THE MUSICLAND GROUP, INC.
MUSICLAND STORES CORPORATION
$150,000,000
9_% Series A Senior Subordinated Notes Due 2008
Purchase Agreement
April 1, 1998
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇
SECURITIES CORPORATION
BT ALEX. BROWN INCORPORATED
NATIONSBANC ▇▇▇▇▇▇▇▇▇▇
SECURITIES LLC
$150,000,000
9_% Series A Senior Subordinated Notes Due 2008
of THE MUSICLAND GROUP, INC.
PURCHASE AGREEMENT
April 1, 1998
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇
SECURITIES CORPORATION
BT ALEX. BROWN INCORPORATED
NATIONSBANC ▇▇▇▇▇▇▇▇▇▇
SECURITIES LLC
c/▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇
Securities Corporation
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Dear Sirs:
The Musicland Group, Inc, a Delaware corporation (the "COMPANY"), proposes
to issue and sell to ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ Securities Corporation
("DLJ"), BT ▇▇▇▇. ▇▇▇▇▇ Incorporated ("BT"), and NationsBanc ▇▇▇▇▇▇▇▇▇▇
Securities LLC ("NBMS") (each, an "INITIAL PURCHASER" and collectively, the
"INITIAL PURCHASERS") an aggregate of $150,000,000 in principal amount of its
9_% Series A Senior Subordinated Notes due 2008 (the "SERIES A NOTES"), subject
to the terms and conditions set forth herein. The Series A Notes are to be
issued pursuant to the provisions of an indenture (the "INDENTURE"), to be dated
as of the Closing Date (as defined below), among the Company, the Guarantor (as
defined below) and Bank One, NA, as trustee (the "TRUSTEE"). The Series A Notes
and the Series B Notes (as defined below) issuable in exchange therefor are
collectively referred to herein as the "NOTES." The Notes will be guaranteed
(the "GUARANTEES") by Musicland Stores Corporation (the "GUARANTOR").
Capitalized terms used but not defined herein shall have the meanings given to
such terms in the Indenture.
1. OFFERING MEMORANDUM. The Series A Notes will be offered and sold to
the Initial Purchasers pursuant to one or more exemptions from the registration
requirements under the Securities Act of 1933, as amended (the "ACT"). The
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Company and the Guarantor have prepared a preliminary offering memorandum, dated
March 13, 1998 (the "PRELIMINARY OFFERING MEMORANDUM") and a final offering
memorandum, dated April 1, 1998 (the "OFFERING MEMORANDUM"), relating to the
Series A Notes and the Guarantees.
Upon original issuance thereof, and until such time as the same is no longer
required pursuant to the Indenture, the Series A Notes (and all securities
issued in exchange therefor, in substitution thereof or upon conversion thereof)
shall bear the following legend:
"THIS NOTE HAS NOT BEEN REGISTERED UNDER THE U.S. SECURITIES ACT OF
1933, AS AMENDED (the "ACT"), AND, ACCORDINGLY, MAY NOT BE OFFERED, SOLD,
PLEDGED OR OTHERWISE TRANSFERRED WITHIN THE UNITED STATES OR TO, OR FOR THE
ACCOUNT OR BENEFIT OF, U.S. PERSONS, EXCEPT AS SET FORTH IN THE NEXT
SENTENCE. BY ITS ACQUISITION HEREOF OR OF A BENEFICIAL INTEREST HEREIN,
THE HOLDER:
(1) REPRESENTS THAT IT IS A "QUALIFIED INSTITUTIONAL BUYER" (as
defined in Rule 144A under the Act)(a "QIB") OR IT HAS ACQUIRED THIS
NOTE IN AN OFFSHORE TRANSACTION IN COMPLIANCE WITH REGULATION S UNDER
THE ACT,
(2) AGREES THAT IT WILL NOT RESELL OR OTHERWISE TRANSFER THIS
NOTE EXCEPT (i) TO THE COMPANY OR ANY OF ITS SUBSIDIARIES, (ii) TO A
PERSON WHOM THE SELLER REASONABLY BELIEVES IS A QIB PURCHASING FOR ITS
OWN ACCOUNT OR FOR THE ACCOUNT OF A QIB IN A TRANSACTION MEETING THE
REQUIREMENTS OF RULE 144A, (iii) IN AN OFFSHORE TRANSACTION MEETING
THE REQUIREMENTS OF RULE 903 OR 904 OF THE ACT, (iv) IN A TRANSACTION
MEETING THE REQUIREMENTS OF RULE 144 UNDER THE ACT, (v) IN ACCORDANCE
WITH ANOTHER EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE ACT
(AND BASED UPON AN OPINION OF COUNSEL ACCEPTABLE TO THE COMPANY) OR
(vi) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT AND, IN EACH
CASE, IN ACCORDANCE WITH THE APPLICABLE SECURITIES LAWS OF ANY
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STATE OF THE UNITED STATES OR ANY OTHER APPLICABLE JURISDICTION AND
(3) AGREES THAT IT WILL DELIVER TO EACH PERSON TO WHOM THIS NOTE
OR AN INTEREST ▇▇▇▇▇▇ IS TRANSFERRED A NOTICE SUBSTANTIALLY TO THE
EFFECT OF THIS LEGEND.
AS USED HEREIN, THE TERMS "OFFSHORE TRANSACTION" AND "UNITED
STATES" HAVE THE MEANINGS GIVEN TO THEM BY RULE 902 OF REGULATION S
UNDER THE ACT. THE INDENTURE CONTAINS A PROVISION REQUIRING THE
TRUSTEE TO REFUSE TO REGISTER ANY TRANSFER OF THIS NOTE IN VIOLATION
OF THE FOREGOING."
2. AGREEMENTS TO SELL AND PURCHASE. On the basis of the representations,
warranties and covenants contained in this Agreement, and subject to the terms
and conditions contained herein, the Company agrees to issue and sell to the
Initial Purchasers, and each Initial Purchaser agrees severally and not jointly
to purchase from the Company, the principal amounts of Series A Notes set forth
opposite the name of such Initial Purchaser on Schedule A at a purchase price
equal to 96.631514% of the principal amount thereof (the "PURCHASE PRICE").
3. TERMS OF OFFERING. The Initial Purchasers have advised the Company
that the Initial Purchasers will make offers (the "EXEMPT RESALES") of the
Series A Notes purchased hereunder on the terms set forth in the Offering
Memorandum, as amended or supplemented, solely to (i) persons whom the Initial
Purchasers reasonably believe to be "qualified institutional buyers" as defined
in Rule 144A under the Act ("QIBS"), and (ii) persons permitted to purchase the
Series A Notes in offshore transactions in reliance upon Regulation S under the
Act (each, a "REGULATION S PURCHASER") (such persons specified in clauses (i)
and (ii) being referred to herein as the "ELIGIBLE PURCHASERS"). The Initial
Purchasers will offer the Series A Notes to Eligible Purchasers initially at a
price equal to 99.211% of the principal amount thereof. Such price may be
changed at any time without notice.
Holders (including subsequent transferees) of the Series A Notes will have
the registration rights set forth in the registration rights agreement (the
"REGISTRATION RIGHTS AGREEMENT"), to be dated the Closing Date, in substantially
the form of Exhibit A hereto, for so long as such Series A Notes constitute
"Transfer Restricted Securities" (as defined in the Registration Rights
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Agreement). Pursuant to the Registration Rights Agreement, the Company and the
Guarantors will agree to file with the Securities and Exchange Commission (the
"COMMISSION") under the circumstances set forth therein, (i) a registration
statement under the Act (the "EXCHANGE OFFER REGISTRATION STATEMENT") relating
to the Company's 9_% Series B Senior Subordinated Notes due 2008 (the "SERIES B
NOTES"), to be offered in exchange for the Series A Notes (such offer to
exchange being referred to as the "EXCHANGE OFFER") and the Guarantees thereof
and (ii) a shelf registration statement pursuant to Rule 415 under the Act (the
"SHELF REGISTRATION STATEMENT" and, together with the Exchange Offer
Registration Statement, the "REGISTRATION STATEMENTS") relating to the resale by
certain holders of the Series A Notes and to use its best efforts to cause such
Registration Statements to be declared and remain effective and usable for the
periods specified in the Registration Rights Agreement and to consummate the
Exchange Offer. This Agreement, the Indenture, the Notes, the Guarantees and
the Registration Rights Agreement are hereinafter sometimes referred to
collectively as the "OPERATIVE DOCUMENTS."
4. DELIVERY AND PAYMENT.
(a) Delivery of, and payment of the Purchase Price for, the Series
A Notes shall be made at the offices of the Company or such other location
as may be mutually acceptable. Such delivery and payment shall be made at
9:00 a.m. Minneapolis, Minnesota time, on April 6, 1998 or at such other
time on the same date or such other date as shall be agreed upon by the
Initial Purchasers and the Company in writing. The time and date of such
delivery and the payment for the Series A Notes are herein called the
"CLOSING DATE."
(b) One or more of the Series A Notes in definitive global form,
registered in the name of Cede & Co., as nominee of the Depository Trust
Company ("DTC"), having an aggregate principal amount corresponding to the
aggregate principal amount of the Series A Notes (collectively, the "GLOBAL
NOTE"), shall be delivered by the Company to the Initial Purchasers (or as
the Initial Purchasers direct) in each case with any transfer taxes thereon
duly paid by the Company against payment by the Initial Purchasers of the
Purchase Price thereof by wire transfer in same day funds to the order of
the Company. The Global Note shall be made available to the Initial
Purchasers for inspection not later than 9:30 a.m., New York City time, on
the business day immediately preceding the Closing Date.
