September 30, 1997
Exhibit 10.1
Xxxxx X. Xxxxxxx
Vice President - Financial/ Chief Financial Officer
Cambridge SoundWorks, Inc.
000 Xxxxxxx Xxxxxx
Xxxxxx, XX 00000
Re: Amendment to Loan and Security Agreement dated as of April 27, 1995
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Dear Xxxxx:
We refer to the Loan and Security Agreement dated as of April 27, 1995 (as
amended, the "Loan Agreement"), between Cambridge SoundWorks, Inc. (the
"Borrower") and BankBoston, N.A. (f/k/a The First National Bank of Boston) (the
"Lender").
This will confirm our understanding that, from and after the date hereof:
(1) Section 1.2 of the Loan Agreement is amended by inserting, immediately
after clause (b), the following new clause (c):
(c) notwithstanding clauses (a) and (b) above, are due
from Creative Technology, Inc. or any of its
Subsidiaries, provided that if any such account debtor is
located in the United States, the Commonwealth of Puerto
Rico or the U.S. Virgin Islands, then the Lender shall
have a valid and perfected first-priority security
interest therein; or"
(2) The first sentence of Section 1.3 of the Loan Agreement is amended to
read in its entirety as follows:
"1.3 "Base Finished Goods Inventory" means Inventory consisting of
finished goods located in the United States, as to which the Borrower
has acquired title, the Lender has acquired a first-priority security
interest and the Borrower has furnished to the Lender information as
provided by Section 3.4."
(3) The first sentence of Section 1.5 of the Loan Agreement is amended to
read in its entirety as follows:
"1.5 "Base Raw Materials Inventory" means Inventory consisting of raw
materials (other than supplies and packaging) located in the Unites
States, as to which the Borrower has acquired title, the Lender has
acquired a first-priority security interest and the Borrower has
furnished to the Lender information as provided by Section 3.4."
(4) Section 1.6 of the Loan Agreement is amended to read in its entirety
as follows:
"Borrowing Base" shall mean an amount equal to the lesser of: (i)
$11,000,000 or (ii) the sum of (A), solely during the period from
September 15 through February 14 of each
year, eighty percent (80%) of the Net Outstanding Amount of Base
Accounts, (B) thirty percent (30%) of the Net Security Value of
Base Raw Materials Inventory, and (C) seventy percent (70%) of the
Net Security Value of Base Finished Goods Inventory (provided that
for purposes of clauses (B) and (C) above, the aggregate amount
determined by applying such percentages shall not exceed $7,500,000).
Whenever the Borrowing Base is used as a measure of Loans it shall be
computed as of, and the Loans referred to shall be those reflected in
the Loan Account at, the time in question."
(5) The parenthetical contained in the sixth line of Section 1.16 of the
Loan Agreement is amended to read in its entirety as follows:
"(including, without limitation, third-party processing liens and
liens in favor of any vendor)"
(6) Section 1.18 of the Loan Agreement is amended to read in its entirety
as follows:
"1.18 "Net Outstanding Amount of Base Accounts" means the net amount
of Base Accounts outstanding after (a) eliminating from the aggregate
amount of outstanding Base Accounts such Accounts as are unpaid more
than sixty (60) days after invoice date, and which the Lender no
longer wishes to include therein, (b) deducting from the aggregate
face amount of the remaining Base Accounts (i) Accounts owing from
affiliates (other than those owing from Creative Technology, Inc. and
its Subsidiaries), (ii) all payments, adjustments and credits
applicable thereto, and (iii) all amounts due thereon considered by
the Lender to be difficult to collect or uncollectible by reason of
return, rejection, repossession, loss or damage of or to the
merchandise giving rise thereto, a merchandise or other dispute,
Insolvency of the account debtor, or any other reason, and (c)
eliminating from the aggregate amount of outstanding Base Accounts
such Accounts as are owing from any Ineligible Account Party or any
supplier to the Borrower, all as determined by the Lender in its sole
discretion, which determination shall be final and binding upon the
Borrower."
(7) Section 1 of the Loan Agreement is amended by inserting at the end
thereof the following new definition:
"1.2 "Ineligible Account Party" shall mean any account debtor or
consolidated group including such account debtor who has twenty
percent (20%) or more of its aggregate Accounts owing to the Borrower
unpaid more than ninety (90) days after invoice date or which are
otherwise excluded from the definition of "Net Outstanding Amount of
Base Accounts" pursuant to any of the provisions of that definition."
