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EXHIBIT 10.1
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SECOND AMENDMENT TO
CREDIT AGREEMENT
THIS SECOND AMENDMENT TO CREDIT AGREEMENT ("Second Amendment") dated as
of April 27, 1998 is by and among ▇▇▇▇▇▇▇ PIANO & ORGAN COMPANY, a Delaware
corporation, (hereinafter, together with its successors in title and assigns
called "Borrower" or "▇▇▇▇▇▇▇"), THE FIFTH THIRD BANK, an Ohio banking
corporation, as Agent (in such capacity, the "Agent"), THE FIFTH THIRD BANK
("Fifth Third"), as a Lender, and NBD BANK, N.A., a national banking
association, ("NBD") as a Lender, (Fifth Third and NBD 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 Credit
Agreement dated as of October 16, 1997, as amended by a First Amendment dated as
of October 16, 1997 (the "Credit Agreement"); and
WHEREAS, Borrower have requested Agent and Lenders to make additional
credit in the amount of $3,800,000 available to Borrower and to make various
other revisions to the Credit Agreement as set forth herein; and
WHEREAS, Borrower, Agent and Lenders now wish to amend the Credit
Agreement in accordance with the terms and provisions hereof;
NOW, THEREFORE, the parties hereto agree to supplement and amend the
Credit 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 Credit Agreement unless the context hereof
requires otherwise. Any definitions as capitalized terms set forth herein shall
be deemed incorporated into the Credit Agreement as amended by this Second
Amendment.
2. EXHIBITS. Exhibit C to the Credit Agreement, Form of Borrowing Base
Certificate, is hereby amended in its entirety by Exhibit C to this Second
Amendment and Exhibit D to the Credit Agreement Form of Revolving Promissory
Note, is hereby amended in its entirety by Exhibit D to this Second Amendment.
3. TOTAL CREDIT FACILITY. Section 3.1 of the Credit Agreement is hereby
amended to in its entirety to read as follows:
"Section 3.1. TOTAL CREDIT FACILITY. In consideration of
▇▇▇▇▇▇▇'▇ payment and performance of its Obligations and subject to the
terms and conditions contained in this Credit Agreement, the Lenders
agree to provide, and ▇▇▇▇▇▇▇ agrees to accept, until the earlier of 45
days following the Second Amendment Closing Date and the closing of a
new $10,000,000 term loan facility among the Borrower, Agent and
Lenders (on terms substantially similar to the Credit Agreement, but in
any event,
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satisfactory to the Lenders) an aggregate credit facility of up to
Forty-Three Million Eight Hundred Thousand and 00/100 Dollars
($43,800,000.00), and thereafter an aggregate credit facility of up to
Forty Million and 00/100 Dollars ($40,000,000.00) (the "TOTAL CREDIT"),
subject to the terms and conditions hereof (the "CREDIT FACILITY"). No
Loans need be made by the Lenders if ▇▇▇▇▇▇▇ is in Default or if there
exists any Unmatured Default. This is an agreement regarding the
extension of credit, and not the provision of goods or services."
4. ELIGIBLE ACCOUNTS AND ELIGIBLE INVENTORY. Section 3.2(a)(i) and
Section 3.2(a)(ii) of the Credit Agreement are hereby amended to in their
entirety to read as follows:
"(i) ELIGIBLE ACCOUNTS. On receipt of each Borrowing
Base Certificate, in the form of Exhibit C, together with such
supporting information as Agent may require from time to time
(the "BORROWING BASE CERTIFICATE"), Agent will credit ▇▇▇▇▇▇▇
with the lesser of: (i) eighty-five percent (85%) of the net
amount of the Eligible Accounts which are, absent error or
other discrepancy, listed in such Borrowing Base Certificate
("ELIGIBLE ACCOUNT AVAILABILITY"); and (ii) Fifteen Million
and 00/100 Dollars ($15,000,000.00). For purposes hereof, the
net amount of Eligible Accounts at any time shall be the face
amount of such Eligible Accounts LESS any and all returns,
discounts (which may, at Agent's option, be calculated on
shortest terms), credits, rebates, allowances, or excise taxes
of any nature at any time issued, owing, claimed by Account
Debtors, granted, outstanding, or payable in connection with
such Accounts at such time.
"(ii) ELIGIBLE INVENTORY. On receipt of each
Borrowing Base Certificate, Agent will credit ▇▇▇▇▇▇▇ with the
lesser of: (i) seventy-five percent (75%) of the Value of
Eligible Inventory which is, absent error or other
discrepancy, listed in such Borrowing Base Certificate, and
(ii) Thirty Million Dollars and 00/100 Dollars
($30,000,000.00)."
