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EXHIBIT 10.31
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WAIVER AND SECOND AMENDMENT TO
AMENDED AND RESTATED TERM LOAN AGREEMENT
THIS WAIVER AND SECOND AMENDMENT TO AMENDED AND RESTATED TERM LOAN
AGREEMENT ("Second Amendment") dated as of December 3, 1999 is by and among
▇▇▇▇▇▇▇ PIANO & ORGAN COMPANY, a Delaware corporation, (hereinafter, together
with its successors in title and assigns called "Borrower" or "▇▇▇▇▇▇▇"), FIFTH
THIRD BANK, an Ohio banking corporation, as Agent (in such capacity, the
"Agent"), FIFTH THIRD BANK ("Fifth Third"), as a Lender, and BANK ONE, INDIANA,
N.A., formerly known as NBD BANK, N.A., a national banking association, ("Bank
One") as a Lender, (Fifth Third and Bank One are hereinafter collectively the
"Lenders" and each individually a "Lender").
PRELIMINARY STATEMENT
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WHEREAS, Borrower, Agent and Lenders have entered into a Amended and
Restated Term Loan Agreement dated as of May 15, 1998, as amended by the First
Amendment thereto dated as of July 15, 1999 (as amended hereby, the "Term Loan
Agreement"); and
WHEREAS, Borrower have requested Agent and Lenders to make various
revisions to the Term Loan Agreement as set forth herein; and
WHEREAS, Borrower, Agent and Lenders now wish to amend the Term Loan
Agreement in accordance with the terms and provisions hereof;
NOW, THEREFORE, the parties hereto agree to supplement and amend the Term
Loan Agreement upon such terms and conditions as follows:
1. CAPITALIZED TERMS. All capitalized terms used herein shall have the
meanings assigned to them in the Term Loan Agreement unless the context hereof
requires otherwise. Any definitions as capitalized terms set forth herein shall
be deemed incorporated into the Term Loan Agreement as amended by this Second
Amendment.
2. DEFINITIONS.
(a) Section 2.1 of the Term Loan Agreement is hereby to amend the
following definitions to read in their entirety as follows:
"INTEREST RATE" means, with respect to the Term Loan, the rate of
interest per annum equal to the Prime Rate.
3. EXHIBITS. The following Exhibit to the Term Loan Agreement is hereby
amended in its entirety to read as the corresponding Exhibit to this Second
Amendment:
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(a) Exhibit A Form of Term Promissory Note;
4. WAIVER. (a) The Agent and the Lenders hereby consent to waive the
application of Section 7.3(a)(iv) of the Term Loan Agreement solely as it
relates to the four quarter period ending September 30, 1999; PROVIDED, HOWEVER,
that this waiver shall expire on the earlier of (i) the date Lenders shall have
received satisfactory evidence, in form and substance satisfactory to Lenders,
of the sale by Borrower of all of the stock of Keyboard Acceptance Corporation
(f/k/a BPO Finance Corporation), a Delaware corporation and a subsidiary of
Borrower, pursuant to that certain Stock Purchase Agreement dated as of December
8, 1999 between Borrower and Deutsche Financial Services Corporation (the
"Purchase Agreement"), (ii) the failure of Borrower to consummate the
transactions contemplated by the Purchase Agreement, and (iii) February 28,
2000.
(b) The Agent and the Lenders hereby consent to waive the application of
Section 7.3(a)(iv) of the Term Loan Agreement solely as it relates to the four
quarter period ending December 31, 1999; PROVIDED, HOWEVER, that this waiver
shall expire on the earlier of (i) the date Lenders shall have received
satisfactory evidence, in form and substance satisfactory to Lenders, of the
sale by Borrower of all of the stock of Keyboard Acceptance Corporation (f/k/a
BPO Finance Corporation), a Delaware corporation and a subsidiary of Borrower,
pursuant to that certain Stock Purchase Agreement dated as of December 8, 1999
between Borrower and Deutsche Financial Services Corporation (the "Purchase
Agreement"), (ii) the failure of Borrower to consummate the transactions
contemplated by the Purchase Agreement, and (iii) February 28, 2000.
