Exhibit 10.20

 

FIRST AMENDMENT AND WAIVER

 

FIRST AMENDMENT AND WAIVER, dated as of March 9, 2004 (“First Amendment”), to
the Credit Agreement dated as of May 20, 2003 (the “Credit Agreement”), among
MUZAK HOLDINGS LLC (“Holdings”), MUZAK LLC as Borrower (the “Borrower”), the
lenders from time to time parties thereto (the “Lenders”), BEAR, STEARNS & CO.
INC. and LEHMAN BROTHERS INC., as Joint Lead Arrangers, LEHMAN COMMERCIAL PAPER
INC. and FLEET NATIONAL BANK, as Co-Syndication Agents, GENERAL ELECTRIC CAPITAL
CORPORATION, as Documentation Agent and BEAR STEARNS CORPORATE LENDING INC., as
Administrative Agent (“Administrative Agent”). Capitalized terms used and not
otherwise defined herein shall have the meanings assigned to them in the Credit
Agreement.

 

WHEREAS, pursuant to Section 10.1 of the Credit Agreement, the Borrower has
requested that the Lenders amend the Credit Agreement and the Required Lenders,
on the terms and subject to the conditions set forth below, have agreed to amend
certain provisions of the Credit Agreement;

 

WHEREAS, the Borrower requests a waiver of any Default and/or Event of Default
relating to Sections 7.1(a) and 7.1(c) of the Credit Agreement to the extent
that any such Default and/or Event of Default may occur as a result of the
failure by the Borrower to satisfy the requirements of such sections in respect
of its fiscal quarter ended December 31, 2003;

 

WHEREAS, pursuant to Section 10.1 of the Credit Agreement the consent of the
Required Lenders is necessary to effect this First Amendment;

 

NOW, THEREFORE, in consideration of the premises and covenants contained herein,
and for other good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the parties hereto, intending to be legally bound
hereby, agree as follows:

 

SECTION 1. WAIVER

 

Subject to the satisfaction of the conditions precedent set forth in Section 4
of this First Amendment, the Required Lenders hereby waive:

 

  (a) any Default or Event of Default of the Company with respect to Section
7.1(a) of the Credit Agreement (as it relates to the Consolidated Leverage Ratio
for the December 31, 2003 measurement period only) to the extent that any such
Default or Event of Default has occurred prior to the date hereof; and

 

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  (b) any Default or Event of Default of the Company with respect to Section
7.1(c) of the Credit Agreement (as it relates to the Consolidated Fixed Charge
Coverage Ratio for the December 31, 2003 measurement period only) to the extent
that any such Default or Event of Default has occurred prior to date hereof.

 

SECTION 2. AMENDMENTS TO CREDIT AGREEMENT

 

  (a) Section 1.1. The definition of “Consolidated EBITDA” in Section 1.1 is
hereby amended by deleting the word “and” immediately prior to clause (i)
thereof and inserting the following provision at the end of such clause (i)
immediately following the term “Closing Date”:

 

“, and (j) $900,000, which represents the impact of lost revenue and expenses
incurred by the Borrower and its Subsidiaries during the fiscal quarter ended
December 31, 2003 as a direct result of the outage of the Telstar 4 satellite in
September 2003.”

 

  (b) Section 3.2(b). Clause (b) of Section 3.2 of the Credit Agreement is
hereby amended by deleting such clause in its entirety and replacing it with the
following:

 

“(b) If on any date any Group Member shall receive Net Cash Proceeds from any
Asset Sale or Recovery Event then, unless a Reinvestment Notice shall be
delivered in respect thereof on the date or dates of receipt of such Net Cash
Proceeds, 100% of such Net Cash Proceeds shall be applied on such date toward
the repayment of the Loans and the Revolving Commitments shall be reduced by an
amount equal to 25% of such Net Cash Proceeds as set forth in Section 3.2(c). If
Borrower delivers a Reinvestment Notice in respect of all or a specified portion
of the Net Cash Proceeds, then (i) 100% of any portion of the Net Cash Proceeds
received and not covered by such Reinvestment Notice shall be applied on the
date of receipt of such Net Cash Proceeds toward repayment of the Loans and the
Revolving Commitments shall be reduced by an amount equal to 25% of such Net
Cash Proceeds not covered by such Reinvestment Notice as set forth in Section
3.2(c) and (ii) 100% of the Reinvestment Prepayment Amount shall be applied on
the Reinvestment Prepayment Date toward repayment of the Loans and on such date
the Revolving Commitments shall be reduced by an amount equal to 25% of such Net
Cash Proceeds as set forth in Section 3.2(c).”

