Assumption Agreement and First Amendment to Loan And Security Agreement
Exhibit 10.4
Assumption Agreement and First Amendment
to
THIS ASSUMPTION AGREEMENT AND FIRST AMENDMENT to Loan and Security Agreement (this “Amendment”) is
entered into as of February 25, 2009, by and between SILICON VALLEY BANK (“Bank”), CARDIOVASCULAR
SYSTEMS, INC. (formerly known as Replidyne, Inc.), a Delaware corporation, for itself and as
successor to Existing Borrower (“Successor Borrower”), whose address is ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇
▇▇▇▇, ▇▇ ▇▇▇▇▇, and CSI MINNESOTA, INC. (formerly known as Cardiovascular Systems, Inc.), a
Minnesota corporation (“Existing Borrower”), whose address is ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇
▇▇▇▇▇. (Successor Borrower and Existing Borrower are referred to herein, jointly and severally, as
“Borrower”.)
Recitals
A. Bank and Existing Borrower have entered into that certain Loan and Security Agreement dated
September 12, 2008 (as the same may from time to time be amended, modified, supplemented or
restated in writing, the “Loan Agreement”).
B. Bank has extended credit to Existing Borrower for the purposes permitted in the Loan
Agreement.
C. Existing Borrower and Successor Borrower have advised Bank that Existing Borrower shall
merge into Successor Borrower, with Successor Borrower being the surviving corporation (the
“Merger”).
D. Existing Borrower and Successor Borrower have requested that the Loan Agreement and other
Loan Documents be amended and supplemented in order to allow Successor Borrower to become the
borrower under the Loan Agreement and other Loan Documents.
E. Bank has agreed to so amend and supplement the Loan Agreement and other Loan Documents, but
only to the extent, in accordance with the terms, subject to the conditions and in reliance upon
the representations, warranties and agreements 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 shall have the meanings
given to them in the Loan Agreement.
2. Assumption. Effective immediately upon the Merger, Successor Borrower, without any further
action, hereby assumes and agrees to perform for the benefit of Bank all of the “Obligations” (as
defined in the Loan Agreement) of Existing Borrower, and Successor Borrower agrees to honor,
perform and in all respects comply with all terms and provisions of all of the Loan Documents
(including, without limitation, the Loan Agreement and the Term Loan B Promissory Notes) to the
same extent as though Successor Borrower were named therein jointly and severally with Existing
Borrower. Effective immediately upon the Merger, all references in the Loan Agreement to
“Collateral” and “Obligations” shall be deemed to refer to all present and future Collateral and
Obligations (as therein defined) of Successor Borrower as well as Existing Borrower, and all
references in the Loan Documents to “Borrower” shall be deemed to refer to Successor Borrower for
itself and as successor to Existing Borrower. For example and without limitation on the generality
of the foregoing, (i) the term “Loan Documents” as defined in the Loan Agreement shall include
agreements executed by Existing Borrower prior to the Merger as well as agreements executed by
Successor Borrower, and (ii) Section 5.11 of the Loan Agreement which reads as follows:
No written representation, warranty or other statement of Borrower
in any certificate or written statement given to Bank, as of the
date such representation, warranty, or other statement was made,
taken together with all such written certificates and written
statements given to Bank, contains any untrue statement of a
material fact or omits to state a material fact necessary to make
the statements contained in the certificates or statements not
misleading (it being recognized by Bank that the projections and
forecasts provided by Borrower in good faith and based upon
reasonable assumptions are not viewed as facts and that actual
results during the period or periods covered by such projections
and forecasts may differ from the projected or forecasted
results).
shall apply to such representations, warranties or other statements whether given by Successor
Borrower upon or after the Merger or by Existing Borrower or Cardiovascular Systems, Inc. (fka
Replidyne, Inc.) prior to the Merger.
3. No Offset or Counterclaim. Existing Borrower and Successor Borrower acknowledge that the
Obligations are owing to Bank from Existing Borrower and, effective immediately upon the Merger,
will be owing from Successor Borrower, without any defense, offset or counterclaim of any kind or
nature whatsoever.