5. FINANCIAL COVENANTS. (a) Section 10.3(a)(iii) of the Credit
Agreement is hereby amended to in its entirety to read as follows:
"(iii) a ratio of Current Tangible Assets to current
liabilities of not less than One and Three Tenths to One (1.3
to 1), PROVIDED HOWEVER for the calculation of current
liabilities for this Section 10.3(a)(iii) only, current
liabilities shall be exclusive of up to $3,800,000 of
▇▇▇▇▇▇▇'▇ Indebtedness to the Lenders in excess of $40,000,000
under the Loans;"
6. REAFFIRMATION OF COVENANTS, WARRANTIES AND REPRESENTATIONS. Borrower
hereby agrees and covenants that all representations and warranties in the
Credit Agreement, including without limitation all of those warranties and
representations set forth in Article 9, are true and accurate as of the date
hereof. Borrower further reaffirms all covenants in the Credit Agreement, and
reaffirm each of the affirmative covenants set forth in Section 10.1, the
negative covenants set forth
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in Section 10.2 and the financial covenants set forth in Section 10.3 thereof,
as if fully set forth herein, except to the extent modified by this Second
Amendment.
7. 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 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) PROCEEDINGS AND DOCUMENTS. All corporate, governmental and
other proceedings in connection with the transactions contemplated on
the Second Amendment Closing Date, each of the other Loan Documents and
all instruments and documents incidental thereto shall be in form and
substance reasonably satisfactory to Provident.
(f) CHANGES; NONE ADVERSE. Since the date of the most recent
balance sheets of Borrower delivered to Provident, no changes shall
have occurred in the assets, liabilities, financial condition,
business, operations or prospects of Borrower which, individually or in
the aggregate, are material to Borrower, and Provident shall have
completed such review of the status of all current and pending legal
issues as Agent shall deem necessary or appropriate.
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8. 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 Vice President & Chief
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Financial Officer
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THE FIFTH THIRD BANK, Agent
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇
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Name: ▇▇▇▇▇▇ ▇▇▇▇
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Title: Vice President
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THE FIFTH THIRD BANK, Lender
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇
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Name: ▇▇▇▇▇▇ ▇▇▇▇
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Title: Vice President
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NBD BANK, N. A., Lender
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
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Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
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Title: Vice President
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EXHIBIT C
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FORM OF BORROWING BASE CERTIFICATE
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▇▇▇▇▇▇▇ PIANO & ORGAN COMPANY Report # __________ Today's date __________________________________
Accounts Reported as of ___________________
Inventory Reported as of __________________
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I. ELIGIBLE ACCOUNT AVAILABILITY
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A. ELIGIBLE ACCOUNT AVAILABILITY
1. Accounts $___________
LESS:
2. Due greater than 60 Days from date of sale ___________
3. Contract Electronics unpaid greater than 90 Days
and others greater than 120 days ___________
4. Entire Account, if 50% or more unpaid greater than 90
Days ___________
5. Affiliate Accounts ___________
6. Consignment Receivables greater than 120 Days ___________
7. Conditional ___________
8. Non U.S./Canada ___________
9. Non Reps & Warr. (per ss.9.18 of Credit Agreement) ___________
10. Demonstration/Loan ___________
11. Progress/Barter/Contra ___________
12. Personal/family/household ___________
13. Agent Designated Accounts ___________
14. TOTAL INELIGIBLE (sum lines 2 through 13) (___________)
15. SUBTOTAL ___________
16. LESS: ELIGIBLE ACCOUNT NET AVAILABILITY
(15% times Line 15) (___________)
17. TOTAL ELIGIBLE ACCOUNT
AVAILABILITY
(Line 15, Less Line 16) $
==========
18. TOTAL CREDIT FOR ELIGIBLE ACCOUNTS
(Lesser of Line 17, or $15,000,000) $___________
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II. ELIGIBLE INVENTORY AVAILABILITY
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A. ELIGIBLE INVENTORY AVAILABILITY
19. INVENTORY (Wholesale Dealer Cost) LESS: __________
20. Work in Progress (___________)
21. Spare Parts/Shipping and Packaging
Materials (___________)
FORM OF BORROWING BASE CERTIFICATE 540177
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22. Defective Inventory (___________)
23. Returned or repossessed (___________)
24. Non U.S./Canada (___________)
25. TOTAL INELIGIBLE INVENTORY:
(Sum of Lines 20 through 24) (__________)
26. SUBTOTAL __________
27. LESS: NET ELIGIBLE INVENTORY
(25% times Line 26) (__________)
28. TOTAL ELIGIBLE INVENTORY AVAILABILITY
(Line 26 minus Line 27) __________
29. TOTAL CREDIT FOR ELIGIBLE INVENTORY
(The Lesser of Line 28, or $30,000,000) $__________
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III. ELIGIBLE RAW MATERIALS AVAILABILITY
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The Sum of :
30. Value of Raw Materials/electronic (▇▇▇▇▇▇▇'▇ Cost) ____________
31. Times 10% X .10 = $
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32. PLUS: The Value of all other Raw Materials
(▇▇▇▇▇▇▇'▇ Cost)
33. Times 50% X .50 = +
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34. TOTAL ==========
35. Raw Materials Availability
(Lesser of Line 34 or $5,000,000) _____________
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36. TOTAL BORROWING BASE AVAILABILITY
(Sum of Lines 18, 29 and 35) $____________
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37. Lesser of Line 36 and $40,000,000.00 (or $43,800,000.00,
as determined by the Credit Agreement) $____________
38. LESS: Outstanding Standby Letters of Credit (____________)
39. LESS: Outstanding Revolving Credit Balance
(____________)
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TOTAL AVAILABILITY TO BORROWERS $____________
(Sum of Lines 37, 38 and 39)
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We certify that the foregoing report is true and correct.
