EXHIBIT 10.2


 


Execution Copy


 


THIRD AMENDMENT TO


THIRD AMENDED AND RESTATED CREDIT
AGREEMENT


 


THIRD
AMENDMENT AND WAIVER TO THIRD AMENDED AND RESTATED CREDIT AGREEMENT, dated as
of July 10, 2009 (this “Amendment”), to the Existing Credit
Agreement (as hereinafter defined), by and among (i) CONN-SELMER, INC., a
Delaware corporation, and (ii) STEINWAY, INC., a Delaware corporation (“Steinway”
and together with Conn-Selmer, the “Borrowers”), (iii) those
signatories hereto and identified on Schedule I (as may be amended from time to
time) as Guarantors (the “Guarantors”), (iv) the lenders (the “Lenders”)
from time to time party to the Agreement (defined below) and (v) GMAC
COMMERCIAL FINANCE LLC, a Delaware limited liability company (the “Administrative
Agent”), as administrative agent for the Lenders hereunder.


 


RECITALS


 


A.          The Borrowers,
Guarantors, the Administrative Agent and the Lenders have entered into the
Existing Credit Agreement, pursuant to which the Lenders are providing to the
Borrowers an $110,000,000 revolving credit facility, which is secured by
certain accounts receivable, and other collateral of the Borrowers and
guaranteed by the Guarantors.


 


B.          Borrowers have
requested certain amendments to the Existing Credit Agreement in order to
increase the amount of the Senior Notes that SMI may redeem.


 


C.          This Amendment
memorializes certain amendments agreed to by the Borrowers and the Lenders.


 


In
consideration of the foregoing and of the mutual covenants and undertakings
herein contained, the parties hereto hereby agree that the Existing Credit
Agreement is amended as hereinafter provided.


 


ARTICLE I


Definitions


 


1.             Definitions.           (a)  In addition to the
definitions set forth in the heading and the recitals to this Amendment, the
following definitions shall apply hereto:


 


“Agreement”:  the Existing Credit Agreement as amended,
supplemented or otherwise modified from time to time up to and including this
Amendment.


 


“Existing
Credit Agreement”: the Third Amended and Restated Credit Agreement, dated
as of September 29, 2006, among (i) Conn-Selmer, (ii) Steinway, (iii) the



 

















 


Guarantors,
(iv) the Lenders and (v) the Administrative Agents, as amended or
otherwise modified from time to time prior to the Third Amendment Effective
Date.


 


(b)           Unless otherwise indicated,
capitalized terms that are used but not defined herein shall have the meanings
ascribed to them in the Existing Credit Agreement.


 


ARTICLE II


Representations


 


1.             Representations.  Each of the Borrowers and Guarantors hereby
represents and warrants as follows:


 


(a)           It has full power, authority and
legal right to enter into this Amendment and perform all of its respective
obligations hereunder. The execution, delivery and performance hereof is within
its powers and has been duly authorized, is not in contravention of any
Requirement of Law which might have a material adverse effect upon it, the
Collateral, its operations, financial condition or prospects, or in
contravention of the terms of its by-laws, certificate of incorporation,
declaration of trust or other documents relating to its formation, as
applicable, or to the conduct of its business or of any material agreement or
undertaking to which it is a party or by which it is bound, and will not
conflict with or result in any breach of any of the provisions of, or
constitute a default under, or result in the creation of any Lien upon any of
its assets under, the provisions of any agreement, charter, instrument, by-law,
declaration of trust or other instrument to which it is a party or by which it
or its assets may be bound.


 


(b)           It is duly organized and in good
standing under the laws of its respective state of organization and it is
qualified to do business and is in good standing in each jurisdiction where
qualification and good standing are necessary for it to conduct its businesses
and own its properties and where the failure to so qualify would have a
Material Adverse Effect.


 


(c)           This Amendment has been duly executed
and delivered on its behalf and this Amendment constitutes its legal, valid and
binding obligation, enforceable against it in accordance with its terms, except
as enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting the enforcement of
creditors’ rights generally and by general equitable principles (whether
enforcement is sought by proceedings in equity or at law).


 


(d)           The
conditions contained in Article IV hereof have been satisfied.