4. Grant of Security Interest. Without limiting the generality of the provisions of Section 2
above, effective immediately upon the Merger, as security for all Obligations, Successor Borrower
grants to Bank a continuing security interest in, and pledges to Bank, all of the following,
whether now owned or hereafter acquired, and wherever located: All of the “Collateral” (as defined
in the Loan Agreement) of Successor Borrower. Effective
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immediately upon the Merger, all references in the Loan Agreement to Collateral shall be deemed to
refer to the Collateral of each of Existing Borrower and Successor Borrower.
5. Merger Consent. Reference is made to the Consent Regarding RMS Merger, dated February 25, 2009,
entered into between Bank and Existing Borrower. Borrowers hereby confirm and agree to perform the
covenants and conditions agreed to by Existing Borrower pursuant to such Consent.
6. Financial and Merger-Related Representations and Warranties. Borrowers represent and warrant
that the financial statements and reports of Cardiovascular Systems, Inc. (fka Replidyne, Inc.)
delivered to Bank and/or filed with the Securities and Exchange Commission fairly present in all
material respects the financial condition and results of operations of Cardiovascular Systems, Inc.
(fka Replidyne, Inc.). Borrowers represent and warrant that there has not been any deterioration
in the financial condition of Cardiovascular Systems, Inc. (fka Replidyne, Inc.) that is not
reflected in such financial statements and reports. Borrowers represent and warrant that they have
delivered to Bank true and complete copies of the Agreement and Plan of Merger and Reorganization
dated November 3, 2008, among Responder Merger Sub, Inc. (“Merger Sub”), Successor Borrower and
Existing Borrower (the “Merger Agreement”), the “Company Disclosure Schedule” (as defined in the
Merger Agreement), and the “Replidyne Disclosure Schedule” (as defined in the Merger Agreement),
and all amendments, supplements and updates thereto. The representations and warranties of Merger
Sub, Successor Borrower and Existing Borrower contained in the Merger Agreement, Company Disclosure
Schedule, and Replidyne Disclosure Schedule, shall be deemed made to Bank and shall survive the
“Effective Date” as defined in the Merger Agreement, and continue in favor of Bank, notwithstanding
Section 10.1 of the Merger Agreement, or anything else to the contrary.
7. Modifications and Clarifications Regarding Loan Documents.
7.1 Delay in Availability. Notwithstanding Section 2.1.1(a) of the Loan Agreement or any
other provision of the Loan Documents, Bank shall have no obligation to make any Advances or allow
the use of the Revolving Line for Cash Management Services (except for Cash Management Services of
up to $200,000 for business credit card purposes), until Bank has received a search from the
Delaware Secretary of State confirming the filing and priority of Bank’s UCC financing statement
against Successor Borrower.
7.2 Insurance. To the extent that Section 6.7 of the Loan Agreement requires any advance
notice to Bank of Borrower’s insurance being changed to recognize the change of identity from
Existing Borrower to Successor Borrower, such advance notice is hereby waived.
7.3 Collateral Accounts. Reference is made to Section 6.8(a) of the Loan Agreement which
reads as follows:
(a) Maintain all of its and all of its Subsidiaries’ operating and other
deposit accounts, securities accounts, and any other
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accounts at which Borrower or its Subsidiaries maintain funds or
investments (including without limitation any Collateral Accounts, but
excluding the Auction Rate Securities (UBS)) with Bank and Bank’s
Affiliates.
Notwithstanding anything to the contrary in Section 6.8 of the Loan Agreement, Successor
Borrower shall have until 30 days following the date of the Merger to close any of its
accounts that are not allowed to be maintained other than with Bank and Bank’s Affiliates
in accordance with Section 6.8(a) of the Loan Agreement, and during such period Borrower
shall not be required to provide Control Agreements with respect to such accounts.
