Exhibit 10.1
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THIRD AMENDMENT TO
CREDIT AGREEMENT
Dated as of May 31, 2002
Among
NEW ENGLAND AUDIO CO., INC. and NEA DELAWARE, INC.,
as Borrowers,
TWEETER HOME ENTERTAINMENT GROUP, INC.,
TWEETER HOME ENTERTAINMENT GROUP FINANCING COMPANY TRUST,
THEG USA, L.P.,
TWEETER OF CALIFORNIA, INC.,
THE VIDEO SCENE INC.,
SOUND ADVICE, INC.
and
SOUND ADVICE OF ARIZONA INC.,
as Guarantors
THE LENDERS PARTY HERETO
and
FLEET NATIONAL BANK,
as Agent for the Lenders
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THIRD AMENDMENT TO CREDIT AGREEMENT
This THIRD AMENDMENT TO CREDIT AGREEMENT is entered into as of May 31,
2002 by and among NEW ENGLAND AUDIO CO., INC., a Massachusetts corporation ("New
England Audio"), and NEA DELAWARE, INC., a Delaware corporation ("NEA
Delaware"), (each a "Borrower" and collectively the "Borrowers"), TWEETER HOME
ENTERTAINMENT GROUP, INC., a Delaware corporation ("Tweeter"), TWEETER HOME
ENTERTAINMENT GROUP FINANCING TRUST, a Massachusetts business trust ("Tweeter
Trust"), THEG USA, L.P., a Delaware limited partnership ("THEG"), TWEETER OF
CALIFORNIA, INC., a California corporation ("TOC"), THE VIDEO SCENE INC., a
California corporation ("TVS"), SOUND ADVICE, INC., a Florida corporation
("Sound Advice"), successor by merger to TWT Acquisition Corp. and SAI
Distributors, Inc., and SOUND ADVICE OF ARIZONA INC., a Florida corporation
("SAOA") (Tweeter, Tweeter Trust, THEG, TOC, TVS, Sound Advice and SAOA, each a
"Guarantor" and collectively the "Guarantors") (each Borrower and each Guarantor
a "Loan Party" and the Borrowers and the Guarantors collectively the "Loan
Parties"), WACHOVIA BANK, N.A., a national banking associations ("Wachovia"),
successor by merger to First Union National Bank and FLEET NATIONAL BANK,
national banking association, as Agent (the "Agent" and together with Wachovia,
the "Lenders").
RECITALS
The Borrowers, the Guarantors, the Lenders and the Agent are parties to
a Credit Agreement dated as of June 29, 2001 (as amended, the "Credit
Agreement"). All capitalized terms used herein and not otherwise defined shall
have the meanings set forth in the Credit Agreement. The Loan Parties, desire to
amend the Credit Agreement in certain respects. The Agent and the Lenders are
willing to amend the Credit Agreement on the terms and conditions set forth
herein.
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Borrowers, the Guarantors, the
Lenders and the Agent hereby amend the Credit Agreement as follows:
Section 1. AMENDMENT TO DEFINITIONS.
(a) Section 1.1 of the Credit Agreement is hereby amended by
deleting the definition "MAXIMUM REVOLVING CREDIT AMOUNT" in its entirety and
substituting therefor the following:
"MAXIMUM REVOLVING CREDIT AMOUNT" shall mean as of any date
of determination, the lesser of (a) $100,000,000 or (b) the amount to
which the Maximum Revolving Credit Amount may have been reduced
pursuant to Section 2.10 hereof; PROVIDED that if the obligation of the
Lenders to make further Revolving Credit Advances is terminated upon
the occurrence of an Event of Default, the Maximum Revolving Credit
Amount as of any date of determination thereafter shall be deemed to be
$0."
Section 2. AMENDMENT TO CREDIT AGREEMENT.
(a) Article 7 of the Credit Agreement is hereby amended by
adding the following Section 7.6 at the end thereof:
"Section 7.6 CONSOLIDATED NET INCOME. Tweeter and its
subsidiaries shall earn Consolidated Net Income of not less than $1 for
each period of four consecutive fiscal quarters, commencing with the
four-quarter period ending June 30, 2002."
Section 3. REVISED REVOLVING CREDIT NOTES. The Agent, the Lenders and
the Borrowers hereby agree that the Borrowers shall execute and deliver to the
Lenders the Revolving Credit Notes in the form of EXHIBIT A hereto to evidence
the Revolving Credit Advances, which notes, from and after the date hereof,
shall be deemed to be the Revolving Credit Notes under the Credit Agreement.
