SECOND AMENDMENT AND CONSENT
SECOND AMENDMENT AND CONSENT (this "AMENDMENT"), dated as of
October 26, 1999, 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
(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
1. Capitalized terms used herein which are not herein defined shall have
the meanings ascribed thereto by the Credit Agreement.
2. The Borrower has requested the ability to (a) incur indebtedness in
favor of one or more sellers in connection with Permitted Acquisitions and (b)
secure certain of that indebtedness.
3. The Borrower has requested that it be permitted to issue additional
senior subordinated notes that will be substantially the same as the Senior
Subordinated Notes (the "Additional Senior Subordinated Notes") and that
Holdings be permitted to issue Preferred Stock (the "Holdings Preferred Stock").
4. The Borrower has requested the ability to increase the Revolving
Commitments or the aggregate Tranche B Term Loan Amount by an additional
$30,000,000.
5. MEM desires to make a subordinated loan to Holdings or Borrower in an
aggregate principal amount of $20,000,000 pursuant to a promissory note, a copy
of which is attached hereto as Annex A (the "Subordinated Note").
6. The Borrower has requested the consent of Requisite Lenders to the
terms and conditions of the Subordinated Note as currently required by the
Credit Agreement. If the Subordinated Note is approved by Requisite Lenders
pursuant to this Amendment, the loan incurred pursuant to the Subordinated Note
will constitute "Permitted Sponsor Subordinated Debt" as permitted by Section
6.1(f) of the Credit Agreement.
7. The Borrower has requested that Requisite Lenders approve the form of
the Subordinated Note for use in connection with future issuances of Permitted
Sponsor
Subordinated Debt, and, if approved, the Subordinated Note will constitute
a permitted form of "Permitted Sponsor Debt Agreement" and will be added as
Exhibit J to the Credit Agreement.
8. The Borrower has requested that the Credit Agreement be amended in
order to permit the Borrower to repay certain Permitted Sponsor Subordinated
Debt with either the proceeds of the Additional Senior Subordinated Notes or the
proceeds of the Holdings Preferred Stock.
9. The Borrower has requested the ability to request (i) Documentary
Letters of Credit in addition to Standby Letters of Credit and (ii) Letters of
Credit denominated in either Yen or Dollars.
10. The Borrower has requested that additional Revolving Lenders be
permitted to act in the capacity of Issuing Bank.
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 Co-Agents, the Issuing Bank and the Lenders signatory hereto,
hereby agree as follows:
1. Amendments to Credit Agreement.
(1) Section 1.1 of the Credit Agreement is hereby amended by inserting
the following in alphabetical order thereof:
"'Acquisition Subsidiary' means an Included
Subsidiary that is either acquired or formed simultaneously and in
connection with a Permitted Acquisition."
"'Additional Related Agreements' means, collectively,
the following: (i) the Additional Senior Subordinated Note Related
Documents, (ii) any documentation relating to Permitted Seller Debt,
(iii) any documentation relating to the Holdings Preferred Stock and
(iv) all documents related thereto."
"'Additional Senior Subordinated Note Indenture'
means the indenture pursuant to which the Additional Senior
Subordinated Notes are to be issued, as amended, restated, supplemented
or otherwise modified from time to time to the extent permitted under
Section 6.13."
"'Additional Senior Subordinated Note Related
Documents' means any or all of, as the context may require, (i) the
Additional Senior Subordinated Notes, (ii) the Additional Senior
Subordinated Note Indenture and (iii) any
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other agreements which are related to the Additional Senior
Subordinated Notes or the Additional Senior Subordinated Note
Indenture."
"'Additional Senior Subordinated Notes' means notes
due 2009 or thereafter of Borrower and Muzak Finance to be issued
pursuant to the Additional Senior Subordinated Note Indenture."
"'Agreement Currency' as defined in Section 10.20."
"'Co-Agents' means, collectively, Administrative Agent and Syndication
Agent."
"'Documentary Letter of Credit' means any letter of
credit or similar instrument, in form and substance reasonably
acceptable to the relevant Issuing Bank, issued for the purpose of
providing the primary payment mechanism in connection with the purchase
of any materials, goods or services by Borrower or any Included
Subsidiary in the ordinary course of business."
"'Dollar Equivalent' means at any date of
determination thereof with respect to the face amount of any Letter of
Credit issued in Yen or the obligation to reimburse any amounts drawn
under (or other amounts owing with respect to) any such Letter of
Credit in Yen, an amount in Dollars equivalent to such face amount or
the amount so drawn or owing, as applicable, calculated at the rate of
exchange quoted by Administrative Agent two Business Days prior to such
date of determination (at the hour on such date at which it customarily
makes such determination) to prime banks in the interbank market where
its foreign currency exchange operations in respect of Yen are then
being conducted for the spot purchase of Yen with Dollars."
"'Excess Net Additional Proceeds' means any remaining
Net Additional Proceeds in excess of the sum of (i) the aggregate
amount of mandatory prepayments required pursuant to Section
2.12(d)(ii)(A), (ii) the aggregate amount of any repayments of
Permitted Sponsor Subordinated Debt permitted to be made with Net
Additional Proceeds pursuant to Section 6.4(a)(x), and (iii)
$20,000,000 (such $20,000,000 amount, or any lesser amount of Net
Additional Proceeds remaining after application of the amounts referred
to in clauses (i) and (ii), shall hereafter be referred to as the
'First Acquisition Basket')."
"'First Acquisition Basket' as defined in the
definition of Excess Net Additional Proceeds."
"'Foreign L/C Sublimit' means the lesser of (i)
$4,500,000 and (ii) the aggregate unused amount of the Revolving
Commitments then in effect."
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"'Foreign L/C Usage' means, at any date of
determination, the sum of (i) the maximum aggregate amount in the
Dollar Equivalent (calculated as of the most recent date set forth for
such calculation in Section 2.2B) which is, or at any time thereafter
may become, available for drawing under all Letters of Credit
denominated in Yen then outstanding, and (ii) the aggregate amount in
the Dollar Equivalent (calculated as of the most recent date set forth
for such calculation in Section 2.2B) of all drawings under Letters of
Credit denominated in Yen honored by all Issuing Banks and not
theretofore reimbursed by or on behalf of Borrower."
"'Holdings Preferred Stock' means Preferred Stock of
Holdings which satisfies the requirements set forth in Section 6.1(r)."
"'Net Additional Proceeds' means, with respect to the
issuance of the Additional Senior Subordinated Notes, an amount equal
to the Cash proceeds received from such issuance, minus any bona fide
direct costs incurred in connection with such issuance."
"'Payment Currency' as defined in Section 10.20."
"'Permitted Indebtedness' means the permitted amount
of Indebtedness that may be incurred pursuant to the terms of any
Subordinated Indenture at such time without compliance with any
financial covenant test requiring computation restricting the
incurrence of Indebtedness contained in such Subordinated Indenture."
"'Permitted Seller Debt' means Indebtedness that (i)
is issued by Borrower or any Included Subsidiary to a seller as part of
the consideration for a Permitted Acquisition and (ii) satisfies the
requirements set forth in Section 6.1(p)."
"'Permitted Seller Debt Lien' means a Lien securing
Permitted Seller Debt that (i) may be a first priority Lien, (ii) is
incurred by an Acquisition Subsidiary and (iii) satisfies the
requirements set forth in Section 6.2(n)."
"'Permitted Secured Seller Note' means a promissory
note that evidences secured Permitted Seller Debt substantially in the
form of Exhibit K hereto."
"'Permitted Seller Notes' means Permitted Secured
Seller Notes and Permitted Unsecured Seller Notes."
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"'Permitted Unsecured Seller Note' means a promissory
note that evidences unsecured Permitted Seller Debt substantially in
the form of Exhibit L hereto."
"'Preferred Stock Proceeds' means, with respect to
the issuance of the Holdings Preferred Stock, an amount equal to the
Cash proceeds received from such issuance, minus any bona fide direct
costs incurred in connection with such issuance."
"'Reimbursement Amount' as defined in Section
2.2A(d)."
"'Second Acquisition Basket' as defined in Section
2.12(d)(ii)."
"'Securities Account' means the Securities Account
which is defined in, and governed by, the Securities Account
Agreement."
"'Securities Account Agreement' means the Securities
Account Control Agreement dated as of July 14, 1999 among the Borrower,
the Administrative Agent, as Secured Party, and CIBC, as Securities
Intermediary."
