NINTH AMENDMENT TO LOAN AND SECURITY AGREEMENT
Exhibit
10.1
NINTH
AMENDMENT
TO
THIS
NINTH AMENDMENT to
Loan and Security Agreement
(this “Amendment”)
is entered into on May 28, 2008, by and between
SILICON
VALLEY BANK (“Bank”)
and
the
following (collectively, jointly and severally, the "Borrower") whose address
is
00000 Xxxxxxxx Xxxxxx, Xxxxxxxxxx, Xxxxxxxxxx 00000:
NORTH
AMERICAN SCIENTIFIC,
INC., a
Delaware corporation (“NASI”); and
NORTH
AMERICAN SCIENTIFIC, INC., a California corporation (“NASI-CA”).
Recitals
A. Bank
and
Borrower have entered into that certain Loan and Security Agreement, with an
Effective Date of October 5, 2005 (as the same has been, and may hereafter
from
time to time be amended, modified, supplemented or restated, the “Loan
Agreement”).
B. Bank
has
extended credit to Borrower for the purposes permitted in the Loan Agreement.
C. Borrower
has requested that Bank amend the Loan Agreement, as herein set forth, and
Bank
has agreed to the same, but only to the extent, in accordance with the terms,
subject to the conditions and in reliance upon the representations and
warranties set forth herein.
Agreement
Now,
Therefore,
in
consideration of the foregoing recitals and other good and valuable
consideration, the receipt and adequacy of which are hereby acknowledged, and
intending to be legally bound, the parties hereto agree as follows:
1. Definitions.
Capitalized terms used but not defined in this Amendment shall have the meanings
given to them in the Loan Agreement.
2. Amendments
to Loan Agreement. The
Loan
Agreement is hereby amended as follows, effective as of the date
hereof:
2.1 Amended
and Restated Schedule 2.
Schedule 2 to the Loan Agreement is amended and restated to read as set forth
in
the Amended and Restated Schedule 2 to Loan and Security Agreement, which is
being signed by Borrower and Bank concurrently herewith.
2.2 Prepayment
Fee.
Section
2.1.1(d) is hereby amended in its entirety to read as follows:
(d) The
Committed Revolving Line may be terminated prior to the Maturity Date by
Borrower, effective three (3) Business Days after written notice of termination
is given to Bank, in which event Borrower shall pay in full all Obligations
arising in connection with the Committed Revolving Line on the effective date
of
termination. Notwithstanding any such termination, Bank’s lien and security
interest in the Collateral and all of Bank’s rights and remedies under this
Agreement shall continue until Borrower fully satisfies its Obligations
(including, without limitation, those not pertaining to the Committed Revolving
Line). If such termination is at Borrower’s election or at Bank’s election due
to the occurrence and continuance of an Event of Default, Borrower shall pay
to
Bank, in addition to the payment of any other expenses or fees then-owing,
a
termination fee in an amount equal to 1.0% of the Revolving Line Credit Amount;
provided that no termination fee shall be charged if the Committed Revolving
Line is replaced with a new facility from another division of Silicon Valley
Bank.
Furthermore,
if the Growth Capital Loan is prepaid for any reason, the Borrower shall pay
to
Bank a prepayment fee with regard to the Growth Capital Loan in an amount equal
to (i) three percent (3.00%) of the amount of the outstanding principal
balance of the Growth Capital Loan prior to such prepayment, if prepayment
occurs on or before May 28, 2009 (the first anniversary of the date of this
Agreement); and (ii) two percent (2.00%) of the amount of the outstanding
principal balance of the Growth Capital Loan prior to such prepayment, if
prepayment occurs after May 28, 2009 but on or before May 28, 2010 (the second
anniversary of the date of this Agreement). No termination fee shall be charged
if either (i) the Capital Growth Loan is prepaid for any reason after May 28,
2010 or (ii) the Growth Capital Loan is replaced with a new facility from
another division of Silicon Valley Bank.
2.3 Modified
Definition of Committed Revolving Line. The
definition of “Committed Revolving Line” set forth in Section 13.1 of the Loan
Agreement is hereby amended to read as follows:
"Committed
Revolving Line"
is the
revolving credit facility hereunder relating to the making of Advances in an
aggregate amount not to exceed Three Million Dollars ($3,000,000) on a joint
basis for all Borrowers and otherwise subject to the terms and conditions
hereof.
2.4 Modified
Definition of Quick Ratio Test.
