Exhibit 10.1
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LOAN AGREEMENT
Dated as of June 13, 1997
BETWEEN
BOSTON ACOUSTICS, INC.
AND
STATE STREET BANK AND TRUST COMPANY
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LOAN AGREEMENT
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THIS LOAN AGREEMENT is made as of June 13, 1997, between BOSTON ACOUSTICS,
INC., a Massachusetts corporation (the "Borrower") having its principal place of
business and chief executive office at ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇, and STATE STREET BANK AND TRUST COMPANY (the "Lender"), a Massachusetts
trust company with its head office at ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇.
SECTION 1. DEFINITIONS.
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1.1 Definitions. As used herein, the following terms shall have the
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following meanings:
"Affiliate" means, with reference to any person, (including an individual,
a corporation, a partnership, a trust, any trade or business and any
governmental agency or instrumentality), (i) any director, officer or employee
of that person, (ii) any other person controlling, controlled by or under direct
or indirect common control of that person, (iii) any other person directly or
indirectly holding 10% or more of any class of the capital stock or other equity
interests (including options, warrants, convertible securities and similar
rights) of that person and (iv) any other person with respect to which such
person holds, directly or indirectly, 10% or more of any class of capital stock
or other equity interests (including options, warrants, convertible securities
and similar rights). For purposes of Section 5.1(v) hereof, "Affiliate" means,
within the meaning of Section 414 of the Code, (i) any member of a controlled
group of corporations which includes the Borrower, (ii) any trade or business,
whether or not incorporated, under common control with the Borrower, (iii) any
member of an affiliated service group which includes the Borrower, and (iv) any
member of a group treated as a single employer by regulation.
"Agreement" means this Loan Agreement, including the Exhibits hereto, as
originally executed, or if this Agreement is amended, varied or supplemented
from time to time, as so amended, varied or supplemented.
"Business Day" means any day on which the head office of the Lender is open
for transactions of all of its normal and customary business, and with respect
to Libor Loans, any day which is also a day for trading by and between banks in
United States dollar deposits in the London interbank market in which the Lender
customarily participates.
"Closing Date" means the first date on which all of the conditions set
forth in Section 4 have been satisfied and any Loans are to be made hereunder.
"Code" means the Internal Revenue Code of 1986 and the rules and
regulations thereunder, as amended.
"Default" means an event or condition that, but for the requirement that
time elapse or notice be given, or both, would constitute an Event of Default.
"Encumbrances" shall have the meaning set forth in Section 5.6.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended, and the rules and regulations thereunder.
"Event of Default" shall have the meaning set forth in Section 6.1.
"GAAP" means generally accepted accounting principles consistently applied.
"Indebtedness" with respect to any person means and includes, without
duplication, (i) all items which, in accordance with GAAP, would be included as
a liability on the balance sheet of such person, (ii) the face amount of all
banker's acceptances and of all letters of credit issued by any bank for the
account of such person and all drafts drawn thereunder, (iii) the total amount
of all indebtedness secured by any Encumbrance to which any property or asset of
such person is subject, whether or not the indebtedness secured thereby shall
have been assumed, and (iv) the total amount of all indebtedness and obligations
of others which such person has directly or indirectly guaranteed, endorsed
(otherwise than for collection or deposit in the ordinary course of business),
discounted with recourse or agreed (contingently or otherwise) to purchase or
repurchase or otherwise acquire, including, without limitation, any agreement
(a) to advance or supply funds to such other person to maintain working capital,
equity capital, net worth or solvency, or (b) otherwise to assure or hold
harmless such other person against loss in respect of its obligations.
"Initial Financial Statement" shall have the meaning set forth in Section
3.5.
"Insolvent" or "Insolvency" means that there shall have occurred one or
more of the following events with respect to a person: death; dissolution;
liquidation; termination of existence; "insolvent" or "insolvency" within the
meaning of the United States Bankruptcy Code or other applicable statute; such
person's inability to pay its debts as they come due or failure to have adequate
capital to conduct its business; such person's failure to have assets having a
fair saleable value net of any cost to dispose of such assets in excess of the
amount required to pay the probable liability on its then existing debts
(including unmatured, unliquidated and contingent debts); appointment of a
receiver of any part of the property of, execution of a trust mortgage or an
assignment for the benefit of creditors by, or the filing of a petition in
bankruptcy or the commencement of any proceedings under any bankruptcy or
insolvency laws or any laws relating to the relief of debtors, readjustment of
indebtedness or reorganization of debtors by or against such person, or the
offering of a plan to creditors or such person for composition or extension,
except for an involuntary proceeding commenced against such person which is
dismissed within 45 days after the commencement thereof without the entry of an
order for relief or the appointment of a trustee.
"Interest Charges" means, for any period, without duplication, all interest
and all amortization of debt discount and expense (including commitment fees and
similar expenses) on any particular Indebtedness for which such calculations are
being made, all as determined in accordance with GAAP.
"Interest Period" means, as to any Libor Loan or Treasury Rate Loan, the
period, the commencement and duration of which shall be determined in accordance
with Section 2.4.1, provided that if any such Interest Period would otherwise
end on a day which is not a Business Day for Libor Rate purposes, such Interest
Period shall end on the Business Day next preceding or next succeeding such day
as determined by the Lender in accordance with its usual practices and notified
to the Borrower at the beginning of such Interest Period.
"Letters of Credit" means letters of credit in the form customarily issued
by the Lender as standby or documentary or commercial letters of credit, issued
by the Lender at the request and for the account of the Borrower.
"Libor Loan Rate" means an annual rate of interest for an Interest Period
equal to the Libor Rate in effect on the first day of such Interest Period plus
the fixed rate spread set forth below which is applicable to the Borrower on the
day of any Notice of Borrowing or Conversion (based upon the Borrower's ratio of
Total Liabilities to Tangible Net Worth on the last day of the fiscal quarter
immediately preceding such Interest Period, as evidenced by the financial
statements required to be delivered by the Borrower pursuant to Section 5.1(i),
provided that the financial statements for the fiscal quarter ending March 31,
1997, on which the initial fixed rate spread is based, shall be adjusted to
reflect the transactions evidenced by the Redemption Agreement on a pro forma
basis):
Total Liabilities/ Libor Loan
Tangible Net Worth Fixed Rate Spread
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greater than 1.5 to 1.0 1.25%
greater than 1.0 to 1.0
but less than or equal
to 1.5 to 1.0 1.00%
greater than 0.75 to 1.0
but less than or equal
to 1.0 to 1.0 0.75%
less than or equal to
0.75 to 1.0 0.50%
"Libor Loans" means, in relation to any Interest Period, any portion of the
principal amount of any Revolving Loans on which the Borrower elects pursuant to
Section 2.4 to pay interest at a rate determined by reference to the Libor Rate.
"Libor Rate" means, with respect to any Interest Period, in the case of any
Libor Loan, the annual rate of interest determined by the Lender, at or before
10:00 a.m. (Boston time) (or as soon thereafter as practicable) on the second
Business Day prior to the first day
of such Interest Period, to be the annual rate of interest at which deposits
of U.S. dollars are offered to the Lender by prime banks in whatever London
interbank market may be selected by the Lender in its sole discretion, acting
in good faith, at or about the time of determination and in accordance with
the usual practice in such market for delivery on the first day of such
Interest Period in immediately available funds and having a maturity equal to
such Interest Period in an amount equal (as nearly as may be) to the amount
of such Libor Loan. Each such determination by the Lender shall be
conclusive.
"Loan" means a loan made to the Borrower by the Lender pursuant to Section
2 hereof, and "Loans" means all of such loans, collectively.
"Loan Documents" means, collectively, this Agreement (including, without
limitation, the agreements and other instruments listed or described in the
Closing Checklist attached hereto as Exhibit E), the Note, the Letters of Credit
(and all letter of credit applications relating thereto) and any other
agreements, instruments or documents referred to herein or therein and/or
delivered in connection herewith, and all schedules, exhibits and annexes
thereto.
"Maturity Date" means July 1, 2002.
"Net Income" means the pre-tax gross revenues of the Borrower for the
period in question, less all expenses and other proper charges, all determined
in accordance with GAAP but in any event, excluding from Net Income (without
duplication): (i) any gain or loss, amortization or deduction arising from any
write-up of assets, except to the extent inclusion thereof shall be approved in
writing by the Lender; (ii) earnings of any Subsidiary accrued prior to the date
it became a Subsidiary; (iii) the net earnings of any business entity (other
than a Subsidiary) in which the Borrower or any of its Subsidiaries has an
ownership interest, except to the extent such net earnings shall have actually
been received by the Borrower or such Subsidiaries in the form of cash
distributions; (iv) any gains or losses on the sale or other disposition of
investments or fixed or capital assets; (v) the proceeds of any life insurance
policy; (vi) any deferred or other credit representing any excess of the equity
of any Subsidiary at the date of acquisition thereof over the amount invested in
such Subsidiary; and (vii) any reversal of any contingency reserve, except to
the extent that provision for such contingency reserve shall be made from income
arising during such period.
"Note" means the Revolving Credit Note.
"Notice of Borrowing, Continuation or Conversion" shall have the meaning
set forth in Section 2.4.1.
"Obligations" means any and all obligations of the Borrower to the Lender
of every kind and description, direct or indirect, absolute or contingent,
primary or secondary, due or to become due, now existing or hereafter arising,
regardless of how they arise or by what agreement or instrument they may be
evidenced or whether evidenced by any agreement or instrument, and includes
obligations to perform acts and to refrain from acting as well as obligations to
pay money.
