1
Exhibit 10.4
SIXTH AMENDMENT TO
CREDIT AGREEMENT
THIS SIXTH AMENDMENT TO CREDIT AGREEMENT ("Sixth Amendment") dated as
of July 15, 1999 is by and among XXXXXXX PIANO & ORGAN COMPANY, a Delaware
corporation, (hereinafter, together with its successors in title and assigns
called "Borrower" or "Xxxxxxx"), 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 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
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, and
a Fifth Amendment dated January 29, 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 Sixth
Amendment.
2. Definitions.
(a) Section 1.2 of the Credit Agreement is hereby amended to add the
following definitions to read in their entirety as follows:
"Applicable Margin" shall initially mean 2.00%; provided that
upon the completion of Borrower's next fiscal quarter after the Sixth
Amendment Closing Date, the Applicable
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Margin shall mean the amount set forth below, as a percentage, to be
added to the LIBOR Rate, and used in calculating the Interest Rate at
any time:
===========================================================================================
MARGIN RATIO APPLICABLE MARGIN
-------------------------------------------------------------------------------------------
Less than 1.0 to 1 2.00%
-------------------------------------------------------------------------------------------
Greater than or equal to 1.0 to 1, but 1.75%
less than 1.5 to 1
-------------------------------------------------------------------------------------------
Greater than or equal to 1.5 to 1 1.50%
===========================================================================================
The determination of Applicable Margin hereunder as of any Interest
Adjustment Date shall be based on unaudited quarterly financial
statements and compliance certificates required to be delivered
pursuant to Section 10.3(a)(iii) hereof, provided, that in the event of
any discrepancy between computations based upon any compliance
certificates and the related audited financial statements furnished
pursuant to Section 10.3(a)(i), the computation based upon the audited
financial statements shall govern (retroactive to the most recent
Interest Adjustment Date). In the event of a retroactive correction of
the determinations of the Applicable Margin in favor of the Lenders,
the amount of interest thereby overdue and payable by the Borrower
shall be paid to the Lenders within five (5) days after the date of
such retroactive correction. Upon any upward adjustment of the
Applicable Margin, there shall be no downward adjustment of the
Applicable Margin until the first day of the first month after the
Margin Ratio shall have been less than or equal to the Margin Ratio
which would result in such downward adjustment as of the end of a
subsequent fiscal quarter. No downward adjustment of the Applicable
Margin shall occur if, at the time such downward adjustment would
otherwise be made, there shall exist any Default or Event of Default,
provided, that such downward adjustment shall be made on the first day
of the first month after the date on which any Default or Event of
Default shall have been waived or cease to exist.
"Capital Lease" means any lease of property which has been or
is required to be capitalized on a Borrower's financial statements in
accordance with GAAP.
"Contingent Obligation" means any direct or indirect
liability, contingent or otherwise, with respect to any Indebtedness,
lease, dividend, letter of credit, banker's acceptance or other
obligation of another if the primary purpose or intent thereof in
incurring the Contingent Obligation is to provide assurance to the
obligee of such obligation of another that such obligation of another
will be paid or discharged, or that any agreements relating thereto
will be complied with, or that the holders of such obligation will be
protected (in whole or in part) against loss in respect thereof.
Contingent Obligations shall include, without limitation, (i) the
direct or indirect guaranty, endorsement (otherwise than for collection
or deposit in the ordinary course of business), co-making, discounting
with recourse or sale with recourse by such Person of the obligation of
another; (ii) any liability
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for the obligations of another through any agreement (contingent or
otherwise) (A) to purchase, repurchase or otherwise acquire such
obligation or any security therefor, or to provide funds for the
payment or discharge of such obligation (whether in the form of loans,
advances, stock purchases, capital contributions or otherwise), (B) to
maintain the solvency of any balance sheet item, level of income or
financial condition of another, or (C) to make take-or-pay, pay-or-play
or similar payments if required regardless of nonperformance by any
other party or parties to an agreement, if in the case of any agreement
described under subclauses (A), (B) or (C) of this sentence the primary
purpose or intent thereof is as described in the preceding sentence.
The amount of any Contingent Obligation shall be equal to the amount of
the obligation so guaranteed or otherwise supported."Debt" shall have
the meaning set forth in Section .
"Conway Closure" means the suspension of Borrower's business
operations at and the transfer of all of borrowers assets from the
facility located at Highway 365 & 000 Xxxxxxx Xxxx, Xxxxxx, Xxxxxxxx
00000-0000.