The
definition of “Quick Ratio Test” set forth in Section 13.1 of the Loan Agreement
that currently reads as follows:
“Quick
Ratio Test”.
As used
herein, the “Quick Ratio Test” will be
deemed
to be met if Borrower’s Adjusted Quick Ratio at the end of August, 2006 and at
the end of each subsequent month is at least 1.00 to 1.00. If at the end of
any
such subsequent month Borrower’s Adjusted Quick Ratio is not at least 1.00 to
1.00, then Borrower shall not thereafter be deemed to meet the Quick Ratio
Test,
unless Borrower’s Adjusted Quick Ratio is at least 1.00 to 1.00 for a subsequent
continuous period, continuous to the date of determination, and such continuous
period is at least three calendar months. As used herein, “Adjusted Quick Ratio”
means the ratio of (i) Borrower’s unrestricted cash plus Borrower’s net Accounts
to (ii) the total of Borrower’s current liabilities (including all of the
Obligations to Bank).
is
hereby
amended to read as follows:
“Quick
Ratio Test”.
As used
herein, the “Quick Ratio Test” will be deemed to be met if Borrower’s Quick
Ratio at the end of May 2008 and at the end of each subsequent month is at
least
1.00 to 1.00. If at the end of any such subsequent month Borrower’s Quick Ratio
is not at least 1.00 to 1.00, then Borrower shall not thereafter be deemed
to
meet the Quick Ratio Test, unless Borrower’s Quick Ratio is at least 1.00 to
1.00 for a subsequent continuous period, continuous to the date of
determination, and such continuous period is at least three calendar months.
As
used herein, “Quick Ratio” means the ratio of (i) Borrower’s unrestricted cash
plus Borrower’s net Accounts to (ii) the total of Borrower’s current
liabilities.
2.5 Exhibit
D. Exhibit
D
to the Loan Agreement, the form of Compliance Certificate, is hereby replaced
by
Exhibit D hereto.
2.6 Exhibit
E Continues Effective.
As
provided in the First Amendment, Exhibit E to the Loan Agreement (as modified
by
this Amendment below) continues to be effective and operative.
2.7 Modified
Collection of Accounts.
Section
2 of Exhibit E to the Loan Agreement, which presently reads as
follows:
(2)
Collection
of Accounts. Borrower shall direct all Account Debtors to make payment
of all
Accounts directly to a lockbox established with Bank (the ‘Lockbox’). Borrower
shall hold all payments on, and proceeds of, Accounts and all other Collateral
in trust for Bank, and Borrower shall immediately deposit all such payments
and
proceeds in the Lockbox. All sums received in the Lockbox shall be transferred
by Bank to Borrower’s operating account at Bank, provided
that
if, at
any time, the Quick Ratio Test is not met and the Reduced Borrowing Test
is not
met, then
all sums
received in the Lockbox shall be applied by Bank to the Obligations in
such
order as Bank shall determine, and any excess shall be transferred by Bank
to
Borrower’s operating account at Bank. Bank or its designee may, at any time,
notify Account Debtors that the Accounts have been assigned to Bank. Nothing
in
this Exhibit limits the restrictions on Transfers of Collateral set forth
elsewhere in this Agreement.
is
hereby
amended to read as follows:
(2) Collection
of Accounts. Borrower shall direct all Account Debtors to make payment of all
Accounts directly to a lockbox established with Bank (the ‘Lockbox’). Borrower
shall hold all payments on, and proceeds of, Accounts and all other Collateral
in trust for Bank, and Borrower shall immediately deposit all such payments
and
proceeds in the Lockbox. All sums received in the Lockbox shall be transferred
by Bank to Borrower’s operating account at Bank, provided
that
if, at
any time, the Borrowing Base is less than 2 times the outstanding principal
balance of the Revolving Loans (including any cash management reserves),
then
all sums
received in the Lockbox shall be applied by Bank to the Obligations pertaining
to the Revolving Loans in such order as Bank shall determine, and any excess
shall be transferred by Bank to Borrower’s operating account at Bank. Bank or
its designee may, at any time, notify Account Debtors that the Accounts have
been assigned to Bank. Nothing in this Exhibit limits the restrictions on
Transfers of Collateral set forth elsewhere in this Agreement.
