Consent
Regarding
Loan and Security
Agreement
THIS
CONSENT Regarding Loan and Security Agreement (this
“Consent”) is entered into as of June 19, 2009, by and
between SILICON VALLEY BANK (“Bank”), on the one
side, and
EV3
ENDOVASCULAR, INC. , a Delaware corporation,
EV3
INTERNATIONAL, INC. , a Delaware corporation,
MICRO
THERAPEUTICS, INC. , a Delaware corporation, and
FOXHOLLOW
TECHNOLOGIES, INC. , a Delaware corporation
(collectively
and jointly and severally referred to as “ Borrowers
”), whose address is c/o ev3 Inc., 9600 54
th Avenue North, Plymouth, MN 55442, on the other
side.
A.
Bank and Borrowers have entered into that certain Loan and Security
Agreement dated as of an Effective Date of June 28, 2006 (as
the same may from time to time be further amended, modified,
supplemented or restated, the “Loan Agreement”). The
Obligations of the Borrowers have been guarantied by, among others,
the following companies, in favor of Bank: ev3 Inc., a Delaware
corporation; Micro Therapeutics International, Inc., a Delaware
corporation; and ev3 Peripheral, Inc., a Minnesota corporation
(collectively, the “Guarantors”).
B.
Bank has extended credit to Borrowers for the purposes permitted in
the Loan Agreement.
C.
Borrowers have requested that Bank (i) consent to the Chestnut
Merger (as defined below), and (ii) make certain other
revisions to the Loan Agreement, all as more fully set forth
herein.
D.
Bank has agreed to provide a consent and 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 Consent shall have the meanings given to them in the Loan
Agreement.
2. Consent to Merger. Borrowers have advised Bank that
(a) Parent has entered into an agreement and plan of merger
whereby Starsky Merger Sub, Inc., a California corporation and a
direct wholly owned subsidiary of Parent, will merge with and into
Chestnut Medical Technologies, Inc., a California corporation
(“Chestnut Medical”), with Chestnut Medical being the
surviving corporation, and, immediately subsequent to such merger,
Chestnut Medical will merge with and into Starsky Acquisition Sub,
Inc., a California corporation and a direct wholly owned subsidiary
of Parent (“Merger Subsidiary”), with Merger Subsidiary
being the surviving corporation (such mergers being collectively
referred to as the “Chestnut Mergers”), and
(b) the total consideration for the acquisition of Chestnut
Medical by virtue of the Chestnut Mergers shall be a maximum of
$150,000,000 to be structured as follows:
An amount equal
to $75,000,000 will be payable by Parent at closing of the Chestnut
Mergers, with 50% to be paid in cash and the remaining amount in
Parent stock; and
Upon receiving
a FDA pre-market approval letter (“PMA letter”) for
securing an indication to treat intracranial aneurysms and to
commercialize the Chestnut Medical Pipeline device in the United
States, a second payment by Parent will be structured as follows:
$75,000,000 (split 50/50 between cash and Parent stock) provided
that (y) if the PMA letter is not received by October 1,
2011, the $75,000,000 payment will decrease by $3,750,000 per month
and will decrease to zero if the PMA letter is not received by
December 31, 2012, and (z) if the following conditions
are not satisfied, Parent will be able to defer up to $30,000,000
of the cash portion of the payment for 12 months:
(A) Parent has a minimum cash balance of $75,000,000 at the
time the PMA letter is received, (B) making the payment would not
result in an Event of Default under the Loan Documents, and
(C) the payment would not be viewed as materially adverse to
the business.
Parent and
Borrowers have requested that, in accordance with Sections 7.3
and 7.7(a) of the Loan Agreement, Bank consent to the Chestnut
Mergers, and, in reliance on the representations, warranties and
covenants contained herein, Bank hereby consents to the Chestnut
Mergers, upon the conditions that (which conditions Borrowers agree
to satisfy) (i) concurrently herewith Merger Subsidiary shall
grant to Bank a security interest in all of its
“Collateral” (defined herein as defined in the Loan
Agreement except that references in such definition to Borrower
shall instead be to Merger Subsidiary) to secure all of the
Obligations pursuant to a writing acceptable to Bank,
(ii) immediately after the consummation of the Chestnut
Mergers, Bank shall have a first-priority, perfected, security
interest in all of the Collateral of Merger Subsidiary, and such
Collateral shall be subject to no security interests or Liens other
than Permitted Liens, and (iii) the Chestnut Mergers are
consummated on or before July 31, 2009. This consent does not
constitute a waiver of any of the other terms or provisions of the
Loan Agreement, or any other Loan Documents, or any other
agreement, document or instrument providing rights in favor
of
2
Bank, nor does
it constitute a consent to any other transaction or event, whether
or not similar to the foregoing, and whether or not related to any
of the transactions or events referred to herein. For purposes of
clarity and without limitation on the generality of the foregoing
limitations on Bank’s consent, Borrowers acknowledge that
Bank is not consenting to any breach of any financial covenant that
may be contained in the Loan Documents that may result from the
Chestnut Mergers.
3. New
Guarantor. Borrowers agree to cause the following to occur
within 30 days of the consummation of the Chestnut
Mergers:
a. Merger Subsidiary shall become a Guarantor of the
Obligations by executing a continuing guaranty in favor of Bank,
and shall execute a security agreement in favor of Bank, in each
case in the same form and substance as has been executed by the
other Guarantors.
b. Merger Subsidiary, Borrowers and Guarantors shall execute
such documents, and take such actions, as Bank shall reasonably
request, in order that the agreements and other documentation that
effectuates Merger Subsidiary becoming a secured Guarantor shall be
the same as that for the other Guarantors.
c. Merger Subsidiary’s organizational documents shall
not prohibit or limit Merger Subsidiary becoming a Guarantor or
providing the security interest contemplated herein.
4. Further Mergers of Merger Subsidiary.
4.1 Section 7.3 (Mergers or Acquisitions).
Notwithstanding and without limitation upon Section 7.3 of the
Loan Agreement, after the consummation of the Chestnut Mergers,
Merger Subsidiary shall not merge into any Borrower or Secured
Guarantor unless Bank has consented in writing.
5. Limitation on Consent and Amendments
5.1 The consents and amendments set forth herein 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 other transaction or 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.
5.2 This Consent 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, shall remain in full force and effect, and are
incorporated herein by reference.
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6. Representations and Warranties. To induce Bank to
enter into this Consent, each Borrower hereby represents and
warrants to Bank as follows:
6.1 Immediately after giving effect to this Consent
(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;
6.2 Borrower has the power and authority to execute and
deliver this Consent and to perform its obligations under the Loan
Agreement, as amended or supplemented by this Consent;
6.3 The organizational documents of Borrower previously
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 except for the amendment to Parent’s
Amended and Restated Certificate of Incorporation filed with the
SEC as an exhibit to Form 8-K on July 23, 2007, a copy of
which has been provided to Bank marked to show the differences from
the certificate of incorporation of Parent that was in effect as of
June 21, 2005;
6.4 The execution and delivery by Borrower of this Consent
and the
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