EXHIBIT 10.1

 

THIRD Amendment to Loan and security agreement

THIS THIRD AMENDMENT TO LOAN AND SECURITY AGREEMENT (this “Amendment”) is
entered into this 30th day of January, 2014 (“Closing Date”), by and between
SILICON VALLEY BANK, a California corporation (“Bank”) and UROLOGIX, INC., a
Minnesota corporation (“Borrower”).

Recitals

A.                  Bank and Borrower have entered into that certain Loan and
Security Agreement dated as of January 11, 2012 (as the same 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 extend the Revolving Line
Maturity Date and make certain other revisions to the Loan Agreement as more
fully set forth herein.

D.                  Although Bank is under no obligation to do so, Bank is
willing to extend the Revolving Line Maturity Date and make certain other
revisions to 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.

Agreement

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, including its preamble and recitals, 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) of the Loan Agreement is hereby amended by deleting it in its
entirety and replacing it with the following:

(a)                 Advances. Subject to Section 2.3(b), the principal amount
outstanding under the Revolving Line shall accrue interest at a floating per
annum rate equal to either the (i) Prime Rate, plus three and one quarter of one
percent (3.25%) at all times that Borrower’s Adjusted Quick Ratio is greater
than 1.50 to 1.00 or (ii) Prime Rate, plus four and one quarter of one percent
(4.25%) at all other times, which interest shall be payable monthly in
accordance with Section 2.3(f) below. The interest rate shall be adjusted based
upon Borrower’s Adjusted Quick Ratio as reported in each monthly Compliance
Certificate as of the first (1st) calendar day of the first (1st) month
immediately following such change. If Borrower fails to deliver a Compliance
Certificate for any month, the Applicable Rate for the following month (as of
the first (1st) calendar day of such month) shall be equal to a floating per
annum rate equal to the Prime Rate plus four and one quarter of percent (4.25%).

 

 

 

2.2                Section 2.4 (Fees). Section 2.4(b) of the Loan Agreement is
hereby amended by deleting it in its entirety and replacing it with the
following:

(b)                 [Reserved];

2.3                Section 2.4 (Fees). Section 2.4(d) of the Loan Agreement is
hereby amended by deleting it in its entirety and replacing it with the
following:

(d)                 Collateral Monitoring Fee. At all times that there shall
exist any outstanding Obligations under the Revolving Line, a monthly collateral
monitoring fee of Seven Hundred Fifty Dollars ($750) and at all other times,
such fee shall be Zero Dollars ($0) (the “Collateral Monitoring Fee”), payable
in arrears on the last day of each month (prorated for any partial month at the
beginning and upon termination of this Agreement).

2.4                Section 2.4 (Fees). Section 2.4 of the Loan Agreement is
hereby amended by adding Section 2.4(g) in its entirety to the Loan Agreement
immediately after Section 2.4(f) of the Loan Agreement as follows:

(g)                 Renewal Commitment Fee. A fully earned, non-refundable
renewal commitment fee of Six Thousand Two Hundred Fifty Dollars ($6,250) (the
“Renewal Commitment Fee”) which shall be paid to Bank on January 30, 2014.

2.5                Section 6.2 (Financial Statements, Reports, Certificates).
Section 6.2(a) of the Loan Agreement is hereby amended by deleting it in its
entirety and replacing it with the following:

(a)                 a Transaction Report (including sales, credit memos,
collections journals, other Collateral adjustments, and any schedules related
thereto) on a weekly basis;

2.6                Section 6.2 (Financial Statements, Reports, Certificates).
Section 6.2 of the Loan Agreement is hereby amended by adding Section 6.2(l) in
its entirety to the Loan Agreement immediately after Section 6.2(k) of the Loan
Agreement as follows:

(l)                 immediate written notice of any demand for a royalty payment
and/or annual license payment from Medtronic.

2.7                Section 6.3 (Accounts Receivable). Section 6.3(c) of the Loan
Agreement is hereby amended by deleting it in its entirety and replacing it with
the following:

(c)                 Collection of Accounts. Borrower shall have the right to
collect all Accounts, unless and until an Event of Default has occurred and is
continuing. Bank shall require that all proceeds of Accounts be deposited by
Borrower into a lockbox account, or such other “blocked account” as specified by
Bank, pursuant to a blocked account agreement in such form as Bank may specify
in its good faith business judgment. Whether or not an Event of Default has
occurred and is continuing, Borrower shall immediately deliver all payments on
and proceeds of Accounts to an account maintained with Bank to be applied (i)
prior to an Event of Default, pursuant to the terms of Section 2.5(b) hereof,
and (ii) after the occurrence and during the continuance of an Event of Default,
pursuant to the terms of Section 9.4 hereof.