"'Subordinated Indentures' means, collectively, the
Senior Subordinated Note Indenture, the Holdings Note Indenture and the
Additional Senior Subordinated Note Indenture."
"'Third Acquisition Basket' as defined in Section
2.12(d)(ii).
"'Uniform Customs' means (i) the Uniform Custom and
Practice for Documentary Credits (1993 Revision), International Chamber
of Commerce Publication No. 500, as the same may be amended from time
to time, or (ii) the International Standby Practices (ISP98),
International Chamber of Commerce Publication No. 590, or any successor
codes of letter of credit practices among banks adopted by any Issuing
Bank in the ordinary course of its business as a letter of credit
issuer."
"'Yen' or '(Y)' means the lawful money of Japan."
(2) The definition of "Business Day" in Section 1.1 of the Credit
Agreement is hereby amended by inserting the following as the new second
sentence thereof:
"With respect to any Letter of Credit denominated in
Yen, the term Business Day shall also exclude any day which is a legal
holiday under the laws
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of Japan or is a day on which banking institutions located in Japan are
authorized or required by law or other governmental action to close."
(3) The definition of "Change of Control" in Section 1.1 of the Credit
Agreement is hereby amended by replacing clause (iii) thereof with the
following:
"(iii) any 'change of control' or similar event
under the Senior Subordinated Note Related Documents, the Holdings Note
Related Documents, the Additional Senior Subordinated Note Related
Documents, or any documentation relating to the Holdings Preferred
Stock shall occur;"
(4) The definition of "Collateral Documents" in Section 1.1 of the
Credit Agreement is hereby amended by inserting ", the Securities Account
Agreement" after the word "Agreement" in the second line thereof.
(5) The definition of "Consolidated Senior Debt" in Section 1.1 of the
Credit Agreement is hereby amended by inserting ", any Additional Senior
Subordinated Notes and any unsecured Permitted Seller Debt" after the word
"Notes" in the second line thereof.
(6) Clause (x) of the definition of "Indebtedness" in Section 1.1 of
the Credit Agreement is hereby amended in its entirety as follows:
"(x) all obligations in respect of any exchange
traded or over the counter derivative transaction, including, without
limitation, under any Interest Rate Agreement or other Hedge Agreement,
in each case whether entered into for hedging or speculative purposes,
calculated as of any date of determination as the net amounts, if any,
that would be required to be paid by such Person if such transaction or
Agreement was terminated on such date;"
(7) The definition of "Issuing Bank" in Section 1.1 of the Credit
Agreement is hereby amended in its entirety as follows:
"'Issuing Bank' means (a) BankBoston, N.A., in its
capacity as issuer of Letters of Credit hereunder, together with its
permitted successors and assigns in such capacity, and (b) any other
Revolving Lender appointed by Borrower and Administrative Agent, with
the consent of such Revolving Lender, in its capacity as issuer of
Letters of Credit hereunder. Unless otherwise specified herein,
'Issuing Bank' shall be used as a collective reference to each Issuing
Bank specified in clauses (a) and (b) above or to any one Issuing Bank
as the context so requires."
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(8) The definition of "Letter of Credit" in Section 1.1 of the Credit
Agreement is hereby amended by inserting the words "Documentary Letters of
Credit and" between the words "means" and "Standby" in the first line thereof.
(9) The definition of "Letter of Credit Usage" in Section 1.1 of the
Credit Agreement is hereby amended in its entirety as follows:
"'Letter of Credit Usage' means, at any date of
determination, the sum of (i) the maximum aggregate amount in Dollars
and in the Dollar Equivalent (calculated as of the most recent date set
forth for such calculation in Section 2.2B) which is, or at any time
thereafter may become, available for drawing under all Letters of
Credit then outstanding, and (ii) the aggregate amount in Dollars and
in the Dollar Equivalent (calculated as of the most recent date set
forth for such calculation in Section 2.2B) of all drawings under
Letters of Credit honored by all Issuing Banks and not theretofore
reimbursed by or on behalf of Borrower."
(10) The definition of "Permitted Sponsor Debt Agreement" in Section
1.1 of the Credit Agreement is hereby amended in its entirety as follows:
"'Permitted Sponsor Debt Agreement' means any loan
agreement between one or more Sponsors or MEM, on the one hand, and
Holdings or Borrower, on the other hand, as applicable, evidencing
Permitted Sponsor Subordinated Debt, and shall include any promissory
note that is substantially in the form of Exhibit J attached hereto, as
amended, restated, supplemented or otherwise modified from time to time
thereafter to the extent permitted under Section 6.13."
(11) The definition of "Permitted Sponsor Subordinated Debt" in Section
1.1 of the Credit Agreement is hereby amended in its entirety as follows:
"'Permitted Sponsor Subordinated Debt' means
subordinated unsecured loans from one or more Sponsors 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 such loans shall be required or made other than as
permitted by Section 6.4(a)(x) (unless otherwise approved by Requisite
Lenders), (ii) no such loan shall mature earlier than June 30, 2007,
(iii) if such loans are 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) each such loan shall
be made pursuant to (a) a Permitted Sponsor Debt Agreement that is
acceptable to Co-Agents and substantially in the form of Exhibit J or
(b) another form of Permitted Sponsor Debt Agreement that provides that
each such loan is
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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
also be referred to as 'Closing Date Sponsor Debt'."
(12) The definition of "Restricted Junior Payment" in Section 1.1 of
the Credit Agreement is hereby amended by (i) replacing the word "stock" in each
instance where it appears in clauses (i), (ii) and (iii) thereof with the words
"Capital Stock" and (ii) inserting ", any secured Permitted Seller Debt" after
the words "Subordinated Indebtedness" in clause (iv) thereof.
(13) The definition of "Subordinated Indebtedness" in Section 1.1 of
the Credit Agreement is hereby amended in its entirety as follows:
"'Subordinated Indebtedness' means (i) Indebtedness
of Borrower under the Senior Subordinated Note Related Documents, (ii)
Indebtedness of Holdings or Borrower under any Permitted Sponsor Debt
Agreement, (iii) Indebtedness of Borrower under the Additional Senior
Subordinated Note Related Documents, (iv) Indebtedness of Borrower or
any Included Subsidiary constituting unsecured Permitted Seller Debt,
and (v) any other subordinated Indebtedness of any Credit Party of any
type."
(14) The first sentence of Section 2.2(a)(ii) of the Credit Agreement
is hereby amended in its entirety as follows:
"(ii) On no more than three occasions prior to
December 31, 2000, Borrower may by written notice to Administrative
Agent elect to increase either the Revolving Commitments or the
aggregate Tranche B Term Loan Amount (collectively, the 'New
Commitments' or the 'New Tranche B Term Loan Amounts,' as applicable),
by an amount not in excess of $50,000,000 in the aggregate measured on
a cumulative basis from the date of the second amendment to this
Agreement and not less than $10,000,000 individually and integral
multiples of $5,000,000 in excess of that amount; provided, however,
that in order to increase the Revolving Commitments or the aggregate
Tranche B Term Loan Amount in excess of $20,000,000 in the aggregate
measured on a cumulative basis from the date of the second amendment to
this Agreement, (A) Borrower shall have received aggregate gross Cash
proceeds from the issuance of (x) Additional Senior Subordinated Notes
of at least $50,000,000 or (y) Holdings Preferred Stock of at least
$25,000,000 and (B) the Total Leverage Ratio, after giving effect to
each increase in Revolving Commitments and each extension of New
Tranche B Term Loans on a Pro Forma Basis as of the most recently ended
Fiscal Quarter for which a Compliance Certificate has been delivered
pursuant to Section 5.1(d), shall be (1) for the period from the date
of the second amendment
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to this Agreement until December 31, 1999, at least 0.50:1.00 below th
required level set forth for such ratio at such time pursuant to
Section 6.6, and (2) for any period from January 1, 2000 to September
30, 2000, at least 0.25:1.00 below the required level set forth fo
such ratio at such time pursuant to Section 6.6."
