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Exhibit 10.5
FIRST AMENDMENT TO
AMENDED AND RESTATED TERM LOAN AGREEMENT
THIS FIRST AMENDMENT TO AMENDED AND RESTATED TERM LOAN AGREEMENT
("First 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 Amended and
Restated Term Loan Agreement dated as of May 15, 1998, (the "Term Loan
Agreement"); and
WHEREAS, Borrower have requested Agent and Lenders to make various
revisions to the Term Loan Agreement as set forth herein; and
WHEREAS, Borrower, Agent and Lenders now wish to amend the Term Loan
Agreement in accordance with the terms and provisions hereof;
NOW, THEREFORE, the parties hereto agree to supplement and amend the
Term Loan 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 Term Loan Agreement unless the context hereof
requires otherwise. Any definitions as capitalized terms set forth herein shall
be deemed incorporated into the Term Loan Agreement as amended by this First
Amendment.
2. Definitions.
(a) Section 2.1 of the Term Loan Agreement is hereby to amend the
following definitions to read in their entirety as follows:
"Interest Rate" means, with respect to the Term Loan, the rate
of interest per annum equal to the LIBOR Rate plus the Applicable
Margin.
"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
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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.
(b) Section 2.1 of the Term Loan Agreement is hereby amended to
add the following definitions to read in their entirety as
follows:
"Applicable Margin" shall initially mean 2.25%; provided that
after the first fiscal quarter of Borrower after the Sixth Amendment
Closing Date, the Applicable Margin shall mean the amount set forth
below, as a percentage, to be added to the LIBOR Rate, and used in
calculating the rate of interest for applicable Loan at any time:
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MARGIN RATIO APPLICABLE MARGIN
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Less than 1.0 to 1 2.25%
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Greater than or equal to 1.0 to 1, but 2.00%
less than 1.5 to 1
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Greater than or equal to 1.5 to 1 1.75%
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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 7.1(j)(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 7.1(j)(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.
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"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.
"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 7.1(j)(iii) with respect to the most recent quarter.
"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 7.3(a)(iv) hereof.
3. Exhibits. The following Exhibits to the Term Loan Agreement are
hereby amended in their entirety to read as the corresponding Exhibits to this
First Amendment:
(a) Exhibit F Form of Quarterly Covenant Certificate;
(b) Exhibit G Form of Monthly Compliance Certificate.
4. Determination of Interest Rate. The last sentence of Section
3.4(a)(i) of the Term Loan Agreement is hereby amended in its entirety to read:
"Any change in the Applicable Margin shall become effective in accordance with
the definition of Applicable Margin."
5. Financial Covenants. Section 7.3(a) of the Term Loan Agreement is
hereby amended as follows:
(a) Section 7.3(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 7.3(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) Section 7.3(a)(iv) is hereby amended 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.
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===========================================================================
Minimum Ratio of
Four (4) Quarter Period Ending EBITDA to Fixed Charges
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June 30, 1999 .75:1
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September 30, 1999 .95 to 1
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December 31, 1999 and thereafter 1.50 to 1
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6. Waiver. The Agent and the Lenders hereby consent to waive the
application of Section 7.3(a)(iv) of the Term Loan Agreement as it relates to
the ratio of EBITDA to Fixed Charges, provided, that, for the four (4) quarters
ending on June 30, 1999, the Minimum Ratio of EBITDA to Fixed Charges is greater
than three-fourths to one (0.75 to 1).
7. Reaffirmation of Covenants, Warranties and Representations. Borrower
hereby agrees and covenants that all representations and warranties in the Term
Loan Agreement, including without limitation all of those warranties and
representations set forth in Article 6 are true and accurate as of the date
hereof. Borrower further reaffirms all covenants in the Term Loan Agreement, and
reaffirm each of the affirmative covenants set forth in Section 7.1, the
negative covenants set forth in Section 7.2 and the financial covenants set
forth in Section 7.3 thereof, as if fully set forth herein, except to the extent
modified by this First Amendment.
8. Conditions Precedent to Closing of First Amendment. On or prior to
the closing of the First Amendment (hereinafter the "First 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 First Amendment Closing
Date, of records of all action taken by Borrower to authorize
(i) the execution and delivery of this First Amendment and all
other certificates, documents and instruments to which it is
or is to become a party as contemplated or required by this
First 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 First 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 First 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.
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(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 First Amendment
Closing Date, and no condition shall exist on the First
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.
9. 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 First 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 First
Amendment, the latter shall govern.
(c) This First Amendment shall be governed by and shall be
construed and interpreted in accordance with the laws of the
State of Ohio.
(d) This First Amendment shall be binding upon and shall inure to
the benefit of the parties hereto and their respective heirs,
successors and assigns.
(e) This First 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.
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IN WITNESS WHEREOF, this First 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
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Name: Xxxxx X. Xxxxxxxx
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Title: Treasurer
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THE FIFTH THIRD BANK, Agent
By: /s/ Xxxxxx Xxxx
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Name: Xxxxxx Xxxx
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Title: Vice President
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THE FIFTH THIRD BANK, Lender
By: /s/ Xxxxxx Xxxx
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Name: Xxxxxx Xxxx
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Title: Vice President
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BANK ONE, INDIANA, N. A., Lender
By: /s/ Xxxxxx Xxxxxx
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Name: Xxxxxx Xxxxxx
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Title:
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