Notes or pursuant to this Indenture other than its certificate of
authentication.
SECTION 7.5. NOTICE OF DEFAULTS.
If a Default or Event of Default occurs and is continuing and if it is
known to a Responsible Officer of the Trustee, the Trustee shall mail to Holders
of Notes a notice of the Default or Event of Default within 90 days after it
occurs. Except in the case of a Default or Event of Default in payment on any
Note pursuant to Section 6.01(i) or (ii) hereof, the Trustee may withhold the
notice if and so long as a committee of its Responsible Officers in good faith
determines that withholding the notice is in the interests of the Holders of the
Notes.
SECTION 7.6. REPORTS BY TRUSTEE TO HOLDERS OF THE NOTES.
Within 60 days after each May 15 beginning with the May 15 following the
date of this Indenture, and for so long as Notes remain outstanding, the Trustee
shall mail to the Holders of the Notes a brief report dated as of such reporting
date that complies with TIA Section 313(a) (but if no event described in TIA
Section 313(a) has occurred within the twelve months preceding the reporting
date, no report need be transmitted). The Trustee also shall comply with TIA
Section 313(b). The Trustee shall also transmit by mail all reports as
required by TIA Section 313(c).
A copy of each report at the time of its mailing to the Holders of Notes
shall be mailed to the Company and filed with the Commission and each stock
exchange on which the Company has informed the Trustee in writing the Notes are
listed in accordance with TIA Section 313(d). The Company shall promptly
notify
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the Trustee when the Notes are listed on any stock exchange and of any delisting
thereof.
SECTION 7.7. COMPENSATION AND INDEMNITY.
The Company and the Guarantor shall pay to the Trustee from time to time
reasonable compensation for its acceptance of this Indenture and services
hereunder. To the extent permitted by law, the Trustee's compensation shall not
be limited by any law on compensation of a trustee of an express trust. The
Company shall reimburse the Trustee promptly upon request for all reasonable
disbursements, advances and expenses incurred or made by it in addition to the
compensation for its services. Such expenses shall include the reasonable
compensation, disbursements and expenses of the Trustee's agents and counsel.
The Company and the Guarantor shall indemnify the Trustee against any and
all losses, liabilities or expenses incurred by it arising out of or in
connection with the acceptance or administration of its duties under this
Indenture, including the costs and expenses of enforcing this Indenture against
the Company and the Guarantor (including this Section 7.07) and defending itself
against any claim (whether asserted by the Company, the Guarantor or any Holder
or any other person) or liability in connection with the exercise or performance
of any of its powers or duties hereunder except to the extent any such loss,
liability or expense may be attributable to its negligence or bad faith. The
Trustee shall notify the Company and the Guarantor promptly of any claim for
which it may seek indemnity. Failure by the Trustee to so notify the Company
and the Guarantor shall not relieve the Company and the Guarantor of its
obligations hereunder. The Company and the Guarantor shall defend the claim and
the Trustee shall cooperate in the defense. The Trustee may have separate
counsel and the Company and the Guarantor shall pay the reasonable fees and
expenses of such counsel. The Company and the Guarantor need not pay for any
settlement made without its consent, which consent shall not be unreasonably
withheld.
The obligations of the Company and the Guarantor under this Section 7.07
shall survive the satisfaction and discharge of this Indenture.
To secure the Company's and the Guarantor' payment obligations in this
Section 7.07, the Trustee shall have a Lien prior to the Notes on all money or
property held or collected by the Trustee, except that held in trust to pay
principal, interest and Liquidated Damages, if any, on particular Notes. Such
Lien shall survive the satisfaction and discharge of this Indenture and the
resignation or removal of the Trustee.
When the Trustee incurs expenses or renders services after an Event of
Default specified in Section 6.01(viii) or (ix) hereof occurs, the expenses and
the compensation for the services (including the fees and expenses of its agents
and
71
counsel) are intended to constitute expenses of administration under any
Bankruptcy Law.
The Trustee shall comply with the provisions of TIA Section 313(b)(2) to
the extent applicable.
SECTION 7.8. REPLACEMENT OF TRUSTEE.
A resignation or removal of the Trustee and appointment of a successor
Trustee shall become effective only upon the successor Trustee's acceptance of
appointment as provided in this Section 7.08.
The Trustee may resign in writing at any time and be discharged from the
trust hereby created by so notifying the Company. The Holders of a majority in
principal amount of the then outstanding Notes may remove the Trustee by so
notifying the Trustee and the Company in writing. The Company may remove the
Trustee if:
(a) the Trustee fails to comply with Section 7.10 hereof;
(b) the Trustee is adjudged a bankrupt or an insolvent or an order for
relief is entered with respect to the Trustee under any Bankruptcy Law;
(c) a Custodian or public officer takes charge of the Trustee or its
property; or
(d) the Trustee becomes incapable of acting.
If the Trustee resigns or is removed or if a vacancy exists in the office
of Trustee for any reason, the Company shall promptly appoint a successor
Trustee. Within one year after the successor Trustee takes office, the Holders
of a majority in principal amount of the then outstanding Notes may appoint a
successor Trustee to replace the successor Trustee appointed by the Company.
If a successor Trustee does not take office within 60 days after the
retiring Trustee resigns or is removed, the retiring Trustee, the Company, or
the Holders of at least 10% in principal amount of the then outstanding Notes
may petition any court of competent jurisdiction for the appointment of a
successor Trustee.
If the Trustee, after written request by any Holder of a Note who has been
a Holder of a Note for at least six months, fails to comply with Section 7.10
hereof, such Holder of a Note may petition any court of competent jurisdiction
for the removal of the Trustee and the appointment of a successor Trustee.
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A successor Trustee shall deliver a written acceptance of its appointment
to the retiring Trustee and to the Company. Thereupon, the resignation or
removal of the retiring Trustee shall become effective, and the successor
Trustee shall have all the rights, powers and the duties of the Trustee under
this Indenture. The successor Trustee shall mail a notice of its succession to
the Holders of the Notes. The retiring Trustee shall promptly transfer all
property held by it as Trustee to the successor Trustee, PROVIDED that all sums
owing to the Trustee hereunder have been paid and subject to the Lien provided
for in Section 7.07 hereof. Notwithstanding replacement of the Trustee pursuant
to this Section 7.08, the Company's obligations under Section 7.07 hereof shall
continue for the benefit of the retiring Trustee.
SECTION 7.9. SUCCESSOR TRUSTEE BY MERGER, ETC.
If the Trustee or any Agent consolidates, merges or converts into, or
transfers all or substantially all of its corporate trust business to, another
corporation, the successor corporation without any further act shall be the
successor Trustee or any Agent, as applicable.
SECTION 7.10. ELIGIBILITY; DISQUALIFICATION.
There shall at all times be a Trustee hereunder that is a corporation
organized and doing business under the laws of the United States of America or
of any state thereof that is authorized under such laws to exercise corporate
trustee power, that is subject to supervision or examination by federal or state
authorities. The Trustee and its direct parent shall at all times have a
combined capital surplus of at least $50.0 million as set forth in its most
recent annual report of condition.
This Indenture shall always have a Trustee who satisfies the requirements
of TIA Section 310(a)(1), (2) and (5). The Trustee is subject to TIA Section
310(b).
SECTION 7.11. PREFERENTIAL COLLECTION OF CLAIMS AGAINST THE COMPANY.
The Trustee is subject to TIA Section 311(a), excluding any creditor
relationship listed in TIA Section 311(b). A Trustee who has resigned or been
removed shall be subject to TIA Section 311(a) to the extent indicated therein.
ARTICLE 8
LEGAL DEFEASANCE AND COVENANT DEFEASANCE
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SECTION 8.1. OPTION TO EFFECT LEGAL DEFEASANCE OR COVENANT DEFEASANCE.
The Company and the Guarantor may, at the option of their respective Boards
of Directors evidenced by a resolution set forth in an Officers' Certificate, at
any time, elect to have either Section 8.02 or 8.03 hereof be applied to all
outstanding Notes and Note Guarantee upon compliance with the conditions set
forth below in this Article 8.
SECTION 8.2. LEGAL DEFEASANCE AND DISCHARGE.
Upon the Company's exercise under Section 8.01 hereof of the option
applicable to this Section 8.02, the Company and the Guarantor shall, subject to
the satisfaction of the conditions set forth in Section 8.04 hereof, be deemed
to have been discharged from their respective obligations with respect to all
outstanding Notes and Note Guarantee on the date the conditions set forth below
are satisfied (hereinafter, "LEGAL DEFEASANCE"). For this purpose, Legal
Defeasance means that the Company and the Guarantor shall be deemed to have paid
and discharged the entire Indebtedness represented by the outstanding Notes and
Note Guarantee, which shall thereafter be deemed to be "OUTSTANDING" only for
the purposes of Section 8.05 hereof and the other Sections of this Indenture
referred to in (a) and (b) below, and to have satisfied all their respective
other obligations under such Notes and Note Guarantee and this Indenture (and
the Trustee, on demand of and at the expense of the Company, shall execute
proper instruments acknowledging the same), except for the following provisions
which shall survive until otherwise terminated or discharged hereunder: (a) the
rights of Holders of outstanding Notes to receive payments in respect of the
principal of, premium, if any, and interest and Liquidated Damages, if any, on
such Notes when such payments are due from the trust referred to in Section
8.04(a); (b) the Company's obligations with respect to such Notes under Sections
2.02, 2.03, 2.04, 2.05, 2.06, 2.07, 2.10 and 4.02 hereof; (c) the rights,
powers, trusts, duties and immunities of the Trustee including without
limitation thereunder Section 7.07, 8.05 and 8.07 hereof and the Company's
obligations in connection therewith and (d) the provisions of this Article 8.
Subject to compliance with this Article 8, the Company may exercise its option
under this Section 8.02 notwithstanding the prior exercise of its option under
Section 8.03 hereof.
SECTION 8.3. COVENANT DEFEASANCE.
Upon the Company's exercise under Section 8.01 hereof of the option
applicable to this Section 8.03, each of the Company and the Guarantor shall,
subject to the satisfaction of the conditions set forth in Section 8.04 hereof,
be released from its obligations under the covenants contained in Sections 3.09,
4.05, 4.07, 4.08, 4.09, 4.10, 4.11, 4.12, 4.13, 4.14, 4.15, 4.16, 4.17, 4.18,
4.19, 4.20, 4.21 and 5.01 hereof with respect to the outstanding Notes and Note
Guarantee on
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and after the date the conditions set forth below are satisfied (hereinafter,
"COVENANT DEFEASANCE"), and the Notes and Note Guarantee shall thereafter be
deemed not "outstanding" for the purposes of any direction, waiver, consent or
declaration or act of Holders (and the consequences of any thereof) in
connection with such covenants, but shall continue to be deemed "outstanding"
for all other purposes hereunder (it being understood that such Notes and Note
Guarantee shall not be deemed outstanding for accounting purposes). For this
purpose, Covenant Defeasance means that, with respect to the outstanding Notes
and Note Guarantee, the Company or any of its Subsidiaries or the Guarantor may
omit to comply with and shall have no liability in respect of any term,
condition or limitation set forth in any such covenant, whether directly or
indirectly, by reason of any reference elsewhere herein to any such covenant or
by reason of any reference in any such covenant to any other provision herein or
in any other document and such omission to comply shall not constitute a Default
or an Event of Default under Section 6.01 hereof, but, except as specified
above, the remainder of this Indenture and such Notes and Note Guarantee shall
be unaffected thereby. In addition, upon the Company's exercise under Section
8.01 hereof of the option applicable to this Section 8.03, subject to the
satisfaction of the conditions set forth in Section 8.04 hereof, Sections
6.01(iii) through 6.01(v) hereof shall not constitute Events of Default.
SECTION 8.4. CONDITIONS TO LEGAL OR COVENANT DEFEASANCE.
The following shall be the conditions to the application of either
Section 8.02 or 8.03 hereof to the outstanding Notes and Note Guarantee:
In order to exercise either Legal Defeasance or Covenant Defeasance:
(a) the Company must irrevocably deposit with the Trustee, in trust, for
the benefit of the Holders of the Notes, cash in U.S. dollars, non-callable
Government Securities, or a combination thereof, in such amounts as shall be
sufficient, in the opinion of a nationally recognized firm of independent public
accountants, to pay the principal of, premium and Liquidated Damages, if any,
and interest on the outstanding Notes on the stated maturity or on the
applicable redemption date, as the case may be, and the Company must specify
whether the Notes are being defeased to maturity or to a particular redemption
date;
(b) in the case of an election under Section 8.02 hereof, the Company
shall have delivered to the Trustee an opinion of counsel in the United States
reasonably acceptable to the Trustee confirming that (A) the Company has
received from, or there has been published by, the Internal Revenue Service a
ruling or (B) since the date hereof, there has been a change in the applicable
federal income tax law, in either case to the effect that, and based thereon
such opinion of counsel shall confirm that, the Holders of the outstanding Notes
shall not recognize income, gain or loss for federal income tax purposes as a
result of
75
such Legal Defeasance and shall be subject to federal income tax on the same
amounts, in the same manner and at the same times as would have been the case if
such Legal Defeasance had not occurred;
(c) in the case of an election under Section 8.03 hereof, the Company
shall have delivered to the Trustee an opinion of counsel in the United States
reasonably acceptable to the Trustee confirming that the Holders of the
outstanding Notes shall not recognize income, gain or loss for federal income
tax purposes as a result of such Covenant Defeasance and shall be subject to
federal income tax on the same amounts, in the same manner and at the same times
as would have been the case if such Covenant Defeasance had not occurred;
(d) no Default or Event of Default shall have occurred and be continuing
on the date of such deposit (other than a Default or Event of Default resulting
from the borrowing of funds to be applied to such deposit) or insofar as Events
of Default from bankruptcy or insolvency events are concerned, at any time in
the period ending on the 91st day after the date of deposit;
(e) such Legal Defeasance or Covenant Defeasance shall not result in a
breach or violation of, or constitute a default under, any material agreement or
instrument (other than this Indenture) to which the Company or any of its
Subsidiaries is a party or by which the Company or any of its Subsidiaries is
bound;
(f) the Company shall have delivered to the Trustee an Opinion of Counsel
to the effect that after the 91st day following the deposit, the trust funds
shall not be subject to the effect of any applicable bankruptcy, insolvency,
reorganization or similar laws affecting creditors' rights generally;
(g) the Company shall have delivered to the Trustee an Officers'
Certificate stating that the deposit was not made by the Company with the intent
of preferring the Holders of Notes over the other creditors of the Company with
the intent of defeating, hindering, delaying or defrauding creditors of the
Company or others; and
(h) the Company shall have delivered to the Trustee an Officers'
Certificate and an opinion of counsel, each stating that all conditions
precedent provided for relating to the Legal Defeasance or the Covenant
Defeasance have been complied with.
SECTION 8.5. DEPOSITED MONEY AND GOVERNMENT SECURITIES TO BE HELD IN
TRUST; OTHER MISCELLANEOUS PROVISIONS.
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Subject to Section 8.06 hereof, all money and non-callable Government
Securities (including the proceeds thereof) deposited with the Trustee (or other
qualifying trustee, collectively for purposes of this Section 8.05, the
"TRUSTEE") pursuant to Section 8.04 hereof in respect of the outstanding Notes
shall be held in trust and applied by the Trustee, in accordance with the
provisions of such Notes and this Indenture, to the payment, either directly or
through any Paying Agent (including the Company acting as Paying Agent) as the
Trustee may determine, to the Holders of such Notes of all sums due and to
become due thereon in respect of principal, premium, if any, interest and
Liquidated Damages, if any, but such money need not be segregated from other
funds except to the extent required by law.
The Company shall pay and indemnify the Trustee against any tax, fee or
other charge imposed on or assessed against the cash or non-callable Government
Securities deposited pursuant to Section 8.04 hereof or the principal and
interest received in respect thereof other than any such tax, fee or other
charge which by law is for the account of the Holders of the outstanding Notes.
Anything in this Article 8 to the contrary notwithstanding, the Trustee
shall deliver or pay to the Company from time to time upon the written request
of the Company and be relieved of all liability with respect to any money or
non-callable Government Securities held by it as provided in Section 8.04 hereof
which, in the opinion of a nationally recognized firm of independent public
accountants expressed in a written certification thereof delivered to the
Trustee (which may be the opinion delivered under Section 8.04(a) hereof), are
in excess of the amount thereof that would then be required to be deposited to
effect an equivalent Legal Defeasance or Covenant Defeasance.
SECTION 8.6. REPAYMENT TO THE COMPANY.
Any money deposited with the Trustee or any Paying Agent, or then held by
the Company, in trust for the payment of the principal of, premium, if any,
interest or Liquidated Damages, if any, on any Note and remaining unclaimed for
one year after such principal, and premium, if any, or interest or Liquidated
Damages, if any, has become due and payable shall be paid to the Company on its
written request or (if then held by the Company) shall be discharged from such
trust; and the Holder of such Note shall thereafter, as an unsecured general
creditor, look only to the Company for payment thereof, and all liability of the
Trustee or such Paying Agent with respect to such trust money, and all liability
of the Company as trustee thereof, shall thereupon cease; PROVIDED, HOWEVER,
that the Trustee or such Paying Agent, before being required to make any such
repayment, may at the expense of the Company cause to be published once, in the
New York Times and The Wall Street Journal (national edition), notice that such
money remains unclaimed and that, after a date specified therein, which shall
not be less
77
than 30 days from the date of such notification or publication, any unclaimed
balance of such money then remaining shall be repaid to the Company.
SECTION 8.7. REINSTATEMENT.
If the Trustee or Paying Agent is unable to apply any United States dollars
or non-callable Government Securities in accordance with Section 8.02 or 8.03
hereof, as the case may be, by reason of any order or judgment of any court or
governmental authority enjoining, restraining or otherwise prohibiting such
application, then the obligations of the Company and the Guarantor under this
Indenture, the Notes and the Note Guarantee shall be revived and reinstated as
though no deposit had occurred pursuant to Section 8.02 or 8.03 hereof until
such time as the Trustee or Paying Agent is permitted to apply all such money in
accordance with Section 8.02 or 8.03 hereof, as the case may be; PROVIDED,
HOWEVER, that, if the Company makes any payment of principal of, premium, if
any, interest or Liquidated Damages, if any, on any Note following the
reinstatement of its obligations, the Company shall be subrogated to the rights
of the Holders of such Notes to receive such payment from the money held by the
Trustee or Paying Agent.
