EXHIBIT 10.10
FIRST AMENDMENT, CONSENT and WAIVER
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FIRST AMENDMENT, CONSENT and WAIVER (this "AMENDMENT"), dated as of
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July 1, 1999, to the Credit and Guaranty Agreement, dated as of March 18, 1999
(as the same may be amended, supplemented or otherwise modified from time to
time, the "Credit Agreement"), among Muzak LLC, formerly known as Audio
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Communications Network, LLC (the "Borrower"), Muzak Holdings, LLC and certain
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Subsidiaries of the Borrower (the "Guarantors"), various Lenders from time to
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time party thereto, Goldman Sachs Credit Partners L.P. ("GSCP"), as Syndication
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Agent, Canadian Imperial Bank of Commerce, as Administrative Agent (the
"Administrative Agent"), and GSCP and CIBC Oppenheimer Corp., as Co-Lead
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Arrangers.
RECITALS
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I. Capitalized terms used herein which are not herein defined shall have
the meanings ascribed thereto by the Credit Agreement.
II. MEM Holdings, LLC ("MEM"), which is a member of Holdings and which is
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indirectly wholly owned by the Sponsors, desires to make a subordinated loan in
an original principal amount of $3,000,000 to the Borrower pursuant to a note, a
copy of which is attached hereto as Exhibit A (the "Subordinated Note").
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III. The Borrower has requested that the definition of "Permitted Sponsor
Subordinated Debt" in the Credit Agreement be amended in its entirety in order
to permit the Borrower to incur Permitted Sponsor Subordinated Debt from MEM as
well as from the Sponsors.
IV. The Borrower has also requested the consent of the Requisite Lenders
to the terms and conditions of the Subordinated Note as required by the Credit
Agreement. If the Subordinated Note is approved by the Requisite Lenders
pursuant to this Amendment, the loan incurred pursuant to the Subordinated Note
will constitute "Permitted Sponsor Subordinated Debt" under the Credit Agreement
as permitted by Section 6.1(f) of the Credit Agreement.
V. The Borrower has also requested a waiver to allow it to be in
compliance with the Total Leverage Ratio and the Senior Leverage Ratio after
giving effect to the borrowing of the New Tranche B Term Loans.
VI. It is appropriate to amend Section 2.4 of the Credit Agreement to
address the use of proceeds of both Term Loans and Revolving Loans made after
the Closing Date.
THEREFORE, in consideration of the foregoing and the covenants and
conditions hereinafter set forth, and for other good and valuable consideration,
the receipt and adequacy of which are hereby acknowledged, the Borrower, the
Agents and the Lenders signatory hereto, hereby agree as follows:
1. Amendments to Credit Agreement.
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(a) The definition of "Permitted Sponsor Subordinated Debt" in
Section 1.1 of the Credit Agreement, is hereby amended in its entirety to read
as follows:
"`Permitted Sponsor Subordinated Debt' means subordinated unsecured
loans from one or more Sponsors and/or MEM to Holdings or Borrower,
provided (i) prior to the payment in full in Cash of all of the Obligations
no payment in respect of the principal of or interest on any such loan
shall be required or made (unless otherwise approved by Requisite Lenders),
(ii) no such loan shall mature earlier than June 30, 2007, (iii) if any
such loan is to Holdings, the net proceeds thereof shall either be
contributed as Equity Capital to Borrower or loaned to Borrower on the
terms described in clauses (i), (ii) and (iv) hereof (and any such loan to
Borrower from Holdings shall also constitute "Permitted Sponsor
Subordinated Debt") and (iv) in all other respects each such loan shall be
subordinated to all of the Obligations on terms and conditions acceptable
to Requisite Lenders; provided, if any Permitted Sponsor Subordinated Debt
is issued on or prior to the Closing Date, it shall be referred to as
`Closing Date Sponsor Debt'".
(b) The second sentence of Section 2.4 of the Credit Agreement
is hereby amended by deleting the word "Revolving" in the first line thereof.
2. Consent. The terms and conditions of the Subordinated Note are accept
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able to the undersigned, and the loan incurred pursuant to the Subordinated Note
will constitute "Permitted Sponsor Subordinated Debt" under the Credit
Agreement.