2.8 Modified
10-Q Reporting. Paragraph
7 of Section (7) of Exhibit E to the Loan Agreement is hereby amended in its
entirety to read as follows:
7. Within
the earlier of (i) 45 days from the end of each fiscal quarter or (ii) 5 days
following the filing with the Securities and Exchange Commission of Borrower’s
Quarterly Report on form 10-Q, a copy of Borrower’s Form 10-Q.
2.9 Modified
10-K Reporting. Paragraph
8 of Section (7) of Exhibit E to the Loan Agreement is hereby amended in its
entirety to read as follows:
8. Within
the earlier of (i) 90 days from the end of each fiscal year or (ii) 5 days
following the filing with the Securities and Exchange Commission of Borrower’s
Annual Report on form 10-K, a copy of Borrower’s Form 10-K (including Borrower’s
audited annual financial statements).
2.10 Warrant.
Concurrently
herewith, Borrower shall issue to Bank a five-year Warrant to Purchase Stock
for
the issuance of the number shares of Borrower’s common stock equal to the result
of $150,000 divided by the Warrant Price (as set forth in the Warrant) and
on
such other terms and conditions as are acceptable to Bank in its good faith
business judgment.
3. Limitation
of Amendments.
3.1 The
amendments set forth in Section 2, above, are effective for the purposes
set forth herein and shall be limited precisely as written and shall not be
deemed to (a) be a consent to any amendment, waiver or modification of any
other term or condition of any Loan Document, or (b) otherwise prejudice
any right or remedy which Bank may now have or may have in the future under
or
in connection with any Loan Document.
3.2 This
Amendment shall be construed in connection with and as part of the Loan
Documents and all terms, conditions, representations, warranties, covenants
and
agreements set forth in the Loan Documents, except as herein amended, are hereby
ratified and confirmed and shall remain in full force and effect.
4. Representations
and Warranties.
To
induce Bank to enter into this Amendment, Borrower hereby represents and
warrants to Bank as follows:
4.1 Immediately
after giving effect to this Amendment (a) the representations and
warranties contained in the Loan Documents are true, accurate and complete
in
all material respects as of the date hereof (except to the extent such
representations and warranties relate to an earlier date, in which case they
are
true and correct as of such date), and (b) no Event of Default has occurred
and is continuing ;
4.2 Borrower
has the corporate power and authority to execute and deliver this Amendment
and
to perform its obligations under the Loan Agreement, as amended by this
Amendment;
4.3 The
organizational documents of NASI-DE delivered to Bank on the Effective Date
remain accurate and complete and have not been amended, supplemented or restated
since the Effective Date (except pursuant to those certain Amendments to
Certificate of Incorporation filed with the Delaware Secretary of State on
April
20, 2007, January 17, 2008 and April 30, 2008) and are, and continue to be,
in
full force and effect. The organizational documents of NASI-CA delivered to
Bank
on the Effective Date remain accurate and complete and have not been amended,
supplemented or restated since the Effective Date and are, and continue to
be,
in full force and effect;
4.4 The
execution and delivery by Borrower of this Amendment and the performance by
Borrower of its obligations under the Loan Agreement, as amended by this
Amendment, have been duly authorized;
4.5 The
execution and delivery by Borrower of this Amendment and the performance by
Borrower of its obligations under the Loan Agreement, as amended by this
Amendment, do not and will not contravene (a) any law or regulation binding
on or affecting Borrower, (b) any material agreement by which Borrower or
its property is bound, (c) any order, judgment or decree of any court or
other governmental or public body or authority, or subdivision thereof, binding
on Borrower, or (d) the organizational documents of Borrower;
4.6 The
execution and delivery by Borrower of this Amendment and the performance by
Borrower of its obligations under the Loan Agreement, as amended by this
Amendment, do not require any order, consent, approval, license, authorization
or validation of, or filing, recording or registration with, or exemption by
any
governmental or public body or authority, or subdivision thereof, binding on
either Borrower, except as already has been obtained or made; and
4.7 This
Amendment has been duly executed and delivered by Borrower and is the binding
obligation of Borrower, enforceable against Borrower in accordance with its
terms, except as such enforceability may be limited by bankruptcy, insolvency,
reorganization, liquidation, moratorium or other similar laws of general
application and equitable principles relating to or affecting creditors’
rights.
5. Counterparts.
This
Amendment may be executed in any number of counterparts and all of such
counterparts taken together shall be deemed to constitute one and the same
instrument.