ARTICLE 9
Amendment, Supplement and Waiver
SECTION 9.1. WITHOUT CONSENT OF HOLDERS OF THE NOTES.
Notwithstanding Section 9.02 of this Indenture, without the consent of any
Holder of Notes, the Company, the Guarantor and the Trustee may amend or
supplement this Indenture, the Notes or the Note Guarantee:
(a) to cure any ambiguity, defect or inconsistency;
(b) to provide for uncertificated Notes in addition to or in place of
certificated Notes;
(c) to provide for the assumption of the Company's or the Guarantor's
obligations to the Holders of the Notes in the case of a merger or
consolidation;
(d) to make any change that would provide any additional rights or
benefits to the Holders of the Notes or that does not adversely affect the legal
rights hereunder of any Holder of the Notes;
(e) to comply with requirements of the Commission in order to effect or
maintain the qualification of this Indenture under the TIA; or
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(f) to allow any Subsidiary to Guarantee the Notes.
Upon the written request of the Company accompanied by a resolution of its
Board of Directors of the Company authorizing the execution of any such amended
or supplemental indenture, and upon receipt by the Trustee of the documents
described in Section 9.06 hereof, the Trustee shall join with the Company and
the Guarantor in the execution of any amended or supplemental indenture
authorized or permitted by the terms of this Indenture and to make any further
appropriate agreements and stipulations that may be therein contained, but the
Trustee shall not be obligated to enter into such amended or supplemental
indenture that affects its own rights, duties or immunities under this Indenture
or otherwise.
SECTION 9.2. WITH CONSENT OF HOLDERS OF NOTES.
Except as provided below in this Section 9.02, or as provided in Section
10.13 or Section 12.13, this Indenture, the Notes or the Note Guarantee may be
amended or supplemented with the consent of the Holders of at least a majority
in principal amount of the Notes then outstanding (including, without
limitation, consents obtained in connection with a purchase of, or tender offer
or exchange offer, for Notes), and, any existing Default or Event of Default or
compliance with any provision of this Indenture, the Notes or the Note Guarantee
may be waived with the consent of the Holders of a majority in principal amount
of the then outstanding Notes (including consents obtained in connection with or
a tender offer or exchange offer for the Notes).
Upon the request of the Company accompanied by a resolution of its Board of
Directors authorizing the execution of any such amended or supplemental
indenture, and upon the filing with the Trustee of evidence satisfactory to the
Trustee of the consent of the Holders of Notes as aforesaid, and upon receipt by
the Trustee of the documents described in Section 9.06 hereof, the Trustee shall
join with the Company and the Guarantor in the execution of such amended or
supplemental indenture unless such amended or supplemental indenture affects the
Trustee's own rights, duties or immunities under this Indenture or otherwise, in
which case the Trustee may, but shall not be obligated to, enter into such
amended or supplemental indenture.
It shall not be necessary for the consent of the Holders of Notes under
this Section 9.02 to approve the particular form of any proposed amendment or
waiver, but it shall be sufficient if such consent approves the substance
thereof. After an amendment, supplement or waiver under this Section 9.02
becomes effective, the Company shall mail to the Holders of each Note affected
thereby a notice briefly describing the amendment, supplement or waiver. Any
failure of the Company to mail such notice, or any defect therein, shall not,
however, in any
79
way impair or affect the validity of any such amended or supplemental indenture
or waiver.
Subject to Sections 6.02, 6.04, 6.07, 10.13 and 12.13 hereof, the Holders
of a majority in aggregate principal amount of the Notes then outstanding may
amend or waive compliance in a particular instance by the Company or the
Guarantor with any provision of this Indenture, the Notes or the Note
Guarantee. However, without the consent of each Holder affected, an amendment
or waiver may not (with respect to any Notes held by a non-consenting Holder):
(a) reduce the principal amount of Notes whose Holders must consent to an
amendment, supplement or waiver;
(b) reduce the principal of or change the fixed maturity of any Note or
alter the provisions with respect to the redemption of the Notes (other than
provisions relating to Sections 3.09, 4.10 and 4.14 hereof);
(c) reduce the rate of or change the time for payment of interest on any
Note;
(d) waive a Default or Event of Default in the payment of principal of or
premium, if any, or interest on the Notes (except a rescission of acceleration
of the Notes by the Holders of at least a majority in aggregate principal amount
of the Notes and a waiver of the payment default that resulted from such
acceleration);
(e) make any Note payable in money other than that stated in the Notes;
(f) make any change in Section 6.04 or 6.07 hereof;
(g) waive a redemption or repurchase payment with respect to any Note
(other than a payment required by Section 4.10 or 4.14 hereof); or
(h) make any change in the amendment and waiver provisions of this Article
9.
SECTION 9.3. COMPLIANCE WITH TRUST INDENTURE ACT.
Every amendment or supplement to this Indenture, the Note Guarantee or the
Notes shall be set forth in an amended or supplemental indenture that complies
with the TIA as then in effect.
SECTION 9.4. REVOCATION AND EFFECT OF CONSENTS.
Until an amendment, supplement or waiver becomes effective, a consent to it
by a Holder of a Note is a continuing consent by the Holder and every
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subsequent Holder of a Note or portion of a Note that evidences the same debt as
the consenting Holder's Note, even if notation of the consent is not made on any
Note. However, any such Holder or subsequent Holder of a Note may revoke the
consent as to its Note if the Trustee receives written notice of revocation
before the date the waiver, supplement or amendment becomes effective. When an
amendment, supplement or waiver becomes effective in accordance with its terms,
it thereafter binds every Holder.
The Company may, but shall not be obligated to, fix a record date for
determining which Holders of the Notes must consent to such amendment,
supplement or waiver. If the Company fixes a record date, the record date shall
be fixed at (i) the later of 30 days prior to the first solicitation of such
consent or the date of the most recent list of Holders of Notes furnished for
the Trustee prior to such solicitation pursuant to Section 2.05 hereof or (ii)
such other date as the Company shall designate.
SECTION 9.5. NOTATION ON OR EXCHANGE OF NOTES.
The Trustee may place an appropriate notation about an amendment,
supplement or waiver on any Note thereafter authenticated. The Company in
exchange for all Notes may issue and the Trustee shall authenticate new Notes
that reflect the amendment, supplement or waiver.
Failure to make the appropriate notation or issue a new Note shall not
affect the validity and effect of such amendment, supplement or waiver.
SECTION 9.6. TRUSTEE TO SIGN AMENDMENTS, ETC.
The Trustee shall sign any amended or supplemental indenture authorized
pursuant to this Article 9 if the amendment or supplement does not adversely
affect the rights, duties, liabilities or immunities of the Trustee. The
Company and the Guarantor may not sign an amendment or supplemental indenture
until their respective Boards of Directors approve it. In signing or refusing
to sign any amended or supplemental indenture the Trustee shall be entitled to
receive and (subject to Section 7.01 hereof) shall be fully protected in relying
upon, in addition to the documents required by Section 13.04 hereof, an
Officers' Certificate and an Opinion of Counsel stating that the execution of
such amended or supplemental indenture is authorized or permitted by this
Indenture, that it is not inconsistent herewith, and that it will be valid and
binding upon the Company and the Guarantor in accordance with its terms.
ARTICLE 10
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SUBORDINATION
SECTION 10.1. AGREEMENT TO SUBORDINATE.
The Company agrees, and each Holder of Notes by accepting a Note agrees,
that the Indebtedness evidenced by the Note is subordinated in right of payment,
to the extent and in the manner provided in this Article, to the prior payment
in full in cash of all Senior Debt (whether outstanding on the date hereof or
hereafter created, incurred, assumed or guaranteed), and that the subordination
is for the benefit of the holders of Senior Debt. Except to the extent set
forth under Section 4.10, the Notes shall be PARI PASSU in right of payment with
the 2003 Notes.
SECTION 10.2. LIQUIDATION; DISSOLUTION; BANKRUPTCY.
Upon any payment or distribution of assets of the Company of any kind or
character, whether in cash, property or securities, to creditors in any
Insolvency or Liquidation Proceeding with respect to the Company, all amounts
due or to become due under or with respect to all Senior Debt shall first be
paid in full in cash before any payment is made on account of the Notes. Upon
any such Insolvency or Liquidation Proceeding, any payment or distribution of
assets of the Company of any kind or character, whether in cash, property or
securities, to which the Holders of the Notes or the Trustee would be entitled
shall be paid by the Company or by any receiver, trustee in bankruptcy,
liquidating trustee, agent or other person making such payment or distribution,
or by the Holders of the Notes or by the Trustee if received by them, directly
to the holders of Senior Debt (PRO RATA to such holders on the basis of the
amounts of Senior Debt held by such holders) or their Representative or
Representatives, as their interests may appear, for application to the payment
of the Senior Debt remaining unpaid until all such Senior Debt has been paid in
full in cash, after giving effect to any concurrent payment, distribution or
provision therefor to or for the holders of Senior Debt.
SECTION 10.3. DEFAULT ON DESIGNATED SENIOR DEBT.
(a) In the event of and during the continuation of any default in the
payment of principal of, interest or premium, if any, on any Senior Debt, or any
Obligation owing from time to time under or in respect of Senior Debt, or in the
event that any event of default (other than a payment default) with respect to
any Senior Debt shall have occurred and be continuing and shall have resulted in
such Senior Debt becoming or being declared due and payable prior to the date on
which it would otherwise have become due and payable, or (b) if any event of
default other than as described in clause (a) above with respect to any
Designated Senior Debt shall have occurred and be continuing permitting the
holders of such Designated Senior Debt (or their Representative or
Representatives) to declare
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such Designated Senior Debt due and payable prior to the date on which it would
otherwise have become due and payable, then no payment shall be made by or on
behalf of the Company on account of the Notes (x) in case of any payment or
nonpayment default specified in (a), unless and until such default shall have
been cured or waived in writing in accordance with the instruments governing
such Senior Debt or such acceleration shall have been rescinded or annulled, or
(y) in case of any nonpayment event of default specified in (b), during the
period (a "PAYMENT BLOCKAGE PERIOD") commencing on the date the Company or the
Trustee receives written notice (a "PAYMENT NOTICE") of such event of default
(which notice shall be binding on the Trustee and the Holders of Notes as to the
occurrence of such nonpayment event of default) from the Credit Agent (or other
holders of Designated Senior Debt or their Representative or Representatives)
and ending on the earliest of (A) 179 days after such date, (B) the date, if
any, on which such Designated Senior Debt to which such default relates is paid
in full in cash or such default is cured or waived in writing in accordance with
the instruments governing such Designated Senior Debt by the holders of such
Designated Senior Debt and (C) the date on which the Trustee receives written
notice from the Credit Agent (or other holders of Designated Senior Debt or
their Representative or Representatives), as the case may be, terminating the
Payment Blockage Period. During any consecutive 360-day period, the aggregate
of all Payment Blockage Periods shall not exceed 179 days and there shall be a
period of at least 181 consecutive days in each consecutive 360-day period when
no Payment Blockage Period is in effect. No event of default which existed or
was continuing with respect to the Senior Debt for which notice commencing a
Payment Blockage Period was given on the date such Payment Blockage Period
commenced shall be or be made the basis for the commencement of any subsequent
Payment Blockage Period unless such event of default is cured or waived for a
period of not less than 90 consecutive days.
SECTION 10.4. ACCELERATION OF NOTES.
If payment of the Notes is accelerated because of an Event of Default, the
Company shall promptly notify holders of Senior Debt of the acceleration.
SECTION 10.5. WHEN DISTRIBUTION MUST BE PAID OVER.
In the event that the Trustee or any Holder of a Note receives any payment
of any Obligations with respect to the Notes at a time when such payment is
prohibited by Section 10.03 hereof, such payment shall be held by the Trustee or
such Holder, in trust for the benefit of, and shall be paid forthwith over and
delivered, upon written request, to, the holders of Senior Debt or their
Representative under the indenture or other agreement (if any) pursuant to which
Senior Debt may have been issued, as their respective interests may appear, for
application to the payment of all Obligations with respect to Senior Debt
remain-
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ing unpaid to the extent necessary to pay such Obligations in full in cash in
accordance with their terms, after giving effect to any concurrent payment or
distribution to or for the holders of Senior Debt.
With respect to the holders of Senior Debt, the Trustee undertakes to
perform only such obligations on the part of the Trustee as are specifically set
forth in this Article 10, and no implied covenants or obligations with respect
to the holders of Senior Debt shall be read into this Indenture against the
Trustee. The Trustee shall not be deemed to owe any fiduciary duty to the
holders of Senior Debt, and shall not be liable to any such holders if the
Trustee shall pay over or distribute to or on behalf of Holders of the Notes or
the Company or any other Person money or assets to which any holders of Senior
Debt shall be entitled by virtue of this Article 10, except if such payment is
made as a result of the willful misconduct or gross negligence of the Trustee.
SECTION 10.6. NOTICE BY THE COMPANY.
The Company shall promptly notify the Trustee and the Paying Agent of any
facts known to the Company that would cause a payment of any Obligations with
respect to the Notes to violate this Article, which notice shall specifically
refer to this Article 10, but failure to give such notice shall not affect the
subordination of the Notes to the Senior Debt as provided in this Article.
SECTION 10.7. SUBROGATION.
After all Senior Debt is paid in full in cash and until the Notes are paid
in full, Holders of the Notes shall be subrogated (equally and ratably with all
other PARI PASSU indebtedness) to the rights of holders of Senior Debt to
receive distributions applicable to Senior Debt to the extent that distributions
otherwise payable to the Holders of the Notes have been applied to the payment
of Senior Debt. A distribution made under this Article to holders of Senior
Debt that otherwise would have been made to Holders of the Notes is not, as
between the Company and Holders of the Notes, a payment by the Company on the
Senior Debt.
SECTION 10.8. RELATIVE RIGHTS.
This Article defines the relative rights of Holders of the Notes and
holders of Senior Debt. Nothing in this Indenture shall:
(1) impair, as between the Company and Holders of the Notes, the
obligations of the Company, which are absolute and unconditional, to pay
principal of and interest on the Notes in accordance with their terms;
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(2) affect the relative rights of Holders of the Notes and creditors
of the Company other than their rights in relation to holders of Senior
Debt; or
(3) prevent the Trustee or any Holder of the Notes from exercising
its available remedies upon a Default or Event of Default, subject to the
rights of holders and owners of Senior Debt to receive distributions and
payments otherwise payable to Holders of the Notes.
If the Company fails because of this Article to pay principal of or
interest on a Note on the due date, the failure is still a Default or Event of
Default.
SECTION 10.9. SUBORDINATION MAY NOT BE IMPAIRED BY THE COMPANY.
No right of any holder of Senior Debt to enforce the subordination of the
Indebtedness evidenced by the Notes shall be impaired by any act or failure to
act by the Company or any Holder or by the failure of the Company or any Holder
to comply with this Indenture.
Without in any way limiting the generality of the foregoing paragraph, the
holders of Senior Debt, or any of them, may, at any time and from time to time,
without the consent of or notice to the Holders of the Notes, without incurring
any liabilities to any Holder of any Notes and without impairing or releasing
the subordination and other benefits provided in this Indenture or the
obligations of the Holders of the Notes to the holders of the Senior Debt, even
if any right of reimbursement or subrogation or other right or remedy of any
Holder of Notes is affected, impaired or extinguished thereby, do any one or
more of the following:
(1) change the manner, place or terms of payment or change or extend
the time of payment of, or renew, exchange, amend, increase or alter, the
terms of any Senior Debt, any security therefor or guaranty thereof or any
liability of any obligor thereon (including any guarantor) to such holder,
or any liability incurred directly or indirectly in respect thereof
or otherwise amend, renew, exchange, extend, modify, increase or
supplement in any manner any Senior Debt or any instrument evidencing or
guaranteeing or securing the same or any agreement under which Senior
Debt is outstanding;
(2) sell, exchange, release, surrender, realize upon, enforce or
otherwise deal with in any manner and in any order any property pledged,
mortgaged or otherwise
85
securing Senior Debt or any liability of any obligor thereon, to such
holder, or any liability incurred directly or indirectly in respect
thereof;
(3) settle or compromise any Senior Debt or any other liability of
any obligor of the Senior Debt to such holder or any security therefor or
any liability incurred directly or indirectly in respect thereof and apply
any sums by whomsoever paid and however realized to any liability
(including, without limitation, Senior Debt) in any manner or order; and
(4) fail to take or to record or to otherwise perfect, for any reason
or for no reason, any lien or security interest securing Senior Debt by
whomsoever granted, exercise or delay in or refrain from exercising any
right or remedy against any obligor or any guarantor or any other person,
elect any remedy and otherwise deal freely with any obligor and any
security for the Senior Debt or any liability of any obligor to such
holder or any liability incurred directly or indirectly in respect thereof.
SECTION 10.10. DISTRIBUTION OR NOTICE TO REPRESENTATIVE.
Whenever a distribution is to be made or a notice given to holders of
Senior Debt, the distribution may be made and the notice given to their
Representative.
Upon any payment or distribution of assets of the Company referred to in
this Article 10, the Trustee and the Holders of the Notes shall be entitled to
rely upon any order or decree made by any court of competent jurisdiction or
upon any certificate of such Representative or of the liquidating trustee or
agent or other Person making any distribution to the Trustee or to the Holders
of the Notes for the purpose of ascertaining the Persons entitled to participate
in such distribution, the holders of the Senior Debt and other Indebtedness of
the Company, the amount thereof or payable thereon, the amount or amounts paid
or distributed thereon and all other facts pertinent thereto or to this Article
10.
SECTION 10.11. RIGHTS OF TRUSTEE AND PAYING AGENT.
Notwithstanding the provisions of this Article 10 or any other provision of
this Indenture, the Trustee shall not be charged with knowledge of the existence
of any facts that would prohibit the making of any payment or distribution by
the Trustee, and the Trustee and the Paying Agent may continue to make payments
on
86
the Notes, unless the Trustee shall have received at its Corporate Trust Office
at least three Business Days prior to the date of such payment written notice of
facts that would cause the payment of any Obligations with respect to the Notes
to violate this Article, which notice shall specifically refer to this Article
10. Only the Company or a Representative may give the notice. Nothing in this
Article 10 shall impair the claims of, or payments to, the Trustee under or
pursuant to Section 7.07 hereof.
