FOURTH AMENDMENT AND WAIVER
---------------------------
FOURTH AMENDMENT AND WAIVER (this "AMENDMENT"), dated as of
August 2, 2000, to the Credit and Guaranty Agreement, dated as of March 18,
1999, as amended by the First Amendment and Consent, dated as of July 1, 1999,
the Second Amendment and Consent, dated as of October 26, 1999 and the Third
Amendment, dated as of January 14, 2000 (as the same may be further amended,
supplemented or otherwise modified from time to time, the "Credit Agreement"),
among Muzak LLC, formerly known as Audio Communications Network, LLC (the
"Borrower"), Muzak Holdings LLC ("Holdings") and certain Subsidiaries of the
Borrower (the "Guarantors"), various Lenders from time to time party thereto,
Goldman Sachs Credit Partners L.P. ("GSCP"), as Syndication Agent, Canadian
Imperial Bank of Commerce, as Administrative Agent (the "Administrative Agent"),
and GSCP and CIBC Oppenheimer Corp., as Co-Lead Arrangers.
RECITALS
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1 . Capitalized terms used herein which are not herein defined shall
have the meanings ascribed thereto by the Credit Agreement.
2. The Borrower and Lenders desire to make certain amendments as set
forth below.
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
parties hereto agree as follows:
1. Amendments to Credit Agreement.
(a) Consolidated Operating Cash Flow. The definition of
Consolidated Operating Cash Flow in Section 1.1 of the Credit Agreement is
hereby amended by (x) moving the word "minus" that appears in the third to the
last line thereof from before the "(ii)" to after the "(ii)" thereof and (y)
inserting the following as new clauses (iii) and (iv) thereof:
", (iii) minus for the first Fiscal Quarter
of Fiscal Year 2000, an amount equal to $803,000 as a charge
to costs of music and business services revenues resulting
from the contract negotiations between Borrower and EchoStar
Satellite Corporation and (iv) plus for the second Fiscal
Quarter of Fiscal Year 2000, an amount equal to $803,000,
representing the charge to costs of music and business
services revenues resulting from the contract
negotiations between Borrower and EchoStar Satellite
Corporation adjusted for in the first Fiscal Quarter of Fiscal
Year 2000."
(b) Mandatory Prepayments/Reductions. Section 2.12(e)(iii) of
the Credit Agreement is hereby amended in its entirety as follows:
"(iii) No later than the first Business Day following
the date of receipt by Holdings of any Preferred Stock Proceeds,
Borrower shall prepay all outstanding Revolving Loans to the full
extent thereof with the amount of Preferred Stock Proceeds."
(c) Indebtedness.
(i) Section 6.1(l) of the Credit Agreement is hereby amended
by deleting the reference to "$5,000,000" contained therein and substituting a
reference to "$1,000,000" therefor.
(ii) Section 6.1(o) of the Credit Agreement is hereby amended
by deleting the reference to "$2,500,000" contained therein and substituting a
reference to "$9,000,000" therefor.
(iii) Section 6.1(r) of the Credit Agreement is hereby amended
by replacing clause (ii) thereof in its entirety with the following:
"(ii) Holdings shall contribute the
Preferred Stock Proceeds thereof to Borrower as Equity Capital
and thereafter the Preferred Stock Proceeds thereof shall be
applied by Borrower as follows: (A) first, Borrower shall make
the mandatory prepayment required pursuant to Section
2.12(e)(iii), (B) next, Borrower may redeem the Floating Rate
Subordinated Notes to the extent permitted pursuant to Section
6.4(a)(xiv), (C) next, Borrower may repay Permitted Sponsor
Subordinated Debt to the extent permitted pursuant to Section
6.4(a)(x), (D) finally, Borrower may use any remaining
Preferred Stock Proceeds to make Permitted Acquisitions,"
(d) Restricted Payments; Restrictions on Subsidiary
Distributions. Section 6.4(a)(xiv) of the Credit Agreement is hereby amended by
adding (x) the words "or Preferred Stock Proceeds" immediately following the
initial reference to Net Additional Proceeds (y) the words "or Section
2.12(e)(iii), as applicable" immediately following the reference to
2.12(d)(ii)(A) and (z) the words "or Holdings Preferred Stock, as applicable,"
after the reference to Additional Series Subordinated Notes.