"Participant" shall have the meaning set forth in Section 7.
"Person" or "person" means any individual, corporation, limited liability
company, partnership, limited liability partnership, trust, trade, business and
governmental agency and instrumentality.
"Plans" means, collectively, each "employee pension benefit plan" and each
"employee welfare benefit Plan" (each as defined in ERISA) maintained by the
Borrower.
"Prime Rate" means the annual rate of interest announced by the Lender from
time to time, at the principal office of the Lender, as its prime rate.
"Prime Rate Loans" means any Revolving Loans (or any portion thereof) as to
which the interest rate is the Prime Rate.
"Redemption Agreement" means that certain Stock Purchase Agreement, dated
as of the date of this Agreement, among the Borrower and certain of its
stockholders.
"Restricted Payments" means (i) any cash or property dividend,
distribution, or other payment, direct or indirect, to any Person who now or in
the future may hold an equity interest in the Borrower, whether evidenced by a
security or not; and (ii) any payment on account of the purchase, redemption,
retirement or other acquisition of any capital stock of the Borrower, or any
other payment or distribution made in respect thereof, either directly or
indirectly.
"Revolving Credit Maximum Amount" means $25,000,000.
"Revolving Credit Note" shall have the meaning set forth in Section 2.1.1.
"Revolving Loan" shall have the meaning set forth in Section 2.1.1.
"Revolving Loan Account" means the account on the books of the Lender in
which will be recorded Revolving Loans made by the Lender to the Borrower
pursuant to this Agreement, payments made on such Revolving Loans and other
appropriate debits and credits as provided by this Agreement.
"Stated Amount" means, with respect to each Letter of Credit outstanding at
any given time, the maximum amount then available to be drawn thereunder
(without regard to whether any conditions to drawing could then be met).
"Subsidiary" means any corporation, association, joint stock company,
business trust or other similar organization of which 50% or more of the
ordinary voting power for the election of a majority of the members of the board
of directors or other governing body of such entity is held or controlled by a
Borrower or a Subsidiary of a Borrower; or any other such organization the
management of which is directly or indirectly controlled by a Borrower or a
Subsidiary of a Borrower through the exercise of voting power or otherwise; or
any joint
venture, whether incorporated or not, in which a Borrower has a 50% ownership
interest or any other entity which would be consolidated with the Borrower in
presenting its financial statements in accordance with GAAP.
"Tangible Net Worth" means the amount which is equal to the net worth of
the Borrower computed in accordance with GAAP and with inventory and cost of
goods sold determined on a "first in, first out" basis, and minus (i) the book
value, net of applicable reserves, of all intangible assets of the Borrower,
including, without limitation, goodwill, trademarks, trade names, copyrights,
patents and any similar rights and unamortized debt discount and expense, (ii)
intercompany accounts with Affiliates (including receivables due from
Affiliates), unless existing on the date of the Initial Financial Statement, or
created thereafter in the ordinary course of business, consistent with past
practices, (iii) to the extent not otherwise approved in advance by Lender, any
write up in the book value of any asset of the Borrower resulting from
revaluation thereof after the date of the Initial Financial Statement, (iv) the
value, if any, attributable to any capital stock of the Borrower held in
treasury, and (v) the value, if any, attributable to any notes or subscriptions
receivable due from stockholders in respect of capital stock.
"Taxes" means, any and all taxes (including, without limitation, income,
receipts, franchise, ad valorem or excise taxes, transfer or gains taxes or
fees, use taxes, withholding, payroll or minimum taxes) imposed on, or otherwise
payable by, or for which responsibility for payment, withholding or collection
lies with, the Borrower by any governmental authority, federal, state or
otherwise, including any taxes imposed on any of the Borrower's Subsidiaries or
other Affiliates for which the Borrower may be liable under applicable law or by
agreement to which the Borrower is a party or by which it is bound or subject
to, and including, but not limited to, any interest, penalties or additions to
tax with respect thereto.
"Total Liabilities" means, at any date as of which the amount thereof shall
be determined, all obligations of the Borrower that should, as determined in
accordance with GAAP, be classified as liabilities on the balance sheet of the
Borrower, including, in any event, all Indebtedness of the Borrower.
"Treasury Rate Loans" means, in relation to any Interest Period, any
portion of the principal amount of any Revolving Loans on which the Borrower
elects pursuant to Section 2.4 to pay interest at a rate determined by reference
to the Treasury Rate.
"Treasury Rate" means, as to any Revolving Loan (or any portion thereof),
the yield per annum determined by the Bank in its good faith and judgment to be
the yield in the secondary market on United States Government Treasury
obligations having a maturity date which is the same as, or is the nearest date
subsequent to, the Interest Period for such Revolving Loan (or portion thereof),
plus the fixed rate spread set forth below which is applicable to the Borrower
on the date of any Notice of Borrowing or Conversion (based upon the Borrower's
ratio of Total Liabilities to Tangible Net Worth on the last day of the fiscal
quarter immediately preceding such Interest Period, as evidenced by the
financial statements required to be delivered by the Borrower pursuant to
Section 5.1(i), provided that the financial statements for the fiscal quarter
ending March 31, 1997, on which the initial
fixed rate spread is based, shall be adjusted to reflect the transactions
evidenced by the Redemption Agreement on a pro forma basis):
Total Liabilities/ Treasury Loan
Tangible Net Worth Fixed Rate Spread
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greater than 1.5 to 1.0 1.25%
greater than 1.0 to 1.0 but
less than or equal to 1.5 to 1.0 1.00%
greater than 0.75 to 1.0 but less
than or equal to 1.0 to 1.0 0.75%
less than or equal to 0.75 to 1.0 0.50%
Such determination shall be made by the Lender on the date which is 2 Business
Days prior to the first day of the Interest Period applicable to such Revolving
Loan.
"Unused Commitment" for any period of time means the difference for each
day during such period between the Revolving Credit Maximum Amount in effect and
the sum of the principal amount of Revolving Loans actually outstanding
hereunder and the Stated Amount of all outstanding Letters of Credit.
SECTION 2. REVOLVING LOANS.
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2.1 Revolving Loans.
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2.1.1 Upon the terms and subject to the conditions of this Agreement,
and in reliance upon the representations, warranties and covenants of the
Borrower made herein, the Lender agrees to make loans ("Revolving Loans") to the
Borrower at the Borrower's request from time to time, from and after the date
hereof and prior to the Maturity Date, provided that the principal amount of
Revolving Loans outstanding at any time, plus the aggregate Stated Amount of
Letters of Credit outstanding at such time, plus the aggregate amount of any
unreimbursed draws under outstanding Letters of Credit, shall not exceed the
Revolving Credit Maximum Amount, and provided, further, that at the time the
Borrower requests a Revolving Loan and after giving effect to the making thereof
there has not occurred and is not continuing any Default or Event of Default.
The Borrower agrees that it shall be an Event of Default hereunder if at any
time the debit balance of the Revolving Loan Account, plus the aggregate Stated
Amount of Letters of Credit outstanding at any time, plus the
aggregate amount of unreimbursed draws under outstanding Letters of Credit at
such time, shall exceed the Revolving Credit Maximum Amount unless the
Borrower shall, upon notice of such excess from the Lender, promptly pay cash
to the Lender to be credited to the Revolving Loan Account in such amount as
shall be necessary to eliminate the excess. Each Revolving Loan shall be in
a minimum amount of $100,000 or an integral multiple thereof. The Revolving
Loans shall be evidenced by a Revolving Credit Note (the "Note") in the form
of Exhibit A hereto.
2.1.2 Subject to the provisions of Sections 2.5 and 2.6, the
Borrower may prepay outstanding Revolving Loans and the Note in whole or in part
at any time without premium or penalty. Amounts so paid in respect of the
Revolving Loans and the Note and other amounts may be borrowed and reborrowed
from time to time as provided in Section 2.1.1. On the Revolving Credit
Maturity Date, the Borrower shall repay all outstanding Revolving Loans and the
Note, together with all unpaid interest thereon and all fees and other amounts
due hereunder.
2.2. Letters of Credit. Upon the terms and subject to the conditions
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of this Agreement, and in reliance upon the representations, warranties and
covenants of the Borrower made herein, the Lender agrees to issue, to the extent
permitted by law and the Uniform Customs Practices of the International Chamber
of Commerce governing Letters of Credit (Publication No. 500 or any successor
thereto), Letters of Credit upon the application of the Borrower during the
period from the date hereof to the Maturity Date; provided that the aggregate
Stated Amount of Letters of Credit outstanding at any time, plus the aggregate
amount of all unreimbursed draws under such outstanding Letters of Credit, shall
not at any time (i) exceed $2,500,000, or (ii) cause the principal amount of
Revolving Loans outstanding at such time (after taking into account such Stated
Amount and all such unreimbursed draws) to exceed the Revolving Credit Maximum
Amount; and provided, further, that at the time the Borrower requests the
issuance of a Letter of Credit and after giving effect to the issuance thereof,
there has not occurred and is not continuing any Default or Event of Default.
All Letters of Credit shall have a stated expiration date not to exceed one year
and shall, in any event, expire not later than the date which is one (1) month
prior to the Maturity Date. Amounts drawn under the Letters of Credit shall
become immediately due and payable by the Borrower to the Lender. Without
limiting the foregoing, if any Letter of Credit would by its terms expire after
the Maturity Date, the Borrower shall, on the Maturity Date, cause another
letter of credit issued by another bank to be substituted therefor or cause
another bank satisfactory to the Lender to indemnify the Lender to its
satisfaction against any and all liabilities and obligations in respect to such
Letter of Credit and, in such event, this Agreement and the other Loan Documents
shall continue in full force and effect until all of the Obligations under any
such Letters of Credit have been paid in full to the Lender. In order to
evidence such Letters of Credit, the Borrower shall enter into, with the Lender,
such agreements and execute such instruments and documents as the Lender
customarily requires in like transactions.