"EBITDA" for any period shall mean without duplication, (i)
Net Income; plus (ii) for such period any Interest Expense deducted in
the determination of Net Income; plus (iii) any income and franchise
taxes paid in cash and included in the determination of Net Income;
plus (iv) amortization and depreciation deducted in determining Net
Income for such period; minus (v) the sum for such period of interest
income, extraordinary non-cash gains, gains from sales of assets (other
than sales of inventory in the ordinary course of business) and
unrealized losses from changes in currency; plus (vi) extraordinary
non-cash losses; plus (vii) any one time cash charges incurred relative
to the Conway Closure in an aggregate amount not to exceed
$1,500,000.00, provided that such charge is recognized in the month(s)
incurred.
"Fixed Charges" means, for any period, the following, each
calculated for such period, without duplication: (i) Interest Expense
paid on accrual; plus (ii) any income and franchise taxes paid in cash;
plus (iii) scheduled payments of principal with respect to all
Indebtedness for Borrowed Money of Borrower including the principal
component of any cash payments made on any Capital Lease.
"Indebtedness for Borrowed Money" means at any particular
time, all Indebtedness (i) in respect of any money borrowed; (ii) under
or in respect of any Contingent Obligation (whether direct or indirect)
of any money borrowed; (iii) evidenced by any loan or credit agreement,
promissory note, debenture, bond, guaranty or other similar written
obligation to pay money; or (iv) Capital Lease obligations.
" Interest Expense" means, for any period, the total amount of
all charges for the use of funds (whether characterized as interest,
debt service or otherwise) payable during such period with respect to
all Indebtedness of a Borrower for such period including the
amortization of debt discounts and the amortization of all fees payable
in connection with the incurrence of such Indebtedness.
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"Interest Adjustment Date" means the first day of the first
month after the date on which each of the Quarterly Compliance
Certificates (together with monthly unaudited financial statements for
each month during such quarter) are required to be delivered under
Section 10.1(k)(iii) with respect to the most recent quarter.
"Interest Rate" means the rate of interest per annum equal to
the LIBOR Rate plus the Applicable Margin.
"Juarez Sale" means the sale of Borrower's real property
located in Fabricantes Tecnicos, X.X. Xxxxxx, Mexico.
"Margin Ratio" means the ratio of EBITDA to Fixed Charges, as
calculated in Section 10.3(a)(iv) hereof.
" Net Income" means, for any period, the aggregate of the net
income (or net loss) of a Borrower for such period, determined in
accordance with GAAP, but excluding, without duplication: (i) the
income of any Person in which a Borrower has an ownership interest,
unless received by such Borrower in a cash distribution; (ii) any
after-tax gains or losses attributable to dispositions of assets; (iii)
the income of any Subsidiary of a Borrower to the extent that the
declaration or payment of dividends or similar distributions by that
Subsidiary of that income is not at that time permitted by operation of
the terms of its charter or any agreement, instrument, judgment,
decree, order, statute, rule or governmental regulation applicable to
that Subsidiary; and (iv) any after-tax extraordinary non-cash gains or
extraordinary non-cash losses.
3. Exhibits. The following Exhibits to the Credit Agreement are hereby
amended in their entirety to read as the corresponding Exhibits to this Sixth
Amendment:
(a) Exhibit C Form of Borrowing Base Certificate;
(b) Exhibit D Form of Fourth Amended and Restated Revolving
Promissory Note
(c) Exhibit H Form of Quarterly Covenant Certificate;
(d) Exhibit I Form of Monthly Compliance Certificate.
4. Section 3.1 of the Credit Agreement is hereby amended to read in its
entirety as follows:
"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, (i) until
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December 31, 1999, an aggregate credit facility of up to Forty Million
and 00/100 Dollars ($40,000,000.00), provided, that, from and after the
closing of the Xxxxxx Sale, up to Thirty-Five Million and 00/100
($35,000,000.00), and (ii) after December 31, 1999, an aggregate credit
facility of up to Thirty Million and 00/100 Dollars ($30,000,000.00)
(the "Total Credit"), subject to the terms and conditions hereof (the
"Credit Facility"). No Loans need be made by the Lenders if Xxxxxxx 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."
