Document:

Prepared by MerrillDirect

Exhibit 10.38

ZORAN CORPORATION

AMENDMENT OF

NONSTATUTORY STOCK OPTION AGREEMENT FOR OUTSIDE DIRECTORS

                THIS
AMENDMENT OF NONSTATUTORY STOCK OPTION AGREEMENT FOR OUTSIDE DIRECTORS is made
by and between Zoran Corporation, a Delaware corporation (the “Company”), and
______________ (the “Optionee”).

RECITALS

                WHEREAS, on
__________, the Company granted the Optionee an option to purchase __________
shares of the Company’s common stock at a price of $_____ per share (the
“Option”), which was evidenced by a form of Nonstatutory Stock Option Agreement
for Outside Directors (the “Option Agreement”);

                WHEREAS, the
Option Agreement currently provides for a one year post-termination exercise
period following the Optionee’s termination of service if the termination was
due to the Optionee’s death or Disability (as defined in the Option
Agreement)  and a 3 month
post-termination exercise period following the Optionee’s termination of
service for terminations due to other reasons; and

                WHEREAS, the
Company and the Optionee wish to amend the Option to provide that if the
Optionee ceases to be a director due to the Optionee’s retirement, or if, after
the Optionee has continuously served on the Board for two years, the Optionee’s
service terminates because of the Optionee’s death or disability, the Option,
to the extent unexercised and exercisable, shall be exercisable at any time
prior to the Option Expiration Date (as defined in the Option Agreement)
pursuant to the terms and conditions set forth below;

AGREEMENT

                NOW, THEREFORE,
the Company and the Optionee agree as follows:

                1.             Effective
Date.  This Amendment is effective
as of ___________ ___, 2001.

                2.             Exercise
Period Upon Retirement. 
Notwithstanding any provisions of the Option Agreement to the contrary,
the Option Agreement shall be amended as follows:

     a.             Section 7.1(a) is restated in its
entirety to read as follows:

“(a) Disability.  If the Optionee’s Service with the Participating Company Group is
terminated because of the Disability of the Optionee, the Option, to the extent
unexercised and exercisable on the date on which the Optionee’s Service
terminated, may be exercised by the Optionee (or the Optionee’s guardian or
legal representative) at any time prior to the expiration of one (1) year
after the date on which the Optionee’s Service terminated, but in any event no
later than the Option Expiration Date; provided, however, that if the Optionee
has served continuously on the Board for at least 2 years prior to such
termination of Service, the Option, to the extent unexercised and exercisable
on the date on which the Optionee's Service terminated, may be exercised by the
Optionee (or the Optionee’s guardian or legal representative) at any time prior
to the Option Expiration Date.”

     b.             Section 7.1(b) is restated in its
entirety to read as follows:

“(b) Death.  If the Optionee’s Service with the
Participating Company Group is terminated because of the death of the Optionee,
the Option, to the extent unexercised and exercisable on the date on which the
Optionee’s Service terminated, may be exercised by the Optionee (or the
Optionee’s legal representative or other person who acquired the right to
exercise the Option by reason of the Optionee’s death) at any time prior to the
expiration of one (1) year after the date on which the Optionee’s Service
terminated, but in any event no later than the Option Expiration Date;
provided, however, that if the Optionee has served continuously on the Board
for at least 2 years prior to such termination of Service, the Option, to the extent
unexercised and exercisable on the date on which the Optionee’s Service
terminated, may be exercised by the Optionee (or the Optionee’s legal
representative or other person who acquired the right to exercise the Option by
reason of the Optionee’s death) at any time prior to the Option Expiration
Date.  The Optionee’s Service shall be
deemed to have terminated on account of death if the Optionee dies within three
(3) months after the Optionee’s termination of Service.”

     c.             Section 7.1 (c) is restated in its
entirety to read as follows:

“(c) Retirement.  If the Optionee’s Service with the
Participating Company Group is terminated because of the “Retirement” (as
defined below) of the Optionee, the Option, to the extent unexercised and
exercisable on the date on which the Optionee’s Service terminated, may be
exercised at any time prior to the Option Expiration Date.  For purposes of this Option Agreement,
“Retirement” shall mean a termination of the Optionee’s Service as a result of
either of the following, provided that the Optionee has served continuously on
the Board for at least 2 years: (i) the Optionee’s resignation from the Board
or (ii) the expiration of the Optionee’s term as a Director of the Company
after the Optionee has declined to stand for reelection.”

