EXHIBIT 10.55
FIRST AMENDMENT TO LOAN AGREEMENT
This First Amendment to Loan Agreement (hereinafter the "FIRST
AMENDMENT") is dated as of January 28, 2004 and is entered into by and between
SOVEREIGN BANK, with an office at ▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇
(hereinafter referred to as the "LENDER"), and BTU INTERNATIONAL, INC., a
Delaware corporation with its chief executive office, principal place of
business and mailing address at ▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇ (hereinafter referred to as the "BORROWER").
WHEREAS, the Bank and Borrower entered into a Loan Agreement dated as of
June 26, 2002 (the "ORIGINAL LOAN AGREEMENT" and together with all amendments,
including this First Amendment, the "LOAN AGREEMENT"), pursuant to which, among
other things, the Bank extended a revolving line of credit (the "REVOLVING
CREDIT") to the Borrower in the amount of $14,000,000.00, evidenced by a
Revolving Credit Note (the "ORIGINAL REVOLVING CREDIT NOTE"); and
WHEREAS, the Bank and Borrower have agreed, subject to the provisions of
a Loan Modification Agreement of even date herewith and this First Amendment,
among other things: (i) that the Termination Date under the Revolving Credit be
extended for one (1) year to May 31, 2007; (ii) that the definition of
"Borrowing Base" be amended; and (iii) that certain covenants and definitions in
the Loan Agreement be modified and amended;
NOW, THEREFORE, in consideration of good and valuable consideration, the
receipt of which is hereby acknowledged, the parties agree as follows:
1. The Original Loan Agreement is hereby amended as follows:
(a) Section 1.35 of the Original Loan Agreement entitled "Termination
Date" is hereby amended by deleting therefrom the date "May 31, 2006" and
substituting in lieu thereof the date "May 31, 2007", thereby extending the
Termination Date for one (1) year.
(b) Section 2.1 of the Original Loan Agreement entitled "Revolving
Loan" is hereby amended by deleting the second paragraph setting forth the
definition of Borrowing Base and substituting the following paragraph in lieu
thereof:
"For purposes of this Agreement, except as otherwise expressly set forth
herein, the term "BORROWING Base" shall be deemed to mean a sum equal to:
Eighty (80%) Percent of the Eligible Receivables; plus
Thirty-Five (35%) Percent of the Borrower's Eligible Inventory,
with Inventory advances not to exceed, in any event, Three Million
Five Hundred Thousand ($3,500,000.00) Dollars;
LESS
The aggregate face amount(s) of any Letter of Credit outstanding
hereunder plus the outstanding amount, if any, of all amounts
previously drawn under any Letter(s) of Credit which have not been
reimbursed to Lender by Borrower."
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(c) Section 2.1 of the Original Loan Agreement entitled "Revolving
Loan" is hereby further amended by deleting from the third paragraph thereof the
language "and the Fixed Assets" to clarify that there is no Fixed Asset
component to the Borrowing Base any longer.
(d) Section 2.2 of the Original Loan Agreement entitled "Borrowing
Base Report, Etc." is hereby amended by deleting from the first paragraph
thereof the language "and a Fixed Asset listing (such as a depreciation
schedule)" to eliminate the requirement of providing information concerning
Fixed Asset since there is no longer a Fixed Assets component to the Borrowing
Base, and is further amended by deleting the second paragraph of said
Section 2.2.
(e) Section 3 of the Loan Agreement entitled "Security Agreement" is
hereby amended by deleting said Section and substituting the following in lieu
thereof:
"SECTION 3. SECURITY INTEREST
Simultaneously, the Borrower shall execute and deliver to the
Lender a security agreement (the "SECURITY AGREEMENT") in
substantially the form attached hereto as Exhibit 3.1, granting to
the Lender a first lien and security interest in all accounts,
inventory and other assets described in the Security Agreement and
the Lender is hereby authorized to file UCC financing statements
to perfect the security interest granted thereby."
(f) Section 7 of the Loan Agreement entitled "Events of Default" is
hereby amended by deleting section (i) and substituting the following
section (i):
(i) If the Borrower shall dissolve or liquidate, or be dissolved
or liquidated, or cease to legally exist, or, except as permitted
in Section 6.6 of this Agreement, merge or consolidate, or be
merged or consolidated with or into any other corporation.
(g) Section 7 of the Loan Agreement entitled "Events of Default" is
hereby further amended by deleting section (j) and substituting the following
section (j):
(j) Except for indebtedness which the Borrower is in good faith
disputing and for which the Borrower has reserves deemed
reasonably adequate by the Bank in its reasonable judgment,
failure by the Borrower to pay any other indebtedness or
obligation which individually or in the aggregate exceeds
$50,000.00, or, if any such other indebtedness or obligation shall
be accelerated, or if there exists any event of default under any
instrument, document or agreement governing, evidencing or
securing such other indebtedness or obligation.
(h) Section 8.16 of the Loan Agreement is hereby amended by
substituting the following address for ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esquire:
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▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esquire
Ropes & ▇▇▇▇
▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Phone: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
(h) Schedule A of the Loan Agreement is hereby amended by amending the
covenant entitled "MINIMUM TANGIBLE NET WORTH" by deleting the figure "Twenty
Million ($20,000,000.00) Dollars" and substituting the figure "Ten Million
($10,000,000.00) Dollars" in lieu thereof and deleting the date "December 31,
2002" and substituting the date "December 31, 2004" in lieu thereof, thereby
reducing the Minimum Tangible Net Worth requirement to "Ten Million
($10,000,000.00) Dollars" plus Fifty (50%) percent of the aggregate after tax
income of the Borrower for each fiscal year commencing with the fiscal year
ending December 31, 2004. Losses in subsequent fiscal years will not serve to
decrease the aforesaid minimum level in effect as of each fiscal year end.
Additionally, Schedule A is further amended by deleting the second and
third paragraphs after the definition of Minimum Tangible Net Worth, which
second paragraph starts with the clause: "Notwithstanding the foregoing..." and
ends with the words: "during which the acquisition was consummated.", and which
third paragraph starts with the clause: "In the event of an acquisition of a
business,..." and ends with the words "... pursuant to Section 2.1."
(i) Schedule A is hereby further amended by adding the following
additional covenant:
"MINIMUM NET INCOME [PROFITABILITY]". Permit Borrower's net income
(as determined in accordance with GAAP) to be less than One Dollar
($1.00) for any fiscal quarter, commencing with the fiscal quarter
ending December 31, 2004.
(j) Notwithstanding the deletion of the second and third paragraphs
after the definition of Minimum Tangible Net Worth in Schedule A, as described
in section (h) above, the Bank hereby acknowledges that the Leverage Ratio set
forth in Schedule A has been modified to 2.0 to 1.0 in lieu of .75 to 1.0.
2. The Borrower hereby represents and warrants that: (a) the
representations and warranties contained in Section 4 of the Loan Agreement
remain true and accurate in all material respects; (b) there has not occurred
any material adverse change in the business, assets, financial condition or
prospects of the business of Borrower since the date of the last financial
statements submitted to the Bank; and (c) the Borrower does not have any
offsets, set-offs or other claims of any kind against the Bank as of the date
hereof, and, to the extent Borrower has any such offsets, set-offs or other
claims, it hereby waives the same.
