EX-10.1 2 f10q0320ex10-1_sensushealth.htm SIXTH AMENDMENT TO SECOND AMENDMENT AND RESTATED LOAN AND SECURITY AGREEMENT, DATED APRIL 13, 2020
SECOND AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT
This Sixth Amendment to Second Amended and Restated Loan and Security Agreement (this “Amendment”) is entered into as of April 13, 2020, by and between Silicon Valley Bank (“Bank”) and Sensus Healthcare, Inc. (f/k/a Sensus Healthcare, LLC), a Delaware corporation (“Borrower”), whose address is 851 Broken Sound Parkway NW, Suite 215, Boca Raton, FL 33487.
A. Bank and Borrower have entered into that certain Second Amended and Restated Loan and Security Agreement dated as of September 21, 2016 (as the same has been and may from time to time be further 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 to (i) increase the amount of the Revolving Line, (ii) extend the maturity date, and (iii) make certain other revisions to the Loan Agreement as more fully set forth herein.
D. Bank has agreed to so amend certain provisions of the Loan Agreement, but only to the extent, in accordance with the terms, subject to the conditions and in reliance upon the representations and warranties set forth below.
Now, Therefore, in consideration of the foregoing recitals and other good and valuable consideration, the receipt and adequacy of which is 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.
2.1 Section 2.3 (Payment of Interest on the Credit Extensions). Section 2.3(a) is amended in its entirety and replaced with the following:
(a) Interest Rate.
(i) Advances. Subject to Section 2.3(b), the principal amount outstanding under the Revolving Line (other than Non-Formula Advances) shall accrue interest at a floating per annum rate equal to (A) during any Streamline Period, the greater of (1) three-quarters of one percentage point (0.75%) above the Prime Rate and (2) four percent (4.00%), and (B) during any Non-Streamline Period, the greater of (1) one and one-half percentage points (1.50%) above the Prime Rate and (2) four and three-quarters percent (4.75%), in any case, which interest shall be payable monthly in accordance with Section 2.3(d) below.
(ii) Non-Formula Advances. Subject to Section 2.3(b), the outstanding principal amount of the Non-Formula Advances shall accrue interest at a floating per annum rate equal to the greater of (A) one and one-half percentage points (1.50%) above the Prime Rate and (B) four and three-quarters percent (4.75%), in either case, which interest shall be payable monthly in accordance with Section 2.3(d) below.
2.2 Section 2.4 (Fees). Section 2.4(e) is amended in its entirety and replaced with the following:
(e) Revolving Line Facility Fee. A non-refundable facility fee of One Hundred Thousand Dollars ($100,000), fully earned as of the Sixth Amendment Date, and payable as follows: (i) Fifty Thousand Dollars ($50,000), shall be due and payable on the Sixth Amendment Date, and (ii) Fifty Thousand Dollars ($50,000), shall be due and payable on the first anniversary of the Sixth Amendment Date (or any earlier termination of the Revolving Line);
2.3 Section 6.6 (Access to Collateral; Books and Records). Section 6.6 is amended by adding the following sentence to the end thereof:
Borrower hereby acknowledges that such an audit shall be conducted prior to the first Advance after the Sixth Amendment Date.
2.4 Section 6.8 (Operating Accounts). Section 6.8(a) is amended in its entirety and replaced with the following:
(a) Borrower and its Subsidiaries shall maintain account balances in any of its accounts at or through Bank representing at least seventy-five percent (75%) of all deposit account balances of Borrower and such Subsidiaries at any financial institution. Borrower and its Subsidiaries shall obtain any letters of credit exclusively from Bank.
2.5 Section 7.11 (Subsidiary Assets). A new Section 7.11 is added to the Loan Agreement as follows:
7.11 Subsidiary Assets. Permit its Subsidiaries’ total cash to exceed One Hundred Thousand Dollars ($100,000) (exclusive of the One Hundred Thousand Dollars ($100,000) on deposit at Bank Hapoalim as of the Sixth Amendment Date).