 

   d.             Section 7.1(c) shall be redesignated as Section 7.1(d)
of the Option Agreement and shall read as follows:

“(d) Other Termination of Service.  If the Optionee’s Service with the
Participating Company Group terminates for any reason, except Disability, death
or Retirement, the Option, to the extent unexercised and exercisable by the
Optionee on the date on which the Optionee’s Service terminated, may be
exercised by the Optionee within three (3) months after the date on which the
Optionee’s Service terminated, but in any event no later than the Option
Expiration Date.”

                3.             Continuation
of Other Terms.  Except as set forth
herein, all other terms and conditions of the Option Agreement shall remain in
full force and effect.

                4.             Applicable
Law.  This Agreement shall be
governed by the laws of the State of California as such laws are applied to
agreements between California residents entered into and to be performed
entirely within the State of California.

 

	 	ZORAN
  CORPORATION
	 	 
	 	By:

	 	Title:

	 	OPTIONEE:Prepared by MerrillDirect

Exhibit 4.1

EXECUTION COPY

SECOND AMENDMENT AND CONSENT TO
SECOND AMENDED AND RESTATED CREDIT AGREEMENT

             SECOND
AMENDMENT AND CONSENT TO SECOND AMENDED AND RESTATED CREDIT AGREEMENT, dated as
of April 19, 2001 (this “Amendment”), to the Existing Credit Agreement
(as hereinafter defined), by and among (i) THE SELMER COMPANY, INC., a Delaware
corporation (“Selmer”), (ii) STEINWAY, INC., a Delaware corporation (“Steinway”),
(iii) UNITED MUSICAL INSTRUMENTS USA, INC., an Indiana corporation (“UMI”
and together with Selmer and Steinway, the “Borrowers”), (iv) those
signatories hereto and identified on Schedule I (as may be amended from time to
time) as Guarantors (the “Guarantors”), (v) the lenders (the “Lenders”)
from time to time party to the Agreement (defined below) and GMAC COMMERCIAL
CREDIT LLC, a New York limited liability company (the “Administrative Agent”),
as administrative agent for the Lenders hereunder.

RECITALS

             The
Borrowers, Guarantors, the Administrative Agent and the Lenders have entered
into the Existing Credit Agreement, pursuant to which the Lenders are providing
to Selmer and Steinway a $120,000,000 revolving credit facility, a $22,500,000
term loan facility and a $45,000,000 term loan facility, each of which are
secured by certain accounts receivable, real estate, and other collateral of
Selmer, Steinway and UMI and guaranteed by the Guarantors.  Steinway Musical Instruments, Inc. (“SMI”)
has requested that the Lenders consent: (i) to SMI’s issuance of $150,000,000
__% Senior Notes due 2011 (the “Senior Notes”) which will be guaranteed by the
Borrowers and the Guarantors and (ii) to SMI’s use of the proceeds of the
issuance of the Senior Notes to redeem the Senior Subordinated Notes and to
prepay certain Revolving Credit Loans and permanently reduce the Aggregate
Maximum Revolving Credit Commitment Amount to $85,000,000 (the issuance of the
Senior Notes and the use of proceeds described in (i) and (ii) above are
referred to herein as the “Transaction”). 
The Lenders have agreed to consent to the Transaction subject to the
conditions described herein and the parties hereto desire to amend certain
provisions of the Existing Credit Agreement as hereinafter provided to
effectuate the same.

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

             “Existing
Credit Agreement”: the Second Amended and Restated Credit Agreement, dated
as of September 14, 2000, among (i) Selmer, (ii) Steinway, (iii) UMI, (iv) the
Guarantors, (v) the Lenders and (vi) the Administrative Agent as amended or
otherwise modified from time to time prior to the Second Amendment Effective
Date.

             “Redemption
Documents”: a duly executed, irrevocable Officers’ Certificate pursuant to
Section 3.01 of the Senior Subordinated Notes Indenture directing the Senior
Subordinated Trustee to effect the redemption of all of the outstanding Senior
Subordinated Notes (and to pay to the Administrative Agent for application in
accordance with the Agreement any amounts not used to effect such redemption)
and a sufficient number of copies of the irrevocable notice of redemption notifying
the Senior Subordinated Note Holders of such redemption on or before June 30,
2001 to be mailed to such note holders on the date of the effectiveness of the
consent set forth in Article IV hereof, in each case in form and substance
satisfactory to the Administrative Agent.

             “Senior
Notes”: those certain Senior Notes issued by SMI in the aggregate principal
face amount not to exceed $150,000,000 pursuant to the Senior Notes Indenture.