3. The Borrower will pay or reimburse the Bank, on demand, for all
expenses (including, without limitation, reasonable counsel fees and expenses)
incurred or paid by the Bank in connection with the making and administration of
the loans and the enforcement by the Bank of its rights as against the Borrower
or any other person primarily or secondarily liable to the Bank hereunder or
thereunder, including the counsel fees incurred in the preparation hereof.
4. Except as set forth herein, the Borrower hereby acknowledges and
agrees that the
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Original Loan Agreement, as amended hereby, and all of the loan documents
previously executed and delivered by the Borrower, or third parties, to the Bank
securing the Obligations remain in full force and effect.
5. All capitalized terms not otherwise defined herein shall have the
meanings ascribed to them in the Original Loan Agreement.
6. Notwithstanding the existence of any other security interests in
the property described in any security agreement or mortgage or other instrument
or agreement, the Bank shall have the right to determine the order in which any
or all of said property shall be subjected to the remedies provided therein and
the right to determine the order in which any or all portions of the Obligations
are satisfied from the proceeds realized upon the exercise of the remedies
provided therein. The Borrower and any party who consents to the Bank's interest
in the said property and who has actual or constructive notice hereof hereby
waives and shall be deemed to have waived any and all rights to require the
marshaling of assets in connection with the exercise of any of the remedies
permitted by applicable law or provided herein.
IN WITNESS WHEREOF, the parties have executed or caused this First
Amendment to be executed by their respective officers hereunto duly authorized,
as of the day first written above and it and shall take effect as a sealed
instrument.
SOVEREIGN BANK
By:
-----------------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Senior Vice President
Duly Authorized
BTU INTERNATIONAL, INC.
By:
-----------------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Vice President, Chief Accounting Officer
and Corporate Controller
Duly Authorized
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COMMONWEALTH OF MASSACHUSETTS
Middlesex, ss January ___, 2004
Before me personally appeared ▇▇▇▇▇▇ ▇. ▇▇▇▇▇ as Vice President, Chief
Accounting Officer and Corporate Controller of BTU International, Inc., known by
me to be the person executing the foregoing instrument, and acknowledged said
instrument to be his free act and deed as Vice President, Chief Accounting
Officer and Corporate Controller of BTU International, Inc and the free act and
deed of said BTU International, Inc.
-----------------------------
Notary Public:
My Commission Expires:
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ALLONGE TO AND AMENDMENT OF REVOLVING CREDIT NOTE
Reference is hereby made to a certain Revolving Credit Note dated June
26, 2002 in the original principal amount of Fourteen Million ($14,000,000.00)
Dollars (the "ORIGINAL NOTE") executed and delivered by BTU INTERNATIONAL, INC
(the "BORROWER") payable to the order of SOVEREIGN BANK (the "BANK");
WHEREAS, the Bank and Borrower entered into a Loan Agreement (the
"ORIGINAL LOAN AGREEMENT") dated as of June 26, 2002 pursuant to which the Bank
extended a Revolving Credit to the Borrower in the amount of $14,000,000.00 and
the Borrower executed and delivered the Original Note; and
WHEREAS, the Borrower has requested that the Termination Date of the
Revolving Credit be extended from May 31, 2006 to May 31, 2007 and the Bank has
agreed, subject to the execution and/or delivery of, among other things, this
Allonge;
NOW, THEREFORE, the parties agree as follows:
1. The Original Note is hereby amended by deleting the date "May 31,
2006" from the first paragraph thereof and substituting the date "May 31, 2007"
in lieu thereof, thereby extending the Termination Date to May 31, 2007.
2. In all other respects, the Original Note is ratified and confirmed
as being in full force and effect and as being secured by the same collateral,
which secured the Original Note.
Signed as a sealed instrument as of the 28th day of January, 2004.
SOVEREIGN BANK
By:
----------------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Senior Vice President
Duly Authorized
BTU INTERNATIONAL, INC.
By:
----------------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Vice President, Chief Accounting Officer
and Corporate Controller
Duly Authorized
SECURITY AGREEMENT
THIS SECURITY AGREEMENT is entered into at Boston, Massachusetts, as of
this 28th day of January, 2004 by and between BTU INTERNATIONAL, INC., a
Delaware corporation with its chief executive office, principal place of
business and mailing address at ▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇ (hereinafter called the "BORROWER") and SOVEREIGN BANK (hereinafter called
the "BANK").
The tangible Collateral, including the Inventory, which is the subject
matter of this Agreement is and will be kept at: ▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ and the other locations, if any, described on
Exhibit A. The Borrower warrants that the Borrower has no places of business
except as set forth in the preceding sentence, except for additional locations
identified on Exhibit A. All records concerning Borrower's accounts, contract
rights and other property are at ▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇.
1. In consideration of the Bank's extending credit and other
financial accommodations to the Borrower, the Borrower hereby grants to the Bank
a security interest in (including, without limitation, a lien on and pledge of)
all of the Borrower's Collateral (as hereinafter defined).
The security interest granted by this Agreement is given to and shall be
held by the Bank as security for the payment and performance of all Obligations
(as hereinafter defined). After the occurrence and during the continuation of an
Event of Default, if the Bank shall have declared the Obligations to be
immediately due and payable pursuant to Section 7.2 of the Loan Agreement, the
Bank shall have the unrestricted right from time to time to apply the proceeds
of any of the Collateral to any of the Obligations, as the Bank in its sole
discretion may determine.
During the continuance of this Agreement, the Borrower will, at such
intervals as the Bank may request, notify the Bank, upon a form satisfactory to
the Bank, of all Collateral which has come into existence since the date hereof
or the date of the last such notification, including, without limitation, the
delivery of schedules of the Collateral.
2. The following definitions shall apply:
(a) "COLLATERAL" shall mean all the Borrower's present and
future right, title and interest in and to any and all of the following
property, whether such property be now existing or hereafter created,
acquired or arising or now or hereafter received by or belonging or owing
to the Borrower:
(i) All Inventory;
(ii) All accounts (as these terms are defined in the Code, as
hereafter defined), including, without limiting the generality of the
foregoing, "Health-Care-Insurance Receivables", accounts receivable, and
all contract rights, and chattel paper, including without limiting the
generality of the foregoing, "Electronic Chattel Paper", regardless of
whether or not any of the foregoing constitute proceeds of other
Collateral;
(iii) All the Borrower's rights (which the Bank may exercise or
not as it in its sole discretion may determine) to acquire or obtain
goods and/or services with respect to the manufacture, processing,
storage, sale, shipment, delivery or installation of any of the
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Borrower's Inventory or other Collateral;
(iv) All products and accessions to any of the Collateral;
(v) All obligations, debts and liabilities owing to the
Borrower, from any person, firm or corporation or any other legal entity,
whether now existing or hereafter arising, now or hereafter received by
or belonging or owing to Borrower, for goods sold by it or for services
rendered by it, all guarantees and securities therefore, all right, title
and interest of Borrower in the merchandise or services which gave rise
thereto, including the rights of reclamation and stoppage in transit, all
rights to replevy goods, and all rights of an unpaid seller of
merchandise or services, and all choses in action relating thereto;
(vi) All documents and instruments (whether negotiable or
nonnegotiable, and regardless of their being attached to chattel paper)
relating to Inventory or accounts or representing the right to payment
for goods sold or services rendered, including, without limitation, all
notes, bills, drafts and acceptances as these terms are defined in the
Uniform Commercial Code representing the right to payment for goods sold
or services rendered;
(vii) All books and records (including, without limiting the
generality of the foregoing all electronically recorded data), whether
now owned or existing or hereafter acquired, created or arising, relating
to its accounts and/or Inventory;
(viii) All proceeds of Collateral of every kind and nature and in
whatever form, including, without limitation, both cash and noncash
proceeds resulting or arising from the rendering of services by the
Borrower or the sale or other disposition by the Borrower of the
Inventory or other Collateral and all insurance proceeds payable under
insurance policies relating to any items of Collateral and rents and
profits resulting from the temporary use of Collateral;
"Collateral" shall not include any of the Borrower's interests in real property,
including fixtures, or equipment as defined in the Uniform Commercial Code.