(15) The third sentence of Section 2.2(a)(ii) of the Credit Agreement
is hereby amended by (i) deleting the "and" at the end of clause (4) thereof,
(ii) inserting "; and" at the end of clause (5) thereof and (iii) adding the
following as new clause (6) thereof:
"(6) except as otherwise required pursuant to the
first sentence hereof, Borrower and its Subsidiaries shall be in
compliance with Section 6.6, after giving effect to each increase in
Revolving Commitments and each extension of New Tranche B Term Loans on
a Pro Forma Basis as of the most recently ended Fiscal Quarter for
which a Compliance Certificate has been delivered pursuant to Section
5.1(d);"
(16) Section 2.2(a)(ii) of the Credit Agreement is hereby amended by
inserting the following after the fifth sentence thereof:
"The proceeds of New Tranche B Term Loans may be
deposited in the Securities Account and for purposes of calculating
each of the Total Leverage Ratio and the Senior Leverage Ratio for 90
days from the date any such Loans are deposited, 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 the Securities Account, it being
understood that the amount of Consolidated Total Debt shall never be
reduced by an amount in excess of the aggregate amount of Cash and Cash
Equivalents that is actually maintained in the Securities Account at
the time of any calculation of such Consolidated Total Debt amount."
(17) The second sentence of Section 2.2(c) of the Credit Agreement is
hereby amended in its entirety as follows:
"At any time that the sum of the Total Utilization of
Revolving Commitments and the Term Loan Exposure, either before or
after giving effect to any proposed borrowing, equals or exceeds, or
would equal or exceed, the amount of Permitted Indebtedness at such
time, each Funding Notice shall be accompanied by a certificate of
Borrower, executed on behalf of Borrower by an Authorized Officer,
demonstrating in reasonable detail compliance with all applicable
covenants contained in each Subordinated Indenture that restrict the
incurrence of Indebtedness (as defined therein)."
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(18) Section 2.2A(a) of the Credit Agreement is hereby amended in its
entirety as follows:
"(a) During the Revolving Commitment Period, subject
to the terms and conditions hereof, Borrower may request from time to
time that any Issuing Bank issue Letters of Credit for the account of
Borrower for the purposes specified in the definitions of Documentary
Letter of Credit and Standby Letter of Credit; provided, Borrower shall
not request that any Issuing Bank issue, and no Issuing Bank shall
issue:
(i) any Letter of Credit if, after giving
effect to such issuance, the Total Utilization of Revolving
Commitments would exceed the Revolving Commitments then in
effect;
(ii) any Letter of Credit if, after giving
effect to such issuance, (A) the Letter of Credit Usage would
exceed the Letter of Credit Sublimit then in effect or (B) the
Foreign L/C Usage would exceed the Foreign L/C Sublimit then
in effect;
(iii) any Standby Letter of Credit having an
expiration date later than the earlier of (A) five (5) days
prior to the Revolving Commitment Termination Date and (B) the
date which is one year from the date of issuance of such
Standby Letter of Credit; subject to the foregoing, any
Issuing Bank may agree that a Standby Letter of Credit will
automatically be extended for one or more successive periods
not to exceed one year each unless such Issuing Bank elects
not to extend for any such additional period; provided, no
Issuing Bank shall extend any such Standby Letter of Credit if
it has received written notice that a Default or an Event of
Default has occurred and is continuing at the time such
Issuing Bank must elect to allow such extension;
(iv) any Documentary Letter of Credit (A)
having an expiration date later than the earlier of (x) thirty
(30) days prior to the Revolving Commitment Termination Date
and (y) the date which is one hundred eighty (180) days from
the date of issuance of such Documentary Letter of Credit or
(B) that is otherwise unacceptable to any Issuing Bank in its
reasonable discretion; and
(v) any Letter of Credit denominated in a
currency other than Dollars or Yen; provided however, a Letter
of Credit will only be issued in Yen if, as of the proposed
date of issuance of such Letter of Credit, the relevant
Issuing Bank determines, in its reasonable judgment (which
shall be binding on Revolving Lenders), that Yen are available
in
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sufficient amount, at a reasonable cost and are otherwise
freely convertible and exchangeable into Dollars."
(19) Section 2.2A(b) of the Credit Agreement is hereby amended in its
entirety as follows:
"Borrower may request that an Issuing Bank issue a
Letter of Credit by delivering to Administrative Agent and such Issuing
Bank an Issuance Notice no later than 12:00 Noon (New York City time)
at least three Business Days (in the case of Standby Letters of Credit)
or five Business Days (in the case of Documentary Letters of Credit),
or in each case such shorter period as may be agreed to by such Issuing
Bank in any particular instance, in advance of the proposed date of
issuance. Pursuant to the Issuance Notice, Borrower may request that a
Letter of Credit be denominated in either Dollars or Yen. Upon
satisfaction or waiver of the conditions set forth in Section 3.2 and
subject to Section 2.2A(a), such Issuing Bank shall issue the requested
Letter of Credit in accordance with such Issuing Bank's standard
operating procedures; provided, however, that no Letter of Credit shall
require payment against a conforming draft or other request for payment
to be made thereunder on the same business day (under the laws of the
jurisdiction in which the office of such Issuing Bank to which such
draft or other request for payment is required to be presented is
located) that such draft or other request for payment is presented if
such presentation is made after 10:00 a.m. (in the time zone of such
Issuing Bank) on such Business Day. Each Issuing Bank shall promptly
notify Administrative Agent of the issuance of any Letter of Credit and
shall provide Administrative Agent with a copy of such Letter of
Credit. Administrative Agent shall promptly notify each other Revolving
Lender of such issuance and the amount of such Revolving Lender's
respective participation in such Letter of Credit pursuant to Section
2.2A(e). In the event of any inconsistency between the terms and
conditions of this Agreement and the terms and conditions of any form
of letter of credit application or other agreement submitted by
Borrower to, or entered into by Borrower with, any Issuing Bank
relating to any Letter of Credit, the terms and conditions of this
Agreement shall control. Within fifteen (15) days after the end of each
month, each Issuing Bank shall deliver to Administrative Agent, and
Administrative Agent shall deliver to each other Revolving Lender, with
respect to each Letter of Credit issued by such Issuing Bank that was
outstanding during such month, a report setting forth (x) the daily
aggregate amount available to be drawn under each such Letter of Credit
and (y) such other information as may be reasonably requested by
Administrative Agent with respect to such Letter of Credit."
(20) Section 2.2A(d) of the Credit Agreement is hereby amended in its
entirety as follows:
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"(d) Borrower agrees to reimburse each Issuing Bank
for the amount of (i) any drawing honored under a Letter of Credit and
(ii) any Taxes, fees, charges or other costs or expenses reasonably
incurred by such Issuing Bank in connection with such honored drawing
(including any such costs and expenses related to any conversion of any
such amount into Dollars as contemplated hereunder) (the "Reimbursement
Amount"). In the event any Issuing Bank has determined to honor a
drawing under a Letter of Credit, it shall immediately notify Borrower
and Administrative Agent, and Borrower shall reimburse such Issuing
Bank prior to 10:00 a.m. (New York City time) on or before the Business
Day immediately following the date on which the Issuing Bank has
determined to honor a drawing (the "Reimbursement Date"), in an amount
equal to the Reimbursement Amount in the currency in which the relevant
Letter of Credit was issued and in same day funds at the office of such
Issuing Bank specified in such notice. Anything contained herein to the
contrary notwithstanding, (A) unless Borrower shall have notified
Administrative Agent and the relevant Issuing Bank prior to 10:00 a.m.
(New York City time) on the Reimbursement Date that Borrower intends to
reimburse such Issuing Bank for the amount of such honored drawing with
funds other than the proceeds of Revolving Loans, Borrower shall be
deemed to have given a timely Funding Notice to Administrative Agent
requesting Lenders to make Revolving Loans that are Alternate Base Rate
Loans on the Reimbursement Date in an amount in Dollars equal to the
Reimbursement Amount, or with respect to any drawing honored in Yen, in
an amount in Dollars equivalent to the Reimbursement Amount (calculated
on the date prior to the Reimbursement Date by the relevant Issuing
Bank at the rate of exchange then available to such Issuing Bank in the
interbank market where its foreign currency exchange operations in
respect of Yen are then being conducted), and (B) subject to
satisfaction or waiver of the conditions specified in Section 3.2,
Revolving Lenders shall, on the Reimbursement Date, make such Revolving
Loans, the proceeds of which shall be applied directly by
Administrative Agent to reimburse such Issuing Bank. If for any reason
proceeds of Revolving Loans are not received by any Issuing Bank on the
Reimbursement Date in an amount in Dollars equal or equivalent to, as
applicable, the Reimbursement Amount, Borrower shall reimburse such
Issuing Bank, in Dollars, on demand, in an amount in same day funds
equal to the excess of (x) an amount in Dollars equal or equivalent to,
as applicable, the Reimbursement Amount (calculated as set forth in
clause (A) of the preceding sentence) over (y) the aggregate amount of
such Revolving Loans, if any, which are so received. Nothing in this
Section 2.2A(d) shall be deemed to relieve any Revolving Lender from
its obligation to make Revolving Loans on the terms and conditions set
forth herein, and Borrower shall retain any and all rights it may have
against any Revolving Lender resulting from the failure of such
Revolving Lender to make such Revolving Loans under this Section
2.2A(d)."
