EXHIBIT 4.4
Audio Communications Network, LLC
(to be renamed Muzak LLC)
Muzak Finance Corp.
$115,000,000
9 7/8% Senior Subordinated Notes due 2009
PURCHASE AGREEMENT
------------------
March 12, 1999
CIBC OPPENHEIMER CORP.
XXXXXXX, XXXXX & CO.
c/o CIBC Xxxxxxxxxxx Corp.
000 Xxxxxxxxx Xxxxxx
0xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Ladies and Gentlemen:
Audio Communications Network, LLC, a Delaware limited liability company
(the "Company"), Muzak Finance Corp., a Delaware Corporation, and a wholly-owned
subsidiary of the Company ("Finance Corp." and, together with the Company, the
"Notes Issuers"), the Company's other subsidiary listed in Exhibit A hereto and
---------
ACN Holdings LLC, a Delaware limited liability company, and the parent company
of the Company ("Holdings") (each of such subsidiary and Holdings, an "ACN
Guarantor" and, collectively, the "ACN Guarantors" and, together with the Muzak
Guarantors (as defined herein), the "Guarantors") hereby confirm their agreement
with you (the "Initial Purchasers"), as set forth below.
1. The Transactions. Subject to the terms and conditions herein
----------------
contained, the Notes Issuers propose to issue and sell to the Initial Purchasers
$115,000,000 aggregate principal amount of their 9 7/8% Senior Subordinated
Notes due 2009 (the "Notes"). The obligations of the Notes Issuers under the
Indenture (as defined herein) and the Notes will be unconditionally guaranteed
(the "Guarantees"), on a joint and several
-2-
basis, by each ACN Guarantor and, at and as of the Effective Time (as defined
herein), by each Muzak Subsidiary (as defined herein) (in such capacity, the
"Muzak Guarantors"). The Notes and the Guarantees are to be issued pursuant to
the Indenture (the "Indenture"), to be dated March 18, 1999, among the Notes
Issuers, the Guarantors and State Street Bank and Trust Company, a Massachusetts
banking corporation, as trustee (the "Trustee"). The Notes and the Guarantees
are hereinafter referred to collectively as the "Securities." The Notes Issuers
and the Guarantors are herein collectively referred to as the "Issuers."
The sale of the Securities to the Initial Purchasers (the "Offering") will
be made without registration of the Securities under the Securities Act of 1933,
as amended together with the rules and regulations of the Securities and
Exchange Commission (the "Commission") promulgated thereunder, the "Securities
Act"), in reliance upon the exemption therefrom provided by Section 4(2) of the
Securities Act.
At the Effective Time, the Muzak Guarantors will become parties to this
Agreement by executing a counterpart to this Agreement and delivering it to the
Initial Purchasers.
In connection with the sale of the Securities, the Company has prepared a
preliminary offering memorandum dated February 25, 1999 (the "Preliminary
Memorandum") and a final offering memorandum dated the date hereof (the "Final
Memorandum"), each setting forth or including a description of the terms of the
Securities, the terms of the Offering, the other Transactions (as defined
herein) and the transactions contemplated thereby and hereby, a description of
the Notes Issuers and Old Muzak (as defined herein) and any material
developments relating to the Company and Old Muzak occurring after the date of
the most recent financial statements included therein.
The Issuers understand that the Initial Purchasers propose to make an
offering of the Notes only on the terms and in the manner set forth in the Final
Memorandum and Section 9 hereof as soon as the Initial Purchasers deem advisable
after this Agreement has been executed and delivered, to persons in
-3-
the United States whom the Initial Purchasers reasonably believe to be qualified
institutional buyers ("QIBs") as defined in Rule 144A under the Securities Act,
as such rule may be amended from time to time ("Rule 144A"), in transactions
under Rule 144A and outside the United States to certain persons in reliance on
Regulation S under the Securities Act.
The Initial Purchasers and their direct and indirect transferees of the
Notes will be entitled to the benefits of the Registration Rights Agreement to
be dated as of March 18, 1999 among the parties hereto (the "Registration Rights
Agreement") pursuant to which the Issuers will agree, among other things, to
file (i) a registration statement (the "Registration Statement") with the
Commission registering the Notes or the Exchange Notes (as defined in the
Registration Rights Agreement) under the Securities Act or (ii) a shelf
registration statement pursuant to Rule 415 under the Securities Act relating to
the resale of the Notes by holders thereof or, if applicable, relating to the
resale of Private Exchange Notes (as defined in the Registration Rights
Agreement) by the Initial Purchasers pursuant to an exchange of the Notes for
Private Exchange Notes.
The Securities are being issued in connection with the merger of Muzak
Limited Partnership, a Delaware limited partnership ("Old Muzak"), with and into
the Company (the "Merger") pursuant to the Agreement and Plan of Merger, dated
as of January 29, 1999, among the Company, Holdings, Old Muzak, MLP Acquisition
L.P., a Delaware limited partnership and the managing general partner of Old
Muzak and Music Holdings Corp., a Delaware corporation and the general partner
of MLP Acquisition (the "Merger Agreement"). At the time of the Merger, the
Company will change its name to Muzak LLC. In connection with the Merger, the
Company will: (i) enter into a new senior secured credit facility that provides
for $135 million of term loans and a $35 million revolving credit facility (the
"New Credit Agreement"); (ii) receive a cash equity investment of approximately
$59.9 million from Holdings (the "Equity Contribution"); and (iii) complete a
tender offer and consent solicitation for the outstanding 10% Senior Notes due
2003 of Old
-4-
Muzak (the "Muzak Notes") (the "Tender Offer"). The date and time of the
consummation of the Merger is referred to herein as the "Effective Time." In
addition, (i) Holdings has entered into a Contribution Agreement dated as of
February 19, 1999 with Capstar Broadcasting Corporation ("Capstar") pursuant to
which Capstar agreed to contribute to Holdings certain Muzak franchises
principally in exchange for equity interests in Holdings (the "Pending Capstar
Acquisition") and (ii) the Company has entered into a Stock Purchase Agreement
dated as of February 18, 1999 with Carolina Georgia Sound, Inc. pursuant to
which the Company acquired Electro Systems Corporation, an owner of Muzak
franchises (the "Electro Systems Acquisition").
Concurrently with the Tender Offer, the Company is soliciting consents (the
"Consent Solicitation") from holders of the Muzak Notes to amendments (the
"Proposed Amendments") to certain of the provisions in the Indenture governing
the Muzak Notes (the "Muzak Indenture") as described in the Offer to Purchase
and Consent Solicitation Statement dated February 8, 1999. After receipt of the
required consents from the holders of the Muzak Notes, Old Muzak and the trustee
under the Muzak Indenture will enter into a supplemental indenture to give
effect to the Proposed Amendments (the "Supplemental Indenture"). Unless
otherwise indicated, the use of the term Tender Offer herein shall be deemed to
include the Consent Solicitation.
The Merger Agreement and the documents entered into in connection therewith
are herein collectively referred to as the "Merger Documents." This Agreement,
the Securities, the Exchange Notes, the Private Exchange Notes, the Registration
Rights Agreement and the Indenture are herein collectively referred to as the
"Offering Documents." The Merger Documents, the Offering Documents, the New
Credit Agreement, and all the documents related to the Equity Contribution, the
Pending Capstar Acquisition, the Electro Systems Acquisition and the Tender
Offer are herein collectively referred to as the "Transaction Documents."
The Merger, the issuance of the Securities, the Equity Contribution,
the Pending Capstar Acquisition, the Electro Systems Acquisition and the Tender
Offer and the transactions
-5-
contemplated by the New Credit Agreement are herein collectively referred to as
the "Transactions."
2. Representations and Warranties of the Issuers. The Issuers,
---------------------------------------------
jointly and severally, represent and warrant to and agree with the Initial
Purchasers that:
(a) The Final Memorandum, as of its date and the Closing Date (as
defined in Section 3 hereof), does not and will not contain any untrue
statement of a material fact or omit 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, except that the representations
and warranties set forth in this Section 2(a) do not apply to statements or
omissions that are made in reliance upon and in conformity with information
relating to the Initial Purchasers furnished to the Company in writing by
the Initial Purchasers expressly for use in the Final Memorandum or any
amendment or supplement thereto. The Final Memorandum and any amendment or
supplement thereto complied or will comply in all material respects with
Rule 144A(d)(4) under the Securities Act.
(b) Each of the Notes Issuers and the subsidiary set forth in Exhibit
-------
A hereto (the "Subsidiary") has been and, at and as of the Effective Time
-
will be, and to the best knowledge of the Notes Issuers, each of Old Muzak
and its subsidiaries set forth in Exhibit B hereto (the "Muzak
---------
Subsidiaries") has been and, at and as of the Effective Time, each of the
Muzak Subsidiaries will be, duly organized, validly existing and in good
standing under the laws of its jurisdiction of organization and has and, at
and as of the Effective Time, will have the power and authority to carry on
its business as now being conducted and as contemplated to be conducted and
to own and operate the properties and assets now owned and being operated
by it or to be owned and operated by it in each case as described in the
Final Memorandum (or, if the Final Memorandum is not in existence, the most
recent Preliminary Memorandum). Each of the Notes Issuers and the
Subsidiary is
-6-
and, at and as of the Effective Time will be, and to the best knowledge of
the Notes Issuers, each of Old Muzak and the Muzak Subsidiaries is, and at
and as of the Effective Time, each of the Muzak Subsidiaries will be, duly
qualified to do business as a foreign entity and is or will be in good
standing in each jurisdiction in which such qualification is necessary
under the applicable law as a result of the conduct of its business or the
ownership of its properties, except where the failure to be so qualified
would not, individually or in the aggregate, have a material adverse effect
on the general affairs, management, business, condition (financial or
other), properties, prospects or results of operations of the Issuers,
taken as a whole (any such event, a "Material Adverse Effect").
(c) As of the Closing Date (after giving effect to the Transactions
and assuming that the Pending Capstar Acquisition has been consummated by
such date): the Company will have the capitalization materially in
conformance with that set forth in the Final Memorandum; and all of the
outstanding capital stock of Finance Corp. will be owned and held by the
Company.
