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EXHIBIT 10.26
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WAIVER AND EIGHTH AMENDMENT TO CREDIT AGREEMENT
THIS WAIVER AND EIGHTH AMENDMENT TO CREDIT AGREEMENT ("Eighth Amendment")
dated as of February 28, 2000 is by and among XXXXXXX PIANO & ORGAN COMPANY, a
Delaware corporation, (hereinafter, together with its successors in title and
assigns called "Borrower" or "Xxxxxxx"), 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 Credit Agreement
dated as of October 16, 1997, as amended by a First Amendment dated as of
October 16, 1997, a Second Amendment dated as of April 27, 1998, a Third
Amendment dated June 19, 1998, a Fourth Amendment dated September 21, 1998, a
Fifth Amendment dated January 29, 1999, and a Sixth Amendment dated July 15,
1999, and a Waiver and Seventh Amendment dated December 3, 1999 (collectively,
the "Credit Agreement"); and
WHEREAS, Borrower has requested Agent and Lenders to make various
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 Eighth
Amendment.
2. EXHIBITS. Effective immediately upon consummation of the Sale (as
defined in Section ), the following Exhibits to the Credit Agreement shall be
amended in their entirety to read as the corresponding Exhibits to this Eighth
Amendment:
(a) Exhibit C Form of Borrowing Base Certificate
3. Effective immediately upon consummation of the Sale (as defined in
Section 7), Section 3.1 of the Credit Agreement shall be amended to read in its
entirety as follows:
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"Section 3.1. TOTAL CREDIT FACILITY. In consideration of Xxxxxxx'x
payment and performance of its Obligations and subject to the terms and
conditions contained in this Credit Agreement, the Lenders agree to
provide, and Xxxxxxx agrees to accept, an aggregate credit facility of up
to (i) Twenty Million and 00/100 Dollars ($20,000,000.00) on or before
March 29, 2000 and (ii) Seventeen Million and 00/100 Dollars
($17,000,000.00) after March 29, 2000 (the "TOTAL CREDIT"), subject to the
terms and conditions hereof (the "CREDIT FACILITY"). No Loans need be made
by the Lenders if Xxxxxxx is in Default or if there exists any Unmatured
Default (and such Default or Unmatured Default has not been waived by
Agent and Lenders). This is an agreement regarding the extension of
credit, and not the provision of goods or services."
4. ELIGIBLE ACCOUNTS AND ELIGIBLE INVENTORY. Effective immediately upon
consummation of the Sale (as defined in Section ), Section 3.2(a)(i) and Section
3.2(a)(ii) of the Credit Agreement shall be amended 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 Xxxxxxx with the
lesser of: (i) seventy-five percent (75%) 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) Eight Million Five Hundred Thousand and
00/100 Dollars ($8,500,000.00). 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 Xxxxxxx with the lesser of: (i)
sixty-five percent (65%) of the Value of Eligible Inventory which
is, absent error or other discrepancy, listed in such Borrowing Base
Certificate, and (ii) Seventeen Million and 00/100 Dollars
($17,000,000.00)."
5. LETTERS OF CREDIT. Effective immediately upon consummation of the
Sale (as defined in Section ), Article 4 of the Credit Agreement shall be
amended to add Section 4.9 to read in its entirety as follows:
"Section 4.9 REQUIREMENTS AFTER TERMINATION OF AGREEMENT.
Upon termination of the Agreement, whether at stated maturity or by
acceleration, Borrower shall deposit in a non-interest bearing, blocked
deposit account at Fifth Third Bank to which only the Agent will have
access (the "LOC Account"), and Agent is hereby authorized to draw,
advance or disburse under the Agreement, a sum in immediately available
funds equal to the aggregate
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amount of all of the issued and outstanding Letters of Credit. The LOC
Account will secure solely Borrower's obligations under the Letters of
Credit and Borrower hereby grants to Agent, for the benefit of the
Lenders, a security interest in such funds and the LOC Account and all
interest, income, proceeds, investments and reinvestments thereof.