 


(e)           Each of the Loan
Documents is on the date hereof in full force and effect.


 


(f)            No Default or Event of Default has
occurred and is continuing.


 


2

















 


ARTICLE III


Amendments to Existing Credit Agreement


 


1.             Section 1.1.  The definition of “Consolidated Cash Flow” in
Section 1.1 of the Credit Agreement is amended in its entirety to read as
follows:


 


“Consolidated
Cash Flow”:  for SMI and its consolidated Subsidiaries, consolidated
net income determined in accordance with GAAP (A) before deducting the
following items (without any duplication): (i) Interest Expenses and
financing charges, (ii) income taxes, (iii) depreciation, (iv) amortization,
(v) gains or losses from early extinguishment of debt or other infrequent
and unusual items, (vi) cost of sales associated with the step-up of
inventory upon acquisition, (vii) stock based compensation and all other
non-cash charges; and (B) minus Capital Expenditures, in each case
determined in accordance with GAAP.  Notwithstanding the foregoing,
Interest Income and income derived by SMI as a result of SMI repurchasing the
Senior Notes at a discount shall not be included in Consolidated Cash Flow.


 


2.             Section 9.9(c).  Section 9.9(c) of the
Existing Credit Agreement is hereby amended in its entirety to read as follows:


 


“(c)         Redeem, repurchase, retire or otherwise
acquire or distribute dividends in respect of the stock of any Loan Party, or
redeem or repurchase the Senior Notes in an aggregate amount not to exceed (A) $35,000,000
plus (B) fifty percent (50%) of the cumulative consolidated SMI net
income earned (exclusive of any income derived by SMI as a result of SMI
repurchasing the Senior Notes at a discount) after January 1, 2006
through the Termination Date (the “Allowed Investment Amount”); provided
that, immediately after giving effect to any such transaction, Excess
Availability shall not be less than $25,000,000.”


 


3.             Section 9.11.  Section 9.11(a)(ii) is
amended in its entirety to read as follows:


 


“(ii) the repurchase
or redemption by SMI of Senior Notes in an aggregate amount not to exceed $15,000,000
(cash paid amount) in any calendar year (for clarity the amount of Senior Notes
allowed to be repurchased pursuant to this Section 9.11(a)(ii) is in
addition to the amounts allowed to be repurchased pursuant to Section 9.9(c) above),
provided that (A) no Default or Event of Default has occurred and is
continuing or would result therefrom, (B) immediately after giving effect to any such repurchase
or redemption, Excess Availability shall not be less than $25,000,000 and (C) any
amounts used by SMI to repurchase or redeem the Senior Notes must first be
applied towards the amounts allowed under Section 9.11 and, second to the
amounts allowed pursuant to this Section 9.9(c). “


 


3

















 


ARTICLE IV


 


Conditions to Effectiveness


 


This
Amendment, and the modifications to the Existing Credit Agreement provided for
herein, shall become effective on the date (the “Third Amendment Effective
Date”)  on which all of the following conditions have been (or are
concurrently being) satisfied:


 


1.             This Amendment shall have been duly
executed and delivered by each party thereto.


 


2.             Each of the representations and
warranties made by the Borrowers and Guarantors in or pursuant to the Loan
Documents shall be true and correct in all material respects on and as of the
Third Amendment Effective Date as if made on and as of such date (except to the
extent the same relate to another, earlier date, in which case they shall be
true and correct in all material respects as of such earlier date).


 


3.             No Default or Event
of Default shall have occurred and be continuing.


 


ARTICLE V


Miscellaneous


 


1.             Payment
of Expenses. Without limiting its obligations under Section 12.8
of the Agreement, the Borrowers jointly and severally agree to pay or reimburse
the Administrative Agent for all of its reasonable costs and expenses incurred
in connection with this Amendment, including, without limitation, the
reasonable costs and expenses of counsel to the Administrative Agent and
expressly acknowledge that their obligations hereunder constitute “Obligations”
within the meaning of the Existing Credit Agreement.


 


2.             No Other Amendments;
Confirmation.  Except as expressly
amended, modified and supplemented hereby and by the documents related hereto,
the provisions of the Existing Credit Agreement and the other Loan Documents
shall remain in full force and effect.


