Exhibit 10.1
AMENDMENT AND WAIVER
TO CREDIT AGREEMENT
AMENDMENT AND WAVER, dated as of October 18, 2002 (the "Amendment and
Waiver"), with respect to the Credit Agreement dated as of February 21, 2002 (as
amended, restated, supplemented or modified, from time to time, the "Credit
Agreement"), by and among VASOMEDICAL, INC., a Delaware corporation (the
"Company") and FLEET NATIONAL BANK, a national banking association organized
under the laws of the United States of America (the "Bank").
RECITALS
The Company has requested and the Bank has agreed, subject to the terms and
conditions of this Amendment, to amend and waive certain provisions of the
Credit Agreement as herein set forth.
Accordingly, in consideration of the premises and of the mutual covenants
and agreements hereinafter set forth, the parties hereto agree as follows:
I. Amendments.
Section 1.1. The following definitions in Section 1.01 of the Credit
Agreement are hereby amended and restated in their entirety to provide as
follows:
"Borrowing Base" shall mean an amount equal to seventy percent (70%) of the
face amount of all Eligible Accounts of the Company, provided, however, the
Bank may increase such percentage from time to time in its sole discretion
based upon the results of field exams and appraisals to be conducted by the
Bank or its agents from time to time.
"Consolidated Tangible Net Worth" shall mean, for any period (a) total
consolidated assets of the Company and its Subsidiaries (excluding any
intangible assets) less (b) deferred tax assets less (c) total consolidated
liabilities of the Company and its Subsidiaries, in each case determined in
accordance with Generally Accepted Accounting Principles applied on a
consistent basis.
"Revolving Credit Commitment" shall mean the Bank's obligation to make
Revolving Credit Loans to the Company in an aggregate amount not to exceed
(a) $2,000,000, at any time that Consolidated Net Income of the Company and
its Subsidiaries, for the immediately preceding three-month period, is less
than $1.00, and (b) $5,000,000, at any other time, as such amounts may be
adjusted in accordance with the terms of this Agreement.
Section 1.2. The last sentence of the definition of "Consolidated EBIT" is
hereby amended and restated in its entirety to provide as follows:
"All of the foregoing categories shall be calculated (without duplication)
for the fiscal quarter ending on the date of calculation thereof."
Section 1.3. The last sentence of the definition of "Consolidated EBITDA"
is hereby amended and restated in its entirety to provide as follows:
"All of the foregoing categories shall be calculated (without duplication)
for the fiscal quarter ending on the date of calculation thereof."
Section 1.4. The definition of "Eligible Inventory" is hereby deleted in
its entirety.
Section 1.5. Section 2.01(a) of the Credit Agreement is amended by amending
and restating the first sentence thereof in its entirety to provide as follows:
"Subject to the terms and conditions, and relying upon the representations
and warranties set forth herein, and subject to the next sentence, the Bank
agrees to make loans (individually a "Revolving Credit Loan" and,
collectively, the "Revolving Credit Loans") to the Company from time to
time during the Revolving Credit Commitment Period, up to but not exceeding
at any one time outstanding the amount of its Revolving Credit Commitment;
provided, however, that no Revolving Credit Loan shall be made if, after
giving effect to such Revolving Credit Loan, the aggregate outstanding
principal amount of all Revolving Credit Loans at such time would exceed
the lesser of (i) the Revolving Credit Commitment in effect at such time or
(ii) the then current Borrowing Base.
Section 1.6. Section 3.1 is hereby amended by amending and restating
subsections "(a)" and "(b)" thereof in their entirety to provide as follows:
"(a) Each Prime Rate Loan shall bear interest for the period from the date
thereof on the unpaid principal amount thereof at a fluctuating rate per
annum equal to the Prime Rate plus a margin of one-half of one percent
(.50%) per annum.