2.6 Section 13 (Definitions). Clauses (b), (c), (d), (e), (q), and (v) of the defined term “Eligible Accounts” in Section 13.1 are amended in their entirety and replaced with the following:
(b) Accounts that the Account Debtor has not paid within ninety (90) days (one hundred eighty (180) days for Accounts of SkinCure Oncology) of invoice date regardless of invoice payment period terms;
(c) Accounts with credit balances over ninety (90) days (one hundred eighty (180) days for Accounts of SkinCure Oncology) from invoice date;
(d) Accounts owing from an Account Debtor, if fifty percent (50%) or more of the Accounts owing from such Account Debtor have not been paid within ninety (90) days (one hundred eighty (180) days for Accounts of SkinCure Oncology) of invoice date;
(e) Accounts owing from an Account Debtor which does not have its principal place of business in the United States other than Accounts owing from Account Debtors approved in writing by Bank on a case-by-case basis in its sole discretion;
(q) Accounts for which Borrower has permitted Account Debtor’s payment to extend beyond ninety (90) days (one hundred eighty (180) days for Accounts of SkinCure Oncology);
(v) Accounts owing from an Account Debtor, whose total obligations to Borrower exceed twenty-five percent (25%) of all Accounts (except for SkinCure Oncology, for which such percentage is fifty percent (50%)), for the amounts that exceed that percentage, unless Bank approves in writing; and
2.7 Section 13 (Definitions). The defined term “Permitted Investments” in Section 13.1 is amended by deleting the word “and” from the end of clause (g), replacing the period at the end of clause (h) with “; and”, and adding a new clause (i) as follows:
(i) Investments (i) by Borrower in Subsidiaries not to exceed (A) One Million Four Hundred Thousand Dollars ($1,400,000) in the aggregate for the 2020 fiscal year, and (B) Seven Hundred Fifty Thousand Dollars ($750,000) in the aggregate for the 2021 fiscal year and for each fiscal year thereafter, and (ii) by Subsidiaries in other Subsidiaries or in Borrower.
2.8 Section 13 (Definitions). The following terms and their respective definitions set forth in Section 13.1 are amended in their entirety and replaced with the following:
“Non-Formula Amount” is an amount equal to (a) at all times that Borrower maintains an Adjusted Quick Ratio, tested monthly, of at least 1.50 to 1.00, Three Million Dollars ($3,000,000), and (b) at all times that Borrower maintains an Adjusted Quick Ratio, tested monthly, of less than 1.50 to 1.00, Zero Dollars ($0).
“Revolving Line” is an aggregate principal amount equal to Ten Million Dollars ($10,000,000).
“Revolving Line Maturity Date” means April 1, 2022.
2.9 Section 13 (Definitions). The following term and its definition are added to Section 13.1, in appropriate alphabetical order, as follows:
“Sixth Amendment Date” is April 13, 2020.
2.10 Exhibit B (Compliance Certificate). Exhibit B to the Loan Agreement is amended in its entirety and replaced with Exhibit B attached hereto.
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 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 Borrower most recently delivered to Bank remain true, accurate and complete and have not been amended, supplemented or restated 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 contractual restriction with a Person binding on Borrower, (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 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. Integration. This Amendment and the Loan Documents represent the entire agreement about this subject matter and supersede prior negotiations or agreements. All prior agreements, understandings, representations, warranties, and negotiations between the parties about the subject matter of this Amendment and the Loan Documents merge into this Amendment and the Loan Documents.
6. 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.
7. Electronic Execution of Documents. Each party hereto may execute this Amendment by electronic means and recognizes and accepts the use of electronic signatures and records by any other party hereto in connection with the execution and storage hereof.
8. 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 fee in an amount equal to Fifty Thousand Dollars ($50,000) pursuant to Section 2.4(e)(i) of the Loan Agreement (as amended hereby), and (c) payment of Bank’s legal fees and expenses in connection with the negotiation and preparation of this Amendment.
[Signature page follows.]
In Witness Whereof, the parties hereto have caused this Amendment to be duly executed and delivered as of the date first written above.
|BANK || ||BORROWER|
| || || |
|Silicon Valley Bank || ||Sensus Healthcare, Inc.|
| || || |
|By: ||/s/ Dan Greaney || ||By: ||/s/ Javier Rampolla|
|Name: ||Dan Greaney || ||Name: ||Javier Rampolla|
|Title: ||Vice President I, Life Sciences || ||Title: ||CFO|
[Signature Page to Sixth Amendment to
Second Amended and Restated Loan and Security Agreement]
|TO: ||SILICON VALLEY BANK ||Date: ________________|
|FROM: ||SENSUS HEALTHCARE, INC. || |
The undersigned authorized officer of SENSUS HEALTHCARE, INC. (“Borrower”) certifies that under the terms and conditions of the Second Amended and Restated Loan and Security Agreement between Borrower and Bank (the “Agreement”), (1) Borrower is in complete compliance for the period ending _______________ with all required covenants except as noted below, (2) there are no Events of Default, (3) all representations and warranties in the Agreement are true and correct in all material respects on this date except as noted below; provided, however, that such materiality qualifier shall not be applicable to any representations and warranties that already are qualified or modified by materiality in the text thereof; and provided, further that those representations and warranties expressly referring to a specific date shall be true, accurate and complete in all material respects as of such date, (4) Borrower, and each of its Subsidiaries, has timely filed all required tax returns and reports, and Borrower has timely paid all foreign, federal, state and local taxes, assessments, deposits and contributions owed by Borrower except as otherwise permitted pursuant to the terms of Section 5.9 of the Agreement, and (5) no Liens have been levied or claims made against Borrower or any of its Subsidiaries relating to unpaid employee payroll or benefits of which Borrower has not previously provided written notification to Bank. Attached are the required documents supporting the certification. The undersigned certifies that these are prepared in accordance with GAAP consistently applied from one period to the next except as explained in an accompanying letter or footnotes. The undersigned acknowledges that no borrowings may be requested at any time or date of determination that Borrower is not in compliance with any of the terms of the Agreement, and that compliance is determined not just at the date this certificate is delivered. Capitalized terms used but not otherwise defined herein shall have the meanings given them in the Agreement.