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(21) The second and third sentences of Section 2.2A(e) of the Credit
Agreement are hereby amended in their entirety as follows:
"In the event that Borrower shall fail for any reason
to reimburse any Issuing Bank as provided in Section 2.2A(d), such
Issuing Bank shall promptly notify Administrative Agent of the
unreimbursed portion of the Reimbursement Amount, and Administrative
Agent shall promptly notify each other Revolving Lender of the
unreimbursed portion of the Reimbursement Amount and such Revolving
Lender's respective participation therein based on such Revolving
Lender's Pro Rata Share of the Revolving Commitments. Each other
Revolving Lender shall make available to such Issuing Bank an amount
equal to its respective participation, in Dollars and in same day
funds, at the office of such Issuing Bank specified in such notice, not
later than 12:00 Noon (New York City time) on the first Business Day
after the date notified by Administrative Agent. The Dollar equivalent
of the unreimbursed portion of the Reimbursement Amount, if applicable,
shall be calculated as set forth in clause (A) of the second sentence
of Section 2.2A(d)."
(22) Section 2.2A of the Credit Agreement is hereby amended by adding
the following new paragraphs at the end thereof:
"(i) Each Letter of Credit shall be subject to the
Uniform Customs and, to the extent not inconsistent therewith, the laws
of the State of New York.
(j) No Issuing Bank shall be obligated to issue any
Letter of Credit hereunder if such issuance would conflict with, or
cause such Issuing Bank or any Revolving Lender to exceed any limits
imposed by, such Person's governing documents or any applicable
requirement of any Governmental Authority."
(23) The Credit Agreement is hereby amended by adding the following new
Section 2.2B after Section 2.2A:
"2.2B Dollar Equivalent Calculation. For purposes of
determining the Total Utilization of Revolving Commitments and the
Letter of Credit Usage, Administrative Agent shall determine the Dollar
Equivalent of all issued and outstanding Letters of Credit denominated
in Yen (a) on the date any such Letter of Credit is issued, (b) on any
date any such Letter of Credit is drawn on, (c) on any date on which a
Credit Extension is to be made, (d) on the last Business Day of each
Fiscal Quarter, (e) at any time a Default or Event of Default shall
have occurred and be continuing and (f) on any other date designated by
Administrative Agent. Each Dollar Equivalent shall remain in effect
until recalculated by
13
Administrative Agent. Administrative Agent shall promptly give notice
to Borrower of each calculation of the Dollar Equivalent."
(24) Section 2.9(b)(i) of the Credit Agreement is hereby amended by
inserting "in Dollars or in the Dollar Equivalent, as applicable," between
"amount" and "available" in the first and second lines thereof.
(25) Section 2.12(d) of the Credit Agreement is hereby amended by (i)
adding "(i)" before the first word thereof and (ii) adding the following as new
paragraph (ii) thereof:
"(ii) No later than the first Business Day following
the date of receipt by Holdings, Borrower or any of their Subsidiaries
of any Net Additional Proceeds, Borrower shall prepay the Loans as
follows: (A) first, Borrower shall prepay all outstanding Revolving
Loans to the full extent thereof with the amount of Net Additional
Proceeds necessary therefor and (B) next, Borrower shall prepay the
Loans as set forth in Section 2.13 with any Excess Net Additional
Proceeds in the aggregate amount necessary to cause the Senior Leverage
Ratio to be (1) for the period from the date of the second amendment to
this Agreement to December 31, 1999, at least 0.50:1.00 below the
required level set forth for such ratio at such time pursuant to
Section 6.6 and (2) for any period from January 1, 2000 to December 31,
2000, at least 0.25:1.00 below the required level set forth for such
ratio at such time pursuant to Section 6.6, in each case after giving
effect to such prepayments on a Pro Forma Basis as of the most recently
ended Fiscal Quarter for which a Compliance Certificate has been
delivered pursuant to Section 5.1(d). Borrower shall have the option,
directly or through one or more of its Included Subsidiaries, to make
Permitted Acquisitions within 180 days of receipt of such Net
Additional Proceeds in an amount equal to sum of (1) the First
Acquisition Basket and (2) the amount of any Net Additional Proceeds
remaining after the mandatory prepayments set forth in clauses (A) and
(B) of this Section 2.12(d)(ii) (the amount described in this clause
(2) shall hereafter be referred to as the "Second Acquisition Basket").
Pending any such Permitted Acquisition during such 180-day period,
Borrower shall be permitted to deposit an amount equal to the sum of
the First Acquisition Basket and the Second Acquisition Basket in the
Securities Account, and for purposes of calculating each of the Total
Leverage Ratio and the Senior Leverage Ratio for 90 days from the date
such amounts are deposited, 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 the Securities Account, it being understood that the amount of
Consolidated Total Debt shall never be reduced by an amount in excess
of the aggregate amount of Cash and Cash Equivalents that is actually
maintained in the Securities Account at the time of any calculation of
such Consolidated Total Debt amount. Upon the expiration of
14
such 180 days, Borrower shall prepay the Loans as set forth in Section
2.13 in an aggregate amount equal to the excess, if any, of (x) the sum
of the First Acquisition Basket and the Second Acquisition Basket over
(y) the amount of Net Additional Proceeds that were actually used to
finance Permitted Acquisitions during such 180-day period; provided,
however, that Borrower may retain for an additional 60 days an amount
(the "Third Acquisition Basket") equal to the aggregate Cash
consideration estimated in good faith by Borrower to be payable with
respect to potential Permitted Acquisitions for which there is an
executed purchase agreement, which amount may be used for such
potential Permitted Acquisitions, and, provided, further, that upon the
expiration of such additional 60-day period, Borrower shall prepay the
Loans as set forth in Section 2.13 in an aggregate amount equal to the
excess, if any, of (x) the Third Acquisition Basket and (y) the amount
of such Net Additional Proceeds that were actually used to finance
Permitted Acquisitions during such 60-day period."
(26) Section 2.12(e) of the Credit Agreement is hereby amended by
adding the following as new paragraph (iii) thereof:
"(iii) No later than the first Business Day following
the date of receipt by Holdings of any Preferred Stock Proceeds,
Borrower shall prepay Revolving Loans with 100% of Preferred Stock
Proceeds."
(27) Section 2.13(b) of the Credit Agreement is hereby amended by (i)
replacing "Section 2.12(d)" in paragraph (ii) thereof with "Section 2.12(d)(i)"
and (ii) adding the following as new paragraphs (iii) and (iv) thereof:
"(iii) Any amount required to be paid pursuant to
Section 2.12(d)(ii)(B) shall be applied to prepay the Tranche A Term
Loans and the Tranche B Terms Loan on a pro rata basis (in accordance
with the respective outstanding principal amounts thereof) and shall be
further applied on a pro rata basis to each scheduled Installment of
principal of the Tranche A Term Loans and Tranche B Term Loans.
(iv) Any amount required to be paid pursuant to the
last sentence of Section 2.12(d)(ii) shall be applied as follows:
first, to prepay the Tranche A Term Loans and the
Tranche B Terms Loan on a pro rata basis (in accordance with
the respective outstanding principal amounts thereof) and
shall be further applied on a pro rata basis to each scheduled
Installment of principal of the Tranche A Term Loans and
Tranche B Term Loans;
15
second, to the extent of any remaining portion of
such amount, to prepay the Revolving Loans to the full extent
thereof and to further permanently reduce the Revolving
Commitments by the amount of such prepayment;
third, to prepay outstanding reimbursement
obligations with respect to Letters of Credit and to further
permanently reduce the Revolving Loan Commitments by the
amount of such payment;
fourth, to cash collateralize Letters of Credit as
provided in Section 2.2A and to further permanently reduce the
Revolving Loan Commitments by the amount of such cash
collateralization; and
fifth, to the extent of any remaining portion of such
amount (which remaining portion need not be paid to the
Lenders), to further permanently reduce the Revolving
Commitments to the full extent thereof."