6. Effectiveness.
This
Amendment shall be deemed effective upon (a) the due execution and delivery
to
Bank of this Amendment by each party hereto, (b) Borrower’s payment of the
Facility Fees set forth in the Amended and Restated Schedule 2 to Loan and
Security Agreement of even date herewith.
Amended
and Restated Schedule 2
to
Borrower:
|
North
American Scientific, Inc., a Delaware
Corporation
|
North
American Scientific, Inc., a California
Corporation
|
|
Date: |
May
28, 2008
|
This
Amended and Restated Schedule 2 amends and restates in its entirety the Amended
and Restated Schedule 2 dated October 31, 2006 to the Loan and Security
Agreement dated October
5, 2005 (as
amended, the “Loan Agreement”) between Silicon Valley Bank (“Bank”) and the
above-borrowers (collectively, jointly and severally, the “Borrower”), and forms
an integral part of the same. (Capitalized terms used herein, which are not
defined, shall have the meanings set forth in the Loan Agreement.)
1. |
CREDIT
LIMIT
|
(Section 2.1.1): |
An
amount not to exceed the sum of 1 and 2
below:
|
1. |
Revolving
Loans.
An amount (the “Revolving
Loans”)
not to exceed:
|
(a) |
the
lesser of (1) $3,000,000
at
any one time outstanding (the “Revolving
Line Credit Amount”)
or (2) the sum of the following (the “Borrowing
Base”):
|
(i) |
up
to 80% (an “Advance Rate”) of the amount of NASI Eligible
Accounts, plus
|
(ii) |
up
to 80% (an “Advance Rate”) of the amount of NASI-CA
Eligible Accounts;
|
minus
(b) |
the
sum of the following:
|
(i) |
the
amount of all outstanding Letters of Credit (including drawn but
unreimbursed Letters of Credit); plus
|
(ii) |
the
FX Reserve; and plus
|
(iii) |
the
aggregate amount of Cash Management Services
utilizations.
|
provided,
however,
that
Bank shall have the right, in Bank’s discretion, to modify the above Advance
Rates based upon the results of field audits conducted by Bank.
plus
2. |
Growth
Capital Loan.
An amount equal to the unpaid principal balance from time to time
outstanding of the Loan (the “Growth
Capital Loan”)
in the original principal amount of up to $3,000,000
to
be disbursed as follows: (i) $1,500,000 disbursed concurrently
herewith
and (ii) up to $1,500,000 to be disbursed prior to September 30,
2008. The
Growth Capital Loan may be used for working capital purposes of
Borrower.
Once any portion of the Growth Capital Loan is repaid, it cannot
be
reborrowed.
|
As
used
in this Agreement, “Loans”
includes the Revolving Loans and the Growth Capital Loan. Loans will be made
to
each Borrower based on the Eligible Accounts of each Borrower, subject to
the
limitations set forth above for all Loans to all Borrowers
combined.
(Section
2.1.2):
|
$
|
500,000.
|
||
Foreign
Exchange Sublimit
|
||||
(Section
2.1.3):
|
$
|
500,000.
|
||
(Section
2.1.4):
|
$
|
500,000.
|
2.
|
INTEREST.
|
Interest
Rate
(Section
2.3(a)):
A
per
annum rate equal to the Prime Rate in effect from time to time plus 0.50%
per
annum; provided
that if the Quick Ratio Test is not met, the interest rate applicable to
the
Obligations shall be a per annum rate equal to the Prime Rate in effect from
time to time, plus 1.50% per annum. Changes in the interest rate based on
whether or not the Quick Ratio Test is met shall go into effect as of the
first
day of the month closest to the date Borrower’s financial statements, which show
whether or not the Quick Ratio Test is met, are due, even if the delivery
of the
financial statements is delayed.
Notwithstanding
the foregoing, with respect to the Growth Capital Loan:
A
per
annum rate equal to the greater of (i) the Prime Rate in effect from time
to
time plus 2.25% per annum or (ii) 7.50% per annum.