The Trustee in its individual or any other capacity may hold Senior Debt
with the same rights it would have if it were not Trustee. Any Agent may do the
same with like rights.
SECTION 10.12. AUTHORIZATION TO EFFECT SUBORDINATION.
Each Holder of a Note by the Holder's acceptance thereof authorizes and
directs the Trustee on the Holder's behalf to take such action as may be
necessary or appropriate to effectuate the subordination as provided in this
Article 10, and appoints the Trustee to act as the Holder's attorney-in-fact for
any and all such purposes, including without limitation the timely filing of a
claim for the unpaid balance of the Notes held by such Holder in the form
required in any Insolvency or Liquidation Proceeding and causing such claim to
be approved. If the Trustee does not file a proper proof of claim or proof of
debt in the form required in any proceeding referred to in Section 6.09 hereof
at least 30 days before the expiration of the time to file such claim, the
Representatives of the Designated Senior Debt, including the Credit Agent, are
hereby authorized to file an appropriate claim for and on behalf of the Holders
of the Notes.
SECTION 10.13. AMENDMENTS.
Any amendment to the provisions of this Article 10 shall require the
consent of the Holders of at least 75% in aggregate principal amount of the
Notes then outstanding if such amendment would adversely affect the rights of
the Holders of Notes.
ARTICLE 11
Guarantee of Notes
SECTION 11.1. NOTE GUARANTEE.
Subject to Section 11.03 hereof, the Guarantor hereby unconditionally
guarantees to each Holder of a Note authenticated and delivered by the Trustee
and to the Trustee and its successors and assigns, irrespective of the validity
and
87
enforceability of this Indenture, the Notes and the Obligations of the Company
hereunder and thereunder, that: (a) the principal of, premium, if any, interest
and Liquidated Damages, if any, on the Notes will be promptly paid in full when
due, subject to any applicable grace period, whether at maturity, by
acceleration, redemption or otherwise, and interest on the overdue principal,
premium, if any, (to the extent permitted by law) interest and Liquidated
Damages, if any, on the Notes, and all other payment Obligations of the Company
to the Holders or the Trustee hereunder or thereunder, will be promptly paid in
full and performed, all in accordance with the terms hereof and thereof; and (b)
in case of any extension of time of payment or renewal of any Notes or any of
such other Obligations, the same will be promptly paid in full when due or
performed in accordance with the terms of the extension or renewal, subject to
any applicable grace period, whether at stated maturity, by acceleration,
redemption or otherwise. Failing payment when so due of any amount so
guaranteed for whatever reason the Guarantor will be obligated to pay the same
immediately. An Event of Default under this Indenture or the Notes shall
constitute an event of default under the Note Guarantee, and shall entitle the
Holders to accelerate the Obligations of the Guarantor hereunder in the same
manner and to the same extent as the Obligations of the Company. The Guarantor
hereby agree that its Obligations hereunder shall be unconditional, irrespective
of the validity, regularity or enforceability of the Notes or this Indenture,
the absence of any action to enforce the same, any waiver or consent by any
Holder with respect to any provisions hereof or thereof, the recovery of any
judgment against the Company, any acion to enforce the same or any other
circumstance which might otherwise constitute a legal or equitable discharge or
defense of the Guarantor. The Guarantor hereby waives diligence, presentment,
demand of payment, filing of claims with a court in the event of insolvency or
bankruptcy of the Company, any right to require a proceeding first against the
Company, protest, notice and all demands whatsoever and covenants that, subject
to the provisions of Article 8 of the Indenture, this Note Guarantee will not be
discharged except by complete performance of the Obligations contained in the
Notes and this Indenture. If any Holder or the Trustee is required by any court
or otherwise to return to the Company, the Guarantor, or any Note Custodian,
Trustee, liquidator or other similar official acting in relation to either the
Company or the Guarantor, any amount paid by either to the Trustee or such
Holder, this Note Guarantee, to the extent theretofore discharged, shall be
reinstated in full force and effect. The Guarantor agrees that it shall not be
entitled to, and hereby waives, any right of subrogation in relation to the
Holders in respect of any Obligations guaranteed hereby. The Guarantor further
agrees that, as between the Guarantor, on the one hand, and the Holders and the
Trustee, on the other hand, (x) the maturity of the Obligations guaranteed
hereby may be accelerated as provided in Article 6 for the purposes of this Note
Guarantee, notwithstanding any stay, injunction or other prohibition preventing
such acceleration in respect of the Obligations guaranteed hereby, and (y) in
the event of any declaration of acceleration of such Obligations as provided in
Article 6
88
hereof, such Obligations (whether or not due and payable) shall forthwith become
due and payable by the Guarantor for the purpose of this Note Guarantee.
SECTION 11.2. EXECUTION AND DELIVERY OF NOTE GUARANTEE.
To evidence its Note Guarantee set forth in Section 11.01, the Guarantor
hereby agrees that a notation of such Note Guarantee substantially in the form
of Exhibit D shall be endorsed by an Officer of the Guarantor on each Note
authenticated and delivered by the Trustee and that this Indenture shall be
executed on behalf of the Guarantor, by manual or facsimile signature, by an
Officer of the Guarantor.
The Guarantor hereby agrees that its Note Guarantee set forth in Section
11.01 shall remain in full force and effect notwithstanding any failure to
endorse on each Note a notation of such Note Guarantee.
If an Officer whose signature is on this Indenture or on the Note Guarantee
no longer holds that office at the time the Trustee authenticates the Note on
which a Note Guarantee is endorsed, the Note Guarantee shall be valid
nevertheless.
The delivery of any Note by the Trustee, after the authentication thereof
hereunder, shall constitute due delivery of the Note Guarantee set forth in this
Indenture on behalf of the Guarantor.
SECTION 11.3. LIMITATION ON GUARANTOR LIABILITY.
For purposes hereof, the Guarantor's liability shall be limited to the
lesser of (i) the aggregate amount of the Obligations of the Company under the
Notes and this Indenture and (ii) the amount, if any, which would not have (A)
rendered the Guarantor "INSOLVENT" (as such term is defined in the United States
Bankruptcy Code and in the Debtor and Creditor Law of the State of New York) or
(B) left the Guarantor with unreasonably small capital at the time its Note
Guarantee of the Notes was entered into; PROVIDED that, it will be a presumption
in any lawsuit or other proceeding in which the Guarantor is a party that the
amount guaranteed pursuant to the Note Guarantee is the amount set forth in
clause (i) above unless any creditor, or representative of creditors of the
Guarantor, or debtor in possession or trustee in bankruptcy of the Guarantor,
otherwise proves in such a lawsuit that the aggregate liability of the Guarantor
is the amount set forth in clause (ii) above. In making any determination as to
solvency or sufficiency of capital of the Guarantor in accordance with the
previous sentence, the right of the Guarantor to contribution from another
guarantor, and any other rights the Guarantor may have, contractual or
otherwise, shall be taken into account.
SECTION 11.4. "TRUSTEE" TO INCLUDE PAYING AGENT.
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In case at any time any Paying Agent other than the Trustee shall have been
appointed by the Company and be then acting hereunder, the term "TRUSTEE" as
used in this Article 11 shall in each case (unless the context shall otherwise
require) be construed as extending to and including such Paying Agent within its
meaning as fully and for all intents and purposes as if such Paying Agent were
named in this Article 11 in place of the Trustee.
ARTICLE 12
Subordination of Note Guarantee
SECTION 12.1. AGREEMENT TO SUBORDINATE.
The Guarantor agrees, and each Holder by accepting a Note agrees, that all
Obligations evidenced by the Note Guarantee shall be subordinated in right of
payment, to the extent and in the manner provided in this Article 12, to the
prior payment in full in cash of all Guarantor Senior Debt (whether outstanding
on the date hereof or hereafter created, incurred, assumed or guaranteed), and
that the subordination is for the benefit of the holders of Guarantor Senior
Debt. The Note Guarantee shall be PARI PASSU in right of payment with the
Guarantee of the 2003 Notes.
SECTION 12.2. LIQUIDATION; DISSOLUTION; BANKRUPTCY.
Upon any payment or distribution of assets of the Guarantor of any kind or
character, whether in cash, property or securities, to creditors in any
Insolvency or Liquidation Proceeding with respect to the Guarantor, all amounts
due or to become due under or with respect to all Guarantor Senior Debt shall
first be paid in full in cash before any payment is made on account of the Note
Guarantee. Upon any such Insolvency or Liquidation Proceeding, any payment or
distribution of assets of the Guarantor of any kind or character, whether in
cash, property or securities, to which the Holders or the Trustee would be
entitled shall be paid by the Guarantor or by any receiver, trustee in
bankruptcy, liquidating trustee, agent or other person making such payment or
distribution, or by the Holders or by the Trustee if received by them, directly
to the holders of Guarantor Senior Debt (PRO RATA to such holders on the basis
of the amounts of Guarantor Senior Debt held by such holders) or their
Representative or Representatives, as their interests may appear, for
application to the payment of the Guarantor Senior Debt remaining unpaid until
all such Guarantor Senior Debt has been paid in full in cash, after giving
effect to any concurrent payment, distribution or provision therefor to or for
the holders of Guarantor Senior Debt.
SECTION 12.3. DEFAULT ON DESIGNATED GUARANTOR SENIOR DEBT.
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(a) In the event of and during the continuation of any default in the
payment of principal of, interest or premium, if any, on any Guarantor Senior
Debt, or any Obligation owing from time to time under or in respect of Guarantor
Senior Debt, or in the event that any event of default (other than a payment
default) with respect to any Guarantor Senior Debt shall have occurred and be
continuing and shall have resulted in such Guarantor Senior Debt becoming or
being declared due and payable prior to the date on which it would otherwise
have become due and payable, or (b) if any event of default other than as
described in clause (a) above with respect to any Designated Guarantor Senior
Debt shall have occurred and be continuing permitting the holders of such
Designated Guarantor Senior Debt (or their Representative or Representatives) to
declare such Designated Guarantor Senior Debt due and payable prior to the date
on which it would otherwise have become due and payable, then no payment shall
be made by or on behalf of the Guarantor on account of the Note Guarantee (x) in
case of any payment or nonpayment default specified in (a), unless and until
such default shall have been cured or waived in writing in accordance with the
instruments governing such Guarantor Senior Debt or such acceleration shall have
been rescinded or annulled, or (y) in case of any nonpayment event of default
specified in (b), during the period (a "PAYMENT BLOCKAGE PERIOD") commencing on
the date the Guarantor or the Trustee receives written notice (a "PAYMENT
NOTICE") of such event of default (which notice shall be binding on the Trustee
and the Holders as to the occurrence of such nonpayment event of default) from
the Credit Agent (or other holders of Designated Guarantor Senior Debt or their
Representative or Representatives) and ending on the earliest of (A) 179 days
after such date, (B) the date, if any, on which such Designated Guarantor Senior
Debt to which such default relates is paid in full in cash or such default is
cured or waived in writing in accordance with the instruments governing such
Designated Guarantor Senior Debt by the holders of such Designated Guarantor
Senior Debt and (C) the date on which the Trustee receives written notice from
the Credit Agent (or other holders of Designated Guarantor Senior Debt or their
Representative or Representatives), as the case may be, terminating the Payment
Blockage Period. During any consecutive 360-day period, the aggregate of all
Payment Blockage Periods shall not exceed 179 days and there shall be a period
of at least 181 consecutive days in each consecutive 360-day period when no
Payment Blockage Period is in effect. No event of default which existed or was
continuing with respect to the Guarantor Senior Debt for which notice commencing
a Payment Blockage Period was given on the date such Payment Blockage Period
commenced shall be or be made the basis for the commencement of any subsequent
Payment Blockage Period unless such event of default is cured or waived for a
period of not less than 90 consecutive days.
SECTION 12.4. ACCELERATION OF NOTE GUARANTEE.
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If payment of the Note Guarantee is accelerated because of an Event of
Default, the Guarantor shall promptly notify holders of Guarantor Senior Debt of
the acceleration.
SECTION 12.5. WHEN DISTRIBUTION MUST BE PAID OVER.
In the event that the Trustee or any Holder receives any payment of any
Obligations with respect to the Note Guarantee at a time when such payment is
prohibited by Section 12.03 hereof, such payment shall be held by the Trustee or
such Holder, in trust for the benefit of, and shall be paid forthwith over and
delivered, upon written request, to, the holders of Guarantor Senior Debt or
their Representative under the indenture or other agreement (if any) pursuant to
which Guarantor Senior Debt may have been issued, as their respective interests
may appear, for application to the payment of all Obligations with respect to
Guarantor Senior Debt remaining unpaid to the extent necessary to pay such
Obligations in full in cash in accordance with their terms, after giving effect
to any concurrent payment or distribution to or for the holders of Guarantor
Senior Debt.
With respect to the holders of Guarantor Senior Debt, the Trustee
undertakes to perform only such obligations on the part of the Trustee as are
specifically set forth in this Article 12, and no implied covenants or
obligations with respect to the holders of Guarantor Senior Debt shall be read
into this Indenture against the Trustee. The Trustee shall not be deemed to owe
any fiduciary duty to the holders of Guarantor Senior Debt, and shall not be
liable to any such holders if the Trustee shall pay over or distribute to or on
behalf of Holders or the Guarantor or any other Person money or assets to which
any holders of Guarantor Senior Debt shall be entitled by virtue of this Article
12, except if such payment is made as a result of the willful misconduct or
gross negligence of the Trustee.
SECTION 12.6. NOTICE BY GUARANTOR.
The Guarantor shall promptly notify the Trustee and the Paying Agent of any
facts known to the Guarantor that would cause a payment of any Obligations with
respect to the Note Guarantee to violate this Article, which notice shall
specifically refer to this Article 12, but failure to give such notice shall not
affect the subordination of the Note Guarantee to the Guarantor Senior Debt as
provided in this Article.
SECTION 12.7. SUBROGATION.
After all Guarantor Senior Debt is paid in full in cash and until the Note
Guarantee is paid in full, Holders shall be subrogated (equally and ratably with
all PARI PASSU indebtedness) to the rights of holders of Guarantor Senior Debt
to receive distributions applicable to Guarantor Senior Debt to the extent that
92
distributions otherwise payable to the Holders have been applied to the payment
of Guarantor Senior Debt. A distribution made under this Article to holders of
Guarantor Senior Debt that otherwise would have been made to Holders is not, as
between the Guarantor and Holders, a payment by the Guarantor on the Guarantor
Senior Debt.
SECTION 12.8. RELATIVE RIGHTS.
This Article defines the relative rights of Holders and holders of
Guarantor Senior Debt. Nothing in this Indenture shall:
(1) impair, as between the Guarantor and Holders, the obligations of
the Guarantor, which are absolute and unconditional, to pay principal of
and interest on the Notes in accordance with the terms of the Note
Guarantee;
(2) affect the relative rights of Holders and creditors of the
Guarantor other than their rights in relation to holders of Guarantor
Senior Debt; or
(3) prevent the Trustee or any Holder from exercising its available
remedies upon a Default or Event of Default, subject to the rights of
holders and owners of Guarantor Senior Debt to receive distributions and
payments otherwise payable to Holders.
If the Guarantor fails because of this Article to pay principal of or
interest on a Note in accordance with the terms of the Note Guarantee, the
failure is still a Default or Event of Default.
SECTION 12.9. SUBORDINATION MAY NOT BE IMPAIRED BY GUARANTOR.
No right of any holder of Guarantor Senior Debt to enforce the
subordination of the Obligations evidenced by the Note Guarantee shall be
impaired by any act or failure to act by the Guarantor or any Holder or by the
failure of the Guarantor or any Holder to comply with this Indenture.
Without in any way limiting the generality of the foregoing paragraph, the
holders of Guarantor Senior Debt, or any of them, may, at any time and from time
to time, without the consent of or notice to the Holders, without incurring any
liabilities to any Holder and without impairing or releasing the subordination
and other benefits provided in this Indenture or the obligations of the Holders
to the holders of the Guarantor Senior Debt, even if any right of reimbursement
or subrogation or other right or remedy of any Holder is affected, impaired or
extinguished thereby, do any one or more of the following:
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(1) change the manner, place or terms of payment or change or
extend the time of payment of, or renew, exchange, amend, increase
or alter, the terms of any Guarantor Senior Debt, any security
therefor or guaranty thereof or any liability of any obligor
thereon (including any guarantor) to such holder, or any liability
incurred directly or indirectly in respect thereof or otherwise
amend, renew, exchange, extend, modify, increase or supplement in
any manner any Guarantor Senior Debt or any instrument evidencing
or guaranteeing or securing the same or any agreement under which
Guarantor Senior Debt is outstanding;
(2) sell, exchange, release, surrender, realize upon, enforce or
otherwise deal with in any manner and in any order any property
pledged, mortgaged or otherwise securing Guarantor Senior Debt or
any liability of any obligor thereon, to such holder, or any
liability incurred directly or indirectly in respect thereof;
(3) settle or compromise any Guarantor Senior Debt or any other
liability of any obligor of the Guarantor Senior Debt to such
holder or any security therefor or any liability incurred directly
or indirectly in respect thereof and apply any sums by whomsoever
paid and however realized to any liability (including, without
limitation, Guarantor Senior Debt) in any manner or order; and
(4) fail to take or to record or to otherwise perfect, for any
reason or for no reason, any lien or security interest securing
Guarantor Senior Debt by whomsoever granted, exercise or delay in
or refrain from exercising any right or remedy against any obligor
or any guarantor or any other person, elect any remedy and
otherwise deal freely with any obligor and any security for the
Guarantor Senior Debt or any liability of any obligor to such
holder or any liability incurred directly or indirectly in respect
thereof.
SECTION 12.10. DISTRIBUTION OR NOTICE TO REPRESENTATIVE.
Whenever a distribution is to be made or a notice given to holders of
Guarantor Senior Debt, the distribution may be made and the notice given to
their Representative.