             “Senior
Notes Documents”: the collective reference to the Senior Notes, the Senior
Notes Indenture, and the Senior Notes Purchase Agreement.

             “Senior
Notes Holders”: the holders of the Senior Notes.

             “Senior
Notes Indenture”: that certain Indenture, dated as of April __, 2001, among
the Steinway Senior Notes Parties and the Senior Notes Trustee, as in effect on
the date hereof.

             “Senior
Notes Purchase Agreement”: that certain Purchase Agreement, dated as of
April __, 2001, by and between SMI and UBS Warburg LLC, providing for the
purchase and sale of the Senior Notes, as in effect on the date hereof.

             “Senior
Notes Trustee”: Firstar Bank, N.A., as trustee for the Senior Notes Holders
pursuant to the Senior Notes Indenture and any successors or assigns of such
trustee.

             “Steinway
Senior Notes Parties”: SMI, Selmer, Emerson, SPC, Steinway, SMIT, S&B
Retail, Boston Piano Co., O.S. Kelly, The O.S. Kelly Company, UMI Holdings,
UMI.

             (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 law(s) 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 which 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 V
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.

             (g)        It has not granted any Lien on any of
its property or assets to the Senior Notes Trustee or any Senior Notes Holder.

ARTICLE
III

Amendments to Existing Credit Agreement

             1.                        Amendments to Section
1.  (a) Section 1.1 of the Existing
Credit Agreement is hereby amended by inserting the following defined terms in
the appropriate alphabetical order:

                           ““Senior Notes”:
those certain Senior Notes issued by SMI 
from time to time in the aggregate principal face amount not to exceed
$150,000,000 pursuant to the Senior Notes Indenture.

                           “Senior Notes
Documents”: the collective reference to the Senior Notes, the Senior Notes
Indenture, and the Senior Notes Purchase Agreement.

                           “Senior Notes
Holders”: the holders of the Senior Notes.

                           “Senior Notes
Indenture”: that certain Indenture, dated as of April __, 2001, among SMI,
Selmer, Emerson, SPC, Steinway, SMIT, S&B Retail, Boston Piano Co., O.S.
Kelly, The O.S. Kelly Company, UMI Holdings, UMI and the Senior Notes Trustee,
as amended, supplemented and otherwise modified from time to time.

                           “Senior Notes
Purchase Agreement”: that certain Purchase Agreement, dated as of April __,
2001, by and between SMI and UBS Warburg LLC, providing for the purchase and
sale of the Senior Notes, as amended, supplemented or modified from time to
time.

                           “Senior Notes
Trustee”: Firstar Bank, N.A., as trustee for the Senior Notes Holders
pursuant to the Senior Notes Indenture and any successors or assigns of such
trustee.”

                           “SMI Note”:
that certain Subordinated Promissory Note of Selmer payable to SMI, dated April
__, 2001 in an aggregate principal amount of $150,000,000.”

             (b)        Section 1.1 of the Existing Credit
Agreement is hereby amended by deleting the definition of “Aggregate Maximum
Revolving Credit Commitment Amount” in its entirety and replacing it with the
following:

                           ““Aggregate
Maximum Revolving Credit Commitment Amount”: $85,000,000; subject to
reduction by the Borrowers in accordance with Section  3.5 hereof.”

             (c)         Section 1.1 of the Existing Credit
Agreement is hereby amended by inserting at the end of the definition of the
term “Change in Control” the words “or any other event or condition that would
constitute a “Change of Control” as defined in the Senior Notes Indenture”.

             (d)        Section 1.1 of the Existing Credit
Agreement is hereby amended by inserting in the third line of the definition of
the term “Other Documents” after the words “the Senior Subordinated Note
Documents,” the words “the Senior Notes Documents,”.

             (e)         Section 1.1 of the Existing Credit
Agreement is hereby amended by inserting in the third line of the definition of
the term “Scheduled Principal Payments” after the words “Senior Subordinated
Notes”, the words “, the Senior Notes”.

             (f)         Section 1.1 of the Existing Credit
Agreement is hereby amended by deleting the definition of “Trustee” in its
entirety and replacing it with the following:

                           ““Trustees”:
the collective reference to the Senior Trustee and the Senior Subordinated
Trustee.”

             2.                        Amendment to Section
2.1(c).  Section 2.1(c) of the
Existing Credit Agreement is hereby deleted in its entirety and replaced by the
following:

                           “(c) The Term Loans
shall be Eurodollar Loans unless they are Converted to Alternate Base Rate
Loans in accordance with Section  5.2 hereof.”

