Exhibit 10.11
FIRST AMENDMENT AND WAIVER TO
LOAN AND SECURITY LETTER AGREEMENT
FIRST AMENDMENT AND WAIVER TO LOAN AND SECURITY AGREEMENT, dated as of
January 12, 2001 (this "Amendment"), by and between EP MEDSYSTEMS, INC., a New
Jersey corporation, (the "Borrower"), and FLEET NATIONAL BANK (the "Bank").
WHEREAS, the borrower and the Bank are parties to that Loan and Security
Letter Agreement, dated as of March 31, 1999 (the "Original Credit Agreement");
WHEREAS, the Original Credit Agreement was modified and amended by a
certain Letter Agreement dated as of December 20, 2000 (the "Default Letter
Agreement") wherein, inter alia, the Borrower acknowledged that it was in
default of certain terms of the Original Credit Agreement and the Bank agreed to
make certain discretionary advances to the Borrower subject to certain terms and
conditions (the Original Credit Agreement, as amended by the Default Letter
Agreement is referred to herein as the "Credit Agreement", and capitalized terms
not otherwise defined herein which are defined in the Credit Agreement shall
have the same meanings herein as specified in the Credit Agreement);
WHEREAS, the defaults specified in the Default Letter Agreement (as set
forth on Part I of the Schedule hereto) have not been cured or waived, and such
defaults specified therein continue to be in existence through the date hereof;
WHEREAS, the Borrower has informed the Bank that the Borrower is likely to
fail to comply with certain provisions of the Credit Agreement as set forth on
Part II of the Schedule hereto, such failures to comply, when occurring,
constitute Events of Default (such Events of Default as set forth on Part I and
Part II of the Schedule are referred to collectively herein as the "Specified
Defaults"); and
WHEREAS, as the request of the Borrower, the Bank and the Borrower have
agreed to waive permanently the Specified Defaults, to cancel and terminate
permanently the Revolving Loan provisions of the Credit Agreement, and to modify
certain other terms and conditions of the Credit Agreement, all as specifically
set forth in this Amendment;
NOW, THEREFORE, in consideration of the mutual agreements contained in the
Credit Agreement, herein and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto
hereby agree to as follows:
Section 1. Waiver. Subject to the satisfaction of the conditions precedent
set forth herein and in consideration of the reliance upon the agreements of the
Borrower contained, the Bank hereby permanently waives the Specified Defaults.
The waiver of the defaults under the Credit Agreement provided herein relates
only to the specific time periods described in the Schedule, is a one-time
waiver and shall not be deemed to constitute a continuing waiver of the
provisions of
the Credit Agreement or a waiver of the provisions of the Credit Agreement with
respect to any other occurrences or for any other period.
Section 2. Other Defaults. The waiver set forth in Section 1 shall apply
only to the Specified Defaults. No waiver with respect to any other Default or
Event of Default, whether presently existing or hereafter arising, is granted
hereby. The Bank shall, at all times, retain all of the rights and remedies in
respect of any Default or Event of Default under the Credit Agreement and the
other Loan Documents other than the Specified Defaults.
Section 3. Amendments to the Credit Agreement. The Credit Agreement is
hereby amended in the following respects:
(a) Section 1.3 of the Credit Agreement is hereby amended by deleting it
in its entirety and replacing it with the following:
"1.3 Repayment. On the Expiration Date, the Borrower shall repay in
full all Revolving Loans and all interest thereon, less the total
face amount of Letters of Credit issued by the Bank for the account
of the Borrower still outstanding on the Expiration Date. The
Borrower may repay, at any time prior to the Expiration Date,
without penalty or premium, the whole or any portion of any
Revolving Loan. In addition, if at any time the Borrowing Base is in
an amount which is less than the then outstanding Aggregate
Revolving Bank Liabilities, the Borrower will forthwith prepay so
much of the Revolving Loans as may be required (or arrange for
termination of such letters of credit as may be required) so that
the Aggregate Revolving Bank Liabilities will not exceed the
Borrowing Base."