(28) Section 2.13(c) of the Credit Agreement is hereby amended by
replacing "Section 2.13(b)(ii)" with "Sections 2.13(b)(ii), (iii) and (iv)" in
clause (B) of the last sentence thereof.
(29) Section 2.15(a) of the Credit Agreement is hereby amended in its
entirety as follows:
"(a) All payments by Borrower of principal, interest,
fees and other Obligations shall be made in Dollars, in same day funds,
without defense, setoff or counterclaim, free of any restriction or
condition, and delivered to Administrative Agent not later than 12:00
Noon (New York City time) on the date due at Administrative Agent's
Principal Office for the account of Lenders, except that payments to be
made to any Issuing Bank shall be made directly to such Issuing Bank
and except that payments made pursuant to Sections 2.17, 2.18, 2.19,
10.2, 10.3 and 10.20 or otherwise shall be made directly to the Persons
entitled thereto. Funds received after 12:00 Noon (New York City time)
on any due date shall be deemed to have been paid by Borrower on the
next succeeding Business Day."
(30) The second sentence of Section 3.2(a)(i) of the Credit Agreement
is hereby amended in its entirety as follows:
"At any time that the Total Utilization of Revolving
Commitments and the Term Loan Exposure, either before or after giving
effect to any proposed borrowing, equals or exceeds, or would equal or
exceed, the amount of Permitted Indebtedness at such time, each Funding
Notice shall be accompanied by a
16
certificate of Borrower, executed on behalf of Borrower by an
Authorized Officer, demonstrating in reasonable detail compliance with
all applicable covenants contained in each Subordinated Indenture that
restrict the incurrence of Indebtedness (as defined therein);"
(31) Section 3.2(a)(ii) of the Credit Agreement is hereby amended in
its entirety as follows:
"(ii) after making the Credit Extensions requested on
such Credit Date, (A) the Total Utilization of Revolving Commitments
shall not exceed the Revolving Commitments then in effect, (B) the
Letter of Credit Usage shall not exceed the Letter of Credit Sublimit
and (C) the Foreign L/C Usage shall not exceed the Foreign L/C
Sublimit;"
(32) Section 4.2 of the Credit Agreement is hereby amended by adding
the following as new paragraphs (d) and (e) thereof:
"(d) Borrower has the limited liability company power
and authority to issue the Additional Senior Subordinated Notes. The
Additional Senior Subordinated Notes, when issued and paid for, will be
the legally valid and binding obligations of Borrower, enforceable
against Borrower in accordance with their 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. The subordination
provisions of the Additional Senior Subordinated Notes will be
enforceable against the holders thereof and the Loans and all other
monetary Obligations hereunder are and will be within the definition of
'Senior Indebtedness' included in such provisions. The Additional
Senior Subordinated Notes, when issued and sold, will either have been
registered or qualified under applicable federal and state securities
laws or be exempt therefrom.
(e) Borrower has the limited liability company power
and authority to issue the Permitted Seller Notes. The Permitted Seller
Notes, when issued and paid for, will be the legally valid and binding
obligations of Borrower, enforceable against Borrower in accordance
with their 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. The subordination provisions of the secured
Permitted Seller Notes and the unsecured Permitted Seller Notes, if
applicable, will be enforceable against the holders thereof and the
Loans and all other monetary Obligations hereunder are and will be
within the definition of 'Senior Indebtedness' included in such
provisions. The Permitted Seller Notes, when issued and
17
sold, will either have been registered or qualified under applicable
federal and state securities laws or be exempt therefrom."
(33) Section 4.20 of the Credit Agreement is hereby amended by (i)
inserting "(a)" before the first word thereof and (ii) adding the following as
new paragraph (b) thereof:
"(b) Holdings and Borrower shall have delivered to
Co-Agents complete and correct (i) copies of each Additional Related
Agreement and of all exhibits and schedules thereto prior to or as of
the date of execution thereof and (ii) copies of any material
amendment, restatement, supplement or other modification to or waiver
of each Additional Related Agreement entered into after the date
thereof. Except to the extent otherwise expressly set forth herein or
in the schedules hereto, and subject to the qualifications set forth
therein, each of the representations and warranties (a) given by any
Credit Party in any Additional Related Agreement and (b) given in any
Additional Related Agreement by any other party to any Additional
Related Agreement, in each case shall be true and correct in all
material respects as of the date thereof (or as of any earlier date to
which such representation and warranty specifically relates).
Notwithstanding anything in any Additional Related Agreement to the
contrary, the representations and warranties of each Credit Party set
forth in this Section 4.20 shall, solely for purposes hereof, survive
after the date of such Additional Related Agreement for the benefit of
Lenders. All Governmental Authorizations and all other authorizations,
approvals and consents of any other Person required by the Additional
Related Agreements shall have been obtained and shall be in full force
and effect. At the time of consummation of each transaction
contemplated by each Additional Related Agreement, all of the
conditions set forth therein shall have been satisfied and each such
transaction shall have been consummated in accordance with all
applicable laws."
(34) Section 6.1 of the Credit Agreement is hereby amended by (i)
replacing the words "of not less than" in the second line of paragraph (h)
thereof with the words "equal to", (ii) inserting "and the Additional Senior
Subordinated Notes" after the words "Senior Subordinated Notes" in clause (i)
thereof, (iii) deleting the word "and" at the end of paragraph (n) thereof and
(iv) adding the following paragraphs (p), (q) and (r) after paragraph (o)
thereof:
"(p) Indebtedness of Borrower or any of its Included
Subsidiaries in respect of Permitted Seller Debt, provided (i) the
aggregate outstanding principal amount of all such Permitted Seller
Debt shall not exceed $20,000,000 at any time, (ii) such Permitted
Seller Debt shall be unsecured unless it initially represents 80% or
more of the aggregate consideration for any Permitted Acquisition,
18
(iii) if such Permitted Seller Debt initially represents 80% or more of
the aggregate consideration for the applicable Permitted Acquisition
and is secured, it shall (A) be evidenced by a Permitted Secured Seller
Note and (B) be issued by an Acquisition Subsidiary, (iv) if such
Permitted Seller Debt is unsecured, it shall be evidenced by a
Permitted Unsecured Seller Note, (v) no more than ten Permitted Seller
Notes shall be outstanding at any time, (vi) such Permitted Seller Debt
shall mature no earlier than five years from the date of issuance
thereof, (vii) no payment in respect of the principal of any such
Permitted Seller Debt shall be required or made prior to January 1,
2000, (viii) payments in respect of the principal of all outstanding
Permitted Seller Debt shall not exceed an aggregate annual principal
amount of (A) $2,000,000 in 2000, (B) $3,000,000 in 2001 and (C)
$4,000,000 in 2002 and each year thereafter, (ix) no payment in respect
of the principal of any Permitted Seller Debt shall be permitted to be
made if such payment, together with all prior payments in respect of
the principal of such Permitted Seller Debt, would exceed the aggregate
amount of all payments that would have been made at or prior to such
time in respect of such Permitted Seller Debt pursuant to the
application of a straight line amortization schedule, (x) payments in
respect of the principal of and interest on Permitted Seller Debt shall
not be payable more frequently than quarterly, (xi) secured Permitted
Seller Debt shall not bear Cash interest at a rate in excess of 8.5%
per annum, (xii) unsecured Permitted Seller Debt shall not bear Cash
interest at a rate in excess of 10% per annum, (xiii) such Permitted
Seller Debt shall be non-recourse to any Credit Party or any Credit
Party's assets (other than the Credit Party that is the obligor with
respect thereto), and no Credit Party shall guaranty or otherwise incur
any Contingent Obligation with respect to such Permitted Seller Debt,
(xiv) Borrower shall provide Administrative Agent with no less than ten
Business Days' prior written notice of any proposed incurrence of
Permitted Seller Debt, (xv) commencing no less than ten Business Days
in advance of any proposed incurrence of Permitted Seller Debt,
Borrower shall provide Administrative Agent with drafts of all
agreements, documents and information in connection with such proposed
Permitted Seller Debt, including, without limitation, the proposed
purchase agreement for the applicable Permitted Acquisition, the
proposed Permitted Seller Note, and, if such Permitted Seller Debt is
to be secured, the proposed security agreement with respect to such
security interest, and each such agreement and document shall be in
form and substance reasonably satisfactory to Administrative Agent, and