(b) "CONTRACT RIGHTS" or "CONTRACT RIGHTS" means the rights of
the Borrower to payment under contracts relating to goods sold or
services rendered not yet earned by performance and not evidenced by
instruments or chattel paper.
(c) "INVENTORY" shall have the meaning set forth in the Code,
including raw materials, work in process, supplies and components, and
finished goods, whether held by the Borrower for sale or other
disposition, and also including any returned or repossessed Inventory
detained from or rejected for entry into the United States by the
appropriate governmental authorities, all products of and accessions to
Inventory and including documents of title, whether negotiable or
nonnegotiable, representing any of the foregoing.
(d) "DEBTOR(S)" shall mean the Borrower's customers who are
indebted to the Borrower, sometimes also referred to as "ACCOUNT
DEBTORS".
(e) "LOAN DOCUMENTS" shall mean any and all agreements,
instruments, documents, security agreements, mortgages, financing
statements, and supplements thereto and relating to the Loan Agreement
dated as of June 26, 2002 between the Bank
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and the Borrower, as amended by a First Amendment to Loan Agreement of
even date herewith, as the same may be amended, supplemented or restated
from time to time, (the "LOAN AGREEMENT"), or entered into between the
Borrower in favor of, or with, the Bank, at any time, for any purpose,
including, without limitation, the Loan Agreement, any Term Notes, as
defined in the Loan Agreement, hereafter executed by the Borrower, and
this Security Agreement.
(f) "OBLIGATION(S)" shall include, without limitation, all
loans, advances, indebtedness, notes, liabilities and amounts, liquidated
or unliquidated, owing by the Borrower and/or its parent or subsidiaries,
including without limitation under the Loan Agreement to the Bank at any
time, each of every kind, nature and description, whether arising under
this Agreement or otherwise, and whether secured or unsecured, direct or
indirect (that is, whether the same are due directly by the Borrower to
the Bank; or are due indirectly by the Borrower to the Bank as endorser
or guarantor; or as obligor of obligations due to third persons which
have been endorsed or assigned to the Bank; or otherwise), absolute or
contingent, due or to become due, now existing or hereafter contracted,
and all obligations arising under the Loan Documents, and any and all
overdrafts of Borrower. Said term shall also include all interest and
other charges chargeable to the Borrower and/or any guarantor or due from
the Borrower to the Bank from time to time and all costs and expenses
referred to in Paragraph 7 of this Agreement.
(g) "PERSON" or "PARTY" shall include individuals, firms,
corporations and all other entities.
(h) "EVENT OF DEFAULT" shall mean the occurrence of any one or
more of the Events of Default specified in the Loan Agreement or in the
event this agreement shall at any time after its execution and delivery
and for any reason cease (a) to create a valid and perfected first
priority security interests in and to the property purported to be
subject hereto or (b) to be in full force and effect or shall be declared
null and void, or the validity or enforceability thereof shall be
contested by the Borrower or any subsidiary or guarantor of the Borrower;
All words and terms used in this Agreement other than those specifically
defined in Paragraph 2, and except as specifically otherwise provided elsewhere
in this Agreement, shall be deemed to have the meanings accorded to them in the
Massachusetts Uniform Commercial Code as amended from time to time (herein the
"CODE").
3. After the occurrence and during the continuation of an Event of
Default and after notice by the Bank to the Borrower, all proceeds of and
collections of the Collateral shall be held in trust by the Borrower for the
Bank and shall not be commingled with the Borrower's other funds or deposited in
any bank account of the Borrower; and the Borrower agrees to deliver to the Bank
on the dates of receipt thereof by the Borrower, duly endorsed to the Bank or to
the bearer, or assigned to the Bank, as may be appropriate, all proceeds of the
Collateral in the identical form received by the Borrower.
4. After the occurrence and during the continuation of an Event of
Default the Borrower may grant such allowances or other adjustments to Debtor(s)
as the Borrower may reasonably deem to accord with sound business practice,
including, without limiting the generality of the foregoing, accepting the
return of all or any part of the Inventory (subject to the provisions set forth
in this Agreement with reference to returned Inventory), unless the Bank shall
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specifically direct otherwise in writing.
5. Intentionally omitted.
6. Intentionally omitted.
7. The Borrower shall pay to the Bank any and all costs and expenses
(including, without limitation, reasonable attorney's fees, court costs,
litigation and other expenses) incurred or paid by the Bank in establishing,
maintaining, protecting or enforcing any of the Bank's rights or the
Obligations, including, without limitation, any and all such costs and expenses
incurred or paid by the Bank in defending the Bank's security interest in, title
or right to the Collateral or in collecting or attempting to collect or
enforcing or attempting to enforce payment of the Collateral.
8. From and after notice to the Borrower pursuant to Paragraph 3, at
the expiration of such period of time after receipt by the Bank as the Bank
determines is reasonably sufficient to allow for clearance or payment of any
items, the cash proceeds of the Collateral shall be credited to the Obligations,
it being specifically understood and agreed, however, that an account
receivable, contract right, negotiable or nonnegotiable instrument (other than a
check), or other non-cash proceeds shall not be so credited until actual payment
thereof. All such credits shall, however, be conditional upon final payment to
the Bank of the items giving rise to them and if any item is not so paid, the
amount of any credit given for it shall be charged as a debit in said Borrower's
loan account, if any, or against any deposit account of the Borrower with the
Bank, whether or not the item is returned.
9. The Borrower shall hold its books and records relating to the
Collateral in a manner reasonably satisfactory to the Bank; and shall deliver to
the Bank from time to time promptly at its request, all invoices, original
documents of title, contracts, chattel paper, instruments and any other writings
relating thereto that relate to the Collateral, and other evidence of
performance of contracts, or evidence of shipment or delivery of the merchandise
or of the rendering of services; and the Borrower will deliver to the Bank
promptly at the Bank's request from time to time additional copies of any or all
such papers of writings, and such other information with respect to any of the
Collateral and such schedules of Inventory, schedules of accounts and such other
writings as the Bank may in its sole discretion deem to be necessary or
effectual to evidence any loan hereunder or the Bank's security interest in the
Collateral.