3. Waiver. For purposes of calculating each of the Total Leverage Ratio
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and the Senior Leverage Ratio for the period of time from the date of the
proposed borrowing of $30,000,000 of New Tranche B Term Loans until September
29, 1999, the Borrower shall be permitted to reduce the amount of Consolidated
Total Debt by an amount equal to the aggregate amount of Cash and Cash
Equivalents that is maintained from time to time in an account (the "Account")
over which the Administrative Agent has a perfected security interest by means
of control pursuant to a control agreement that is in form and substance
satisfactory to the Administrative Agent; provided that the amount that shall be
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deposited in the Account on the Transition Date shall be equal to the
difference between the aggregate principal amount of New Tranche B Term Loans
and the amount of proceeds of such New Tranche B Term Loans that is used to
prepay Revolving Loans on
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the Transition Date; provided, further, that the outstanding Revolving Loans
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shall be prepaid in their entirety on the Transition Date.
4. Covenants of the Borrower. The Borrower covenants and agrees that (a)
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the proceeds of the Subordinated Note shall be used for Transaction Costs and
working capital and other general purposes in a manner permitted by the terms of
the Credit Agreement, (b) no transfer or assignment of the Subordinated Note
shall be effected except as set forth in Section 11 of the Subordinated Note and
(c) no amendment to or waiver of the Subordinated Note shall be effected except
as set forth in Section 15 of the Subordinated Note.
5. Effectiveness. This Amendment shall not be effective until such time
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as the Credit Parties and as many Lenders as may be necessary to comprise the
"Requisite Lenders" have indicated their consent by the execution and delivery
of the signature pages hereof to the Administrative Agent.
6. Representations and Warranties of the Borrower. The Borrower hereby
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represents and warrants to the Administrative Agent and the Lenders that:
(a) the execution, delivery and performance of this Amendment have
been duly authorized by all necessary action on the part of the Borrower. The
execution, delivery and performance by the Borrower of this Amendment and the
consummation of the transactions contemplated by this Amendment do not and will
not (a) violate any provision of any law or governmental rule or regulation
applicable to the Borrower, the Organizational Documents of the Borrower, or any
order, judgment or decree of any court or other agency of governmental binding
on the Borrower, (b) conflict with, result in a breach of or constitute (with
due notice or lapse of time or both) a default under any Contractual Obligation
of the Borrower (including, without limitation, the Senior Subordinated Note
Indenture), (c) result in or require the creation or imposition of any Lien upon
any of the properties or assets of the Borrower or any of its Subsidiaries, or
(d) require the approval of members of the Borrower or any approval or consent
of any Person under any Contractual Obligation, except for such approvals or
consents which will be obtained on or before the date hereof and disclosed in
writing to the Lenders and except for any such approvals or consents the failure
of which to obtain will not have a Material Adverse Effect;
(b) this Amendment and each Credit Document has been duly executed
and delivered by the Borrower and is the legally valid and binding obligation of
the Borrower, enforceable against the Borrower in accordance with its respective
terms, except as may be limited by bankruptcy, insolvency, reorganization,
moratorium or similar laws relating to or limiting creditors' rights generally
or by equitable principles relating to enforceability;
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(c) on or as of the date hereof, and both before and after giving
effect to this Amendment and the transactions contemplated hereunder, no Default
or Event of Default has occurred and is continuing; and
(d) the representations and warranties of the Borrower and the other
Credit Parties contained in the Credit Agreement and the Credit Documents are
true and correct on and as of the date hereof as if made on and as of the date
hereof, except to the extent such representations and warranties expressly
relate to a specific date.
7. Acknowledgments and Covenants of the Borrower. The Borrower hereby
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(a) reaffirms and admits the validity and enforceability of the Credit Agreement
and the other Credit Documents and all of its obligations thereunder, (b) agrees
and admits that it has no defenses to or offsets against any of its obligations
to the Administrative Agent or any Lender under the Credit Documents, and (c)
agrees to pay all of expenses of the Agents (including counsel fees and
disbursements) incurred in connection with the preparation, negotiation and
completion of this Amendment.
8. Status of Credit Documents. This Amendment is limited solely for the
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purposes and to the extent expressly set forth herein, and, except as expressly
modified hereby, the terms, provisions and conditions of the Credit Documents
and the Liens granted thereunder shall continue in full force and effect and are
hereby ratified and confirmed in all respects.
9. Counterparts. This Amendment may be executed in any number of
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counterparts all of which, taken together, shall constitute one Amendment. In
making proof of this Amendment, it shall only be necessary to produce the
counterpart executed and delivered by the party to be charged.