3. |
FEES
(Section 2.4(a)):
|
Facility Fee: |
With
respect to the Revolving Loans:
|
$15,000
payable on the date hereof.
|
With
respect to the Growth Capital Loan:
|
$15,000
payable on the date hereof.
|
Collateral Handling Fee: |
None,
provided that if the Quick Ratio Test is not met, Borrower
shall pay Bank a collateral handling fee in an amount equal to
$1,000 per
month, payable in arrears on the first day of each month with respect
to
the prior month. Changes
in whether or not the collateral handling fee is charged, based
on whether
or not the Quick Ratio Test is met shall go into effect as of the
first
day of the month closest to the date Borrower’s financial statements,
which show whether or not the Quick Ratio Test is met, are due,
even if
the delivery of the financial statements is
delayed.
|
Unused Line Fee: |
None,
provided that if the Quick Ratio Test is not met, Borrower shall
pay to
Bank an unused line fee equal to the rate of one-half of one percentage
point (0.50%) per annum multiplied by the amount by which the Revolving
Line Credit Amount exceeds the average daily principal balance
of the
outstanding aggregate amount of the sum, without duplication, of
Advances,
Letters of Credit, FX Reserve and Cash Management Services utilizations
during the immediately preceding calendar month (or part thereof),
which
fee shall be payable monthly in arrears on the first day of each
month.
Changes in whether or not the unused line fee is charged, based
on whether
or not the Quick Ratio Test is met shall go into effect as of the
first
day of the month closest to the date Borrower’s financial statements,
which show whether or not the Quick Ratio Test is met, are due,
even if
the delivery of the financial statements is
delayed.
|
Termination Fee: |
See
Section 2.1.1(d) of the Loan Agreement (as amended by that certain
Ninth
Amendment to Loan Documents).
|
None
of
the fees provided for in this Agreement are refundable.
4. |
MATURITY
|
DATE
(Section 13.1): |
May
28, 2010 [a date that is two years from the date of this
Agreement].
|
Notwithstanding
the foregoing, with respect to the Growth Capital Loan: The outstanding
principal balance of the Growth Capital Loan shall be repaid by Borrower
to
Silicon in thirty-six (36) equal monthly payments of principal, commencing
on
October 1, 2008 and continuing on the first day of each subsequent month
until
the earlier of the following dates: (i) September 1, 2011, or (ii) the date
the
Growth Capital Loan has been indefeasibly paid in full, or (iii) the date
this
Agreement terminates by its terms or is terminated by either party in accordance
with its terms. On the earlier to occur of the foregoing dates, the entire
unpaid principal balance of the Growth Capital Loan, plus all accrued and
unpaid
interest thereon, shall be due and payable. Interest on the Growth Capital
Loan
shall be payable monthly (regardless of whether any principal payment is
to be
made in such month) as provided in Section 2.3 of this Agreement.
5. |
FINANCIAL
COVENANTS
|
(Section 6.7): |
Borrower
shall comply with the following financial covenant at all times
during the
term of this Agreement, measured at the end of each month, and,
Borrower
shall provide evidence of compliance therewith to Bank monthly
and
otherwise at the request of Bank from time to time. Notwithstanding
the
foregoing, the following financial covenant will not be applicable
in the
event Borrower terminates the Committed Revolving Line in accordance
with
Section 2.1.1(d) of the Loan Agreement.
|
Minimum
Tangible
Net
Worth:
|
Borrower
shall maintain a Tangible Net Worth of not less than $2,000,000 plus
(i) 50% of the Borrower’s net income in each fiscal quarter ending after
the date hereof plus (ii) 50% of all
consideration received after the date hereof for equity securities
and
subordinated debt of the Borrower.
Increases in the Minimum Tangible Net Worth Covenant based on net
income
shall be effective on the last day of the fiscal quarter in which
said net
income is realized, and shall continue effective thereafter. In
no event
shall the Minimum Tangible Net Worth Covenant be decreased. Increases
in the Minimum
Tangible Net Worth Covenant based on consideration received for
equity
securities and subordinated debt of the Borrower shall be effective
as of
the end of the month in which such consideration is received, and
shall
continue effective thereafter.
|
“Tangible
Net Worth” shall mean the excess of total assets less total liabilities,
determined in accordance with GAAP, with the following adjustments:
(A)
there
shall be excluded from assets: (i) notes, accounts receivable and other
obligations owing to Borrower from its officers or other Affiliates, and
(ii)
all assets which would be classified as intangible assets under GAAP, including
without limitation goodwill, licenses, patents, trademarks, trade names,
copyrights, capitalized software and organizational costs, licenses and
franchises, and (iii) minority investments in other Persons.
(B)
there
shall be excluded from liabilities: all indebtedness which is subordinated
to
the Obligations under a subordination agreement in form specified by Bank
or by
language in the instrument evidencing the indebtedness which Bank agrees
in
writing is acceptable to Bank in its good faith business judgment.