2.3 Interest and Fees.
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2.3.1 Interest on any Revolving Loans shall be calculated and due and
payable based upon the following interest rate alternatives:
(i) In the absence of any election by the Borrower under
clause (ii) or (iii) below, either initially with respect to
any Revolving Loan or at the expiration of the applicable
Interest Period under such clause (ii) or (iii) below, such
Revolving Loans shall bear interest at a rate per annum
equal to the Prime Rate in effect from time to time, with
interest thereon being payable monthly in arrears on the
last Business Day of each month. Any change in the Prime
Rate shall result in a change on the same day in the rate of
interest to accrue from and after such day on the unpaid
balance of principal of the Revolving Loans bearing interest
with reference to the Prime Rate.
(ii) In the manner and subject to the provisions set forth
in Sections 2.1, 2.4 and 2.5, so long as no Default or Event
of Default has occurred and is then continuing, the Borrower
may elect from time to time prior to the Maturity Date to
have all or a portion of the unpaid principal amount of any
Revolving Loan bear interest during any particular Interest
Period applicable to Libor Loans at the Libor Rate and be
treated as a Libor Loan, with interest, in all cases, being
due and payable on the last day of the applicable Interest
Period relating to such Libor Loan (but in any event, no
less frequently than quarterly), provided, that any such
portion of any Loan shall be in an amount not less than
$100,000 or an integral multiple thereof.
(iii) In the manner and subject to the provisions set
forth in Sections 2.1, 2.4 and 2.5, so long as no Default or
Event of Default has occurred and is then continuing, the
Borrower may elect from time to time prior to the Maturity
Date to have all or a portion of the unpaid principal amount
of any Revolving Loan bear interest during any particular
Interest Period applicable to Treasury Rate Loans at the
Treasury Rate and be treated as a Treasury Rate Loan; with
interest, in all cases, being due and payable monthly in
arrears on the last Business Day of each month and last day
of the applicable Interest Period relating to such Treasury
Rate Loan, provided that any such portion of any Loan shall
be in an amount not less than $100,000 or an integral
multiple thereof.
The rates of interest set forth above shall apply before an Event of
Default. After an Event of Default pursuant to Section 6 of this
Agreement, interest shall accrue on the balance hereof at a rate equal
to four percent (4%) per annum above the highest rate that would
otherwise apply to amounts outstanding hereunder.
2.3.2 The Borrower shall pay to the Lender a commitment
fee, payable monthly in arrears on the last Business Day of each
month, equal to one-eighth of one percent (0.125%) per annum of the
Unused Commitment during the preceding month.
2.3.3 The Borrower shall pay to the Lender on the Closing
Date a non-refundable closing fee in the amount of $15,000.
2.3.4 The Borrower authorizes the Lender to charge to the
Revolving Loan Account or to any deposit account which the Borrower
may maintain with the Lender the principal, interest, fees, charges,
taxes and expenses provided for in this Agreement or any other
document executed or delivered in connection herewith.
2.3.5 If, after the date hereof, the Lender shall have
determined that the adoption of any applicable law, rule, regulation,
guideline, directive or request (whether or not having the force of
law) regarding capital requirements for banks or bank holding
companies, or any change therein, or any change in the interpretation
or administration thereof by any governmental authority, central bank
or comparable agency charged with the interpretation or administration
thereof, or compliance by the Lender with any of the foregoing imposes
or increases a requirement by the Lender to allocate capital resources
to the Lender's commitment to make Revolving Loans or issue Letters of
Credit which has or would have the effect of reducing the return on
the Lender's capital to a level below that which the Lender could have
achieved (taking into consideration the Lender's then existing
policies with respect to capital adequacy and assuming full
utilization of the Lender's capital) but for such adoption, change or
compliance by any amount deemed by the Lender to be material, then:
(i) the Lender shall promptly after its determination of such
occurrence give notice thereof to the Borrower; and (ii) to the extent
that the costs of such increased capital requirements are not
reflected in the Prime Rate, the Borrower and the Lender shall
thereafter attempt to negotiate in good faith, within 30 days
following the date the Borrower receives such notice, an adjustment
payable hereunder that will adequately compensate the Lender in light
of the circumstances. If the Lender and the Borrower are unable to
agree to such adjustment within 30 days following the date upon which
the Borrower receives such notice, then commencing on the date of such
notice (but no earlier than the effective date of any such increased
capital requirement), the fees payable hereunder shall increase by an
amount that will, in the Lender's reasonable determination, provide
adequate compensation. The provisions of this Section 2.3.5 shall be
applied to the Borrower so as not to discriminate against the Borrower
vis-a-vis other customers of the Lender.
2.3.6 Anything hereinbefore to the contrary
notwithstanding, if any present or future applicable law (which
expression, as used in this Agreement, includes statutes and rules and
regulations thereunder and interpretations thereof by any competent
court or by any governmental or other regulatory body or official
charged with the administration or the interpretation thereof and
requests, directives, instructions and notices at any time or from
time to time heretofore or hereafter made upon or otherwise issued to
the Lender by any central bank or other fiscal, monetary or other
authority, whether or not having the force of law) shall (i) subject
the Lender to any tax, levy, impost, duty, charge, fee, deduction or
withholding of any nature with respect to this Agreement, the maximum
amount of the Revolving Loans or Letters of Credit or the payment to
the Lender of any amounts due to it hereunder, or (ii)
materially change the basis of taxation of payments to the Lender of the
principal or the interest on or any other amounts payable to the
Lender hereunder, or (iii) impose or increase or render applicable any
special or supplemental special deposit or reserve or similar
requirements or assessment against assets held by, or deposits in or
for the account of, or any liabilities of, or loans by an office of
the Lender in respect of the transactions contemplated herein, or (iv)
impose on the Lender any other conditions or requirements with respect
to this Agreement, the Revolving Credit Maximum Amount, the Letters of
Credit or any Revolving Loan, and the result of any of the foregoing
is (A) to increase the cost to the Lender of making, funding or
maintaining all or any part of the Revolving Loans or the Letters of
Credit, or (B) to reduce the amount of principal, interest or other
amount payable to the Lender hereunder, or (C) to require the Lender
to make any payment or to forego any interest or other sum payable
hereunder, the amount of which payment or foregoing interest or other
sum is calculated by reference to the gross amount of any sum
receivable or deemed received by the Lender from the Borrower
hereunder, then, and in each such case not otherwise provided for
hereunder, the Borrower will, upon demand made by the Lender
accompanied by calculations thereof in reasonable detail, pay to the
Lender such additional amounts as will be sufficient to compensate the
Lender for such additional cost, reduction, payment or foregoing
interest or other sum, provided that the foregoing provisions of this
sentence shall not apply in the case of any additional cost,
reduction, payment or foregoing interest or other sum resulting from
any taxes charged upon or by reference to the overall net income,
profits or gains of the Lender.
2.4 Loan Requests.
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2.4.1 All requests under this Agreement for Revolving
Loans or for a conversion of the interest rate applicable to any
Revolving Loan (or portion thereof) under Section 2.3 above to a rate
of a different type or for a continuation of a Revolving Loan (or a
portion thereof) at an interest rate of the same type for an
additional Interest Period, shall be made by the Borrower in writing
(each such request to be irrevocable), substantially in the form
attached hereto as Exhibit C (each a "Notice of Borrowing,
Continuation or Conversion"), specifying (a) the amount of the
requested advance or portion of outstanding principal into which the
type of interest rate requested is to be converted or continued,
(b) the requested borrowing or interest rate conversion or
continuation date, (c) whether the requested advance or affected
principal portion is to be treated as a Libor Loan or a Treasury Rate
Loan or a combination thereof (and if a combination, the proportions
of each), and (d) if the requested advance or affected principal
portion is to be in whole or in part a Libor Loan or a Treasury Rate
Loan, the length of the requested Interest Period for such advance or
principal portion as applicable (which must be, in the case of Libor
Loans, for one, two, three, six or twelve months, and in the case of
Treasury Rate Loans, for two, three or four years), provided, however,
that no Interest Period shall extend beyond the Maturity Date.
2.4.2 Each Notice of Borrowing, Continuation or
Conversion must be delivered to an officer of the Lender no later than
11:00 a.m. Boston time, (a) 2
Business Days prior to the requested advance, continuation or conversion
date, in the case of Libor Loans or Treasury Rate Loans, or (b) on the
requested advance, continuation or conversion date, in the case of Prime
Rate Loans. If the Borrower does not request that an existing Libor Loan
or Treasury Rate Loan be maintained as a Libor Loan or Treasury Rate Loan
at least 2 Business Days prior to the end of the Interest Period applicable
to such Loan, in accordance with the procedure set forth herein, then the
Borrower shall be deemed to have requested that such Loan be converted
into a Prime Rate Loan.