(b) Each LIBOR Rate Loan shall bear interest for the Interest Period
applicable thereto on the unpaid principal amount thereof at a rate per
annum equal to the Reserve Adjusted Libor determined for each Interest
Period thereof in accordance with the terms hereof plus a margin of two
percent (2.0%) per annum."
Section 1.7. Section 5.02 of the Credit Agreement is hereby amended by
adding the following new subsection "(e)" immediately after subsection "(d)"
thereof:
"(e) Borrowing Base Certificate. On the date of each borrowing hereunder,
the Company shall have delivered to the Bank a duly completed Borrowing
Base Certificate, dated such date and signed by the Chief Financial Officer
of the Company."
Section 1.8. Section 5.03(d) of the Credit Agreement is hereby amended and
restated in its entirety to provide as follows:
"(d) Availability. After giving effect to any requested Revolving Credit
Loan, (i) the outstanding principal amount of the Revolving Credit Loans
shall not exceed the lesser of (A) the then current Borrowing Base and (B)
the Revolving Credit Commitment then in effect, (ii) cash and cash
equivalents of the Company and its Subsidiaries not subject to any Lien or
other restriction shall not be less than fifty percent (50%) of the
aggregate outstanding principal amount of the Revolving Credit Loans"
Section 1.9. Section 6.03(e) of the Credit Agreement is hereby amended and
restated in its entirety to provide as follows:
"(e) as soon as available, and in any event within twenty (20) days of the
end of each calendar month, monthly accounts receivable agings summaries of
the Company and a monthly Borrowing Base Certificate, provided that at any
time that there are no outstanding Revolving Credit Loans, the Company
shall only be required to provide to the Bank quarterly accounts
receivables agings summaries, within twenty (20) days of the end of each
fiscal quarter;"
Section 1.10. Section 7.02(h) of the Credit Agreement is hereby amended and
restated in its entirety to provide as follows:
"(h) Intentionally omitted."
Section 1.11. Section 7.03(d) of the Credit Agreement is hereby amended and
restated in its entirety to provide as follows:
"(d) Intentionally Omitted."
Section 1.12. Section 7.06 of the Credit Agreement is hereby amended and
restated in its entirety to provide as follows:
"SECTION 7.06. Loans and Investments. Make or commit to make any advance,
loan, extension of credit, or capital contribution to, or purchase or hold
beneficially any stock or other securities, or evidence of Indebtedness of,
purchase or acquire all or a substantial part of the assets of, make or
permit to exist any interest whatsoever in, any other Person except for (a)
the ownership of stock of its Subsidiaries as existing as of the Closing
Date and (b) Eligible Investments. Notwithstanding anything to the contrary
herein, no loans or investments shall be made to Viromedics, Inc., a
Delaware corporation, at any time that it shall be an Inactive Subsidiary."
Section 1.13. Section 7.13(a) of the Credit Agreement is hereby amended and
restated in its entirety to provide as follows:
"(a) Leverage Ratio. Commencing with the fiscal quarter ending February 28,
2003, permit the ratio of Consolidated Funded Debt to Consolidated EBITDA
to be greater than the 2.25:1.00, at the end of any fiscal quarter."
Section 1.14. Section 7.13(b) of the Credit Agreement is hereby amended and
restated in its entirety to provide as follows:
(b) Interest Coverage Ratio. Commencing with the fiscal quarter ending
February 28, 2003, permit the ratio of Consolidated EBIT to Consolidated
Interest Expense to be less than 5.00:1.00, at the end of any fiscal
quarter.
