**Exhibit 10.18**

 

December 12,2007

 

Mr. Dennis Hanson

SeniorExecutive Vice President

SteinwayMusical Instruments, Inc.

800South Street, Suite 305

Waltham,MA  02453-1439

 

***Re:******                            ******Loan and Security Documents(collectively, the “Loan Documents”) among Conn-Selmer, Inc. (“Conn-Selmer”),Steinway, Inc. (“Steinway” and together with Conn-Selmer, the “Borrowers”),the guarantors party thereto (“Guarantors”), the lenders party thereto (“Lenders”)and GMAC Commercial Finance LLC, as administrative agent (the “AdministrativeAgent”).***

 

DearMr. Hanson:

 

Thisletter will constitute an amendment to the Third Amended and Restated CreditAgreement, dated as of September 29, 2006 (as the same may be amended,restated or modified from time to time, the “Credit Agreement”), amongthe Borrowers, the Guarantors, the Lenders and Administrative Agent.  Unless defined in this letter, capitalizedterms shall have the meanings set forth in the Credit Agreement and referencesto Sections are to Sections of the Credit Agreement.

 

Borrowershave advised Lenders that they desire to repurchase stock in excess of theamount currently allowed under the Credit Agreement and have requested that theLenders amend the Credit Agreement to increase the dividend and stockrepurchase basket by $10 million in order to allow such action.  Accordingly, Section 9.9(c) ofthe Credit Agreement is amended and restated in its entirety to read asfollows:

 

### “(c) Redeem, repurchase, retire or otherwiseacquire or distribute dividends in respect of the stock of any Loan Party in anaggregate amount not to exceed (A) $35,000,000 plus (B) fiftypercent (50%) of the cumulative consolidated SMI net income earned after January 1, 2006through the Termination Date (the “Allowed Investment Amount”); providedthat, immediately after giving effect to any such transaction, ExcessAvailability shall not be less than $25,000,000.”

 

EachBorrower (a) reaffirms, ratifies and confirms its obligations under theLoan Documents as amended hereby and acknowledges that all of the terms andconditions in the Loan Documents remain in full force and effect, and (b) acknowledgesthat no further approvals or authorizations are needed to execute this letteramendment.

 

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Byexecution of this letter amendment by the Required Lenders, Borrowers andGuarantors in the spaces provided below, the Credit Agreement is amended asprovided above.

 

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Thisletter amendment, may be executed in any number of counterparts, (including byfacsimile transmission of signature pages hereto) and all of saidcounterparts taken together shall be deemed to constitute one and the sameletter.

 
|   | Sincerely,                         |
|--------|------------------------------------|
|   |                               | ** ** |
|   | **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. O’Halloran |
|   |                               | Name: | Christopher M. O’Halloran |
|   |                               | Title: | Vice President |
|   |                               |   |
|   | **JPMORGAN  CHASE BANK, N.A.,**    |
|   | as Lender                          |
|   |                               |   |
|   | By                                 | /s/ Kim Nguyen |
|   |                               | Name: | Kim Nguyen |
|   |                               | Title: | Vice President |
|   |                               |   |
|   | **TD BANKNORTH, N.A.**,            |
|   | as Lender                          |
|   |                               |   |
|   | By                                 | /s/ Matthew Leighton |
|   |                               | Name: | Matthew Leighton |
|   |                               | Title: | Vice President |
|   |                               |   |
|   | **LASALLE BUSINESS CREDIT, LLC**,  |
|   | as Lender                          |
|   |                               |   |
|   | By                                 | /s/ Christopher M. O’Halloran |
|   |                               | Name: | Christopher M. O’Halloran |
|   |                               | Title: | Authorized Officer |
|        |                                    |  |  |  |

 

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|   | **ISRAEL DISCOUNT BANK OF NEW YORK**, |
|--------|---------------------------------------|
|   | as Lender                             |
|   |                                  |   |
|   | By                                    | /s/ James M. Morton |
|   |                                  | Name: | James M. Morton |
|   |                                  | Title: | First Vice President |
|   |                                  |   |
|   | By                                    | /s/ Ronald Bongiovanni |
|   |                                  | Name: | Ronald Bongiovanni |
|   |                                  | Title: | Senior Vice President I |
|        |                                       |  |  |  |  |

 

 
| **Agreed  to and accepted by:**           |                  |
|-------------------------------------------|-----------------------|
|                                      |                  |
| **CONN-SELMER,  INC.,**as Borrower        |                  |
|                                      |                  |
| By:                                       | /s/  Dennis M. Hanson |   |
|                                      | Name:                 | Dennis  M. Hanson |   |
|                                      | Title:                | Executive  Vice President |   |
|                                      |                  |
| **STEINWAY,  INC.,**as Borrower           |                  |
|                                      |                  |
| By:                                       | /s/  Dennis M. Hanson |   |
|                                      | Name:                 | Dennis  M. Hanson |   |
|                                      | Title:                | Executive  Vice President |   |
|                                      |                  |
| **Consented  to by:**                     |                  |
|                                      |                  |
| **STEINWAY  MUSICAL INSTRUMENTS, INC.,**  |                  |
| as****Guarantor                           |                  |
|                                      |                  |
| By:                                       | /s/  Dennis M. Hanson |   |
|                                      | Name:                 | Dennis  M. Hanson |   |
|                                      | Title:                | Senior  Executive V.P. and CFO |   |
|                                      |                  |
| **THE  O.S. KELLY COMPANY,** as Guarantor |                  |
|                                      |                  |
| By:                                       | /s/  Dennis M. Hanson |   |
|                                      | Name:                 | Dennis  M. Hanson |   |
|                                      | Title:                | Executive  Vice President |   |
|                                           |                       |  |  |  |  |  |  |

 

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