2.5 Libor Loan Provisions.
---------------------
2.5.1 The Lender shall promptly notify the Borrower upon
determining any Libor Rate. Each such notice shall be conclusive and
binding upon the Borrower. If, with respect to any Interest Period,
the Lender is unable to determine the Libor Rate relating thereto, or
adverse or unusual conditions in or changes in applicable law relating
to the London interbank market make it illegal or, in the reasonable
judgment of the Lender, impracticable, to fund therein the amount of
the requested Libor Loan or make the projected Libor Rate unreflective
of the actual costs of funds therefor to the Lender, or if it shall
become unlawful for the Lender to charge interest on the Loans on a
Libor Rate basis, then in any of the foregoing events the Lender shall
so notify the Borrower and interest will be calculated and payable in
respect of such projected Interest Period (and thereafter for so long
as the conditions referred to in this sentence shall continue) by
reference to the Prime Rate in accordance with Section 2.3.1(i).
2.5.2 In the event the Lender shall incur any loss, cost
or expense as a result of:
(i) any payment, prepayment of or election to change the
interest rate applicable to any principal of a Libor Loan on
a date other than the last day of any Interest Period
applicable thereto, or
(ii) any failure by the Borrower to borrow or convert into
any Libor Loan on the date or in the amount specified in a
Notice of Borrowing, Continuation or Conversion, or
(iii) any increase in the cost to the Lender of making Libor
Loans (including without limitation costs associated with
increases in taxes, with reserves required by law or
regulation, or with any other governmental assessments, in
connection with Libor Loans),
then in any such event the Borrower shall pay to the Lender such
amount or amounts as shall be sufficient (in the reasonable opinion of
the Lender) to compensate the Lender fully for such loss, cost or
expense, such compensation to include, without limitation, an amount
equal to the excess, if any, of (a) the amount of interest that
would have accrued on the principal amount so paid, prepaid or converted or
not borrowed for the period from the date of such payment, prepayment
or conversion to the last day of the Interest Period for such
Revolving Loan or, in the case of a failure to borrow, for the entire
Interest Period for such Revolving Loan, commencing on the date of
such failure to borrow, at the applicable rate of interest for such
Revolving Loan provided for herein, over (b) the amount of interest
(as reasonably determined by the Lender) the Lender would have been
offered in the London interbank market for dollar deposits of amounts
comparable to such principal amount at a maturity comparable to said
period.
2.6 Prepayment of Fixed Rate Treasury Loans. In the event the
---------------------------------------
Lender shall incur any loss, cost or expense as a result of:
(i) any payment, prepayment of or election to change the
interest rate applicable to any principal of a Treasury Rate
Loan on a date other than the last day of any Interest
Period applicable thereto, or
(ii) any failure by the Borrower to borrow or convert into
any Treasury Rate Loan on the date or in the amount
specified in a Notice of Borrowing, Continuation or
Conversion, or
(iii) any increase in the cost to the Lender of making
Treasury Loans (including without limitation costs
associated with increases in taxes (except for taxes on the
overall net income of the Lender imposed by the United
States of America or any political subdivision thereof),
with reserves required by law or regulation, or with any
other governmental assessments, in connection with Treasury
Rate Loans),
then in any such event the Borrower shall pay to the Lender such
amount or amounts as shall be sufficient (in the reasonable opinion of
the Lender) to compensate the Lender fully for such loss, cost or
expense, such compensation to include, without limitation, an amount
equal to the excess, if any, of (a) the monthly interest which would
otherwise be payable on the principal to be prepaid from the date of
the first day of the calendar month immediately following the date of
prepayment (unless prepayment is tendered on the first day of any
calendar month during the term of the applicable Note, in which case
from the date of prepayment) to and including the applicable maturity
date; over (b) the monthly interest the holder would earn if the
principal to be prepaid were reinvested for the period from the first
day of the calendar month immediately following the date of prepayment
(unless prepayment is tendered on the first day of any calendar month
during the term of the applicable Note, in which case from the date of
prepayment) to and including the applicable maturity date, at the
Treasury Rate, such difference to be discounted to present value at
the Treasury Rate.
SECTION 3. REPRESENTATIONS AND WARRANTIES.
------------------------------
The Borrower represents, warrants and covenants as follows:
3.1 Organization and Qualification. The Borrower (i) is a
------------------------------
corporation duly organized, validly existing and in good standing
under the laws of The Commonwealth of Massachusetts; (ii) has all
requisite corporate power and authority to own its property and
conduct its business as now conducted and as presently contemplated;
and (iii) is duly qualified and in good standing in each jurisdiction
(which jurisdictions are listed on Exhibit B hereto) where the nature
of its properties or its business (present or proposed) requires such
qualification. Since the date of the Initial Financial Statement, the
Borrower has continued to engage in substantially the same business as
that in which it was then engaged and is engaged in no unrelated
business.
3.2 Corporate Authority; Valid Obligations; Approvals. The
-------------------------------------------------
execution, delivery and performance of the Loan Documents and the
transactions and other documents contemplated hereby and thereby are
within the Borrower's corporate authority, have been authorized by all
necessary corporate proceedings on the part of the Borrower, and do
not and will not contravene any provision of law, its charter document
or its by-laws, or contravene any provisions of, or constitute a
Default or Event of Default hereunder or a default under any other
agreement, instrument, judgment, order, decree, permit, license or
undertaking binding upon or applicable to the Borrower or any of its
properties, or result in the creation, other than in favor of the
Lender, of any mortgage, pledge, security interest, lien, encumbrance
or charge upon any of the properties or assets of the Borrower. The
Loan Documents have been duly executed and delivered and constitute
the legal, valid and binding obligations of the Borrower enforceable
in accordance with their terms. The execution, delivery and
performance of the Loan Documents and the transactions and other
documents contemplated hereby and thereby do not require any approval
or consent of, or filing or registration with, any person.
3.3 Title to Properties; Absence of Liens. The Borrower
-------------------------------------
has good and marketable title to all of its properties, assets and
rights of every name and nature now purported to be owned by it, which
properties, assets and rights include all those necessary to permit
the Borrower to conduct its business as such business was conducted on
the date of the Initial Financial Statement, free from all liens,
charges and encumbrances whatsoever except for insubstantial and
immaterial defects in title and liens, charges or encumbrances
permitted under Section 5.6.
3.4 Compliance. The Borrower (i) has all necessary
----------
permits, approvals, authorizations, consents, licenses, franchises,
registrations and other rights and privileges (including without
limitation patents, trademarks, trade names and copyrights) to allow
it to own and operate its business without any violation of law or the
rights of others, (ii) is duly authorized, qualified and licensed
under and in compliance with all applicable laws, regulations,
authorizations and orders of public authorities (including, without
limitation, laws relating to hazardous materials,
hazardous waste, oil, and protection of the environment and laws relating
to ERISA or to employee benefit plans generally), and (iii) has performed
all obligations required to be performed by it under, and is not in
default under or in violation of, its charter or by-laws, or any
agreement, lease, mortgage, note, bond, indenture, license or other
instrument or undertaking to which it is a party or by which any of it
or any of its properties are bound, except for any such violations or
failures to comply under clauses (i) through (iii) above which,
individually or in the aggregate, would not have a material adverse
effect on the business, condition (financial or otherwise), results of
operations or assets of the Borrower, and the Borrower has not
received any notice by any governmental authority or third party with
respect to the generation, storage, or disposal or release or threat
of release of hazardous substances, hazardous materials, or oil, or
with respect to any violation of any federal, state or local
environmental, health or safety statute or regulation.
3.5 Financial Statements. The Borrower has furnished to
--------------------
the Lender its audited balance sheet as of March 29, 1997 and the
related audited statements of income and stockholders' equity and cash
flows for the year then ended, which were prepared in accordance with
GAAP, certified by independent certified public accountants
acceptable to the Lender and fairly present the financial position of
the Borrower as at the close of business on such date and the results
of its operations for the year then ended (the "Initial Financial
Statement"). At the date hereof, the Borrower has no material
Indebtedness or other liabilities, whether accrued, absolute,
contingent or otherwise, and whether due or to become due, that are
not set forth on the Initial Financial Statement or on Exhibit B
hereto. Since the Initial Financial Statement there have been no
material adverse changes, individually or in the aggregate, in the
assets, liabilities, financial condition or business of the Borrower,
except as set forth on Exhibit B hereto.
3.6 Events of Default; Solvency. As of the date of this
---------------------------
Agreement, no Default or Event of Default exists and the Borrower is
not, and immediately after giving effect to the consummation of the
Revolving Loans will not be, Insolvent.
3.7 Taxes. The Borrower has filed all federal, state and
-----
other tax returns required to be filed for all Taxes, and has paid (or
has established adequate reserves in accordance with GAAP for the
payment of) all Taxes, assessments and other such governmental charges
due from the Borrower have been fully paid. The Borrower has not
executed any waiver that would have the effect of extending the
applicable statute of limitations in respect of any Tax.
3.8 Labor Relations; Litigation. The Borrower is not
---------------------------
engaged in any unfair labor practice and, except as set forth on
Exhibit B attached hereto, there is no litigation, proceeding,
governmental investigation (administrative or judicial) or labor
dispute, pending or, to the best knowledge of the Borrower, threatened
against the Borrower, which, if decided adversely to the Borrower,
could have a materially adverse effect on the business, properties or
condition (whether financial or otherwise) of the Borrower or on the
ability of the Borrower to perform its obligations under this
Agreement or any other agreement or document contemplated hereby, nor
is any substantial basis for any such litigation or labor dispute
known to exist.
3.9 Restrictions on the Borrower. The Borrower is not
----------------------------
party to or bound by any contract, agreement or instrument, nor
subject to any charter or other corporate restriction which will,
under current or foreseeable conditions, materially and adversely
affect its business, property, assets, operations or conditions,
financial or otherwise.