Section 1.15. Section 7.13(c) of the Credit Agreement is hereby amended and
restated in its entirety to provide as follows:
"(c) Consolidated Tangible Net Worth. Permit Consolidated Tangible Net
Worth to be less than the amount set forth below opposite the applicable
fiscal quarter:
Fiscal Quarter Ending Consolidated Tangible Net Worth
--------------------- -------------------------------
November 30, 2002 $12,583,651 (the "Reference Amount")
February 28, 2003 and the The Reference Amount plus 50% of
last day of each fiscal quarter Consolidated Net Income (but not net loss) of
thereafter the Company for the fiscal quarter then
ending"
Section 1.16. Section 7.13(d) of the Credit Agreement is amended and
restated in its entirety to provide as follows:
"(d) Consolidated Net Income. Permit Consolidated Net Income to be less
than (i) ($600,000), for the fiscal quarter ending November 30, 2002, or
(ii) $1.00, at the end of any fiscal quarter thereafter with respect to the
fiscal quarter then ending."
Section 1.17. Section 7.13 of the Credit Agreement is further amended by
adding the following new subsection "(f)" immediately following subsection "(e)"
thereof:
"(f) Consolidated Liquidity. Permit cash and cash equivalents of the
Company and its Subsidiaries not subject to any Lien or other restriction,
to be less than fifty percent (50%) of the aggregate outstanding principal
amount of the Revolving Credit Loans.
Section 1.18. Exhibit A and Exhibit F to the Credit Agreement are hereby
amended and replaced with Exhibit A and Exhibit F, respectively, attached to
this Amendment and Waiver.
II. Waiver.
Section 2.1. The Bank hereby waives the Company's compliance with Section
7.13(a) of the Credit Agreement, Leverage Ratio, for the fiscal quarter ended
August 31, 2002, provided that the ratio of Consolidated Funded Debt to
Consolidated EBITDA was not less than (0.93):1.00 at the end of such fiscal
quarter.
Section 2.2. The Bank hereby waives the Company's compliance with Section
7.13(b) of the Credit Agreement, Interest Coverage Ratio, for the fiscal quarter
ended August 31, 2002, provided that the ratio of Consolidated EBIT to
Consolidated Interest Expense was not less than (25.07):1.00 at the end of such
fiscal quarter.
Section 2.3. The Bank hereby waives the Company's compliance with Section
7.13(c), Consolidated Tangible Net Worth, for the fiscal quarter ended August
31, 2002, provided that Consolidated Tangible Net Worth was not less than
$13,183,651 at the end of such fiscal quarter.
Section 2.4. The Bank hereby waives the Company's compliance with Section
7.13(d) of the Credit Agreement, Consolidated Net Income, for the fiscal quarter
ended August 31, 2002, provided that the Consolidated Net Income was not less
than ($4,234,278) at the end of such fiscal quarter.
Section 2.5. The waivers set forth above are limited specifically to the
matters set forth above and for the specific instances and purposes given and do
not constitute, directly or by implication, a waiver or amendment of any other
provision of the Credit Agreement or a waiver of any Default or Event of
Default, whether now existing or hereafter arising (except as contemplated by
Sections 2.1, 2.2, 2.3 and 2.4 above ).
III. Miscellaneous.
Section 3.1. This Amendment and Waiver shall become effective only upon
receipt by the Bank of (a) this Amendment and Waiver, duly executed by the
Company and the Guarantor, (b) the Amended and Restated Revolving Credit Note,
substantially in the form of Exhibit A attached hereto, duly executed by the
Company and (b) an amendment fee of $15,000.
Section 3.2. This Amendment and Waiver shall be governed by and construed
in accordance with the laws of the State of New York.
Section 3.3. All terms used herein shall have the same meaning as in the
Credit Agreement, as amended hereby, unless specifically defined herein.
Section 3.4. This Amendment and Waiver shall constitute a Loan Document.
Section 3.5. As expressly amended hereby, the Credit Agreement remains in
full force and effect in accordance with the terms thereof. The Credit Agreement
is ratified and confirmed in all respects by the Company. The amendments and
waivers herein are limited specifically to the matters set forth above and for
the specific instance and purposes for which given and to not constitute
directly or by implication an amendment or waiver of any other provisions of the
Credit Agreement or a waiver of any Event of Default or event which upon notice,
lapse of time or both would constitute an Event of Default which may occur or
may have occurred under the Credit Agreement or any other Loan Document.
