Exhibit 10.1

 

 

 

FIRST AMENDMENT TO LOAN DOCUMENTS

 

 

THIS FIRST AMENDMENT TO LOAN DOCUMENTS (the “Amendment”) is executed to be
effective as of the 27th day of May, 2015, by and between TD Bank, N.A., a
National Association (together with its successors and assigns, the “Lender”);
Span-America Medical Systems, Inc., a South Carolina corporation (the
“Borrower”) and Span Medical Products Canada Inc., a British Columbia
corporation (the “Guarantor”) (Borrower and Guarantor, each an “Obligor” and
collectively, the “Obligors”) (Lender and Obligors, each a “Party” and
collectively, the “Parties”).

 

PRELIMINARY STATEMENT

 

WHEREAS, Borrower and Lender have an existing credit relationship governed by,
among other things, that certain Loan Agreement dated June 5, 2007, as amended
and restated by that certain Amended and Restated Loan Agreement dated December
9, 2011 (together with any modifications, amendments, restatements or
replacements thereof, the “Loan Agreement”);

 

WHEREAS, said credit relationship presently includes a $10,000,000.00 revolving
line of credit loan evidenced by that certain Revolving Note dated June 5, 2007,
as amended and restated by that certain Amended and Restated Revolving Note
dated December 9, 2011 (together with any modifications, amendments,
restatements or replacements thereof, the “Note”) in the amount of up to the
Maximum Availability as defined in the Loan Agreement, all on the terms and
conditions as more particularly set forth in the Loan Agreement and other Loan
Documents (the “Loan”); and

 

WHEREAS, Borrower has requested and Lender is so willing, subject to the terms
and conditions of this Amendment and the other Loan Documents, to lower the
commitment amount and extend the maturity date of the Loan and modify certain
covenants in the Loan Agreement; among other agreements of the Parties as more
particularly provided herein.

 

STATEMENT OF AGREEMENT

 

NOW, THEREFORE, in consideration of the foregoing premises which are hereby
affirmed by each Obligor to be true and correct, the mutual agreements of the
Parties set forth herein, and other good and valuable consideration, the receipt
and sufficiency of which are hereby acknowledged, the Parties do covenant and
agree as follows:

 

1.     Definitions. Any capitalized terms used but not otherwise defined in this
Amendment shall have the meaning as set forth in the Loan Agreement, such
definitions being hereby incorporated by reference, and all references in the
Loan Documents to the “Loan Agreement”, and any other Loan Document modified,
amended or replaced hereby or concurrently herewith shall mean such Loan
Document, as modified, amended and/or replaced hereby or of even date herewith.

 

2.     Amendments to Loan Agreement. The Loan Agreement is hereby modified and
amended as follows:

 

(a)     Extension of Maturity Date. The definition of “Maturity Date” in Section
1.16 of the Loan Agreement is hereby deleted and replaced in its entirety with
the following new definition:

 

“Maturity Date” means April 30, 2018.

 

(b)     Lowering of Maximum Availability. The definition of “Maximum
Availability” in Section 1.17 of the Loan Agreement is hereby deleted and
replaced in its entirety with the following new definition:

 

“Maximum Availability” means Five Million and No/100 Dollars ($5,000,000.00).

 

(c)     Removal of Unused Commitment Fee. Section 2.4(b) of the Loan Agreement
entitled “Unused Commitment Fee” is hereby deleted in its entirety and replaced
with the following:

 

2.4(b) [Reserved].

 

 

 
 

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(d)     Removal of Negative Covenant. Section 4.2(k) of the Loan Agreement
captioned “Dividends” is hereby deleted in its entirety and replaced with the
following:

 

4.2(k) [Reserved].

 

(e)     Modification of Tangible Net Worth. Section 4.3(a) of the Loan Agreement
captioned “Tangible Net Worth” is hereby deleted in its entirety and replaced
with the following:

 

4.3(a) Tangible Net Worth. Tangible Net Worth of not less than the then
applicable Tangible Net Worth Threshold, tested annually using the financial
statements delivered pursuant to Section 4.1(c)(i). The “Tangible Net Worth
Threshold” shall initially be $17,850,000.00 for the 2015 reporting period, and
on the 120th day of each fiscal year of the Company thereafter during the term
of this Agreement, the Tangible Net Worth Threshold shall be increased by an
amount equal to one-half of the Company’s consolidated net income for the most
recently-completed full fiscal year reported in the Company’s fiscal year-end
audited financial statements required to be provided by the Company to the
Lender by clause (i) of Paragraph 4.1(c) of this Agreement.

 

3.     Continuing Enforceability of Loan Documents. The terms and conditions of
each Loan Document shall remain in full force and effect to the extent such
terms and conditions are not inconsistent with the modification and amendment of
such Loan Documents concurrently herewith and as otherwise provided in this
Amendment, and any such modification or amendment of the Loan Documents shall
not be construed as a novation, waiver or release of the repayment or
performance of any indebtedness, obligation or liability of either Obligor
arising under any Loan Document.

 

4.     Continuing Priority of Liens and Security Interests. Each Obligor
acknowledges and agrees that this Amendment, together with any transactions
contemplated herein or occurring contemporaneously herewith, shall not disturb
the existing priority of any Loan Document, or any lien or security interest in
favor of Lender granted or created thereunder, and any such Loan Document, lien
or security interest shall retain the same priority and effective date as
originally provided in any such Loan Document.