(xvi) Borrower shall deliver to Co-Agents execution copies of each
Additional Related Agreement that relates to any Permitted Seller Debt
and all exhibits and schedules thereto prior to or as of the date of
execution thereof (including, without limitation, copies of any
opinions of counsel delivered to the parties in connection with such
transaction, accompanied by a letter from each such counsel authorizing
Lenders to rely upon such opinion to the same extent as though it were
addressed to Lenders, except in the case of any such legal opinion
rendered by counsel to any Person other than a Credit Party to the
extent such
19
counsel has refused to deliver such a letter on the basis that it is
inconsistent with such counsel's internal policies);
(q) Indebtedness of Borrower and Muzak Finance in
respect of the Additional Senior Subordinated Notes, provided (i) such
Indebtedness (A) shall be unsecured and subordinated to the Obligations
of Borrower hereunder on terms and conditions substantially the same as
(and no less favorable to Lenders than) those applicable to the Senior
Subordinated Notes, other than with respect to the interest rate
thereon, and such terms and conditions shall be otherwise reasonably
satisfactory to Co-Agents, (B) shall mature no earlier than December
31, 2007, (C) shall contain other terms and conditions substantially
the same as (and no less favorable to Lenders than) those applicable to
the Senior Subordinated Notes and such terms and conditions shall be
otherwise reasonably satisfactory to Co-Agents and (D) shall be issued
in one transaction, (ii) Borrower and its Subsidiaries shall be in
compliance with Section 6.6 after giving effect to the proposed
issuance of the Additional Senior Subordinated Notes on a Pro Forma
Basis as of the most recently ended Fiscal Quarter for which a
Compliance Certificate has been delivered pursuant to Section 5.1(d),
(iii) the terms and conditions of the Additional Senior Subordinated
Note Indenture shall be substantially the same as (and no less
favorable to Lenders than) those of the Senior Subordinated Note
Indenture and such terms and conditions shall be otherwise reasonably
acceptable to the Co-Agents, (iv) the Net Additional Proceeds shall be
applied as follows: (A) first, Borrower shall make all mandatory
prepayments required pursuant to Section 2.12(d)(ii)(A), (B) next,
Borrower may repay Permitted Sponsor Subordinated Debt to the extent
permitted pursuant to Section 6.4(a)(x), (C) next, Borrower may use up
to $20,000,000 to make Permitted Acquisitions over a 180-day period (as
such period may be extended by 60 days as set forth in Section
2.12(d)(ii), (D) next, Borrower shall make any mandatory prepayments
required pursuant to Section 2.12(d)(ii)(B), (E) next, Borrower may use
any remaining Net Additional Proceeds to make Permitted Acquisitions
over a 180-day period (as such period may be extended by 60 days as set
forth in Section 2.12(d)(ii)), and (F) finally, to the extent that
Borrower does not make Permitted Acquisitions as permitted during such
180-day period (as such period may be extended by 60 days as set forth
in Section 2.12(d)(ii)), Borrower shall make the mandatory prepayments
required pursuant to the last sentence of Section 2.12(d)(ii), (v) no
Default or Event of Default shall have occurred or be continuing or
would result from such issuance, (vi) Borrower shall provide Co-Agents
with no less than fifteen Business Days' prior written notice of any
proposed issuance of Additional Senior Subordinated Notes, (vii)
commencing no less than fifteen Business Days in advance of any
proposed issuance of Additional Senior Subordinated Notes, Borrower
shall provide Co-Agents with drafts of all proposed Additional Senior
Subordinated Note Related Documents and information in connection with
such proposed issuance, and each such proposed Additional
20
Senior Subordinated Note Related Document shall be in form and
substance reasonably satisfactory to Co-Agents and (viii) Borrower
shall deliver to Co-Agents execution copies of each Additional Senior
Subordinated Note Related Document and all exhibits and schedules
thereto prior to or as of the date of execution thereof (including,
without limitation, copies of any opinions of counsel delivered to the
parties in connection with such transaction, accompanied by a letter
from each such counsel authorizing Lenders to rely upon such opinion to
the same extent as though it were addressed to Lenders, except in the
case of any such legal opinion rendered by counsel to any Person other
than a Credit Party to the extent such counsel has refused to deliver
such a letter on the basis that it is inconsistent with such counsel's
internal policies); and
(r) Holdings Preferred Stock, provided (i) (A) the
terms of such Holdings Preferred Stock shall provide that no Cash
dividends shall be payable or paid thereon until after the fifth
anniversary of the date of issuance thereof, (B) such Holdings
Preferred Stock shall not mature or provide for any repurchase or
redemption thereof, in whole or in part, contingent or otherwise, on or
prior to December 31, 2007, (C) the terms and conditions thereof shall
be reasonably satisfactory to Co-Agents and (D) such Holdings Preferred
Stock shall be issued in one transaction, (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 repay Permitted Sponsor Subordinated Debt to the
extent permitted pursuant to Section 6.4(a)(x), (C) finally, Borrower
may use any remaining Preferred Stock Proceeds to make Permitted
Acquisitions, (iii) Holdings shall provide Co-Agents with no less than
fifteen Business Days' prior written notice of any proposed issuance of
Holdings Preferred Stock, (iv) commencing no less than fifteen Business
Days in advance of any proposed issuance of Holdings Preferred Stock,
Holdings shall provide Co-Agents with drafts of all agreements,
documents and information in connection with such proposed Holdings
Preferred Stock, and each such proposed agreement and document shall be
in form and substance reasonably satisfactory to Co-Agents and (v)
Holdings shall deliver to Co-Agents execution copies of each Additional
Related Agreement that relates to the Holdings Preferred Stock and all
exhibits and schedules thereto prior to or as of the date of execution
thereof (including, without limitation, copies of any opinions of
counsel delivered to the parties in connection with such transaction,
accompanied by a letter from each such counsel authorizing Lenders to
rely upon such opinion to the same extent as though it were addressed
to Lenders, except in the case of any such legal opinion rendered by
counsel to any Person other than a Credit Party to the extent such
counsel has refused to deliver such a letter on the basis that it is
inconsistent with such counsel's internal policies);"
21
(35) Section 6.2 of the Credit Agreement is hereby amended by (i) deleting
the "and" at the end of paragraph (1) thereof, (ii) replacing the period at the
end of paragraph (m) thereof with "; and" and (iii) adding the following as new
paragraph (n) thereof:
"(n) Permitted Seller Debt Liens incurred by an
Acquisition Subsidiary as security for Permitted Seller Debt; provided
(i) such Permitted Seller Debt Liens shall only be permitted to the
extent that such Liens will secure Permitted Seller Debt that initially
represents 80% or more of the aggregate consideration of the applicable
Permitted Acquisition, (ii) such Permitted Seller Debt Liens shall not
at any time cover or encumber any assets or property other than the
assets or property financed by the applicable Permitted Seller Debt,
except that such Permitted Seller Debt Liens may extend to assets or
properties that replace the original assets or properties so financed,
(iii) such Permitted Seller Debt Liens shall not at any time cover or
encumber any after-acquired property of the applicable Acquisition
Subsidiary, except as set forth in clause (ii) with respect to
replacement property, (iv) the applicable secured party shall not at
any time be entitled to receive a percentage of the proceeds or other
payments in respect of such assets or property that would exceed the
percentage of the consideration for such Permitted Acquisition that was
financed with the applicable Permitted Seller Debt (i.e., if 80% of the
consideration for a Permitted Acquisition is financed with Permitted
Seller Debt, then the applicable secured party shall not be entitled to
receive more than 80% of any proceeds or payments in respect of the
assets or property that are securing such Permitted Seller Debt), (v)
Administrative Agent, for the benefit of Lenders, Lender Counterparties
and Indemnitees shall have (A) a valid and perfected Lien covering all
assets and property transferred pursuant to a Permitted Acquisition in
which Permitted Seller Debt was incurred and (B) a valid and perfected
Lien covering all other property of the applicable Acquisition
Subsidiary, and each Lien described in clauses (A) and (B) shall be
prior to all Liens other than any Permitted Liens, and (vi) Borrower
shall have delivered drafts and execution copies of all agreements and
documents governing the terms and conditions of each such Permitted
Seller Debt Lien as required by Section 6.1(p), and each such agreement
and document shall be in form and substance satisfactory to
Administrative Agent."