             3.                        Amendment to Section
3.1(b).  Section 3.1(b) of the
Existing Credit Agreement is hereby deleted in its entirety and replaced by the
following:

                           “(b) The Revolving
Credit Loans shall be Eurodollar Loans unless they are Converted to Alternate
Base Rate Loans in accordance with Section  5.2 hereof.”

             4.                        Amendments to Section
3.7(a).  Section 3.7(a) of the
Existing Credit Agreement is hereby amended by (i) deleting in the first,
eighth and ninth lines the word “Lender” and replacing it with the words
“Administrative Agent” and (ii) deleting in the sixth and seventh lines the
word “Lender’s” and replacing it with the words “Administrative Agent’s”.

             5.                        Amendments to Section
4.1(a). Section 4.1(a) of the Existing Credit Agreement is hereby amended
by: (i) deleting in the sixteenth line thereof the words “Lender retains” and
replacing them with the words “Lenders retain” and (ii) deleting in the
seventeenth line thereof the words “to the Lender to terminate such Letter of
Credit prior to each extension date” and replacing them with the words “to the
Lenders to refuse to extend such Letter of Credit prior to such automatic
extension”.

             6.                        Amendments to Section
4.1(c). Section 4.1(c) of the Existing Credit Agreement is hereby amended
by:

             (i)
inserting in the first line of subparagraph (iii) after the words
“Administrative Agent” the words “for the benefit of the Lenders”;

             (ii)
inserting in the second line of subparagraph (iv) after the words
“Administrative Agent” the words “for the benefit of the Lenders”;

             (iii)
inserting in the second, third, eleventh, thirteenth and fourteenth lines of
subparagraph (v) after the words “Administrative Agent” the words “and each
Lender”; and

             (iv)
inserting in the tenth line of subparagraph (v) after the words “Administrative
Agent” the words “or any Lender”.

             7.                        Amendment to Section
5.2.  Section 5.2 of the Existing
Credit Agreement is hereby amended by deleting in the last line thereof the
words “the Loans shall bear interest at the Alternate Base Rate” and replacing
them with the words “the Loans shall be Alternate Base Rate Loans”.

             8.                        Amendment to Article
5.  Article 5 of the Existing Credit
Agreement is hereby amended by inserting the following language as Section 5.10
thereof:

                           “Section 5.10   Increased Costs.  (a) If any Lender shall have determined that
the adoption of or any change in any Requirement of Law regarding capital
adequacy or in the interpretation or application thereof or compliance by such
Lender or any corporation controlling such Lender with any request or directive
regarding capital adequacy (whether or not having the force of law) from any
Governmental Authority made subsequent to the date hereof shall have the effect
of reducing the rate of return on such Lender’s or such corporation’s capital
as a consequence of its obligations hereunder to a level below that which such
Lender or such corporation could have achieved but for such adoption, change or
compliance (taking into consideration such Lender’s or such corporation’s
policies with respect to capital adequacy) by an amount deemed by such Lender
to be material, then from time to time, the Borrowers shall promptly pay to
such Lender such additional amount or amounts as will compensate such Lender or
such corporation for such reduction.

                           (b) If any Lender
becomes entitled to claim any additional amounts pursuant to this Section, it
shall promptly notify the Borrowers (with a copy to the Administrative Agent)
of the event by reason of which it has become so entitled.  A certificate as to any additional amounts
payable pursuant to this Section submitted by such Lender to the Borrowers
(with a copy to the Administrative Agent) shall be conclusive in the absence of
manifest error.  The agreements in this
Section shall survive the termination of this Agreement and the payment of
the Loans and all other amounts payable hereunder.  Notwithstanding the preceding provisions of this Section, no
Lender shall be entitled to receive any additional amount as compensation for
any such reduction in return on capital experienced more than 180 days prior to
the date that such Lender has notified the Borrowers thereof.”

             9.                        Amendment to Section
6.17.  Section 6.17 of the Existing
Credit Agreement is hereby deleted in its entirety and replaced with the
following:

                           “6.17                  Indebtedness. Except for the inter–company loan of Selmer to Vincent Bach
permitted pursuant to Section 9.2 of this Agreement, as of the Closing Date,
the aggregate accounts payable and/or accrued expenses of it are not materially
different from its Interim Balance Sheet, dated June 30, 2000, supplied to the
Administrative Agent and the Lenders. 
Without limiting the foregoing, (a) in the case of Selmer, it
additionally represents that as of the Closing Date: (i) the only Indebtedness
due or which may become due from Selmer (as well as from any other Loan Party)
to Textron or its assignees arises or shall arise under or in connection with
the Textron Note Purchase Agreement; and (ii) the only Indebtedness due or
which may become due from Selmer (as well as from any other Loan Party) to the
holders of the Subordinated Notes are evidenced by the Senior Subordinated
Notes in an aggregate principal amount not to exceed $110,000,000, which are in
substantially the form heretofore provided to the Administrative Agent and (b)
in the case of SMI, the only Indebtedness due or which may become due from SMI
(as well as from any other Loan Party) to the holders of the Senior Notes are
evidenced by the Senior Notes in an aggregate principal amount not to exceed
$150,000,000, which are in substantially the form heretofore provided to the
Administrative Agent.  Except for the
Indebtedness referred to in subsections (a) and (b) immediately set forth
above, the capital expenditures, Financing Leases and purchase money
obligations permitted under Section 9.2 of this Agreement, the SMIT Notes, the
SMI Note, and the Obligations to the Lenders arising from time to time under
this Agreement, no Loan Party has or shall have during the term of this
Agreement, any long term Indebtedness with a maturity of one year or more.”

             10.                      Amendment to Section
8.2(k).  Section 8.2(k) of the
Existing Credit Agreement is hereby amended by inserting in the first line
thereof after the words “Textron, ITT,” the words “the Senior Notes Trustee,
any Senior Notes Holder,”.

             11.                      Amendment to Section
8.3.  Section 8.3 of the Existing
Credit Agreement is hereby amended by inserting in the eleventh line thereof
after the words “the Senior Subordinated Note Holders” the words “, the Senior
Notes Trustee, the Senior Notes Holders”.

             12.                      Amendment to Section
8.16.  Section 8.16 of the Existing
Credit Agreement is hereby deleted in its entirety and replaced by the
following:

                           “8.16    Guarantees/General Security Agreements.  Cause
each of its future Subsidiaries that is not an “Unrestricted Subsidiary” (as
defined in the Senior Subordinated Indenture or the Senior Notes Indenture) and
that, under the terms of either the Senior Subordinated Indenture or the Senior
Notes Indenture, is required to become a “Guarantor” thereunder, to execute and
deliver to the Administrative Agent and each Lender an instrument pursuant to
which such Subsidiary shall become a Loan Party hereunder and bound hereby to
the extent set forth in Section 12.22 hereof and a separate Guarantee and such
Security Documents as shall be necessary or advisable, in the opinion of the
Administrative Agent, for such Subsidiary to grant Liens on substantially all
of its property in favor of the Administrative Agent for the ratable benefit of
the Lenders.  The Administrative Agent
and each Lender shall also be entitled to such incumbency certificates,
certified copies of charter documents and resolutions and such legal opinions
and other documents and instruments as shall be consistent with those delivered
pursuant to Section 7.2 hereof.”

             13.                      Amendment to Section
8.17.  Section 8.17 of the Existing
Credit Agreement is hereby amended by inserting in the last line thereof after
the words “Senior Subordinated Notes” the words  “or Senior Notes, in each case”.

             14.                      Amendments to Section
9.2.  Section 9.2 of the Existing
Credit Agreement is hereby amended by:

             (i)
adding at the end of paragraph (b) the words, “provided, that the same shall be
subordinated to the Obligations and be evidenced by a written instrument which
has been delivered and pledged to the Administrative Agent for the benefit of
the Lenders”;

             (ii)
deleting in the first line of subparagraph (f), “(f)” and replacing it with
“(g)”;

             (iii)
deleting in the first line of subparagraph (g), “(g)” and replacing it with
“(h)”; and

             (iv)
inserting the following language as new paragraph (f):

                           “(f)       the Senior Notes and any guarantees of
the Senior Notes and any refinancings of the same with senior notes or
subordinated notes that are obligations of SMI provided that such refinancings
are on similar and customary terms and conditions that are no less favorable in
any material respect to the Loan Parties or the Lenders than the terms
governing the Senior Notes;”.

             15.                      Amendment to Section
9.3(a).  Section 9.3(a) of the
Existing Credit Agreement is hereby amended by inserting in the fifth line
thereof after the words “Senior Subordinated Note Holders” the words “, the
Senior Notes Trustee, the Senior Notes Holders”.

             16.                      Amendments to Section
9.4.  (a) Section 9.4(a) of the
Existing Credit Agreement is hereby amended by deleting in the third line
thereof after the words “Textron Note Purchase Agreement”, the words “and (iii)
except for” and replacing them with the words “, (iii) Guarantee Obligations in
connection with the Senior Notes, and (iv)”.

