SECOND LIMITED WAIVER AND AMENDMENT OF
CERTAIN LOAN DOCUMENTS AND KEY AGREEMENTS
WHEREAS, pursuant to the terms of that certain Lease Guaranty dated as
of May 12, 1995, executed and delivered by The Musicland Group, Inc., a Delaware
corporation, as guarantor ("Guarantor") in favor of Media Play Trust, a trust
existing under the laws of the State of New York ("Trust")(the "Guaranty"), in
connection with (i) that certain Master Lease dated as of May 12, 1995, by and
between Trust, as landlord, and Media Play, Inc., a Delaware corporation as
tenant ("Tenant")(the "Master Lease"), (ii) that certain Construction Loan
Agreement dated as of May 12, 1995, by and among Trust, as borrower
("Borrower"), National Westminster Bank Plc, as Agent and a Lender, and such
other Lenders parties thereto (collectively the "Lenders")(the "Loan Agreement")
and (iii) that certain Participation Agreement dated as of May 12, 1995, among
NatWest Markets Leasing Corporation (formerly known as NatWest Leasing
Corporation), Trust, Yasuda Bank and Trust Company U.S.A.) ("Owner Trustee")(the
"Participation Agreement"), the Lender and Tenant, as the foregoing have been
supplemented or amended, certain Financial Covenants (as defined in the Guaranty
and the Master Lease) were incorporated into the Guaranty and the Master Lease
by reference;
WHEREAS, pursuant to the Guaranty and the Master Lease, certain waivers
of compliance by Guarantor and Tenant with, and amendments of, the Financial
Covenants shall be effective with respect to the Guaranty and the Master Lease
only if the Trust agrees and the Required Lenders (as defined in the Loan
Agreement) and the Owner Participant consent; and
WHEREAS, Guarantor and Tenant have requested that the Trust agree and
the Lenders and the Owner Participant consent that the Fourth Amendment and
Waiver of and with respect to the Credit Agreement (as defined in the Loan
Agreement) as set forth in Exhibit "A" hereto (the "Credit Waiver"), of and with
respect to certain of the Financial Covenants, be effective with respect to the
Guaranty and the Master Lease, to the limited extent and from the effective date
of the Credit Waiver set forth in such Exhibit "A"; and
WHEREAS, the Trust, the undersigned Lenders and the Owner Participant,
subject to the terms, conditions, and agreements hereof, desire to consent to
the effectiveness of the Credit Waiver; and
Second Limited Waiver and Amendment
(Media Play) - Page I
WHEREAS the Trust, the undersigned Lenders, the Tenant, the Owner
Trustee, the Owner Participant and the Guarantor desire to amend certain
provisions of certain of the Loan Documents and the Key Agreements (as such
terms are defined in the Loan Agreement) in connection with and to consent to
the effectiveness of the Credit Waiver, and to execute this Second Limited
Waiver and Amendment of Certain Loan documents and Key Agreements (this "Second
Limited Waiver and Amendment") to evidence the same;
NOW, THEREFORE:
1. The Trust agrees, and the undersigned Lenders and the Owner
Participant consent, that, subject to the satisfaction of each term and
condition hereof, the payments provided herein, and the payment of all amounts
otherwise required to be paid by Guarantor or Tenant as of the date hereof
pursuant to the Loan Documents or the Key Agreements: (i) the limited waiver of
Guarantor's and Tenants obligations, respectively, to comply with certain of the
Financial Covenants set forth in the Credit Waiver shall be effective with
respect to the Guaranty and the Master Lease, respectively, from and after the
later of the date hereof and the date the waiver set forth in the Credit Waiver
is effective with respect to the Credit Agreement, and through and including the
earliest date on which such waiver ceases to be effective with respect to.the
Credit Agreement, and to the extent such limited waiver is effective with
respect to the Financial Covenants pursuant to the Credit Agreement; and (ii)
the amendments to the Incorporated Provisions shall be effective with respect to
the Guaranty and the Master Lease from and after the later of the date hereof
and the date the amendments set forth in the Credit Waiver are effective with
respect to the Credit Agreement.