 

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  (c) Section 7.1. Section 7.1 of the Credit Agreement is hereby amended by
deleting such Section in its entirety and replacing it with the provisions set
forth in Exhibit A attached hereto.

 

SECTION 3. REPRESENTATIONS AND WARRANTIES

 

  (a) Holdings, Borrower and their respective Subsidiaries have taken all
necessary action to authorize the execution, delivery and performance of this
First Amendment.

 

  (b) The execution, delivery and performance of this First Amendment will not
violate: (i) the Certificate of Incorporation and By-Laws or other
organizational or governing documents of Holdings, Borrower or any of their
respective Subsidiaries; (ii) any law, treaty, rule or regulation or
determination of an arbitrator or a court or other nation or government, any
state or other political subdivision thereof, any agency, authority,
instrumentality, regulatory body, court, central bank or other entity exercising
executive, legislative, judicial, taxing, regulatory or administrative functions
of or pertaining to government, any securities exchange and any self-regulatory
or other organization (including the National Association of Insurance
Commissioners), in each case applicable to or binding upon Holdings, Borrower or
any of their respective Subsidiaries or any of their property to which they or
any of their property are subject; or (iii) any provision of any written
agreement, written instrument or other written undertaking to which Holdings,
Borrower or any of their respective Subsidiaries is a party or by which any of
their property is bound.

 

  (c) All of the representations and warranties in the Credit Agreement, after
giving effect to this First Amendment, are true and correct in all material
respects on and as of the date hereof as if made on the date hereof (or, if any
such representation or warranty is expressly stated to have been made as of a
specific date, as of such specific date).

 

  (d) After giving effect to the waivers described in Section 1 hereof, no
Default or Event of Default has occurred and is continuing.

 

SECTION 4. CONDITIONS TO EFFECTIVENESS

 

The effectiveness of this First Amendment is subject to the following conditions
precedent (unless specifically waived in writing by the Administrative Agent),
each to be in form and substance satisfactory to the Administrative Agent:

 

  (a)

The Borrower shall have paid to the Agents and the Lenders, as the case may be,
all costs, fees and expenses (including, without limitation, the fees and
disbursements of Cahill Gordon & Reindel LLP, counsel to the Administrative
Agent) payable to the Agents and the Lenders, including without limitation an

 

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amendment fee payable to each Lender executing this First Amendment in an amount
equal to 0.10% of such Lender’s outstanding Revolving Commitments.

 

  (b) All corporate and other proceedings taken or to be taken in connection
with this First Amendment and all documents incidental thereto, whether or not
referred to herein, shall be satisfactory in form and substance to the
Administrative Agent and its legal counsel.

 

  (c) The Administrative Agent shall have received duly executed counterparts of
this First Amendment which, when taken together, bear the authorized signatures
of the Borrower, Holdings and the Required Lenders.

 

  (d) After giving effect to the waivers described in Section 1 hereof, no
Default or Event of Default has occurred and is continuing.

 

SECTION 5. MISCELLANEOUS

 

  (a) This First Amendment may be executed by the parties hereto in one or more
counterparts, each of which shall be an original and all of which shall
constitute one and the same agreement.

 

  (b) THIS FIRST AMENDMENT SHALL BE GOVERNED BY, CONSTRUED AND ENFORCED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO THE
PRINCIPLES OF CONFLICT OF LAWS.

 

  (c) Except as expressly provided herein, this First Amendment shall not
constitute a consent or waiver to or modification of any other provision, term
or condition of the Credit Agreement or any other Loan Document. All terms,
provisions, covenants, representations, warranties, agreements and conditions
contained in the Credit Agreement, as amended hereby, and the other Loan
Documents are ratified and confirmed in all respects and shall remain in full
force and effect.

 

[Signature Pages Follow]

 

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IN WITNESS WHEREOF, the parties hereto have caused this First Amendment to be
duly executed as of the date first above written.

