EXHIBIT 10.1
(SOVEREIGN LOGO)
SOVEREIGN BANK NEW ENGLAND
June 30, 2005
Xx. Xxxxxx X. Xxxxx
Vice President
BTU International, Inc.
00 Xxxxxxx Xxxx
Xxxxx Xxxxxxxxx, XX 00000
Dear Xx. Xxxxx:
As you know, BTU International, Inc. ("BTU") is indebted to Sovereign Bank
(the "Bank") in the principal amount of up to $14,000,000 (the "Loan") pursuant
to the terms of a certain Loan Agreement between BTU and the Bank, dated June
26, 2002, which Loan Agreement was as modified on January 28, 2004 (together
with all of the other documents that evidence or pertain to the Loan, the "Loan
Documents").
BTU has stated to the Bank that it is in default of the Maximum Leverage
Ratio (as defined in Schedule A of the Loan Agreement) for the period ending
October 3, 2004. The Bank has agreed to waive this default subject to
modifications in the terms of the Loan and the conditions set forth on the Term
Sheet that is attached hereto and made a part hereof.
Please be advised that this waiver is applicable to this particular
circumstance and is not, and should not be construed as, a waiver of any other
Loan covenant or term of the Loan Documents or a waiver of the subject covenant
for any other period of time. The Bank retains all of its rights and remedies
under the Loan Documents, in equity, and under applicable law.
Please sign below, and initial the Term Sheet, to indicate BTU's acceptance
of the conditions of this waiver. This acknowledgement will also authorize the
Bank to debit the main operating deposit account of the Borrower in payment for
the fee referenced in the Term Sheet. Once received, legal documentation will be
prepared to reflect the revised terms and conditions as described herein.
Please do not hesitate to contact the undersigned with any questions, at
000-000-0000.
Very truly yours,
SOVEREIGN BANK
By:
------------------------------------
Xxxxxxx X. Xxxxx, SVP
Agreed to and accepted this ____ day of ____________, 2005:
BTU INTERNATIONAL, INC.
By:
---------------------------------
Title:
------------------------------
Revised Terms and Conditions
BTU International, Inc.
July 12, 2005
- Borrowing Base and supporting A/R aging reports to be submitted monthly.
- Reduce the inventory cap from $3.5MM to $0 MM for the remainder of FY 2005.
If the Borrower meets 90% or better of its stated goals for FYE 12/31/05,
as confirmed by the CPA Audited statements, the Bank will undertake to
obtain credit approval to reinstate the cap to the $3.5MM limit in the
borrowing base.
- Advances on domestic and Foreign A/R to remain unchanged, at 80% of
eligible A/R.
- The cross aging provision to remain at the existing limit of 50% of total
A/R due to be excluded.
- Without reducing our commitment, reduce the maximum level of advances under
the line to be $12MM for direct advances and for letters of credit. If the
Company meets by 90% or better its stated profitability goals for Q1 and Q2
2005, the maximum level to increase to $13MM. If the Company meets by 90%
or better its profitability goals for FYE 12/31/05, the maximum level will
increase to the committed amount of $14MM. All advances, including L/C's,
to be governed by the borrowing base. The profitability goals are those as
presented to the Bank on March 18, 2005.
- A field examination to be conducted twice annually for FY 2005, in mid 2005
and at FYE. If the Company meets or exceeds its projections for FYE
12/31/05, field examinations will be reduced to once annually.
- Require a pro forma balance sheet and income statement for FYE 12/31/05, to
be presented on a quarterly basis.
- Interest rate on the Line to be increased to Prime + 0.25% or LIBOR +
2.50%. If the Company meets by 90% or better its profitability goals for
YTD 6/30/05; the rate will reduce to the original rates of Prime or LIBOR +
2.25%. The profitability goals are those as presented to the Bank on March
18, 2005.
- A one-time covenant waiver fee of $10,000 to be charged. In addition, the
Borrower shall pay for all costs and expenses related to this modification
of terms, including but not limited to reasonable legal fees and expenses.