Please indicate compliance status by circling Yes/No under “Complies” column.
|Reporting Covenant|| ||Required|| ||Complies|
| || || || || |
|Monthly financial statements with Compliance Certificate|| ||Monthly within 30 days|| ||Yes No|
|Annual financial statement (CPA Audited) + CC|| ||FYE within 150 days|| ||Yes No|
|10-Q, 10-K and 8-K|| ||Monthly within 30 days|| ||Yes No|
|Borrowing Base Report|| ||Monthly within 30 days|| ||Yes No|
|A/R & A/P Agings, Deferred Revenue report|| ||Monthly within 30 days|| ||Yes No|
|Annual Financial Projections|| ||FYE within 30 days and as updated|| ||Yes No|
|Financial Covenant|| ||Required|| ||Actual|| ||Complies|
| || || || || || || |
|Maintain on a Monthly Basis:|| || || || || || |
|Minimum Adjusted Quick Ratio|| ||1.35:1.00|| ||____:1.00|| ||Yes No|
|Lockbox; Streamline Period; Non-Formula Availability|| ||Applies|
|AQR ≥ 2.00:1.00*|| ||No Lockbox Required; Streamline Period; Non-Formula = $3,000,000|| ||Yes No|
|2.00:1.00 > AQR ≥ 1.50:1.00*|| ||Lockbox Required; Streamline Period; Non-Formula = $3,000,000|| ||Yes No|
|AQR < 1.50:1.00|| ||Lockbox Required; Non-Streamline Period; Non-Formula = $0|| ||Yes No|
|*||At all times during the applicable Testing Month |
The following financial covenant analysis and information set forth in Schedule 1 attached hereto are true and accurate as of the date of this Certificate.
The following are the exceptions with respect to the certification above: (If no exceptions exist, state “No exceptions to note.”)
|Sensus Healthcare, Inc. || ||BANK USE ONLY|
| || || |
|By: || || ||Received by: || |
|Name: || || || ||AUTHORIZED SIGNER|
|Title: || || |
| || ||Date: || |
| || || |
| || ||Verified: || |
| || || ||AUTHORIZED SIGNER|
| || || || |
| || ||Date: || |
| || || || |
| || ||Compliance Status: Yes No|
Schedule 1 to Compliance Certificate
Financial Covenants of Borrower
In the event of a conflict between this Schedule and the Loan Agreement, the terms of the Loan Agreement shall govern.
|Required: ||1.35:1.00 (For financial covenants) |
| ||2.00:1.00 (For Lockbox to not be required) |
| ||1.50:1.00 (For Streamline Period eligibility (at all times during the applicable Testing Month) and Non-Formula availability)|
|A. ||Aggregate value of the unrestricted cash and Cash Equivalents of Borrower maintained with Bank ||$_________ |
| || || |
|B. ||Aggregate value of the net billed accounts receivable of Borrower ||$ _________ |
| || || |
|C. ||Quick Assets (the sum of lines A and B) ||$ _________ |
| || || |
|D. ||Aggregate value of Obligations to Bank ||$ _________ |
| || || |
|E. ||Aggregate value of liabilities that should, under GAAP, be classified as liabilities on Borrower’s consolidated balance sheet, including all Indebtedness and the current portion of Subordinated Debt, and not otherwise reflected in line D above that matures within one (1) year ||$ _________ |
| || || |
|F. ||Current Liabilities (the sum of lines D and E) ||$ _________ |
| || || |
|G. || |
Aggregate value of all amounts received or invoiced by Borrower in advance of performance under contracts and not yet recognized as revenue
|$ _________ |
| || || |
|H. ||Line F minus line G ||$ _________ |
| || || |
|I. ||Adjusted Quick Ratio (line C divided by line H) ||____:1.00 |
Is line I equal to or greater than 1.35:1.00?
|_______ No: Not in compliance || ||_______ Yes: In Compliance|
| || || |
|Has line I been equal to or greater than 2.00:1.00 at all times during the term of this Agreement?|
| || || |
|_______ No: Lockbox is required || |
_______ Yes: Lockbox is not required
| || || |
Was line I equal to or greater than 1.50:1.00 at all times during the applicable Testing Month?
| || || |
|_______ No: Non-Streamline Period; Non-Formula = $0 || ||_______ Yes: Streamline Period; Non-Formula = $3,000,000|