(d) Except as described in the Final Memorandum: (i) all of the
issued and outstanding shares or capital stock of the Notes Issuers and the
Subsidiary are and, at and as of the Effective Time, will be, and to the
best knowledge of the Notes Issuers, as of the Closing Date, all of the
issued and outstanding shares of capital stock of the Muzak Subsidiaries
will be, duly authorized and validly issued and fully paid and non-
assessable and none of them have been issued in violation of any preemptive
or other right; (ii) all of the outstanding shares of capital stock of the
Subsidary is owned, directly or indirectly, by the Company; (iii) except
for options issued to management, as of the Effective Time, no options,
warrants or other rights to purchase from the Company or any Guarantor, or
agreements or other obligations of the Company or any Guarantor, to issue
or other rights to convert any obligation into, or exchange any securities
for, shares of
-7-
capital stock of or ownership interests in the Company or any Guarantor,
are outstanding and no holder of securities of the Company or any Guarantor
is entitled to have such securities registered under the Registration
Statement; and (iv) as of the Effective Time, there will be no agreement,
understanding or arrangement among the Company or any Guarantor, and each
of their respective stockholders or any other person relating to the
ownership or disposition of any capital stock of the Company or any
Guarantor, or the election of directors of the Company or any Guarantor, or
the governance of the Company's or any Guarantor's affairs, and, if any,
such agreements, understandings and arrangements will not be breached or
violated as a result of the execution and delivery of, or the consummation
of the Transactions.
(e) Each of the Notes Issuers has and, at and as of the Effective
Time, each of the Notes Issuers will have the required corporate or limited
liability company power and authority to execute, deliver and perform its
obligations under the Notes, the Exchange Notes and the Private Exchange
Notes. The Notes, the Exchange Notes, the Private Exchange Notes have each
been duly and validly authorized by each of the Notes Issuers for issuance
and, when executed by the Notes Issuers and authenticated by the Trustee in
accordance with the provisions of the Indenture and, in the case of the
Notes, when delivered to and paid for by the Initial Purchasers in
accordance with the terms hereof, will have been duly executed, issued and
delivered and will constitute valid and legally binding obligations of the
Notes Issuers, entitled to the benefits of the Indenture and enforceable
against the Notes Issuers in accordance with their terms except that the
enforcement thereof may be limited by (i) bankruptcy, insolvency,
reorganization, moratorium or other similar laws now or hereafter in effect
relating to or affecting creditors' rights generally and (ii) general
principles of equity (regardless of whether such enforcement is considered
in a proceeding at law or in equity) and the discretion of the court before
which any proceeding with respect thereto may
-8-
be brought (the "Enforceability Exceptions"); the Guarantees to be endorsed
on the Notes and the guarantees to be endorsed on the Exchange Notes and
the Private Exchange Notes have each been duly and validly authorized by
the ACN Guarantors and, at and as of the Effective Time, will have each
been duly and validly authorized by each of the Guarantors and, when the
Notes are executed by the Notes Issuers and authenticated by the Trustee in
accordance with the provisions of the Indenture, and delivered to and paid
for by the Initial Purchasers in accordance with the terms hereof, and when
the Guarantees have been endorsed on the Notes in accordance with the terms
of the Indenture, such Guarantees will have been duly executed, issued and
delivered and will constitute valid and legally binding obligations of the
Guarantors, entitled to the benefits of the Indenture and enforceable
against the Guarantors in accordance with their terms except that the
enforcement thereof may be limited by the Enforceability Exceptions. The
Securities are in the form contemplated by the Indenture.
(f) Each of the Issuers has the requisite corporate or limited
liability company power and authority to execute, deliver and perform its
obligations under the Indenture. The Indenture has been duly and validly
authorized by the Notes Issuers and the ACN Guarantors and, at and as of
the Effective Time, will have been duly and validly authorized by the
Issuers, and meets the requirements for qualification under the Trust
Indenture Act of 1939, as amended (the "TIA"), and, when executed and
delivered by the Issuers (assuming the due authorization, execution and
delivery by the Trustee), will constitute a valid and legally binding
agreement of the Issuers, enforceable against the Issuers in accordance
with its terms except that the enforcement thereof may be limited by the
Enforceability Exceptions.
(g) Each of the Issuers has the requisite corporate or limited
liability company power and authority to execute, deliver and perform its
obligations under the
-9-
Registration Rights Agreement. The Registration Rights Agreement has been
duly and validly authorized by the Notes Issuers and the ACN Guarantors
and, at and as of the Effective Time, will have been duly and validly
authorized by the Issuers, and when executed and delivered by the Issuers
(assuming the due authorization, execution and delivery by the Initial
Purchasers), will constitute a valid and legally binding agreement of the
Issuers, enforceable against the Issuers in accordance with its terms
except (i) that the enforcement thereof may be limited by the
Enforceability Exceptions and (ii) as any rights to indemnity or
contribution thereunder may be limited by federal and state securities laws
and public policy considerations.
(h) Each of the Issuers has the requisite corporate or limited
liability power and authority to execute, deliver and perform its
obligations under this Agreement. This Agreement has been duly and validly
authorized by the Notes Issuers and the ACN Guarantors and, at and as of
the Effective Time, will have been duly and validly authorized by the
Issuers, and when executed and delivered by each Issuer (assuming due
authorization, execution and delivery by the Initial Purchasers), will
constitute a valid and legally binding agreement of such Issuer,
enforceable against such Issuer in accordance with its terms except (i)
that the enforcement thereof may be limited by the Enforceability
Exceptions and (ii) as any rights to indemnity or contribution hereunder
may be limited by federal and state securities laws and public policy
considerations. The Securities, the Indenture and the Registration Rights
Agreement conform in all material respects to the descriptions thereof in
the Final Memorandum (or, if the Final Memorandum is not in existence, the
most recent Preliminary Memorandum).
(i) The Notes Issuers and, to the best knowledge of the Notes
Issuers, Old Muzak and each of the Muzak Subsidiaries, each have the
requisite power and authority to execute, deliver and perform each of their
respective
-10-
obligations under each of the Transaction Documents other than the Offering
Documents and to enter into all other agreements, instruments and documents
executed and delivered by any of them pursuant thereto and to carry out
their respective obligations thereunder. As of the Closing Date, each of
the Transaction Documents other than the Offering Documents will have been
duly and validly authorized by the Issuers and Old Muzak (in each case to
the extent a party thereto) and, when executed and delivered by the Issuers
and Old Muzak (in each case to the extent a party thereto), will constitute
a valid and legally binding agreement of the Issuers and Old Muzak (in each
case to the extent a party thereto), enforceable against the Issuers and
Old Muzak (in each case to the extent a party thereto) in accordance with
their respective terms except that (i) the enforcement thereof may be
limited by the Enforceability Exceptions and (ii) as any rights to
indemnity or contribution hereunder may be limited by federal and state
securities laws and public policy considerations.
(j) (i) The Company has delivered to the Initial Purchasers a true
and correct copy of each of the Transaction Documents that have been
executed and delivered prior to the date of this Agreement, together with
all related agreements and all schedules and exhibits thereto, and as of
the date hereof there have been no amendments, alterations, modifications
or waivers of any of the provisions of any of such Transaction Documents
since their date of execution; and (ii) there exists as of the date hereof
(after giving effect to the transactions contemplated by each of the
Transaction Documents) no event or condition that would constitute a
default or an event of default (in each case as defined in each of the
Transaction Documents) under any of the Transaction Documents that would
result in a Material Adverse Effect or materially adversely affect the
ability of the Issuers and Old Muzak to consummate the Transactions.
-11-
(k) Except as set forth in the Final Memorandum (or, if the Final
Memorandum is not in existence, the most recent Preliminary Memorandum), no
consent, approval, authorization or order of any court or governmental
agency or body is required for the performance of any of the Transaction
Documents by the Issuers and Old Muzak, to the extent each is or will be a
party thereto, or for the consummation by the Issuers or Old Muzak, of any
of the transactions contemplated thereby, except for such consents,
approvals, authorizations or orders as have been obtained or made or as may
be required under the Securities Act and the TIA (with respect to the
transactions contemplated by the Registration Rights Agreement) or as may
be required under state securities or "Blue Sky" laws in connection with
the purchase and distribution of the Securities by the Initial Purchasers
or such that the failure to obtain would not reasonably be expected to have
a Material Adverse Effect; and none of the Notes Issuers or the Subsidiary
is and, to the best knowledge of the Notes Issuers, none of Old Muzak or
the Muzak Subsidiaries is, (i) in violation of its respective certificate
of incorporation, organizational documents, limited liability company
agreement, partnership agreement or bylaws, (ii) in violation of any
statute, judgment, decree, order, rule or regulation applicable to it or
any of its properties or assets, which violation would, individually or in
the aggregate, have a Material Adverse Effect, or (iii) in default in the
performance or observance of any obligation, agreement, covenant or
condition contained in any of the Transaction Documents or any other
contract, indenture, mortgage, deed of trust, loan agreement, note, lease,
license, franchise agreement, permit, certificate or agreement or
instrument to which it is a party or to which it is subject, which default
would, individually or in the aggregate, have a Material Adverse Effect.
(l) The execution, delivery and performance by (i) the Notes Issuers
and the Subsidiary and (ii) to the best knowledge of the Notes Issuers, Old
Muzak and the Muzak Subsidiaries of, in each case, each of the Transac-
-12-
tion Documents to which it is a party, and the consummation of the
transactions contemplated hereby and thereby and the fulfillment of the
terms hereof and thereof, will not violate, conflict with or constitute or
result in a breach of or a default under (or an event that, with notice or
lapse of time, or both, would constitute a breach of or a default under)
any of (a) the terms or provisions of any indenture, mortgage, deed of
trust, loan agreement, note, lease, license, franchise agreement, or
agreement or instrument to which any of them is a party or to which any of
their respective properties or assets are subject, which violation,
conflict, breach or default would, individually or in the aggregate, have a
Material Adverse Effect, (b) the certificate of incorporation,
organizational documents, limited liability company agreement, partnership
agreement or by-laws of any of them or (c) (assuming compliance with all
applicable Federal and state securities and "Blue Sky" laws and the
accuracy of the representations and warranties of the Initial Purchasers in
Section 9 hereof) any statute, judgment, decree, order, rule or regulation
of any court or governmental agency or other body applicable to any of them
or any of their respective properties or assets, which violation, conflict,
breach or default would, individually or in the aggregate, have a Material
Adverse Effect.