2. The Borrower and the Lenders agree and the Owner Participant, Tenant and
Guarantor consent that the Loan Agreement is amended in the following respects:
(a) Section 1.1 is amended;
(i) by amending the definitions of
"Applicable Rate", "Construction Advance Limit", "Tranche "A"
Commitment" and "Tranche "B" Commitment" in their entirety to read as follows:
"Applicable Rate" means, for any Interest Period
and with respect to each Note the rate per annum of the applicable of: (a)
except to the extent clause (b) or (c) shall apply to all or a portion of the
Loan, the rate set forth below in each circumstance so indicated the sum of (i)
the LIBO Rate for such period, plus (ii) a Margin of (A)(1) with respect to
Tranche "A" Loans:
Second Limited Waiver and Amendment
(Media Play) - Page 2
Level I^ Level 2^ Xxxxx 0x Xxxxx 0x Xxxxx 0x
XXX and BIB- or BB+ or BB or BB- or
--- -- -- -- --
Xxx0 Xxx0 Xx0 Xx0 Xx0
or better or lower*
------------------------------------------------------------------------------
0.30% 0.4375% 0.50% 0.875% 1.50%
*If TMGI's implied senior unsecured non-credit-enhanced
long-term debt is unrated by either rating agency, Level 5
will be applicable.
^Any change in the committed pricing shall be effective as of
the date on which the applicable rating agency announces the
applicable change in ratings.
Rating by Standard & Poors Ratings Group ("S&P") for TMGI's
implied senior unsecured non-credit-enhanced long-term debt
Rating by Xxxxx'x Investors Service,Inc.("Moody's")for TMGI's
implied senior unsecured non-credit-enhanced long-term debt
or, (2) with respect to Tranche "B" Loans, as set out in the Tranche "B"
Schedule, plus (in the case of both (A)(1) And (A)(2) preceding), (B)(1) from
and after June 16, 1997, through April 29, 1998, 0.25%, and (2) from and after
April 30, 1998, 0.50%, or (b)(i) from the date hereof until another rate is
requested by Borrower in compliance with the requirements of this Agreement or
(ii) from a date subsequent to the date hereof to a future date until another
rate is requested by Borrower in compliance with the requirements of this
Agreement, provided the Borrower has so requested with respect to all or a
portion of the Loan, the Base Rate, or (c) with respect to any Lender's
Proportionate Share of the Loan following a Notice of Change in Legality, from
and after the date provided pursuant to Section 2.2(k), the rate provided in
such Section."
"Construction Advance Limit" means, for (1) Parcel Costs and/or (ii)
Improvements Costs, the greater of (A) the then applicable of (1) prior to
December 12, 1997, $12,076,000, or (2) from and after December 12, 1997, but
prior to December 14, 1998, $11,076,000, plus the product of the Payment Portion
and the Reduction Amount as of December 12, 1997, or (3) from and after December
14, 1998, $10,276,000, plus the product of the Payment Portion and the Reduction
Amount as of December 14, 1998, less, in the case of each of (1) - (3)
preceding, the Debt Portion of the aggregate of the Construction Amount of all
of the Parcels described in Xxxxxxxx "X-X", "X-0" xx "X-0" to the Master Lease
and the Improvements thereon which have then been sold, or (B) such greater
amount as may be determined hereunder pursuant to the provisions of Section
2.2(1) hereof."
Second Limited Waiver and Amendment
(Media Play) - Page 3
"Tranche "A" Commitment" means, with respect to each Lender, the amount set
out in Schedule I with respect to such Lender, as adjusted from time to time:
(i) pursuant to the terms of such Schedule I, or (ii) with the written agreement
of such Lender, an increase in the Construction Advance Limit."