             (b)         Section 9.4(b) of the Existing Credit
Agreement is hereby amended by inserting in the third line thereof after the
words “Senior Subordinated Note Holders” the words “the Senior Notes Trustee,
the Senior Notes Holders”.

             17.                      Amendment to Section
9.9.  Section 9.9 of the Existing
Credit Agreement is hereby amended by inserting in the twenty-sixth line
thereof after the words “Senior Subordinated Note Holders” the words “, the
Senior Notes Trustee, the Senior Notes Holders”.

             18.                      Amendments to Section
9.11.  (a) Section 9.11(a) of the
Existing Credit Agreement is hereby amended by deleting in the twenty-sixth
line thereof the words “or (v)” and replacing them with the words “(v) the
repurchase or redemption by SMI of not more than $14,000,000 aggregate
principal amount of Senior Notes in any calendar year, provided that (A) no
Default or Event of Default has occurred and is continuing or would result
therefrom and (B) the Borrowers have aggregate Available RC Commitments
immediately after such repurchase or redemption that equal or exceed
$25,000,000, (vi) the refinancing of the Senior Notes in accordance with
Section 9.2(f) hereof, (vii) the payment, prepayment or redemption by Selmer of
its Indebtedness to SMI under the SMI Note, or (viii)”.

             (b)
Section 9.11 of the Existing Credit Agreement is hereby amended by inserting
the following language at the end of such Section as paragraph (c):

                           “(c)  SMI will not effect a legal or covenant
defeasance pursuant to Article 8 of the Senior Notes Indenture without the
prior written consent of the Administrative Agent.”

             19.                      Amendments to Section
9.15.  Section 9.15 of the Existing
Credit Agreement is hereby amended by (i) deleting in the second line the words
“Loan” and replacing it with the word “Note” and (ii) deleting in the second
line thereof the words “and (c)” and replacing them with the words “, (c) the
Senior Notes Documents and (d)”.

             20.                      Amendments to Section
10.  (a) Section 10(c) of the
Existing Credit Agreement is hereby amended by inserting in the first line
thereof after the words “when due” the word “and”.

             (b)
Section 10(i) of the Existing Credit Agreement is hereby amended by inserting
in the ninth line thereof, after the words “General Intangibles and/or” the
word “in”.

             (c)
Section 10(n) of the Existing Credit Agreement is hereby amended by inserting
in the fourth line thereof after the words “Textron, ITT” the words “, the
Senior Notes Trustee, the Senior Notes Holders”.

             (d)
Section 10(q) of the Existing Credit Agreement is hereby amended by inserting
at the end thereof after the semicolon, the word “or”;

             (e)
Section 10 of the Existing Credit Agreement is hereby amended by adding the
following language as paragraph (r):

                           “(r)  for any reason, Selmer does not redeem all
of the outstanding Senior Subordinated Notes on or before June 30, 2001;

             (f)
Section 10 of the Existing Credit Agreement is hereby amended by deleting in
the sixth line of the last paragraph of such Section the word “Lean” and
replacing it with the words “Loan”.

             21.                      Amendments to Section
11.4.  Section 11.4 to the Existing
Credit Agreement is hereby amended by deleting the last sentence thereof in its
entirety and replacing it with the following:

                           “The Administrative
Agent shall in all cases be fully protected in acting, or in refraining from
acting, under this Agreement and the other Loan Documents in accordance with a
request of the Lenders, the Required Lenders or the Majority Lenders as
applicable in accordance with the terms of this Agreement, and such request and
any action taken or failure to act pursuant thereto shall be binding upon all
the Lenders and all future holders of the Loans.”

             22.                      Amendments to Section
12.7.  Section 12.7 of the Existing
Credit Agreement is hereby amended by (i) inserting in the ninth line thereof
after the words “Administrative Agent” the words “and/or the Lenders, as
applicable” and (ii) inserting in the eleventh line thereof after the words
“Administrative Agent” the words “and/or the Lenders as applicable”.