Section 3.6. The Company hereby represents and warrants that (i) the
representations and warranties by the Company pursuant to the Credit Agreement
and each other Loan Document are true and correct on the date hereof, and (ii)
after giving effect to this Amendment and Waiver, no Event of Default or event
which upon notice, lapse of time or both would constitute an Event of Default
exists under the Credit Agreement or any other Loan Document.
Section 3.7. This Amendment and Waiver may be executed in one or more
counterparts, each of which shall constitute an original, but all of which, when
taken together, shall constitute but one Amendment and Waiver.
[next page is signature page]
IN WITNESS WHEREOF, the Company and the Bank have caused this Amendment and
Waiver to be duly executed by their duly authorized officers as of the day and
year first above written.
VASOMEDICAL, INC.
By: /s/ Xxxxxx X. Xxxxxxxxx
---------------------------
Name: Xxxxxx Xxxxxxxxx
Title: Chief Financial Officer
FLEET NATIONAL BANK
By: /s/ Xxxxxxx X. Xxxxxx
-------------------------
Name: Xxxxxxx X. Xxxxxx
Title: Senior Vice President
CONSENT
The undersigned, not parties to the Credit Agreement but as a Guarantor under
the Guaranty dated as of February 21, 2002, hereby acknowledges the terms of the
Amendment and Waiver contained herein and confirms that its Guaranty is in full
force and effect.
000 XXXXXX XXXXXX CORPORATION
By: /s/ Xxxxxx X. Xxxxxxxxx
---------------------------
Name: Xxxxxx X. Xxxxxxxxx
Title: Vice President
EXHIBIT A
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AMENDED AND RESTATED REVOLVING CREDIT NOTE
$5,000,000 Suffolk County, New York
October 18, 2002
FOR VALUE RECEIVED, VASOMEDICAL, INC., a Delaware corporation (the
"Company"), promises to pay to the order of FLEET NATIONAL BANK (the "Bank"), on
or before the Revolving Credit Commitment Termination Date, the principal amount
of FIVE MILLION DOLLARS ($5,000,000) or, if less, the unpaid principal amount of
all Revolving Credit Loans made by the Bank to the Company under the Credit
Agreement referred to below.
The Company also promises to pay interest on the unpaid principal amount
hereof from the date hereof until paid in full at the rates and at the times
which shall be determined, and to make principal repayments on this Note at the
times which shall be determined, in accordance with the provisions of the Credit
Agreement referred to below.
This Note is the "Revolving Credit Note" referred to in the
Credit Agreement dated as of February 21, 2002, by and
between the Company and the Bank (as the same may be
amended, modified or supplemented from time to time, the
"Credit Agreement") and is issued pursuant to and entitled
to the benefits of the Credit Agreement to which reference
is hereby made for a more complete statement of the terms
and conditions under which the Revolving Credit Loans
evidenced hereby were made and are to be repaid. Capitalized
terms used herein without definition shall have the meanings
set forth in the Credit Agreement.
Each of the Bank and any subsequent holder of this Note agrees, by its
acceptance hereof, that before transferring this Note it shall record the date,
Type and amount of each Revolving Credit Loan and the date and amount of each
payment or prepayment of principal of each Revolving Credit Loan previously made
hereunder on the grid schedule annexed to this Note; provided, however, that the
failure of the Bank or holder to set forth such Revolving Credit Loans, payments
and other information on the attached grid schedule shall not in any manner
affect the obligation of the Company to repay the Revolving Credit Loans made by
the Bank in accordance with the terms of this Note.
This Note is subject to optional and mandatory prepayments pursuant to
Section 3.03 of the Credit Agreement.
Upon the occurrence of an Event of Default, the unpaid balance of the
principal amount of this Note together with all accrued but unpaid interest
thereon, may become, or may be declared to be, due and payable in the manner,
upon the conditions and with the effect provided in the Credit Agreement.