4. SALE OR TRANSFER OF ASSETS. Section 7.2(b) of the Term Loan Agreement
is hereby amended in its entirety to read as follows:
(b) SALE OR TRANSFER OF ASSETS. Except in the ordinary course of
business or except as consented to in writing by Agent, or except for
sales to a Lender or any affiliate thereof or except for sales to and by
KAC as contemplated by the Permitted Securitization Documents, or except
for sales to Deutsche Financial Services Corporation of finished inventory
pursuant to the Amended and Restated Inventory Purchase and Consignment
Agreement entered into by and between Borrower and Deutsche Financial
Services Corporation as of June 30, 1998, as amended on January 13, 2000,
which such agreement shall be in form and substance satisfactory to Agent,
provided that, after giving effect to such sale, Deutsche Financial
Services Corporation does not own Retail Consigned Goods (as defined
therein) purchased from Borrower pursuant to this subsection with an
aggregate value greater than $5,000,000 or Consigned Goods (as defined
therein) purchased from Borrower pursuant to this subsection with an
aggregate value greater than $20,000,000, ▇▇▇▇▇▇▇ and the Subsidiaries
will not sell, transfer, lease (including sale-leaseback) or otherwise
dispose of all or any substantial part of their assets; provided, however,
that any sales of KAC Accounts by ▇▇▇▇▇▇▇ to KAC under the Permitted
Securitization Documentation, and sales, contributions or other transfers
of KAC Accounts under the Permitted Securitization Documentation by KAC,
shall be permitted. This provision will not apply to any sale if the
proceeds of such sale pay the Obligations in full.
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5. REAFFIRMATION OF COVENANTS, WARRANTIES AND REPRESENTATIONS. Borrower
hereby agrees and covenants that all representations and warranties in the Term
Loan Agreement, including without limitation all of those warranties and
representations set forth in Article 6 are true and accurate as of the date
hereof. Borrower further reaffirms all covenants in the Term Loan Agreement, and
reaffirm each of the affirmative covenants set forth in Section 7.1, the
negative covenants set forth in Section 7.2 and the financial covenants set
forth in Section 7.3 thereof, as if fully set forth herein, except to the extent
modified by this Second Amendment.
6. CONDITIONS PRECEDENT TO CLOSING OF SECOND AMENDMENT. On or prior to
the closing of the Second Amendment (hereinafter the "Second Amendment Closing
Date"), each of the following conditions precedent shall have been satisfied:
(a) PROOF OF CORPORATE AUTHORITY. Agent shall have received from
Borrower copies, certified by a duly authorized officer to be true and
complete on and as of the Second Amendment Closing Date, of records of all
action taken by Borrower to authorize (i) the execution and delivery of
this Second Amendment and all other certificates, documents and
instruments to which it is or is to become a party as contemplated or
required by this Second Amendment, and (ii) its performance of all of its
obligations under each of such documents.
(b) DOCUMENTS. Each of the documents to be executed and delivered at
the Second Amendment Closing, including, without limitation, executed Term
Promissory Notes substantially in the form of Exhibit A hereto, and all
other certificates, documents and instruments to be executed in connection
herewith shall have been duly and properly authorized, executed and
delivered by Borrower and shall be in full force and effect on and as of
the Second Amendment Closing Date.
(c) LEGALITY OF TRANSACTIONS. No change in applicable law shall have
occurred as a consequence of which it shall have become and continue to be
unlawful (i) for Agent and each Lender to perform any of its agreements or
obligations under any of the Loan Documents, or (ii) for Borrower to
perform any of its agreements or obligations under any of the Loan
Documents.