(m) The audited historical financial statements of the Company and
Audio Communications Network, Inc. ("ACN Inc.") and, to the best knowledge
of the Company, Old Muzak, included in the Final Memorandum (or, if the
Final Memorandum is not in existence, the most recent Preliminary
Memorandum) present fairly in all material respects the consolidated
financial position, results of operations and cash flows of each such
entity, at the dates and for the periods to which they relate and have been
prepared in accordance with generally accepted accounting principles
applied on a consistent basis, except as otherwise stated therein; the
unaudited financial statements and financial information of the Capstar
Affiliate (as defined in the
-13-
Final Memorandum), Business Sound Inc.(as defined in the Final Memorandum),
the MTI Business (as defined in the Final Memorandum), Electro Systems Inc.
and the Omaha Muzak affiliate to be acquired by Capstar included in the
Final Memorandum (or, if the Final Memorandum is not in existence, the most
recent Preliminary Memorandum) present fairly in all material respects the
financial position and results of operations of each such entity at the
dates and for the periods to which they relate, and have been prepared in
accordance with generally accepted accounting principles applied on a
consistent basis except as otherwise stated therein and have been prepared
on a basis substantially consistent with that of the audited financial
statements of the Company referred to above except as otherwise stated
therein; the summary and selected financial and statistical data included
in the Final Memorandum (or, if the Final Memorandum is not in existence,
the most recent Preliminary Memorandum) present fairly in all material
respects the information shown therein and have been prepared and compiled
on a basis consistent with the audited and unaudited financial statements
included therein, except as otherwise stated therein; and each of
PricewaterhouseCoopers LLP and Deloitte & Touche LLP, which have examined
certain of such financial statements as set forth in their reports included
in the Final Memorandum (or, if the Final Memorandum is not in existence,
the most recent Preliminary Memorandum), are independent public accounting
firms within the meaning of Rule 101 of the Code of Professional Conduct of
the American Institute of Certified Public Accountants and its
interpretations and rulings.
(n) (i) The pro forma financial statements and other pro forma
financial information (including the notes thereto) included in the Final
Memorandum (or, if the Final Memorandum is not in existence, the most
recent Preliminary Memorandum) have been properly computed on the bases
described therein; and the assumptions used in the preparation of the pro
forma financial statements and other pro forma financial information
included in the Final Memorandum (or, if the Final Memorandum is not in
ex-
-14-
istence, the most recent Preliminary Memorandum) are reasonable and the
adjustments used therein are appropriate to give effect to the transactions
or circumstances referred to therein.
(o) Except as described in the Final Memorandum (or, if the Final
Memorandum is not in existence, the most recent Preliminary Memorandum),
there is not pending or, to the best knowledge of the Notes Issuers,
threatened any action, suit, proceeding, inquiry or investigation,
governmental or otherwise, to which any of the Notes Issuers or, to the
best knowledge of the Notes Issuers, Old Muzak or any Muzak Subsidiary, is
a party, or to which their respective properties or assets are subject,
before or brought by any court, arbitrator or governmental agency or body,
that, if determined adversely to the Notes Issuers or Old Muzak or any
Muzak Subsidiary, would, individually or in the aggregate, have a Material
Adverse Effect, or that seeks to restrain, enjoin, prevent the consummation
of or otherwise challenge the issuance or sale of the Securities to be sold
hereunder or the other Transactions.
(p) None of the Notes Issuers or the Subsidiary has, and, to the best
knowledge of the Notes Issuers, none of Old Muzak or any of the Muzak
Subsidiaries has, and, after giving effect to the Transactions and the
issuance and sale of the Securities, none of the Issuers will not have, any
liability for any prohibited transaction or funding deficiency or any
complete or partial withdrawal liability with respect to any pension,
profit sharing or other plan which is subject to the Employee Retirement
Income Security Act of 1974, as amended ("ERISA"), to which any of them
makes or ever has made a contribution and in which any employee of any of
them is or has ever been a participant. With respect to such plans, the
Notes Issuers and the Subsidiary are, and, to the best knowledge of the
Notes Issuers, Old Muzak and the Muzak Subsidiaries are, and, after giving
effect to the Transactions and the issuance and sale of the Securities, the
Issuers will be, in
-15-
compliance in all material respects with all provisions of ERISA.
(q) The Notes Issuers and the Subsidiary and, to the best knowledge
of the Notes Issuers, Old Muzak and the Muzak Subsidiaries, own or possess
adequate licenses or other rights to use all patents, trademarks, service
marks, trade names, copyrights and know-how that are necessary to conduct
their business as described in the Final Memorandum (or, if the Final
Memorandum is not in existence, the most recent Preliminary Memorandum).
None of the Notes Issuers or the Subsidiary and, to the best knowledge of
the Notes Issuers, none of Old Muzak or any of the Muzak Subsidiaries, has
received any notice of infringement of or conflict with (or 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 that, if such assertion of infringement or conflict were
sustained, would, individually or in the aggregate, have a Material Adverse
Effect.
(r) Each of the Notes Issuers and the Subsidiary, and, to the best
knowledge of the Notes Issuers, each of Old Muzak and the Muzak
Subsidiaries, possesses all licenses, permits, certificates, consents,
orders, approvals and other authorizations from, and has made all
declarations and filings with, all federal, state, local and other
governmental authorities, all self-regulatory organizations and all courts
and other tribunals presently required or necessary to own or lease, as the
case may be, and to operate its respective properties and to carry on its
respective businesses as now or proposed to be conducted as set forth in
the Final Memorandum (or, if the Final Memorandum is not in existence, the
most recent Preliminary Memorandum) ("Permits"), except where the failure
to obtain such Permits would not, individually or in the aggregate, have a
Material Adverse Effect; each of the Notes Issuers and the Subsidiary and,
to the best knowledge of the Notes Issuers, each of Old Muzak and the Muzak
-16-
Subsidiaries, has fulfilled and performed all of its obligations with
respect to such Permits and no event has occurred which allows, or after
notice or lapse of time would allow, revocation or termination thereof or
results in any other material impairment of the rights of the holder of any
such Permit, except for nonperformance or events or revocations or
terminations that would not, individually or in the aggregate, have a
Material Adverse Effect; and none of the Notes Issuers or the Subsidiary
and, to the best knowledge of the Notes Issuers, none of Old Muzak and the
Muzak Subsidiaries, has received any notice of any proceeding relating to
revocation or modification of any such Permit, except as described in the
Final Memorandum (or, if the Final Memorandum is not in existence, the most
recent Preliminary Memorandum) and except where such revocation or
modification would not, individually or in the aggregate, have a Material
Adverse Effect.
(s) Subsequent to the respective dates as of which information is
given in the Final Memorandum (or, if the Final Memorandum is not in
existence, the most recent Preliminary Memorandum) and except as described
therein or as contemplated by the Transaction Documents, (i) the Notes
Issuers, the Subsidiary and, to the best knowledge of the Notes Issuers,
Old Muzak and the Muzak Subsidiaries, have not incurred any material
liabilities or obligations, direct or contingent, or entered into any
material transactions not in the ordinary course of business, (ii) the
Notes Issuers, the Subsidiary and, to the best knowledge of the Notes
Issuers, Old Muzak and the Muzak Subsidiaries have not purchased any of
their respective outstanding capital stock, membership interests,
partnership interests or the equivalent, or declared, paid or otherwise
made any dividend or distribution of any kind on any of their respective
capital stock, membership interests, partnership interest or otherwise,
(iii) there shall not have been any change in the capital stock or
long-term indebtedness of the Notes Issuers, the Subsidiary and, to the
best knowledge of the Notes Issuers, Old Muzak and the Muzak Subsidiaries
and (iv) none of the Notes Issuers, the Subsidi-
-17-
ary or, to the best knowledge of the Notes Issuers, Old Muzak or any of the
Old Muzak Subsidiaries, has sustained any material loss or interference
with its business from fire, explosion, flood, earthquake or other
calamity, whether or not covered by insurance, except in each case as would
not have a Material Adverse Effect.
(t) Except as described in the Final Memorandum (or, if the Final
Memorandum is not in existence, the most recent Preliminary Memorandum),
none of the Notes Issuers or the Subsidiary and, to the best knowledge of
the Notes Issuers, Old Muzak or the Muzak Subsidiaries is in default under
any of the contracts described in the Final Memorandum (or, if the Final
Memorandum is not in existence, the most recent Preliminary Memorandum),
has received a notice or claim of any such default or has knowledge of any
breach of such contracts by the other party or parties thereto, except such
defaults or breaches as would not, individually or in the aggregate, have a
Material Adverse Effect.
(u) None of the Notes Issuers, the Subsidiary or, to the best
knowledge of the Notes Issuers, Old Muzak or the Old Muzak Subsidiaries has
taken or will take any action that would cause this Agreement or the
issuance or sale of the Securities to violate Regulation G, T, U or X of
the Board of Governors of the Federal Reserve System, in each case as in
effect, or as the same may hereafter be in effect, on the Closing Date.
(v) Each of the Notes Issuers and the Subsidiary and, to the best
knowledge of the Notes Issuers, Old Muzak and the Muzak Subsidiaries has
good and marketable title to all real property described in the Final
Memorandum (or, if the Final Memorandum is not in existence, the most
recent Preliminary Memorandum) as being owned by it and good and marketable
title to the leasehold estate in the real property described therein as
being leased by it, free and clear of all liens, charges, encumbrances or
restrictions, except, in each case, as described in the Final Memorandum
(or, if the Final Memorandum is not in ex-
-18-
istence, the most recent Preliminary Memorandum) or such as would not,
individually or in the aggregate, have a Material Adverse Effect.
(w) Each of the Notes Issuers and the Subsidiary and, to the best
knowledge of the Notes Issuers, Old Muzak and the Muzak Subsidiaries, has
filed all necessary federal, state and foreign income and franchise tax
returns, except where the failure to so file such returns would not,
individually or in the aggregate, have a Material Adverse Effect; and,
other than taxes due thereon or tax deficiencies which any Notes Issuer or
the Subsidiary or, to the best knowledge of the Notes Issuers, Old Muzak or
any Muzak Subsidiary reasonably believes that it has provided adequate
reserves, has paid all taxes due thereon and there is no tax deficiency
that has been asserted against any Notes Issuer or the Subsidiary or, to
the best knowledge of the Notes Issuers, Old Muzak and the Muzak
Subsidiaries, that would, individually or in the aggregate, have a Material
Adverse Effect.