5. AGREEMENTS OF THE COMPANY AND THE GUARANTOR. Each of the Company and
the Guarantor hereby agrees with the Initial Purchasers as follows:
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(a) To advise the Initial Purchasers promptly and, if requested by
the Initial Purchasers, confirm such advice in writing, (i) of the issuance
by any state securities commission of any stop order suspending the
qualification or exemption from qualification of any Series A Notes for
offering or sale in any jurisdiction designated by the Initial Purchasers
pursuant to Section 5(e) hereof, or the initiation of any proceeding by any
state securities commission or any other federal or state regulatory
authority for such purpose and (ii) of the happening of any event during
the period referred to in Section 5(c) below that makes any statement of a
material fact made in the Preliminary Offering Memorandum or the Offering
Memorandum untrue or that requires any additions to or changes in the
Preliminary Offering Memorandum or the Offering Memorandum in order to make
the statements therein not misleading. The Company and the Guarantor shall
use their best efforts to prevent the issuance of any stop order or order
suspending the qualification or exemption of any Series A Notes under any
state securities or Blue Sky laws and, if at any time any state securities
commission or other federal or state regulatory authority shall issue an
order suspending the qualification or exemption of any Series A Notes under
any state securities or Blue Sky laws, the Company and the Guarantor shall
use their best efforts to obtain the withdrawal or lifting of such order at
the earliest possible time.
(b) To furnish the Initial Purchasers and those persons identified
by the Initial Purchasers to the Company as many copies of the Preliminary
Offering Memorandum and the Offering Memorandum, and any amendments or
supplements thereto, as the Initial Purchasers may reasonably request for
the time period specified in Section 5(c). Subject to each Initial
Purchaser's compliance with its representations and warranties and
agreements set forth in Section 7 hereof, the Company consents to the use
of the Preliminary Offering Memorandum and the Offering Memorandum, and any
amendments and supplements thereto required pursuant hereto, by the Initial
Purchasers in connection with Exempt Resales.
(c) During such period as in the opinion of counsel for the Initial
Purchasers an Offering Memorandum is required by law to be delivered in
connection with Exempt Resales by the Initial Purchasers and in connection
with market-making activities of the Initial Purchasers for so long as any
Series A Notes are outstanding, (i) not to make any amendment or supplement
to the Offering Memorandum of which the Initial Purchasers shall not
previously have been advised or to which the Initial Purchasers shall
reasonably object after being so advised and (ii) to
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prepare promptly upon the Initial Purchasers' reasonable request, any
amendment or supplement to the Offering Memorandum which may be necessary
or advisable in connection with such Exempt Resales or such market-making
activities.
(d) If, during the period referred to in Section 5(c) above, any
event shall occur or condition shall exist as a result of which, in the
opinion of counsel to the Initial Purchaser, it becomes necessary to amend
or supplement the Offering Memorandum in order to make the statements
therein, in the light of the circumstances when such Offering Memorandum is
delivered to an Eligible Purchaser, not misleading, or if, in the opinion
of counsel to the Initial Purchasers, it is necessary to amend or
supplement the Offering Memorandum to comply with any applicable law,
forthwith to prepare an appropriate amendment or supplement to such
Offering Memorandum so that the statements therein, as so amended or
supplemented, will not, in the light of the circumstances when it is so
delivered, be misleading, or so that such Offering Memorandum will comply
with applicable law, and to furnish to the Initial Purchasers and such
other persons as the Initial Purchasers may designate such number of copies
thereof as the Initial Purchasers may reasonably request.
(e) Prior to the sale of all Series A Notes pursuant to Exempt
Resales as contemplated hereby, to cooperate with the Initial Purchasers
and counsel to the Initial Purchasers in connection with the registration
or qualification of the Series A Notes for offer and sale to the Initial
Purchasers and pursuant to Exempt Resales under the securities or Blue Sky
laws of such jurisdictions as the Initial Purchasers may request and to
continue such registration or qualification in effect so long as required
for Exempt Resales and to file such consents to service of process or other
documents as may be necessary in order to effect such registration or
qualification; PROVIDED, HOWEVER, that neither the Company nor the
Guarantor shall be required in connection therewith to qualify as a foreign
corporation in any jurisdiction in which it is not now so qualified or to
take any action that would subject it to general consent to service of
process or taxation other than as to matters and transactions relating to
the Preliminary Offering Memorandum, the Offering Memorandum or Exempt
Resales, in any jurisdiction in which it is not now so subject.
(f) During the period as and to the extent the Company or the
Guarantor, as the case may be, may be required by applicable law or by the
rules of any exchange or securities association upon which any of the
Company's or the Guarantor's securities are listed or quoted, to mail to
the record holders of the Securities (i) within 90 days after the end of
each
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fiscal year of the Company or the Guarantor, as the case may be, a
financial report of the Company or the Guarantor, as the case may be, and
its subsidiaries on a consolidated basis, and a similar financial report of
all unconsolidated subsidiaries, if any, all such financial reports to
include a consolidated balance sheet as at the end of the preceding fiscal
year, a consolidated statement of operations, a consolidated statement of
cash flows and a consolidated statement of shareholders' equity covering
such fiscal year, together with comparable information as of the end of and
for the preceding fiscal year, and all to be in reasonable detail and
examined and reported on by independent certified public accountants for
the Company or the Guarantor, as the case may be, and (ii) within 45 days
after the end of each quarterly fiscal period of the Company or the
Guarantor, as the case may be, (except for the last quarterly period of
each fiscal year) copies of the consolidated statement of operations and
statement of cash flows for that period, and the consolidated balance sheet
as of the end of that period, of the Company or the Guarantor, as the case
may be, and its subsidiaries, and the income statement, statement of
changes in financial condition and balance sheet of each unconsolidated
subsidiary, if any, of the Company or the Guarantor, as the case may be, as
at the end of and for that period, together with comparable information as
at the end of and for the same quarterly fiscal period of the preceding
fiscal year.
(g) During the periods referred to in paragraph (f), to furnish to
you as soon as available a copy of each report of the Company or the
Guarantor, as the case may be, or other publicly available information
which the Company or the Guarantor, as the case may be, shall mail or
otherwise make available to the security holders of the Company or the
Guarantor, as the case may be, or shall file with the Commission and such
other publicly available information concerning the Company or the
Guarantor, as the case may be, and its subsidiaries as you may reasonably
request.
(h) So long as any of the Series A Notes remain outstanding and
during any period in which the Company and the Guarantor are not subject to
Section 13 or 15(d) of the Securities Exchange Act of 1934, as amended (the
"EXCHANGE ACT"), to make available to any holder of Series A Notes in
connection with any sale thereof and any prospective purchaser of such
Series A Notes from such holder, the information ("RULE 144A INFORMATION")
required by Rule 144A(d)(4) under the Act.
(i) Whether or not the transactions contemplated in this Agreement
are consummated or this Agreement is terminated, to pay or
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cause to be paid all expenses incident to the performance of the
obligations of the Company and the Guarantor under this Agreement,
including: (i) the fees, disbursements and expenses of counsel to the
Company and the Guarantor and accountants of the Company and the Guarantor
in connection with the sale and delivery of the Series A Notes to the
Initial Purchasers and pursuant to Exempt Resales, and all other fees and
expenses in connection with the preparation, printing, filing and
distribution of the Preliminary Offering Memorandum, the Offering
Memorandum and all amendments and supplements to any of the foregoing
(including financial statements), including the mailing and delivering of
copies thereof to the Initial Purchasers and persons designated by it in
the quantities specified herein, (ii) all costs and expenses related to the
transfer and delivery of the Series A Notes to the Initial Purchasers and
pursuant to Exempt Resales, including any transfer or other taxes payable
thereon, (iii) all costs of printing or producing this Agreement, the other
Operative Documents and any other agreements or documents in connection
with the offering, purchase, sale or delivery of the Series A Notes, (iv)
all expenses in connection with the registration or qualification of the
Series A Notes and the Guarantees for offer and sale under the securities
or Blue Sky laws of the several states and all costs of printing or
producing any preliminary and supplemental Blue Sky memoranda in connection
therewith (including the filing fees and fees and disbursements of counsel
for the Initial Purchasers in connection with such registration or
qualification and memoranda relating thereto,) (v) the cost of printing
certificates representing the Series A Notes and the Guarantees, (vi) all
expenses and listing fees in connection with the application for quotation
of the Series A Notes in the National Association of Securities Dealers,
Inc. ("NASD") Automated Quotation System - PORTAL ("PORTAL"), (vii) the
fees and expenses of the Trustee and the Trustee's counsel in connection
with the Indenture, the Notes and the Guarantees, (viii) the costs and
charges of any transfer agent, registrar and/or depositary (including DTC),
(ix) any fees charged by rating agencies for the rating of the Notes, (x)
all costs and expenses of the Exchange Offer and any Registration
Statement, as set forth in the Registration Rights Agreement, and (xi) and
all other costs and expenses incident to the performance of the obligations
of the Company and the Guarantor hereunder for which provision is not
otherwise made in this Section. It is understood that, except as set forth
herein, the Initial Purchasers shall pay their own expenses in connection
with the Initial Purchase and Exempt Resales of the Series A Notes.
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(j) To use its best efforts to effect the inclusion of the Series A
Notes in PORTAL and to maintain the listing of the Series A Notes on PORTAL
for so long as the Series A Notes are outstanding.
(k) To obtain the approval of DTC for "book-entry" transfer of the
Notes, and to comply with all of its agreements set forth in the
representation letters of the Company and the Guarantor to DTC relating to
the approval of the Notes by DTC for "book-entry" transfer.
(l) During the period beginning on the date hereof and continuing
to and including the Closing Date, not to offer, sell, contract to sell or
otherwise transfer or dispose of any debt securities of the Company or the
Guarantor or any warrants, rights or options to purchase or otherwise
acquire debt securities of the Company or the Guarantor substantially
similar to the Notes and the Guarantees (other than (i) the Notes and the
Guarantees and (ii) commercial paper issued in the ordinary course of
business), without the prior written consent of the Initial Purchasers.
(m) Not to sell, offer for sale or solicit offers to buy or
otherwise negotiate in respect of any security (as defined in the Act) that
would be integrated with the sale of the Series A Notes to the Initial
Purchaser or pursuant to Exempt Resales in a manner that would require the
registration of any such sale of the Series A Notes under the Act.