 

MUZAK LLC,
as Borrower

By:   /s/ Catherine Walsh    

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Name: Catherine Walsh

   

Title: Treasurer

 

MUZAK HOLDINGS LLC

By:   /s/ Catherine Walsh    

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Name: Catherine Walsh

    Title: Treasurer

 

First Amendment and Waiver

S-     of S-    

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BEAR STEARNS CORPORATE LENDING INC., as Administrative Agent and a Lender

By:   /s/ Victor F. Balzacchelli    

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Name: Victor F. Balzacchelli

   

Title: Vice President

 

First Amendment and Waiver

S-     of S-    

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LEHMAN COMMERCIAL PAPER INC.,
as Lender

By:   /s/ Frank P. Turner    

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Name: Frank P. Turner

   

Title: Authorized Signatory

 

First Amendment and Waiver

S-     of S-    

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FLEET NATIONAL BANK,
as Lender

By:   /s/ Kay H. Campbell    

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Name: Kay H. Campbell

   

Title: Director

 

First Amendment and Waiver

S-     of S-    

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GENERAL ELECTRIC CAPITAL CORPORATION, as Lender

By:   /s/ Bhupesh Gupta    

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Name: Bhupesh Gupta

   

Title: Duly Authorized Signatory

 

First Amendment and Waiver

S-     of S-    

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CANPARTNERS INVESTMENTS IV, LLC,
as Lender

By:   /s/ R. Christian B. Eversen    

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Name: R. Christian B. Eversen

   

Title: Authorized Member

 

First Amendment and Waiver

S-     of S-    

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CANYON CAPITAL CLO 2004-1 LTD.,
as Lender

By:   /s/ R. Christian B. Eversen    

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Name: R. Christian B. Eversen

   

Title: Authorized Member

 

First Amendment and Waiver

S-     of S-    

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GOLDENTREE HIGH YIELD OPPORTUNITIES I, L.P., as Lender

By:   /s/ Frederick S. Haddad    

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Name: Frederick S. Haddad

   

Title:

 

First Amendment and Waiver

S-     of S-    

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GOLDENTREE HIGH YIELD OPPORTUNITIES II, L.P., as Lender

By:   /s/ Frederick S. Haddad    

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Name: Frederick S. Haddad

   

Title:

 

First Amendment and Waiver

S-     of S-    

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EXHIBIT A

 

(a) Consolidated Leverage Ratio. Permit the Consolidated Leverage Ratio as at
the last day of any fiscal quarter of the Borrower set forth below to exceed the
ratio set forth below opposite such fiscal quarter:

 

Fiscal Quarter Ended

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Consolidated Leverage Ratio

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June 30, 2003

   5.00 to 1.0

September 30, 2003

   5.00 to 1.0

December 31, 2003

   4.75 to 1.0

March 31, 2004

   5.25 to 1.0

June 30, 2004

   5.25 to 1.0

September 30, 2004

   5.00 to 1.0

December 31, 2004

   4.75 to 1.0

March 31, 2005

   4.75 to 1.0

June 30, 2005

   4.75 to 1.0

September 30, 2005

   4.75 to 1.0

December 31, 2005 and each fiscal quarter ended thereafter

   4.50 to 1.0

 

(b) Consolidated Interest Coverage Ratio. Permit the Consolidated Interest
Coverage Ratio for any period of four consecutive fiscal quarters of the
Borrower ending with any fiscal quarter set forth below to be less than the
ratio set forth below opposite such fiscal quarter:

 

Fiscal Quarter Ended

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Consolidated Interest

Coverage Ratio

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Fiscal quarter June 30, 2003 and each fiscal quarter ended thereafter

   2.00 to 1.0

 

A-1

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(c) Consolidated Fixed Charge Coverage Ratio. Permit the Consolidated Fixed
Charge Coverage Ratio for any period of four consecutive fiscal quarters of the
Borrower ending with any fiscal quarter set forth below to be less than the
ratio set forth below opposite such fiscal quarter:

 

Fiscal Quarter Ended

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Consolidated Fixed

Charge Coverage Ratio

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Fiscal quarter June 30, 2003 through fiscal quarter ended September 30, 2003

   1.0 to 1.0

Fiscal quarter December 31, 2003 through fiscal quarter ended September 30, 2004

   0.90 to 1.0

Fiscal quarter December 31, 2004 through fiscal quarter ended September 30, 2005

   0.95 to 1.0

Fiscal quarter December 31, 2005 through fiscal quarter ended June 30, 2006

   1.00 to 1.0

Fiscal quarter September 30, 2006 and each fiscal quarter ended thereafter

   1.05 to 1.0

 

A-2