(x) (i) Immediately after the consummation of the Transactions, the
fair value and present fair saleable value of the assets of the Issuers
will exceed the sum of their stated liabilities and identified contingent
liabilities; and (ii) the Issuers are not, nor will they be, after giving
effect to the execution, delivery and performance of the Transaction
Documents and the consummation of the transactions contemplated thereby,
(a) left with unreasonably small capital with which to carry on their
businesses as is proposed to be conducted, (b) unable to pay their debts
(contingent or otherwise) as they mature or (c) insolvent.
(y) Except as disclosed in the Final Memorandum (or, if the Final
Memorandum is not in existence, the most recent Preliminary Memorandum) and
except as would not individually or in the aggregate have a Material
Adverse Effect, (A) each of the Notes Issuers and the Subsidiary and, to
the best knowledge of the Notes Issuers, Old Muzak and the Muzak
Subsidiaries, is in compliance with all ap-
-19-
plicable Environmental Laws, (B) each of the Notes Issuers and the
Subsidiary and, to the best knowledge of the Notes Issuers, Old Muzak and
the Muzak Subsidiaries has made all filings and provided all notices
required under any applicable Environmental Law, and has all permits,
authorizations and approvals required under any applicable Environmental
Laws and is in compliance with their requirements, (C) there are no pending
or, to the best knowledge of the Notes Issuers, after due inquiry,
threatened Environmental Claims against any of the Notes Issuers or the
Subsidiary or, in each case, to the best knowledge of the Notes Issuers,
Old Muzak and the Muzak Subsidiaries and (D) none of the Notes Issuers or
the Subsidiary or, to the best knowledge of the Notes Issuers, Old Muzak
and the Muzak Subsidiaries has knowledge of any circumstances with respect
to any of their respective properties or operations that could reasonably
be anticipated to form the basis of an Environmental Claim against any of
them or any of their subsidiaries or any of their respective properties or
operations and the business operations relating thereto.
For purposes of this Agreement, the following terms shall have the
following meanings: "Environmental Law" means any federal, state, local
or municipal statute, law, rule, regulation, ordinance, code or rule and
any judicial or administrative interpretation thereof, including any
judicial or administrative order, consent decree or judgment binding on
any of the Issuers or Old Muzak relating to pollution or protection of the
environment or health or safety or any chemical, material or substance that
is subject to regulation thereunder. "Environmental Claims" means any and
all administrative, regulatory or judicial actions, suits, demands, demand
letters, claims, written notices of responsibility, information requests,
liens, written notices of noncompliance or violation, investigations or
proceedings relating in any way to any Environmental Law.
(z) None of the Notes Issuers or the Subsidiary or, to the best
knowledge of the Notes Issuers, Old Muzak and
-20-
the Muzak Subsidiaries, or any of their respective Affiliates (as defined
in Rule 501(b) of Regulation D under the Securities Act) directly, or
through any agent, (i) sold, offered for sale, solicited offers to buy or
otherwise negotiated in respect of any "security" (as defined in the
Securities Act) which is or could be integrated with the sale of the
Securities in a manner that would require the registration under the
Securities Act of the Securities or (ii) engaged in any form of general
solicitation or general advertising (as those terms are used in Regulation
D under the Securities Act) in connection with the offering of the
Securities or in any manner involving a public offering within the meaning
of Section 4(2) of the Securities Act. Assuming the accuracy of the Initial
Purchasers' representations and warranties set forth in Section 9 hereof,
the offer and sale of the Securities to the Initial Purchasers in the
manner contemplated by this Agreement and the Final Memorandum does not
require registration under the Securities Act and the Indenture does not
require qualification under the TIA.
(aa) No securities of the Notes Issuers or the Subsidiary are (i) of
the same class (within the meaning of Rule 144A under the Securities Act)
as the Securities and (ii) listed on a national securities exchange
registered under Section 6 of the Exchange Act or quoted in a U.S.
automated interdealer quotation system.
(bb) None of the Notes Issuers or the Subsidiary or, to the best
knowledge of the Notes Issuers, Old Muzak or the Muzak Subsidiaries, or, in
each case, any of their respective Affiliates or any person acting on their
behalf, has engaged in any directed selling efforts (as that term is
defined in Regulation S under the Securities Act ("Regulation S")) with
respect to the Securities; and the Notes Issuers and the Subsidiary and, to
the best knowledge of the Notes Issuers, Old Muzak and the Muzak
Subsidiaries, their respective Affiliates and any person acting on their
behalf have acted in accordance with the offering restrictions requirements
of Regulation S.
-21-
(cc) None of the Notes Issuers or the Subsidiary or, to the best
knowledge of the Notes Issuers, Old Muzak and the Muzak Subsidiaries, is
required to register as an "investment company" within the meaning of the
Investment Company Act of 1940, as amended.
(dd) None of the Notes Issuers or the Subsidiary or, to the best
knowledge of the Notes Issuers, Old Muzak or the Muzak Subsidiaries, or any
of their respective directors, officers or controlling persons, has taken,
directly or indirectly, any action designed, or that might reasonably be
expected, to cause or result, under the Act or otherwise, in, or that has
constituted, stabilization or manipulation of the price of any security of
any Issuer to facilitate the sale or resale of the Securities (it being
understood that no representation or warranty is made as to any actions by
the Initial Purchasers).
(ee) Except as set forth in the Final Memorandum (or, if the Final
Memorandum is not in existence, the most recent Preliminary Memorandum),
there is no strike, labor dispute, slowdown or work stoppage with the
employees of any of the Notes Issuers or the Subsidiary or, to the best
knowledge of the Notes Issuers, Old Muzak or the Muzak Subsidiaries, which
is pending or, to the best knowledge of the Notes Issuers, threatened that
would have a Material Adverse Effect.
(ff) Each of the Notes Issuers and the Subsidiary and, to the best
knowledge of the Notes Issuers, Old Muzak and the Muzak Subsidiaries,
carries insurance (including self-insurance) in such amounts and covering
such risks as in its reasonable determination is adequate for the conduct
of its business and the value of its properties.
(gg) Each of the Notes Issuers and the Subsidiary and, to the best
knowledge of the Notes Issuers, Old Muzak and the Muzak Subsidiaries, (i)
makes and keeps accurate books and records and (ii) maintains internal
accounting controls which provide reasonable assurance that (A)
transactions are executed in accordance with management's
-22-
authorization, (B) transactions are recorded as necessary to permit
preparation of its financial statements and to maintain accountability for
its assets, (C) access to its assets is permitted only in accordance with
management's authorization and (D) the reported accountability for its
assets is compared with existing assets at reasonable intervals.
(hh) The statistical and market and industry-related data included in
the Final Memorandum (or, if the Final Memorandum is not in existence, the
most recent Preliminary Memorandum) are based on or derived from sources
which the Notes Issuers believe to be reliable and accurate or represent
the Notes Issuers' good faith estimates that are made on the basis of data
derived from such sources.
Any certificate signed by any officer of any Issuer and delivered to
any Initial Purchaser or to counsel for the Initial Purchasers shall be deemed a
joint and several representation and warranty by the Issuers to each Initial
Purchaser as to the matters covered thereby.
3. Purchase, Sale and Delivery of the Securities. On the basis of
---------------------------------------------
the representations, warranties, agreements and covenants herein contained and
subject to the terms and conditions herein set forth, the Notes Issuers agree to
issue and sell to the Initial Purchasers, and each of the Initial Purchasers,
acting severally and not jointly, agrees to purchase from the Notes Issuers, at
97.25% of their principal amount, the respective aggregate principal amounts of
the Securities set forth opposite their respective names on Schedule 1 hereto.
----------
One or more certificates in definitive form for the Securities that
the Initial Purchasers have agreed to purchase hereunder, and in such
denomination or denominations and registered in such name or names as each
Initial Purchaser requests upon notice to the Company at least 48 hours prior to
the Closing Date, shall be delivered by or on behalf of the Company, against
payment by or on behalf of the Initial Purchasers of the purchase price therefor
by wire transfer of immediately
-23-
available funds to the account of the Company previously designated by it in
writing. Such delivery of and payment for the Securities shall be made at the
offices of Xxxxxxxx & Xxxxx, 000 Xxxx 00xx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, at
9:00 a.m., New York time, on March 18, 1999, or at such date as the Initial
Purchasers and the Company may agree upon, such time and date of delivery
against payment being herein referred to as the "Closing Date." The Company will
make such certificate or certificates for the Securities available for
inspection by the Initial Purchasers at the offices in New York, New York of
Xxxxxxxx & Xxxxx at least 24 hours prior to the Closing Date.
4. Offering by the Initial Purchasers. The Initial Purchasers
----------------------------------
propose to make an offering of the Securities at the price and upon the terms
set forth in the Final Memorandum as soon as practicable after this Agreement is
entered into and as in the judgment of the Initial Purchasers is advisable.
5. Certain Covenants. The Issuers, jointly and severally, covenant
-----------------
and agree with the Initial Purchasers that:
(a) None of the Issuers will amend or supplement the Final Memorandum
or any amendment or supplement thereto of which the Initial Purchasers
shall not previously have been advised and furnished a copy for a
reasonable period of time prior to the proposed amendment or supplement and
as to which the Initial Purchasers shall not have given its consent (which
consent shall not be unreasonably withheld). The Issuers will promptly,
upon the reasonable request of the Initial Purchasers or counsel to the
Initial Purchasers, make any amendments or supplements to the Final
Memorandum that may be reasonably necessary or advisable in connection with
the resale of the Securities by the Initial Purchasers.
(b) The Issuers will cooperate with the Initial Purchasers in
arranging for the qualification of the Securities for offering and sale
under the securities or "Blue Sky" laws of such jurisdictions as the
Initial Purchasers may designate and will continue such qualifications in
effect for as long as may be necessary to complete the dis-
-24-
tribution of the Securities by the Initial Purchasers; provided, however,
-------- -------
that in connection therewith none of the Issuers shall be required to
qualify as a foreign corporation or to execute a general consent to service
of process in any jurisdiction or to take any other action that would
subject it to general service of process or to taxation in respect of doing
business in any jurisdiction in which it is not otherwise subject.