3.10 Contracts with Affiliates, Etc. Except as disclosed on
------------------------------
Exhibit B attached hereto, and except for agreements or transactions
(in each case) in the ordinary course of business and on an
arm's-length basis, the Borrower is not a party to or otherwise bound
by any agreements, instruments or contracts (whether written or oral)
with any Affiliate, except for any such agreement, instrument or
contract (other than an agreement, instrument or contract with respect
to Indebtedness for borrowed money) as would not materially and
adversely affect the condition (financial or otherwise), properties,
business or results of operations of the Borrower.
3.11 Disclosure. No representations and warranties made by
----------
the Borrower in this Agreement, any other Loan Document or in any
other agreement, instrument, document, certificate, statement or
letter furnished to the Lender by or on behalf of the Borrower, and no
other factual information heretofore or contemporaneously furnished by
or on behalf of the Borrower to the Lender, in connection with any of
the transactions contemplated by any of the Loan Documents contains
(as of the date given) any untrue statement of fact or omits to state
a fact necessary in order to make the statements contained therein not
misleading in any material respect in light of the circumstances in
which they are made. Except as disclosed herein or in the Initial
Financial Statement or in the other Loan Documents, there is no fact
known to the Borrower which materially adversely affects, or which
would in the future materially adversely affect, the business,
condition (financial or otherwise), results of operations or assets of
the Borrower.
3.12 Subsidiaries. As of the date hereof, the Borrower has
------------
no Subsidiaries, except as disclosed on Exhibit B attached hereto.
SECTION 4. CONDITIONS OF LOANS.
-------------------
4.1 Conditions to Initial Revolving Loan. The obligation of the
------------------------------------
Lender to make the initial Revolving Loan is subject to the
fulfillment to the satisfaction of the Lender on the date hereof of
the following conditions precedent:
4.1.1 Receipt by the Lender of all of the agreements,
documents, instruments, certificates and opinions listed or described
on the Closing Checklist attached hereto as Exhibit E, in form and
substance satisfactory to the Lender, and duly executed and delivered
by the parties thereto, along with such additional
instruments, certificates, opinions and other documents as the Lender
shall reasonably request.
4.1.2 The representations and warranties contained herein
shall be true and accurate on and as of the date hereof, the Borrower
shall have performed and complied with all covenants and conditions
required herein to be performed or complied with by it prior to the
making of such Revolving Loan, and no Default or Event of Default
shall be continuing or result from the Revolving Loans to be made on
the date hereof or the transactions contemplated hereby.
4.2 Conditions to all Loans. The obligation of the Lender to
-----------------------
make any Revolving Loan is subject to the fulfillment to the
satisfaction of the Lender immediately prior to or contemporaneously
with each such Loan of each of the following conditions: (i) the
representations and warranties contained herein or otherwise made in
writing by or on behalf of the Borrower pursuant hereto or in
connection with the transactions contemplated hereby shall be true and
correct in all material respects at the time of each such Loan (except
for representations and warranties limited as to time or with respect
to a specific event) with and without giving effect to the Loan to be
made at such time and the application of the proceeds thereof, (ii) no
Default or Event of Default shall be continuing or result from such
Loan, (iii) no material adverse change in the condition (financial or
otherwise), business or properties of the Borrower shall have occurred
since the date of the Initial Financial Statement, and (iv) no change
in applicable law or regulation shall have occurred as a consequence
of which it shall have become and continue to be unlawful for the
Lender or the Borrower to perform any of its respective agreements or
obligations under any Loan Document to which it is a party.
SECTION 5. COVENANTS.
---------
During the term of this Agreement and so long as any Obligation
of the Borrower in respect of any Loan remains outstanding, the
Borrower hereby covenants to the Lender that:
5.1 Financial Statements and Other Reporting Requirements. The
-----------------------------------------------------
Borrower shall furnish to the Lender:
(i) as soon as available to the Borrower, but in any event
within 120 days after each fiscal year-end, the balance sheet of
the Borrower as at the end of, and related statements of income,
retained earnings and cash flow for, such year prepared in
accordance with GAAP and certified by independent certified
public accountants satisfactory to the Lender that such
statements present fairly the financial position of the Borrower
prepared in accordance with GAAP applied in a manner consistent
with the Borrower's past practices; and concurrently with such
financial statements, if in the opinion of such accountants a
Default or Event of Default exists, a written statement by such
accountants that, in the making of the audit necessary for their
report and
opinion upon such financial statements, they have obtained knowledge of
such Default or Event of Default, and they shall disclose in such
written statement the nature and status thereof;
(ii) as soon as available to the Borrower, but in any event
within 45 days after the end of each fiscal quarter of each
fiscal year of the Borrower, the balance sheet of the Borrower as
at the end of, and related statements of income, retained
earnings and cash flow for, the portion of the year then ended
and for the quarter then ended, prepared in accordance with GAAP
(with the exception of footnotes) applied in a manner consistent
with the audited financial statements required by clause (i)
above (subject to normal year-end audit adjustments, none of
which shall be materially adverse) and certified pursuant to the
report to be delivered to the Lender under clause (iv) of this
Section 5.1;
(iii) promptly as they become available, copies of all such
financial statements, proxy material and reports as the Borrower
shall send to or make generally available to stockholders and of
all regular and periodic reports filed by the Borrower or any of
its Subsidiaries with any securities exchange or with the
Securities and Exchange Commission or any governmental authority
succeeding to any or all of the functions of said Commission, and
promptly as they become available, a copy of each report
(including any so-called management letters) submitted to the
Borrower by independent certified public accountants in
connection with each annual audit of the books of the Borrower by
such accountants or in connection with any interim audit thereof
pertaining to any phase of the business of the Borrower;
(iv) concurrently with each delivery of financial
statements pursuant to clause (i) and clause (ii) of this Section
5.1, a chief financial officer's report in substantially the form
of Exhibit D hereto, and including, without limitation,
computations in reasonable detail evidencing compliance with the
covenants contained in Sections 5.16 and 5.17;
(v) promptly after obtaining knowledge of the existence
thereof, notice of (a) the occurrence of any event which
constitutes a Default or Event of Default, together with the
nature and duration thereof and the action proposed to be taken
with respect thereto, (b) the occurrence of any condition or
event with respect to the Borrower or any Affiliate which could
be expected to constitute a material adverse change in or to have
a material adverse effect on the business, properties or
condition (financial or otherwise) of the Borrower, together with
the nature and duration thereof and the action proposed to be
taken with respect thereto, (c) any litigation or any
investigative proceedings of a governmental agency or authority
commenced or threatened against the Borrower, any Affiliate or
any Plan which could be expected to have a material adverse
effect on the business, properties or condition (financial or
otherwise) of the Borrower, or the issuance of any judgment,
award, decree, order or other
determination in or relating to any such litigation or proceedings,
(d) the occurrence of a reportable event (as defined in ERISA) or any
communications to, or receipt of communications from, the PBGC, the
United States Department of Labor or the IRS by the Borrower or any
Affiliate relating to any Plan, along with copies of all such
communications, (e) the adoption by the Borrower of any stock
option or executive compensation plan, whether or not subject to
ERISA, and any Plan subject to ERISA, or the substantial
modification of any such plan, along with the vesting and funding
schedules and other principal provisions thereof, and (f) any
communications given or received by the Borrower in any way
relating to compliance with, any violation or potential violation
of, or any potential liability under, any environmental law or
regulation (including those relating to pollution control,
hazardous materials and hazardous wastes), along with copies of
all such communications; and
(vi) from time to time, such other financial data and
information about the Borrower as the Lender may reasonably
request.
5.2 Conduct of Business. The Borrower will maintain its
-------------------
corporate existence, continue to have a fiscal year ending on the
last Saturday of March of each year (unless otherwise agreed to
by the Lender) and remain or engage in substantially the same
business as that in which it is now engaged, and will duly
observe and comply with all applicable laws and all requirements
of any governmental authorities relative to it, its assets or to
the conduct of its business, including laws relating to the
environment, pollution control, hazardous materials and hazardous
waste (except where the failure to observe and comply with such
laws or requirements would not materially and adversely affect
the condition (financial or otherwise), properties, business, or
results of operations of the Borrower or the ability of the
Borrower to perform its obligations to the Lender) and will
maintain and keep in full force and effect all licenses and
permits necessary to the proper conduct of its business.
5.3 Maintenance and Insurance. The Borrower will maintain
-------------------------
and keep its properties in good repair, working order and
condition so that its business may be properly and advantageously
conducted at all times, and will comply with the provisions of
all material Leases to which it is a party or under which it
occupies property so as to prevent any material loss or
forfeiture thereof or thereunder. The Borrower at all times will
maintain insurance with such insurance companies, in such amounts
against such hazards and liabilities and for such purposes as is
customary in the industry for companies of established reputation
engaged in the same or similar businesses and owning or operating
similar properties. Upon request of the Lender from time to
time, the Borrower shall furnish to the Lender certificates or
other evidence satisfactory to the Lender of compliance with the
foregoing insurance provisions.
5.4 Taxes. The Borrower will pay or cause to be paid all
-----
taxes, assessments or governmental charges on or against it or
its properties prior to
such taxes becoming delinquent, except for any tax, assessment or
charge which is being contested in good faith by proper legal
proceedings and with respect to which adequate reserves have been
established and are being maintained, provided that no enforcement
action to enforce a lien has been commenced against the Borrower with
respect to any such tax, assessment or charge which is material in
amount.