(n) Not to voluntarily claim, and to actively resist any attempts
to claim, the benefit of any usury laws against the holders of any Notes
and the related Guarantees.
(o) To cause the Exchange Offer to be made in the appropriate form
to permit Series B Notes and guarantees thereof by the Guarantor registered
pursuant to the Act to be offered in exchange for the Series A Notes and
the Guarantees and to comply with all applicable federal and state
securities laws in connection with the Exchange Offer.
(p) To comply with all of its agreements set forth in the
Registration Rights Agreement.
(q) To use its best efforts to do and perform all things required
or necessary to be done and performed under this Agreement by it prior to
the Closing Date and to satisfy all conditions precedent to the delivery of
the Series A Notes and the Guarantees.
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(r) To use the net proceeds from the offering in the manner set
forth under "Use of Proceeds" in the Offering Memorandum.
6. REPRESENTATIONS, WARRANTIES AND AGREEMENTS OF THE COMPANY AND THE
GUARANTOR. As of the date hereof, each of the Company and the Guarantor
represents and warrants to, and agrees with, the Initial Purchasers that:
(a) The Preliminary Offering Memorandum and the Offering Memorandum
do not, and any supplement or amendment to them will not, contain any
untrue statement of a material fact or omit to state any material fact
required to be stated therein or necessary to make the statements therein,
in the light of the circumstances under which they were made, not
misleading, except that the representations and warranties contained in
this Section 6(a), 6(b), 6(c) shall not apply to statements in or omissions
from the Preliminary Offering Memorandum or the Offering Memorandum (or any
supplement or amendment thereto) based upon information relating to the
Initial Purchasers furnished to the Company in writing by the Initial
Purchasers expressly for use therein. No stop order preventing the use of
the Preliminary Offering Memorandum or the Offering Memorandum, or any
amendment or supplement thereto, or any order asserting that any of the
transactions contemplated by this Agreement are subject to the registration
requirements of the Act, has been issued.
(b) The Guarantor, the Company and each of their respective
subsidiaries are corporations duly organized, validly existing and in good
standing under the laws of their respective jurisdictions of incorporation,
with corporate power and authority to carry on their respective businesses
and to own or lease and operate their respective properties as described in
the Offering Memorandum, and each of the Guarantor, the Company and their
respective subsidiaries owns or possesses all licenses and permits
necessary for the conduct of its respective business and the ownership,
leasing and operation of its properties, except such licenses and permits
as to which the failure to own or possess such licenses and permits will
not in the aggregate have a material adverse effect on the financial
condition, earnings or business of the Company; and each is duly qualified
and in good standing as a foreign corporation authorized to do business in
each jurisdiction in which the nature of its business or its ownership or
leasing of property requires such qualification, except where the failure
to be so qualified will not have a material adverse effect on the financial
condition, earnings or business of the Company. All the outstanding shares
of capital stock or other securities evidencing equity ownership of each
subsidiary of the Guarantor have been duly and validly authorized and
issued and are
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fully paid and non-assessable, and are owned by the Guarantor free and
clear of any security interest, claim, lien, encumbrance or adverse
interest of any nature other than those created relating to the shares of
capital stock of the Company pursuant to the Loan Documents (as defined in
the Credit Agreement dated as of October 7, 1994, as amended, among the
Company, the Guarantor, the various lenders party thereto from time to time
and ▇▇▇▇▇▇ Guaranty Trust Company of New York, as Agent (the "Credit
Agreement")). There are no outstanding rights, warrants or options to
acquire, or instruments convertible into or exchangeable for, any shares of
cpital stock or other equity interest in any such subsidiary except for the
warrants issued pursuant to the Warrant and Registration Rights Agreement
dated as of June 16, 1997 among the Guarantor and the Investors listed
therein, and options issued pursuant to the Guarantor's stock option plans.
(c) The Series A Notes have been duly authorized and, when executed
and authenticated in accordance with the provisions of the Indenture and
delivered to the Initial Purchasers against payment therefor as provided by
this Agreement, will be entitled to the benefits of the Indenture, and will
be valid and binding obligations of the Company or the Guarantor, as the
case may be, enforceable in accordance with their terms except as (i) the
enforceability thereof may be limited by bankruptcy, insolvency or similar
laws affecting creditors' rights generally and (ii) rights of acceleration
and the availability of equitable remedies may be limited by equitable
principles of general applicability.
(d) On the Closing Date, the Series B Notes will have been duly
authorized by the Company. When the Series B Notes are issued, executed
and authenticated in accordance with the terms of the Exchange Offer and
the Indenture, the Series B Notes will be entitled to the benefits of the
Indenture and will be the valid and binding obligations of the Company,
enforceable against the Company in accordance with their terms, except as
(i) the enforceability thereof may be limited by bankruptcy, insolvency or
similar laws affecting creditors' rights generally and (ii) rights of
acceleration and the availability of equitable remedies may be limited by
equitable principles of general applicability.
(e) The Guarantee to be endorsed on the Series A Notes by the
Guarantor has been duly authorized by such Guarantor and, on the Closing
Date, will have been duly executed and delivered by such Guarantor. When
the Series A Notes have been issued, executed and authenticated in
accordance with the Indenture and delivered to and paid for by the Initial
Purchasers in accordance with the terms of this Agreement, the Guarantee
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of the Guarantor endorsed thereon will be entitled to the benefits of the
Indenture and will be the valid and binding obligation of such Guarantor,
enforceable against such Guarantor in accordance with its terms, except as
(i) the enforceability thereof may be limited by bankruptcy, insolvency or
similar laws affecting creditors' rights generally and (ii) rights of
acceleration and the availability of equitable remedies may be limited by
equitable principles of general applicability. On the Closing Date, the
Guarantees to be endorsed on the Series A Notes will conform as to legal
matters to the description thereof contained in the Offering Memorandum.
(f) The Guarantee to be endorsed on the Series B Notes by the
Guarantor has been duly authorized by such Guarantor and, when issued, will
have been duly executed and delivered by such Guarantor. When the Series B
Notes have been issued, executed and authenticated in accordance with the
terms of the Exchange Offer and the Indenture, the Guarantee of the
Guarantor endorsed thereon will be entitled to the benefits of the
Indenture and will be the valid and binding obligation of such Guarantor,
enforceable against such Guarantor in accordance with its terms, except as
(i) the enforceability thereof may be limited by bankruptcy, insolvency or
similar laws affecting creditors' rights generally and (ii) rights of
acceleration and the availability of equitable remedies may be limited by
equitable principles of general applicability. When the Series B Notes are
issued, authenticated and delivered, the Guarantees to be endorsed on the
Series B Notes will conform as to legal matters to the description thereof
in the Offering Memorandum.
(g) The Indenture has been duly authorized, executed and delivered
by the Company and the Guarantor and is a valid and binding agreement of
the Company and the Guarantor, enforceable in accordance with its terms
except as (i) the enforceability thereof may be limited by bankruptcy,
insolvency or similar laws affecting creditors' rights generally and (ii)
rights of acceleration and the availability of equitable remedies may be
limited by equitable principles of general applicability. On the Closing
Date, the Indenture will conform in all material respects to the
requirements of the Trust Indenture Act of 1939, as amended (the "TIA" or
"TRUST INDENTURE ACT"), and the rules and regulations of the Commission
applicable to an indenture which is qualified thereunder.
(h) The Registration Rights Agreement has been duly authorized by
the Company and the Guarantor and, on the Closing Date, will have been duly
executed and delivered by the Company and the Guarantor. When the
Registration Rights Agreement has been duly executed and delivered, the
Registration Rights Agreement will be a valid and binding
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agreement of the Company and the Guarantor, enforceable against the Company
and the Guarantor in accordance with its terms except as (i) the
enforceability thereof may be limited by bankruptcy, insolvency or similar
laws affecting creditors' rights generally and (ii) rights of acceleration
and the availability of equitable remedies may be limited by equitable
principles of general applicability. On the Closing Date, the Registration
Rights Agreement will conform as to legal matters to the description
thereof in the Offering Memorandum.
(i) Neither the Guarantor, the Company nor any of their respective
subsidiaries is in violation of its charter documents or by-laws or in
default in the performance of any obligation, agreement or condition
contained in any bond, debenture, note or any other evidence of
indebtedness or in any other material indenture, instrument or agreement to
which the Guarantor, the Company or any of their respective subsidiaries is
a party or which binds the Guarantor, the Company or any of their
respective subsidiaries or any of their respective property. Neither the
Guarantor, the Company nor any of their respective subsidiaries is in
material violation of any law, ordinance, governmental rule or regulation
or court decree to which it is subject. The execution, delivery and
performance of this Agreement, the Indenture, the Notes and the Guarantees,
compliance by the Guarantor and the Company with all provisions hereof and
thereof, and the consummation of the transactions contemplated hereby and
thereby will not violate or conflict with or constitute a breach of any of
the terms or provisions of, or constitute a default under (i) the charter
documents or by-laws of the Guarantor, the Company or any of their
respective subsidiaries, or (ii) any bond, debenture, note or other
evidence of indebtedness or any other material indenture, instrument or
agreement to which the Guarantor, the Company or any of their respective
subsidiaries is a party or which binds the Guarantor, the Company or any of
their respective subsidiaries or any of their respective property, or (iii)
(assuming compliance with all applicable state securities or Blue Sky laws
in the several states in which the Notes will be offered or sold) any law,
regulation or ruling or any order, judgment or decree to which the
Guarantor, the Company or any of their respective subsidiaries or any of
their respective property may be subject.
(j) Except for permits and similar authorizations required under
the securities or Blue Sky laws of the several states in which the Notes
and Guarantee will be offered or sold, no authorization, consent, approval,
license or other order of any regulatory body, administrative agency or
other governmental body is required for the valid issuance, sale and
delivery of the Notes to the Initial Purchasers as contemplated by this
14
Agreement; no consents or waivers from the holders of the Guarantor's or
the Company's capital stock or debt securities are required to consummate
the transactions contemplated hereby other than such consents and waivers
as have been obtained.