10. Governing Law. THIS AMENDMENT AND THE RIGHTS AND OBLIGATIONS OF THE
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PARTIES HEREUNDER SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED AND ENFORCED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK (INCLUDING SECTION 5-1401 OF
THE GENERAL OBLIGATIONS LAW OF THE STATE OF NEW YORK), WITHOUT REGARD TO
CONFLICT OF LAWS PRINCIPLES THEREOF.
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IN WITNESS WHEREOF, the parties hereto have caused this First Amendment and
Consent to be duly executed and delivered by their respective officers thereunto
duly authorized as of the date first written above.
MUZAK LLC
By:_____________________________
Name:___________________________
Title:__________________________
CANADIAN IMPERIAL BANK OF COM-
MERCE, as Administrative Agent, Issuing
Bank and a Lender
By:_______________________________
Name:_____________________________
Title:____________________________
GOLDMAN SACHS CREDIT PARTNERS L.P.
By:_______________________________
Name:_____________________________
Title:____________________________
BANKBOSTON, N.A.
By:_______________________________
Name:_____________________________
Title:____________________________
MAGNETITE ASSET INVESTORS LLC
By:_______________________________
Name:_____________________________
Title:____________________________
KZH CNC LLC
By:_______________________________
Name:_____________________________
Title:____________________________
NORTH AMERICAN SENIOR FLOATING
RATE FUND
By: CypressTree Investment Management
Company, Inc. as Portfolio Manager
By:_______________________________
Name:_____________________________
Title:____________________________
CYPRESSTREE SENIOR FLOATING
RATE FUND
By: CypressTree Investment Management
Company, Inc. as Portfolio Manager
By:_______________________________
Name:_____________________________
Title:____________________________
KZH CYPRESSTREE-1 LLC
By:_______________________________
Name:_____________________________
Title:____________________________
CYPRESSTREE INVESTMENT FUND, LLC
By: CypressTree Investment Management
Company, Inc. its Managing Member
By:_______________________________
Name:_____________________________
Title:____________________________
CYPRESSTREE INVESTMENT
PARTNERS I, LTD.
By: CypressTree Investment Management
Company, Inc. as Portfolio Manager
By:_______________________________
Name:_____________________________
Title:____________________________
CYPRESS TREE INSTITUTIONAL
FUND, LLC
By: CypressTree Investment Management
Company, Inc. its Managing Member
By:______________________________
Name:____________________________
Title:___________________________
FREMONT INVESTMENT & LOAN
By:______________________________
Name:____________________________
Title:___________________________
MERRILL LYNCH SENIOR FLOATING
RATE FUND, INC.
By:______________________________
Name:____________________________
Title:___________________________
MERRILL LYNCH PRIME RATE
PORTFOLIO
By: Merrill Lynch Asset Management, L.P.,
as Investment Advisor
By:______________________________
Name:____________________________
Title:___________________________
NEW YORK LIFE INSURANCE
COMPANY
By:______________________________
Name:____________________________
Title:___________________________
SEQUILS I, LTD
By: TCW Advisors, Inc. as its Collateral
Manager
By:_______________________________
Name:_____________________________
Title:____________________________
TORONTO DOMINION BANK
By:_______________________________
Name:_____________________________
Title:____________________________
VAN KAMPEN PRIME RATE INCOME TRUST
By:_______________________________
Name:_____________________________
Title:____________________________
COAST BUSINESS CREDIT, a division of
SOUTHERN PACIFIC BANK
By:_______________________________
Name:_____________________________
Title:____________________________
GREAT POINT CLO 1999-1 LTD.
By:_______________________________
Name:_____________________________
Title:____________________________
By signing below, the Guarantors (w) ratify and
reaffirm the Credit Documents to which they are
a party, (x) acknowledge this Amendment and (y) agree
and admit that they have no defenses or offsets
against any of their obligations to the Administrative
Agent or any Lender under the Credit Documents.
MUZAK HOLDINGS LLC
By:_______________________________
Name:_____________________________
Title:____________________________
MUZAK CAPITAL CORPORATION
By:_______________________________
Name:_____________________________
Title:____________________________
MLP ENVIRONMENTAL MUSIC, LLC
By:_______________________________
Name:_____________________________
Title:____________________________
ELECTRO-SYSTEMS CORPORATION
By:_______________________________
Name:_____________________________
Title:____________________________
BUSINESS SOUND, INC.
By:_______________________________
Name:_____________________________
Title:____________________________