EXHIBIT 10.14
FOURTH AMENDMENT TO
CREDIT AGREEMENT
Dated as of September 27, 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
FOURTH AMENDMENT TO CREDIT AGREEMENT
This FOURTH AMENDMENT TO CREDIT AGREEMENT is entered into as of September
27, 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, NATIONAL ASSOCIATION, a national banking association
("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. In connection with an anticipated
write-down of goodwill and corresponding charge to Consolidated Net Income of
not to exceed $197,000,000 to be taken by Tweeter and its Subsidiaries during
the quarter ended September 30, 2002 (the "2002 Goodwill Charge"), the Loan
Parties desire to amend the Credit Agreement in certain respects and to compute
certain covenants without regard to the effect of the 2002 Goodwill Charge. The
Agent and the Lenders are willing to amend the Credit Agreement and agree that
such covenants may be computed without regard to the effect of the 2002 Goodwill
Charge, in each case 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:
AMENDMENT TO DEFINITIONS. SECTION 1.1 OF THE CREDIT AGREEMENT IS
HEREBY AMENDED BY ADDING THE FOLLOWING
DEFINITIONS THERETO IN ALPHABETICAL ORDER:
"Consolidated Intangible Assets" shall mean (a) all intercompany
loans (without duplication for exclusions made in accordance with
generally accepted accounting principles) and loans to any employee or
officer of Tweeter and its Subsidiaries, and all amounts payable to
Tweeter and its Subsidiaries from any of the aforesaid persons, (b) all
assets which would be classified as intangible assets under generally
accepted accounting principles consistently applied, including, without
limitation, goodwill (whether representing the excess of cost over book
value of assets acquired or otherwise), patents, trademarks, trade names,
copyrights, franchises, and deferred charges (including, without
limitation, unamortized debt discount and expense, organization costs, and
research and development costs), (c) treasury stock and minority interests
in other corporations or business organizations, (d) cash set apart and
held in a sinking or other analogous fund established for the purpose of
redemption or other retirement of capital stock, and (e) to the extent not
already deducted from total assets, reserves for depreciation, depletion,
obsolescence and/or amortization of properties and all other reserves or
appropriations of retained earnings which, in accordance with generally
accepted accounting principles consistently applied, should be established
in connection with the business conducted by Tweeter and its Subsidiaries.
"Consolidated Tangible Net Worth" shall mean, at any date as of
which the amount thereof shall be determined, the consolidated assets of
Tweeter and its Subsidiaries less the sum of (a) Consolidated Intangible
Assets and (b) the consolidated liabilities of Tweeter and its
Subsidiaries, determined in accordance with generally accepted accounting
principles.
AMENDMENTS TO CREDIT AGREEMENT.
ARTICLE 7 OF THE CREDIT AGREEMENT IS HEREBY AMENDED BY DELETING SECTION
7.3 THEREOF IN ITS ENTIRETY AND SUBSTITUTING THEREFOR THE FOLLOWING:
Section 7.3 Consolidated Tangible Net Worth. Commencing with the
quarter ending September 30, 2002, Tweeter and its Subsidiaries shall, at
all times, maintain a Consolidated Tangible Net Worth equal to or greater
than the sum of (a) $140,000,000 plus (b) 50% of cumulative Consolidated
Net Income (without deduction for any losses) for each quarter, commencing
with the quarter ending on December 31, 2002 plus (c) all amounts received
by Tweeter and its Subsidiaries after September 30, 2002 from the issuance
of equity interests.
ARTICLE 7 OF THE CREDIT AGREEMENT IS HEREBY FURTHER AMENDED BY DELETING
FROM SECTION 7.4 THEREOF AND THE TITLE OF SUCH SECTION, THE PHRASE
"INTEREST EXPENSE" AND TO SUBSTITUTE THEREFOR THE PHRASE "INTEREST
CHARGES".
ARTICLE 7 OF THE CREDIT AGREEMENT IS HEREBY FURTHER AMENDED BY DELETING
SECTION 7.6 THEREOF IN ITS ENTIRETY AND SUBSTITUTING THEREFOR THE
FOLLOWING:
Section 7.6 Consolidated EBITDA. Tweeter and its Subsidiaries shall
earn Consolidated EBITDA of not less than $45,000,000 for each period of
four consecutive fiscal quarters, commencing with the four-quarter period
ending September 30, 2002.
COMPUTATION OF CERTAIN COVENANTS. THE LENDERS AND THE AGENT HEREBY AGREE
THAT THE COVENANTS CONTAINED IN SECTION 7.1, 7.2, 7.4 AND 7.6 OF THE CREDIT
AGREEMENT, AS AMENDED BY THIS FOURTH AMENDMENT TO CREDIT AGREEMENT, SHALL BE
CALCULATED WITHOUT REGARD TO THE EFFECT OF THE 2002 GOODWILL CHARGE WITH RESPECT
TO ALL CALCULATIONS TO BE MADE FROM SEPTEMBER 30, 2002 THROUGH JUNE 30, 2003.
EFFECTIVENESS; CONDITIONS TO EFFECTIVENESS. THIS FOURTH AMENDMENT TO
CREDIT AGREEMENT SHALL BECOME EFFECTIVE AS OF SEPTEMBER 27, 2002 UPON (A)
EXECUTION HEREOF BY THE BORROWERS, THE GUARANTORS, THE LENDERS AND THE AGENT AND
(B) RECEIPT BY AGENT, ON BEHALF OF THE LENDERS, OF AN AMENDMENT FEE IN THE
AMOUNT OF $10,000 TO BE PAID TO THE LENDERS PRO RATA.
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 THAT THE REFERENCES IN ARTICLE 5
OF THE CREDIT AGREEMENT 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.
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 FOURTH 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 FOURTH 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]
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
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
FLEET NATIONAL BANK
By: /s/ Xxxxxxx X. Xxxxxxx
--------------------------------
Name: Xxxxxxx X. Xxxxxxx
Title: Vice President
WACHOVIA BANK, NATIONAL ASSOCIATION
By: /s/ Xxxx X. Xxxxxx
--------------------------------
Name Xxxx X. Xxxxxx
Title: Vice President