10. The Borrower shall promptly make, stamp or record such entries or
legends on the Borrower's books and records or on any of the Collateral as the
Bank shall request from time to time to indicate and disclose that the Bank has
a security interest in such Collateral.
11. The Bank, or its representatives, at any time and from time to
time on reasonable notice and at reasonable times, shall have the right, and the
Borrower will permit them:
(a) to examine, check, make copies of or extracts from any of
the Borrower's books, records and files (including, without limitation,
orders, and original correspondence);
(b) to inspect and examine the Borrower's Inventory or other
Collateral; and
(c) to verify the Collateral or any portion or portions thereof
or the Borrower's compliance with the provisions of this Agreement.
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12. The Borrower will execute and deliver to the Bank any writings and
do all things necessary, effectual or requested by the Bank to carry into effect
the provisions and intent of this Agreement, or to vest more fully in or assure
to the Bank (including, without limitation, all steps to create and perfect) the
security interest in the Collateral granted to the Bank by this Agreement or to
comply with applicable statute or law and to facilitate the collection of the
Collateral, including the furnishing at the Borrower's own cost and expense, at
such intervals as the Bank may establish from time to time, of reports,
financial data and analyses satisfactory to the Bank.
13. The Borrower covenants with and warrants to the Bank:
(a) That all Inventory in which the Bank is now or hereafter
given a security interest pursuant to this Agreement will at all times be
kept and maintained in good order and condition at the sole cost and
expense of the Borrower.
(b) That the Borrower will maintain in force one or more
policies of insurance on all, Inventory and all other tangible Collateral
against risks of fire (with customary extended coverage), sprinkler
leakage, theft, loss or damage and other risks customarily insured
against by companies engaged in businesses similar to that of the
Borrower in such amounts, containing such terms, in such form, for such
periods, covering such hazards and written by such companies as may be
reasonably satisfactory to the Bank, such insurance to be payable to the
Bank as its interest may appear in the event of loss after the occurrence
and during the continuation of an Event of Default, and after the
occurrence and during the continuation of an Event of Default no loss
shall be adjusted thereunder without the Bank's approval; and all such
policies shall provide that they may not be canceled without first giving
at least ten (10) days' written notice of cancellation to the Bank. In
the event that the Borrower fails to provide evidence of the maintenance
of such insurance satisfactory to the Bank, the Bank may, at its option,
secure such insurance and charge the cost thereof to the Borrower and as
a debit charge in the Borrower's loan account, if any, or any other
accounts of the Borrower with the Bank. At the option of the Bank, after
the occurrence and during the continuation of an Event of Default, all
insurance proceeds received from any loss or damage to any of the
Collateral shall be applied either to the replacement or repair thereof
or as a payment on account of the Obligations.
(c) That at the date hereof the Borrower is (and as to
Collateral that the Borrower may acquire after the date hereof, will be)
the lawful owner of the Collateral or have valid rights thereto, and that
the Collateral, and each item thereof, is, will be, and shall continue to
be free of all restrictions, liens, encumbrances, or other right, title
or interest (other than the security interest therein granted to the Bank
hereby, or permitted by the Loan Agreement) that the Borrower has and
will have full power and authority to grant to the Bank a security
interest in, and will not transfer, assign, sell (except sales or other
dispositions in the ordinary course of business in respect to Inventory
as expressly permitted in Paragraph 3 of this Agreement), pledge,
encumber, subject to lien or grant any security interest in any of the
Collateral (or any of the Borrower's right, title or interest therein) to
any person other than the Bank or as permitted by the Loan Agreement; and
that the Borrower will warrant and defend the Bank's right to and
interest in the Collateral against all claims and demands of all persons
whatsoever.
(d) That no contract right, account general intangible or
chattel paper is or will be represented by any note or other instrument
(negotiable or otherwise), and that no contract right or account is, or
will be represented by any conditional or installment sales
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obligation or other chattel paper, except such instruments or chattel
paper as have been or forthwith upon receipt by the Borrower following
the occurrence and during the continuation of an Event of Default and the
giving of notice by the Bank as provided in Section 7.2 of the Loan
Agreement will be delivered to the Bank (duly endorsed or assigned, as
may be appropriate), such delivery, in the case of chattel paper, to
include all executed copies except those in the possession of the
installment buyer (provided, that if the Bank elects to leave chattel
paper in the possession of the Borrower, such procedure shall be subject
to the Borrower's compliance with the provisions of Paragraph 10 hereof
and to the Bank's right to require delivery and endorsement or assignment
of such chattel paper by the Borrower to the Bank whenever the Bank shall
so request); and following the occurrence and during the continuation of
an Event of Default and the giving of notice by the Bank as provided in
Section 7.2 of the Loan Agreement any security for or guaranty of any of
the Collateral shall be delivered to the Bank immediately upon receipt
thereof by the Borrower, with such assignments and endorsements thereof
as the bank may request.
(e) (i) That, except as the Bank may otherwise approve in
writing, and except or as permitted by the Loan Agreement for sale,
processing, use, consumption or other disposition in the ordinary course
of business, the Borrower will keep all Inventory at one or more of the
locations specified in the preamble to this Agreement.
(ii) That the Borrower shall, during the term of this
Agreement, keep the Bank currently and accurately informed in
writing of each location where the Borrower's records relating to
its accounts and contract rights, respectively, are kept, and
shall not remove such records, or any of them, to another state
without giving the Bank at least thirty (30) days' prior written
notice thereof.
(iii) That the Borrower's chief executive office is
correctly stated in the preamble to this Agreement, that the
Borrower shall, during the term of this Agreement, keep the Bank
currently and accurately informed in writing of each of its other
places of business, and that the Borrower shall not change the
location of such chief office or open any new, or close, move or
change any existing or new place of business without giving the
Bank at least thirty (30) days' prior written notice thereof.
(f) That the Bank shall not be deemed to have assumed any
liability or responsibility to the Borrower or any third person for the
correctness, validity or genuineness of any instruments or documents that
may be released or endorsed to the Borrower by the Bank (which shall
automatically be deemed to be without recourse to the Bank in any event),
or for the existence, character, quantity, quality, condition, value or
delivery of any goods purporting to be represented by any such documents;
and that the Bank, by accepting such security interest in the Collateral,
or by releasing any Collateral to the Borrower, shall not be deemed to
have assumed any obligation or liability to any supplier or Debtor or to
any other third party, and the Borrower agrees to indemnify and defend
the Bank and hold it harmless in respect to any claim or proceeding
arising out of any matter referred to in this Paragraph 13(f).
(g) Intentionally omitted.
(h) That the Borrower will immediately notify the Bank of any
loss or damage to, or material diminution in or any occurrence which
would materially and
6
adversely affect the value of, the Inventory or other Collateral. In the
event that the Bank, in its sole discretion, shall determine that there
has been any such material loss, damage or material diminution in the
value of any of the assets included in the Borrowing Base, then any such
assets which have been lost, damaged or otherwise diminished in value
shall be excluded from the calculation of the Borrowing Base, without
regard as to whether there is insurance coverage therefore. If the
outstanding Loans exceed the Borrowing Base calculated after the
exclusion of assets as a result of such casualty, then, at the Bank's
election, exercised in its sole discretion, within thirty (30) days of
notice, the Borrower shall pay, to the Bank such amount so that the
Borrower is in compliance with the Borrowing Base, or, alternatively,
provide substitute collateral which is satisfactory to the Bank in its
sole discretion.