(c) If, at any time prior to the completion of the resale by the
Initial Purchasers of the Notes or the Private Exchange Notes, any event
shall occur as a result of which it is necessary, in the opinion of counsel
for the Initial Purchasers, to amend or supplement the Final Memorandum in
order to make such Final Memorandum not misleading in the light of the
circumstances existing at the time it is delivered to a purchaser, or if
for any other reason it shall be necessary to amend or supplement the Final
Memorandum in order to comply with applicable laws, rules or regulations,
the Issuers shall (subject to Section 5(a)) forthwith amend or supplement
such Final Memorandum at their own expense so that, as so amended or
supplemented, such Final Memorandum will not include an untrue statement of
a material fact or omit to state a material fact necessary in order to make
the statements therein, in the light of the circumstances existing at the
time it is delivered to a purchaser, not misleading and will comply with
all applicable laws, rules or regulations.
(d) The Issuers will, without charge, provide to each Initial
Purchaser and to counsel to the Initial Purchasers as many copies of each
of the Preliminary Memorandum and Final Memorandum or any amendment or
supplement thereto as the Initial Purchasers may reasonably request.
(e) During the period of five years from the Closing Date, the
Issuers will furnish to the Initial Purchasers (a) as soon as available, a
copy of each report and other communication (financial or otherwise) of any
Issuer mailed to the Trustee or the holders of the Securities,
-25-
stockholders or any national securities exchange on which any class of
securities of any Issuer may be listed other than materials filed with the
Commission and (b) from time to time such other information concerning the
Issuers as the Initial Purchasers may reasonably request.
(f) If this Agreement shall terminate or shall be terminated after
execution because of any failure or refusal on the part of the Issuers to
comply with the terms or fulfill any of the conditions of this Agreement,
the Issuers agree to reimburse the Initial Purchasers for all reasonable
out-of-pocket expenses (including fees and expenses of counsel for the
Initial Purchasers) incurred by you in connection herewith.
(g) The Issuers will apply the net proceeds from the sale of the
Securities materially as set forth under "Use of Proceeds" in the Final
Memorandum.
(h) None of the Issuers or any of their respective Affiliates will
sell, offer for sale or solicit offers to buy or otherwise negotiate in
respect of any "security" (as defined in the Securities Act) which could be
integrated with the sale of the Securities in a manner which would require
the registration under the Securities Act of the Securities.
(i) For so long as the Securities constitute "restricted" securities
within the meaning of Rule 144(a)(3) under the Securities Act, the Issuers
will not, and will not permit any of the Subsidiaries to, solicit any offer
to buy or offer to sell the Securities by means of any form of general
solicitation or general advertising (as those terms are used in Regulation
D under the Securities Act) or in any manner involving a public offering
within the meaning of Section 4(2) of the Securities Act, except in
connection with the exchange offer contemplated by the Registration Rights
Agreement.
(j) For so long as any of the Securities remain outstanding and are
"restricted securities" within the mean-
-26-
ing of Rule 144(a)(3) under the Securities Act and not able to be sold in
their entirety under Rule 144 under the Securities Act (or any successor
provision), the Issuers will make available, upon request, to any seller of
such Securities the information specified in Rule 144A(d)(4) under the
Securities Act, unless the Issuers are then subject to Section 13 or 15(d)
of the Exchange Act.
(k) The Issuers will use their best efforts to (i) permit the
Securities to be included for quotation on the PORTAL Market and (ii)
permit the Securities to be eligible for clearance and settlement through
The Depository Trust Company ("DTC").
(l) In connection with Securities offered and sold in an offshore
transaction (as defined in Regulation S), the Issuers will not register any
transfer of such Securities not made in accordance with the provisions of
Regulation S and will not, except in accordance with the provisions of
Regulation S, if applicable, issue any such Securities in the form of
definitive securities.
(m) The Issuers will use their best efforts to do and perform all
things required to be done and performed by them under this Agreement and
the other Offering Documents prior to or after the Closing Date and to
satisfy all conditions precedent on their part to the obligations of the
Initial Purchasers to purchase and accept delivery of the Securities.
6. Expenses. Notwithstanding any termination of this Agreement
--------
(pursuant to Section 11 or otherwise), the Issuers jointly and severally agree
to pay the following costs and expenses and all other costs and expenses
incident to the performance by the Issuers of their obligations hereunder: (i)
the negotiation, preparation, printing, typing, reproduction, execution and
delivery of this Agreement and of the other Offering Documents, any amendment or
supplement to or modification of any of the foregoing and any and all other
documents furnished pursuant hereto or thereto or in connection herewith or
therewith; (ii) the preparation, printing or reproduction of
-27-
each Preliminary Memorandum, the Final Memorandum and each amendment or
supplement to any of them; (iii) the delivery (including postage, air freight
charges and charges for counting and packaging) of such copies of each
Preliminary Memorandum, the Final Memorandum and all amendments or supplements
to any of them as may be reasonably requested for use in connection with the
offering and sale of the Securities; (iv) the preparation, printing,
authentication, issuance and delivery of certificates for the Notes and the
related Guarantees, including any stamp taxes in connection with the original
issuance and sale of the Securities and trustees' fees; (v) the reproduction and
delivery of this Agreement and the other Offering Documents, the preliminary and
supplemental "Blue Sky" memoranda and all other agreements or documents
reproduced and delivered in connection with the offering of the Securities; (vi)
the registration or qualification of the Securities for offer and sale under the
securities or Blue Sky laws of the several states (including filing fees and the
reasonable fees, expenses and disbursements of Xxxxxx Xxxxxx & Xxxxxxx, counsel
to the Initial Purchasers, relating to such registration and qualification not
to exceed $10,000); (vii) the transportation and other expenses incurred by or
on behalf of Company representatives in connection with presentations to and
related communications with prospective purchasers of the Securities; (viii) the
fees and expenses of the Company's accountants and the fees and expenses of
counsel (including local and special counsel) for the Notes Issuers; (ix) fees
and expenses of the Trustee including fees and expenses of its counsel; (x) all
expenses and listing fees incurred in connection with the application for
quotation of the Securities on the PORTAL Market; and (xi) any fees charged by
investment rating agencies for the rating of the Securities.
7. Conditions of the Initial Purchasers' Obligations. The several
-------------------------------------------------
obligations of the Initial Purchasers to purchase and pay for the Securities are
subject to the accuracy of the representations and warranties contained herein,
to the performance by the Issuers of their respective covenants and agreements
hereunder and to the following additional conditions unless waived in writing by
the Initial Purchasers:
-28-
(i) The Initial Purchasers shall have received an opinion of
counsel in form and substance satisfactory to the Initial Purchasers and
Xxxxxx Xxxxxx & Xxxxxxx, counsel to the Initial Purchasers, dated the
Closing Date, of each of (i) Xxxxxxxx & Xxxxx, counsel to the Notes
Issuers, substantially in the form of Exhibit C hereto and (ii) Weil,
---------
Gotshal & Xxxxxx LLP, counsel to Old Muzak, substantially in the form of
Exhibit D hereto. In rendering such opinions, each such counsel shall have
---------
received and may rely upon such certificates and other documents and
information, including one or more opinions of local counsel reasonably
acceptable to the Initial Purchasers and Xxxxxx Xxxxxx & Xxxxxxx, counsel
to the Initial Purchasers, as they may reasonably request to pass upon such
matters.
(ii) The Initial Purchasers shall have received an opinion, dated
the Closing Date, of Xxxxxx Xxxxxx & Xxxxxxx, counsel to the Initial
Purchasers, with respect to the sufficiency of certain legal matters
relating to this Agreement and such other related matters as the Initial
Purchasers may require. In rendering such opinion, Xxxxxx Xxxxxx & Xxxxxxx
shall have received and may rely upon such certificates and other documents
and information as they may reasonably request to pass upon such matters.
In addition, in rendering their opinion, Xxxxxx Xxxxxx & Xxxxxxx may state
that their opinion is limited to matters of New York, Delaware corporate
and federal law.
(iii) The Initial Purchasers shall have received from
PricewaterhouseCoopers LLP and Deloitte & Touche LLP, independent public
accountants for the Company and Old Muzak, "comfort" letters dated the date
hereof and the Closing Date, in form and substance reasonably satisfactory
to the Initial Purchasers and Xxxxxx Xxxxxx & Xxxxxxx, counsel to the
Initial Purchasers.
(iv) The representations and warranties of the Issuers contained
in this Agreement shall be true and correct on and as of the Closing Date;
the Issuers shall have complied in all material respects with all
agreements and
-29-
satisfied all conditions on their part to be performed or satisfied
hereunder at or prior to the Closing Date.
(v) None of the issuance and sale of the Securities pursuant to
this Agreement or any of the Transactions or any of the other transactions
contemplated by any of the other Offering Documents or the Transaction
Documents shall be enjoined (temporarily or permanently) and no restraining
order or other injunctive order shall have been issued; and there shall not
have been any legal action, order, decree or other administrative
proceeding instituted or threatened against any of the Issuers or against
the Initial Purchasers relating to the issuance of the Securities or the
Initial Purchasers' activities in connection therewith or any other
transactions contemplated by this Agreement or the Final Memorandum, the
other Offering Documents or the Transaction Documents.
(vi) Subsequent to the date of this Agreement and since the date of
the most recent financial statements in the Final Memorandum (exclusive of
any amendment or supplement thereto after the date hereof), there shall not
have occurred (i) any change, or any development involving a prospective
change, in or affecting the general affairs, management, business,
condition (financial or other), properties, prospects or results of
operations of the Notes Issuers, the Subsidiaries, Old Muzak and the Muzak
Subsidiaries, taken as a whole, not contemplated by the Final Memorandum
that, in the opinion of the Initial Purchasers, would materially adversely
affect the market for the Securities, or (ii) any event or development
relating to or involving any of the Notes Issuers, the Subsidiaries, Old
Muzak or the Muzak Subsidiaries, or any of their respective officers or
directors that makes any statement made in the Final Memorandum untrue or
that, in the opinion of the Notes Issuers and their counsel or the Initial
Purchasers and their counsel, requires the making of any addition to or
change in the Final Memorandum in order to state a material fact required
by any applicable law, rule
-30-
or regulation to be stated therein or necessary in order to make the
statements made therein not misleading.