5. 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 Xxxxxxx
with the lesser of: (i) eighty-five percent (85%) until
September 30, 1999, and eighty percent (80%) from and after
September 30, 1999, 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 Xxxxxxx with the lesser
of: (i) seventy-five percent (75%) until September 30, 1999,
and sixty-five percent (65%) from and after September 30,
1999, 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)."
6. Interest; Calculation of Charges; Fees; Loans. Section 3.5(a)(i) of
the Credit Agreement is hereby amended in its entirety to read as follows:
"(i) Interest. Xxxxxxx hereby agrees to pay interest
to Agent for the benefit of the Lenders, on the average daily
loan balance owed under Xxxxxxx'x Loans interest at the annual
rate equal to the Interest Rate. Any change in the Applicable
Margin shall become effective in accordance with the
definition of Applicable Margin. Interest on Loans prior to
maturity shall be payable monthly and at maturity.
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7. Financial Covenants. Section 10.3(a) of the Credit Agreement is
hereby amended as follows:
(a) Section 10.3(a)(i) is hereby amended to read in its entirety
as follows:
"(i) a Tangible Net Worth in the combined amount of not less
than Forty Million and 00/100 Dollars ($40,000,000.00) prior to the
Xxxxxx Sale, and thereafter not less than Forty-Five Million and 00/100
Dollars ($45,000,000.00).
(b) Section 10.3(a)(ii) is hereby amended to read in its entirety
as follows:
"(ii) a ratio of Debt to Tangible Net Worth of not more than
one and one-half to one (1.5 to 1).
(c) The following clause is added as Section 10.3(a)(iv) to read
in its entirety as follows:
"(iv) a ratio of EBITDA to Fixed Charges, calculated on a four
(4) quarter rolling basis, greater than the amount set forth below
opposite the applicable time period.
===========================================================================================
Minimum Ratio of
Four (4) Quarter Period Ending EBITDA to Fixed Charges
-------------------------------------------------------------------------------------------
June 30, 1999 .75:1
-------------------------------------------------------------------------------------------
September 30, 1999 .95 to 1
-------------------------------------------------------------------------------------------
December 31, 1999 and thereafter 1.50 to 1
===========================================================================================
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 Sixth Amendment.
9. Conditions Precedent to Closing of Sixth Amendment. On or prior to
the closing of the Sixth Amendment (hereinafter the "Sixth 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 Sixth Amendment Closing
Date, of records of all action taken by Borrower to authorize
(i) the
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execution and delivery of this Sixth Amendment and all other
certificates, documents and instruments to which it is or is
to become a party as contemplated or required by this Sixth
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 Sixth 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 Sixth 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 Sixth Amendment
Closing Date, and no condition shall exist on the Sixth
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.
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 Sixth 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 Sixth
Amendment, the latter shall govern.
(c) This Sixth Amendment shall be governed by and shall be
construed and interpreted in accordance with the laws of the
State of Ohio.
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(d) This Sixth Amendment shall be binding upon and shall inure to
the benefit of the parties hereto and their respective heirs,
successors and assigns.
(e) This Sixth 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 Sixth 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 X. Xxxxxxxx
-------------------------------
Name: Xxxxx X. Xxxxxxxx
-----------------------------
Title: Treasurer
----------------------------
THE FIFTH THIRD BANK, Agent
By: /s/ Xxxxxx Xxxx
-------------------------------
Name: Xxxxxx Xxxx
-----------------------------
Title: Vice President
----------------------------
THE FIFTH THIRD BANK, Lender
By: /s/ Xxxxxx Xxxx
-------------------------------
Name: Xxxxxx Xxxx
-----------------------------
Title: Vice President
----------------------------
BANK ONE, INDIANA, N. A., Lender
By: /s/ Xxxxxx Xxxxxx
-------------------------------
Name: Xxxxxx Xxxxxx
-----------------------------
Title:
----------------------------
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EXHIBIT D
FORM OF FOURTH AMENDED AND RESTATED REVOLVING PROMISSORY NOTE(1)
[$20,000,000.00] Cincinnati, Ohio
[July __, 1999]
THIS FOURTH AMENDED AND RESTATED REVOLVING CREDIT NOTE ("Note") is made
and entered into as of the date hereof by XXXXXXX PIANO & ORGAN COMPANY, a
Delaware corporation, (the "Borrower") to the order of [THE FIFTH THIRD
BANK/BANK ONE, INDIANA, N.A., formerly known as 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, Second Amendment to Credit Agreement dated as
of April, 27, 1998, Third Amendment to Credit Agreement dated as of June 19,
0000, Xxxxxx Xxxxxxxxx to Credit Agreement dated as of September 21, 1998, a
Fifth Amendment dated as of January 29, 1999, and a Sixth Amendment dated as of
July ___, 1999, 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 MILLION AND 00/100 DOLLARS
($20,000,000.00), subject to the mandatory reductions set forth in Section 3.1
of the Credit Agreement (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. 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. 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.