(i) That the Bank may from time to time in the Bank's
discretion hold and treat any deposits or other sums at any time credited
by or due from the Bank to the Borrower and any securities or other
property of the Borrower in the possession of the Bank, whether for
safekeeping or otherwise, as collateral security for and apply or set the
same off against any Obligations after the occurrence and during the
continuance of an Event of Default.
(j) That if any of the Collateral includes a charge for, or if
any loan by the Bank to the Borrower shall be subject to any tax payable
to any governmental taxing authority, the Borrower shall pay such tax
independently when due. The Borrower will indemnify and save the Bank
harmless from any loss, cost, liability or expense (including, without
limitation, reasonable attorney's fees), in connection therewith other
than such as shall be caused by the Bank's willful misconduct, gross
negligence or acts taken in bad faith.
(k) That at any time or times after the occurrence and during
the continuation of an Event of Default, the Bank may notify any Debtor
or Debtors of its security interest in the Collateral and collect all
amounts due thereon; and the Borrower agrees, at the request of the Bank,
to notify all or any of the Debtors in writing of the Bank's security
interest in the Collateral in whatever manner the Bank requests, and if
the Bank so requests, to permit the Bank to mail such notices at the
Borrower's expense.
(l) That the Bank may, at its option, from time to time,
discharge any taxes, liens or encumbrances on any of the Collateral not
permitted by the Loan Agreement, or take any other action that the Bank
may deem proper to maintain or preserve its security interest in the
Collateral, and the Borrower will pay to the Bank on demand or the Bank
in its sole discretion may charge to the Borrower all amounts so paid or
incurred by it or as a debit charge against the Borrower's loan account,
if any, or any other deposit account of the Borrower with the Bank.
(m) If any of Borrower's accounts arise out of contracts with
the United States or any department, agency, or instrumentality thereof,
Borrower will immediately notify Bank thereof in writing and execute any
instruments and take any steps required by Bank in order that all monies
due and to become due under such contracts shall be assigned to Bank and
notice thereof given to the Government under the Federal Assignment of
Claims Act.
(n) That all representations now or hereafter made by the
Borrower to the Bank, whether in this Agreement or in any supporting or
supplemental reports, statements
7
or documentation, including, without limitation, statements relating to
the Collateral and financial statements, are, and will be, at and as of
the date when made true and correct in all material respects.
(o) Except for the Bank's gross negligence or willful
misconduct or acts taken in bad faith, Borrower will indemnify and save
Bank harmless from all loss, costs, damage, liability or expenses
(including, without limitation, court costs and reasonable attorneys,
fees) that Bank may sustain or incur by reason of defending or protecting
this security interest or the priority thereof or enforcing the
Obligations, or in the prosecution or defense of any action or proceeding
concerning any matter growing out of or in connection with this Agreement
and/or any other documents now or hereafter executed in connection with
this Agreement and/or the Obligations and/or the Collateral. This
indemnity shall survive the repayment of the Obligations and the
termination of Bank's agreement to make loans available to Borrower and
the termination of this Agreement.
14. The Borrower hereby irrevocably constitutes and appoints the Bank
as the Borrower's true and lawful attorney, with full power of substitution, at
the sole cost and expense of the Borrower but for the sole benefit of the Bank,
to be exercised only after the occurrence and during the continuation an Event
of Default and the giving of the notice as provided by Section 7.2 of the Loan
Agreement, to convert the Collateral into cash, including without limitation,
the sale (either public or private) of all or any portion or portions of the
Inventory and other Collateral; to enforce collection of the Collateral, either
in its own name or in the name of the Borrower, including, without limitation,
executing releases, compromising or settling with any Debtors and prosecuting,
defending, compromising or releasing any action relating to the Collateral; to
notify Post Office authorities to change the address for delivery of mail
addressed to the Borrower to such address as the Bank shall designate; to
receive, open and dispose of all mail addressed to the Borrower received at such
address and to take therefrom any remittances or proceeds of Collateral in which
the Bank has a security interest; to endorse the name of the Borrower in favor
of the Bank upon any and all checks, drafts, money orders, notes, acceptances or
other instruments of the same or different nature received at such address; to
sign and endorse the name of the Borrower on and to receive as secured party any
of the Collateral, any invoices, schedules of Collateral, freight or express
receipts, or bills of lading, storage receipts, warehouse receipts, or other
documents of title of the same or different nature relating to the Collateral;
to sign the name of the Borrower or any notice to the Debtors or on verification
of the Collateral; and to sign and file or record on behalf of the Borrower any
financing or other statement in order to perfect or protect the Bank's security
interest. The Bank shall not be obliged to do any of the acts or exercise any of
the powers hereinabove authorized, but if the Bank elects to do any such act or
exercise any such power, it shall not be accountable for more than it actually
receives as a result of such exercise of power, and it shall not be responsible
to the Borrower except for willful misconduct, gross negligence, or acts taken
in bad faith. All powers conferred upon the Bank by this Agreement, being
coupled with an interest, shall be irrevocable so long as any Obligation of the
Borrower to the Bank shall remain unpaid. Additionally, whether or not there is
an Event of Default, the Borrower hereby authorizes the Bank, at any time, and
from time to time, to file UCC financing statements, amendments and
continuations statements in the name of the Borrower, as debtor, to perfect the
security interests in the Collateral granted hereby in such jurisdictions as the
Bank deems necessary or appropriate without any signature of the Borrower or the
Bank to the extent permitted in such jurisdictions.
8
Whenever the Bank deems it desirable that any legal action be instituted
with respect to any Collateral or that any other action be taken in an attempt
to effectuate collection of any Collateral, the Bank may reassign the item in
question to the Borrower (and if the Bank shall execute any such reassignment,
it shall automatically be deemed to be without recourse to the Bank in any
event) and require the Borrower to proceed with such legal or other action at
the Borrower's sole liability, cost and expense, in which event all amounts
collected by the Borrower on such item shall nevertheless be subject to the
provisions of Paragraph 3 of this Agreement.
15. The Bank is hereby authorized, at its election, at any time or
times after an Event of Default has occurred and during the continuation
thereof, if the Bank has given the notice as provided by Section 7.2 of the Loan
Agreement, and without any further demand or notice except to such extent as
notice may be required by applicable law, to sell or otherwise dispose of all or
any of the Collateral at public or private sale, and the Bank may also exercise
any and all other rights and remedies of a secured party under the Code or which
are otherwise accorded to it by applicable law, all as the Bank may determine.