▇▇▇▇▇▇▇ PIANO & ORGAN COMPANY
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Name:
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Title:
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FORM OF BORROWING BASE CERTIFICATE 540177
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EXHIBIT D
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FORM OF AMENDED AND RESTATED REVOLVING PROMISSORY NOTE(1)
[$21,900,000.00] Cincinnati, Ohio
[April, ___, 1998]
THIS AMENDED AND RESTATED REVOLVING CREDIT 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 [THE FIFTH THIRD BANK/NBD BANK,
N.A.] (hereinafter, together with its permitted successors and assigns, called
"Bank").
This Note has been executed and delivered pursuant to a certain Credit
Agreement dated as of October 16, 1997, as amended by First Amendment to Credit
Agreement dated October 16, 1997 and Second Amendment to Credit Agreement dated
as of April, 27, 1998, by and among Borrower, The Fifth Third Bank, an Ohio
banking corporation, as "Agent", and the Banks listed therein (collectively, and
as the same may be further amended, modified or restated, the "Credit
Agreement"), and is subject to the terms and conditions of the Credit Agreement,
including without limitation, acceleration upon the terms provided therein. All
capitalized terms used herein shall have the meanings assigned to them in the
Credit 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 Credit
Agreement, the principal sum of TWENTY ONE MILLION NINE HUNDRED THOUSAND AND
00/100 DOLLARS ($21,900,000.00) until the earlier of 45 days following the date
of this note or the closing of a new $10,000,000 term loan upon the terms and
conditions set forth in the Second Amendment to the Credit Agreement, and
thereafter $20,000,000.00 (the "Credit Commitment") or so much thereof as is
loaned by Bank pursuant to the provisions hereof and the terms and provisions of
the Credit Agreement, together with interest on the unpaid principal amount as
defined, determined and adjusted pursuant to the Credit Agreement ("Interest
Rate"). Interest shall be due and payable monthly in arrears on the first day of
each month, commencing on November 1, 1997 and thereafter. All interest under
this Note shall be computed on the basis of the actual number of days elapsed
over an assumed year consisting
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1 This Amended and Restated Revolving Promissory Note is issued upon
surrender of and in exchange for a Revolving Promissory Note dated October 16,
1997, in the original principal amount of $20,000,000.00 having a maturity date
of October 1, 2002. The issuance of this Amended and Restated Revolving
Promissory Note is to reflect the various amendments that have been made to the
terms of the Credit Agreement, including but not limited to Lender replacing the
Revolving Promissory Note, and Lender extending to Borrowers, as hereinafter
defined, additional funds under the Revolving Promissory Loan. This Amended and
Restated Revolving Promissory Note shall not be construed as a novation or be
construed in any manner as an extinguishment of the obligations arising under
the original Revolving Promissory Note, or to affect the priority of the
security interest granted in connection with any promissory notes executed
pursuant to the Credit Agreement as defined herein.
AMENDED AND RESTATED REVOLVING PROMISSORY NOTE 540177
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of three hundred sixty (360) days. Principal and all remaining accrued interest
shall be due and payable on or before October 1, 2000, or as otherwise provided
in the Credit Agreement.
This Note is subject to mandatory prepayment upon the terms and
conditions set forth in the Credit Agreement. This Note may be prepaid in whole
or in part as set forth in the Credit Agreement.
If this Note is accelerated pursuant to the Credit Agreement or if a
Default or an Event of Default with respect to any monetary payment under the
Credit 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%) above the Interest Rate.
Subject to the terms and conditions of the Credit Agreement and until
the earlier of October 1, 2000 or the earlier termination of the Credit
Agreement in accordance with its terms, Borrower may borrow, repay and reborrow
from Bank and Bank hereby agrees to lend and relend to Borrower such amounts not
to exceed Bank's Participation Percentage of the Total Credit as the Borrower
may from time to time request.
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 Credit 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 Credit
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 Credit 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 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,
AMENDED AND RESTATED REVOLVING PROMISSORY NOTE 540177
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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.
TIME IS OF THE ESSENCE IN THE PERFORMANCE OF THE OBLIGATIONS
OF THIS NOTE.
IN WITNESS WHEREOF, the undersigned has executed this Revolving Credit
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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AMENDED AND RESTATED REVOLVING PROMISSORY NOTE 540177