(vii) The Initial Purchasers shall have received certificates, dated
the Closing Date and signed by the chief executive officer and the chief
financial officer of each Issuer (in their capacities as such), to the
effect that:
a. All of the representations and warranties of such Issuer
set forth in this Agreement are true and correct as if made on and as
of the Closing Date and such Issuer has complied in all material
respects with all agreements and satisfied all conditions on its part
to be performed or satisfied at or prior to the Closing Date.
b. The issuance and sale of the Securities pursuant to this
Agreement or the Final Memorandum and the consummation of the
transactions contemplated by the Transaction Documents have not been
enjoined (temporarily or permanently) and no restraining order or
other injunctive order has been issued and there has not been any
legal action, order, decree or other administrative proceeding
instituted or, to such officers' knowledge, threatened against such
Issuer relating to the issuance of the Securities or the Initial
Purchasers' activities in connection therewith or in connection with
any other transactions contemplated by this Agreement or the Final
Memorandum, the other Offering Documents or the Transaction Documents.
c. Subsequent to the date of this Agreement and since the date
of the most recent financial statements in the Final Memorandum
(exclusive of any amendment or supplement thereto after the date
hereof), there has not occurred (i) any change, or any development
involving a prospective change, in or affecting the general affairs,
management, business, condition (financial or other), properties,
prospects or results of operations of the Notes Issuers, the
-31-
Subsidiaries, Old Muzak and the Muzak Subsidiaries, taken as a whole,
not contemplated by the Final Memorandum that would materially
adversely affect the market for the Securities, or (ii) any event or
development relating to or involving any of the Notes Issuers, the
Subsidiaries, Old Muzak and the Muzak Subsidiaries or any of their
respective officers or directors that makes any statement made in the
Final Memorandum untrue or that requires the making of any addition to
or change in the Final Memorandum in order to state a material fact
required by any applicable law, rule or regulation to be stated
therein or necessary in order to make the statements made therein not
misleading.
d. At the Closing Date and after giving effect to the
consummation of the transactions contemplated by the Transaction
Documents, there exists no Default or Event of Default (as defined in
the Indenture).
(viii) Each of the Transaction Documents and each other agreement
or instrument executed in connection with the Transactions shall be
reasonably satisfactory in form and substance to the Initial Purchasers and
shall have been executed and delivered by all the respective parties
thereto and shall be in full force and effect, and there shall have been no
material amendments, alterations, modifications or waivers of any provision
thereof since the date of this Agreement. On the Closing Date, the New
Credit Agreement shall provide for revolving credit and term loan
borrowings in such amounts as are sufficient to consummate the Transactions
to be consummated on the Closing Date and substantially as described in the
Final Memorandum.
(ix) The Company shall have received cash equity financing pursuant
to the Equity Contribution in such an amount as is sufficient to consummate
the Transactions to be consummated on the Closing Date, substantially as
described in the Final Memorandum.
-32-
(x) The Certificate of Merger with respect to the Merger shall
have been filed with the Secretary of State of the State of Delaware and
shall have become effective.
(xi) Each of the Proposed Amendments to the Muzak Notes shall have
been approved by the requisite percentage of holders of Muzak Notes;
simultaneously with the closing of the sale of the Notes by the Notes
Issuers, the Notes Issuers shall have accepted for payment and have
instructed the depositary with respect thereto to pay to the trustee under
the Muzak Indenture the purchase price for all Muzak Notes properly
tendered pursuant to the Tender Offer. The Supplemental Indenture shall
have been executed by Old Muzak and the trustee under the Muzak Indenture
and the terms of the Muzak Indenture shall be as modified by such
Supplemental Indenture.
(xii) All proceedings taken in connection with the issuance of the
Securities and the transactions contemplated by this Agreement, the other
Offering Documents and the Transaction Documents and all documents and
papers relating thereto shall be reasonably satisfactory to the Initial
Purchasers and counsel to the Initial Purchasers. The Initial Purchasers
and counsel to the Initial Purchasers shall have received copies of such
papers and documents as they may reasonably request in connection
therewith, all in form and substance reasonably satisfactory to them.
(xiii) The Notes Issuers shall apply the proceeds necessary from
the issuance and sale of the Notes and from initial borrowings under the
New Credit Agreement and the Equity Contribution as described under "Use of
Proceeds" in the Final Memorandum.
(xiv) On the Closing Date, the Initial Purchasers shall have
received a letter, dated the Closing Date, from Xxxxxxxx Xxxxx Xxxxxx &
Zukin Inc. with respect to the solvency of the Issuers as of the Effective
Time in form, scope and substance reasonably satisfactory to the Initial
Purchasers.
-33-
(xv) Since the date of this Agreement, there shall not have been any
announcement by any "nationally recognized statistical rating
organization," as defined for purposes of Rule 436(g) under the Securities
Act, that (A) it is downgrading its rating assigned to any debt securities
of the Company or Old Muzak, or (B) it is reviewing its rating assigned to
any debt securities of the Company or Muzak with a view to possible
downgrading, or with negative implications, or direction not determined.
(xvi) On or before the Closing Date, the Initial Purchasers shall have
received the Registration Rights Agreement executed by the Issuers and such
agreement shall be in full force and effect at all times from and after the
Closing Date.
(xvii) The Issuers shall have furnished or caused to be furnished to the
Initial Purchasers such further certificates and documents as the Initial
Purchasers shall have reasonably requested.
All such opinions, certificates, letters, schedules, documents or
instruments delivered pursuant to this Agreement will comply with the provisions
hereof only if they are reasonably satisfactory in all material respects to the
Initial Purchasers and counsel to the Initial Purchasers. The Issuers shall
furnish to the Initial Purchasers such conformed copies of such opinions,
certificates, letters, schedules, documents and instruments in such quantities
as the Initial Purchasers shall reasonably request.
8. Indemnification and Contribution. (a) Each Issuer jointly and
--------------------------------
severally agrees to indemnify and hold harmless the Initial Purchasers, each
director, officer, employee or agent of any Initial Purchaser and each person,
if any, who controls any Initial Purchaser within the meaning of Section 15 of
the Securities Act or Section 20 of the Exchange Act, against any losses,
claims, damages, liabilities or expenses to which such Initial Purchaser or such
director, officer, employee, agent or controlling person may become subject
under the Securities Act, the Exchange Act or otherwise, insofar as
-34-
any such losses, claims, damages, liabilities or expenses (or actions in respect
thereof) arise out of or are based upon:
(i) any untrue statement or alleged untrue statement of any material
fact contained in (A) any Preliminary Memorandum or the Final Memorandum or
any amendment or supplement thereto or (B) any of the Offering Documents or
any application or other document, or any amendment or supplement thereto,
executed by any Issuer or based upon written information furnished by or on
behalf of any Issuer filed in any jurisdiction in order to qualify the
Securities under the securities or "Blue Sky" laws thereof or filed with
the Commission or any securities association or securities exchange
(collectively, the "Documents"); or
(ii) the omission or alleged omission to state, in any Preliminary
Memorandum or the Final Memorandum or any amendment or supplement thereto,
or any of the Documents, a 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,
and will reimburse, promptly after demand, the Initial Purchasers and each such
director, officer, employee, agent or controlling person for any legal or other
expenses reasonably incurred by the Initial Purchasers or such director,
officer, employee, agent or controlling person in connection with investigating,
defending against or appearing as a third-party witness in connection with any
such loss, claim, damage, liability, expense or action; provided, however, that
-------- -------
none of the Issuers will be liable in any such case to any Initial Purchaser or
any director, officer, employee, agent or controlling person of such Initial
Purchaser to the extent that any such loss, claim, damages, liability expense or
action arises out of or is based upon any untrue statement or alleged untrue
statement or omission or alleged omission made in any Preliminary Memorandum or
the Final Memorandum or any amendment or supplement thereto, or any Document, in
reliance upon and in conformity with written information furnished to the
Company by or on behalf of an Initial Purchaser specifically for use therein;
and provided, further, that none of the Issuers will be liable to any Initial
-------- -------
Purchaser or any director, officer, employee, agent or any person controlling
any Initial
-35-
Purchaser with respect to any such untrue statement or omission made in any
Preliminary Memorandum that is corrected in the Final Memorandum (or any
amendment or supplement thereto) to the extent that any such loss, claim,
damage, expense or liability results from the fact that the person asserting any
such loss, claim, damage, expense or liability purchased Securities from an
Initial Purchaser in reliance upon the Preliminary Memorandum but was not sent
or given a copy of the Final Memorandum (as amended or supplemented) that was
made available by the Issuers to such Initial Purchaser at or prior to the
written confirmation of the sale of the Securities to such person, unless such
failure to deliver such Final Memorandum (as amended or supplemented) was a
result of noncompliance by the Issuers with Section 5(d) of this Agreement. This
indemnity agreement will be in addition to any liability that the Issuers may
otherwise have to the indemnified parties. The Issuers further agree that the
indemnification, contribution and reimbursement commitments set forth in this
Section 8 shall apply whether or not any Initial Purchaser is a formal party to
any such lawsuits, claims or other proceedings.
(b) The Initial Purchasers severally and not jointly will indemnify
and hold harmless the Issuers, their respective directors, officers, employees
and agents and each person, if any, who controls any of the Issuers within the
meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act
against any losses, claims, damages or liabilities to which any of the Issuers
or any such director, officer, employee, agent or controlling person may become
subject under the Securities Act, the Exchange Act or otherwise, insofar as such
losses, claims, damages or liabilities (or actions in respect thereof) arise out
of or are based upon any untrue statement or alleged untrue statement of any
material fact contained in any Preliminary Memorandum or the Final Memorandum or
any amendment or supplement thereto or any Document, in each case to the extent,
but only to the extent, that such untrue statement or alleged untrue statement
was made in reliance upon and in conformity with written information furnished
to the Company by or on be-
-36-
half of an Initial Purchaser specifically for use therein; and, subject to the
limitation set forth immediately preceding this clause, will reimburse, promptly
after request, any legal or other expenses reasonably incurred by any of the
Issuers or any such director, officer, employee, agent or controlling person in
connection with investigating or defending against or appearing as a third-party
witness in connection with any such loss, claim, damage, liability or action in
respect thereof. This indemnity agreement will be in addition to any liability
that the Initial Purchasers may otherwise have to the indemnified parties.