If notice of a sale or other action by the Bank is required by applicable law,
the Borrower agrees that ten (10) days' written notice to the Borrower, or the
shortest period of written notice permitted by such law, whichever is larger,
shall be sufficient; and that to the extent permitted by such law, the Bank, its
officers, attorneys and agents may bid and become purchasers at any such sale,
if public, and may purchase at any private sale any of the Collateral that is of
a type customarily sold on a recognized market or which is the subject of widely
distributed standard price quotations, and any sale (public or private) shall be
free from any right of redemption, which the Borrower hereby waives and
releases. No purchaser at any sale (public or private) shall be responsible for
the application of the purchase money other than the Bank. Any balance of the
net proceeds of sale remaining after paying all direct Obligations of the
Borrower to the Bank, and all costs and expenses of manufacturer, processing,
completion or installation of the Inventory; collection, storage, custody, sale
and delivery of the Inventory, and/or the Collateral, including, without
limitation, reasonable attorneys' fees, and after retaining as collateral
security or applying as the Bank may elect (in whole or in part at any time and
from time to time) amounts equal to the aggregate of all other Obligations shall
be returned to the Borrower or to such other party as may be legally entitled
thereto; and if there is a deficiency, the Borrower shall be responsible for the
same, with interest as provided in the Loan Agreement. Upon demand by the Bank,
the Borrower shall assemble the Collateral and make it available to the Bank at
a place designated by the Bank which is reasonably convenient to the Bank and
the Borrower.
16. The Borrower waives notice of nonpayment, demand, presentment,
protest or notice of protest of the Collateral, and all other notices, consents
to any renewals or extensions of time of payment thereof, and generally waives
any and all suretyship defenses and defenses in the nature thereof. No delay or
omission of the Bank in exercising or enforcing any of its rights, powers,
privileges, remedies, immunities or discretions (all of which are hereinafter
collectively referred to as the "BANK'S RIGHTS AND REMEDIES") hereunder shall
constitute a waiver thereof; and no waiver by the Bank of any default of the
Borrower hereunder shall operate as a waiver of any other default hereunder. No
term or provision hereof shall be waived, altered or modified except with the
prior written consent of the Bank, which consent makes explicit reference to
this Agreement. Except as provided in the preceding sentence, no other agreement
or transaction, of whatsoever nature, entered into between the Bank and the
Borrower at any time (whether before, during or after the effective date or term
of this Agreement), shall be construed in any particular as a waiver,
modification or limitation of any of the Bank's rights and remedies under this
Agreement (nor shall anything in this Agreement be construed as a waiver,
modification or limitation of any of the Bank's rights and remedies under any
such other agreement or transaction) but all of the Bank's rights and remedies
not only under the provisions of this
9
Agreement but also under any such other agreement or transaction shall be
cumulative and not alternative or exclusive, and may be exercised by the Bank at
such time or times and in such order of preference as the Bank in its sole
discretion may determine.
17. If any provision of this Agreement or portion of such provision or
the application thereof to any person or circumstance shall to any extent be
held invalid or unenforceable, the remainder of this Agreement (or the remainder
of such provision) and the application thereof to other persons or circumstances
shall not be affected thereby.
18. This Agreement shall be binding upon and inure to the benefit of
the respective successors and assigns of the parties hereto, and shall remain in
full force and effect (and the Bank shall be entitled to rely thereon,
notwithstanding payment of all Obligations of the Borrower to the Bank at any
time or times) until terminated as to future transactions by written notice from
either party to the other party of the termination hereof; provided that any
such termination shall not release or affect any Collateral in which the bank
already has a security interest or any Obligations incurred or rights accrued
hereunder prior to the effective date of such notice (as hereinafter defined) of
such termination. Notwithstanding any such termination, the Bank shall have a
security interest in all Collateral to secure the payment and performance of
Obligations arising after such termination as a result of commitments or
undertakings made or entered into by the Bank prior to such termination. Upon
the later to occur of the effective date of any such termination and the date on
which all Obligations are paid in full, the Bank shall terminate its security
interests in the Collateral and the Bank shall deliver to Borrower termination
statements with respect thereto. The Bank may transfer and assign this Agreement
and deliver the Collateral to the assignee, who shall thereupon have all of the
rights and obligations of the Bank; and the Bank shall then be relieved and
discharged of any responsibility or liability with respect to this Agreement and
the Collateral.
19. This Agreement is intended to take effect as a sealed instrument
and has been executed or completed and is to be performed in Massachusetts, and
it and all transactions thereunder or pursuant thereto shall be governed as to
interpretation, validity, effect, rights, duties and remedies of the parties
thereunder and in all other respects by the domestic laws of The Commonwealth of
Massachusetts.
20. Notwithstanding the existence of any other security interests in
the Collateral described in this Agreement held by the Bank or by any other
party, or the existence of any other mortgage or security interest in any other
property or collateral of the Borrower or of any co-obligor, guarantor or
endorser held by the Bank or any other party, the Bank shall have the right to
determine the order in which any or all of said collateral and property,
including the Collateral, shall be subjected to the remedies provided herein and
in any other security agreement or mortgage granted by the Borrower or any other
party and the right to determine the order in which any or all portions of the
Obligations secured hereby are satisfied from the proceeds realized upon the
exercise of the remedies provided herein or therein. The Borrower and any party
who consents to this interest in the said Collateral and other property and who
has actual or constructive notice hereof hereby waives and shall be deemed to
have waived any and all rights to require the marshalling of assets in
connection with the exercise of any of the remedies permitted by applicable law
or provided herein.
21. All notices, requests, demands, claims and other communications
required or permitted to be delivered, given or otherwise provided under this
Agreement must be in writing and must be delivered, given or otherwise provided:
10
(a) by facsimile (in which case, it will be effective upon receipt
of confirmation of good transmission), with a copy via overnight
delivery by a nationally recognized courier service; or
(b) by overnight delivery by a nationally recognized courier
service (in which case, it will be effective on the Business Day after
being deposited with such courier service);
in each case, to the address (or facsimile number) listed below:
If to the Borrower:
------------------
BTU International, Inc.
▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇,
Attention: President
Phone: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to:
▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esquire
Ropes & ▇▇▇▇
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Phone: (▇▇▇) ▇▇▇-▇▇▇▇
Fax:(▇▇▇) ▇▇▇-▇▇▇▇
If to the Bank:
--------------
Sovereign Bank
▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Mail Stop: MA1-PLS-0201
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Phone: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to:
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Esquire
▇▇▇▇▇▇ & ▇▇▇▇▇ LLP
▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Phone: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
11
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first written above.
SOVEREIGN BANK
By:
----------------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Senior Vice President
BTU INTERNATIONAL, INC.
--------------------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Vice President, Chief Accounting Officer
and Corporate Controller
12
EXHIBIT A
OTHER LOCATIONS
None other than:
BTU International (Headquarters)
▇▇ ▇▇▇▇▇▇▇ ▇▇
▇. ▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
BTU Europe
▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇ Summit Centre
Hants, GU14
ONR
United Kingdom
BTU France/Germany
▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇-▇▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇
BTU Beijing
Rm 6415, Garden Business ▇▇▇▇ ▇▇
▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇
▇▇▇▇▇
BTU Overseas -- Penang
23 Tingkat Bukit ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇
Malaysia
BTU Overseas -- Singapore
#01-03 LHK Building
▇▇▇ ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇
BTU Overseas -- Shanghai
Sales & Service Office
Room 2202, Development Mansion
51 Ri Jing Road, ▇▇▇ ▇▇▇ Qiao Free Trade Zone
Shanghai 200131
China
BTU Ltd.
13
BTU Shanghai Mfg.
▇▇ ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇ Free Trade ▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇
MEP Technologies INC.
▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇ ▇▇▇
UPS Logistics
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
UPS Logistics
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Inventory In Transit:
---------------------
Inter-company shipments
Trade show systems
Non-FOB terms with customer, i.e. DDP terms
Supplier FOB terms
BTU product loaned to BTU customers for trial
BTU parts consigned to BTU suppliers
14
EXHIBIT "A"
TO FINANCING STATEMENT
DEBTOR: BTU INTERNATIONAL, INC.
SECURED PARTY: SOVEREIGN BANK
The collateral (the "Collateral"), now existing or hereafter arising, in
which the Secured Party does and shall hold a secured interest consists of:
1) All inventory (as defined in the UCC), including raw materials, work
in process, supplies and components, and finished goods, whether held
by the Debtor for sale or other disposition, and also including any
returned or repossessed Inventory detained from or rejected for entry
into the United States by the appropriate governmental authorities,
all products of and accessions to Inventory and including documents of
title, whether negotiable or nonnegotiable, representing any of the
foregoing;
2) All accounts (as defined in the UCC), including, without limiting the
generality of the foregoing, "Health-Care-Insurance Receivables",
accounts receivable, and all contract rights, and chattel paper,
including without limiting the generality of the foregoing,
"Electronic Chattel Paper", regardless of whether or not any of the
foregoing constitute proceeds of other Collateral;
3) All the debtor's rights (which the Secured Party may exercise or not
as it in its sole discretion may determine) to acquire or obtain goods
and/or services with respect to the manufacture, processing, storage,
sale, shipment, delivery or installation of any of the Debtor's
Inventory or other Collateral;
4) All products and accessions to any of the Collateral;
5) All obligations, debts and liabilities owing to the Debtor, from any
person, firm or corporation or any other legal entity, whether now
existing or hereafter arising, now or hereafter received by or
belonging or owing to Debtor, for goods sold by it or for services
rendered by it, all guarantees and securities therefore, all right,
title and interest of Debtor in the merchandise or services which gave
rise thereto, including the rights of reclamation and stoppage in
transit, all rights to replevy goods, and all rights of an unpaid
seller of merchandise or services, and all choses in action relating
thereto;
6) All documents and instruments (whether negotiable or nonnegotiable,
and regardless of their being attached to chattel paper) relating to
Inventory or accounts or representing the right to payment for goods
sold or services rendered, including, without limitation, all notes,
bills, drafts and acceptances as these terms are defined in the UCC
representing the right to payment for goods sold or services rendered;
7) All books and records (including, without limiting the generality of
the foregoing all electronically recorded data), whether now owned or
existing or hereafter acquired, created or arising, relating to its
accounts and/or Inventory; and
8) All proceeds of Collateral of every kind and nature and in whatever
form, including, without limitation, both cash and noncash proceeds
resulting or arising from the rendering of services by the Debtor or
the sale or other disposition by the Debtor of the Inventory or other
Collateral and all insurance proceeds payable under insurance policies
relating to any items of Collateral and rents and profits resulting
from the temporary use of Collateral.
All references to the UCC shall refer to the Massachusetts Uniform
Commercial Code as amended from time to time. "Collateral" shall not include any
of the Debtor's interests in real property, including fixtures, or equipment as
defined in the UCC.
LOAN MODIFICATION AGREEMENT
This Loan Modification Agreement (hereinafter the "AGREEMENT") is dated
as of January 28, 2004 and is entered into by and between SOVEREIGN BANK, with
an office at ▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ (hereinafter referred to as
the "LENDER") and BTU INTERNATIONAL, INC., a Delaware corporation with its chief
executive office, principal place of business and mailing address at ▇▇ ▇▇▇▇▇▇▇
▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ (hereinafter referred to as the
"BORROWER").
In consideration of the mutual covenants herein contained and other good
and valuable consideration, the receipt and sufficiency of which by each party
hereto hereby are acknowledged, the undersigned hereby agree as follows:
I. BACKGROUND
A. The Credit Facility. The Lender and Borrower have previously
entered into a Loan Agreement dated as of June 26, 2002 (the "ORIGINAL LOAN
AGREEMENT" and together with all amendments, including the First Amendment, the
"LOAN AGREEMENT"), pursuant to which, among other things, the Lender extended a
revolving line of credit (the "REVOLVING CREDIT") to the Borrower in the amount
of $14,000,000.00 (the "CREDIT FACILITY"), evidenced by, among other things, a
Revolving Credit Note (the "ORIGINAL NOTE").
The Credit Facility has been made and is governed by the following
documents:
1. The Original Note;
2. The Original Loan Agreement; and
3. Various other documents, instruments, and agreements executed in
connection therewith (collectively, with the Original Note and the
Original Loan Agreement, the "ORIGINAL LOAN DOCUMENTS").
Except as otherwise provided herein or in the Closing Documents
(hereinafter defined), the provisions of the Original Loan Documents shall
remain unmodified and in full force and effect.
As of the date hereof, the sum of zero ($0) Dollars have been advanced
under the Revolving Loan.
B. Purpose. The purpose of this Agreement is to set forth the terms,
provisions and conditions upon which certain modifications shall be made by and
among the parties with respect to the Credit Facility and to address certain
other financial accommodations being made to Borrower.
II. GENERAL TERMS OF MODIFICATION.
A. Revised Terms of the Credit Facility. Lender and the Borrower have
agreed to certain modifications to the terms of the Credit Facility, subject to
the terms and conditions of this Agreement, so as to, among other things:
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(i) extend the Termination Date of the Credit Facility to May 31,
2007;
(ii) modify the definition of Borrowing Base;
(iii) modify the minimum tangible net worth covenant and require
Borrower to comply with a certain financial covenant regarding
minimum net profit and confirm the reporting requirements of the
Borrower to the Lender and other terms; and
(iv) grant the Lender a perfected first lien and security interest in
the Collateral (as defined in the Security Agreement) and
authorize the filing of a UCC financing statement.
In connection with the foregoing, the Borrower shall pay to the Lender a
one time transaction fee of Twenty Thousand ($20,000.00) Dollars.
C. Additional Documents. Concurrently with the execution hereof, the
Borrower shall execute and/or deliver the following documents, each of which
shall be in form and substance satisfactory to lender ("CLOSING DOCUMENTS"):
(i) A First Amendment to Loan Agreement (the "FIRST AMENDMENT");
(ii) An Allonge to and Amendment of the Original Note (collectively
with the Original Note, the "AMENDED NOTE");
(iii) A Security Agreement (the "SECURITY AGREEMENT"); and
(iv) Such other instruments, documents and certificates as the Lender
or its counsel may reasonably require.
III. GENERAL.
A. Ratification. The Borrower hereby ratifies and confirms that each
of the Original Loan Documents, as modified by the First Amendment and the
Closing Documents (collectively the "LOAN DOCUMENTS"), remain in full force and
effect and agrees that the outstanding balance due and payable to Lender under
the Loan Documents is set forth in Section I.A. hereof. The Borrower further
agrees that the advances under the Credit Facility are due and payable in
accordance with the terms of the Loan Documents, without any offset,
counterclaim or other claim against Lender of any nature whatsoever as of the
date hereof. Without limiting the generality of the foregoing, the Borrower
hereby agrees that outstanding advances under the Revolving Loan are due and
payable in accordance with the terms of the Amended Note without any offset,
counterclaim or other claim against the Lender of any nature whatsoever as of
the date hereof.