--------
(1) This Fourth Amended and Restated Revolving Promissory Note is
issued upon surrender of and in exchange for a Third Amended and Restated
Revolving Promissory Note dated January 29, 1999, in the original principal
amount of $22,000,000.00 having a maturity date of October 1, 2000. The issuance
of this Fourth 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 Third Amended and Restated
Revolving Promissory Note. This Fourth 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 Amended and Restated
Revolving Promissory Note, the Second Amended and Restated Revolving Promissory
Note, the Third Amended and Restated 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.
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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, prorating, allocating and spreading in equal parts during the period
of the full stated term of this
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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 Note as of the
day and year set forth above.
XXXXXXX PIANO & ORGAN COMPANY,
a Delaware corporation
By:
----------------------------------
Name:
--------------------------------
Title:
-------------------------------
13
FORM OF BORROWING BASE CERTIFICATE
XXXXXXX PIANO & ORGAN COMPANY Report # Today's date
--------------- ----------------------------------------------
Accounts Reported as of
-----------------------
Inventory Reported as of
----------------------
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I. ELIGIBLE ACCOUNT AVAILABILITY
--------------------------------------------------------------------------------------------------------------------
A. ELIGIBLE ACCOUNT AVAILABILITY
1. Accounts $
------------
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) ( )
------------
17. SUBTOTAL
------------
18. LESS: ELIGIBLE ACCOUNT NET AVAILABILITY ( )
(15% times Line 17, and after 9/30/99, 20% times Line 17) ------------
19. TOTAL ELIGIBLE ACCOUNT AVAILABILITY $
(Line 17, Less Line 18) ------------
------------------
20. TOTAL CREDIT FOR ELIGIBLE ACCOUNTS |$ |
(Lesser of Line 19, or $15,000,000) | ------------ |
------------------
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II. ELIGIBLE INVENTORY AVAILABILITY
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A. ELIGIBLE INVENTORY AVAILABILITY
21. INVENTORY (Wholesale Dealer Cost)
LESS:
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22. Work in Progress ( )
23. Spare Parts/Shipping and Packaging Materials ( )
24. Defective Inventory ( )
25. Returned or repossessed ( )
26. Non U.S./Canada ( )
27. TOTAL INELIGIBLE INVENTORY: ( )
(Sum of Lines 22 through 26)
28. SUBTOTAL
29. LESS: NET ELIGIBLE INVENTORY ( )
(25% times Line 28, and after 9/30/99, 35% of Line 28)
30. TOTAL ELIGIBLE INVENTORY AVAILABILITY
(Line 28 minus Line 29)
------------------
31. TOTAL CREDIT FOR ELIGIBLE INVENTORY |$ |
(The Lesser of Line 30, or $30,000,000) | ------------ |
------------------
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III. ELIGIBLE RAW MATERIALS AVAILABILITY
--------------------------------------------------------------------------------------------------------------------
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
============
------------------
37. Raw Materials Availability | |
(Lesser of Line 35 or $5,000,000) | ------------ |
------------------
====================================================================================================================
38. TOTAL BORROWING BASE AVAILABILITY
(Sum of Lines 20, 31 and 37) $
====================================================================================================================
39. Lesser of Line 38 and the Total Credit ------------------
($40,000,000, $35,000,000 or $30,000,000) | |
as determined by the Credit Agreement) | ------------ |
------------------
40. LESS: Outstanding Standby Letters of Credit ------------------
| ( ) |
| ------------ |
------------------
41. LESS: Outstanding Revolving Credit Balance ------------------
| ( ) |
| ------------ |
------------------
====================================================================================================================
TOTAL AVAILABILITY TO BORROWERS
(Sum of Lines 39, 40 and 41) $
====================================================================================================================
We certify that the foregoing report is true and correct.
XXXXXXX PIANO & ORGAN COMPANY
Name:
--------------------------
Title:
-------------------------