(c) Promptly after receipt by an indemnified party under this Section
8 of notice of the commencement of any action, such indemnified party will, if a
claim in respect thereof is to be made against the indemnifying party under this
Section 8, notify the indemnifying party of the commencement thereof; but the
omission so to notify the indemnifying party will not relieve it from any
liability that it may have to any indemnified party except to the extent that
such omission results in the forfeiture by the indemnifying party of substantial
rights and defenses. In case any such action is brought against any indemnified
party, and such indemnified party notifies the indemnifying party of the
commencement thereof, the indemnifying party will be entitled to participate
therein and, to the extent that it may wish, jointly with any other indemnifying
party similarly notified, to assume the defense thereof, with counsel reasonably
satisfactory to such indemnified party; provided, however, that if the named
-------- -------
parties in any such action (including any impleaded parties) include both the
indemnified party and the indemnifying party and the indemnified party shall
have reasonably concluded that there may be one or more legal defenses available
to it and/or other indemnified parties that are different from or additional to
those available to any such indemnifying party, and a conflict of interest may
exist between an indemnified party and the indemnifying party and the
representation of both would be inappropriate, then the indemnifying parties
shall not have the right to direct the defense of such action on behalf of such
indemnified party or parties and such indemnified party or parties shall have
the right to
-37-
select separate counsel to defend such action on behalf of such indemnified
party or parties. After notice from the indemnifying party to such indemnified
party of its election so to assume the defense thereof and approval by such
indemnified party of counsel appointed to defend such action, the indemnifying
party will not be liable to such indemnified party under this Section 8 for any
legal or other expenses, other than reasonable out-of-pocket costs of
investigation, incurred by such indemnified party in connection with the defense
thereof, unless (i) the indemnified party shall have employed separate counsel
in accordance with the proviso to the immediately preceding sentence (it being
understood, however, that in connection with such action the indemnifying party
shall not be liable for the expenses of more than one separate counsel (in
addition to local counsel) in any one action or separate but substantially
similar actions in the same jurisdiction arising out of the same general
allegations or circumstances, representing the indemnified parties under such
paragraph (a) or paragraph (b), as the case may be, who are parties to such
action or actions); (ii) the indemnifying party has authorized in writing the
employment of counsel for the indemnified party at the expense of the
indemnifying parties; or (iii) the indemnifying party shall have failed to
assume the defense or retain counsel reasonably satisfactory to the indemnified
party. After such notice from the indemnifying parties to such indemnified party
(so long as the indemnified party shall have informed the indemnifying parties
of such action in accordance with this Section 8 on a timely basis prior to the
indemnified party seeking indemnification hereunder), the indemnifying parties
will not be liable under this Section 8 for the costs and expenses of any
settlement of such action effected by such indemnified party without the consent
of the indemnifying party, unless such indemnified party waived its rights under
this Section 8, in which case the indemnified party may effect such a settlement
without such consent. No indemnifying party will, without the prior written
consent of the indemnified party (which shall not be unreasonably withheld or
delayed), settle or compromise or consent to the entry of any judgment in any
pending or threatened claim, action, suit or proceeding in respect of which
indemnification by an indemnified party may be sought hereunder (whether or not
-38-
the indemnified party or any person who controls any indemnified party within
the meaning of Section 15 of the Securities Act or Section 20 of the Exchange
Act is a party to such claim, action, suit or proceeding), unless such
settlement, compromise or consent (i) includes an unconditional release of each
indemnified party and each such director, officer, employee, agent or
controlling person from all liability arising out of such claim, action, suit or
proceeding and (ii) does not include a statement as to or an admission of fault,
culpability or a failure to act as to any such person.
(d) In circumstances in which the indemnity agreement provided for in
the preceding paragraphs of this Section 8 is unavailable or insufficient to
hold harmless an indemnified party in respect of any losses, claims, damages,
expenses or liabilities (or actions in respect thereof), each indemnifying
party, in order to provide for just and equitable contribution, shall contribute
to the amount paid or payable by such indemnified party as a result of such
losses, claims, damages, expenses or liabilities (or actions in respect thereof)
in such proportion as is appropriate to reflect (i) the relative benefits
received by the Issuers on the one hand and the Initial Purchasers on the other
from the offering of the Securities or (ii) if the allocation provided by the
foregoing clause (i) is not permitted by applicable law, not only such relative
benefits but also the relative fault of the indemnifying party or parties on the
one hand and the indemnified party on the other in connection with the
statements or omissions or alleged statements or omissions that resulted in such
losses, claims, damages, expenses or liabilities (or actions in respect
thereof). The relative benefits received by the Issuers on the one hand and the
Initial Purchasers on the other shall be deemed to be in the same proportion as
the total proceeds from the offering of the Securities (before deducting
expenses) received by the Issuers bear to the total discounts and commissions
received by the Initial Purchasers. The relative fault of the parties 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 Issuers on
-39-
the one hand or the Initial Purchasers on the other, the parties' relative
intent, knowledge, access to information and opportunity to correct or prevent
such statement or omission, and any other equitable considerations appropriate
in the circumstances. The amount paid or payable by a party as a result of the
losses, claims, damages and liabilities referred to above shall be deemed to
include any legal or other fees or expenses incurred by such party in connection
with investigating or defending any such claim. The Issuers and the Initial
Purchasers agree that it would not be equitable if the amount of such
contribution were determined by pro rata or per capita allocation (even if the
Issuers on the one hand and the Initial Purchasers on the other hand were
treated as one entity for such purpose) or by any other method of allocation
that does not take into account the equitable considerations referred to in the
first sentence of this paragraph (d). Notwithstanding any other provision of
this paragraph (d), the Initial Purchasers shall not be obligated to make
contributions hereunder that in the aggregate exceed the total discounts and
commissions received by the Initial Purchasers under this Agreement, less the
aggregate amount of any damages that the Initial Purchasers have otherwise been
required to pay by reason of the untrue or alleged untrue statements, and no
person guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the Securities Act) shall be entitled to contribution from any person
who was not guilty of such fraudulent misrepresentation. For purposes of this
paragraph (d), each director, officer, employee or agent of and each person, if
any, who controls any Initial Purchaser within the meaning of Section 15 of the
Securities Act or Section 20 of the Exchange Act shall have the same rights to
contribution as such Initial Purchaser, and each director, officer, employee and
agent of any of the Issuers and each person, if any, who controls any of the
Issuers within the meaning of Section 15 of the Securities Act or Section 20 of
the Exchange Act shall have the same rights to contribution as the Issuers.
(e) Notwithstanding anything to the contrary in this Section 8, the
indemnification and contribution provisions of
-40-
the Registration Rights Agreement shall govern any claim with respect thereto.
9. Offering of Securities; Restrictions on Transfer. Each Initial
------------------------------------------------
Purchaser represents and warrants as to itself only that it is a QIB. Each
Initial Purchaser agrees with the Issuers as to itself only that (i) it has not
and will not solicit offers for, or offer or sell, the Securities by any form of
general solicitation or general advertising (as those terms are used in
Regulation D under the Securities Act) or in any manner involving a public
offering within the meaning of Section 4(2) of the Securities Act; and (ii) it
has and will solicit offers for the Securities only from, and will offer the
Securities only to, (A) in the case of offers inside the United States persons
whom such Initial Purchaser reasonably believes to be QIBs or, if any such
person is buying for one or more institutional accounts for which such person is
acting as fiduciary or agent, only when such person has represented to such
Initial Purchaser that each such account is a QIB, to whom notice has been given
that such sale or delivery is being made in reliance on Rule 144A and, in each
case, in transactions under Rule 144A and (B) in the case of offers outside the
United States, to persons other than U.S. persons ("foreign purchasers," which
term shall include dealers or other professional fiduciaries in the United
States acting on a discretionary basis for foreign beneficial owners (other than
an estate or trust)); provided, however, that, in the case of this clause (B),
-------- -------
in purchasing such Securities such persons are deemed to have represented and
agreed as provided under the caption "Notice to Investors" contained in the
Final Memorandum (or, if the Final Memorandum is not in existence, the most
recent Preliminary Memorandum).
10. Survival Clause. The respective representations, warranties,
---------------
agreements, covenants, indemnities and other statements of the Issuers, their
respective officers and the Initial Purchasers set forth in this Agreement or
made by or on behalf of them, respectively, pursuant to this Agreement shall
remain in full force and effect, regardless of (i) any investigation made by or
on behalf of the Issuers, any of their re-
-41-
spective officers or directors, the Initial Purchasers or any controlling person
referred to in Section 8 hereof and (ii) delivery of and payment for the
Securities, and shall be binding upon and shall inure to the benefit of, any
successors, assigns, heirs, personal representatives of the Issuers, the Initial
Purchasers and indemnified parties referred to in Section 8 hereof. The
respective agreements, covenants, indemnities and other statements set forth in
Sections 6 and 8 hereof shall remain in full force and effect, regardless of any
termination or cancellation of this Agreement.
11. Termination. (a) This Agreement may be terminated in the sole
-----------
discretion of the Initial Purchasers by notice to the Issuers given in the event
that the Issuers shall have failed, refused or been unable to satisfy all
conditions on its respective part to be performed or satisfied hereunder on or
prior to the Closing Date or, if at or prior to the Closing Date:
(i) any of the Issuers or Old Muzak shall have sustained any loss or
interference with respect to their respective businesses or properties from
fire, flood, hurricane, earthquake, accident or other calamity, whether or
not covered by insurance, or from any labor dispute or any legal or
governmental proceeding, which loss or interference has had or has a
Material Adverse Effect or there shall have been any material adverse
change, or any development involving a prospective material adverse change
(including without limitation a change in management or control of the
Notes Issuers or Old Muzak), in the general affairs, management, business,
condition (financial or other), properties, prospects or results of
operations of the Issuers or Old Muzak except as described in or
contemplated by the Final Memorandum (exclusive of any amendment or
supplement thereto);
(ii) trading in securities generally on the New York, American Stock
Exchange or the Nasdaq National Market shall have been suspended or minimum
or maximum prices shall have been established on any such exchange;
-42-
(iii) a banking moratorium shall have been declared by New York or
United States authorities;
(iv) there shall have been (A) an outbreak or escalation of
hostilities between the United States and any foreign power, (B) an
outbreak or escalation of any other insurrection or armed conflict
involving the United States or (C) any material change in the financial
markets of the United States that, in the sole judgment of the Initial
Purchasers, makes it impracticable or inadvisable to proceed with the
offering or the delivery of the Securities as contemplated by the Final
Memorandum, as amended as of the date hereof; or
(v) any securities of the Notes Issuers or Old Muzak shall have
been downgraded or placed on any "watch list" for possible downgrading by
any nationally recognized statistical rating organization.