ARTICLE
IV

Consent and Agreement

             1.                        The Administrative Agent
and the Lenders hereby (i) consent to the execution and delivery of the Senior
Notes Indenture (including the guarantees set forth therein), the issuance of
the Senior Notes and the use of the proceeds thereof to redeem the Senior
Subordinated Notes (notwithstanding any Lien that the Administrative Agent and
the Lenders may have in such proceeds) and prepay the Revolving Credit Loans as
hereinafter provided, (ii) subordinate all Liens that they may have under any
Loan Document in the Senior Subordinated Note Redemption Proceeds (as
hereinafter defined) to the Lien of the Subordinated Notes Trustee solely for
the benefit of the holders of the Senior Subordinated Notes and (iii) consent
to the amendment of the Senior Subordinated Note Indenture in the form attached
hereto as Exhibit A, subject in each such case to the conditions (which
are in addition to those set forth in Article V hereof) that, simultaneously
with the issuance of the Senior Notes, and in no event later than April
30, 2001, (x) SMI shall deliver or caused to be delivered to the
Senior Subordinated Note Trustee the Redemption Documents together with
immediately available Dollars in an amount, not to exceed $114,000,000, equal
to the amount required to redeem all outstanding Senior Subordinated Notes on
or before June 30, 2001 (such funds, the “Senior Subordinated Note
Redemption Proceeds”) and the Administrative Agent shall have received
satisfactory evidence thereof, (y) SMI shall deliver to the Administrative
Agent for application to the prepayment of any outstanding Revolving Credit
Loans immediately available Dollars in an amount equal to the excess of the net
proceeds of the Senior Notes over the amount delivered to the Subordinated Note
Trustee pursuant to the immediately preceding clause (x) and shall permanently
reduce the Aggregate Maximum Revolving Credit Amount to $85,000,000, and (z) no
Loan Party shall have granted a Lien in any of its property or assets to the
Senior Notes Trustee or any Senior Notes Holder.  The parties hereto hereby acknowledge and agree that a failure by
SMI to comply with the conditions set forth in the immediately preceding
sentence shall be an Event of Default (as defined in the Agreement) and that in
such event or in the event that all of the outstanding Senior Subordinated
Notes are not redeemed on or before June 30, 2001, the subordination of such
Lien shall be void ab initio and of no force and effect.  The Administrative Agent and the Lenders
further agree that any Event of Default (as defined in the Agreement) which
shall occur and be continuing solely as the result of the occurrence of an
Event of Default as defined in the Senior Subordinated Notes Indenture on or
after the date hereof shall be deemed to be waived upon the payment of all
amounts owing under the Senior Subordinated Notes, the satisfaction and discharge
thereof and the satisfaction and discharge of all other obligations of any Loan
Party to the Senior Subordinated Note Holders under the Senior Subordinated
Indenture unless such Event of Default (as defined in the Agreement) is also a
Default or Event of Default as defined in the Senior Notes Indenture.  The parties hereto hereby further agree that
the Net Proceeds of the sale of any asset of any Loan Party shall first be
applied to the Obligations as set forth in Section 5.4 of the Agreement and (i)
any excess of such Net Proceeds remaining after such application and (ii) any
proceeds of any sale of any Qualified Capital Stock (as defined in the Senior
Notes Indenture) shall be delivered to the Administrative Agent to be applied
to the outstanding Obligations in accordance with Section 12.4 of the
Agreement.

ARTICLE
V

Conditions to Effectiveness

             This
Amendment, and the modifications to the Existing Credit Agreement provided for
herein, shall become effective on the date (the "Second 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.                        the Administrative Agent
shall have received executed copies of each of the Senior Notes Documents, in
form and substance satisfactory to it.

             3.                        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 Second 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).

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

             5.                        The Administrative Agent
shall have received, with a counterpart for each Lender, the executed legal
opinion of Milbank Tweed Hadley & McCloy, counsel to the Borrowers, in form
and substance satisfactory to the Lender and counsel to the Lender, and
covering such matters incident to the transactions contemplated by this
Agreement as the Administrative Agent may reasonably require.

             6.                        All corporate and other
proceedings, and all documents, instruments and other legal matters in
connection with the transactions contemplated by the Existing Credit Agreement
and this Amendment shall be reasonably satisfactory in form and substance to
the Administrative Agent, and the Administrative Agent shall have received such
other documents in respect of any aspect or consequence of the transactions
contemplated hereby or thereby as it shall reasonably request.

ARTICLE
VI

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 Cadwalader, Wickersham & Taft, 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.                        Affirmation 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
Administrative Agent.  This Amendment
may be delivered by facsimile transmission of the relevant signature pages
hereof.

                           IN
WITNESS WHEREOF, the parties hereto have caused this Amendment to be duly
executed and delivered as of the day and year first above written.