(k) Each contract, lease or document of a character described in
the Offering Memorandum is so described; the descriptions thereof or
references thereto are accurate in all material respects; and each
contract, lease or document so described is in full force and effect in
accordance with its respective terms.
(l) Each of the Guarantor, the Company and their respective
subsidiaries has good and marketable title, free and clear of all liens,
claims, encumbrances and restrictions except liens for taxes not yet due
and payable, to all property and assets described in the Offering
Memorandum as being owned by it. All leases to which the Guarantor, the
Company or any of their respective subsidiaries is a party are valid and
binding and no default has occurred or is continuing thereunder, which
might result in any material adverse change in the business, prospects,
financial condition or results of operation of the Guarantor and its
subsidiaries taken as a whole, and the Guarantor and its subsidiaries enjoy
peaceful and undisturbed possession under all such leases to which any of
them is a party as lessee with such exceptions as do not materially
interfere with the use made by the Guarantor or such subsidiary. Each of
the Guarantor, the Company and their respective subsidiaries has all
governmental licenses, certificates, permits, authorizations, approvals,
franchises or other rights necessary to engage in the business currently
conducted by it, and neither the Guarantor, the Company nor any of their
respective subsidiaries has any reason to believe that any governmental
body or agency is considering limiting, suspending or revoking any such
license, certificate, permit, authorization, approval, franchise or right
which might result in any material adverse change in the business,
prospects, financial condition or results of operation of the Guarantor and
its subsidiaries, taken as a whole.
(m) The accountants who have certified the financial statements of
the Guarantor and its subsidiaries as a part of (or incorporated by
reference in) the Offering Memorandum are independent accountants as
required by the Act. The consolidated financial statements of the
Guarantor and its subsidiaries included in the Offering Memorandum comply
in all material respects with the requirements of the Act and present
fairly the financial position and results of operation of the Guarantor and
its consolidated subsidiaries at the respective dates and for
15
the respective periods specified. All such financial statements have been
prepared in accordance with generally accepted accounting principles
applied on a consistent basis throughout such periods (except as otherwise
noted).
(n) Since the dates as of which information is given in the
Offering Memorandum, except as otherwise stated or contemplated therein (i)
there has been no material adverse change in the financial condition of the
Guarantor or any of its subsidiaries, or in their earnings or business
affairs, whether or not arising in the ordinary course of business, (ii)
there have been no material transactions entered into by the Guarantor or
any of its subsidiaries, other than the transactions in the ordinary course
of business, that are material to the Guarantor, (iii) neither the
Guarantor nor any of its subsidiaries has incurred any obligation,
contingent or otherwise, that is material to the Guarantor, (iv) there has
been no change in the capital stock or debt of the Guarantor or any of its
subsidiaries and (v) there has been no dividend or distribution of any kind
declared, paid or made by the Company on its capital stock.
(o) Each of the Guarantor and the Company has corporate power and
authority to enter into and perform this Agreement and to issue, sell and
deliver the Notes and the Guarantees to be sold by the Company and the
Guarantor, respectively, hereunder; this Agreement has been duly
authorized, executed and delivered by the Guarantor and the Company and is
a valid and binding agreement of the Guarantor and the Company except as
rights to indemnity and contribution hereunder may be limited under
applicable federal and state securities laws.
(p) Each of the Guarantor, the Company and their respective
subsidiaries owns or possesses adequate licenses or other rights to use all
patents, trademarks, service marks, trade names, copyrights and know-how
(including trade secrets, and other proprietary and confidential
information, systems or procedures) necessary to conduct the businesses now
operated by it as described in the Offering Memorandum; and neither the
Guarantor, the Company nor any of their respective subsidiaries has
received any notice of infringement of or conflict with (and no officer or
director of the Guarantor knows of any such infringement of or conflict
with) asserted rights of others with respect to any patents, trademarks,
service marks, trade names, copyrights or know-how, which might result in
any material adverse change in the business, prospects, financial condition
or results of operation of the Company and its subsidiaries, taken as a
whole.
16
(q) Each of the Guarantor, the Company and their respective
subsidiaries maintains reasonably adequate insurance.
(r) There is not now pending or, to the knowledge of the
Guarantor's officers, threatened, any litigation, action, suite or
proceeding, including any such litigation, action, suit or proceeding
related to environmental matters or related to discrimination on the basis
of age, sex, religion or race, to which the Guarantor or any of its
subsidiaries is or will be a party before or by any court or governmental
agency or body, which might result in any material adverse charge in the
business, prospects, financial condition or results of operation of the
Guarantor and its subsidiaries, taken as a whole, or might materially and
adversely affect the property or assets of the Guarantor and its
subsidiaries, taken as a whole, and no labor disturbance by the employees
of the Guarantor or any of its subsidiaries exists or is imminent which
might be expected to adversely affect the conduct of the business,
financial condition or results of operation of the Guarantor and the
officers of the Guarantor are not aware of any existing or imminent labor
disturbance by the employees of any of its principal suppliers,
manufacturers, contractors or customers wich may be expected to result in
any material adverse change in the condition, financial or otherwise, or
the earnings, affairs or business prospects of the Guarantor and its
subsidiaries, taken as a whole.
(s) To the knowledge of the officers of the Guarantor neither the
Guarantor nor any of its subsidiaries has violated any environmental,
safety or similar law applicable to its business, nor any federal or state
law relating to discrimination in the hiring, promotion or pay of employees
nor any applicable federal or state wages and hours laws, nor any
provisions of the Employee Retirement Income Security Act or the rules and
regulations promulgated thereunder, which in each case might result in any
material adverse change in the business, prospects, financial condition or
results of operation of the Guarantor and its subsidiaries, taken as a
whole.
(t) All federal, state and other tax returns of the Guarantor
required by law to be filed have been duly filed. The Guarantor and its
subsidiaries have properly expended or paid all necessary federal, state,
local and foreign income taxes and franchise taxes and, except as disclosed
in the Offering Memorandum, there is no tax deficiency that has been
asserted or is threatened against the Guarantor or any of its subsidiaries.
The provisions and reserves on the books of the Guarantor in respect of
federal, state and other taxes are, in the opinion of the Guarantor,
adequate.
17
(u) Neither the Guarantor nor the Company is or, after giving
effect to the offering and sale of the Series A Notes and the application
of the net proceeds thereof as described in the Offering Memorandum, will
be, an "investment company," as such term is defined in the Investment
Company Act of 1940, as amended.
(v) No holder of any security of the Guarantor has any right to
require registration of shares of common stock or any other security of the
Company in connection with the Offering Memorandum with respect to the
Notes except for rights pursuant to the Warrant and Registration Rights
Agreement dated as of June 16, 1997 among the Guarantor and the Investors
listed therein.
(w) All indebtedness of the Company and the Guarantor that will be
repaid with the proceeds of the issuance and sale of the Series A Notes was
incurred, and the indebtedness represented by the Series A Notes is being
incurred for proper purposes and in good faith and each of the Company and
the Guarantor was, at the time of the incurrence of such indebtedness that
will be repaid with the proceeds of the issuance and sale of the Series A
Notes, solvent, and had at the time of the incurrence of such indebtedness
that will be repaid with the proceeds of the issuance and the sale of the
Series A Notes) sufficient capital for carrying on their respective
business and were, at the time of the incurrence of such indebtedness that
will be repaid with the proceeds of the issuance and sale of the Series A
Notes, and will be on the Closing Date (after giving effect to the
application of the proceeds from the issuance of the Series A Notes) able
to pay their respective debts as they mature.
(x) Except for publicly disclosed ratings downgrades prior to the
date hereof, no "nationally recognized statistical rating organization" as
such term is defined for purposes of Rule 436(g)(2) under the Act (i) has
imposed (or has informed the Company or the Guarantor that it is
considering imposing) any condition (financial or otherwise) on the
Company's or the Guarantor's retaining any rating assigned to the Company
or the Guarantor, any securities of the Company or any Guarantor or (ii)
has indicated to the Company or the Guarantor that it is considering (A)
the downgrading, suspension, or withdrawal of, or any review for a possible
change that does not indicate the direction of the possible change in, any
rating so assigned or (B) any negative change in the outlook for any rating
of the Company, the Guarantor or any securities of the Company or the
Guarantor.
18
(y) Each of the Preliminary Offering Memorandum and the Offering
Memorandum, as of its date, contains all the information specified in, and
meeting the requirements of, Rule 144A(d)(4) under the Act.
(z) When the Series A Notes and the Guarantees are issued and
delivered pursuant to this Agreement, neither the Series A Notes nor the
Guarantees will be of the same class (within the meaning of Rule 144A under
the Act) as any security of the Company or the Guarantor that is listed on
a national securities exchange registered under Section 6 of the Exchange
Act or that is quoted in a United States automated inter-dealer quotation
system.
(aa) No form of general solicitation or general advertising (as
defined in Regulation D under the Act) was used by the Company, the
Guarantor or any of their respective representatives (other than the
Initial Purchasers, as to whom the Company and the Guarantor make no
representation) in connection with the offer and sale of the Series A Notes
contemplated hereby, including, but not limited to, articles, notices or
other communications published in any newspaper, magazine, or similar
medium or broadcast over television or radio, or any seminar or meeting
whose attendees have been invited by any general solicitation or general
advertising. No securities of the same class as the Series A Notes have
been issued and sold by the Company within the six-month period immediately
prior to the date hereof.
(bb) Prior to the effectiveness of any Registration Statement, the
Indenture is not required to be qualified under the TIA.
(cc) None of the Company, the Guarantor nor any of their respective
affiliates or any person acting on its or their behalf (other than the
Initial Purchasers, as to whom the Company and the Guarantor make no
representation) has engaged or will engage in any directed selling efforts
within the meaning of Regulation S under the Act ("REGULATION S") with
respect to the Series A Notes or the Guarantees.
(dd) The sale of the Series A Notes pursuant to Regulation S is not
part of a plan or scheme to evade the registration provisions of the Act.