Section 4. AMENDMENT OF SCHEDULES 1 AND 2. SCHEDULES 1 AND 2 to the
Credit Agreement are hereby deleted in their entirety and the new SCHEDULES 1
AND 2 attached hereto are substituted therefor.
Section 5. EFFECTIVENESS; CONDITIONS TO EFFECTIVENESS. This Third
Amendment to Credit Agreement shall become effective as of May 31, 2002 upon
execution hereof by the Borrowers, the Guarantors, the Lenders and the Agent and
satisfaction of the following conditions:
(a) EXECUTION OF REVOLVING CREDIT NOTES. The Borrowers shall
have executed the Revolving Credit Notes substantially in the form of EXHIBIT A
hereto in favor of the Lenders.
(b) OFFICERS' CERTIFICATE. The Loan Parties shall have
delivered to the Agent an Officers' Certificate in the form of EXHIBIT B hereto.
(c) OPINION OF COUNSEL. The Loan Parties shall have delivered
to the Agent an opinion of Goulston & Storrs, P.C., counsel to the Loan Parties,
in form and substance satisfactory to the Agent.
(d) RESOLUTIONS. The Loan Parties shall have delivered to the
Agent copies of the resolutions of the Boards of Directors or partners of the
Loan Parties authorizing the execution, delivery and performance of this
Amendment, and the other Lender Agreements of the date hereof to which any Loan
Party is a party, certified by an officer (or in the case of the Tweeter Trust,
trustee) or partner of each Loan Party (which certificate shall state that such
resolutions are in full force and effect).
(e) EXISTENCE, QUALIFICATION AND GOOD STANDING CERTIFICATES.
The Loan Parties shall have delivered to the Agent certificates of legal
existence for the Loan Parties of recent date issued by the appropriate
governmental authorities.
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(f) AMENDMENT FEE. The Agent, on behalf of the Lenders, shall
have received from the Borrowers an amendment fee in the amount of $62,500.
Section 6. REPRESENTATIONS AND WARRANTIES; NO DEFAULT. The Loan Parties
hereby confirm to the Lenders and the Agent the representations and warranties
of the Loan Parties set forth in Article 5 of the Credit Agreement as of the
date hereof, as if set forth herein in full (except as to transactions permitted
hereunder and described in a Compliance Certificate previously delivered to the
Agent and except that the references in Article 5 to the 2000 Financial
Statements shall be deemed to refer to the most recent annual audited
consolidated financial statements of Tweeter and its Subsidiaries furnished to
the Agent). The Loan Parties hereby certify that, after giving effect hereto, no
Default exists under the Credit Agreement.
Section 7. MISCELLANEOUS. The Loan Parties agree, jointly and
severally, to pay on demand all the Agent's fees and reasonable expenses in
preparing, executing and delivering this Third Amendment to Credit Agreement,
and all related instruments and documents, including, without limitation, the
reasonable fees and out-of-pocket expenses of the Agent's special counsel,
Xxxxxxx Procter LLP. This Third Amendment to Credit Agreement shall be a Lender
Agreement and shall be governed by and construed and enforced under the laws of
The Commonwealth of Massachusetts without regard to principles relating to
choice of law.
[INTENTIONALLY LEFT BLANK]
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IN WITNESS WHEREOF, the Borrowers, the Guarantors, the Lender and the
Agent have caused this Third Amendment to the Credit Agreement to be executed
under seal by their duly authorized officers as of the date first set forth
above.
NEW ENGLAND AUDIO CO., INC.
By: /s/ Xxxxxx Xxxxxxx
------------------------------------
Name: Xxxxxx XxXxxxx
Title: Senior Vice President and
Chief Financial Officer
NEA DELAWARE, INC.
By: /s/ Xxxxxx Xxxxxxx
------------------------------------
Name: Xxxxxx XxXxxxx
Title: Senior Vice President and
Chief Financial Officer
TWEETER HOME ENTERTAINMENT GROUP, INC.