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(e) Interest Coverage Ratio. Section 6.6(a) of the Credit
Agreement is hereby amended by deleting the table contained therein and
substituting the following therefor:
===============================================
Period Ratio
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Closing Date - 12/31/99 1.60:1.00
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1/1/00 - 3/31/00 1.80:1.00
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4/1/00 - 12/31/00 1.65:1.00
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1/1/01 - 12/31/01 2.00:1.00
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1/1/02 - 12/31/02 2.25:1.00
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1/1/03 and thereafter 2.50:1.00
===============================================
(f) Maximum Consolidated Capital Expenditures. Section 6.6(e)
of the Credit Agreement is hereby amended by deleting the reference to
"$32,000,000" contained in the table therein for Fiscal Year 2000 and
substituting a reference to "$38,000,000" therefor.
(g) Fundamental Changes; Disposition of Assets; Acquisitions.
Section 6.7(f)(iii) of the Credit Agreement is hereby amended by replacing
clause (F) thereof in its entirety with the following:
"(F) an amount equal to the Preferred Stock
Proceeds in connection with any issuance of Holdings Preferred
Stock during such fiscal year, less an amount equal to the sum
of (x) the amount of any repayment of Permitted Sponsor
Subordinated Debt made with such proceeds during such fiscal
year and (y) an amount equal to the aggregate Net Floating
Rate Notes Proceeds in connection with any issuance of
Floating Rate Subordinated Notes,"
2. Limited Waivers; Total Leverage Ratio and Interest Coverage Ratio.
The Lenders party hereto hereby agree to waive the provisions of (y) Section
6.6(a) with respect to the Fiscal Quarter ending March 31, 2000; provided that,
the Interest Coverage Ratio for the period ending on such date is not less than
1.75:1.00 and (z) Section 6.6(c) for the period commencing April 1, 2000 through
the period ending on June 30, 2000; provided that, at all times during such
period, the Total Leverage Ratio shall not exceed 6.25:1.00.
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The provisions of the foregoing waiver shall be limited
precisely as written and shall not affect any other provisions of the Credit
Documents or affect any of the rights or remedies of the Agents or Lenders
except as provided above.
3. Effectiveness. This Amendment shall not be effective until such time
as (a) the Credit Parties, Administrative Agent, and Requisite Lenders shall
have indicated their consent by the execution and delivery of the signature
pages hereof to Administrative Agent, (b) Borrower shall have paid all accrued
costs, fees and expenses of each Agent in connection with this Amendment,
including, without limitation, all accrued fees and expenses of counsel to
Agents and (c) Borrower shall have paid to Administrative Agent, on behalf of
each Lender that has signed this Amendment, a non-refundable amendment fee equal
to 0.1 % of the total amount of outstanding Loans and unfunded Revolving
Commitments of such Lenders, such fee to be allocated among such Lenders in
accordance with their Pro Rata Shares.
4. Representations and Warranties of Each Credit Party. Each Credit
Party hereby 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 each Credit
Party. The execution, delivery and performance by each Credit Party 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 such Credit Party, the
Organizational Documents of such Credit Party, or any order, judgment or decree
of any court or other agency of governmental binding on any Credit Party, (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 any Credit Party
(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 any Credit Party or any of its Subsidiaries, or (d)
require the approval of members of any Credit Party 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 each Credit Party and is the legally valid and binding
obligation of such Credit Party, enforceable against such Credit Party 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 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 each Credit Party
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.
5. Acknowledgments and Covenants of Each Credit Party. Each Credit
Party hereby (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 Co-Agents
(including counsel fees and disbursements) incurred in connection with the
preparation, negotiation and completion of this Amendment.
6. Status of Credit Documents. This Amendment is limited solely for the
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.
7. Counterparts. This Amendment may be executed in any number of
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.
8. Governing Law. THIS AMENDMENT AND THE RIGHTS AND OBLIGATIONS OF THE
PARTIES HEREUNDER SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED AND ENFORCED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO CONFLICT OF
LAWS PRINCIPLES THEREOF.
[Remainder of page intentionally left blank]
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IN WITNESS WHEREOF, the parties hereto have caused this
Fourth Amendment and Waiver to be duly executed and delivered by their
respective officers thereunto duly authorized as of the date first written
above.