(ee) No registration under the Act of the Series A Notes or the
Guarantee is required for the sale of the Series A Notes and the Guarantees
to the Initial Purchasers as contemplated hereby or for the Exempt Resales
assuming the accuracy of the Initial Purchasers' representations and
warranties and agreements set forth in Section 7 hereof.
19
(ff) Each certificate signed by any officer of the Company or the
Guarantor and delivered to the Initial Purchasers or counsel for the
Initial Purchasers shall be deemed to be a representation and warranty by
the Company or the Guarantor to the Initial Purchasers as to the matters
covered thereby.
(gg) The Company, the Guarantor and their respective affiliates and
all persons acting on their behalf (other than the Initial Purchasers, as
to whom the Company and the Guarantor make no representation) have complied
with and will comply with the offering restrictions requirements of
Regulation S in connection with the offering of the Series A Notes outside
the United States and, in connection therewith, the Offering Memorandum
will contain the disclosure required by Rule 902(h).
(hh) The Series A Notes sold in reliance on Regulation S will be
represented upon issuance by a temporary global security that may not be
exchanged for definitive securities until the expiration of the 40-day
restricted period referred to in Rule 903(c)(3) of the Act and only upon
certification of beneficial ownership of such Series A Notes by non-U.S.
persons or U.S. persons who purchased such Series A Notes in transactions
that were exempt from the registration requirements of the Act.
The Company acknowledges that the Initial Purchasers and, for purposes of
the opinions to be delivered to the Initial Purchasers pursuant to Section 9
hereof, counsel to the Company and the Guarantor and counsel to the Initial
Purchasers will rely upon the accuracy and truth of the foregoing
representations and hereby consents to such reliance.
7. INITIAL PURCHASERS' REPRESENTATIONS AND WARRANTIES. Each of the
Initial Purchasers, severally and not jointly, represents and warrants the
Company and the Guarantor:
(a) Such Initial Purchaser is either a QIB or an Accredited
Institution, in either case, with such knowledge and experience in
financial and business matters as is necessary in order to evaluate the
merits and risks of an investment in the Series A Notes.
(b) Such Initial Purchaser (i) is not acquiring the Series A Notes
with a view to any distribution thereof or with any present intention of
offering or selling any of the Series A Notes in a transaction that would
violate the Act or the securities laws of any state of the United States or
20
any other applicable jurisdiction and (ii) will be reoffering and reselling
the Series A Notes only to (x) QIBs in reliance on the exemption from the
registration requirements of the Act provided by Rule 144A, and (y) in
offshore transactions in reliance upon Regulation S under the Act.
(c) Such Initial Purchaser agrees that no form of general
solicitation or general advertising (within the meaning of Regulation D
under the Act) has been or will be used by such Initial Purchaser or any of
its representatives in connection with the offer and sale of the Series A
Notes pursuant hereto, including, but not limited to, articles, notices or
other communications published in any newspaper, magazine or similar medium
or broadcast over television or radio, or any seminar or meeting whose
attendees have been invited by any general solicitation or general
advertising.
(d) Such Initial Purchaser agrees that, in connection with Exempt
Resales, such Initial Purchaser will solicit offers to buy the Series A
Notes only from, and will offer to sell the Series A Notes only to,
Eligible Purchasers. Each Initial Purchaser further agrees that it will
offer to sell the Series A Notes only to, and will solicit offers to buy
the Series A Notes only from (i) Eligible Purchasers that the Initial
Purchaser reasonably believes are QIBs, and (ii) Regulation S Purchasers,
in each case, that agree that (x) the Series A Notes purchased by them may
be resold, pledged or otherwise transferred within the time period referred
to under Rule 144(k) (taking into account the provisions of Rule 144(d)
under the Act, if applicable) under the Act, as in effect on the date of
the transfer of such Series A Notes, only (A) to the Guarantor, the Company
or any of its subsidiaries, (B) to a person whom the seller reasonably
believes is a QIB purchasing for its own account or for the account of a
QIB in a transaction meeting the requirements of Rule 144A under the Act,
(C) in an offshore transaction (as defined in Rule 902 under the Act)
meeting the requirements of Rule 904 of the Act, (D) in a transaction
meeting the requirements of Rule 144 under the Act, (E) in accordance with
another exemption from the registration requirements of the Act (and based
upon an opinion of counsel acceptable to the Company) or (F) pursuant to an
effective registration statement and, in each case, in accordance with the
applicable securities laws of any state of the United States or any other
applicable jurisdiction and (y) they will deliver to each person to whom
such Series A Notes or an interest therein is transferred a notice
substantially to the effect of the foregoing.
(e) Such Initial Purchaser and its affiliates or any person acting on
its or their behalf have not engaged or will not engage in any directed
21
selling efforts within the meaning of Regulation S with respect to the
Series A Notes or the Guarantees.
(f) The sale of the Series A Notes offered and sold by such Initial
Purchaser pursuant hereto in reliance on Regulation S is not part of a plan
or scheme to evade the registration provisions of the Act.
(g) Such Initial Purchaser agrees that it has not offered or sold and
will not offer or sell the Series A Notes in the United States or to, or
for the benefit or account of, a U.S. Person (other than a distributor), in
each case, as defined in Rule 902 under the Act (i) as part of its
distribution at any time and (ii) otherwise until 40 days after the later
of the commencement of the offering of the Series A Notes pursuant hereto
and the Closing Date, other than in accordance with Regulation S of the Act
or another exemption from the registration requirements of the Act. Such
Initial Purchaser agrees that, during such 40-day restricted period, it
will not cause any advertisement with respect to the Series A Notes
(including any "tombstone" advertisement) to be published in any newspaper
or periodical or posted in any public place and will not issue any circular
relating to the Series A Notes, except such advertisements as permitted by
and include the statements required by Regulation S.
(h) Such Initial Purchaser agrees that, at or prior to confirmation
of a sale of Series A Notes by it to any distributor, dealer or person
receiving a selling concession, fee or other remuneration during the 40-day
restricted period referred to in Rule 903(c)(3) under the Act, it will send
to such distributor, dealer or person receiving a selling concession, fee
or other remuneration a confirmation or notice to substantially the
following effect:
"The Series A Notes covered hereby have not been registered under the
U.S. Securities Act of 1933, as amended (the "SECURITIES ACT"), and
may not be offered and sold within the United State or to, or for the
account or benefit of, U.S. persons (i) as part of your distribution
at any time or (ii) otherwise until 40 days after the later of the
commencement of the Offering and the Closing Date, except in either
case in accordance with Regulation S under the Securities Act (or Rule
144A or to Accredited Institutions in transactions that are exempt
from the registration requirements of the Securities Act), and in
connection with any subsequent sale by you of the Series A Notes
covered hereby in reliance on Regulation S during the period referred
to above to any distributor, dealer or person receiving a selling
concession, fee or other remuneration, you must
22
deliver a notice to substantially the foregoing effect. Terms used
above have the meaning assigned to them in Regulation S."
(i) Such Initial Purchaser agrees that the Series A Notes offered and
sold in reliance on Regulation S will be represented upon issuance by a
global security that may not be exchanged for definitive securities until
the expiration of the 40-day restricted period referred to in Rule
903(c)(3) of the Act and only upon certification of beneficial ownership of
such Series A Notes by non-U.S. persons or U.S. persons who purchased such
Series A Notes in transactions that were exempt from the registration
requirements of the Act.
Such Initial Purchaser acknowledges that the Company and the
Guarantor and, for purposes of the opinions to be delivered to each
Initial Purchaser pursuant to Section 9 hereof, counsel to the Company
and the Guarantor and counsel to the Initial Purchaser will rely upon
the accuracy and truth of the foregoing representations and such
Initial Purchaser hereby consents to such reliance.
8. INDEMNIFICATION.
(a) The Company and the Guarantor agree, jointly and severally, to
indemnify and hold harmless each Initial Purchaser, its directors, its
officers and each person, if any, who controls such Initial Purchaser
within the meaning of Section 15 of the Act or Section 20 of the Exchange
Act, from and against any and all losses, claims, damages, liabilities and
judgments (including, without limitation, any legal or other expenses
incurred in connection with investigating or defending any matter,
including any action, that could give rise to any such losses, claims,
damages, liabilities or judgments) caused by any untrue statement or
alleged untrue statement of a material fact contained in the Offering
Memorandum (or any amendment or supplement thereto), the Preliminary
Offering Memorandum or any Rule 144A Information provided by the Company or
the Guarantor to any holder or prospective purchaser of Series A Notes
pursuant to Section 5(h) or caused by any omission or alleged omission to
state therein a material fact required to be stated therein or necessary to
make the statements therein not misleading, except insofar as such losses,
claims, damages, liabilities or judgments are caused by any such untrue
statement or omission or alleged untrue statement or omission based upon
information relating to such Initial Purchaser furnished in writing to the
Company by such Initial Purchaser; PROVIDED, HOWEVER, that the foregoing
indemnity agreement with respect to the
23
Preliminary Offering Memorandum shall not inure to the benefit of any
Initial Purchaser who failed to deliver the Offering Memorandum, as then
amended or supplemented (so long as the Offering Memorandum and any such
amendment or supplement was provided by the Company to the several Initial
Purchasers in the requisite quantity and on a timely basis to permit proper
delivery on or prior to the Closing Date) to the person asserting any
losses, claims, damages, liabilities or judgments caused by any untrue
statement or alleged untrue statement of a material fact contained in the
Preliminary Offering Memorandum, or caused by any omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, if such material
misstatement or omission or alleged material misstatement or omission was
cured in the Offering Memorandum, as so amended or supplemented.
(b) Each Initial Purchaser, severally and not jointly, agrees to
indemnify and hold harmless the Company and the Guarantor, and their
respective directors and officers and each person, if any, who controls
(within the meaning of Section 15 of the Act or Section 20 of the Exchange
Act) the Company or the Guarantor, to the same extent as the foregoing
indemnity from the Company and the Guarantor to each Initial Purchaser but
only with reference to information relating to such Initial Purchaser
furnished in writing to the Company by such Initial Purchaser expressly for
use in the Preliminary Offering Memorandum or the Offering Memorandum.