""Tranche "B" Commitment" means, with respect to each Tranche "B" Lender,
the amount set out in Schedule I with respect to such Lender, as adjusted from
time to time: (i) persuant to the terms of such Schedule I, or (ii) with the
written agreement of such Lender, an increase in the Construction Advance
Limit."; and
(ii) by adding the following definitions:
""Adjustment Amount" means, (i) with respect to the Tranche "A" Commitment,
82%; (ii) with respect to the Tranche "B" Commitment, 15%, and (iii) with
respect to the Owner Participant Amount, 3%, of the product of the Payment
Portion and the Reduction Amount."
""Payment Portion" means, as of any date on or after the Closing Date of
the sale of any of the Parcels described in Exhibits "X-0 ", "X-0" xx "X-0" to
the Master Lease and the Improvements thereon, the total of the Appraised Value
of all such Properties sold divided by $14,680,000."
""Reduction Amount" means (i) on December 12, 1997, $1,000,000, and (ii) on
December 14, 1998, $800,000."
(b) Section 2.1(a) is amended by amending the first sentence thereof in its
entirety to read as follows:
"Section 2.1 Advance of Loan. (a) By their execution hereof, and in each
case subject to the terms and conditions hereof, the Tranche "A" Lenders
severally agree to lend to Borrower (in the respective proportion of and up to
each such Lender's Tranche "A" Commitment) and the Tranche "B" Lenders severally
agree to lend to Borrower (in the respective portion of and up to each such
Tranche "B" Lender's Tranche "B" Commitment, respectively), and Borrower agrees
to borrow from Lenders amounts up to the Debt Portion of the Construction
Advance Limit, but never, with respect to any Lender, in excess of its then
Tranche "A" Commitment or Tranche "B" Commitment (the then applicable of such
amounts the "Facility Amount"), in Advances strictly in accordance with this
Agreement."
(c) Section 2.2(i)(ii)(E) is amended in its entirety to read as follows:
Second Limited Waiver and Amendment
(Media Play) - Page 4
"(E) the amount by which the balance of the Loans exceeds the aggregate of
the Commitments from time to time; such prepayments to be made on or before any
date on which the aggregate balance of the Commitments is reduced, provided,
however, that with respect to the reduction of the aggregate balance of the
Commitments provided for on December 12, 1997, such prepayment shall be made
before the earlier of (1) 3:30 p.m. New York time on December 15, 1997, or (2)
the payment of any amount due on December 15, 1997, of, or with respect to,
Subordinated Debt, as defined in the Lease Guaranty."
(d) The first sentence of Section 11.26 is amended in its entirety to read
as follows:
"Section 11-26 Assignees; Participation Lenders Borrower acknowledges and
agrees that Lenders may, from time to time, sell or offer to sell interests in
the Loan and the Loan Documents, or assign Lender's rights and interests in the
Loan and the Loan Documents, to one or more participants or assignees, provided
that no Lender may sell or assign its interest or a portion thereof pursuant to
an Assignment Agreement without the written consent of Borrower and Tenant
(which consent shall not be unreasonably withheld), and provided further that no
Lender may sell or assign less than all of such Lender's Tranche "A" Commitment
or Tranche "B" Commitment."
(e) Schedule I is amended and restated as attached hereto.
3- The Lenders, the Owner Participant, the Owner Trustee, the Trust and
the Tenant agree, and the Guarantor consents, that the Participation Agreement
is amended as follows:
(a) Article I is amended by amending the definition of "Initial Owner
Participant Investment" in its entirety to read as follows:
""Initial Owner Participant Investment" means an amount not in excess of (i)
prior to December 12, 1997, $362,280, or (ii) from and after December 12, 1997,
but prior to December 14, 1998, $332,280, plus the Adjustment Amount on December
12, 1997, or (3) from and after December 14, 1998, $308,280, plus the Adjustment
Amount on December 14, 1998, less, in the case of each of (1) - (3) preceding,
three percent (3.0%) of the aggregate of the Construction Amount of all of the
Parcels described in Exhibits 'A-1', 'A-2' or "A-3" to the Master @ and the
Improvements thereon which have then been sold.'