MUZAK LLC
By: /s/
-------------------------------
Name:
Title:
S-1
CANADIAN IMPERIAL BANK OF COMMERCE,
as Administrative Agent and a Lender
By: /s/
-------------------------------
Name:
Title:
S-2
GOLDMAN SACHS CREDIT PARTNERS L.P.,
as Syndication Agent and a Lender
By: /s/
-------------------------------
Authorized Signatory
S-3
FLEET NATIONAL BANK,
as Issuing Bank and a Lender
By: /s/
-------------------------------
Name:
Title:
S-4
COAST BUSINESS CREDIT,
a division of SOUTHERN PACIFIC BANK
By: /s/
-------------------------------
Name:
Title:
S-5
KZH CNC LLC
By: /s/
-------------------------------
Name:
Title:
S-6
NORTH AMERICAN SENIOR FLOATING RATE FUND
By: CypressTree Investment Management Company, Inc.
as Portfolio Manager
By: /s/
-------------------------------
Name:
Title:
S-7
CYPRESSTREE SENIOR FLOATING RATE FUND
By: CypressTree Investment Management Company, Inc.
as Portfolio Manager
By: /s/
-------------------------------
Name:
Title:
S-8
KZH CYPRESSTREE-1 LLC
By: /s/
-------------------------------
Name:
Title:
S-9
CYPRESSTREE INVESTMENT FUND, LLC
By: CypressTree Investment Management Company, Inc.
its Managing Member
By: /s/
-------------------------------
Name:
Title:
S-10
CYPRESSTREE INVESTMENT PARTNERS I, LTD.
By: CypressTree Investment Management Company, Inc.
as Portfolio Manager
By: /s/
-------------------------------
Name:
Title:
S-11
CYPRESSTREE INSTITUTIONAL FUND, LLC
By: CypressTree Investment Management Company, Inc.
its Managing Member
By: /s/
-------------------------------
Name:
Title:
S-12
CYPRESSTREE INVESTMENT MANAGEMENT COMPANY, INC.
As: Attorney-in-Fact and on behalf of
First Allmerica Financial Life Insurance Company as
Portfolio Manager
By: /s/
-------------------------------
Name:
Title:
S-13
FREMONT INVESTMENT & LOAN
By: /s/
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Name:
Title:
S-14
MERRILL LYNCH SENIOR
FLOATING RATE FUND, INC.
By: /s/
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Name:
Title:
S-15
MERRILL LYNCH SENIOR
FLOATING RATE FUND II, INC.
By: /s/
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Name:
Title:
S-16
MERRILL LYNCH PRIME RATE PORTFOLIO
By: Merrill Lynch Investment Managers, L.P.,
as Investment Advisor
By: /s/
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Name:
Title:
S-17
MERRILL LYNCH SENIOR HIGH INCOME
PORTFOLIO, INC.
By: /s/
-------------------------------
Name:
Title:
S-18
MERRILL LYNCH GLOBAL INVESTMENT FUND
BANK LOAN INCOME PORTFOLIO
By: /s/
-------------------------------
Name:
Title:
S-19
WINGED FOOT FUNDING TRUST
By: /s/
-------------------------------
Name:
Title:
S-20
NEW YORK LIFE INSURANCE COMPANY
By: /s/
-------------------------------
Name:
Title:
S-21
SANKATY ADVISORS, INC., as Collateral Manager for
GREAT POINT CLO 1999-1 LTD., as Term Lender
By: /s/
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Name:
Title:
S-22
SAWGRASS TRADING LLC
By: /s/
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Name:
Title:
S-23
SRF TRADING, INC.
By: /s/
-------------------------------
Name:
Title:
S-24
STEIN, ROE AND FARNHAM CLO I
By: /s/
-------------------------------
Name:
Title:
S-25
THE TORONTO-DOMINION BANK
By: /s/
-------------------------------
Name:
Title:
S-26
VAN KAMPEN PRIME RATE INCOME TRUST
By: /s/
-------------------------------
Name:
Title:
S-27
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 AUDIO ENVIRONMENTS, INC.
By: /s/ By: /s/
------------------------------ ------------------------------
Name: Name:
Title: Title:
MUZAK CAPITAL CORPORATION TELEPHONE AUDIO PRODUCTIONS, INC.
By: /s/ By: /s/
------------------------------ ------------------------------
Name: Name:
Title: Title:
MLP ENVIRONMENTAL MUSIC, LLC BACKGROUND MUSIC BROADCASTERS, INC.
By: /s/ By: /s/
------------------------------ ------------------------------
Name: Name:
Title: Title:
ELECTRO-SYSTEMS CORPORATION MUZAK HOUSTON, INC.
By: /s/ By: /s/
------------------------------ ------------------------------
Name: Name:
Title: Title:
BUSINESS SOUND, INC. VORTEX SOUND COMMUNICATIONS
COMPANY, INC.
By: /s/ By: /s/
------------------------------ ------------------------------
Name: Name:
Title: Title:
BI ACQUISITION, LLC MUSIC INCORPORATED
By: /s/ By: /s/
------------------------------ ------------------------------
Name: Name:
Title: Title:
S-28