(c) In case any action shall be commenced involving any person in
respect of which indemnity may be sought pursuant to Section 8(a) or 8(b)
(the "INDEMNIFIED PARTY"), the indemnified party shall promptly notify the
person against whom such indemnity may be sought (the "INDEMNIFYING PARTY")
in writing and the indemnifying party shall assume the defense of such
action, including the employment of counsel reasonably satisfactory to the
indemnified party and the payment of all fees and expenses of such counsel,
as incurred (except that in the case of any action in respect of which
indemnity may be sought pursuant to both Sections 8(a) and 8(b), the
Initial Purchasers shall not be required to assume the defense of such
action pursuant to this Section 8(c), but may employ separate counsel and
participate in the defense thereof, but the fees and expenses of such
counsel, except as provided below, shall be at the expense of the Initial
Purchasers). Any indemnified party shall have the right to employ separate
counsel in any such action and participate in the defense thereof, but the
fees and expenses of such counsel shall be at the expense of the
indemnified party unless (i) the employment of such
24
counsel shall have been specifically authorized in writing by the
indemnifying party, (ii) the indemnifying party shall have failed to assume
the defense of such action or employ counsel reasonably satisfactory to the
indemnified party or (iii) the named parties to any such action (including
any impleaded parties) include both the indemnified party and the
indemnifying party, and the indemnified party shall have been advised by
such counsel that there may be one or more legal defenses available to it
which are different from or additional to those available to the
indemnifying party (in which case the indemnifying party shall not have the
right to assume the defense of such action on behalf of the indemnified
party). In any such case, the indemnifying party shall not, in connection
with any one action or separate but substantially similar or related
actions in the same jurisdiction arising out of the same general
allegations or circumstances, be liable for the fees and expenses of more
than one separate firm of attorneys (in addition to any local counsel) for
all indemnified parties and all such fees and expenses shall be reimbursed
as they are incurred. Such firm shall be designated in writing by
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ Securities Corporation, in the case of the
parties indemnified pursuant to Section 8(a), and by the Company, in the
case of parties indemnified pursuant to Section 8(b). The indemnifying
party shall indemnify and hold harmless the indemnified party from and
against any and all losses, claims, damages, liabilities and judgments by
reason of any settlement of any action (i) effected with the indemnifying
party's written consent or (ii) effected without the indemnifying party's
written consent if the settlement is entered into more than twenty business
days after the indemnifying party shall have received a request from the
indemnified party for reimbursement for the fees and expenses of counsel
(in any case where such fees and expenses are at the expense of the
indemnifying party) and, prior to the date of such settlement, the
indemnifying party shall have failed to comply with such reimbursement
request. No indemnifying party shall, without the prior written consent of
the indemnified party, effect any settlement or compromise of, or consent
to the entry of judgment with respect to, any pending or threatened action
in respect of which the indemnified party is or could have been a party and
indemnity or contribution may be or could have been sought hereunder by the
indemnified party, unless such settlement, compromise or judgment (i)
includes an unconditional release of the indemnified party from all
liability on claims that are or could have been the subject matter of such
action and (ii) does not include a statement as to or an admission of
fault, culpability or a failure to act, by or on behalf of the indemnified
party.
(d) To the extent the indemnification provided for in this Section 8
is unavailable to an indemnified party or insufficient in respect of any
25
losses, claims, damages, liabilities or judgments referred to therein, then
each indemnifying party, in lieu of indemnifying such indemnified party,
shall contribute to the amount paid or payable by such indemnified party as
a result of such losses, claims, damages, liabilities and judgments (i) in
such proportion as is appropriate to reflect the relative benefits received
by the Company and the Guarantor, on the one hand, and the Initial
Purchasers on the other hand from the offering of the Series A Notes or
(ii) if the allocation provided by clause 8(d)(i) above is not permitted by
applicable law, in such proportion as is appropriate to reflect not only
the relative benefits referred to in clause 8(d)(i) above but also the
relative fault of the Company and the Guarantor, on the one hand, and the
Initial Purchasers, on the other hand, in connection with the statements or
omissions which resulted in such losses, claims, damages, liabilities or
judgments, as well as any other relevant equitable considerations. The
relative benefits received by the Company and the Guarantor, on the one
hand and the Initial Purchasers, on the other hand, shall be deemed to be
in the same proportion as the total net proceeds from the offering of the
Series A Notes (after underwriting discounts and commissions, but before
deducting expenses) received by the Company, and the total discounts and
commissions received by the Initial Purchasers bear to the total price to
investors of the Series A Notes, in each case as set forth in the table on
the cover page of the Offering Memorandum. The relative fault of the
Company and the Guarantor, on the one hand, and the Initial Purchasers, on
the other hand, shall be determined by reference to, among other things,
whether the untrue or alleged untrue statement of a material fact or the
omission or alleged omission to state a material fact relates to
information supplied by the Company or the Guarantor, on the one hand, or
the Initial Purchasers, on the other hand, and the parties' relative
intent, knowledge, access to information and opportunity to correct or
prevent such statement or omission.
The Company and the Guarantor, and the Initial Purchasers agree
that it would not be just and equitable if contribution pursuant to
this Section 8(d) were determined by pro rata allocation (even if the
Initial Purchasers were treated as one entity for such purpose) or by
any other method of allocation which does not take account of the
equitable considerations referred to in the immediately preceding
paragraph. The amount paid or payable by an indemnified party as a
result of the losses, claims, damages, liabilities or judgments
referred to in the immediately preceding paragraph shall be deemed to
include, subject to the limitations set forth above, any legal or
other expenses incurred by such indemnified party in connection with
investigating or defending
26
any matter, including any action, that could have given rise to such
losses, claims, damages, liabilities or judgments. Notwithstanding
the provisions of this Section 8, the Initial Purchasers shall not be
required to contribute any amount in excess of the amount by which the
total discounts and commissions received by such Initial Purchasers
exceeds the amount of any damages which the Initial Purchasers have
otherwise been required to pay by reason of such untrue or alleged
untrue statement or omission or alleged omission. No person guilty
of fraudulent misrepresentation (within the meaning of Section 11(f)
of the Act) shall be entitled to contribution from any person who was
not guilty of such fraudulent misrepresentation. The Initial
Purchasers' obligations to contribute pursuant to this Section 8(d)
are several in proportion to the respective principal amount of Series
A Notes purchased by each of the Initial Purchasers hereunder and not
joint.
(e) The remedies provided for in this Section 8 are not exclusive and
shall not limit any rights or remedies which may otherwise be available to
any indemnified party at law or in equity.
9. CONDITIONS OF INITIAL PURCHASER'S OBLIGATIONS. The obligations of the
Initial Purchasers to purchase the Series A Notes under this Agreement are
subject to the satisfaction of each of the following conditions:
(a) All the representations and warranties of the Company and the
Guarantor contained in this Agreement shall be true and correct on the
Closing Date with the same force and effect as if made on and as of the
Closing Date.
(b) On or after the date hereof, (i) there shall not have occurred
any downgrading, suspension or withdrawal of, nor shall any notice have
been given of any potential or intended downgrading, suspension or
withdrawal of, or of any review (or of any potential or intended review)
for a possible change that does not indicate the direction of the possible
change in, any rating of the Company or the Guarantor or any securities of
the Company or the Guarantor (including, without limitation, the placing of
any of the foregoing ratings on credit watch with negative or developing
implications or under review with an uncertain direction) by any
"nationally recognized statistical rating organization" as such term is
defined for purposes of Rule 436(g)(2) under the Act, (ii) there shall not
have occurred any change, nor shall any notice have been given of any
potential or intended change, in the outlook for any rating of the Company
or the Guarantor or any securities of the Company or any Guarantor by
27
any such rating organization and (iii) no such rating organization shall
have given notice that it has assigned (or is considering assigning) a
lower rating to the Notes than that on which the Notes were marketed.
(c) Since the respective dates as of which information is given in
the Offering Memorandum other than as set forth in the Offering Memorandum
(exclusive of any amendments or supplements thereto subsequent to the date
of this Agreement), (i) there shall not have occurred any change or any
development involving a prospective change in the condition, financial or
otherwise, or the earnings, business, management or operations of the
Company and its subsidiaries, taken as a whole, (ii) there shall not have
been any change or any development involving a prospective change in the
capital stock or in the long-term debt of the Company or any of its
subsidiaries and (iii) neither the Guarantor, the Company nor any of its
subsidiaries shall have incurred any liability or obligation, direct or
contingent, the effect of which, in any such case described in clause
9(c)(i), 9(c)(ii) or 9(c)(iii), in your judgment, is material and adverse
and, in your judgment, makes it impracticable to market the Series A Notes
on the terms and in the manner contemplated in the Offering Memorandum.
(d) You shall have received on the Closing Date a certificate dated
the Closing Date, signed by the President and the Chief Financial Officer
of the Company and the Guarantor, confirming the matters set forth in
Sections 9(a), 9(b) and 9(c) and stating that each of the Company and the
Guarantor has complied with all the agreements and satisfied all of the
conditions herein contained and required to be complied with or satisfied
on or prior to the Closing Date.
(e) You shall have received on the Closing Date an opinion
(satisfactory to you and counsel for the Initial Purchaser), dated the
Closing Date, of ▇▇▇▇ & ▇▇▇▇▇▇▇, a professional association ("▇▇▇▇ &
▇▇▇▇▇▇▇"), counsel for the Company and the Guarantor substantially as set
forth in Exhibit B. With respect to the opinions to be set forth in
Exhibit B, ▇▇▇▇ & ▇▇▇▇▇▇▇ may state that their opinion and belief are based
upon their participation in the preparation of the Offering Memorandum and
any amendments or supplements thereto and review and discussion of the
contents thereof, but are without independent check or verification except
as specified. In giving the opinions referred to in Exhibit B, ▇▇▇▇ &
▇▇▇▇▇▇▇ may (x) assume, as to any matters governed by the laws of New York,
that the laws of Minnesota are substantially comparable to the laws of New
York (provided such counsel has no reason to believe that such laws are not
substantially comparable) and (y) rely on the opinion of the
28
Vice President and General Counsel of the Company and Guarantor or of
Faegre & ▇▇▇▇▇▇, L.L.P., ("Faegre & ▇▇▇▇▇▇") counsel to the Company and
Guarantor, as to certain specified matters. In lieu of reliance on such
opinion of the Vice President and General Counsel, such opinion of the Vice
President and General Counsel or of Faegre & ▇▇▇▇▇▇ may be delivered
directly to the Initial Purchasers.