94
Upon any payment or distribution of assets of the Guarantor referred to in
this Article 12, the Trustee and the Holders shall be entitled to rely upon any
order or decree made by any court of competent jurisdiction or upon any
certificate of such Representative or of the liquidating trustee or agent or
other Person making any distribution to the Trustee or to the Holders for the
purpose of ascertaining the Persons entitled to participate in such
distribution, the holders of the Guarantor Senior Debt and other Indebtedness of
the Company or the Guarantor, the amount thereof or payable thereon, the amount
or amounts paid or distributed thereon and all other facts pertinent thereto or
to this Article 12.
SECTION 12.11. RIGHTS OF TRUSTEE AND PAYING AGENT.
Notwithstanding the provisions of this Article 12 or any other provision of
this Indenture, the Trustee shall not be charged with knowledge of the existence
of any facts that would prohibit the making of any payment or distribution by
the Trustee, and the Trustee and the Paying Agent may continue to make payments
on the Notes or the Note Guarantee, unless the Trustee shall have received at
its Corporate Trust Office at least three Business Days prior to the date of
such payment written notice of facts that would cause the payment of any
Obligations with respect to the Notes or the Note Guarantee to violate this
Article, which notice shall specifically refer to this Article 12. Only the
Company, the Guarantor or a Representative may give the notice. Nothing in this
Article 12 shall impair the claims of, or payments to, the Trustee under or
pursuant to Section 7.07 hereof.
The Trustee in its individual or any other capacity may hold Guarantor
Senior Debt with the same rights it would have if it were not Trustee. Any
Agent may do the same with like rights.
SECTION 12.12. AUTHORIZATION TO EFFECT SUBORDINATION.
Each Holder by the Holder's acceptance thereof authorizes and directs the
Trustee on the Holder's behalf to take such action as may be necessary or
appropriate to effectuate the subordination as provided in this Article 12, and
appoints the Trustee to act as the Holder's attorney-in-fact for any and all
such purposes, including without limitation the timely filing of a claim for the
unpaid balance of the Notes held by such Holder in the form required in any
Insolvency or Liquidation Proceeding and causing such claim to be approved. If
the Trustee does not file a proper proof of claim or proof of debt in the form
required in any proceeding referred to in Section 6.09 hereof at least 30 days
before the expiration of the time to file such claim, the Representatives of the
Designated Guarantor Senior Debt, including the Credit Agent, are hereby
authorized to file an appropriate claim for and on behalf of the Holders.
SECTION 12.13. AMENDMENTS.
95
Any amendment to the provisions of this Article 12 shall require the
consent of the Holders of at least 75% in aggregate principal amount of the
Notes then outstanding if such amendment would adversely affect the rights of
the Holders.
ARTICLE 13
Miscellaneous
SECTION 13.1. TRUST INDENTURE ACT CONTROLS.
If any provision of this Indenture limits, qualifies or conflicts with the
duties imposed by TIA Section 318(c), the imposed duties shall control.
SECTION 13.2. NOTICES.
Any notice or communication by the Company, the Guarantor or the Trustee to
the others is duly given if in writing and delivered in person or mailed by
registered or certified mail, return receipt requested, telecopier or overnight
air courier guaranteeing next day delivery, to the others' address:
If to the Company or the Guarantor:
The Musicland Group, Inc.
▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: General Counsel
With a copy to:
Faegre & ▇▇▇▇▇▇ LLP
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
and
▇▇▇▇ & ▇▇▇▇▇▇▇
4800 Norwest Center
▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇
▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
If to the Trustee:
Bank One, NA
▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: Corporate Trust Department
The Company, the Guarantor or the Trustee, by notice to the others may
designate additional or different addresses for subsequent notices or
communications.
All notices and communications (other than those sent to Holders) shall be
deemed to have been duly given: at the time delivered by hand, if personally
delivered; five Business Days after being deposited in the mail, postage
prepaid, if mailed; when receipt acknowledged, if telecopied; and the next
Business Day after timely delivery to the courier, if sent by overnight air
courier promising next Business Day delivery.
Any notice or communication to a Holder shall be mailed by first class mail
or by overnight air courier promising next Business Day delivery to its address
shown on the register kept by the Registrar. Any notice or communication shall
also be so mailed to any Person described in TIA Section 313(c), to the extent
required by the TIA. Failure to mail a notice or communication to a Holder or
any defect in it shall not affect its sufficiency with respect to other Holders.
If a notice or communication is mailed in the manner provided above within
the time prescribed, it is duly given, whether or not the addressee receives it.
If the Company mails a notice or communication to Holders, it shall mail a
copy to the Trustee and each Agent at the same time.
SECTION 13.3. COMMUNICATION BY HOLDERS OF NOTES WITH OTHER HOLDERS OF
NOTES.
Holders may communicate pursuant to TIA Section 312(b) with other Holders
with respect to their rights under this Indenture or the Notes. The Company,
the Trustee, the Registrar and anyone else shall have the protection of TIA
Section 312(c).
97
SECTION 13.4. CERTIFICATE AND OPINION AS TO CONDITIONS PRECEDENT.
Upon any request or application by the Company or the Guarantor to the
Trustee to take any action under this Indenture (other than the initial issuance
of the Senior Subordinated Notes), the Company or Guarantor shall furnish to the
Trustee upon request:
(a) an Officers' Certificate in form and substance reasonably satisfactory
to the Trustee (which shall include the statements set forth in Section 13.05
hereof) stating that, in the opinion of the signers, all conditions precedent
and covenants, if any, provided for in this Indenture relating to the proposed
action have been satisfied; and
(b) an Opinion of Counsel in form and substance reasonably satisfactory to
the Trustee (which shall include the statements set forth in Section 13.05
hereof) stating that, in the opinion of such counsel, all such conditions
precedent and covenants have been satisfied.
SECTION 13.5. STATEMENTS REQUIRED IN CERTIFICATE OR OPINION.
Each certificate or opinion with respect to compliance with a condition or
covenant provided for in this Indenture (other than a certificate provided
pursuant to TIA Section 314(a)(4)) shall comply with the provisions of TIA
Section 314(e) and shall include:
(a) a statement that the Person making such certificate or opinion has
read such covenant or condition;
(b) a brief statement as to the nature and scope of the examination or
investigation upon which the statements or opinions contained in such
certificate or opinion are based;
(c) a statement that, in the opinion of such Person, he or she has made
such examination or investigation as is necessary to enable him to express an
informed opinion as to whether or not such covenant or condition has been
satisfied; and
(d) a statement as to whether or not, in the opinion of such Person, such
condition or covenant has been satisfied.
SECTION 13.6. RULES BY TRUSTEE AND AGENTS.
The Trustee may make reasonable rules for action by or at a meeting of
Holders. The Registrar or Paying Agent may make reasonable rules and set
reasonable requirements for its functions.
98
SECTION 13.7. NO PERSONAL LIABILITY OF DIRECTORS, OFFICERS, EMPLOYEES AND
STOCKHOLDERS.
No director, officer, employee, incorporator or stockholder of the Company
(other than the Guarantor) or the Guarantor, as such, shall have any liability
for any obligations of the Company or the Guarantor under the Notes, this
Indenture, the Note Guarantee or for any claim based on, in respect of, or by
reason of, such obligations or their creation. Each Holder of Notes by
accepting a Note waives and releases all such liability. The waiver and release
are part of the consideration for issuance of the Notes.
SECTION 13.8. GOVERNING LAW.
THE INTERNAL LAW OF THE STATE OF NEW YORK SHALL GOVERN AND BE USED TO
CONSTRUE THIS INDENTURE, THE NOTES AND THE NOTE GUARANTEE.
SECTION 13.9. NO ADVERSE INTERPRETATION OF OTHER AGREEMENTS.
This Indenture may not be used to interpret any other indenture, loan or
debt agreement of the Company or its Subsidiaries or of any other Person. Any
such indenture, loan or debt agreement may not be used to interpret this
Indenture.
SECTION 13.10. SUCCESSORS.
All agreements of the Company and the Guarantor in this Indenture, the
Notes and the Note Guarantee shall bind their respective successors and
assigns. All agreements of the Trustee in this Indenture shall bind its
successors and assigns.
SECTION 13.11. SEVERABILITY.
In case any provision in this Indenture or in the Notes shall be invalid,
illegal or unenforceable, the validity, legality and enforceability of the
remaining provisions shall not in any way be affected or impaired thereby.
SECTION 13.12. COUNTERPART ORIGINALS.
The parties may sign any number of copies of this Indenture. Each signed
copy shall be an original, but all of them together represent the same
agreement.
SECTION 13.13. TABLE OF CONTENTS, HEADINGS, ETC.
The Table of Contents, Cross-Reference Table and Headings of the Articles and
Sections of this Indenture have been inserted for convenience of
99
reference only, are not to be considered a part of this Indenture and shall in
no way modify or restrict any of the terms or provisions hereof.
[Signatures on following page]
100
SIGNATURES
Dated as of April 6, 1998 THE MUSICLAND GROUP, INC.
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
------------------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: CEO and Chairman
MUSICLAND STORES CORPORATION
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
------------------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: CEO and Chairman
BANK ONE, NA,
as Trustee
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: Vice President
101
EXHIBIT A-1
(Face of Senior Subordinated Note)
9_% Senior Subordinated Notes due 2008
No. $ CUSIP NO. ▇▇▇▇▇▇▇▇▇
--- ---------------
THE MUSICLAND GROUP, INC.
promises to pay to ________________ or registered assigns, the principal sum of
___________ Dollars on March 15, 2008.
Interest Payment Dates: March 15 and September 15
Record Dates: March 1 and September 1
THE MUSICLAND GROUP, INC.
By:
-------------------------------
Name:
Title:
This is one of the Senior Subordinated Notes
referred to in the within-mentioned Indenture:
Dated:
------------------------
BANK ONE, NA,
as Trustee
By:
----------------------------------
1
(Back of Senior Subordinated Note)
9_% Senior Subordinated Notes due 2008
[Unless and until it is exchanged in whole or in part for Senior
Subordinated Notes in definitive form, this Senior Subordinated Note may not be
transferred except as a whole by the Depositary to a nominee of the Depositary
or by a nominee of the Depositary to the Depositary or another nominee of the
Depositary or by the Depositary or any such nominee to a successor Depositary or
a nominee of such successor Depositary. Unless this certificate is presented by
an authorized representative of The Depository Trust Company (55 ▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇)("▇▇▇"), to the issuer or its agent for registration of
transfer, exchange or payment, and any certificate issued is registered in the
name of Cede & Co. or such other name as may be requested by an authorized
representative of DTC (and any payment is made to Cede & Co. or such other
entity as may be requested by an authorized representative of DTC), ANY
TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON
IS WRONGFUL in as much as the registered owner hereof, Cede & Co., has an
interest herein.](1)
------------------
(1) This paragraph should be included only if the Senior Subordinated Note is
issued in global form.
2
[THE SECURITY (OR ITS PREDECESSOR) EVIDENCED
HEREBY WAS ORIGINALLY ISSUED IN A TRANSACTION
EXEMPT FROM REGISTRATION UNDER ▇▇▇▇▇▇▇ ▇ ▇▇ ▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇ SECURITIES ACT OF 1933, AS AMENDED
(THE "SECURITIES ACT"), AND THE SECURITY EVIDENCED
HEREBY MAY NOT BE OFFERED, SOLD OR OTHERWISE
TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR
AN APPLICABLE EXEMPTION THEREFROM. EACH PURCHASER
OF THE SECURITY EVIDENCED HEREBY IS HEREBY
NOTIFIED THAT THE SELLER MAY BE RELYING ON THE
EXEMPTION FROM THE PROVISIONS OF SECTION 5 OF THE
SECURITIES ACT PROVIDED BY RULE 144A THEREUNDER.
THE HOLDER OF THE SECURITY EVIDENCED HEREBY
AGREES, FOR THE BENEFIT OF THE COMPANY, THAT (A)
SUCH SECURITY MAY BE RESOLD, PLEDGED OR OTHERWISE
TRANSFERRED, ONLY (1)(a) INSIDE THE UNITED STATES
TO A PERSON WHO THE SELLER REASONABLY BELIEVES IS
A QUALIFIED INSTITUTIONAL BUYER (AS DEFINED IN
RULE 144A UNDER THE SECURITIES ACT) IN A
TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A,
(b) IN A TRANSACTION MEETING THE REQUIREMENTS OF
RULE 144 UNDER THE SECURITIES ACT, (c) OUTSIDE THE
UNITED STATES TO A FOREIGN PERSON IN A TRANSACTION
MEETING THE REQUIREMENTS OF RULE 903 OR RULE 904
OF REGULATION S UNDER THE SECURITIES ACT, OR (d)
IN ACCORDANCE WITH ANOTHER EXEMPTION FROM THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT
(AND, IN THE CASE OF CLAUSE (b), (c) or (d), BASED
UPON AN OPINION OF COUNSEL IF THE COMPANY SO
REQUESTS), (2) TO THE COMPANY OR (3) PURSUANT TO
AN EFFECTIVE REGISTRATION STATEMENT AND, IN EACH
CASE, IN ACCORDANCE WITH ANY APPLICABLE SECURITIES
LAWS OF ANY STATE OF THE UNITED STATES OR ANY
OTHER APPLICABLE JURISDICTION AND (B) THE HOLDER
WILL, AND EACH SUBSEQUENT HOLDER IS REQUIRED TO,
NOTIFY ANY PURCHASER FROM IT OF THE SECURITY
EVIDENCED HEREBY OF THE RESALE RESTRICTIONS SET
FORTH IN (A) ABOVE.](2)
Capitalized terms used herein shall have the meanings assigned to them
in the Indenture referred to below unless otherwise indicated.
1. INTEREST. The Musicland Group, Inc., a Delaware corporation, or
its successor (the "COMPANY"), promises to pay interest on the
principal amount of this Senior Subordinated Note at the rate of
9_% per annum and shall pay the Liquidated Damages, if any,
payable pursuant to Section 5 of the Registration Rights
Agreement referred to below. The Company will pay interest and
Liquidated Damages, if any, in United States dollars (except as
otherwise provided herein) semi-annually in arrears on March 15
and September 15, commencing on September 15, 1998, or if any
such day is not a Business Day, on the next succeeding Business
Day (each an "INTEREST
-------------------------
(2) This paragraph should be removed upon the exchange of Senior Subordinated
Notes for New Senior Subordinated Notes in the Exchange Offer or upon the
registration of the Senior Subordinated Notes pursuant to the terms of the
Registration Rights Agreement.
3
PAYMENT DATE"). Interest on the Senior Subordinated Notes shall
accrue from the most recent date to which interest has been paid
or, if no interest has been paid, from the date of issuance;
PROVIDED that if there is no existing Default or Event of Default
in the payment of interest, and if this Senior Subordinated Note
is authenticated between a record date referred to on the face
hereof and the next succeeding Interest Payment Date, interest
shall accrue from such next succeeding Interest Payment Date,
except in the case of the original issuance of Senior
Subordinated Notes, in which case interest shall accrue from the
date of authentication. The Company shall pay interest
(including post-petition interest in any proceeding under any
Bankruptcy Law) on overdue principal at the rate equal to 1% per
annum in excess of the then applicable interest rate on the
Senior Subordinated Notes to the extent lawful; it shall pay
interest (including post-petition interest in any proceeding
under any Bankruptcy Law) on overdue installments of interest and
Liquidated Damages (without regard to any applicable grace
period) at the same rate to the extent lawful. Interest shall be
computed on the basis of a 360-day year comprised of twelve
30-day months.
2. METHOD OF PAYMENT. The Company will pay interest on the Senior
Subordinated Notes (except defaulted interest) and Liquidated
Damages, if any, on the applicable Interest Payment Date to the
Persons who are registered Holders of Senior Subordinated Notes
at the close of business on the March 1 or September 1 next
preceding the Interest Payment Date, even if such Senior
Subordinated Notes are canceled after such record date and on or
before such Interest Payment Date, except as provided in Section
2.12 of the Indenture with respect to defaulted interest. The
Senior Subordinated Notes shall be payable as to principal,
premium and Liquidated Damages, if any, and interest at the
office or agency of the Company maintained for such purpose
within or without the City and State of New York, or, at the
option of the Company, payment of interest and Liquidated
Damages, if any, may be made by check mailed to the Holders at
their respective addresses set forth in the register of Holders;
PROVIDED that payment by wire transfer of immediately available
funds shall be required with respect to principal of, premium and
Liquidated Damages, if any, and interest on, all Global Notes and
all other Senior Subordinated Notes the Holders of which shall
have provided written wire transfer instructions to the Company
and the Paying Agent. Such payment shall be in such coin or
currency of the United States of America as at the time of
payment is legal tender for payment of public and private debts.
3. PAYING AGENT AND REGISTRAR. Initially, Bank One, NA, the Trustee
under the Indenture, shall act as Paying Agent and Registrar.
The Company may change any Paying Agent or Registrar without
notice to any Holder. The Company or any of its Subsidiaries may
act in any such capacity.
4. INDENTURE. The Company issued the Senior Subordinated Notes
under an Indenture dated as of April 6, 1998 ("INDENTURE") among
the Company, the Guarantor and the Trustee. The terms of the
Senior Subordinated Notes include those stated in the Indenture
and those made a part of the Indenture by reference to the Trust
Indenture Act of 1939, as amended (15 U.S. Code Sections
77aaa-77bbbb) (the "TIA"). The Senior Subordinated Notes are
subject to all such terms, and Holders are referred to the
Indenture and such Act for a statement of such terms. The Senior
Subordinated Notes are general unsecured Obligations of the
Company limited to $150,000,000 in aggregate principal amount,
plus amounts, if any, sufficient to pay premium or Liquidated
Damages, if any, and interest on outstanding Senior Subordinated
Notes as set forth in Paragraph 2 hereof.