5.5 Limitation of Indebtedness. Except with the prior
--------------------------
written consent of the Lender, the Borrower will not create,
incur, assume or suffer to exist, or in any manner become or be
liable directly or indirectly with respect to, any Indebtedness
except: (i) the Obligations; (ii) Indebtedness for borrowed money
existing on the date of this Agreement and described on Exhibit B
hereto or in the Initial Financial Statement; and
(iii) Indebtedness on open account for the purchase price of
services, materials and supplies incurred by the Borrower in the
ordinary course of business (not as a result of borrowing), so
long as all of such open account Indebtedness shall be promptly
paid and discharged when due or in conformity with customary
trade terms and practices, except for any such open account
Indebtedness which is being contested in good faith by the
Borrower and as to which adequate reserves required by GAAP have
been established and are being maintained.
5.6 Restrictions on Liens. Without the Lender's prior
---------------------
written consent, the Borrower will not create, incur, assume or
suffer to exist any mortgage, pledge, security interest, lien or
other charge or encumbrance, including the lien or retained
security title of a conditional vendor, ("Encumbrances") upon or
with respect to any property or assets, real or personal, of the
Borrower, or assign or otherwise convey any right to receive
income, except:
(i) Encumbrances existing on the date of this Agreement and set
forth on Exhibit B hereto;
(ii) Encumbrances in favor of the Lender;
(iii) liens for taxes, fees, assessments and other
governmental charges to the extent that payment of the
same is not required in accordance with the provisions
of Section 5.4; or
(iv) liens incurred or deposits made in the ordinary
course of the Borrower's business in connection with
workers' compensation, unemployment insurance, social
security and other similar laws, or liens of mechanics,
laborers, materialmen, carriers and warehousemen arising
by operation of law to secure payment for labor, materials,
supplies or services incurred in the ordinary course of
Borrower's business, but only if the payment thereof is not
at the time required and such liens do not, individually or
in the aggregate, materially detract from the value or limit
the use of any property subject thereto.
5.7 Mergers, Acquisitions and Purchases and Sales
---------------------------------------------
of Assets. The Borrower will not (i) consolidate or merge with or
---------
into any other corporation or other entity, (ii) acquire the assets
or stock of any entity, other than in connection with acquisitions
of interests in other corporations or business entities engaged in
the same business as that in which the Borrower is now engaged or
in a reasonable extension or expansion thereof (either through the
purchase of assets or capital stock or otherwise); provided, that
(a) the aggregate amount of all such acquisitions shall not exceed
$500,000, (b) the properties and assets acquired in connection with
such acquisitions shall be free from all liens, charges and
encumbrances whatsoever, and (c) immediately prior to and after
giving effect to such acquisition, no Default or Event of Default
shall exist, or (iii) sell, lease, transfer or otherwise dispose of
or discount any portion of its assets (including any note,
instrument or account), other than the sale of finished goods and
the disposition of scrap, waste and obsolete items in the ordinary
course of business.
5.8 Investments and Loans. The Borrower will not
---------------------
make or have outstanding at any time any investments in or loans to
any other person, whether by way of advance, guaranty, extension of
credit, capital contribution, purchase of stocks, notes, bonds or
other securities or evidences of Indebtedness, or acquisition of
limited or general partnership interests or interests in any
limited liability company, other than: (i) in direct obligations of
the United States of America, maturing within one year of their
issuance; (ii) in time certificates of deposit or repurchase
agreements, maturing within one year of their issuance, from banks
or other financial institutions in the United States having
capital, surplus and undivided profits in excess of $200,000,000;
(iii) in short-term commercial paper carrying the highest rating by
Moody's or Standard and Poor's rating services and issued by
corporations headquartered in the United States, in currency of the
United States; (iv) in shares of money-market mutual funds having
assets in excess of $100,000,000 and substantially all of the
assets of which consist of investments referred to in clauses (i)
through (iii), inclusive, above; (v) advances to employees for
business related expenses to be incurred in the ordinary course of
business and consistent with past practices in an amount not to
exceed $150,000 in the aggregate outstanding at any one time,
provided that no such advances to any single employee shall exceed
$100,000 in the aggregate; and (vi) investments in addition to
those permitted by this Section 5.8 and disclosed on Exhibit B
attached hereto.
5.9 Restricted Payments The Borrower shall not,
-------------------
directly or indirectly (through any Affiliate or otherwise),
declare, pay or make any Restricted Payment other than (i) regular
compensation and bonuses paid to employees of the Borrower in the
ordinary course of business and consistent with past practices, and
(ii) dividends in respect of, or repurchases of, the Borrower's
common stock (including the repurchase contemplated by the
Redemption Agreement), so long as no Default or Event of Default
exists or would occur by reason of the taking of such action.
5.10 ERISA Compliance.
----------------
None of the Borrower, any Plan and any fiduciary thereof shall
(i) engage in any "prohibited transaction" or incur, whether or not
waived, any "accumulated funding deficiency" (both as defined in
ERISA and the Code), (ii) fail to satisfy any additional funding
requirements set forth in Section 412 of the Code and Section 302
of ERISA, or (iii) terminate or withdraw from participation in any
Plan in a manner which could result in the imposition of a lien on
any property of, or impose a substantial withdrawal liability on,
the Borrower. The Borrower and each Plan shall comply in all
material respects with ERISA.
5.11 Inspection by the Lender; Books and Records. The
-------------------------------------------
Borrower will permit the Lender or its designees, at any reasonable
time and from time to time, to visit and inspect the properties of
the Borrower, to examine and make copies of the books and records
of the Borrower and to discuss the affairs, finances and accounts
of the Borrower with appropriate officers. The Borrower will keep
adequate books and records of account in which true and complete
entries will be made reflecting all of its business and financial
transactions, and such entries will be made in accordance with GAAP
and applicable law.
5.12 Use of Proceeds. The Borrower will use the proceeds of
---------------
the Loans solely for (i) the consummation of the redemption
transactions contemplated by the Redemption Agreement, and (ii) its
working capital needs. No portion of any Loans shall be used for
the purpose of purchasing or carrying any "margin security" or
"margin stock" as such terms are used in Regulations G, U or X of
the Board of Governors of the Federal Reserve System.
5.13 Transactions with Affiliates. The Borrower will not,
----------------------------
directly or indirectly, enter into any transaction with any
Affiliate except in the ordinary course of business on terms that
are no less favorable to the Borrower than those which might be
obtained at the time in a comparable arm's-length transaction with
any person who is not an Affiliate.
5.14 No Amendments to Certain Documents. The Borrower will
----------------------------------
not at any time cause or permit any of the Redemption Agreement,
the charter or other incorporation documents or by-laws of the
Borrower to be modified, amended or supplemented in any respect
whatever, without the express prior written agreement, consent or
approval of the Lender, except for immaterial changes which could
not adversely affect the Lender or its rights hereunder.
5.15 Subsidiaries. The Borrower shall give the Lender
------------
written notice of the formation after the date hereof of any
Subsidiary, and agrees that it shall cause any such Subsidiary to
engage in the business of conducting branches or divisions of the
business now conducted by the Borrower or holding any of the
property of the Borrower. The Borrower will, at the direction of
the Lender, cause such Subsidiary to
become a party to this Agreement and to such of the other Loan Documents as
the Lender shall require.
5.16 Leverage. The Borrower will not permit the ratio of
--------
(i) Total Liabilities to (ii) Tangible Net Worth as at any fiscal
quarter-end during any period specified below to be more than the
ratio identified below as applicable to such period:
Maximum
Period Ratio
------ -----
Date hereof to March 31, 1998 2.25 to 1.0
April 1, 1998 to
March 31, 1999 1.75 to 1.0
April 1, 1999 to
March 31, 2000 1.25 to 1.0
April 1, 2000 and
thereafter 1.0 to 1.0
5.17 Profitability. The Borrower will not permit its Net
-------------
Income during any four consecutive fiscal quarters (as determined
at the end of each fiscal quarter for the four quarters then
ending) to be less than $3,000,000.
SECTION 6. EVENTS OF DEFAULT; ACCELERATION.
-------------------------------
6.1 The following shall constitute events of default
(individually, an "Event of Default"):
(i) default in the payment, when due or payable, of any
Obligation for the payment of money; or
(ii) default in the performance or observance of or compliance
with (i) any of the provisions of Sections 2 (other than the
payment of principal and interest), 5.1, 5.5 through 5.9,
inclusive, 5.11 through 5.17, inclusive, of this Agreement, or (ii)
any term or condition of the Note (other than the payment of
principal and interest on the Note), or (iii) any other covenant or
condition of this Agreement, any other Loan Document or any other
Obligation not listed previously in this Section, and such default
continues for more than 15 days; or
(iii) any representation or warranty at any time made by or on
behalf of the Borrower in any Loan Document or otherwise shall
prove to have been false in any material respect upon the date when
made or deemed to have been made; or
(iv) the occurrence of any default under any agreement, note
or other instrument evidencing or relating to any obligation of the
Borrower to any other person or entity for the payment of $100,000
or more; or
(v) issuance of an injunction which might have a material
adverse effect on the condition (financial or otherwise),
properties, business or results of operations of the Borrower, or
attachment which in the aggregate exceeds $100,000 in value,
against the Borrower, any property of the Borrower or any endorser,
guarantor or surety for any Obligation which is not dismissed or
bonded, to the satisfaction of the Lender, within 30 days after its
issuance;
(vi) calling of a meeting of creditors, formation or
appointment of a committee of creditors or liquidating agents or
offering of a composition or extension to creditors by, for or with
the consent or acquiescence of any of the Borrower or any endorser,
guarantor or surety for any Obligation;
(vii) Insolvency of the Borrower or any endorser, guarantor or
surety for any Obligation;
(viii) any money judgment or judgments aggregating in excess
of $100,000 are entered against the Borrower or any endorser,
guarantor or surety for any Obligation (except to the extent fully
covered by insurance and the insurance carrier has not reserved the
right to disallow such claim), and shall continue unsatisfied and
in effect for a period of 30 days, provided that the total cost of
any bond applied in order to procure a stay of execution in any
such litigation shall not exceed $10,000; or
(ix) any Loan Document, or any covenant, agreement or
obligation contained therein or evidenced thereby, shall cease in
any material respect to be legal, valid, binding or enforceable in
accordance with its terms, or shall be cancelled, terminated,
revoked or rescinded; or
(x) any action at law, suit in equity or other legal
proceeding to cancel, revoke or rescind any Loan Document shall be
commenced by or on behalf of the Borrower or any other person bound
thereby, or by any court or any other governmental or regulatory
authority or agency of competent jurisdiction; or any court or any
other governmental or regulatory authority or agency of competent
jurisdiction shall make a determination that, or shall issue a
judgment, order, decree or ruling to the effect that, any one or
more of the Loan Documents, or any one or more of the obligations
of the Borrower or any other person under any one or more of the
Loan Documents, are illegal, invalid or unenforceable in any
material respect in accordance with the terms thereof; or
(xi) any default or event of default shall occur and be
continuing under the Redemption Agreement.