	 	THE
  SELMER COMPANY, INC.,
	 	 	Borrower
	 	 	 
	 	 	 
	 	By	/s/  Dennis M. Hanson
	 	 	

	 	 	Title:	Senior
  Executive Vice President 
	 	 	 
	 	 	 
	 	STEINWAY,
  INC.,
	 	 	Borrower
	 	 	 
	 	 	 
	 	By	/s/  Dennis M. Hanson
	 	 	

	 	 	Title:	Senior
  Executive Vice President and Chief Financial Officer
	 	 	 	 
	 	 	 	 
	 	UNITED
  MUSICAL INSTRUMENTS USA, INC., 
	 	 	Borrower
	 	 	 
	 	 	 
	 	By	 /s/ 
  Dennis M. Hanson
	 	 	

	 	 	Title:	Senior
  Executive Vice President 
	 	 	 	 
	 	 	 	 
	 	GMAC
  COMMERCIAL CREDIT LLC,
	 	as Administrative Agent and as a Lender
	 	 
	 	 
	 	By	 /s/ 
  Frank Imperato
	 	 	

	 	 	Title:	Senior
  Vice President
	 	 	 	 
	 	 	 	 
	 	GMAC
  COMMERCIAL CREDIT LLC,
	 	as Lender
	 	 
	 	 
	 	By	 /s/ 
  Frank Imperato
	 	 	

	 	 	Title:	Senior
  Vice President
	 	 	 
	 	 	 
	 	FLEET
  CAPITAL CORPORATION,
	 	as Lender
	 	 
	 	 
	 	By	 /s/ 
  Mark B. Schafer
	 	 	

	 	 	Title:	Vice
  President
	 	 	 	 
	 	 	 	 
	 	GUARANTY
  BUSINESS CREDIT CORPORATION,
	 	as Lender
	 	 
	 	 
	 	By	 /s/ 
  Michael D. Haddad
	 	 	

	 	 	Title:	President

SCHEDULE I

GUARANTORS

	Steinway Musical
  Instruments, Inc.,
	Guarantor
	 	 
	 	 
	By:	 /s/ 
  Dennis M. Hanson
	 	

	Title:	Senior
  Executive Vice President and Chief Financial Officer
	 	 
	800 South Street
	Suite 425
	Waltham, MA 02453
	 	 
	 	 
	Emerson Musical
  Instruments, Inc.,
	Guarantor
	 	 
	 	 
	By:	 /s/ 
  Dennis M. Hanson
	 	

	Title:	Senior
  Executive Vice President 
	 	 
	28135 West Hively Avenue
	Elkhart, IN 46517
	 	 
	 	 
	The Steinway Piano
  Company, Inc.,
	Guarantor
	 
	 
	By:	 /s/ 
  Dennis M. Hanson
	 	

	Title:	Senior
  Executive Vice President and Chief Financial Officer
	 	 
	600 Industrial Parkway
	Elkhart, IN 46516
	 	 
	 	 
	The SMI Trust,
	Guarantor
	 	 
	 	 
	By:	 /s/ 
  Dennis M. Hanson
	 	

	Title:	Senior
  Executive Vice President and Chief Financial Officer
	 	 
	800 South Street
	Suite 425
	Waltham, MA 02453
	 	 
	 	 
	S&B Retail, Inc.,
	Guarantor
	 	 
	 	 
	By:	 /s/ 
  Dennis M. Hanson
	 	

	Title:	Senior
  Executive Vice President and Chief Financial Officer
	 	 
	455 Route 17 South
	Paramus, New Jersey
  07652
	 	 
	 	 
	Boston Piano Company,
  Inc.,
	Guarantor
	 	 
	 	 
	By:	 /s/ 
  Dennis M. Hanson
	 	

	Title:	Senior
  Executive Vice President and Chief Financial Officer
	 	 
	37-11 19th
  Avenue
	Long Island City, NY
  11105
	 	 
	 	 
	The O.S. Kelly
  Corporation,
	Guarantor
	 	 
	 	 
	By:	 /s/ 
  Dennis M. Hanson
	 	

	Title:	Senior
  Executive Vice President 
	 	 
	P.O. Box 1267
	318 E. North Spring
  Street
	Springfield, OH 45503
	 	 
	 	 
	The O.S. Kelly Company,
	Guarantor
	 	 
	 	 
	By:	 /s/ 
  Dennis M. Hanson
	 	

	Title:	Senior
  Executive Vice President 
	 	 
	P.O. Box 1267
	318 E. North Spring
  Street
	Springfield, OH 45503
	 	 
	 	 
	United Musical
  Instruments Holdings, Inc.,
	Guarantor
	 	 
	 	 
	By:	 /s/ 
  Dennis M. Hanson
	 	

	Title:	Senior
  Executive Vice President 
	 	 
	100 Industrial Parkway
	Elkhart, IN 46516

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