(b) From and after January 12, 2001, the Borrower shall not be permitted
to request Revolving Loans or Letters of Credit from the Bank and the Bank
shall not be required to make Revolving Loans to the Borrower or to issue
Letters of Credit for the account of the Borrower. From and after January
16, 2001, the revolving financing arrangements between the Bank and the
Borrower, as evidenced by the Credit Agreement and the Loan Documents, are
permanently cancelled and nullified. Notwithstanding such cancellation and
nullification, nothing contained herein shall impair or affect the
absolute and unconditional obligation of the Borrower to repay the Bank,
in full, all amount due and owing under the Credit Agreement in respect of
Revolving Loans made to the Borrower prior to January 16, 2001 as
evidenced by the Revolving Note. The Credit Agreement is hereby amended in
all appropriate respects to reflect the foregoing agreements.
(c) The definition of "Expiration Date" contained in Section 8.1 of the
Credit Agreement is hereby amended by deleting it in its entirety and
replacing it with the following:
"Expiration Date" - January 16, 2001."
Section 4. Representations and Warranties. The Borrower hereby represents
and warrants to the Bank as follows:
(a) Each of the representations and warranties of the Borrower contained
in the Credit Agreement as modified hereby or in any document or instrument
delivered pursuant to or in connection with the Credit Agreement as modified
hereby are true as of the date hereof and, but for the Specified Defaults and
after taking into account this Amendment, no Default or Event of Default has
occurred and is continuing; and
(b) The execution, delivery and performance of this Amendment and the
transactions contemplated hereby (i) are within the corporate authority of the
Borrower, (ii) have been duly authorized by all necessary corporate proceedings,
(iii) do not conflict with or result in any material breach or contravention of
any provision of law, statute, rule or regulation to which the Borrower is
subject or any judgment, order, writ, injunction, license or permit applicable
to the Borrower so as to materially adversely affect the assets, business or any
activity of the Borrower, and (iv) do not conflict with any provision of the
corporate charter or bylaws of the Borrower or any agreement or other instrument
binding upon it. The execution, delivery and performance of this Amendment will
result in valid and legally binding obligations of the Borrower enforceable
against the Borrower in accordance with the terms and provisions hereof.
Section 5. Cash Collateral for Letters of Credit. The Borrower agrees that
on or prior to January 16, 2001, the Borrower will place, or cause to be placed,
on deposit with the Bank in a cash collateral account pledged to the Bank (the
"Cash Collateral Account"), United Sates currency in an amount equal to the
aggregate face amount of all Letters of Credit issued by the Bank for the
account of the Borrower that are unexpired and outstanding (the "Letter of
Credit Outstanding Amount") as of January 16, 2001. The Borrower agrees to
maintain sufficient cash funds in such deposit account to equal or exceed the
Letter of Credit Outstanding Amount at all times after January 16, 2001 until
such time as there are no unexpired or outstanding Letters of Credit issued by
the Bank for the account of the Borrower. The Borrower hereby authorizes the
Bank, without further request from, or notice to, the Borrower, to cause the
Borrower's liability to the Bank for reimbursement of funds drawn under any
Letter of Credit to be repaid from the Cash Collateral Account.
Section 6. Conditions Precedent to Effectiveness. This Amendment shall
become effective only upon the satisfaction of the following conditions:
(a) this Amendment shall have been executed and delivered by the Borrower
and the Bank; and
(b) the Borrower shall have paid, or shall have authorized the Bank to
pay, all unpaid fees and expenses of in-house and external legal counsel to the
Bank, including fees expenses of Bank's counsel Xxxxxxx and Xxxxxx in the amount
of $1,899.15.
Section 7. Conditions to Continuing Effectiveness. The waiver granted in
Section 1 of this Amendment shall continue to be effective if, and only if:
(a) the Borrower satisfies all of the terms and conditions set forth in
Section 5 of this Amendment; and
(b) the Borrower pays to the Bank all of the amounts specified by the
provisions of Section 1.3 of the Credit Agreement (as amended by this Amendment)
in the manner specified therein on or before the Expiration Date.
Section 8. Ratification, Etc. The Borrower hereby adopts again, ratifies
and confirms in all respects each of the Credit Agreement and the other Loan
Documents to which it is a party; the Borrower hereby adopts again, ratifies and
confirms in all respects the grant of a security interest in the Collateral
under the Loan Documents, together with any and all Uniform Commercial Code
financing statements and other instruments or documents previously executed in
connection therewith to create, evidence, perfect or preserve the priority of
such security interest in the Collateral in favor, of the Bank; the Borrower
hereby adopts again, ratifies and confirms the mortgage of real assets in which
such Borrower has an ownership or other rights; and the Borrower hereby adopts
again, ratifies and confirms each of the other instruments or documents
delivered by it in connection with the Credit Agreement and the other Loan
Documents and acknowledges that all of the foregoing Loan Documents and other
instruments, documents, filings and recordings shall continue in full force and
effect. By its signature below, the Borrower hereby consents to this Amendment,
and after taking into account this Amendment, acknowledges that this Amendment
shall not alter, release, discharge or otherwise affect any of its obligations
under any Loan Document.