Borrower agrees that after the termination of the Notes, Agent is hereby
authorized to liquidate such account (or any part thereof) and apply the
proceeds as reimbursement for the amount of such drawing or payment under
or with respect to the Letters of Credit. The LOC Account shall continue
until such time as the Letters of Credit shall expire or have been
terminated . At such time, any part of the funds remaining in the Account
shall be remitted to Borrower and discharged from the security interest
granted hereby. Notwithstanding the foregoing provisions of this Section
4.9, Borrower shall not be required to establish the LOC Account or
deposit funds therein upon termination of this Agreement with respect to
any issued and outstanding Letter of Credit that is secured by a letter of
credit from another financial entity reasonably acceptable to Lenders (it
being understood that General Electric Capital Corporation or First Union
National Bank, or affiliates of either such entity which issue letters of
credit in the ordinary course of business, are acceptable to Lenders)."
6. CONTINUATION OF WAIVER. (a) The Agent and the Lenders hereby consent
to waive the application of Section 10.3(a)(iv) of the Credit 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) March 29, 2000 and
(ii) the date on which good faith negotiations between Borrower and General
Electric Capital Corporation for the refinancing of the Loan shall cease.
(b) The Agent and the Lenders hereby consent to waive the
application of Section 10.3(a)(iv) of the Credit 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) March 29, 2000 and (ii) the date
on which good faith negotiations between Borrower and General Electric Capital
Corporation for the refinancing of the Loan shall cease.
7. SALE OF KAC AND SIGNATURE LEASING COMPANY. The Agent and the
Lenders hereby consent to the sale by Borrower of all of the stock of (i)
Keyboard Acceptance Corporation (f/k/a BPO Finance Corporation) a Delaware
corporation and a subsidiary of Borrower, and (ii) Signature Leasing Company, an
Ohio corporation and a subsidiary of Borrower, pursuant to that Stock Purchase
Agreement between Borrower and Duetsche Financial Services Corporation and dated
as of December 8, 1999 (the "Sale"); PROVIDED, HOWEVER, that the proceeds of the
Sale shall first be applied in the inverse order of maturity to the payment of
the remaining installments on the Term Loan, and at any time after the Term Loan
shall have been repaid in full, such proceeds shall be applied in repayment of
the Loan. For purposes of this Section , "Term Loan" shall mean the Obligations
as defined in the Amended and Restated Term Loan Agreement dated as of May 15,
1998, by and among Borrower, Agent and the Lenders thereto, as amended by the
First Amendment thereto dated as of July 15, 1999 and the Waiver and Second
Amendment thereto dated as of December 3, 1999.
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8. 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 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 Eighth Amendment.
9. CONDITIONS PRECEDENT TO CLOSING OF EIGHTH AMENDMENT. On or prior to
the closing of the Eighth Amendment (hereinafter the "Eighth 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 Eighth Amendment Closing Date, of records of all
action taken by Borrower to authorize (i) the execution and delivery of
this Eighth Amendment and all other certificates, documents and
instruments to which it is or is to become a party as contemplated or
required by this Eighth 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 Eighth 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 Eighth 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 Eighth Amendment Closing Date, and no condition shall exist
on the Eighth 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 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.
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(f) CLOSING FEE. Agent, for the pro rata benefit of the Lenders,
shall have received a closing fee in the amount of Twenty Thousand and
00/100 Dollars ($20,000.00).
10. 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 Eighth 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 Eighth Amendment, the latter shall govern.
(c) This Eighth Amendment shall be governed by and shall be
construed and interpreted in accordance with the laws of the State of Ohio.
(d) This Eighth Amendment shall be binding upon and shall inure to
the benefit of the parties hereto and their respective heirs, successors and
assigns.
(e) This Eighth 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 Eighth 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.
XXXXXXX PIANO & ORGAN COMPANY, Borrower
By: /s/ Xxxxx Xxxxxx
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Name: Xxxxx Xxxxxx
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Title: Executive Vice President
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FIFTH THIRD BANK, Agent
By: /s/ Xxxxxx X. Xxxx
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Name: Xxxxxx X. Xxxx
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Title: Vice President
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FIFTH THIRD BANK, Lender
By: /s/ Xxxxxx X. Xxxx
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Name: Xxxxxx X. Xxxx
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Title: Vice President
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BANK ONE, INDIANA, N. A., Lender
By: /s/ Xxxxxx X. Xxxxxxxx
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Name: Xxxxxx X. Xxxxxxxx
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Title: First Vice President
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The undersigned, guarantors of the obligations of Xxxxxxx Piano & Organ Company
under the Credit Agreement, hereby acknowledge and accept the above Eighth
Amendment and the terms and conditions therein.