(36) Section 6.4(a)(ii) of the Credit Agreement is hereby amended in
its entirety as follows:
"(ii) Borrower may make regularly scheduled payments
of interest in respect of the Senior Subordinated Notes and the
Additional Senior Subordinated Notes in accordance with the terms of,
and only to the extent required by, and subject to the subordination
provisions contained in, each of the Senior Subordinated Note
22
Indenture and the Additional Senior Subordinated Note Indenture, as
each su ch Indenture may be amended from time to time to the extent
permitted under Section 6.13;"
(37) Section 6.4(a) is hereby amended by (i) deleting the word "and" at
the end of paragraph (viii) thereof, (ii) replacing the period at the end of
paragraph (ix) thereof with "; and", and (iii) adding the following as new
paragraphs (x), (xi), (xii), and (xiii) thereof:
"(x) if Borrower shall have received (A) aggregate
gross Cash proceeds from the issuance of Additional Senior Subordinated
Notes in excess of $50,000,000 or (B) any Preferred Stock Proceeds,
then substantially simultaneously with the issuance of such Additional
Senior Subordinated Notes or Holdings Preferred Stock, as applicable,
Borrower and Holdings may repay up to $30,000,000 in aggregate
principal amount of Permitted Sponsor Subordinated Debt, together with
any accrued and unpaid interest thereon, to the extent of available Net
Additional Proceeds or Preferred Stock Proceeds, as applicable,
provided that immediately prior thereto Borrower shall have made all
mandatory prepayments of Revolving Loans required pursuant to Section
2.12(d)(ii) or Section 2.12(e)(iii), as applicable, in connection with
such issuance of Additional Senior Subordinated Notes or Holdings
Preferred Stock, as applicable;
(xi) Borrower and any Included Subsidiary may make
regularly scheduled payments of interest and principal in respect of
Permitted Seller Debt to the extent permitted by Section 6.2(p) and in
accordance with the terms of, and only to the extent required by, and
subject to the subordination and other provisions contained in, the
Permitted Seller Notes, as any such Permitted Seller Note may be
amended from time to time to the extent permitted under Section 6.13;
(xii) beginning in the sixth year after the issuance
of the Holdings Preferred Stock, Borrower may make Restricted Junior
Payments to Holdings in an amount sufficient to permit Holdings to make
regularly scheduled dividend payments on the Holdings Preferred Stock,
in accordance with the terms of, and only to the extent required by the
terms of, such Holdings Preferred Stock, provided (a) Holdings applies
such amounts to the payment of such dividends, (b) after giving effect
to such payment, Borrower shall be in compliance with Section 6.6 on a
Pro Forma Basis as of the most recently ended Fiscal Quarter for which
a Compliance Certificate has been delivered pursuant to Section 5.1(d),
and (c) such dividend payments may only be made with respect to
dividends accruing on the Holdings Preferred Stock in the sixth year
after the issuance thereof; and
(xiii) Holdings may make dividend payments on the
Holdings Preferred Stock with amounts received from Borrower described
in clause (xii) above."
23
(38) Section 6.6(d) of the Credit Agreement is hereby amended by
replacing the last reference to the date "1/1/02" contained therein with
"1/1/03".
(39) Section 6.7 of the Credit Agreement is hereby amended by (i)
inserting the phrase "(other than any Acquisition Subsidiary)" after the words
"Included Subsidiary" in the first line of paragraph (a) thereof, (ii) replacing
the number "$25,000,000" in clause (i) of paragraph (f) thereof with the number
"$35,000,000", (iii) inserting the phrase "prior to December 31, 1999," at the
beginning of clause (ii) of paragraph (f) thereof, (iv) replacing the "and" with
a comma at the end of clause (ii) of paragraph (f) thereof, (v) inserting the
following as new clause (iii) thereof:
"(iii) in any fiscal year after 1999, the aggregate
amount for all acquisitions in such fiscal year shall constitute no
more than an amount equal to the sum of (A) $25,000,000, (B) an amount
equal to the Net Additional Proceeds in connection with any issuance of
Additional Senior Subordinated Notes during such fiscal year less the
amount of any repayment of Permitted Sponsor Subordinated Debt made
with such proceeds during such fiscal year, (C) an amount equal to the
net proceeds of any New Tranche B Term Loans made to the Borrower
during such fiscal year, (D) an amount equal to the net proceeds of any
Permitted Sponsor Subordinated Debt issued to the Borrower or Holdings
during such fiscal year and (E) an amount equal to the Preferred Stock
Proceeds in connection with any issuance of Holdings Preferred Stock
during such fiscal year less the amount of any repayment of Permitted
Sponsor Subordinated Debt made with such proceeds during such fiscal
year, and"
and (vi) replacing "(iii)" with "(iv)" in clause (iii) of paragraph (f) thereof.
(a) Section 6.12(b) of the Credit Agreement is hereby amended
by (i) inserting the words "and Additional Related Agreements" after the words
"Related Agreements" in clause (i) thereof and (ii) inserting the words "and
Additional Related Agreements to which it is a party" after the words "Related
Agreements" in clause (iii) thereof.
(40) Section 6.13 of the Credit Agreement is hereby amended by (i)
inserting the words "or any Additional Related Agreement" after the words
"Related Agreement" in the fourth line of paragraph (a) thereof and (ii)
inserting ", secured Permitted Seller Notes" after the words "Holdings Notes" in
each of the second, fourth, ninth and thirteenth lines in paragraph (b) thereof
and (iii) replacing paragraph (c) thereof in its entirety with the following:
"(c) Borrower shall not designate any Indebtedness as
"Designated Senior Indebtedness" or its equivalent (as defined or used
in either the Senior Subordinated Note
24
Indenture or the Additional Senior Subordinated Note Indenture) for
purposes of either the Senior Subordinated Note Indenture or the
Additional Senior Subordinated Note Indenture, in either case without
the prior written consent of Requisite Lenders."
(41) Section 6.15 of the Credit Agreement is hereby amended by
replacing the parenthetical phrase in clause (e) thereof with the following
"(other than obligations under the Credit Documents, the Senior Subordinated
Note Related Documents and any Additional Senior Subordinated Note Related
Documents or any documentation relating to any Holdings Preferred Stock)".
(42) Section 8.1(b) of the Credit Agreement is hereby amended by (i)
inserting "that constitutes Subordinated Indebtedness, secured Permitted Seller
Debt or Holdings Notes or that is" after the parenthetical phrase in the third
line of clause (i) thereof and (ii) deleting the phrase "in the individual or
aggregate principal amounts" in clause (ii)(1) thereof.
(43) Section 8.1(n) of the Credit Agreement is hereby amended by
inserting the words "and Additional Related Agreements" after the words "Related
Agreements" in clause (i) thereof.
(44) The second sentence of Section 10.8 of the Credit Agreement is
hereby amended by (i) replacing the "and" between "10.3" and "10.4" with a comma
and (ii) inserting "and 10.20" after "10.4".
(45) The Credit Agreement is hereby amended by inserting the following
new Section after Section 10.19:
"10.20. Payment Currency. The obligation of each
Credit Party under this Agreement to make payments hereunder in the
applicable currency (the "Agreement Currency") shall not be discharged
or satisfied by payment, including any tender or recovery pursuant to
any judgment expressed in or converted into any other currency (the
"Payment Currency") except to the extent that such payment, tender or
recovery of the Payment Currency results in the effective receipt by
Lenders and the relevant Issuing Banks, as the case may be, of the full
amount of the Agreement Currency payable under this Agreement and each
Credit Party agrees to indemnify Lenders and the relevant Issuing
Banks, as the case may be (and Lenders and the relevant Issuing Banks,
as the case may be, shall have an additional legal claim), for any
difference between such full amount and the amount effectively received
by such Lenders and such Issuing Banks, as the case may be, pursuant to
any such payment, tender or recovery. Each Lender's and Issuing Bank's
determination of amounts effectively received by such Lender or Issuing
Bank shall be presumed correct absent manifest error. The obligations
of each Credit Party under this subsection shall survive the
termination of this
25
Agreement and the payment of the Loans, the cancellation or expiration
of the Letters of Credit and the reimbursement of any amounts drawn
thereunder, and the termination is hereof."