(b) Section 10.5 is amended by amending the paragraph immediately preceding
the last paragraph thereof to read as follows:
Second Limited Waiver and Amendment
(Media Play) - Page 5
"On June 16, 1997, and on or before any subsequent date on which the
Initial Owner Participant Investment is reduced, the outstanding balance of the
Owner Participant Amount shall be reduced (by a payment from or on behalf of
Tenant pursuant to clause A. (D) of Exhibit "C" to the Master Lease) to the
amount of the Initial Owner Participant Investment to be effective thereon,
provided, however, that with respect to the reduction of the Owner Participant
Investment provided for on December 12, 1997, such payment shall be made before
the earlier of (1) 3:30 p.m. New York time on December 15, 1997, or (2) the
payment of any amount due on December 15, 1997, of, or with respect to,
Subordinated Debt, as defined in the Lease Guaranty."
(c) The Owner Participant Schedule is amended by adding to each "Owner
Participant Margin" set forth therein (i) from and after June 16, 1997, through
April 29, 1998, 0.25%, and (ii) from and after April 30, 1998, 0.50%.
4. The Trust and the Tenant agree, and the Lenders, the Owner
Participant and the Guarantor consent, that the Master Lease is hereby amended
by amending Exhibit "C" by amending the last clause of the first paragraph of
clause A. thereof in its entirety to read as follows:
", plus (D) on June 16, 1997, and on or before any subsequent date on which the
Initial Owner Participant Investment is reduced or the aggregate balance of the
Commitments is reduced, the amount by which the outstanding balance of all
Construction Advances exceeds the aggregate of the Owner Participant Amount and
the Commitments to be effective, thereon, provided that each such payment of Net
Rent on or after March 27, 1997, shall reduce the Offer Price of one or more of
the Parcels and the improvements thereon then subject to this Lease as follows:
(1) prior to the Closing Date of the sale of any of the Parcels described in
Exhibits "A-1", "A-2" or "A-3" to this Lease and the Improvements thereon, such
payment shall be so applied in the following respective proportions: (x) 38.68 %
of the aggregate thereof to the Parcel in Exhibit "A-1" and the Improvements
thereon; (y) 25.50% of the aggregate thereof to the Parcel described in Exhibit
"A-2" and the Improvements thereon; and (z) 35.82 % of the aggregate thereof to
the Parcel described in Exhibit "A-3" and the Improvements thereon, and (2) on
or after the Closing Date of the sale of any of the Parcels described in
Exhibits "A-1", "A-2" or "A-3" to this Lease and the Improvements thereon, such
payment shall be so applied to reduce the Offer Purchase Price of each of the
Parcels and the Improvements thereon still subject to this Lease in the
respective proportions of the Appraised Value thereof to $14,680,000."
5. The Trust and the Guarantor agree, and the Lenders, the Owner
Participant and the Tenant consent, that the Lease Guaranty is hereby amended by
amending Section 14(a)(viii)(A) by adding the following clause following the
semicolon at the end:
Second Limited Waiver and Amendment (Media Play) - Page 6
"provided, however, that such report may contain a "going concern" qualification
for the years ending December 31, 1996, and December 31, 1997;".