B. Complete Terms. Any and all duties or obligations that Lender may
have to the Borrower are limited to those expressly stated in this Agreement and
the Loan Documents and neither the duties and obligations of Lender nor the
rights of the Borrower shall be expanded beyond the express terms of this
Agreement and the Loan Documents on the basis of any legal or equitable
principle or on any other basis whatsoever.
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C. No Other Representation. The Borrower acknowledges and agrees that
neither Lender, nor any person, firm, corporation or entity acting on behalf of
Lender has made any representation or promise to the Borrower which is not
expressly set forth herein.
D. Events of Default. An "Event of Default" under the Loan Agreement
shall be deemed to have occurred (i) if the Borrower fails fully and timely to
perform all obligations to be performed by it under this Agreement; or (ii) if
any warranty or representation of the Borrower under any of this Agreement or
the Closing Documents proves to have been false or misleading in any material
respect when made.
E. Reservation of Rights. Upon the occurrence of an Event of Default
under this Agreement, Lender reserves any and all of its rights that it may have
against the Borrower or any other obligor, maker or guarantor under the Loan
Documents.
F. Costs and Expenses. The Borrower agrees to pay to Lender all costs
that Lender incurs in connection with the preparation of this Agreement and the
documents provided for herein and the implementation of the transactions
contemplated herein, including without limitation, reasonable attorneys' fees
and expenses. In the event such costs are not paid in full within ten (10) days
of the date hereof, the Borrower hereby authorizes Lender and acknowledges and
agrees that Lender shall have the right to debit any or all of the deposit or
other accounts maintained with Lender in an aggregate amount equal to the amount
of such costs.
G. Amendments. No purported alteration, amendment, change, waiver,
termination or other modification of the Loan Documents shall be binding upon
any party hereto or have any other force or effect in any respect unless the
same shall be in writing and signed, in the case of Lender, by an authorized
officer or agent thereof, and, in the case of the Borrower, by the President,
Treasurer or Chief Accounting Officer of the Borrower.
H. Governing Law. This Agreement shall be interpreted and enforced in
accordance with the laws of the Commonwealth of Massachusetts as the same may
from time to time exist, without giving effect to the principles of conflicts of
law.
I. Binding Effect. This Agreement shall be binding upon, and shall
inure to the benefit of, the parties hereto and their respective successors and
assigns.
J. Merger. All prior understandings and agreements between the
parties relating to the modification of the obligations of the Borrower to
Lender with respect to the Credit Facility are merged in this Agreement which,
together with the Closing Documents and other Loan Documents fully and
completely express the understanding and agreements among the parties with
respect thereto and which is entered into after full investigation. None of the
parties hereby is relying upon any statement or representation made by any other
party which is not set forth or referred to in this Agreement or the other Loan
Documents.
K. Captions. The caption headings in this Agreement are for
convenience and reference only, are not intended to be a part of this Agreement
and shall not be construed to define, modify, alter or describe the scope or
intent of any of the terms, covenants or conditions of this Agreement.
L. No Waiver. No failure or delay of any party hereto in the exercise
of any right given to such party under any of the Loan Documents shall be deemed
to be a waiver thereof. No
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waiver by any party hereto of any condition hereunder for its benefit (unless
the time specified herein for exercise of such right or satisfaction of such
condition has expired) shall constitute a waiver of any other or further right
nor shall any single or partial exercise of any right preclude other or further
exercise thereof or any other rights. The waiver of any breach shall not be
deemed a waiver of any other or subsequent breach. No extensions of time for the
performance of any obligations shall be deemed or construed as an extension of
time for the performance of any other obligation.
M. Further Instruments. Each party shall from time to time execute,
acknowledge and deliver such further instruments and perform such additional
acts as any other party may reasonably request in order to effectuate the intent
of this Agreement. Without limiting the generality of the preceding sentence,
the Borrower shall execute, acknowledge and deliver such instruments as Lender
reasonably may request to further evidence, secure, effectuate or perfect its
obligations to Lender under the Loan Documents or Lender's interest or priority
in the collateral granted to secure such obligations.
N. Counterparts. This Agreement may be executed in one or more
counterparts, each of which when so executed and delivered shall be deemed an
original, but all of which taken together shall constitute but one and the same
instrument.
O. Severability. If any term or provision of this Agreement or the
application thereof to any person or circumstance shall to any extent be invalid
or unenforceable, the remainder of this Agreement, or the application of such
term or provision to such person or circumstance other than those to which it is
held invalid or unenforceable, shall not be affected thereby and each term and
provision of this Agreement shall be valid and enforced to the fullest extent
permitted by law.
P. Cumulative Rights. Each right and remedy provided for in this
Agreement shall be cumulative and shall be in addition to every other right or
remedy provided for in this Agreement or now or hereafter existing at law or in
equity or by statute or otherwise and the exercise or beginning of the exercise
by any party hereto of any one or more of the rights and remedies provided for
in this Agreement or now or hereafter existing at law or in equity or by statute
or otherwise shall not preclude the simultaneous or later exercise by such party
of any and all other rights or remedies provided for in this Agreement or now or
hereafter existing at law or in equity or by statute or otherwise.
Q. Conflicts With Other Documents. In the event of any conflicts
between the terms of this Agreement, the other Loan Documents and the Closing
Documents, the terms of this Agreement shall control.
R. WAIVER OF JURY TRIAL. LENDER AND THE BORROWER DO HEREBY KNOWINGLY,
VOLUNTARILY AND INTENTIONALLY WAIVE THE RIGHT WHICH THEY MAY HAVE TO A TRIAL BY
JURY IN RESPECT OF ANY LITIGATION BASED HEREON OR ARISING OUT OF, UNDER OR IN
CONNECTION WITH THE LOAN DOCUMENTS, OR ANY TRANSACTION CONTEMPLATED HEREIN. THE
FOREGOING WAIVER IS A MATERIAL INDUCEMENT FOR EACH PARTY TO ENTER INTO THIS
AGREEMENT.
[Signature Page Follows]
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IN WITNESS WHEREOF, the parties have executed and delivered this
Agreement as an instrument under seal within the Commonwealth of Massachusetts
effective as of the day and year first above written.
SOVEREIGN BANK
By:
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▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Senior Vice President
Duly Authorized
BTU INTERNATIONAL, INC.
By:
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▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Vice President, Chief Accounting Officer
and Corporate Controller
Duly Authorized
COMMONWEALTH OF MASSACHUSETTS
Middlesex, ss January ___, 2004
Before me personally appeared ▇▇▇▇▇▇ ▇. ▇▇▇▇▇ as Vice President, Chief
Accounting Officer and Corporate Controller of BTU International, Inc., known by
me to be the person executing the foregoing instrument, and acknowledged said
instrument to be his free act and deed as Vice President, Chief Accounting
Officer and Corporate Controller of BTU International, Inc and the free act and
deed of said BTU International, Inc.
-----------------------------
Notary Public:
My Commission Expires:
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