6.2 If an Event of Default shall occur and be continuing, the
Lender may, at its option, (i) declare any or all of the
Obligations of the Borrower to the Lender to be immediately due and
payable without further notice or demand, whereupon the same shall
become immediately due and payable without presentment, demand,
protest or other notice of any kind, all of which are hereby waived
by the Borrower, (ii) limit, suspend or terminate the Borrower's
right to borrow hereunder, and (iii) exercise any rights and
remedies under this Agreement and law; provided that in the event
of any Event of Default specified in Sections 6.1(vi) or 6.1(vii),
all Obligations shall become immediately due and payable
automatically and without any requirement of notice from the Lender
or action by the Lender.
SECTION 7. SET OFF; PARTICIPATIONS.
-----------------------
Any deposits or other sums at any time credited by or due from
the Lender to the Borrower may, without notice (any such notice
being expressly waived hereby) and to the fullest extent permitted
by law and without regard to any source of payment whatsoever, at
any time during the continuance of an Event of Default, be applied
to or set off against Obligations on which the Borrower is
primarily liable and may at or after the maturity thereof be
applied to or set off against Obligations on which the Borrower is
secondarily liable.
The Borrower invites any financing institution which may
consider investing or participating in the Loans (each such
financing institution being referred to in this Section as a
"Participant") to rely upon all of the representations, warranties,
covenants and other provisions of this Agreement, the Note and the
other agreements, instruments and documents referred to herein or
contemplated hereby in making such investment or participation and
agrees that its becoming a Participant in the Loans shall
constitute an acceptance of such offer and shall make the
Participant a creditor of the Borrower. Any Participant may
exercise the rights of set-off given to the Lender in this Section
7 with respect to any outstanding indebtedness of the Borrower to
such Participant hereunder.
SECTION 8. GENERAL.
-------
8.1 Written Notices. Any notices, expressly required by this
---------------
Agreement to be in writing, to any party hereto shall be deemed to
have been given when delivered by hand, when sent by telecopier,
when delivered to any overnight delivery service freight pre-paid
or 3 days after deposit in the mails, postage prepaid, and
addressed to such party at its address given at the beginning of
this Agreement or at any other address specified in writing.
Written notices to the Borrower shall be sent to the attention of
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇., President, with a copy to ▇▇▇▇▇▇ ▇. ▇.
▇▇▇▇▇▇▇, Esq., Peabody & ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, and written notices to the Lender shall be
sent to the attention of ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Vice President, with a
copy to ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq., Goulston & Storrs, P.C., ▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇. Any notice, unless otherwise specified, may be
given orally or in writing.
8.2 No Waivers. No failure or delay by the Lender in
----------
exercising any right, power or privilege hereunder shall operate as
a waiver thereof; nor shall any single or partial exercise thereof
preclude any other or further exercise thereof or the exercise of
any other right, power or privilege. The rights and remedies
herein provided are cumulative and not exclusive of any rights or
remedies otherwise provided by law.
8.3 Further Assurances. The Borrower shall do, make, execute
------------------
and deliver all such additional and further acts, things,
assurances, and instruments as the Lender may reasonably require
more completely to vest in and assure to the Lender its rights
hereunder and under the other Loan Documents and to carry into
effect the provisions and intent of this Agreement and the other
Loan Documents.
8.4 Governing Law. This Agreement and the other Loan
-------------
Documents shall be deemed to be contracts made under seal and shall
be construed in accordance with and governed by the laws of The
Commonwealth of Massachusetts (without regard to conflicts of laws
rules). Any legal action or proceeding arising out of or relating
to this Agreement or any Obligation may be instituted in the courts
of The Commonwealth of Massachusetts or of the United States of
America for the District of Massachusetts, and the Borrower hereby
irrevocably submits to the jurisdiction of each such court in any
such action or proceeding; provided, however, that the foregoing
shall not limit the Lender's rights to bring any legal action or
proceeding in any other appropriate jurisdiction.
8.5 Expenses, Taxes and Indemnification.
-----------------------------------
(a) The Borrower will pay and indemnify and hold the Lender
harmless against all taxes (other than taxes on the income of the
Lender), charges and expenses of every kind or description,
including without limitation attorneys' fees and expenses and the
costs and expenses of field audits and commercial finance exams,
reasonably incurred or expended by the Lender in connection with or
in any way related to the Lender's relationship with the Borrower,
whether hereunder or otherwise, except that the Lender shall be
responsible for its attorneys' fees incurred or expended in
connection with the preparation, execution and delivery of this
Agreement.
(b) The Borrower shall absolutely and unconditionally
indemnify and hold the Lender harmless against any and all claims,
demands, suits, actions, causes of action, damages, losses,
settlement payments, obligations, costs, expenses and all other
liabilities whatsoever which shall at any time or times be incurred
or sustained by the Lender or by any of its shareholders,
directors, officers, employees, subsidiaries, affiliates or agents
(except any of the foregoing incurred or sustained as a result of
the gross negligence or willful misconduct of the Lender) on
account of, or in relation to, or in any way in connection with,
associated with or ancillary to this Agreement, the other Loan
Documents and the other documents executed or delivered in
connection
herewith, and the arrangements or transactions contemplated therein, whether
or not all or any of the transactions contemplated by, associated with or
ancillary to this Agreement or any of such documents are ultimately
consummated.
8.6 Amendments, Waivers, Etc. This Agreement, the Note and
------------------------
the other Loan Documents and any provision hereof or thereof may be
waived, discharged or terminated only by an instrument in writing
signed by the Lender and may be amended only by an instrument in
writing signed by the Borrower and the Lender.
8.7 Binding Effect of Agreement. This Agreement shall be
---------------------------
binding upon and inure to the benefit of the Borrower and the
Lender and their respective successors and assigns. The Lender may
sell, assign or otherwise transfer all or any portion of its right,
title and interest in, and its obligations under, this Agreement,
the Loans made and to be made hereunder, or grant participations in
its right, title and interest herein and therein. The Borrower
may not assign or transfer its rights or obligations hereunder.
8.8 Computation of Interest and Fees, Etc. Interest, fees
-------------------------------------
and charges shall be computed daily on the basis of a year of 360
days and paid for the actual number of days for which due. If the
due date for any payment of principal is extended by operation of
law, interest shall be payable for such extended time. If any
payment required by this Agreement becomes due on a day on which
banks in Boston, Massachusetts are required or permitted by law or
an appropriate authority to remain closed, such payment may be made
on the next succeeding day on which such banks are open, and such
extension shall be included in computing interest in connection
with such payment. All payments required of the Borrower hereunder
or under the Note shall be made in lawful money of the United
States of America in federal or other funds immediately available
to the recipient thereof at the prescribed place of payment.
8.9 Entire Agreement; Miscellaneous. This Agreement,
-------------------------------
including the exhibits hereto, sets forth the entire agreement and
understanding of the parties hereto in respect of the subject
matter contained herein, and supersedes all prior agreements,
promises, covenants, arrangements, communications, representations,
warranties, whether oral or written, by any officer, employee or
representative of any party hereto. The captions for the sections
of this Agreement are for ease of reference only and are not an
integral part of this Agreement. This Agreement may be signed in
any number of counterparts with the same effect as if the
signatures hereto and thereto were upon the same instrument. The
provisions of this Agreement are severable, and if any of these
provisions shall be held by any court of competent jurisdiction to
be unenforceable, such holdings shall not affect or impair any
other provision hereof.
8.10 WAIVER OF JURY TRIAL. THE BORROWER HEREBY IRREVOCABLY
--------------------
WAIVES TRIAL BY JURY IN ANY JURISDICTION AND IN ANY COURT WITH
RESPECT TO, IN CONNECTION WITH, OR ARISING OUT OF THIS AGREEMENT,
THE OBLIGATIONS, OR ANY INSTRUMENT
OR DOCUMENT DELIVERED PURSUANT HERETO OR THERETO, OR ANY CLAIM OR DISPUTE
HOWSOEVER ARISING, BETWEEN THE BORROWER AND THE LENDER. THIS WAIVER SHALL BE
EFFECTIVE FOR EACH DOCUMENT EXECUTED BY THE BORROWER OR THE LENDER AND
DELIVERED TO THE LENDER OR THE BORROWER, AS THE CASE MAY BE, WHETHER OR NOT
SUCH DOCUMENT SHALL CONTAIN A WAIVER OF JURY TRIAL. THE BORROWER FURTHER
ACKNOWLEDGES THAT ALL DOCUMENTS DELIVERED BY THE LENDER OR THE BORROWER ARE
SUBJECT TO THIS WAIVER OF JURY TRIAL AS TO ANY ACTION THAT MAY BE BROUGHT AS
TO ANY OF SUCH DOCUMENTS, AND CONFIRMS THAT THE FOREGOING WAIVERS ARE
INFORMED AND FREELY MADE.