4
5. OPTIONAL REDEMPTION.
Except as set forth in the next paragraph, the Senior
Subordinated Notes shall not be redeemable at the Company's
option prior to March 15, 2003. Thereafter, the Senior
Subordinated Notes shall be subject to redemption at any time at
the option of the Company, in whole or in part, upon not less
than 30 nor more than 60 days' notice, at the redemption prices
(expressed as percentages of principal amount) set forth below
together with accrued and unpaid interest and Liquidated Damages,
if any, thereon to the applicable redemption date, if redeemed
during the twelve-month period beginning on March 15 of the years
indicated below:
YEAR PERCENTAGE
2003 104.938%
2004 103.292%
2005 101.646%
2006 and thereafter 100.000%
Notwithstanding the foregoing, at any time prior to March
15, 2001, the Company may redeem up to 40% of the original
aggregate principal amount of Senior Subordinated Notes at a
redemption price of 109.875% of the principal amount thereof,
plus accrued and unpaid interest and Liquidated Damages, if any,
thereon to the redemption date, with the net proceeds of a Public
Equity Offering; PROVIDED that at least 60% of the original
aggregate principal amount of Senior Subordinated Notes remains
outstanding immediately after the occurrence of each such
redemption; and PROVIDED, FURTHER, that such redemption shall
occur within 45 days of the date of the closing of such Public
Equity Offering.
6. MANDATORY REDEMPTION.
Except as set forth in paragraph 7 below, the Company shall
not be required to make mandatory redemption or sinking fund
payments with respect to the Senior Subordinated Notes.
7. REPURCHASE AT OPTION OF HOLDER.
(a) Upon the occurrence of a Change of Control, each Holder of
Senior Subordinated Notes will have the right to require the
Company to repurchase all or any part (equal to $1,000 or an
integral multiple thereof) of such Holder's Senior Subordinated
Notes pursuant to the offer described below (the "CHANGE OF
CONTROL OFFER") at an offer price in cash equal to 101% of the
aggregate principal amount thereof plus accrued and unpaid
interest and Liquidated Damages, if any, thereon, to the date of
purchase. Within 30 days following any Change of Control, the
Company will mail a notice to each Holder describing the
transaction or transactions that constitute the Change of Control
and offering to purchase Senior Subordinated Notes on the date
specified in such notice, which date shall be no earlier than 30
days and no later than 60 days from the date such notice is
mailed, pursuant to the procedures governing the Change of
Control Offer required by the Indenture.
(b) When the aggregate amount of Excess Proceeds exceeds $5.0
million, the Company shall offer to all Holders of Senior
Subordinated Notes (an "ASSET SALE OFFER") to purchase the
maximum principal amount of Senior Subordinated Notes that may be
purchased out of the Excess Proceeds at an offer price in cash
equal to 100% of principal amount thereof, plus accrued and
unpaid interest and Liquidated
5
Damages thereon, if any, to the date of purchase in accordance
with the procedures set forth in the Indenture. To the extent
that the aggregate amount of Senior Subordinated Notes tendered
pursuant to an Asset Sale Offer is less than the Excess Proceeds,
the Company may use any remaining Excess Proceeds for any general
corporate purposes. If the aggregate principal amount of Senior
Subordinated Notes surrendered by Holders thereof exceeds the
amount of Excess Proceeds, the Trustee shall select the Senior
Subordinated Notes to be purchased on a PRO RATA basis. Upon
completion of such offer to purchase, the amount of Excess
Proceeds shall be reset at zero.
(c) Holders of the Senior Subordinated Notes that are the
subject of an offer to purchase will receive a Change of Control
Offer or Asset Sale Offer from the Company prior to any related
purchase date and may elect to have such Senior Subordinated
Notes purchased by completing the form titled "OPTION OF HOLDER
TO ELECT PURCHASE" appearing below.
8. NOTICE OF REDEMPTION. Notice of redemption shall be mailed at
least 30 days but not more than 60 days before the redemption
date to each Holder whose Senior Subordinated Notes are to be
redeemed at its registered address. Senior Subordinated Notes in
denominations larger than $1,000 may be redeemed in part but only
in whole multiples of $1,000, unless all of the Senior
Subordinated Notes held by a Holder are to be redeemed. On and
after the redemption date, interest and Liquidated Damages, if
any, ceases to accrue on the Senior Subordinated Notes or
portions thereof called for redemption.
9. SUBORDINATION. The Senior Subordinated Notes are subordinated to
Senior Debt, which is: (i) all Indebtedness outstanding under the
Credit Facility, including any Guarantee thereof and all Hedging
Obligations with respect thereto, (ii) any other Indebtedness
permitted to be incurred by the Company under the terms of the
Indenture, unless the instrument under which such Indebtedness is
incurred expressly provides that it is on a parity with or
subordinated in right of payment to the Senior Subordinated
Notes, (iii) all Obligations with respect to the foregoing, and
(iv) all interest with respect to the foregoing clauses (i) and
(ii) accruing during the pendency of an Insolvency or Liquidation
Proceeding, whether or not allowed or allowable thereunder.
Notwithstanding anything to the contrary in the foregoing, Senior
Debt will not include (w) any liability for federal, state, local
or other taxes owed or owing by the Company, (x) any Indebtedness
of the Company to any of its Subsidiaries or other Affiliates,
(y) any trade payables or liability to trade creditors or
obligations with respect to consigned inventory arising in the
ordinary course of business (including guarantees thereof or
instruments evidencing such liabilities) or (z) any Indebtedness
that is incurred in violation of the Indenture. To the extent
provided in the Indenture, Senior Debt must be paid before the
Senior Subordinated Notes may be paid. The Company agrees and
each Holder of Senior Subordinated Notes by accepting a Senior
Subordinated Note consents and agrees to the subordination
provided in the Indenture and authorizes the Trustee to give it
effect.
10. DENOMINATIONS, TRANSFER, EXCHANGE. The Senior Subordinated Notes
are in registered form without coupons in initial denominations
of $1,000 and integral multiples of $1,000. The transfer of the
Senior Subordinated Notes may be registered and the Senior
Subordinated Notes may be exchanged as provided in the
Indenture. The Registrar and the Trustee may require a Holder,
among other things, to furnish appropriate endorsements and
transfer documents and the Company may require a Holder to pay
any taxes and fees required by law or permitted by the
Indenture. The
6
Company need not exchange or register the transfer of any Senior
Subordinated Note or portion of a Senior Subordinated Note
selected for redemption, except for the unredeemed portion of any
Senior Subordinated Note being redeemed in part. Also, it need
not exchange or register the transfer of any Senior Subordinated
Notes for a period of 15 days before a selection of Senior
Subordinated Notes to be redeemed or during the period between a
record date and the corresponding Interest Payment Date.
11. PERSONS DEEMED OWNERS. The registered Holder of a Senior
Subordinated Note may be treated as its owner for all purposes.
12. AMENDMENT, SUPPLEMENT AND WAIVER. Subject to the following
paragraph and certain other provisions set forth in the
Indenture, the Indenture, the Senior Subordinated Notes and the
Note Guarantee may be amended or supplemented with the consent of
the Holders of at least a majority in principal amount of the
Senior Subordinated Notes then outstanding (including, without
limitation, consents obtained in connection with a purchase of
or, tender offer or exchange offer for Senior Subordinated
Notes), and any existing Default or Event of Default or
compliance with any provision of the Indenture, the Senior
Subordinated Notes or the Note Guarantee may be waived with the
consent of the Holders of a majority in principal amount of the
then outstanding Senior Subordinated Notes (including consents
obtained in connection with a tender offer or exchange offer for
Senior Subordinated Notes).
Without the consent of any Holder of Senior Subordinated
Notes, the Company, the Guarantor and the Trustee may amend or
supplement the Indenture, the Note Guarantee or the Senior
Subordinated Notes to cure any ambiguity, defect or
inconsistency, to provide for uncertificated Senior Subordinated
Notes in addition to or in place of certificated Senior
Subordinated Notes, to provide for the assumption of the
Company's or the Guarantor's obligations to Holders of Senior
Subordinated Notes in the case of a merger or consolidation, to
make any change that would provide any additional rights or
benefits to the Holders of Senior Subordinated Notes or that does
not adversely affect the legal rights under the Indenture of any
such Holder, to comply with the requirements of the Commission in
order to effect or maintain the qualification of the Indenture
under the Trust Indenture Act or to allow any Subsidiary to
guarantee the Senior Subordinated Notes. Any amendments with
respect to subordination provisions of the Senior Subordinated
Notes or the Note Guarantee would require the consent of the
Holders of at least 75% in aggregate principal amount of the
Senior Subordinated Notes then outstanding if such amendment
would adversely affect the rights of the Holders of the Senior
Subordinated Notes.
13. DEFAULTS AND REMEDIES. Events of Default include: (i) default
for 30 days in the payment when due of interest on or Liquidated
Damages, if any, with respect to the Senior Subordinated Notes;
(ii) default in payment when due of the principal of or premium,
if any, on the Senior Subordinated Notes; (iii) failure by the
Company to comply with the provisions described in Section 4.10
or 4.14 or Article 5 of the Indenture; (iv) failure by the
Company for 30 days after notice from the Trustee or the Holders
of at least 25% in principal amount of the Senior Subordinated
Notes then outstanding to comply with the provisions described in
Section 4.07 or 4.09 of the Indenture; (v) failure by the Company
for 60 days after notice from the Trustee or the Holders of at
least 25% in principal amount of the Senior Subordinated Notes
then outstanding to comply with its other agreements in the
Indenture or the Senior Subordinated Notes; (vi) default under
any mortgage, indenture or instrument under
7
which there may be issued or by which there may be secured or
evidenced any Indebtedness for money borrowed by the Company or
any of its Restricted Subsidiaries (or the payment of which is
guaranteed by the Company or any of its Restricted Subsidiaries)
whether such Indebtedness or guarantee now exists, or is created
after the date of the Indenture, which default (a) is caused by a
failure to pay principal of or premium, if any, or interest on
such Indebtedness prior to the expiration of the grace period
provided in such Indebtedness on the date of such default (a
"PAYMENT DEFAULT") or (b) results in the acceleration of such
Indebtedness prior to its express maturity and, in each case, the
principal amount of any such Indebtedness, together with the
principal amount of any other such Indebtedness under which there
has been a Payment Default or the maturity of which has been so
accelerated, aggregates $15.0 million or more; (vii) failure by
the Company or any of its Restricted Subsidiaries to pay final
judgments aggregating in excess of $15.0 million, which judgments
are not paid, discharged or stayed within 60 days after their
entry; and (viii) certain events of bankruptcy or insolvency with
respect to the Company, any of its Significant Subsidiaries or
any group of Subsidiaries that, taken together, would constitute
a Significant Subsidiary.
If any Event of Default occurs and is continuing, the
Trustee or the Holders of at least 25% in principal amount of the
then outstanding Senior Subordinated Notes may declare all the
Senior Subordinated Notes to be due and payable immediately;
PROVIDED, HOWEVER, that if any Indebtedness or Obligation is
outstanding pursuant to the Credit Facility, upon a declaration
of acceleration by the Holders of the Senior Subordinated Notes
or the Trustee, all principal and interest under the Indenture
shall be due and payable upon the earlier of (x) the day which is
five Business Days after the provision to the Company, the Credit
Agent and the Trustee of such written notice of acceleration or
(y) the date of acceleration of any Indebtedness under the Credit
Facility; and PROVIDED, FURTHER, that in the event of an
acceleration based upon an Event of Default set forth in clause
(vi) above, such declaration of acceleration shall be
automatically annulled if the holders of Indebtedness which is
the subject of such acceleration have rescinded their declaration
of acceleration in respect of such Indebtedness or such Payment
Default shall have been cured or waived within 30 days thereof
and no other Event of Default has occurred during such 30-day
period which has not been cured, paid or waived. Notwithstanding
the foregoing, in the case of an Event of Default arising from
certain events of bankruptcy or insolvency with respect to the
Company or any of its Significant Subsidiaries, all outstanding
Senior Subordinated Notes will become due and payable without
further action or notice. Holders of the Senior Subordinated
Notes may not enforce the Indenture or the Senior Subordinated
Notes except as provided in the Indenture. Subject to certain
limitations, Holders of a majority in principal amount of the
then outstanding Senior Subordinated Notes may direct the Trustee
in its exercise of any trust or power. The Trustee may withhold
from Holders of the Senior Subordinated Notes notice of any
continuing Default or Event of Default (except a Default or Event
of Default relating to the payment of principal or interest) if
it determines that withholding notice is in their interest.
14. TRUSTEE DEALINGS WITH COMPANY. The Trustee, in its individual or
any other capacity, may make loans to, accept deposits from, and
perform services for the Company, the Guarantor or their
respective Affiliates, and may otherwise deal with the Company,
the Guarantor or their respective Affiliates, as if it were not
the Trustee.
8
15. NO RECOURSE AGAINST OTHERS. No director, officer, employee,
incorporator or stockholder of the Company or the Guarantor, as
such, shall have any liability for any obligations of the Company
or the Guarantor under the Senior Subordinated Notes, the
Indenture or the Note Guarantee or for any claim based on, in
respect of, or by reason of, such obligations or their creation.
Each Holder of Senior Subordinated Notes by accepting a Senior
Subordinated Note waives and releases all such liability. The
waiver and release are part of the consideration for the issuance
of the Senior Subordinated Notes and any Note Guarantee.
16. AUTHENTICATION. This Senior Subordinated Note shall not be valid
until authenticated by the manual signature of the Trustee or an
authenticating agent.
17. ABBREVIATIONS. Customary abbreviations may be used in the name
of a Holder or an assignee, such as: TEN COM (= tenants in
common), TEN ENT (= tenants by the entireties), JT TEN (= joint
tenants with right of survivorship and not as tenants in common),
CUST (= Custodian), and U/G/M/A (= Uniform Gifts to Minors Act).
18. ADDITIONAL RIGHTS OF HOLDERS OF TRANSFER RESTRICTED SECURITIES.
In addition to the rights provided to Holders of the Senior
Subordinated Notes under the Indenture, Holders of Transferred
Restricted Securities (as defined in the Registration Rights
Agreement) shall have all the rights set forth in the A/B
Exchange Registration Rights Agreement, dated as of the date
hereof, among the Company, the Guarantor and the Initial
Purchaser (the "REGISTRATION RIGHTS AGREEMENT").
19. CUSIP NUMBERS. Pursuant to a recommendation promulgated by the
Committee on Uniform Security Identification Procedures, the
Company has caused CUSIP numbers to be printed on the Senior
Subordinated Notes and the Trustee may use CUSIP numbers in
notices of redemption as a convenience to the Holders. No
representation is made as to the accuracy of such numbers either
as printed on the Senior Subordinated Notes or as contained in
any notice of redemption and reliance may be placed only on the
other identification numbers placed thereon.
The Company shall furnish to any Holder upon written request and
without charge a copy of the Indenture and/or the Registration Rights Agreement.
Requests may be made to:
The Musicland Group, Inc.
▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
General Counsel
9
ASSIGNMENT FORM
To assign this Senior Subordinated Note, fill in the form below: (I) or (we)
assign and transfer this Senior Subordinated Note to
--------------------------------------------------------------------------------
(Insert assignee's soc. sec. or tax I.D. no.)
--------------------------------------------------------------------------------
-------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
(Print or type assignee's name, address and zip code)
and irrevocably appoint_________________________________________________________
to transfer this Senior Subordinated Note on the books of the Company. The
agent may substitute another to act for him.
--------------------------------------------------------------------------------
Date:
Your Signature:_______________________________________
(Sign exactly as your name appears on the face of this
Senior Subordinated Note)
Signature Guarantee:
10
OPTION OF HOLDER TO ELECT PURCHASE
If you want to elect to have this Senior Subordinated Note purchased by the
Company pursuant to Section 4.10 or 4.14 of the Indenture, check the box below:
/ / Section 4.10 Section 4.14
If you want to elect to have only part of the Senior Subordinated Note
purchased by the Company pursuant to Section 4.10 or Section 4.14 of the
Indenture, state the amount you elect to have purchased: $___________
Date:
Your Signature:____________________________________________
(Sign exactly as your name appears on the Senior Subordinated Note)
Tax Identification No.:_________
Signature Guarantee:
11
SCHEDULE OF EXCHANGES OF SENIOR SUBORDINATED NOTES (3)
THE FOLLOWING EXCHANGES OF A PART OF THIS GLOBAL NOTE FOR OTHER SENIOR
SUBORDINATED NOTES HAVE BEEN MADE:
Principal Amount Signature of
Amount of decrease Amount of increase of this Global authorized officer
in Principal Amount in Principal Note following of Trustee or Senior
Date of Exchange of this Global Note Amount of this such decrease (or Subordinated Note
Global Note increase) Custodian
-------------------------
(3) This should be included only if the Senior Subordinated Note is issued in
global form.
12
EXHIBIT A-2
(Face of Regulation S Temporary Global Note)
9_% Senior Subordinated Notes due 2008
No. $
----- --------------- ▇▇▇▇ ▇▇. ▇▇▇▇▇▇▇▇▇
THE MUSICLAND GROUP, INC.
promises to pay to ________________ or registered assigns, the principal sum of
________ Dollars on March 15, 2008.
Interest Payment Dates: March 15 and September 15
Record Dates: March 1 and September 1
THE MUSICLAND GROUP, INC.
By:
------------------------------
Name:
Title:
This is one of the Senior Subordinated Notes
referred to in the within-mentioned Indenture:
Dated:
-------------------------
BANK ONE, NA,
as Trustee
By:
-----------------------------
1
(Back of Regulation S Temporary Global Note)
9_% Senior Subordinated Note due 2008
UNLESS AND UNTIL IT IS EXCHANGED IN WHOLE OR IN PART FOR SENIOR
SUBORDINATED NOTES IN DEFINITIVE FORM, THIS SENIOR SUBORDINATED NOTE MAY NOT BE
TRANSFERRED EXCEPT AS A WHOLE BY THE DEPOSITARY TO A NOMINEE OF THE DEPOSITARY
OR BY A NOMINEE OF THE DEPOSITARY TO THE DEPOSITARY OR ANOTHER NOMINEE OF THE
DEPOSITARY OR BY THE DEPOSITARY OR ANY SUCH NOMINEE TO A SUCCESSOR DEPOSITARY OR
A NOMINEE OF SUCH SUCCESSOR DEPOSITARY. UNLESS THIS CERTIFICATE IS PRESENTED BY
AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY (55 ▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇) ("▇▇▇"), TO THE ISSUER OR ITS AGENT FOR REGISTRATION OF
TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE
NAME OF CEDE & CO. OR SUCH OTHER NAME AS MAY BE REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR SUCH OTHER
ENTITY AS MAY BE REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY
TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON
IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST
HEREIN.