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2.8                Section 6.9 (Financial Covenants). Section 6.9 of the Loan
Agreement is hereby amended by deleting it in its entirety and replacing it with
the following:

6.9                Financial Covenants.

 

Maintain at all times, to be tested as of the last day of each month, on a
consolidated basis with respect to Borrower and its Subsidiaries:

(a)                 Minimum Liquidity. Liquidity of at least four (4) months
Cash Burn.

2.9                Section 8 (Events of Default). Section 8 of the Loan
Agreement is hereby amended by adding Section 8.10 in its entirety to the Loan
Agreement immediately after Section 8.9 of the Loan Agreement as follows:

8.10                Medtronic Royalty Payments. (a) Borrower makes any royalty
payment and/or annual license payment to Medtronic (the “Medtronic Royalty
Payment”), (b) Medtronic threatens orally or in writing to take any action,
exercise any remedy, or enforce any right it may have against Borrower to
collect any portion of the Medtronic Royalty Payment, or (c) Medtronic commences
any action or proceeding against Borrower with respect to the Medtronic Royalty
Payment, provided, however, that an Event of Default under this Section 8.10
shall be cured for purposes of this Agreement upon Borrower receiving, within
thirty (30) days of the occurrence of the Event of Default under this Section
8.10, Net Proceeds from a new round of Financing with investors satisfactory to
Bank in its sole discretion of at least Seven Hundred Fifteen Thousand Dollars
($715,000) (the “Cure Equity Raise”), if at the time of such Cure Equity Raise
Bank has not declared an Event of Default under this Agreement and/or exercised
any rights with respect thereto. Upon the occurrence of an Event of Default
under this Section 8.10, no additional Credit Extensions shall be available to
Borrower under the Revolving Line.

2.10            Section 12.1 (Termination Prior to Revolving Line Maturity
Date). Section 12.1 of the Loan Agreement is hereby amended by deleting it in
its entirety and replacing it with the following:

12.1                 Termination Prior to Revolving Line Maturity Date.

This Agreement may be terminated prior to the Revolving Line Maturity Date by
Borrower, effective three (3) Business Days after written notice of termination
is given to Bank. Notwithstanding any such termination, Bank’s lien and security
interest in the Collateral shall continue until Borrower fully satisfies its
Obligations.

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2.11            Section 13 (Definitions).

(a)                 The definition of “Revolving Line Maturity Date” set forth
in Section 13.1 of the Loan Agreement is hereby amended by deleting it in its
entirety and replacing it with the following:

“Revolving Line Maturity Date” is June 30, 2014.

(b)                 The following terms and their respective definitions are
hereby added in alphabetical order to Section 13.1 of the Loan Agreement as
follows:

“Adjusted Quick Ratio” means, as of the date of determination, a ratio of Quick
Assets to Current Liabilities.

“Cash Burn” means Borrower’s average monthly Net Income for the trailing three
(3) month period then ended, plus (i) to the extent deducted in the calculation
of Net Income, depreciation expense and amortization expense, plus (ii) all
non-cash expenses, minus (iii) all non-cash gains.

“Current Liabilities” are all obligations and liabilities of Borrower to Bank,
plus, without duplication, the aggregate amount of Borrower’s Total Liabilities
that mature within one (1) year.

“Financing” means a bona fide round of private or public equity financing or
Subordinated Debt of Borrower with investors satisfactory to Bank in its sole
discretion, on terms acceptable to Bank.

“Liquidity” means the sum of (a) Borrower’s unrestricted cash maintained at
Bank, plus fifty percent (50%) of (b) an amount equal to (i) the Revolving Line
multiplied by the Borrowing Base, minus (ii) the outstanding principal balance
of any Advances.

“Medtronic” means Medtronic, Inc., a Minnesota corporation.

“Net Proceeds” means the gross proceeds received by Borrower from any bona-fide
issuances of new equity, less reasonable and customary closing costs (including,
but not limited to, reasonable attorneys’ fees, brokers’ fees or commissions,
investment bankers’ fees or commissions and similar items) owed to any Person in
an arm’s length transaction that are actually incurred in connection with such
bona-fide issuances of new equity.

“Quick Assets” is, on any date, Borrower’s consolidated, unrestricted cash and
Cash Equivalents, net billed accounts receivable and investments with maturities
of fewer than 12 months determined according to GAAP.

“Total Liabilities” is on any day, obligations that should, under GAAP, be
classified as liabilities on Borrower’s consolidated balance sheet, including
all Indebtedness, but excluding all Subordinated Debt.