(8) Subsection (d) of Section 2.14 of the Loan Agreement is amended to
read in its entirety as follows:
"(d) as soon as available to the Borrower, but in any event (i)
within twenty (20) days after the end of each fiscal month, a written
report in form satisfactory to the Lender setting forth the Borrowing
Base as of the last day of such fiscal month and all relevant
components thereof, and all relevant calculations and other
information relating thereto, including without limitation a detailed
accounts receivable aging report, a backlog report and a designation
of inventory, as of such last day, all certified on behalf of the
Borrower
by the chief financial officer of the Borrower; and (ii) not later
than the last day of each fiscal month, a written report in form
satisfactory to the Lender setting forth the Borrowing Base with
respect to accounts receivable as of the fifteenth day of such month
and all relevant components thereof, and all relevant calculations
and other information relating thereto, including without
limitation a detailed accounts receivable aging report, as of such
fifteenth day, all certified on behalf of the Borrower by the chief
financial officer of the Borrower;"
(9) Section 2.14 of the Loan Agreement is further amended by adding the
following two clauses at the end thereof:
"(h) as soon as available to the Borrower, but in any event within
one hundred eighty (180) days after each fiscal year-end of Creative
Technology, Inc. and its Subsidiaries, the consolidated balance sheet
of Creative Technology, Inc. and its Subsidiaries as at the end of,
and related statements of income, retained earnings and cash flow for,
such fiscal year prepared in accordance with GAAP and, in the case of
such statement, audited by Price Waterhouse L.L.P. or other certified
public accountants reasonably accepted to the Lender;
(i) as soon as available to the Borrower, but in any event within
ninety (90) days after the end of each fiscal quarter of Creative
Technology, Inc. and its Subsidiaries, the consolidated balance sheet
of Creative Technology, Inc. and its Subsidiaries as at the end of,
and related statements of income, retained earnings and cash flow for,
the portion of the fiscal year then ended and for the fiscal quarter
then ended, prepared in accordance with GAAP, except for normal
year-end audit adjustments (none of which are material) and footnotes
with respect to unaudited reports, and certified by the chief
financial officer of Creative Technology, Inc."
(10) Section 5.1 (b) of the Loan Agreement is amended to read in its
entirety as follows:
"(b) Interest on Loans computed on the daily debit balance in the
Loan Account (i) for amounts up to and including $8,000,000 at a rate
which at all times shall be equal to the Base Rate plus one-quarter of
one percent (.25%), and (ii) for amounts exceeding $8,000,000, at a
rate which at all times shall be equal to the Base Rate plus
three-quarters of one percent (.75%), calculated on the basis of a
360-day year for the actual number of days elapsed, provided however,
that even if the Lender has not made demand for such interest and an
Event of Default has not occurred, such interest, to the extent
accrued but unpaid, shall be nonetheless paid by the Borrower on the
last day of each month; provided, further, however, that if any Loan
is not paid when due or upon demand, then the debit balance of the
Loan Account shall bear interest, to the extent permitted by law,
compounded monthly at an interest rate equal to the rate of four
percent (4%) above the Base Rate in effect on the first business day
after such Loan becomes overdue. Any change in the Base Rate shall
become effective as of the beginning of the day during which such
change in the Base Rate occurs;"
(11) Section 13.1 is amended: (i) by deleting the name of Xxxxxxx X.
Xxxxxxx; and (ii) by inserting in place thereof the following name:
"Xxxxx Xxxxxxx"
(12) Section 13.1 is further amended: (i) by deleting the name and
address of Xxxxxxx X. Xxxxxxxx; and (ii) by inserting in place thereof the
following name and address:
"Xxxxxxxx X. Xxxxxxxxxx
Assistant Vice President
BankBoston, N.A.
000 Xxxxxxx Xxxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000"
Except to the extent specifically amended by the preceding paragraphs,
all of the terms, conditions and provisions of the Loan Agreement remain
unmodified, and the Loan Agreement, as amended by this letter, is confirmed
as being in full force and effect. In addition, this letter does not
constitute a waiver of any rights or remedies which the Lender may have under
the Loan Agreement or otherwise arising.
Please sign this letter where indicated below to confirm your agreement
with the provisions hereof, and return the same together with authorizing
resolutions of the Board of Directors, a Certificate of Good Standing, a
Certificate of Incumbency, and a satisfactory legal opinion.
Very truly yours,
BANKBOSTON, N.A. (f/k/a THE FIRST NATIONAL
BANK OF BOSTON)
By: /s/ Xxxxxxxxxxx X. Xxxxx
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Title: Director
ACCEPTED AND AGREED
as of the date of the above letter:
CAMBRIDGE SOUNDWORKS, INC.
By: /s/ Xxxxx X. Xxxxxxx
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Title: VP Finance, CFO