Section 9. Release. In order to induce the Bank to enter into this
Amendment, the Borrower acknowledges and agrees that: (i) the Borrower has no
claim or cause of action against the Bank (or any of the Bank's directions,
officers, employees or agents); (ii) the Borrower has no offset right,
counterclaim or defense of any kind against any of its obligations, indebtedness
or liabilities to the Bank; and (iii) the Bank has heretofore properly performed
and satisfied in a timely manner all of its obligations to the Borrower. The
Borrower wishes to eliminate any possibility that any past conditions, acts,
omissions, events, circumstances or matters would impair or otherwise adversely
affect any of the Bank's rights, interests, contracts, collateral security or
remedies. Therefore, the Borrower unconditionally releases, waives and forever
discharges (A) any and all liabilities, obligations, duties, promises or
indebtedness of any kind of the Bank to the Borrower, except the obligations to
be performed by the Bank on or after the date hereof as expressly stated in this
Amendment, the Credit Agreement and the other Loan Documents, and (B) all
claims, offsets, causes of action, suits or defenses of any kind whatsoever (if
any), whether arising at law or in equity, whether known or unknown, which the
Borrower might otherwise have against the Bank or any of the Bank's directors,
officers, employees or agents, in either case (A) or (B), on account of any past
or presently existing condition, act, omission, event, contract liability,
obligation, indebtedness, claim, cause of action, defense, circumstance or
matter of any kind.
Section 10. Effect of Amendment. Except as expressly set forth herein,
this Amendment does not constitute an amendment or waiver of any term or
condition of the Credit Agreement or any other Loan Document, and all such terms
and conditions shall remain in full force and effect and are hereby ratified and
confirmed in all respects. Nothing contained in this Amendment shall be
construed to imply a willingness on the part of the Bank to grant any similar or
other future waivers of any of the terms and conditions of the Credit Agreement
or the other Loan Documents. Nothing contained herein shall in any way
prejudice, impair or otherwise adversely affect any rights or remedies of the
Bank under the Credit Agreement, as amended, or any other Loan Document. This
Amendment shall constitute a Loan Document.
Section 11. Reimbursement of Expenses. The Borrower acknowledges that all
out of pocket costs and expenses incurred by the Bank in connection with the (a)
the preparation, negotiation, execution, delivery and monitoring of this
Amendment, and (ii) the discussions and meetings that preceded this Amendment
(including, without limitation, the allocable costs of in-house counsel, and all
legal and other professional and consultant's fees and disbursements), shall be
paid by the Borrower and shall constitute a portion of the Obligations secured
by the Collateral.
Section 12. Governing Law. This Amendment shall be governed by and
construed in accordance with the laws of the Commonwealth of Massachusetts.
Section 13. Counterparts. This Amendment may be signed in any number of
counterparts, each of which shall be an original, with the same effect as if the
signatures thereto and hereto were upon the same instrument.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
IN WITNESS WHEREOF, the undersigned have duly executed this Amendment as a
sealed instrument as of the date first above written.
EP MEDSYSTEMS, INC.
By: s/ Xxxxxx X. Xxxxxx
Name: Xxxxxx X. Xxxxxx
Title: CFO
Hereunto duly authorized
FLEET NATIONAL BANK
By: s/ Xxxxxxxx Xxxxxxx
Name: Xxxxxxxx Xxxxxxx
Title: Director
SCHEDULE
Specified Defaults
Part I
Financial Covenants. Failure to comply with the following financial
covenant for the period ending September 30, 2000:
Section 3.9 Liquidity ("Net Quick Assets to Adjusted Current Liabilities"
Ratio)
Part II
Financial Covenants. Failure to comply with the following financial
covenants for the respective periods ending December 31, 2000:
Section 3.9 Liquidity ("Net Quick Assets to Adjusted Current Liabilities"
Ratio)
Section 3.10 Profitability ("Net Income" Test)