(d) PERFORMANCE, ETC. Except as set forth herein, Borrower shall
have duly and properly performed, complied with and observed each of its
covenants, agreements and obligations contained in each of the Loan
Documents. Except as set forth herein, no event shall have occurred on or
prior to the Second Amendment Closing Date, and no condition shall exist
on the Second Amendment Closing Date, which constitutes a Default or an
Event of Default.
(e) CHANGES; NONE ADVERSE. Since the date of the most recent balance
sheets of Borrower delivered to Agent, no changes shall have occurred in
the assets, liabilities, financial condition, business, operations or
prospects of Borrower which, individually or in
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the aggregate, are material to Borrower, and Agent shall have completed
such review of the status of all current and pending legal issues as Agent
shall deem necessary or appropriate.
(f) FEE. Agent shall have received, for the pro rata benefit of
Lenders, a closing fee in the amount of $108,750.00
7. MISCELLANEOUS. (a) Borrower shall reimburse Agent for all fees and
disbursements of legal counsel to Agent which shall have been incurred by Agent
in connection with the preparation, negotiation, review, execution and delivery
of this Second Amendment and the handling of any other matters incidental
hereto.
(b) All of the terms, conditions and provisions of the Agreement not
herein modified shall remain in full force and effect. In the event a term,
condition or provision of the Agreement conflicts with a term, condition or
provision of this Second Amendment, the latter shall govern.
(c) This Second Amendment shall be governed by and shall be construed
and interpreted in accordance with the laws of the State of Ohio.
(d) This Second Amendment shall be binding upon and shall inure to the
benefit of the parties hereto and their respective heirs, successors and
assigns.
(e) This Second Amendment may be executed in several counterparts,
each of which shall constitute an original, but all which together shall
constitute one and the same agreement.
[Remainder of page intentionally left blank. Signature page follows.]
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IN WITNESS WHEREOF, this Second Amendment has been duly executed and
delivered by or on behalf of each of the parties as of the day and in the year
first above written.
▇▇▇▇▇▇▇ PIANO & ORGAN COMPANY,
Borrower
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇
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Name: ▇▇▇▇▇ ▇▇▇▇▇▇
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Title: Executive VP, CFO and Secretary
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FIFTH THIRD BANK, Agent
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇
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Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇
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Title: Vice President
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FIFTH THIRD BANK, Lender
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇
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Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇
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Title: Vice President
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BANK ONE, INDIANA, N. A., Lender
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
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Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
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Title: First Vice President
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The undersigned, guarantors of the obligations of ▇▇▇▇▇▇▇ Piano & Organ Company
under the Loan Agreement, hereby acknowledge and accept the above Second
Amendment and the terms and conditions therein.
SIGNATURE LEASING COMPANY
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇
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Name: ▇▇▇▇▇ ▇▇▇▇▇▇
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Title: Executive VP, CFO and Secretary
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▇▇▇▇▇▇▇ TRADING COMPANY
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇
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Name: ▇▇▇▇▇ ▇▇▇▇▇▇
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Title: Executive VP, CFO and Secretary
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▇▇▇▇▇▇▇ PIANO COMPANY (CANADA)
LIMITED
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇
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Name: ▇▇▇▇▇ ▇▇▇▇▇▇
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Title: Executive VP, CFO and Secretary
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THE WURLITZER COMPANY
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇
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Name: ▇▇▇▇▇ ▇▇▇▇▇▇
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Title: Executive VP, CFO and Secretary
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EXHIBIT A
Form of Term Promissory Note
THIRD AMENDED AND RESTATED TERM PROMISSORY NOTE(1)
$[ ] Cincinnati, Ohio
------------ December __, 1999
THIS SECOND AMENDED AND RESTATED TERM PROMISSORY NOTE ("Note") is made and
entered into as of the date hereof by ▇▇▇▇▇▇▇ PIANO & ORGAN COMPANY, a Delaware
corporation, (the "Borrower") to the order of _______________ (hereinafter,
together with its permitted successors and assigns, called "Bank").