[THE SECURITY (OR ITS PREDECESSOR) EVIDENCED HEREBY WAS ORIGINALLY ISSUED
IN A TRANSACTION EXEMPT FROM REGISTRATION UNDER ▇▇▇▇▇▇▇ ▇ ▇▇ ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND THE SECURITY
EVIDENCED HEREBY MAY NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED IN THE
ABSENCE OF SUCH REGISTRATION OR AN APPLICABLE EXEMPTION THEREFROM. EACH
PURCHASER OF THE SECURITY EVIDENCED HEREBY IS HEREBY NOTIFIED THAT THE SELLER
MAY BE RELYING ON THE EXEMPTION FROM THE PROVISIONS OF SECTION 5 OF THE
SECURITIES ACT PROVIDED BY RULE 144A THEREUNDER. THE HOLDER OF THE SECURITY
EVIDENCED HEREBY AGREES, FOR THE BENEFIT OF THE COMPANY, THAT (A) SUCH SECURITY
MAY BE RESOLD, PLEDGED OR OTHERWISE TRANSFERRED, ONLY (1)(a) INSIDE THE UNITED
STATES TO A PERSON WHO THE SELLER REASONABLY BELIEVES IS A QUALIFIED
INSTITUTIONAL BUYER (AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT) IN A
TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A, (b) IN A TRANSACTION MEETING
THE REQUIREMENTS OF RULE 144 UNDER THE SECURITIES ACT, (c) OUTSIDE THE UNITED
STATES TO A FOREIGN PERSON IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 903
OR RULE 904 OF REGULATION S OF THE SECURITIES ACT, OR (d) IN ACCORDANCE WITH
ANOTHER EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT (AND,
IN THE CASE OF CLAUSES (b), (c) OR (d), BASED UPON AN OPINION OF COUNSEL IF THE
COMPANY SO REQUESTS), (2) TO THE COMPANY OR (3) PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT AND, IN EACH CASE, IN ACCORDANCE WITH ANY APPLICABLE
SECURITIES LAWS OF ANY STATE OF THE UNITED STATES OR ANY OTHER APPLICABLE
JURISDICTION AND (B) THE HOLDER WILL, AND EACH SUBSEQUENT HOLDER IS REQUIRED TO,
NOTIFY ANY PURCHASER FROM IT OF THE SECURITY EVIDENCED HEREBY OF THE RESALE
RESTRICTIONS SET FORTH IN (A) ABOVE.
THE RIGHTS ATTACHING TO THIS REGULATION S TEMPORARY GLOBAL NOTE, AND THE
CONDITIONS AND PROCEDURES GOVERNING ITS EXCHANGE FOR
2
DEFINITIVE SENIOR SUBORDINATED NOTES, ARE AS SPECIFIED IN THE INDENTURE (AS
DEFINED HEREIN).
NEITHER THE HOLDER NOR THE BENEFICIAL OWNERS OF THIS REGULATION S TEMPORARY
GLOBAL NOTE SHALL BE ENTITLED TO RECEIVE PAYMENT OF INTEREST HEREON PRIOR TO THE
EXCHANGE OF THIS REGULATION S TEMPORARY GLOBAL NOTE FOR A REGULATION S PERMANENT
GLOBAL NOTE AS CONTEMPLATED BY THE INDENTURE.]
Until this Regulation S Temporary Global Note is exchanged for Regulation S
Permanent Global Notes, the Holder hereof shall not be entitled to receive
payments of interest or Liquidated Damages, if any, hereon although interest and
Liquidated Damages, if any, will continue to accrue; until so exchanged in full,
this Regulation S Temporary Global Note shall in all other respects be entitled
to the same benefits as other Senior Subordinated Notes under the Indenture.
This Regulation S Temporary Global Note is exchangeable in whole or in part
for one or more Regulation S Permanent Global Notes or Rule 144A Global Notes
only (i) on or after the termination of the 40-day restricted period (as defined
in Regulation S) and (ii) upon presentation of certificates (accompanied by an
Opinion of Counsel, if applicable) required by Article 2 of the Indenture. Upon
exchange of this Regulation S Temporary Global Note for one or more Regulation S
Permanent Global Notes or Rule 144A Global Notes, the Trustee shall cancel this
Regulation S Temporary Global Note.
This Regulation S Temporary Global Note shall not become valid or
obligatory until the certificate of authentication hereon shall have been duly
manually signed by the Trustee in accordance with the Indenture. This
Regulation S Temporary Global Note shall be governed by and construed in
accordance with the laws of the State of the New York. All references to "$,"
"Dollars," "dollars" or "U.S. $" are to such coin or currency of the United
States of America as at the time shall be legal tender for the payment of public
and private debts therein.
Capitalized terms used herein shall have the meanings assigned to them in
the Indenture referred to below unless otherwise indicated.
1. INTEREST. The Musicland Group, Inc., a Delaware corporation, or its
successor (the "COMPANY"), promises to pay interest on the principal
amount of this Senior Subordinated Note at the rate of 9_% per annum
and shall pay the Liquidated Damages, if any, payable pursuant to
Section 5 of the Registration Rights Agreement referred to below. The
Company will pay interest and Liquidated Damages, if any, in United
States dollars (except as otherwise provided herein) semi-annually in
arrears on March 15 and September 15, commencing on September 15,
1998, or if any such day is not a Business Day, on the next succeeding
Business Day (each an "INTEREST PAYMENT DATE"). Interest on the
Senior Subordinated Notes shall accrue from the most recent date to
which interest has been paid or, if no interest has been paid, from
the date of issuance; PROVIDED that if there is no existing Default or
Event of Default in the payment of interest, and if this Senior
Subordinated Note is authenticated between a record date referred to
on the face hereof and the next succeeding Interest Payment Date,
interest shall accrue from such next succeeding Interest Payment Date,
except in the case of the
------------------------------
1 These paragraphs should be removed upon the exchange of Regulation S
Temporary Global Notes for Regulation S Permanent Global Notes pursuant to the
Indenture.
3
original issuance of Senior Subordinated Notes, in which case interest
shall accrue from the date of authentication. The Company shall pay
interest (including post-petition interest in any proceeding under any
Bankruptcy Law) on overdue principal at the rate equal to 1% per annum
in excess of the then applicable interest rate on the Senior
Subordinated Notes to the extent lawful; it shall pay interest
(including post-petition interest in any proceeding under any
Bankruptcy Law) on overdue installments of interest and Liquidated
Damages (without regard to any applicable grace period) at the same
rate to the extent lawful. Interest shall be computed on the basis of
a 360-day year comprised of twelve 30-day months.
2. METHOD OF PAYMENT. The Company will pay interest on the Senior
Subordinated Notes (except defaulted interest) and Liquidated Damages,
if any, on the applicable Interest Payment Date to the Persons who are
registered Holders of Senior Subordinated Notes at the close of
business on the March 1 or September 1 next preceding the Interest
Payment Date, even if such Senior Subordinated Notes are canceled
after such record date and on or before such Interest Payment Date,
except as provided in Section 2.12 of the Indenture with respect to
defaulted interest. The Senior Subordinated Notes shall be payable as
to principal, premium and Liquidated Damages, if any, and interest at
the office or agency of the Company maintained for such purpose within
or without the City and State of New York, or, at the option of the
Company, payment of interest and Liquidated Damages, if any, may be
made by check mailed to the Holders at their respective addresses set
forth in the register of Holders; PROVIDED that payment by wire
transfer of immediately available funds shall be required with respect
to principal of, premium and Liquidated Damages, if any, and interest
on, all Global Notes and all other Senior Subordinated Notes the
Holders of which shall have provided written wire transfer
instructions to the Company and the Paying Agent. Such payment shall
be in such coin or currency of the United States of America as at the
time of payment is legal tender for payment of public and private
debts.
3. PAYING AGENT AND REGISTRAR. Initially, Bank One, NA, the Trustee
under the Indenture, shall act as Paying Agent and Registrar. The
Company may change any Paying Agent or Registrar without notice to any
Holder. The Company or any of its Subsidiaries may act in any such
capacity.
4. INDENTURE. The Company issued the Senior Subordinated Notes under an
Indenture dated as of April 6, 1998 ("INDENTURE") among the Company,
the Guarantor and the Trustee. The terms of the Senior Subordinated
Notes include those stated in the Indenture and those made a part of
the Indenture by reference to the Trust Indenture Act of 1939, as
amended (15 U.S. Code Sections 77aaa-77bbbb) (the "TIA"). The Senior
Subordinated Notes are subject to all such terms, and Holders are
referred to the Indenture and such Act for a statement of such terms.
The Senior Subordinated Notes are general unsecured Obligations of the
Company limited to $150,000,000 in aggregate principal amount, plus
amounts, if any, sufficient to pay premium or Liquidated Damages, if
any, and interest on outstanding Senior Subordinated Notes as set
forth in Paragraph 2 hereof.
5. OPTIONAL REDEMPTION.
Except as set forth in the next paragraph, the Senior
Subordinated Notes shall not be redeemable at the Company's option
prior to March 15, 2003. Thereafter, the Senior Subordinated Notes
shall be subject to redemption at any time at the option of the
Company, in whole or in part, upon not less than 30 nor
4
more than 60 days' notice, at the redemption prices (expressed as
percentages of principal amount) set forth below together with accrued
and unpaid interest and Liquidated Damages, if any, thereon to the
applicable redemption date, if redeemed during the twelve-month period
beginning on March 15 of the years indicated below:
YEAR PERCENTAGE
2003 . . . . . . . . . . . . . . . . . . . 104.938%
2004 . . . . . . . . . . . . . . . . . . . 103.292%
2005 . . . . . . . . . . . . . . . . . . . 101.646%
2006 and thereafter . . . . . . . . . . . 100.000%
Notwithstanding the foregoing, at any time prior to March 15,
2001, the Company may redeem up to 40% of the original aggregate
principal amount of Senior Subordinated Notes at a redemption price of
109.875% of the principal amount thereof, plus accrued and unpaid
interest and Liquidated Damages, if any, thereon to the redemption
date, with the net proceeds of a Public Equity Offering; PROVIDED that
at least 60% of the original aggregate principal amount of Senior
Subordinated Notes remains outstanding immediately after the
occurrence of each such redemption; and PROVIDED, FURTHER, that such
redemption shall occur within 45 days of the date of the closing of
such Public Equity Offering.
6. MANDATORY REDEMPTION.
Except as set forth in paragraph 7 below, the Company shall not
be required to make mandatory redemption or sinking fund payments with
respect to the Senior Subordinated Notes.
7. REPURCHASE AT OPTION OF HOLDER.
(a) Upon the occurrence of a Change of Control, each Holder of Senior
Subordinated Notes will have the right to require the Company to
repurchase all or any part (equal to $1,000 or an integral multiple
thereof) of such Holder's Senior Subordinated Notes pursuant to the
offer described below (the "CHANGE OF CONTROL OFFER") at an offer
price in cash equal to 101% of the aggregate principal amount thereof
plus accrued and unpaid interest and Liquidated Damages, if any,
thereon, to the date of purchase. Within 30 days following any Change
of Control, the Company will mail a notice to each Holder describing
the transaction or transactions that constitute the Change of Control
and offering to purchase Senior Subordinated Notes on the date
specified in such notice, which date shall be no earlier than 30 days
and no later than 60 days from the date such notice is mailed,
pursuant to the procedures governing the Change of Control Offer
required by the Indenture.
(b) When the aggregate amount of Excess Proceeds exceeds $5.0
million, the Company shall offer to all Holders of Senior Subordinated
Notes (an "ASSET SALE OFFER") to purchase the maximum principal amount
of Senior Subordinated Notes that may be purchased out of the Excess
Proceeds at an offer price in cash equal to 100% of principal amount
thereof, plus accrued and unpaid interest and Liquidated Damages
thereon, if any, to the date of purchase in accordance with the
procedures set forth in the Indenture. To the extent that the
aggregate amount of Senior Subordinated Notes tendered pursuant to an
Asset Sale Offer is less than the Excess
5
Proceeds, the Company may use any remaining Excess Proceeds for any
general corporate purposes. If the aggregate principal amount of
Senior Subordinated Notes surrendered by Holders thereof exceeds the
amount of Excess Proceeds, the Trustee shall select the Senior
Subordinated Notes to be purchased on a PRO RATA basis. Upon
completion of such offer to purchase, the amount of Excess Proceeds
shall be reset at zero.
(c) Holders of the Senior Subordinated Notes that are the subject of
an offer to purchase will receive a Change of Control Offer or Asset
Sale Offer from the Company prior to any related purchase date and may
elect to have such Senior Subordinated Notes purchased by completing
the form titled "Option of Holder to Elect Purchase" appearing below.
8. NOTICE OF REDEMPTION. Notice of redemption shall be mailed at least
30 days but not more than 60 days before the redemption date to each
Holder whose Senior Subordinated Notes are to be redeemed at its
registered address. Senior Subordinated Notes in denominations larger
than $1,000 may be redeemed in part but only in whole multiples of
$1,000, unless all of the Senior Subordinated Notes held by a Holder
are to be redeemed. On and after the redemption date, interest and
Liquidated Damages, if any, ceases to accrue on the Senior
Subordinated Notes or portions thereof called for redemption.
9. SUBORDINATION. The Senior Subordinated Notes are subordinated to
Senior Debt, which is: (i) all Indebtedness outstanding under the
Credit Facility, including any Guarantee thereof and all Hedging
Obligations with respect thereto, (ii) any other Indebtedness
permitted to be incurred by the Company under the terms of the
Indenture, unless the instrument under which such Indebtedness is
incurred expressly provides that it is on a parity with or
subordinated in right of payment to the Senior Subordinated Notes,
(iii) all Obligations with respect to the foregoing, and (iv) all
interest with respect to the foregoing clauses (i) and (ii) accruing
during the pendency of an Insolvency or Liquidation Proceeding,
whether or not allowed or allowable thereunder. Notwithstanding
anything to the contrary in the foregoing, Senior Debt will not
include (w) any liability for federal, state, local or other taxes
owed or owing by the Company, (x) any Indebtedness of the Company to
any of its Subsidiaries or other Affiliates, (y) any trade payables or
liability to trade creditors or obligations with respect to consigned
inventory arising in the ordinary course of business (including
guarantees thereof or instruments evidencing such liabilities) or (z)
any Indebtedness that is incurred in violation of the Indenture. To
the extent provided in the Indenture, Senior Debt must be paid before
the Senior Subordinated Notes may be paid. The Company agrees and
each Holder of Senior Subordinated Notes by accepting a Senior
Subordinated Note consents and agrees to the subordination provided in
the Indenture and authorizes the Trustee to give it effect.
10. DENOMINATIONS, TRANSFER, EXCHANGE. The Senior Subordinated Notes are
in registered form without coupons in initial denominations of $1,000
and integral multiples of $1,000. The transfer of the Senior
Subordinated Notes may be registered and the Senior Subordinated Notes
may be exchanged as provided in the Indenture. The Registrar and the
Trustee may require a Holder, among other things, to furnish
appropriate endorsements and transfer documents and the Company may
require a Holder to pay any taxes and fees required by law or
permitted by the Indenture. The Company need not exchange or register
the transfer of any Senior Subordinated Note or portion of a Senior
Subordinated Note
6
selected for redemption, except for the unredeemed portion of any
Senior Subordinated Note being redeemed in part. Also, it need not
exchange or register the transfer of any Senior Subordinated Notes for
a period of 15 days before a selection of Senior Subordinated Notes to
be redeemed or during the period between a record date and the
corresponding Interest Payment Date.
11. PERSONS DEEMED OWNERS. The registered Holder of a Senior Subordinated
Note may be treated as its owner for all purposes.
12. AMENDMENT, SUPPLEMENT AND WAIVER. Subject to the following paragraph
and certain other provisions set forth in the Indenture, the
Indenture, the Senior Subordinated Notes and the Note Guarantee may be
amended or supplemented with the consent of the Holders of at least a
majority in principal amount of the Senior Subordinated Notes then
outstanding (including, without limitation, consents obtained in
connection with a purchase of or, tender offer or exchange offer for
Senior Subordinated Notes), and any existing Default or Event of
Default or compliance with any provision of the Indenture, the Senior
Subordinated Notes or the Note Guarantee may be waived with the
consent of the Holders of a majority in principal amount of the then
outstanding Senior Subordinated Notes (including consents obtained in
connection with a tender offer or exchange offer for Senior
Subordinated Notes).
Without the consent of any Holder of Senior Subordinated Notes,
the Company, the Guarantor and the Trustee may amend or supplement the
Indenture, the Note Guarantee or the Senior Subordinated Notes to cure
any ambiguity, defect or inconsistency, to provide for uncertificated
Senior Subordinated Notes in addition to or in place of certificated
Senior Subordinated Notes, to provide for the assumption of the
Company's or the Guarantor's obligations to Holders of Senior
Subordinated Notes in the case of a merger or consolidation, to make
any change that would provide any additional rights or benefits to the
Holders of Senior Subordinated Notes or that does not adversely affect
the legal rights under the Indenture of any such Holder, to comply
with the requirements of the Commission in order to effect or maintain
the qualification of the Indenture under the Trust Indenture Act or to
allow any Subsidiary to guarantee the Senior Subordinated Notes. Any
amendments with respect to subordination provisions of the Senior
Subordinated Notes or the Note Guarantee would require the consent of
the Holders of at least 75% in aggregate principal amount of the
Senior Subordinated Notes then outstanding if such amendment would
adversely affect the rights of the Holders of Senior Subordinated
Notes.