XXXXXXX TRADING COMPANY
By: /s/ Xxxxx Xxxxxx
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Name: Xxxxx Xxxxxx
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Title: Executive Vice President
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XXXXXXX PIANO COMPANY (CANADA) LIMITED
By: /s/ Xxxxx Xxxxxx
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Name: Xxxxx Xxxxxx
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Title: Executive Vice President
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THE WURLITZER COMPANY
By: /s/ Xxxxx Xxxxxx
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Name: Xxxxx Xxxxxx
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Title: Executive Vice President
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EXHIBIT C
FORM OF BORROWING BASE CERTIFICATE
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XXXXXXX PIANO & ORGAN COMPANY Report # Today's date
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Accounts Reported as of
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Inventory Reported as of
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I. ELIGIBLE ACCOUNT AVAILABILITY
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A. ELIGIBLE ACCOUNT AVAILABILITY
1. Accounts $
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LESS:
2. From sales of goods and services > 60 Days from
date of sale, except Biasco --------------
3. Biasco (other than Biasco Special Account),
Due > 130 Days from date of sale (3/15/99) --------------
4. Biasco Special Account (after 3/1/99) --------------
5. Contract Electronics unpaid > 90 Days
and others > 120 days --------------
6. Entire Account, if 50% or more unpaid > 90 Days --------------
7. Affiliate Accounts --------------
8. Consignment Receivables > 120 Days --------------
9. Conditional --------------
10. Non U.S./Canada --------------
11. Non Reps & Warr. (per section 9.18 of Credit Agreement) --------------
12. Demonstration/Loan --------------
13. Progress/Barter/Contra --------------
14. Personal/family/household --------------
15. Agent Designated Accounts --------------
16. TOTAL INELIGIBLE (sum lines 2 through 15) ( )
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17. SUBTOTAL --------------
18. LESS: ELIGIBLE ACCOUNT NET AVAILABILITY ( )
(25% times Line 17) ------------
19. TOTAL ELIGIBLE ACCOUNT AVAILABILITY $
(Line 17, Less Line 18) ============
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20. TOTAL CREDIT FOR ELIGIBLE ACCOUNTS
(Lesser of Line 19, or $8,500,000) $
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II. ELIGIBLE INVENTORY AVAILABILITY
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A. ELIGIBLE INVENTORY AVAILABILITY
21. INVENTORY (Wholesale Dealer Cost)
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LESS:
22. Work in Progress ( )
23. Spare Parts/Shipping and Packaging Materials ( )
24. Defective Inventory ( )
25. Returned or repossessed ( )
26. Non U.S./Canada ( )
27. TOTAL INELIGIBLE INVENTORY: ( )
(Sum of Lines 22 through 26)
28. SUBTOTAL
29. LESS: NET ELIGIBLE INVENTORY ( )
(35% times Line 28)
30. TOTAL ELIGIBLE INVENTORY AVAILABILITY
(Line minus Line 29)
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31. TOTAL CREDIT FOR ELIGIBLE INVENTORY
(THE LESSER OF LINE 30, OR $17,000,000) ----------------
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III. ELIGIBLE RAW MATERIALS AVAILABILITY
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The Sum of:
32. Value of Raw Materials/electronic (Xxxxxxx'x Cost)
33. Times 10% X .10 = $
34. PLUS: The Value of all other Raw Materials
(Xxxxxxx'x Cost)
35. Times 50% X .50 = $
36. TOTAL
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37. RAW MATERIALS AVAILABILITY
(Lesser of Line 35 or $ )
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38. TOTAL BORROWING BASE AVAILABILITY
(Sum of Lines 20, 31, and 37) $
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39. Lesser of Line 38 and the Total Credit ($20,000,000) -----------------
as determined by the Credit Agreement
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40. LESS: Outstanding Standby Letters of Credit -----------------
( )
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41. LESS: Outstanding Revolving Credit Balance ( )
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TOTAL AVAILABILITY TO BORROWERS
(Sum of Lines 39, 40 and 41) $
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We certify that the foregoing report is true and correct.
XXXXXXX PIANO & ORGAN COMPANY
Name:
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Title:
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