This Note has been executed and delivered pursuant to a certain General
Loan and Security Agreement dated as of June 15, 1989 by and between Borrower
and Fifth Third Bank, as amended by an Amended and Restated General Loan and
Security Agreement dated as of February 24, 1994 by and between Borrower and
Fifth Third Bank, as amended by an Amended and Restated Term Loan Agreement
dated as of May 15, 1998, by and among Borrower, Fifth Third Bank, an Ohio
banking corporation, as "Agent", and the Banks listed therein and a First
Amendment to Amended and Restated Term Loan Agreement dated as of July 15, 1999
(collectively, and as the same may be amended, modified, supplemented or
restated, the "Loan Agreement"), and is subject to the terms and conditions of
the Loan Agreement, including without limitation, acceleration upon the terms
provided therein. All capitalized terms used herein shall have the meanings
assigned to them in the Loan Agreement unless the context hereof requires
otherwise.
Borrower, for value received, promises to pay to the order of Bank, at
Agent's Head Office, for the account of Bank in accordance with the Loan
Agreement, the principal sum of [______________] AND 00/100 DOLLARS
($5,000,000.00) (the "Credit Commitment") or so much thereof as is loaned by
Bank pursuant to the provisions hereof and the terms and provisions of the Loan
Agreement, together with interest on the unpaid principal amount at the annual
rate defined, determined and adjusted pursuant to the Loan Agreement ("Interest
Rate"). Interest shall be due and payable quarterly in arrears commencing on
January 2, 2000, and on each April 1, July 1, October 1 and January 1
thereafter. All interest under this Note shall be computed on the basis of the
actual number of days elapsed over an assumed year consisting of three hundred
sixty (360) days.
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(1) This Third Amended and Restated Term Promissory Note is one of two
notes issued as of the date hereof in exchange for and in substitution for two
Second Amended and Restated Secured Promissory Notes, each in the original
principal amount of $5,000,000.00 and dated as of May 18, 1998 ("Second Amended
and Restated Notes"), which such Second Amended and Restated Notes were issued
in exchange for and in substitution of an Amended and Restated Secured
Promissory Note dated as of February 24, 1994 (the "Amended Note") which Amended
Note was issued in exchange for and in substitution of a Secured Promissory Note
dated as of June 15, 1989 (the "Original Note"). This Note is not and shall not
be construed as a novation or be construed in any manner as an extinguishment of
the obligations arising under the Second Amended and Restated Notes, the Amended
Note or the Original Note, or to affect the priority of the security interest
granted in connection with either the Second Amended and Restated Notes, the
Amended Note or the Original Note, with it being expressly understood and agreed
by the parties hereto, and any third parties relying on its terms, that this
Note does not replace the original indebtedness, but merely modifies the terms
and conditions of such indebtedness evidenced by the Original Note, as modified
by the Amended Note, the Second Amended and Restated Notes and the underlying
loan documents, as the same have been amended and restated.
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Borrower shall pay to Bank, commencing on January 2, 2000, and on each
April 1, July 1, October 1 and January 1 thereafter, and on the date this Note
is due (whether by maturity, acceleration or otherwise), quarterly installments
of principal in the amount of ONE HUNDRED TWENTY-FIVE THOUSAND AND 00/100
DOLLARS ($125,000.00), provided that, in any event, the last installment payable
on this Note shall be in an amount sufficient to pay in full the entire unpaid
principal and accrued interest of this Note. All of the indebtedness evidenced
by this Note shall, if not sooner due and payable as provided in the Loan
Agreement, be in any event absolutely and unconditionally due and payable in
full by Borrower on May 1, 2003.
This Note is subject to mandatory prepayment upon the terms and conditions
set forth in the Loan Agreement. This Note may be prepaid in whole or in part as
set forth in the Loan Agreement. Amounts borrowed hereunder and repaid or
prepaid may not be reborrowed.