(f) The Initial Purchasers shall have received on the Closing Date an
opinion, dated the Closing Date, of ▇▇▇▇▇ ▇▇▇▇ & ▇▇▇▇▇▇▇▇, counsel for the
Initial Purchasers, in form and substance reasonably satisfactory to the
Initial Purchasers.
(g) The Initial Purchasers shall have received, at the time this
Agreement is executed and at the Closing Date, letters dated the date
hereof or the Closing Date, as the case may be, in form and substance
satisfactory to the Initial Purchasers from ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ LLP,
independent public accountants, containing the information and statements
of the type ordinarily included in accountants' "comfort letters" to the
Initial Purchasers with respect to the financial statements and certain
financial information contained in the Offering Memorandum.
(h) The Series A Notes shall have been approved by the NASD for
trading and duly listed in PORTAL.
(i) The Initial Purchasers shall have received a counterpart,
conformed as executed, of the Indenture which shall have been entered into
by the Company, the Guarantor and the Trustee.
(j) The Company and the Guarantor shall have executed the
Registration Rights Agreement and the Initial Purchasers shall have
received an original copy thereof, duly executed by the Company and the
Guarantor.
(k) Neither the Company nor the Guarantor shall have failed at or
prior to the Closing Date to perform or comply with any of the agreements
herein contained and required to be performed or complied with by the
Company or the Guarantor, as the case may be, at or prior to the Closing
Date.
(l) The Amendment to the Credit Agreement substantially in the form
attached hereto as Exhibit C will have been executed by the Company and the
Required Banks as defined therein.
29
10. EFFECTIVENESS OF AGREEMENT AND TERMINATION. This Agreement shall
become effective upon the execution and delivery of this Agreement by the
parties hereto.
This Agreement may be terminated at any time on or prior to the Closing
Date by the Initial Purchasers by written notice to the Company if any of the
following has occurred: (i) any outbreak or escalation of hostilities or other
national or international calamity or crisis or change in economic conditions or
in the financial markets of the United States or elsewhere that, in the Initial
Purchasers' judgment, is material and adverse and, in the Initial Purchasers'
judgment, makes it impracticable to market the Series A Notes on the terms and
in the manner contemplated in the Offering Memorandum, (ii) the suspension or
material limitation of trading in securities or other instruments on the New
York Stock Exchange, the American Stock Exchange, the Chicago Board of Options
Exchange, the Chicago Mercantile Exchange, the Chicago Board of Trade or the
Nasdaq National Market or limitation on prices for securities or other
instruments on any such exchange or the Nasdaq National Market, (iii) the
suspension of trading of any securities of the Company or the Guarantor on any
exchange or in the over-the-counter market, (iv) the enactment, publication,
decree or other promulgation of any federal or state statute, regulation, rule
or order of any court or other governmental authority which in your opinion
materially and adversely affects, or will materially and adversely affect, the
business, prospects, financial condition or results of operations of the
Guarantor, the Company and its subsidiaries, taken as a whole, (v) the
declaration of a banking moratorium by either federal or New York State
authorities or (vi) the taking of any action by any federal, state or local
government or agency in respect of its monetary or fiscal affairs which in your
opinion has a material adverse effect on the financial markets in the United
States.
If on the Closing Date any one or more of the initial Purchasers shall fail
or refuse to purchase the Series A Notes which it or they have agreed to
purchase hereunder on such date and the aggregate principal amount of the Series
A Notes which such defaulting Initial Purchase or Initial Purchasers, as the
case may be, agreed but failed or refused to purchase is not more than one-tenth
of the aggregate principal amount of the Series A Notes to be purchased on such
date by all Initial Purchasers, each non-defaulting Initial Purchaser shall be
obligated severally, in the proportion which the principal amount of the Series
A Notes set forth opposite its name in Schedule B bears to the aggregate
principal amount of the Series A Notes which all the non-defaulting Initial
Purchasers, as the case may be, have agreed to purchase, or in such other
proportion as you may specify, to purchase the Series A Notes which such
defaulting Initial Purchaser or Initial Purchasers, as the case may be, agreed
but failed or refused to purchase on such date; PROVIDED that in no event shall
the aggregate principal amount of the Series
30
A Notes which any Initial Purchaser has agreed to purchase pursuant to Section 2
hereof be increased pursuant to this Section 10 by an amount in excess of
one-ninth of such principal amount of the Series A Notes without the written
consent of such Initial Purchaser. If on the Closing Date any Initial Purchaser
or Initial Purchasers shall fail or refuse to purchase the Series A Notes with
respect to which such default occurs is more than one-tenth of the aggregate
principal amount of the Series A Notes to be purchased by all Initial Purchasers
and arrangements satisfactory to the Initial Purchasers and the Company for
purchase of such the Series A Notes are not made within 48 hours after such
default, this Agreement will terminate without liability on the part of any
non-defaulting Initial Purchaser, the Company and the Guarantor. If any such
case which does not result in termination of this Agreement, either you or the
Company shall have the right to postpone the Closing Date, but in no event for
longer than seven days, in order that the required changes, if any, in the
Offering Memorandum or any other documents or arrangements may be effected. Any
action taken under this paragraph shall not relieve any defaulting Initial
Purchaser from liability in respect of any default of any such Initial Purchaser
under this Agreement.
11. MISCELLANEOUS. Notices given pursuant to any provision of this
Agreement shall be addressed as follows: (i) if to the Company or the
Guarantor, to Musicland Group Inc., ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇
▇▇▇▇▇, Fax: (▇▇▇) ▇▇▇-▇▇▇▇, Attention: General Counsel and (ii) if to the
Initial Purchasers, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ Securities Corporation, ▇▇▇
▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, Attention: Syndicate Department, or in
any case to such other address as the person to be notified may have requested
in writing.
The respective indemnities, contribution agreements, representations,
warranties and other statements of the Company, the Guarantor and the Initial
Purchasers set forth in or made pursuant to this Agreement shall remain
operative and in full force and effect, and will survive delivery of and payment
for the Series A Notes, regardless of (i) any investigation, or statement as to
the results thereof, made by or on behalf of the Initial Purchasers, the
officers or directors of the Initial Purchasers, any person controlling the
Initial Purchasers, the Company, the Guarantor, the officers or directors of the
Company or the Guarantor, or any person controlling the Company or the
Guarantor, (ii) acceptance of the Series A Notes and payment for them hereunder
and (iii) termination of this Agreement.
If for any reason the Series A Notes are not delivered by or on behalf of
the Company as provided herein (other than as a result of any termination of
this Agreement pursuant to Section 10), the Company and the Guarantor, jointly
and severally, agree to reimburse the Initial Purchasers for all reasonable
out-of-pocket expenses (including the fees and disbursements of counsel)
incurred
31
by them. Notwithstanding any termination of this Agreement, the Company shall
be liable for all expenses which it has agreed to pay pursuant to Section 5(i)
hereof. The Company and the Guarantor also agree, jointly and severally, to
reimburse each Initial Purchaser and its officers, directors and each person, if
any, who controls such Initial Purchaser within the meaning of Section 15 of the
Act or Section 20 of the Exchange Act for any and all fees and expenses
(including without limitation the fees and expenses of counsel) incurred by them
in connection with enforcing their rights under this Agreement (including
without limitation its rights under Section 8).
Except as otherwise provided, this Agreement has been and is made solely
for the benefit of and shall be binding upon the Company, the Guarantor, the
Initial Purchasers, the Initial Purchasers' directors and officers, any
controlling persons referred to herein, the directors of the Company and the
Guarantor and their respective successors and assigns, all as and to the extent
provided in this Agreement, and no other person shall acquire or have any right
under or by virtue of this Agreement. The term "successors and assigns" shall
not include a purchaser of any of the Series A Notes from the Initial Purchasers
merely because of such purchase.
This Agreement shall be governed and construed in accordance with the laws
of the State of New York.
This Agreement may be signed in various counterparts which together shall
constitute one and the same instrument.
32
Please confirm that the foregoing correctly sets forth the agreement among
the Company, the Guarantor and the Initial Purchasers.
Very truly yours,
THE MUSICLAND GROUP, INC.