(46) The Credit Agreement is hereby amended by adding the form of
Exhibit J which is attached hereto as Annex A.
(47) Exhibit D of the Credit Agreement is hereby amended in its
entirety with the form of Exhibit D attached hereto as Annex B.
(48) The Credit Agreement is hereby amended by adding the form of
Exhibit K which is attached hereto as Annex C and the form of Exhibit L which is
attached hereto as Annex D.
2. Consent. The terms and conditions of the Subordinated Note are
acceptable to the undersigned, and the loan incurred pursuant to the
Subordinated Note will constitute "Permitted Sponsor Subordinated Debt" under
the Credit Agreement.
3. Effectiveness. This Amendment shall not be effective until such time as
(a) the Credit Parties, Administrative Agent, Issuing Bank and as many Lenders
as may be necessary to comprise the Second Amendment Requisite Lenders (as
hereafter defined) shall have indicated their consent by the execution and
delivery of the signature pages hereof to Administrative Agent and (b) Borrower
shall have paid to Administrative Agent for the account of each Lender signatory
hereto an amendment fee in an amount equal to 0.125% of the sum of such Lender's
Revolving Commitment and Term Loan Exposure. The "Second Amendment Requisite
Lenders" shall mean the following Lenders: (i) Lenders having or holding more
than 66-2/3% of the sum of (A) the aggregate Tranche A Term Loan Exposure of all
Lenders plus (B) the aggregate Tranche B Term Loan Exposure of all Lenders plus
(C) the aggregate Tranche C Term Loan Exposure of all Lenders plus (D) the
aggregate Revolving Exposure of all Lenders and (ii) Requisite Class Lenders
having more than 50% of the sum of the aggregate Revolving Exposure and the
aggregate Tranche A Term Loan Exposure of all Lenders.
4. Representations and Warranties of Each Credit Party. Each Credit Party
hereby represents and warrants to the Administrative Agent and the Lenders that:
(1) 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)
26
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;
(2) 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;
(3) 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
(4) 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.
27
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 (INCLUDING SECTION 5-1401 OF
THE GENERAL OBLIGATIONS LAW OF THE STATE OF NEW YORK), WITHOUT REGARD TO
CONFLICT OF LAWS PRINCIPLES THEREOF.
IN WITNESS WHEREOF, the parties hereto have caused this Second
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 COMMERCE
as Administrative Agent and a Lender
By:_____________________________
Name:___________________________
Title:__________________________
GOLDMAN SACHS CREDIT PARTNERS L.P., as
Syndication Agent and a Lender
By:_____________________________
Name:___________________________
Title:__________________________
BANKBOSTON, N.A., as Issuing Bank and a Lender
By:_____________________________
Name:___________________________
Title:____________________________
s-28
MAGNETITE ASSET INVESTORS LLC
By:_____________________________
Name:___________________________
Title:____________________________
CARAVELLE INVESTMENT FUND, L.L.C.
By:_____________________________
Name:___________________________
Title:__________________________
COAST BUSINESS CREDIT, a division of
SOUTHERN PACIFIC BANK
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:__________________________
S-29
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:__________________________
CYPRESSTREE INSTITUTIONAL FUND, LLC
By: CypressTree Investment Management Company,
Inc. its Managing Member
By:_____________________________
Name:___________________________
Title:__________________________
CYPRESSTREE INVESTMENT MANAGEMENT COMPANY, INC.
As: Attorney-in-Fact and on behalf of First Allmerica
Financial Life Manager
By:_____________________________
Name:___________________________
Title:__________________________
S-30
FREMONT INVESTMENT & LOAN
By:_____________________________
Name:___________________________
Title:__________________________
MERRILL LYNCH SENIOR FLOATING RATE FUND, INC.
By:_____________________________
Name:___________________________
Title:__________________________
MERRILL LYNCH SENIOR FLOATING RATE FUND II, INC.
By:_____________________________
Name:___________________________
Title:__________________________
MERRILL LYNCH PRIME RATE PORTFOLIO
By: Merrill Lynch Asset Management, L.P., as
Investment Advisor
By:_____________________________
Name:___________________________
Title:__________________________
WINGED FOOT FUNDING TRUST
By:_____________________________
Name:___________________________
Title:__________________________
NEW YORK LIFE INSURANCE COMPANY
By:_____________________________
Name:___________________________
Title:__________________________
S-31
SANKATY ADVISORS, INC., as
Collateral Manager for GREAT POINT
CLO 1999-1 LTD.
By:_____________________________
Name:___________________________
Title:__________________________
SRF TRADING, INC.
By:_____________________________
Name:___________________________
Title:__________________________
STEIN, ROE AND FARNHAM CLO I
By:_____________________________
Name:___________________________
Title:__________________________
THE TORONTO-DOMINION BANK
By:_____________________________
Name:___________________________
Title:__________________________
VAN KAMPEN PRIME RATE INCOME TRUST
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:__________________________
S-32
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:____________________________
BI ACQUISITION, LLC
By:_____________________________
Name:___________________________
Title:____________________________
S-33
ANNEX B
EXHIBIT D TO
CREDIT AGREEMENT
FORM OF
ISSUANCE NOTICE
Reference is made to the Credit and Guaranty Agreement, dated as
of March 18,1999 (as it may be amended, supplemented or otherwise modified,
the "Credit Agreement"), by and among Muzak LLC (formerly known as Audio
Communications Network, LLC), a Delaware limited liability company
("Company"), Muzak Holdings LLC, a Delaware limited liability company
("Holdings"), certain Subsidiaries of Company, the financial institutions
listed therein as Lenders, Goldman Sachs Credit Partners L.P. ("GSCP"), as
Syndication Agent, Canadian Imperial Bank of Commerce, as Administrative
Agent and GSCP and CIBC Oppenheimer Corp., as Co-Lead Arrangers.
Capitalized terms used and not defined herein shall have the meanings
assigned to such terms in the Credit Agreement.
Pursuant to Section 2.2A(b) of the Credit Agreement, Company
desires Letters of Credit to be issued in accordance with such Section of
the Credit Agreement on _________________ (the "Credit Date") as follows:
11. Type of Letter of Credit to be issued (Documentary or Standby):
- -------------------------------------------------------------------------------
12. Currency in which Letter of Credit is to be denominated (Dollars or
Yen):
- -------------------------------------------------------------------------------
13. Aggregate Face Amount of Letter of Credit to be issued:
- -------------------------------------------------------------------------------
14. Name and Address of the Beneficiary: --------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
15. Expiration Date:
-------------------------------------------------------
Attached hereto for each such Letter of Credit is either (a) the
verbatim text of such proposed Letter of Credit, or (b) a description of the
proposed terms and conditions of such Letter of Credit, including a precise
description of any documents to be presented by the beneficiary which, if
presented by the beneficiary prior to the expiration date of such Letter of
Credit, would require the Issuing Bank to make payment under such Letter of
Credit.
The undersigned officer of the Company, to the best of his or her
knowledge, and the Company certify that (a) as of the Credit Date, the
representations and warranties contained in the Credit Documents are true,
correct and complete in all material respects on and as of such Credit Date to
the same extent as though made on and as of such date, except to the extent such
representations and warranties specifically relate to an earlier date, in which
case such representations and warranties were true, correct and complete in all
material respects on and as of such earlier date; (b) as of the Credit Date no
injunction or other restraining order shall have been issued and no hearing to
cause an injunction or other restraining order to be issued shall be pending or
noticed with respect to any action, suit or proceeding seeking to enjoin or
otherwise prevent the consummation of, or to recover any damages or obtain
relief as a result of, the issuance contemplated hereby; (c) each Credit Party
has performed in all material respects all agreements and satisfied all
conditions which the Credit Agreement or the Credit Documents provide shall be
performed or satisfied by it on or prior to the Credit Date; (d) after giving
effect to the issuance of the Letter of Credit on the Credit Date, (1) the
Letter of Credit Usage will not exceed the Letter of Credit Sublimit and (2) the
Foreign L/C Usage will not exceed the Foreign L/C Sublimit then in effect; and
(e) as of such Credit Date, no event has occurred and is continuing or would
result from the issuance contemplated hereby that would constitute an Event of
Default or a Default.
Date: ____________________ MUZAK LLC
By: ______________________
Name:
Title:
2