6. To induce the Lenders, the Trust, the Owner Trustee and the Owner
Participant to enter into this Second Limited Waiver and Amendment: (i) the
Tenant agrees to pay to Agent on the date hereof, for the ratable benefit of
each Lender and the Owner Participant pursuant to the Amendment Fee Schedule
attached hereto, an amendment fee of $45,285, (ii) the Tenant and the Guarantor
agree that, in addition to any other payments which may be required pursuant to
the terms of the Loan Documents and Key Agreements, the Tenant shall, pursuant
to the terms of the amendments contained in Paragraphs 2 and 3 of this Second
Limited Waiver and Amendment, make payments, in the manner provided by the Loan
documents and the Key Agreement, of. (A) on the date hereof, $506,850; (B)
before the earlier of (1) 3:30 p.m. New York time on December 15, 1997, or (2)
the payment of any amount due on December 15, 1997, of, or with respect to,
Subordinated Debt, as defined in the Lease Guaranty, an additional $1,000,000,
less the product of the Payment Portion and the Reduction Amount on such date;
and (C) on or before December 14, 1998, an additional $800,000, less the product
of the Payment Portion and the Reduction Amount on such date, and (iii) the
Tenant and Guarantor hereby reaffirm, as of the date hereof, their
representations and warranties in their entirety contained in the Loan Documents
and Key Agreements (except to the extent such representations and warranties
relate solely to an earlier date) and additionally represent and warrant that
(A) this Second Limited Waiver and Amendment has been duly authorized and duly
and validly executed and delivered by each of them and is valid, binding and
enforceable against them in accordance with its terms; and (B) the execution and
delivery by each of does not, and the performance or observance by each of the
terms, conditions or provisions hereof will not, conflict with, violate or
result in the breach of any agreement or instrument to which either is a party
or by which either, or any of its respective properties is bound, or constitute
a default thereunder.
7. The Loan Documents and Key Agreements, as amended hereby, are hereby
ratified, approved and confirmed in each and every respect. All references to
the Loan documents and Key Agreements herein and in any other document,
instrument, agreement.or writing shall hereafter refer to the Loan Documents and
Key Agreements as amended hereby.
8. Except as amended hereby, terms used herein when defined in the Loan
Documents and Key Agreements shall have the same meanings therein unless the
context otherwise requires.
9. This Second Limited Waiver and Amendment may be executed in any number
of counterparts each executed counterpart constituting an original but all
together only one document.
Second Limited Waiver and Amendment
(Media Play) - Page 7
10. THIS SECOND LIMITED WAIVER AND AMENDMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK WITHOUT GIVING
EFFECT TO ANY CHOICE OR CONFLICT OF LAW PROVISION OR RULE THAT WOULD CAUSE THE
APPLICATION OF THE DOMESTIC SUBSTANTIVE LAWS OF ANY OTHER JURISDICTION.
IN WITNESS WHEREOF, the parties hereto have caused this Second Limited
Waiver and Amendment to be duly executed as of June 16, 1997.
NATWEST MARKETS LEASING CORPORATION,
as Owner Participant
By:
Xxxx Xxxxxxxxx
Director
MEDIA PLAY TRUST
as Landlord and Borrower
By: Yasuda Bank and Trust Company (U.S.A.), not in its individual capacity,
but solely in its capacity as Owner Trustee of the Media Play Trust
By:
Xxxxxxx Xxxxxxxx
Vice President
Second Limited Waiver and Amendment
(Media Play) - Page 8
YASUDA BANK AND TRUST COMPANY
(U.S.A.), as Owner Trustee
BY:
Xxxxxxx Bocchimo
Vice President
NATIONAL WESTMINSTER BANK Plc, as
Agent and Lender
By:
Xxxxxxxxxx X. Xxxxxx
Vice President
MEDIA PLAY, INC.,
as Tenant
By:
Xxxxxxx X. Xxxxxx
Assistant Treasurer
OTHER LENDERS
THE LONG-TERM CREDIT BANK OF JAPAN,
LTD., Chicago Branch
By:
Xxxxxx Xxxxxx, Xx.
Vice President
Second Limited Waiver and Amendment
(Media Play) - Page 9
THE YASUDA TRUST & BANKING COMPANY,
LTD., Chicago Branch
By:
Xxxxxxx X. Xxxxxx
Vice President
Second Limited Waiver and Amendment
(Media Play) - Page 10
SCHEDULE I
LENDERS AND COMMITMENTS
LENDER:
The Long-Term Credit Bank of Japan, Ltd.
Chicago Branch
000 Xxxxx XxXxxxx Xxxxxx, Xxx. 000
Xxxxxxx, XX 00000
Attention: Xxxxx Xxxxxx, Assistant Vice President
Xxx.Xx. (000) 000-0000
Fax No. (000) 000-0000
Account Information:
Credit: The First National Bank of Chicago, Chicago
ABA No.: 0000-0000-0
For further credit to: For the account of
The Long-Term Credit Bank of Japan, Ltd.