 

5.     Continuing Compliance with Loan Documents. Each Obligor does reaffirm,
represent, warrant, covenant and agree that: (a) each and every representation
and warranty in the Loan Agreement and any other Loan Document remains true and
correct as of the date hereof and since the effective date of such Loan
Document; (b) each Obligor is in compliance with every applicable covenant and
agreement set forth in the Loan Documents to the extent such covenants require
compliance on the date hereof; (c) all of the terms, provisions, covenants,
warranties and agreements contained in the Loan Agreement and all other Loan
Documents remain in full force and effect and the obligations of each Obligor
thereunder are hereby acknowledged, ratified and confirmed to be the valid and
binding obligations thereof; and (d) there exists no Event of Default, as
defined in the Loan Agreement, or any other default or breach under any other
Loan Document or other agreement executed by either Obligor in favor of Lender.

 

6.     Conditions Precedent. Each of the following constitutes a condition
precedent to Lender’s obligations and agreements hereunder:

 

(a)     Execution of Loan Documents. Each Obligor shall execute and deliver this
Amendment and all documents, instruments and agreements contemplated in this
Amendment or otherwise reasonably required by Lender to give full force and
effect to the terms and conditions of this Amendment and the Loan Documents;

 

(b)     Closing Fee. Borrower shall pay or cause to be paid to Lender a
commitment fee in the amount of Five Thousand and No/100 Dollars ($5,000.00);
and

 

(c)     Closing Costs and Fees. Borrower shall pay or cause to be paid to Lender
all other fees and costs associated with the preparation and closing of this
Amendment and otherwise due and payable by Borrower on or before the effective
date of this Amendment or arising hereafter, including, without limitation,
fees, costs and expenses as a result of the drafting, negotiation and
documentation of the transactions contemplated by this Amendment together with
any costs of any appraisals, real estate brokerage fees, title insurance,
environmental audits, recording costs, taxes and fees, and the fees of
Borrower’s own legal counsel; and

 

 

 
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(d)     Other Matters. Each Obligor shall attend to any other matters Lender may
reasonably require to be executed or performed by either Obligor or any
third-party as a condition precedent to Lender’s obligations hereunder or under
any other Loan Document.

 

7.     Miscellaneous. The Parties further covenant and agree as follows: (a)
Governing Law. This Amendment shall be governed by, and construed in accordance
with, the laws of the State of South Carolina except as superseded by applicable
U.S. federal law. (b) Time is of the Essence. Time is of the essence to this
Amendment. (c) Execution in Counterparts. This Amendment may be executed in a
number of identical counterparts which, taken together, shall constitute
collectively one (1) agreement, but in making proof of this Amendment, it shall
not be necessary to produce or account for more than one such counterpart
executed by the Party to be charged. (d) Headings and Construction. all
references to “Sections” shall mean, with respect to this Amendment, the
Arabic-numbered main paragraphs hereof, together with any subparagraphs or
subparts thereof, and the heading of any Section is for convenience of reference
only and shall not in any way affect the interpretation of this Amendment, and
every covenant, term and provision of this Amendment shall be construed simply
according to its fair meaning and not strictly for or against either Party. (e)
Usage. Terms such as “hereof”, “hereunder”, “hereto”, “herein”, and words of
similar import shall refer to this Amendment in its entirety and all references
shall refer to specified portions of this Amendment, unless the context clearly
requires otherwise. (f) Further Assurances. Each Obligor agrees that each will
at any time after the date of this Amendment make, execute, deliver, or cause to
be delivered any and all additional documents or instruments reasonably
necessary to effectuate the transactions contemplated by this Amendment. (g)
Final Agreement. This Amendment represents the final agreement among the Parties
with respect to the subject matter hereof and may not be contradicted by
evidence of prior oral or written, contemporaneous, or subsequent oral
agreements among the Parties, and there are no unwritten oral agreements among
the Parties. (h) Survival. All representations, warranties, covenants and
agreements of each Obligor set forth in this Amendment shall survive the
execution of this Amendment, and all indemnity and other reimbursement
obligations of either Obligor under this Amendment and any other Loan Document
shall survive the termination of such Loan Document. (i) Severability. The
invalidity of any one or more of the terms, conditions or provisions of this
Amendment shall in no way affect the balance hereof which shall remain in full
force and effect. (j) Schedules and Exhibits. Schedules, exhibits, attachments,
addendums and riders attached to this Amendment, if any, are hereby incorporated
into this Amendment as if set forth verbatim.

 

[SIGNATURE PAGE ATTACHED]

 

 

 
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IN WITNESS WHEREOF, the undersigned have executed this First Amendment to Loan
Documents under seal to be effective as of the date first above written:

 

LENDER:

BORROWER:

 

 

 TD BANK, N.A. (SEAL)  

SPAN-AMERICA MEDICAL SYSTEMS, INC. (SEAL)

 

 

 

 

/s/ Michael B. Cooper                              /s/ Richard C.
Coggins                                      

Michael B. Cooper, Vice President    

Richard C. Coggins, Chief Financial Officer

 

 

 

REAFFIRMATION OF CONTINUING GUARANTY. In addition to Guarantor’s covenants and
agreements as set forth in this Amendment and the other Loan Documents,
Guarantor does further: (i) acknowledge and reaffirm its unconditional and
unlimited guarantee of the repayment and performance of all Obligations as set
forth in the Unlimited Guaranty Agreement dated December 9, 2011; and (ii)
acknowledge and agree that such guarantee shall continue to extend to all loans
and other obligations and performance owing from Borrower to Lender, whether now
existing or hereafter arising, including, without limitation, obligations and
indebtedness arising under this Amendment, the Loan, the Note, and any other
Loan Document, whether now or in the future.

 

 

 

GUARANTOR:

 

SPAN MEDICAL PRODUCTS CANADA INC. (SEAL)

 

 

 /s/ James D. Ferguson                                                        

James D. Ferguson, President/Chief Executive Officer

 

 

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