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3.                   Compliance Certificate. From and after the Closing Date,
Exhibit D of the Loan Agreement is replaced in its entirety with Exhibit D
attached hereto and all references in the Loan Agreement to the Compliance
Certificate shall be deemed to refer to Exhibit D attached hereto.

4.                   Limitation of Amendments.

4.1                The amendments set forth in Sections 2 and 3, are effective
for the purposes set forth herein and shall be limited precisely as written and
shall not be deemed to be a consent to any amendment, waiver or modification of
any other term or condition of any Loan Document, or  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.

4.2                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.

4.3                In addition to those Events of Default specifically
enumerated in the Loan Documents, the failure to comply with the terms of any
covenant or agreement contained herein shall constitute an Event of Default and
shall entitle the Bank to exercise all rights and remedies provided to the Bank
under the terms of any of the other Loan Documents as a result of the occurrence
of the same.

5.                   Representations and Warranties. To induce Bank to enter
into this Amendment, Borrower hereby represents and warrants to Bank as follows:

5.1                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;

5.2                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;

5.3                The organizational documents of Borrower delivered to Bank on
the Effective Date remain true, accurate and complete and have not been amended,
supplemented or restated and are and continue to be in full force and effect;

5.4                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;

5.5                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  any law or regulation
binding on or affecting Borrower,  any contractual restriction with a Person
binding on Borrower,  any order, judgment or decree of any court or other
governmental or public body or authority, or subdivision thereof, binding on
Borrower, or  the organizational documents of Borrower;

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5.6                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

5.7                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.

6.                   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.

7.                   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.

8.                   Effectiveness. This Amendment shall be deemed effective
upon  the due execution and delivery to Bank of this Amendment by each party
hereto, Borrower’s payment of a renewal fee to Bank in an amount equal to Six
Thousand Two Hundred Fifty Dollars ($6,250), and   payment of Bank’s legal fees
and expenses in connection with the negotiation and preparation of this
Amendment.

[Signature page follows.]

 

 

 

 

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In Witness Whereof, the parties hereto have caused this Amendment to be duly
executed and delivered as of the date first written above.

BANK     SILICON VALLEY BANK         By: /s/ Eric Jacobson   Name:  Eric
Jacobson
Title:  Director         BORROWER:     UROLOGIX, INC.         By: /s/ Brian J.
Smrdel   Name:  Brian J. Smrdel
Title:  Chief Financial Officer

 

 

 

 

 

 

 

 

 

 

 

EXHIBIT D

 

COMPLIANCE CERTIFICATE

 

TO: SILICON VALLEY BANK Date:   FROM:   Urologix, Inc.    

 

The undersigned authorized officer of Urologix, Inc. (“Borrower”) certifies that
under the terms and conditions of the 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) FYE within 120 days Yes   No Board Projections FYE
within 30 days Yes   No A/R & A/P Agings Monthly within 30 days Yes   No
Transaction Report Weekly Yes   No Deferred Revenue Reports Monthly within 30
days Yes   No  

 

 

 

 

Financial Covenants Required Actual Complies         Maintain on a Monthly
Basis:          Minimum Liquidity of at least 4 months Cash Burn $________
Yes   No

 

Performance Pricing Applies       Adjusted Quick Ratio > 1.50 to 1.00 Prime +
3.25% Yes   No Adjusted Quick Ratio ≤ 1.50 to 1.00 Prime + 4.25% Yes   No

 

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.”)

 

 

 

UROLOGIX, Inc   BANK USE ONLY                     Received by:     By:      
authorized signer     Name:   Date:       Title:   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.

 

Dated: __________________________

 

I.      Minimum Liquidity (Section 6.9(a))

 

Required:      Liquidity of at least four (4) months Cash Burn.

 

Actual:

 

A. Borrower’s unrestricted cash at Bank $______ B. Revolving Line multiplied by
the Borrowing Base $______ C. Outstanding principal balance of any Advances

$______

D. Availability (line B minus line C) $______ E. Liquidity (sum of line A plus
line D) $______ F Average Monthly Net Income of Borrower (on a trailing 3-month
basis) $______ G. Amortization of Borrower $______ H. Depreciation of Borrower
$______ I. Non-cash expenses of Borrower $______ J. Non-cash gains $______ K.
Cash Burn (line F plus, line G plus, line H plus, line I, minus line J) $______
L Four (4) months Cash Burn (line K multiplied by 4) $______

 

Is line E equal to or greater than line K?

 

_________  No, not in compliance                  _________  Yes, in compliance