WITNESS the execution hereof under seal on the day and year
first above written.
BOSTON ACOUSTICS, INC.
By: /s/▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇.
------------------------
Name:
Title:
STATE STREET BANK AND TRUST
COMPANY
By: /s/▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
-------------------------
Name:
Title:
EXHIBIT A
---------
REVOLVING CREDIT NOTE
---------------------
$25,000,000.00 Date: June 13, 1997
FOR VALUE RECEIVED, the undersigned (hereinafter, together
with its successors in title and assigns, called the "Borrower"),
by this promissory note (hereinafter, together with the Schedule
annexed hereto, called "this Note"), absolutely and unconditionally
promises to pay to the order of State Street Bank and Trust Company
(hereinafter, together with its successors in title and assigns,
called the "Bank"), the principal sum of Twenty-Five Million and
00/100 Dollars ($25,000,000.00), or so much thereof as shall have
been advanced by the Bank to the Borrower by way of Revolving Loans
under the Loan Agreement (as hereinafter defined) and shall remain
outstanding, such payment to be made as hereinafter provided, and
to pay interest on the principal sum outstanding hereunder from
time to time from the date hereof until the said principal sum or
the unpaid portion thereof shall have become due and payable as
hereinafter provided.
Capitalized terms used herein without definition shall have
the meaning set forth in the Loan Agreement.
The unpaid principal (not at the time overdue) under this Note
shall bear interest at the rate or rates from time to time in
effect under the Loan Agreement. Accrued interest on the unpaid
principal under this Note shall be payable on the dates specified
in the Loan Agreement.
On July 1, 2002, the date of the final maturity of this Note,
there shall become absolutely due and payable by the Borrower
hereunder, and the Borrower hereby promises to pay to the Bank, the
balance (if any) of the principal hereof then remaining unpaid, all
of the unpaid interest accrued hereon and all (if any) other
amounts payable on or in respect of this Note or the indebtedness
evidenced hereby.
Each overdue amount (whether of principal, interest or
otherwise) payable on or in respect of this Note or the
indebtedness evidenced hereby shall (to the extent permitted by
applicable law) bear interest at the rates and on the terms
provided by the Loan Agreement. The unpaid interest accrued on
each overdue amount in accordance with the foregoing terms of this
paragraph shall become and be absolutely due and payable by the
Borrower to the Bank on demand by the Bank. Interest on each
overdue amount will continue to accrue as provided by the foregoing
terms of this paragraph, and will (to the extent permitted by
applicable law) be compounded daily until the obligations of the
Borrower in respect of the payment of such overdue amount shall be
discharged (whether before or after judgment).
Each payment of principal, interest or other sum payable on or
in respect of this Note or the indebtedness evidenced hereby shall
be made by the Borrower directly to the Bank in dollars, at the
address of the Bank set forth in the Loan Agreement, on the due
date of such payment, and in immediately available and freely
transferable funds. All payments on or in respect of this Note or
the indebtedness evidenced hereby shall be made without set-off or
counterclaim and free and clear of and without any deductions,
withholdings, restrictions or conditions of any nature.
This Note is made and delivered by the Borrower to the Bank
pursuant to the Loan Agreement, dated as of June 13, 1997, by and
between the Borrower and the Bank (hereinafter, as originally
executed, and as now or hereafter varied or supplemented or amended
and restated, called the "Loan Agreement"). This Note evidences
the obligation of the Borrower (a) to repay the principal amount of
the Revolving Loans made by the Bank to the Borrower pursuant to
the Loan Agreement; (b) to pay interest, as herein and therein
provided, on the principal amount hereof remaining unpaid from time
to time; and (c) to pay other amounts which may become due and
payable hereunder or thereunder as herein and therein provided.
The Borrower will have the right to prepay the unpaid
principal of this Note in full or in part upon the terms contained
in the Loan Agreement. The Borrower will have an obligation to
prepay principal of this Note from time to time if and to the
extent required under, and upon the terms contained in, the Loan
Agreement. Any partial payment of the indebtedness evidenced by
this Note shall be applied in accordance with the terms of the Loan
Agreement.
Pursuant to and upon the terms contained in Section 6 of the
Loan Agreement, the entire unpaid principal of this Note, all of
the interest accrued on the unpaid principal of this Note and all
(if any) other amounts payable on or in respect of this Note or the
indebtedness evidenced hereby may be declared to be immediately due
and payable, whereupon the entire unpaid principal of this Note,
all of the interest accrued on the unpaid principal of this Note
and all (if any) other amounts payable on or in respect of this
Note or the indebtedness evidenced hereby shall (if not already due
and payable) forthwith become and be due and payable to the Bank
without presentment, demand, protest or any other formalities of
any kind, all of which are hereby expressly and irrevocably waived
by the Borrower, excepting only for notice expressly provided for
in the Loan Agreement.
All computations of interest payable as provided in this Note
shall be computed by the Bank daily on the basis of a 360 day year
and paid for the actual number of days for which due. The interest
rate in effect from time to time shall be determined in accordance
with the terms of the Loan Agreement.
Should all or any part of the indebtedness represented by this
Note be collected by action at law, or in bankruptcy, insolvency,
receivership or other court proceedings, or should this Note be
placed in the hands of attorneys for collection after default, the
Borrower hereby promises to pay to the holder of this Note, upon
demand by the holder
hereof at any time, in addition to principal, interest and all (if any) other
amounts payable on or in respect of this Note or the indebtedness evidenced
hereby, all court costs and attorneys' fees and all other collection charges
and expenses reasonably incurred or sustained by the holder of this Note.
The Borrower hereby irrevocably waives notice of acceptance,
presentment, notice of nonpayment, protest, notice of protest, suit
and all other conditions precedent in connection with the delivery,
acceptance, collection and/or enforcement of this Note or any
collateral or security therefor, except for notices expressly
provided for in the Loan Agreement. The Borrower hereby absolutely
and irrevocably consents and submits to the jurisdiction of the
courts of the Commonwealth of Massachusetts and of any federal
court located in Suffolk County in the said Commonwealth in
connection with any actions or proceedings brought against the
Borrower by the holder hereof arising out of or relating to this
Note.
This Note is intended to take effect as a sealed instrument.
This Note and the obligations of the Borrower hereunder shall be
governed by and interpreted and determined in accordance with the
laws of the Commonwealth of Massachusetts without regard to its law
relating to choice of law.
IN WITNESS WHEREOF, this REVOLVING CREDIT NOTE has been duly
executed by the undersigned on the day and in the year first above
written in Boston, Massachusetts.
WITNESS: BOSTON ACOUSTICS, INC.
___________________________ By:__________________________________
Name:
Title:
SCHEDULE TO REVOLVING CREDIT NOTE
AMOUNT INTEREST AMOUNT NOTATION
DATE OF LOAN RATE PAID MADE BY
---- ------- -------- ------ --------
Exhibit B
---------
LOAN AGREEMENT
dated as of June 13, 1997
between
BOSTON ACOUSTICS, INC.
and
STATE STREET BANK AND TRUST COMPANY
Using the paragraph numbers of the above Loan Agreement, and the
definitions of terms provided therein, the Borrower provides the
following information:
3.1 [jurisdictions where the nature of Borrower's properties or
its business (present or proposed) requires qualification] - None
3.5 [material Indebtedness or other liabilities, whether accrued,
absolute, contingent or otherwise, and whether due or to become
due, that are not set forth on the Initial Financial Statement] - None
3.5 [material adverse changes, individually or in the aggregate,
in the assets, liabilities, financial condition or business of the
Borrower] - None
3.8 [litigation, proceeding, governmental investigation
(administrative or judicial) or labor dispute, pending or, to the
best knowledge of the Borrower, threatened against the Borrower,
which, if decided adversely to the Borrower, could have a
materially adverse effect on the business, properties or condition
(whether financial or otherwise) of the Borrower or on the ability
of the Borrower to perform its obligations under this Agreement or
any other agreement or document contemplated hereby] - None
3.10 [agreements, instruments or contracts (whether written or
oral) with any Affiliate with respect to Indebtedness for borrowed
money or as would materially and adversely affect the condition
(financial or otherwise), properties, business or results of
operations of the Borrower] - None
3.12 [Subsidiaries]
Jurisdiction of
Name of Subsidiary Incorporation Ownership
------------------ --------------- ------------------------------
BA Acquisition Corp. Mass. 100% by Boston Acoustics, Inc.
Boston Acoustics Securities Corp. Mass. 100% by Boston Acoustics, Inc.
Boston Acoustics Foreign Sales Corp. St. ▇▇▇▇▇▇ 100% by Boston Acoustics, Inc.
Boston Acoustics Italia, SRL Italian 98% by Boston Acoustics, Inc.
2% by BA Acquisition Corp.
5.5 [Indebtedness for borrowed money existing on the date of this Agreement] -
None
5.6 [Encumbrances existing on the date of this Agreement] - None
5.8 [Investments] - See attached Exhibit B-1