If this Note is accelerated pursuant to the Loan Agreement or if a Default
or an Event of Default with respect to any monetary payment under the Loan
Agreement shall have occurred and during the period in which such Default or
Event of Default is continuing, the outstanding principal and all accrued
interest as well as any other Obligations due Bank or Agent under any Loan
Document shall bear interest at three percent (3.0%) above the Interest Rate.
If any payment of principal, interest or other charge due hereunder is not
paid when due, or in the event of an Event of Default under the Loan Agreement,
this Note shall, at the option of Bank, become immediately due and payable, upon
demand by Bank, except that if there shall be an Event of Default under Sections
8.12, 8.13 or 8.14 of the Loan Agreement, this Note shall automatically and
immediately be due and payable without demand.
The Borrower hereby: (i) waives presentment, demand, notice of demand,
protest, notice of protest, notice of presentment and notice of nonpayment and
any other notice required to be given by law, except as otherwise specifically
provided in the Loan Agreement, in connection with the delivery, acceptance,
performance, default or enforcement of this Note, of any indorsement or guaranty
of this Note; and (ii) consents to any and all delays, extensions, renewals or
other modifications of this Note or waivers of any term hereof or the failure to
act on the part of Agent or Bank or any indulgence shown by Agent or Bank, from
time to time and in one or more instances, (without notice to or further assent
from Borrower) and agrees that no such action, failure to act or failure to
exercise any right or remedy, on the part of Agent or Bank shall in any way
affect or impair the obligations of Borrower or be construed as a waiver by Bank
of, or otherwise affect, any of Bank's rights under this Note, or under any
indorsement or guaranty of this Note. Subject to the terms of the Loan
Agreement, Borrower further agrees to reimburse Agent and Bank for all advances,
charges, costs and expenses, including reasonable attorney's fees, incurred or
paid in exercising any right, power or remedy conferred by this Note, or in the
enforcement thereof.
Anything herein to the contrary notwithstanding the obligations of
Borrower under this Note, the Loan Agreement or any other Loan Documents shall
be subject to the limitation that payments of interest shall not be required to
the extent that receipt of any such payment by any Bank would
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be contrary to the provisions of law applicable to such Bank limiting the
maximum rate of interest that may be charged or collected by the Bank. Without
limiting the generality of the foregoing, all calculations of the rate of
interest contracted for, charged or received under this Note which are made for
the purposes of determining whether such rate of interest exceeds the maximum
rate of interest permitted by applicable law shall be made, to the extent
permitted by applicable law, by amortizing, prorating, allocating and spreading
in equal parts during the period of the full stated term of this Note, all
interest at any time contracted for, charged or received in connection with the
indebtedness evidenced by this Note, and then to the extent that any excess
remains, all such excess shall be automatically credited against and in
reduction of the principal balance, and any portion of said excess which exceeds
the principal balance shall be paid by Bank to Borrower, it being the intent of
the parties hereto that under no circumstances shall Borrower be required to pay
any interest in excess of the highest rate permissible under applicable law.
The provisions of this note shall be governed by and interpreted in
accordance with the laws of Ohio.
The undersigned hereby designates all courts of record sitting in
Cincinnati, Ohio and having jurisdiction over the subject matter, state and
federal, as forums where any action, suit or proceeding in respect of or arising
from or out of this Note, its making, validity or performance, may be prosecuted
as to all parties, their successors and assigns, and by the foregoing
designation the undersigned consents to the jurisdiction and venue of such
courts.
[Remainder of page intentionally left blank. Signature page follows.]
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TIME IS OF THE ESSENCE IN THE PERFORMANCE OF THE OBLIGATIONS OF THIS NOTE.
IN WITNESS WHEREOF, the undersigned has executed this Note as of the day
and year set forth above.
▇▇▇▇▇▇▇ PIANO & ORGAN COMPANY,
a Delaware corporation
By:
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Name:
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Title:
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