All payments of principal and interest in respect of this Note shall be
made in lawful money of the United States of America in immediately available
funds at the office of Fleet National Bank, located at 000 Xxxxx Xxxxxx Xxxx,
Xxxxxxxx, Xxx Xxxx 00000 or at such other place as shall be designated in
writing for such purpose in accordance with the terms of the Credit Agreement.
No reference herein to the Credit Agreement and no provision of this Note
or the Credit Agreement shall alter or impair the obligation of the Company,
which is absolute and unconditional, to pay the principal of and interest on
this Note at the place, at the respective times, and in the currency herein
prescribed.
This Note amends and restates in its entirety and given in substitution
for, but not in satisfaction of, that certain Revolving Credit Note dated as of
February 21, 2002, issued by the Company in favor of the Bank in the original
principal sum of $15,000,000.00 (the "Original Note"). In addition to evidencing
the indebtedness formerly evidenced by the Original note, this Note shall
evidence any accrued and unpaid interest on the Original Note.
The Company and endorsers of this Note waive presentment, diligence,
demand, protest, and notice of any kind in connection with this Note.
THIS NOTE SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED AND ENFORCED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO PRINCIPLES
OF CONFLICTS OF LAW.
IN WITNESS WHEREOF, the Company has caused this Note to be executed and
delivered by its duly authorized officer, as of the day and year and at the
place first above written.
VASOMEDICAL, INC.
By: /s/ Xxxxxx X. Xxxxxxxxx
---------------------------
Name: Xxxxxx X. Xxxxxxxxx
Title: Chief Financial Officer
SCHEDULE
Date Principal Type Applicable Amount of Notation
of Amount of of Interest Interest Principal Made
Loan Loan Loan Rate Period Paid By
---- --------- ---- -------- ---------- --------- --------
EXHIBIT F
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FORM OF NOTICE OF BORROWING
[Date]
Fleet National Bank
000 Xxxxx Xxxxxx Xxxx
Xxxxxxxx, Xxx Xxxx 00000
Attention: Xxxxxxx X. Xxxxxx,
Senior Vice President
Re: Vasomedical, Inc.
Gentlemen:
Pursuant to the Credit Agreement dated as of February 21, 2002, (as the
same may have been and may hereafter be amended, modified or supplemented the
"Credit Agreement") by and among Vasomedical, Inc. and Fleet National Bank, we
hereby give you irrevocable notice that we request a Revolving Credit Loan as
follows:
1. Amount of Loan: $____________
2. Borrowing Date: _____________
3. Type of Loan: [Prime Rate Loan] [LIBOR Rate Loan]
4. Interest Period: [Specify 1, 2, 3, or 6 months]
We hereby certify that (i) the representations and warranties contained in
the Credit Agreement and the other Loan Documents are true, correct and complete
on and as of the date hereof to the same extent as though made on and as of the
date hereof; (ii) no Default or Event of Default has occurred and is continuing
under the Credit Agreement or will result after giving effect to the Loan
requested hereunder; (iii) the Company has performed all agreements and
satisfied all conditions under the Credit Agreement required to be performed by
it on or before the date hereof; (iv) after giving effect to the requested
Revolving Credit Loan, the outstanding principal amount of the Revolving Credit
Loans shall not exceed the lesser of (a) the current Borrowing Base and (b) the
Revolving Credit Commitment currently in effect, and (v) cash and cash
equivalents of the Company and its Subsidiaries not subject to any Lien or other
restriction is not less than fifty percent (50%) of the aggregate outstanding
principal amount of the Revolving Credit Loans (including the requested
Revolving Credit Loan).
Capitalized terms used herein but not defined shall have the respective
meanings given to them in the Credit Agreement.
IN WITNESS WHEREOF, the Company has caused this document to be executed and
delivered by its Executive Officer as of the date written above.
VASOMEDICAL, INC.
By: ________________________
Title: Chief Financial Officer