13. DEFAULTS AND REMEDIES. Events of Default include: (i) default for 30
days in the payment when due of interest on or Liquidated Damages, if
any, with respect to the Senior Subordinated Notes; (ii) default in
payment when due of the principal of or premium, if any, on the Senior
Subordinated Notes; (iii) failure by the Company to comply with the
provisions described in Section 4.10 or 4.14 or Article 5 of the
Indenture; (iv) failure by the Company for 30 days after notice from
the Trustee or the Holders of at least 25% in principal amount of the
Senior Subordinated Notes to comply with the provisions described in
Section 4.07 or 4.09 of the Indenture; (v) failure by the Company for
60 days after notice from the Trustee or the Holders of at least 25%
in principal amount of the Senior Subordinated Notes then outstanding
to comply with its other agreements in the Indenture or the Senior
7
Subordinated Notes; (vi) default under any mortgage, indenture or
instrument under which there may be issued or by which there may be
secured or evidenced any Indebtedness for money borrowed by the
Company or any of its Restricted Subsidiaries (or the payment of which
is guaranteed by the Company or any of its Restricted Subsidiaries)
whether such Indebtedness or guarantee now exists, or is created after
the date of the Indenture, which default (a) is caused by a failure to
pay principal of or premium, if any, or interest on such Indebtedness
prior to the expiration of the grace period provided in such
Indebtedness on the date of such default (a "PAYMENT DEFAULT") or (b)
results in the acceleration of such Indebtedness prior to its express
maturity and, in each case, the principal amount of any such
Indebtedness, together with the principal amount of any such other
Indebtedness under which there has been a Payment Default or the
maturity of which has been so accelerated, aggregates $15.0 million or
more; (vii) failure by the Company or any of its Restricted
Subsidiaries to pay final judgments aggregating in excess of $15.0
million, which judgments are not paid, discharged or stayed within 60
days after their entry; and (viii) certain events of bankruptcy or
insolvency with respect to the Company, any of its Significant
Subsidiaries or any group of Subsidiaries that, taken together, would
constitute a Significant Subsidiary.
If any Event of Default occurs and is continuing, the Trustee or
the Holders of at least 25% in principal amount of the then
outstanding Senior Subordinated Notes may declare all the Senior
Subordinated Notes to be due and payable immediately; PROVIDED,
HOWEVER, that if any Indebtedness or Obligation is outstanding
pursuant to the Credit Facility, upon a declaration of acceleration by
the Holders of the Senior Subordinated Notes or the Trustee, all
principal and interest under the Indenture shall be due and payable
upon the earlier of (x) the day which is five Business Days after the
provision to the Company, the Credit Agent and the Trustee of such
written notice of acceleration or (y) the date of acceleration of any
Indebtedness under the Credit Facility; and PROVIDED, FURTHER, that in
the event of an acceleration based upon an Event of Default set forth
in clause (vi) above, such declaration of acceleration shall be
automatically annulled if the holders of Indebtedness which is the
subject of such acceleration have rescinded their declaration of
acceleration in respect of such Indebtedness or such Payment Default
shall have been cured or waived within 30 days thereof and no other
Event of Default has occurred during such 30-day period which has not
been cured, paid or waived. Notwithstanding the foregoing, in the
case of an Event of Default arising from certain events of bankruptcy
or insolvency with respect to the Company or any of its Significant
Subsidiaries, all outstanding Senior Subordinated Notes will become
due and payable without further action or notice. Holders of the
Senior Subordinated Notes may not enforce the Indenture or the Senior
Subordinated Notes except as provided in the Indenture. Subject to
certain limitations, Holders of a majority in principal amount of the
then outstanding Senior Subordinated Notes may direct the Trustee in
its exercise of any trust or power. The Trustee may withhold from
Holders of the Senior Subordinated Notes notice of any continuing
Default or Event of Default (except a Default or Event of Default
relating to the payment of principal or interest) if it determines
that withholding notice is in their interest.
14. TRUSTEE DEALINGS WITH COMPANY. The Trustee, in its individual or any
other capacity, may make loans to, accept deposits from, and perform
services for the Company, the Guarantor or their respective
Affiliates, and may otherwise deal with
8
the Company, the Guarantor or their respective Affiliates, as if it
were not the Trustee.
15. NO RECOURSE AGAINST OTHERS. No director, officer, employee,
incorporator or stockholder of the Company or the Guarantor, as such,
shall have any liability for any obligations of the Company or the
Guarantor under the Senior Subordinated Notes, the Indenture or the
Note Guarantee or for any claim based on, in respect of, or by reason
of, such obligations or their creation. Each Holder of Senior
Subordinated Notes by accepting a Senior Subordinated Note waives and
releases all such liability. The waiver and release are part of the
consideration for the issuance of the Senior Subordinated Notes and
any Note Guarantee.
16. AUTHENTICATION. This Senior Subordinated Note shall not be valid
until authenticated by the manual signature of the Trustee or an
authenticating agent.
17. ABBREVIATIONS. Customary abbreviations may be used in the name of a
Holder or an assignee, such as: TEN COM (= tenants in common), TEN
ENT (= tenants by the entireties), JT TEN (= joint tenants with right
of survivorship and not as tenants in common), CUST (= Custodian), and
U/G/M/A (= Uniform Gifts to Minors Act).
18. ADDITIONAL RIGHTS OF HOLDERS OF TRANSFER RESTRICTED SECURITIES. In
addition to the rights provided to Holders of the Senior Subordinated
Notes under the Indenture, Holders of Transferred Restricted
Securities (as defined in the Registration Rights Agreement) shall
have all the rights set forth in the A/B Exchange Registration Rights
Agreement, dated as of the date hereof, among the Company, the
Guarantor and the Initial Purchaser (the "REGISTRATION RIGHTS
AGREEMENT").
19. CUSIP NUMBERS. Pursuant to a recommendation promulgated by the
Committee on Uniform Security Identification Procedures, the Company
has caused CUSIP numbers to be printed on the Senior Subordinated
Notes and the Trustee may use CUSIP numbers in notices of redemption
as a convenience to the Holders. No representation is made as to the
accuracy of such numbers either as printed on the Senior Subordinated
Notes or as contained in any notice of redemption and reliance may be
placed only on the other identification numbers placed thereon.
The Company shall furnish to any Holder upon written request and without
charge a copy of the Indenture and/or the Registration Rights Agreement.
Requests may be made to:
9
The Musicland Group, Inc.
▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
General Counsel
10
ASSIGNMENT FORM
To assign this Senior Subordinated Note, fill in the form below: (I) or (we)
assign and transfer this Senior Subordinated Note to
--------------------------------------------------------------------------------
(Insert assignee's soc. sec. or tax I.D. no.)
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
(Print or type assignee's name, address and zip code)
and irrevocably appoint ____________________________________________________
to transfer this Senior Subordinated Note on the books of the Company. The
agent may substitute another to act for him.
--------------------------------------------------------------------------------
Date: Your Signature:
----------------------------------
(Sign exactly as your name appears
on the face of this Senior
Subordinated Note)
Signature Guarantee:
11
OPTION OF HOLDER TO ELECT PURCHASE
If you want to elect to have this Senior Subordinated Note purchased by the
Company pursuant to Section 4.10 or 4.14 of the Indenture, check the box below:
/ / Section 4.10 Section 4.14
If you want to elect to have only part of the Senior Subordinated Note
purchased by the Company pursuant to Section 4.10 or Section 4.14 of the
Indenture, state the amount you elect to have purchased: $___________
Date: Your Signature:
----------------------------------
(Sign exactly as your name appears
on the face of this Senior
Subordinated Note)
Tax Identification No.:
---------
Signature Guarantee:
12
SCHEDULE OF EXCHANGES FOR GLOBAL NOTES
The following exchanges of a part of this Regulation S Temporary Global
Note for other Global Notes have been made:
Amount of decrease in Amount of increase in Principal Amount of this Signature of
Date of Exchange Principal Amount Principal Amount Global Note authorized officer of Trustee or
---------------- of this Global of this Global following such decrease Senior Subordinated Note
Note Note (or increase) Custodian
---- ---- ------------- ---------
13
EXHIBIT B-1
FORM OF CERTIFICATE FOR EXCHANGE OR REGISTRATION OF TRANSFER
FROM RULE 144A GLOBAL NOTE TO REGULATION S GLOBAL NOTE
(Pursuant to Section 2.06(a)(i) of the Indenture)
Bank One, NA
c/o Corporate Trust ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Re: 9_% Senior Subordinated Notes due 2008 The Musicland Group, Inc.
Reference is hereby made to the Indenture, dated as of April 6, 1998 (the
"INDENTURE"), among The Musicland Group, Inc., a Delaware corporation (the
"COMPANY"), and Musicland Stores Corporation, a Delaware corporation, ("MSC" or
the "GUARANTOR") and Bank One, NA, as trustee (the "TRUSTEE"). Capitalized
terms used but not defined herein shall have the meanings given to them in the
Indenture.
This letter relates to $ _______________ principal amount of Senior
Subordinated Notes which are evidenced by one or more Rule 144A Global Notes and
held with the Depositary in the name of ______________________ (the
"TRANSFEROR"). The Transferor has requested a transfer of such beneficial
interest in the Senior Subordinated Notes to a Person who will take delivery
thereof in the form of an equal principal amount of Senior Subordinated Notes
evidenced by one or more Regulation S Global Notes, which amount, immediately
after such transfer, is to be held with the Depositary through Euroclear or
Cedel or both.
In connection with such request and in respect of such Senior Subordinated
Notes, the Transferor hereby certifies that such transfer has been effected in
compliance with the transfer restrictions applicable to the Global Notes and
pursuant to and in accordance with Rule 903 or Rule 904 under the United States
Securities Act of 1933, as amended (the "SECURITIES ACT"), and accordingly the
Transferor hereby further certifies that:
(1) The offer of the Senior Subordinated Notes was not made to a person in
the United States;
(2) either:
(a) at the time the buy order was originated, the transferee was
outside the United States or the Transferor and any person acting
on its behalf reasonably believed and believes that the
transferee was outside the United States; or
(b) the transaction was executed in, on or through the facilities of
a designated offshore securities market and neither the
Transferor
1
nor any person acting on its behalf knows that the transaction
was prearranged with a buyer in the United States;
(3) no directed selling efforts have been made in contravention of the
requirements of Rule 904(b) of Regulation S;
(4) the transaction is not part of a plan or scheme to evade the
registration provisions of the Securities Act; and
(5) upon completion of the transaction, the beneficial interest being
transferred as described above is to be held with the Depositary
through Euroclear or Cedel or both.
Upon giving effect to this request to exchange a beneficial interest in a
Rule 144A Global Note for a beneficial interest in a Regulation S Global Note,
the resulting beneficial interest shall be subject to the restrictions on
transfer applicable to Regulation S Global Notes pursuant to the Indenture and
the Securities Act and, if such transfer occurs prior to the end of the 40-day
restricted period associated with the initial offering of Senior Subordinated
Notes, the additional restrictions applicable to transfers of interest in the
Regulation S Temporary Global Note.
This certificate and the statements contained herein are made for your
benefit and the benefit of the Company, the Guarantor and ▇▇▇▇▇▇▇▇▇, Lufkin &
▇▇▇▇▇▇▇▇ Securities Corporation, BT Alex. ▇▇▇▇▇ Incorporated and NationsBanc
▇▇▇▇▇▇▇▇▇▇ Securities LLC, the initial purchasers of such Senior Subordinated
Notes being transferred. Terms used in this certificate and not otherwise
defined in the Indenture have the meanings set forth in Regulation S under the
Securities Act.
[Insert Name of Transferor]
By:
-------------------------------------
Name:
Title:
Dated:
cc: The Musicland Group, Inc.
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ Securities Corporation
BT Alex. ▇▇▇▇▇ Incorporated
NationsBanc ▇▇▇▇▇▇▇▇▇▇ Securities LLC
2
EXHIBIT B-2
FORM OF CERTIFICATE FOR EXCHANGE OR REGISTRATION OF TRANSFER
FROM REGULATION S GLOBAL NOTE TO RULE 144A GLOBAL NOTE
(Pursuant to Section 2.06(a)(ii) of the Indenture)
Bank One, NA
c/o Corporate Trust ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Re: 9_% Senior Subordinated Notes due 2008 The Musicland Group, Inc.
Reference is hereby made to the Indenture, dated as of April 6, 1998 (the
"INDENTURE"), among The Musicland Group, Inc., a Delaware corporation (the
"COMPANY"), and Musicland Stores Corporation, a Delaware corporation, ("MSC" or
the "GUARANTOR") and Bank One, NA, as trustee (the "TRUSTEE"). Capitalized
terms used but not defined herein shall have the meanings given to them in the
Indenture.
This letter relates to $_________ principal amount of Senior Subordinated
Notes which are evidenced by one or more Regulation S Global Notes and held with
the Depositary through Euroclear or Cedel in the name of ______________________
(the "TRANSFEROR"). The Transferor has requested a transfer of such beneficial
interest in the Senior Subordinated Notes to a Person who will take delivery
thereof in the form of an equal principal amount of Senior Subordinated Notes
evidenced by one or more Rule 144A Global Notes, to be held with the Depositary.
In connection with such request and in respect of such Senior Subordinated
Notes, the Transferor hereby certifies that:
[CHECK ONE]
/ / such transfer is being effected pursuant to and in accordance with Rule
144A under the United States Securities Act of 1933, as amended (the
"SECURITIES ACT"), and, accordingly, the Transferor hereby further
certifies that the Senior Subordinated Notes are being transferred to a
Person that the Transferor reasonably believes is purchasing the Senior
Subordinated Notes for its own account, or for one or more accounts with
respect to which such Person exercises sole investment discretion, and such
Person and each such account is a "QUALIFIED INSTITUTIONAL BUYER" within
the meaning of Rule 144A in a transaction meeting the requirements of Rule
144A;
or
/ / such transfer is being effected pursuant to and in accordance with Rule 144
under the Securities Act;
1
or
/ / such transfer is being effected pursuant to an exemption under the
Securities Act other than Rule 144A, Rule 144 or Rule 904 and the
Transferor further certifies that the Transfer complies with the transfer
restrictions applicable to beneficial interests in Global Notes and
Definitive Senior Subordinated Notes bearing the Private Placement Legend
and the requirements of the exemption claimed, which certification is
supported by (x) if such transfer is in respect of a principal amount of
Senior Subordinated Notes at the time of Transfer of $100,000 or more, a
certificate executed by the Transferee in the form of Exhibit C to the
Indenture, or (y) if such Transfer is in respect of a principal amount of
Senior Subordinated Notes at the time of transfer of less than $100,000,
(1) a certificate executed in the form of Exhibit C to the Indenture and
(2) an Opinion of Counsel provided by the Transferor or the Transferee (a
copy of which the Transferor has attached to this certification), to the
effect that (1) such Transfer is in compliance with the Securities Act and
(2) such Transfer complies with any applicable blue sky securities laws of
any state of the United States;
or
/ / such transfer is being effected pursuant to an effective registration
statement under the Securities Act;
or
/ / such transfer is being effected pursuant to an exemption from the
registration requirements of the Securities Act other than Rule 144A or
Rule 144, and the Transferor hereby further certifies that the Senior
Subordinated Notes are being transferred in compliance with the transfer
restrictions applicable to the Global Notes and in accordance with the
requirements of the exemption claimed, which certification is supported by
an Opinion of Counsel, provided by the transferor or the transferee (a copy
of which the Transferor has attached to this certification) in form
reasonably acceptable to the Company and to the Registrar, to the effect
that such transfer is in compliance with the Securities Act;
and such Senior Subordinated Notes are being transferred in compliance with any
applicable blue sky securities laws of any state of the United States.
Upon giving effect to this request to exchange a beneficial interest in
Regulation S Global Notes for a beneficial interest in 144A Global Notes, the
resulting beneficial interest shall be subject to the restrictions on transfer
applicable to Rule 144A Global Notes pursuant to the Indenture and the
Securities Act.
This certificate and the statements contained herein are made for your
benefit and the benefit of the Company, the Guarantor and ▇▇▇▇▇▇▇▇▇, Lufkin &
▇▇▇▇▇▇▇▇ Securities Corporation, BT Alex. ▇▇▇▇▇ Incorporated and NationsBanc
▇▇▇▇▇▇▇▇▇▇ Securities LLC, the initial purchasers of such Senior Subordinated
Notes being transferred. Terms used in this certificate and not otherwise
defined in the Indenture have the meanings set forth in Regulation S under the
Securities Act.
2
[Insert Name of Transferor]
By:
-------------------------------------
Name:
Title:
Dated:
cc: The Musicland Group, Inc.
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ Securities Corporation
BT Alex. ▇▇▇▇▇ Incorporated
NationsBanc ▇▇▇▇▇▇▇▇▇▇ Securities LLC
3
EXHIBIT B-3
FORM OF CERTIFICATE FOR EXCHANGE OR REGISTRATION OF TRANSFER
OF DEFINITIVE SENIOR SUBORDINATED NOTES
(Pursuant to Section 2.06(b) of the Indenture)
Bank One, NA
c/o Corporate Trust ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Re: 9_% Senior Subordinated Notes due 2008 of The Musicland Group, Inc.
Reference is hereby made to the Indenture, dated as of April 6, 1998 (the
"INDENTURE"), among The Musicland Group, Inc., a Delaware corporation (the
"Company"), Musicland Stores Corporation, a Delaware corporation ("MSC" or the
"GUARANTOR") and Bank One, NA, as trustee (the "TRUSTEE"). Capitalized terms
used but not defined herein shall have the meanings given to them in the
Indenture.
This letter relates to $_______________ principal amount of Senior
Subordinated Notes which are evidenced by one or more Definitive Senior
Subordinated Notes in the name of ________________ (the "TRANSFEROR"). The
Transferor has requested an exchange or transfer of such Definitive Senior
Subordinated Note(s) in the form of an equal principal amount of Senior
Subordinated Notes evidenced by one or more Definitive Senior Subordinated
Notes, to be delivered to the Transferor or, in the case of a transfer of such
Senior Subordinated Notes, to such Person as the Transferor instructs the
Trustee.