By: /s/ Xxxxxx Xxxxxxx
------------------------------------
Name: Xxxxxx XxXxxxx
Title: Senior Vice President and
Chief Financial Officer
TWEETER HOME ENTERTAINMENT
GROUP FINANCING COMPANY TRUST
By: /s/ Xxxxxx Xxxxxxx
------------------------------------
Name: Xxxxxx XxXxxxx
Title: Senior Vice President and
Chief Financial Officer
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THEG USA, L.P
By: New England Audio Co., Inc.,
General Partner
By: /s/ Xxxxxx Xxxxxxx
------------------------------------
Name: Xxxxxx XxXxxxx
Title: Senior Vice President and
Chief Financial Officer
TWEETER OF CALIFORNIA, INC.
By: /s/ Xxxxxx Xxxxxxx
------------------------------------
Name: Xxxxxx XxXxxxx
Title: Senior Vice President and
Chief Financial Officer
THE VIDEO SCENE INC.
By: /s/ Xxxxxx Xxxxxxx
------------------------------------
Name: Xxxxxx XxXxxxx
Title: Senior Vice President and
Chief Financial Officer
SOUND ADVICE, INC.
By: /s/ Xxxxxx Xxxxxxx
------------------------------------
Name: Xxxxxx XxXxxxx
Title: President
SOUND ADVICE OF ARIZONA INC.
By: /s/ Xxxxxx Xxxxxxx
------------------------------------
Name: Xxxxxx XxXxxxx
Title: President
FLEET NATIONAL BANK, as Agent
By: /s/ Xxxxxxx X. Xxxxxxx
------------------------------------
Name: Xxxxxxx X. Xxxxxxx
Title: Vice President
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FLEET NATIONAL BANK
By: /s/ Xxxxxxx X. Xxxxxxx
------------------------------------
Name: Xxxxxxx X. Xxxxxxx
Title: Vice President
WACHOVIA BANK, N.A.
By: /s/ Xxxx X. Xxxxxx
------------------------------------
Name Xxxx X. Xxxxxx
Title: Vice President
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SCHEDULE 1
COMMITMENT PERCENTAGES
MAXIMUM AMOUNT OF
LENDER COMMITMENT PERCENTAGE REVOLVING CREDIT ADVANCES
Fleet National Bank 65% $65,000,000
Wachovia Bank, N.A. 35% $35,000,000
SCHEDULE 2
PRICING SCHEDULE
The Eurodollar Rate Margin and the Applicable Commitment Fee on any day
are the respective percentages set forth below in the applicable row under the
column corresponding to the Status that exists on such day:
---------------------------- ------------------ ------------------ -------------------- ------------------
STATUS XXXXX 0 XXXXX XX XXXXX XXX XXXXX XX
---------------------------- ------------------ ------------------ -------------------- ------------------
---------------------------- ------------------ ------------------ -------------------- ------------------
Eurodollar Rate Margin 1.50 1.75 2.00 2.25
---------------------------- ------------------ ------------------ -------------------- ------------------
Commitment Fee 0.25 0.25 0.375 0.375
---------------------------- ------------------ ------------------ -------------------- ------------------
For purposes of this Schedule, the following terms have the following
meanings:
"Level I Status" exists at any date if, at such date, the
Consolidated Leverage Ratio is less than 1.50 to 1.00 and no Default
exists.
"Level II Status" exists at any date if, at such date, the
Consolidated Leverage Ratio is equal to or greater than 1.50 to 1.00
and less than 2.00 to 1.00 and no Default exists.
"Level III Status" " exists at any date if, at such date, the
Consolidated Leverage Ratio is equal to or greater than 2.00 to 1.00
and less than 2.50 to 1.00 and no Default exists.
"Level IV Status" exists at any date if, at such date, no
other Status exists.
"Status" refers to the determination of which of Level I
Status, Level II Status, Level III Status or Level IV Status exists at
any date.
For the period from the Closing Date through the date five Business
Days following the Agent's receipt of the financial statements of Tweeter and
its Subsidiaries for the period ended June 30, 2001, the Status shall be deemed
to be Level I so long as no Default exists. Thereafter, the "Consolidated
Leverage Ratio" shall be determined on the date five Business Days following the
Agent's receipt of the financial statements of Tweeter and its Subsidiaries for
the previous fiscal quarter certified by the chief financial officer of Tweeter,
commencing with receipt of the financial statements for the fiscal quarter
ending June 30, 2001, and shall be equal to the Consolidated Leverage Ratio in
effect as of the end of such previous fiscal quarter as reflected on such
financial statements.