(b) Termination of this Agreement pursuant to this Section 11 shall
be without liability of any party to any other party except as provided in
Section 10 hereof.
12. Notices. All communications hereunder shall be in writing and,
-------
if sent to the Initial Purchasers, shall be hand delivered, mailed by first-
class mail, couriered by next-day air courier or telecopied and confirmed in
writing to the Initial Purchasers c/o CIBC Xxxxxxxxxxx Corp., 000 Xxxxxxxxx
Xxxxxx, 0xx Xxxxx, Xxx Xxxx, Xxx Xxxx 00000, Attention: Xxxxx Xxxxx, and with a
copy to Xxxxxx Xxxxxx & Xxxxxxx, 00 Xxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000,
Attention: Xxxx X. Xxxxxxxxx, Esq. If sent to the Issuers, shall be delivered,
mailed, couriered or telecopied and confirmed in writing, to Muzak LLC, 0000
Xxxxx Xxxxxx, Xxxxx 000, Xxxxxxx, Xxxxxxxxxx 00000, Attention: Xxxx X. Xxxxxxxx
and with a copy to Xxxxxxxx & Xxxxx, 000 Xxxx Xxxxxxxx Xxxxx, Xxxxxxx, Xxxxxxxx
00000, Attention: Xxxxxx Xxxxxxx, Esq., and a copy to ABRY Partners, Inc., 00
Xxxxxxx Xxxxxx, Xxxxxx, Xxxxxxxxxxxxx 00000, Attention: Xxxx Xxxxxx.
-43-
13. Successors. This Agreement shall inure to the benefit of and be
----------
binding upon the Initial Purchasers and each of the Issuers and their respective
successors and legal representatives, and nothing expressed or mentioned in this
Agreement is intended or shall be construed to give any other person any legal
or equitable right, remedy or claim under or in respect of this Agreement, or
any provisions herein contained; this Agreement and all conditions and
provisions hereof being intended to be and being for the sole and exclusive
benefit of such persons and for the benefit of no other person except that (i)
the indemnities of the Issuers contained in Section 9 of this Agreement shall
also be for the benefit of any person or persons who control the Initial
Purchasers within the meaning of Section 15 of the Act or Section 20 of the
Exchange Act and (ii) the indemnities of the Initial Purchasers contained in
Section 9 of this Agreement shall also be for the benefit of the directors of
the Issuers, their respective officers, employees and agents and any person or
persons who controls any Issuer within the meaning of Section 15 of the Act or
Section 20 of the Exchange Act. No purchaser of Securities from the Initial
Purchasers will be deemed a successor because of such purchase.
14. No Waiver; Modifications in Writing. No failure or delay on the
-----------------------------------
part of any Issuer or the Initial Purchasers in exercising any right, power or
remedy hereunder shall operate as a waiver thereof, nor shall any single or
partial exercise of any such right, power or remedy preclude any other or
further exercise thereof or the exercise of any other right, power or remedy.
The remedies provided for herein are cumulative and are not exclusive of any
remedies that may be available to any Issuer or the Initial Purchasers at law or
in equity or otherwise. No waiver of or consent to any departure by any Issuer
or Initial Purchasers from any provision of this Agreement shall be effective
unless signed in writing by the party entitled to the benefit thereof, provided
--------
that notice of any such waiver shall be given to each party hereto as set forth
below. Except as otherwise provided herein, no amendment, modification or
termination of any provision of this Agreement shall be effective unless signed
in writing by or on behalf of each of the
-44-
Issuers and the Initial Purchasers. Any amendment, supplement or modification of
or to any provision of this Agreement, any waiver of any provision of this
Agreement, and any consent to any departure by the Issuers or the Initial
Purchasers from the terms of any provision of this Agreement shall be effective
only in the specific instance and for the specific purpose for which made or
given. Except where notice is specifically required by this Agreement, no notice
to or demand on the Issuers in any case shall entitle the Issuers to any other
or further notice or demand in similar or other circumstances.
15. Joint and Several Obligations. All of the obligations of the
-----------------------------
Issuers hereunder shall be joint and several obligations of each of them.
16. Information Supplied by the Initial Purchasers. The statements
----------------------------------------------
set forth in the fifth, ninth and tenth paragraphs under the heading "Plan of
Distribution" constitute the only information furnished by the Initial
Purchasers to the Issuers for purposes of Section 2(a) hereof.
17. Entire Agreement. This Agreement constitutes the entire
----------------
agreement among the parties hereto and supersedes all prior agreements,
understandings and arrangements, oral or written, among the parties hereto with
respect to the subject matter hereof.
18. APPLICABLE LAW. THE VALIDITY AND INTERPRETATION OF THIS
--------------
AGREEMENT, AND THE TERMS AND CONDITIONS SET FORTH HEREIN SHALL BE GOVERNED BY
AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT
GIVING EFFECT TO ANY PROVISIONS RELATING TO CONFLICTS OF LAW.
19. Counterparts. This Agreement may be executed in two or more
------------
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
-45-
If the foregoing correctly sets forth our understanding, please
indicate your acceptance thereof in the space provided below for that purpose,
whereupon this letter shall constitute a binding agreement among the Issuers and
the Initial Purchasers.
Very truly yours,
AUDIO COMMUNICATIONS NETWORK LLC,
a Delaware limited liability company
By: /s/ Xxxx Xxxxxx
-------------------------------------
Name: Xxxx Xxxxxx
Title:
MUZAK FINANCE CORP., a Delaware corporation
By: /s/ Xxxx Xxxxxx
-------------------------------------
Name: Xxxx Xxxxxx
Title:
MUZAK CAPITAL CORPORATION, a Delaware
corporation
By: /s/ Xxxx Xxxxxx
--------------------------------------
Name: Xxxx Xxxxxx
Title:
-46-
MLP ENVIRONMENTAL MUSIC, LLC, a Washington
limited liability company
By: /s/ Xxxx Xxxxxx
---------------------------------------
Name: Xxxx Xxxxxx
Title:
BUSINESS SOUND, INC., an Ohio corporation
By: /s/ Xxxx Xxxxxx
---------------------------------------
Name: Xxxx Xxxxxx
Title:
ACN HOLDINGS LLC, a Delaware limited
liability company
By: /s/ Xxxx Xxxxxx
---------------------------------------
Name: Xxxx Xxxxxx
Title:
-47-
The foregoing Agreement is hereby confirmed and accepted as of the date first
above written.
CIBC XXXXXXXXXXX CORP.
By: /s/ Xxxxx Xxxxx
-------------------------------------
Name: Xxxxx Xxxxx
Title: Managing Director
XXXXXXX, XXXXX & CO.
By: /s/ Xxxxxxx, Sachs & Co.
--------------------------------------
Xxxxxxx, Xxxxx & Co.
Schedule 1
----------
Principal Amount
Initial Purchaser of Securities
----------------- ----------------
CIBC Xxxxxxxxxxx Corp................................ $ 69,000,000
Xxxxxxx, Xxxxx & Co.................................. 46,000,000
------------
Total........................................... $115,000,000
============
Exhibit A
---------
Subsidiaries
------------
Business Sound, Inc.
Exhibit B
---------
Muzak Subsidiaries
------------------
MLP Environmental Music,LLC
Exhibit C
---------
Form of Opinion of Xxxxxxxx & Xxxxx
-----------------------------------
Opinion, dated the Closing Date and addressed to the Initial
Purchasers, of Xxxxxxxx & Xxxxx, counsel to the Notes Issuers, to the effect
that:
Exhibit D
---------
Form of Opinion of Weil, Gotshal & Xxxxxx LLP
---------------------------------------------
Opinion, dated the Closing Date and addressed to the Initial
Purchasers, of Weil, Gotshal & Xxxxxx LLP, counsel to Old Muzak, to the effect
that:
(i) Old Muzak has been duly formed, is validly existing in good
standing as a limited partnership under the laws of its jurisdiction of
formation, with the requisite power and authority to own its properties and
conduct its business as now conducted as described in the Final Memorandum
and is duly qualified to do business as a foreign partnership in good
standing in all other jurisdictions where the ownership or leasing of its
properties or the conduct of its business requires such qualification,
except where the failure to be so qualified would not, individually or in
the aggregate, have a Material Adverse Effect.
(ii) Old Muzak has the requisite limited partnership power and
authority to execute, deliver and perform its obligations under the
Transaction Documents to which it is a party. The Transaction Documents
have been duly and validly authorized by Old Muzak to the extent a party
thereto and, when executed and delivered by the other parties thereto, will
constitute valid and legally binding agreements of Old Muzak, enforceable
against Old Muzak in accordance with their terms except that the
enforcement thereof may be limited by the Enforceability Exceptions and
except as any rights to indemnity or contribution thereunder may be limited
by federal and state securities laws and public policy considerations.
(iii) No consent, approval, authorization, license, qualification,
exemption or order of any court or governmental agency or body or third
party is required for the performance of the Transaction Document by Old
Muzak or for the consummation by Old Muzak of any of the Transactions or
any of the other transactions contemplated thereby; all such consents,
approvals, authorizations, li-
-2-
censes, qualifications, exemptions and orders set forth in the Final
Memorandum which are required to be obtained by the Closing Date have been
obtained or made, as the case may be, and are in full force and effect and
not the subject of any pending or, to the best knowledge of such counsel,
threatened attack by appeal or direct proceeding or otherwise.
(iv) The execution, delivery and performance of the Transaction
Documents and the consummation of the Transactions and the other
transactions contemplated thereby and by the Final Memorandum and the
fulfillment of the terms thereof will not (a) violate, conflict with or
constitute or result in a breach of or a default under (or an event that,
with notice or lapse of time, or both, would constitute a breach of or a
default under) any of (i) the terms or provisions of any contract,
indenture, mortgage, deed of trust, loan agreement, note, lease, license,
franchise agreement, permit, certificate or agreement or instrument to
which Old Muzak is a party or to which any of their respective properties
or assets are subject, (ii) the certificate of formation or limited
partnership agreement of Old Muzak or (iii) (assuming compliance with all
applicable state securities or "Blue Sky" laws) any statute, judgment,
decree, order, rule or regulation of any court or governmental agency or
other body applicable to Old Muzak or any of its properties or assets or
(b) result in the imposition of any lien upon or with respect to any of the
properties or assets of Old Muzak, which violation, conflict, breach,
default or lien would, individually or in the aggregate, have a Material
Adverse Effect.