 


3.             Reaffirmation by Loan Parties.
Each Loan Party hereby reaffirms its obligations under the Loan Documents
executed by such Loan Party.


 


4.             Governing Law; Counterparts.
(a) This Amendment and the rights and obligations of the parties hereto
shall be governed by, and construed and interpreted in accordance with, the
laws of the State of New York.


 


(b)           This Amendment may be executed by one
or more of the parties hereto on any number of separate counterparts, and all
of said counterparts taken together shall be deemed to constitute one and the
same instrument. A set of the copies of this Amendment signed by all the
parties shall be lodged with each of the Borrowers and the Administrative
Agent, as the 


 


4

















 


Administrative
Agent. This Amendment may be delivered by facsimile transmission of the
relevant signature pages hereof.


 


[Signature page follows]


 


5

















 


[Signature page to Third
Amendment to Steinway Inc. and Conn-Selmer Inc.’s Third Amended and Restated
Credit Agreement]


 


	
   

  	
  CONN-SELMER,
  INC.,  Borrower

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By

  	
  /s/
  Dennis M. Hanson

  
	
   

  	
   

  	
  Name:
  

  	
  Dennis
  M. Hanson

  
	
   

  	
   

  	
  Title:
  

  	
  E.V.P.

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  STEINWAY,
  INC., Borrower

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By

  	
  /s/
  Dennis M. Hanson

  
	
   

  	
   

  	
  Name:
  

  	
  Dennis
  M. Hanson

  
	
   

  	
   

  	
  Title:
  

  	
  E.V.P.

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  GMAC
  COMMERCIAL FINANCE LLC,

  
	
   

  	
  as
  Administrative Agent and Lender

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By

  	
  /s/
  Joseph Skaferowsky

  
	
   

  	
   

  	
  Name:
  

  	
  Joseph
  Skaferowsky

  
	
   

  	
   

  	
  Title:

  	
  Director

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  BANK OF AMERICA, N.A.,

  
	
   

  	
  as
  Lender

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By

  	
  /s/
  Christopher M. Halloran

  
	
   

  	
   

  	
  Name:

  	
  Christopher
  M. Halloran

  
	
   

  	
   

  	
  Title:
  

  	
  Vice
  President

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  JPMORGAN CHASE BANK, N.A.,

  
	
   

  	
  as
  Lender

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By

  	
  /s/
  Kim Nguyen

  
	
   

  	
   

  	
  Name:

  	
  Kim
  Nguyen

  
	
   

  	
   

  	
  Title:
  

  	
  V.P.

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  [Signatures
  continue on following page]

  



 


6

















 


	
   

  	
  [Signatures
  continued from prior page]

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  TD
  BANKNORTH, N.A.,

  
	
   

  	
  as
  Lender

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  LASALLE
  BUSINESS CREDIT, LLC,

  as Lender

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By

  	
   

  
	
   

  	
   

  	
  Name:
  

  	
   

  
	
   

  	
   

  	
  Title:
  

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  ISRAEL
  DISCOUNT BANK OF NEW YORK,

  as Lender

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  



 


7

















 


SCHEDULE I


 


GUARANTORS


 


 


	
  STEINWAY MUSICAL INSTRUMENTS, INC.,

  	
   

  	
   

  	
   

  
	
  Guarantor

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  By:
  

  	
  /s/
  Dennis M. Hanson

  	
   

  	
   

  	
   

  
	
   

  	
  Name:

  	
  Dennis
  M. Hanson

  	
   

  	
   

  	
   

  
	
   

  	
  Title:
  

  	
  Sr.
  E.V.P.

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  THE O.S. KELLY COMPANY,

  	
   

  	
   

  	
   

  
	
  Guarantor

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  By:
  

  	
  /s/
  Dennis M. Hanson

  	
   

  	
   

  	
   

  
	
   

  	
  Name:
  

  	
  Dennis
  M. Hanson

  	
   

  	
   

  	
   

  
	
   

  	
  Title:
  

  	
  E.V.P.

  	
   

  	
   

  	
   

  



 


8