Chicago Branch
Account No.: 15-20547
Reference: Media Play Trust
Prior to December 12, 1997:
Tranche "A" Commitment: $4,025,293.08 Tranche "A" Commitment Percentage:
40.65%
Tranche "B" Commitment: $-0- Tranche "B" Commitment Percentage:
0%
On and after December 12, 1997, and prior to December 14, 1998:
Tranche "A" Commitment: $3,691,963.08^ Tranche "A" Commitment Percentage:
40.65%
Tranche "B" Commitment: $-0- Tranche "B" Commitment Percentage:
0%
On and after December 14, 1998:
Tranche "A" Commitment: $3,425,299.08 Tranche "A" Commitment Percentage:
40.65%
Tranche "B" Commitment: $0 Tranche "B" Commitment Percentage:
0%
Second Limited Waiver and Amendment
(Media Play) - Page 11
LENDER:
The Yasuda Trust & Banking Company, Ltd.
Chicago Branch
000 Xxxx Xxxxxxx Xx., Xxx. 0000
Xxxxxxx, XX 00000
Attention: Xxxx Xxxxxxxxxxx, Loan Operations
Xxx.Xx. (000) 000-0000
Fax No. (000) 000-0000
Account Information:
Credit: Citibank N.A.
ABA No.: 0210-00089
Account of: Yasuda Trust New York
Account No.: 00000000
In favor of: Yasuda Trust-Chicago
Account No.: 0000000
Reference: Media Play
Prior to December 12, 1997:
Tranche "A" Commitment: $4,025,293,08 Tranche "A" Commitment Percentage:
40.65%
Tranche "B" Commitment: $-0- Tranche "B" Commitment Percentage:
0%
On or after December 12, 1997, and prior to December 14, 1998:
Tranche "A" Commitment: $3,691,963.08^ Tranche "A" Commitment Percentage:
40.65%
Tranche "B" Commitment: $-0- Tranche "B" Commitment Percentage:
0%
On and after December 14, 1998:
Tranche "A" Commitment: $3,425,299.08 Tranche "A" Commitment Percentage:
40.65%
Tranche "B" Commitment: $-0- Tranche "B" Commitment Percentage:
0%
Second Limited Waiver and Amendment
(Media Play) - Page 12
LENDER:
National Westminster Bank Plc
000 Xxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxxxxxx X. Xxxxxx, Vice President
Tel. No. (000) 000-0000
Fax No. (000) 000-0000
Prior to December 12, 1997:
Tranche "A" Commitment: $1,851,733.84 Tranche "A" Commitment Percentage:
18.7%
Tranche "B" Commitment: $1,811,400 Tranche "B" Commitment Percentage:
100%
On and after December 12, 1997 and prior to December 14, 1998:
Tranche "A" Commitment: $1,698,393.84^ Tranche "A" Commitment Percentage:
18.7%
Tranche "B" Commitment: $1,661,400 Tranche "B" Commitment Percentage:
100%
On and after December 14, 1998:
Tranche "A" Commitment: $1,575,721.84 Tranche "A" Commitment Percentage:
18.7%
Tranche "B" Commitment: $1,541,400 Tranche "B" Commitment Percentage:
100%
A - Plus the Adjustment Amount as of December 12, 1997, and less the Debt
Portion of the aggregate of the Construction Amount of all of the Parcels
described in Exhibits "A-1", "A-2" or "A-3" to the Master Lease and the
Improvements thereon which have then been sold.
B - Plus the Adjustment Amount as of December 14, 1998, and less the Debt
Portion of the aggregate of the Construction Amount of all of the Parcels
described in Exhibits "A-1", "A-2" or "A-3" to the Master Lease and the
Improvements thereon which have then been sold.
Second Limited Waiver and Amendment
(Media Play) - Page 13