In connection with such request and in respect of the Senior Subordinated
Notes surrendered to the Trustee herewith for exchange (the "SURRENDERED SENIOR
SUBORDINATED NOTES"), the Holder of such Surrendered Senior Subordinated Notes
hereby certifies that:
[CHECK ONE]
/ / the Surrendered Senior Subordinated Notes are being acquired for the
Transferor's own account, without transfer;
or
/ / the Surrendered Senior Subordinated Notes are being transferred to the
Company;
or
/ / the Surrendered Senior Subordinated Notes are being transferred pursuant to
and in accordance with Rule 144A under the United States Securities Act of
1933, as amended (the "SECURITIES ACT"), and, accordingly, the Transferor
hereby further certifies that the Surrendered Senior Subordinated Notes are
being transferred to a Person that the Transferor reasonably believes is
purchasing the Surrendered Senior Subordinated Notes for its own account,
or for one or more accounts with
1
respect to which such Person exercises sole investment discretion, and such
Person and each such account is a "QUALIFIED INSTITUTIONAL BUYER" within
the meaning of Rule 144A, in each case in a transaction meeting the
requirements of Rule 144A;
or
/ / the Surrendered Senior Subordinated Notes are being transferred in a
transaction permitted by Rule 144 under the Securities Act;
or
/ / the Surrendered Senior Subordinated Notes are being transferred pursuant to
an exemption under the Securities Act other than Rule 144A, Rule 144 or
Rule 904 and the Transferor further certifies that the Transfer complies
with the transfer restrictions applicable to beneficial interests in Global
Notes and Definitive Senior Subordinated Notes bearing the Private
Placement Legend and the requirements of the exemption claimed, which
certification is supported by (x) if such transfer is in respect of a
principal amount of Senior Subordinated Notes at the time of Transfer of
$100,000 or more, a certificate executed by the Transferee in the form of
Exhibit C to the Indenture, or (y) if such Transfer is in respect of a
principal amount of Senior Subordinated Notes at the time of transfer of
less than $100,000, (1) a certificate executed in the form of Exhibit C to
the Indenture and (2) an Opinion of Counsel provided by the Transferor or
the Transferee (a copy of which the Transferor has attached to this
certification), to the effect that (1) such Transfer is in compliance with
the Securities Act and (2) such Transfer complies with any applicable blue
sky securities laws of any state of the United States;
or
/ / the Surrendered Senior Subordinated Notes are being transferred pursuant to
an effective registration statement under the Securities Act;
or
/ / such transfer is being effected pursuant to an exemption from the
registration requirements of the Securities Act other than Rule 144A or
Rule 144, and the Transferor hereby further certifies that the Senior
Subordinated Notes are being transferred in compliance with the transfer
restrictions applicable to the Global Notes and in accordance with the
requirements of the exemption claimed, which certification is supported by
an Opinion of Counsel, provided by the transferor or the transferee (a copy
of which the Transferor has attached to this certification) in form
reasonably acceptable to the Company and to the Registrar, to the effect
that such transfer is in compliance with the Securities Act;
and the Surrendered Senior Subordinated Notes are being transferred in
compliance with any applicable blue sky securities laws of any state of the
United States.
2
This certificate and the statements contained herein are made for your
benefit and the benefit of the Company, the Guarantor and ▇▇▇▇▇▇▇▇▇, Lufkin &
▇▇▇▇▇▇▇▇ Securities Corporation, BT Alex. ▇▇▇▇▇ Incorporated and NationsBanc
▇▇▇▇▇▇▇▇▇▇ Securities LLC, the initial purchasers of such Senior Subordinated
Notes being transferred. Terms used in this certificate and not otherwise
defined in the Indenture have the meanings set forth in Regulation S under the
Securities Act.
[Insert Name of Transferor]
By:
-------------------------------------
Name:
Title:
Dated:
----------------------
cc: The Musicland Group, Inc.
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ Securities Corporation
BT Alex. ▇▇▇▇▇ Incorporated
NationsBanc ▇▇▇▇▇▇▇▇▇▇ Securities LLC
3
EXHIBIT B-4
FORM OF CERTIFICATE FOR EXCHANGE OR REGISTRATION OF TRANSFER
FROM RULE 144A GLOBAL NOTE OR REGULATION S
PERMANENT GLOBAL NOTE
TO DEFINITIVE SENIOR SUBORDINATED NOTE
(Pursuant to Section 2.06(c) of the Indenture)
Bank One, NA
c/o Corporate Trust ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Re: 9_% Senior Subordinated Notes due 2008 of The Musicland Group, Inc.
Reference is hereby made to the Indenture, dated as of April 6, 1998 (the
"INDENTURE"), among The Musicland Group, Inc., a Delaware corporation (the
"Company"), Musicland Stores Corporation, a Delaware corporation ("MSC" or the
"GUARANTOR"), and Bank One, NA, as trustee (the "TRUSTEE"). Capitalized terms
used but not defined herein shall have the meanings given to them in the
Indenture.
This letter relates to $__________ principal amount of Senior Subordinated
Notes which are evidenced by a beneficial interest in one or more Rule 144A
Global Notes or Regulation S Permanent Global Notes in the name of ____________
______ (the "TRANSFEROR"). The Transferor has requested an exchange or transfer
of such beneficial interest in the form of an equal principal amount of Senior
Subordinated Notes evidenced by one or more Definitive Senior Subordinated
Notes, to be delivered to the Transferor or, in the case of a transfer of such
Senior Subordinated Notes, to such Person as the Transferor instructs the
Trustee.
In connection with such request and in respect of the Senior Subordinated
Notes surrendered to the Trustee herewith for exchange (the "SURRENDERED SENIOR
SUBORDINATED NOTES"), the Holder of such Surrendered Senior Subordinated Notes
hereby certifies that:
[CHECK ONE]
/ / the Surrendered Senior Subordinated Notes are being transferred to the
beneficial owner of such Senior Subordinated Notes;
or
/ / the Surrendered Senior Subordinated Notes are being transferred pursuant to
and in accordance with Rule 144A under the United States Securities Act of
1933, as amended (the "SECURITIES ACT"), and, accordingly, the Transferor
hereby further certifies that the Surrendered Senior Subordinated Notes are
being transferred to a Person that the Transferor reasonably believes is
purchasing the Surrendered Senior Subordinated Notes for its own account,
or for one or more accounts with respect to which such Person exercises
sole investment discretion, and such Person and each such account is
1
a "QUALIFIED INSTITUTIONAL BUYER" within the meaning of Rule 144A, in each
case in a transaction meeting the requirements of Rule 144A;
or
/ / the Surrendered Senior Subordinated Notes are being transferred in a
transaction permitted by Rule 144 under the Securities Act;
or
/ / the Surrendered Senior Subordinated Notes are being transferred pursuant to
an effective registration statement under the Securities Act;
or
/ / the Surrendered Senior Subordinated Notes are being transferred pursuant to
an exemption under the Securities Act other than Rule 144A, Rule 144 or
Rule 904 and the Transferor further certifies that the Transfer complies
with the transfer restrictions applicable to beneficial interests in Global
Notes and Definitive Senior Subordinated Notes bearing the Private
Placement Legend and the requirements of the exemption claimed, which
certification is supported by (x) if such transfer is in respect of a
principal amount of Senior Subordinated Notes at the time of Transfer of
$100,000 or more, a certificate executed by the Transferee in the form of
Exhibit C to the Indenture, or (y) if such Transfer is in respect of a
principal amount of Senior Subordinated Notes at the time of transfer of
less than $100,000, (1) a certificate executed in the form of Exhibit C to
the Indenture and (2) an Opinion of Counsel provided by the Transferor or
the Transferee (a copy of which the Transferor has attached to this
certification), to the effect that (1) such Transfer is in compliance with
the Securities Act and (2) such Transfer complies with any applicable blue
sky securities laws of any state of the United States;
or
/ / such transfer is being effected pursuant to an exemption from the
registration requirements of the Securities Act other than Rule 144A or
Rule 144, and the Transferor hereby further certifies that the Senior
Subordinated Notes are being transferred in compliance with the transfer
restrictions applicable to the Global Notes and in accordance with the
requirements of the exemption claimed, which certification is supported by
an Opinion of Counsel, provided by the transferor or the transferee (a copy
of which the Transferor has attached to this certification) in form
reasonably acceptable to the Company and to the Registrar, to the effect
that such transfer is in compliance with the Securities Act;
and the Surrendered Senior Subordinated Notes are being transferred in
compliance with any applicable blue sky securities laws of any state of the
United States.
This certificate and the statements contained herein are made for your
benefit and the benefit of the Company, the Guarantor and ▇▇▇▇▇▇▇▇▇, Lufkin &
▇▇▇▇▇▇▇▇ Securities
2
Corporation, BT Alex. ▇▇▇▇▇ Incorporated and NationsBanc ▇▇▇▇▇▇▇▇▇▇ Securities
LLC, the initial purchasers of such Senior Subordinated Notes being transferred.
Terms used in this certificate and not otherwise defined in the Indenture have
the meanings set forth in Regulation S under the Securities Act.
[Insert Name of Transferor]
By:
-------------------------------------
Name:
Title:
Dated:
----------------------
cc: The Musicland Group, Inc.
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ Securities Corporation
BT Alex. ▇▇▇▇▇ Incorporated
NationsBanc ▇▇▇▇▇▇▇▇▇▇ Securities LLC
3
EXHIBIT C
FORM OF CERTIFICATE FROM
ACQUIRING INSTITUTIONAL ACCREDITED INVESTOR
Bank One, NA
c/o Corporate Trust ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Re: 9_% Senior Subordinated Notes due 2008 of The Musicland Group, Inc.
Reference is hereby made to the Indenture, dated as of April 6, 1998 (the
"INDENTURE"), among The Musicland Group, Inc., a Delaware corporation (the
"Company"), Musicland Stores Corporation, a Delaware corporation ("MSC" or the
"GUARANTOR"), and Bank One, NA, as trustee (the "TRUSTEE"). Capitalized terms
used but not defined herein shall have the meanings given to them in the
Indenture.
In connection with our proposed purchase of $__________ aggregate principal
amount of:
/ / (a) Beneficial interests, or
/ / (b) Definitive Senior Subordinated Notes,
we confirm that:
1. We understand that any subsequent transfer of the Senior Subordinated
Notes of any interest therein is subject to certain restrictions and conditions
set forth in the Indenture and the undersigned agrees to be bound by, and not to
resell, pledge or otherwise transfer the Senior Subordinated Notes or any
interest therein except in compliance with, such restrictions and conditions and
the Securities Act of 1933, as amended (the "SECURITIES ACT").
2. We understand that the offer and sale of the Senior Subordinated Notes
have not been registered under the Securities Act, and that the Senior
Subordinated Notes and any interest therein may not be offered or sold except as
permitted in the following sentence. We agree, on our own behalf and on behalf
of any accounts for which we are acting as hereinafter stated, that if we should
sell the Senior Subordinated Notes or any interest therein, (A) we will do so
only (1)(a) to a person who the Seller reasonably believes is a qualified
institutional buyer (as defined in Rule 144A under the Securities Act) in a
transaction meeting the requirements of 144A, (b) in a transaction meeting the
requirements of Rule 144 under the Securities Act, (c) outside the United States
to a foreign person in a transaction meeting the requirements of Rule 904 of the
Securities Act, or (d) in accordance with another exemption from the
registration requirements of the Securities Act (and based upon an opinion of
counsel), (2) to the Company or any of its subsidiaries or (3) pursuant to an
effective registration statement and, in each case, in accordance with any
applicable securities laws of any State of the United States or any other
applicable jurisdiction and (B)
1
we will, and each subsequent holder will be required to, notify any purchaser
from it of the security evidenced hereby of the resale restrictions set forth in
(A) above."
3. We understand that, on any proposed resale of the Senior Subordinated
Notes or beneficial interests, we will be required to furnish to you and the
Company such certifications, legal opinions and other information as you and the
Company may reasonably require to confirm that the proposed sale complies with
the foregoing restrictions. We further understand that the Senior Subordinated
Notes purchased by us will bear a legend to the foregoing effect.
4. We are an institutional "ACCREDITED INVESTOR" (as defined in Rule
501(a)(1), (2), (3) or (7) of Regulation D under the Securities Act) and have
such knowledge and experience in financial and business matters as to be capable
of evaluating the merits and risks of our investment in the Senior Subordinated
Notes, and we and any accounts for which we are acting are each able to bear the
economic risk of our or its investment.
5. We are acquiring the Senior Subordinated Notes or beneficial interests
therein purchased by us for our own account or for one or more accounts (each of
which is an institutional "ACCREDITED INVESTOR") as to each of which we exercise
sole investment discretion.
6. We are not acquiring the Senior Subordinated Notes with a view to any
distribution thereof that would violate the Securities Act or the securities
laws of any State of the United States.
2
You and the Company are entitled to rely upon this letter and are
irrevocably authorized to produce this letter or a copy hereof to any interested
party in any administrative or legal proceedings or official inquiry with
respect to the matters covered hereby.
----------------------------------------
[Insert Name of Accredited
Investor]
By:
-------------------------------------
Name:
Title:
Dated: ,
-------------- ----
3
EXHIBIT D
NOTE GUARANTEE
Subject to Section 11.03 of the Indenture, the Guarantor hereby
unconditionally guarantees to each Holder of a Senior Subordinated Note
authenticated and delivered by the Trustee and to the Trustee and its successors
and assigns, irrespective of the validity and enforceability of the Indenture,
the Senior Subordinated Notes and the Obligations of the Company under the
Senior Subordinated Notes or under the Indenture, that: (a) the principal of,
premium, if any, interest and Liquidated Damages, if any, on the Senior
Subordinated Notes will be promptly paid in full when due, subject to any
applicable grace period, whether at maturity, by acceleration, redemption or
otherwise, and interest on overdue principal, premium, if any, (to the extent
permitted by law) interest and Liquidated Damages, if any, on the Senior
Subordinated Notes and all other payment Obligations of the Company to the
Holders or the Trustee under the Indenture or under the Senior Subordinated
Notes will be promptly paid in full and performed, all in accordance with the
terms thereof; and (b) in case of any extension of time of payment or renewal of
any Senior Subordinated Notes or any of such other payment Obligations, the same
will be promptly paid in full when due or performed in accordance with the terms
of the extension or renewal, subject to any applicable grace period, whether at
stated maturity, by acceleration, redemption or otherwise. Failing payment when
so due of any amount so guaranteed or any performance so guaranteed for whatever
reason, the Guarantor will be obligated to pay the same immediately.
The obligations of the Guarantor to the Holders and to the Trustee pursuant
to this Note Guarantee and the Indenture are expressly set forth in Article 11
of the Indenture, and reference is hereby made to such Indenture for the precise
terms of this Note Guarantee. The terms of Article 11 of the Indenture are
incorporated herein by reference.
This is a continuing Guarantee and, subject to the provisions of Article 8
of the Indenture, shall remain in full force and effect and shall be binding
upon the Guarantor and its respective successors and assigns to the extent set
forth in the Indenture until full and final payment of all of the Company's
Obligations under the Senior Subordinated Notes and the Indenture and shall
inure to the benefit of the successors and assigns of the Trustee and the
Holders and, in the event of any transfer or assignment of rights by any Holder
or the Trustee, the rights and privileges herein conferred upon that party shall
automatically extend to and be vested in such transferee or assignee, all
subject to the terms and conditions hereof. This is a Note Guarantee of payment
and not a guarantee of collection.
This Note Guarantee shall not be valid or obligatory for any purpose until
the certificate of authentication on the Senior Subordinated Note upon which
this Note Guarantee is noted shall have been executed by the Trustee under the
Indenture by the manual signature of one of its authorized officers.
1
For purposes hereof, the Guarantor's liability shall be limited to the
lesser of (i) the aggregate amount of the Obligations of the Company under the
Senior Subordinated Notes and the Indenture and (ii) the amount, if any, which
would not have (A) rendered such Guarantor "INSOLVENT" (as such term is defined
in the United States Bankruptcy Code and in the Debtor and Creditor Law of the
State of New York) or (B) left the Guarantor with unreasonably small capital at
the time its Note Guarantee of the Senior Subordinated Notes was entered into;
PROVIDED that, it will be a presumption in any lawsuit or other proceeding in
which the Guarantor is a party that the amount guaranteed pursuant to the Note
Guarantee is the amount set forth in clause (i) above unless any creditor, or
representative of creditors of the Guarantor, or debtor in possession or trustee
in bankruptcy of the Guarantor, otherwise proves in such a lawsuit that the
aggregate liability of the Guarantor is limited to the amount set forth in
clause (ii) above. The Indenture provides that, in making any determination as
to the solvency or sufficiency of capital of the Guarantor in accordance with
the previous sentence, the right of the Guarantor to contribution from another
guarantor and any other rights such Guarantor may have, contractual or
otherwise, shall be taken into account.
The Indenture provides that all Obligations evidenced by this Note
Guarantee shall be subordinated in right of payment, to the extent and in the
manner provided in Article 12 of the Indenture, to the prior payment in full in
cash of all Guarantor Senior Debt (whether outstanding on the date of the
Indenture or created, incurred, assumed or guaranteed thereafter), and that the
subordination is for the benefit of the holders of Guarantor Senior Debt.
Capitalized terms used herein have the same meanings given in the Indenture
unless otherwise indicated.
Dated as of , 1998 MUSICLAND STORES CORPORATION
-----------
By:
-------------------------------------
Name:
Title:
1
CROSS-REFERENCE TABLE*
TRUST INDENTURE
ACT SECTION INDENTURE SECTION
310(a)(1). . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.10
(a)(2). . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.10
(a)(3). . . . . . . . . . . . . . . . . . . . . . . . . . . . N.A.
(a)(4). . . . . . . . . . . . . . . . . . . . . . . . . . . . N.A.
(a)(5). . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.10
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.03; 7.10
(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . N.A.
311(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.11
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.11
(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . N.A.
312(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.05
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13.03
(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13.03
313(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.06
(b)(1). . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.06
(b)(2). . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.06; 7.07
(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.06;13.02
(d) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.06
314(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.03;13.05
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . N.A.
(c)(1). . . . . . . . . . . . . . . . . . . . . . . . . . . . 13.04
(c)(2). . . . . . . . . . . . . . . . . . . . . . . . . . . . 13.04
(c)(3). . . . . . . . . . . . . . . . . . . . . . . . . . . . N.A.
(d) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . N.A.
(e) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13.05
(f) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . N.A.
315(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.01
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.05,13.02
(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.01
(d) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.01
(e) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.11
316(a)(last sentence). . . . . . . . . . . . . . . . . . . . . . 2.09
(a)(1)(A) . . . . . . . . . . . . . . . . . . . . . . . . . . 6.05
(a)(1)(B) . . . . . . . . . . . . . . . . . . . . . . . . . . 6.04
(a)(2). . . . . . . . . . . . . . . . . . . . . . . . . . . . N.A.
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.07
(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.13
317(a)(1). . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.08
(a)(2). . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.09
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.04
318(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13.01
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . N.A.
(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13.01
N.A. means not applicable.
i
*This Cross-Reference Table is not part of the Indenture.
ii