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
------------------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: CEO, Chairman, and President
MUSICLAND STORES CORPORATION
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
------------------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: CEO, Chairman, and President
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇
SECURITIES CORPORATION
BT ALEX. BROWN INCORPORATED
NATIONSBANC ▇▇▇▇▇▇▇▇▇▇
SECURITIES LLC
By: ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ &
▇▇▇▇▇▇▇▇ SECURITIES
CORPORATION, on behalf of
the Initial Purchaser
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
--------------------------------
Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Title: Vice President
33
SCHEDULE A
INITIAL PURCHASERS PRINCIPAL AMOUNT OF NOTES
------------------ -------------------------
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇
Securities Corporation $ 90,000,000
BT ▇▇▇▇. ▇▇▇▇▇ Incorporated $ 30,000,000
NationsBanc ▇▇▇▇▇▇▇▇▇▇
Securities LLC $ 30,000,000
Total $
34
EXHIBIT A
FORM OF REGISTRATION RIGHTS AGREEMENT
EXHIBIT B
FORM OF OPINIONS TO BE DELIVERED BY COMPANY COUNSEL
(i) each of the Guarantor, the Company and its subsidiaries has
been duly incorporated, is validly existing as a corporation in good
standing under the laws of its jurisdiction of incorporation and has the
corporate power and authority to carry on its business as described in the
Offering Memorandum and to own, lease and operate its properties;
(ii) each of the Guarantor, the Company and its subsidiaries is
duly qualified and is in good standing as a foreign corporation authorized
to do business in each jurisdiction in which the nature of its business or
its ownership or leasing of property requires such qualification, except
where the failure to be so qualified would not have a material adverse
effect on the business, prospects, financial condition or results of
operations of the Guarantor and its subsidiaries, taken as a whole;
(iii) this Agreement has been duly and validly authorized, executed
and delivered by the Guarantor and the Company and (assuming the due
authorization, execution and delivery of this Agreement by the Initial
Purchasers) is a valid and binding agreement of the Guarantor and the
Company, except as rights to indemnity and contribution hereunder may be
limited by applicable law;
(iv) all the outstanding shares of capital stock or other
securities evidencing equity ownership of the Company by the Guarantor have
been duly and validly authorized and issued and are fully paid and
non-assessable, and are owned by the Guarantor, free and clear of any
security interest, claim, lien or encumbrance other than those created
pursuant to the Loan Documents (as defined in the Credit Agreement); to the
knowledge of such counsel after due inquiry, there are no outstanding
rights, warrants or options to acquire, or instruments convertible into or
exchangeable for, any shares of capital stock or other equity interest in
the Guarantor except for rights issued pursuant to the Warrant and
Registration Rights Agreement dated as of June 16, 1997 among the Guarantor
and the Investors listed therein, and options issued pursuant to the
Guarantor's stock option plans;
B-2
(v) the Series A Notes have been duly authorized and, when
executed and authenticated in accordance with the provisions of the
Indenture and delivered to and paid for by the Initial Purchasers in
accordance with the terms of this Agreement, will be entitled to the
benefits of the Indenture and will be valid and binding obligations of the
Company, enforceable in accordance with their terms except as (x) the
enforceability thereof may be limited by bankruptcy, insolvency or similar
laws affecting creditors' rights generally and (y) rights of acceleration
and the availability of equitable remedies may be limited by equitable
principles of general applicability;
(vi) the Guarantees have been duly authorized and, when the Series
A Notes are executed and authenticated in accordance with the provisions of
the Indenture and delivered to and paid for by the Initial Purchasers in
accordance with the terms of this Agreement, the Guarantees endorsed
thereon will be entitled to the benefits of the Indenture and will be valid
and binding obligations of the Guarantor, enforceable in accordance with
their terms except as (x) the enforceability thereof may be limited by
bankruptcy, insolvency or similar laws affecting creditors' rights
generally and (y) rights of acceleration and the availability of equitable
remedies may be limited by equitable principles of general applicability;
(vii) the Indenture has been duly authorized, executed and
delivered by the Company and the Guarantor and is a valid and binding
agreement of the Company and the Guarantor, enforceable against the Company
and the Guarantor in accordance with its terms except as (x) the
enforceability thereof may be limited by bankruptcy, insolvency or similar
laws affecting creditors' rights generally and (y) rights of acceleration
and the availability of equitable remedies may be limited by equitable
principles of general applicability;
(viii) such counsel does not know of any legal or governmental
proceeding pending or threatened against the Guarantor or the Company or to
which the Guarantor or the Company is a party or to which any of the
properties of the Guarantor or the Company is subject which is required to
be described in the Offering Memorandum and is not so described, or any
contract, lease or other document which is required to be described in the
Offering Memorandum which is not described as
B-3
required; the descriptions thereof or references thereto are accurate in
all material respects; and each contract, lease or document so described is
in full force and effect in accordance with its terms;
(ix) neither the Guarantor nor the Company is in violation of
their respective charter documents or by-laws or, to such counsel's
knowledge, in default in the performance of any material obligation,
agreement or condition contained in any bond, debenture, note or any other
evidence of indebtedness or in any material indenture, instrument or other
agreement material to the conduct of the business of either the Guarantor
or the Company to which either the Guarantor or the Company is a party or
which binds either the Guarantor or the Company or any of their property;
(x) the execution, delivery and performance of this Agreement,
the Indenture, the Notes and the Guarantees and compliance by the Guarantor
or the Company with all the provisions hereof and thereof and the
consummation of the transactions contemplated hereby and thereby will not
violate or conflict with or constitute a breach of any of the terms or
provisions of, or a default under, the charter documents or by-laws of
either the Guarantor or the Company or, to the knowledge of such counsel,
after due inquiry, any agreement, indenture or other instrument material to
either the Guarantor or the Company to which either the Guarantor or the
Company is a party or which binds either the Guarantor or the Company or
any of their property, or to the knowledge of such counsel after due
inquiry, (assuming compliance with all applicable state securities and Blue
Sky laws in those several states in which the Notes will be offered or
sold), violate or conflict with any laws, administrative regulations or
rulings or court decrees applicable to either the Guarantor or the Company
or to any of their property;
(xi) all proceedings required in connection with the authorization
of the Indenture and the authorization and issuance of the Notes and the
Guarantees and the sale of the Notes by the Company and the Guarantor in
accordance with the terms of this Agreement have been taken and all
authorizations, consents, approvals, licenses or other orders of any
regulatory body, administrative agency or other governmental body required
for the valid issuance, sale and delivery of the Notes hereunder have been
obtained (assuming compliance with all applicable Blue Sky or
B-4
state securities laws in the several states in which the Notes will be
offered or sold);
(xii) no consents or waivers from the holders of the Guarantor's
capital stock or debt securities are required under any agreement,
indenture or other instrument to which either the Company or the Guarantor
is a party to consummate the transactions contemplated hereby other than
such consents and waivers as have been obtained;
(xiii) The Registration Rights Agreement has been duly authorized,
executed and delivered by the Company and the Guarantor and is a valid and
binding agreement of the Company and the Guarantor, enforceable against the
Company and the Guarantor in accordance with its terms, except as (x) the
enforceability thereof may be limited by bankruptcy, insolvency or similar
laws affecting creditors' rights generally and (y) rights of acceleration
and the availability of equitable remedies may be limited by equitable
principles of general applicability;
(xiv) the Series B Notes have been duly authorized;
(xv) the statements under the captions "Certain Federal Income Tax
Considerations," "Description of Existing Financing Arrangements,"
"Description of Notes" and "Plan of Distribution" in the Offering
Memorandum, insofar as such statements constitute a summary of the legal
matters, documents or proceedings referred to therein, fairly present in
all material respects such legal matters, documents and proceedings;
(xvi) neither the Guarantor, nor the Company is or, after giving
effect to the offering and sale of the Series A Notes and the application
of the net proceeds thereof as described in the Offering Memorandum, will
be, an "investment company" as such term is defined in the Investment
Company Act of 1940, as amended;
(xvii) the Indenture complies as to form in all material respects
with the requirements of the TIA, and the rules and regulations of the
Commission applicable to an indenture which is qualified thereunder. It is
not necessary in connection with the offer, sale and delivery of the Series
A Notes to the Initial Purchaser in the manner contemplated by this
Agreement or in
B-5
connection with the Exempt Resales to qualify the Indenture under the TIA.
(xviii) no registration under the Act of the Series A Notes is
required for the sale of the Series A Notes to the Initial Purchasers as
contemplated by this Agreement or for the Exempt Resales assuming that (A)
each Initial Purchaser is a QIB, or a Regulation S Purchaser, (B) the
accuracy of, and compliance with, the Initial Purchasers' representations
and agreements contained in Section 7 of this Agreement, (C) the accuracy
of the representations of the Company and the Guarantor set forth in
Sections 6(cc), 6(dd), 6(gg) and 6(hh) of this Agreement.
(xix) (i) each of the Incorporated Documents (except for financial
statements and schedules as to which no opinion need be expressed) complied
when so filed as to form in all material respects with the Exchange Act and
the applicable rules and regulations of the Commission thereunder and (ii)
such counsel has no reason to believe that, as of the date of the Offering
Memorandum or as of the Closing Date, the Offering Memorandum, as amended
or supplemented, if applicable (except for the financial statements and
other financial data included therein, as to which such counsel need not
express any belief) contains any untrue statement of a material fact or
omits to state a material fact necessary in order to make the statements
therein, in the light of the circumstances under which they were made, not
misleading.
B-6
CROSS-REFERENCE TARGET LIST
NOTE: DUE TO THE NUMBER OF TARGETS SOME TARGET NAMES MAY NOT APPEAR IN THE
TARGET PULL-DOWN LIST.
(This list is for the use of the wordprocessor only,
is not a part of this document and may be discarded.)
ARTICLE/SECTION TARGET NAME ARTICLE/SECTION TARGET NAME ARTICLE/SECTION TARGET NAME ARTICLE/SECTION TARGET NAME
---------------------------- ---------------------------- ---------------------------- ----------------------------
---------------------------- ---------------------------- ---------------------------- ----------------------------
5(c) . . . . . .off.memo.del
5(e) . . . . .exempt.resales
5(h) . . . . . .series.a.out
5(i) . . . . . .pay.expenses
6(a), 6(b), 6(c) . no.untrue
?. . . . . . .no.mat.adv.chg
6(cc). . . . . . no.dir.sell
?. . . . . . . only.offshore
6(dd). . series.a.not.scheme
7. . . . . ini.purch.rep.war
8. . . . . . . . . . . indem
8(a) . . . . . co.guar.agree
8(b) . . . . ini.purch.agree
8(c) . . . . . . ▇▇▇▇▇.▇▇▇▇▇
8(d) . . . . . indem.unavail
8(d)(i). . . . .appro.propor
9. . . .cond.ini.purch.oblig
9(a) . . . . . .rep.war.true
9(b) . . . . .no.downgrading
9(c) . . . . . . no.pros.chg
9(c)(i). . . . . no.chg.earn
9(c)(ii) . . .no.chg.cap.stk
9(c)(iii). . . . . . no.liab
9(e) . . . . . .co.coun.opin
11(a)(xx). . . .coun.believe
10 . . . . . effect.agt.term