7.4 Changes in Ownership. Section 7.2(c) of the Loan Agreement reads as follows:
(c) permit a change in the record or beneficial ownership of an aggregate
of more than 20% of the outstanding shares of stock of Borrower, in one or
more transactions, compared to the ownership of outstanding shares of
stock of Borrower in effect on the date hereof (other than by the sale of
Borrower’s equity securities in a public offering or to private equity
investors so long as Borrower identifies to Bank the private equity
investors prior to the closing of the transaction); or
Effective immediately upon the Merger, said Section 7.2(c) is hereby amended to read as follows:
(c) permit or suffer any Change in Control; or
7.5 Assumption Agreement. The following definition is hereby added to Section 13.1 of the
Loan Agreement in the appropriate alphabetical order:
“Assumption Agreement” is that certain Assumption Agreement and First
Amendment to Loan and Security Agreement, dated February 25, 2009, among
Bank, Cardiovascular Systems, Inc. (fka Replidyne, Inc.), and CSI
Minnesota (fka Cardiovascular Systems, Inc.).
7.6 Change in Control. The following definition is hereby added to Section 13.1 of the Loan
Agreement in the appropriate alphabetical order:
“Change in Control” means any event, transaction, or occurrence as a
result of which any “person” (as such term is defined in Sections 3(a)(9)
and 13(d)(3) of the Securities Exchange Act of 1934, as an amended (the
“Exchange Act”)), other than a trustee or other fiduciary holding
securities under an employee benefit plan of Borrower, is or becomes a
beneficial owner (within the meaning Rule 13d-3 promulgated under the
Exchange Act), directly or indirectly, of securities of Borrower,
representing
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twenty percent (20%) or more of the combined voting power of Borrower’s
then outstanding securities.
7.7 Designated Deposit Account. The definition of “Designated Deposit Account” contained in
Section 13.1 of the Loan Agreement reads as follows:
“Designated Deposit Account” is Borrower’s deposit account, account number
,
maintained with Bank.
Borrower and Bank acknowledge and agree that, following the Merger, Bank intends to have a
new Designated Deposit Account opened with respect to Successor Borrower because Existing
Borrower, for which the above-referenced Designated Deposit Account was opened, will have
merged into Successor Borrower. Borrower will cooperate with the opening of such new
Designated Deposit Account.
7.8 Initial Projections. For purposes of clarity, Bank and Borrower acknowledge and agree that
the “Initial Projections” as defined in Section 13.1 of the Loan Agreement shall continue to be the
projections provided by Existing Borrower for purposes of entering into the Loan Agreement.
7.9 Perfection Certificate. The definition of “Perfection Certificate” contained in Section
13.1 of the Loan Agreement reads as follows:
“Perfection Certificate” is defined in Section 5.1.
Effective immediately upon the Merger, said definition is amended to read as
follows:
“Perfection Certificate” is defined in Section 5.1 provided that
“Perfection Certificate” shall, (a) with reference to “Existing
Borrower” (as defined in the Assumption Agreement) prior to the
Merger, mean the Perfection Certificate delivered by Existing
Borrower, dated September 12, 2008, (b) with reference to
“Successor Borrower” (as defined in the Assumption Agreement)
prior to the Merger, mean the pre-Merger Perfection Certificate
delivered by Successor Borrower, dated February 25, 2009, and (c)
with reference to the “Borrower” (as defined in the Assumption
Agreement) upon and after the Merger, mean the post-Merger
Perfection Certificate delivered by Successor Borrower, dated
February 25, 2009.
8. Limitation of Amendments.
8.1 The consents and amendments set forth in this Amendment 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
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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.
8.2 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.
9. Representations and Warranties. To induce Bank to enter into this Amendment, Borrower hereby
represents, warrants and agrees as follows:
9.1 Immediately after giving effect to this Amendment and immediately after giving effect to
the Merger (a) the representations and warranties contained in the Loan Documents are true,
accurate and complete in all material respects as of the date hereof and as of the date of the
Merger (except to the extent such representations and warranties relate to an earlier date, in
which case they are true and correct in all material respects as of such date), and (b) no Event of
Default has occurred and is continuing;
9.2 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;
9.3 The organizational documents of Successor Borrower previously delivered to Bank (including
the amendment referenced in the Merger Consent) remain true, accurate and complete and have not
been amended, supplemented or restated and are and continue to be in full force and effect;
9.4 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;
9.5 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;
9.6 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
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9.7 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.
10. Expenses. Without limitation on the terms of the Loan Documents, Borrower agrees to reimburse
Bank for all its reasonable costs and expenses (including reasonable attorneys’ fees) incurred in
connection with this Amendment. Bank is authorized to charge said fees, costs and expenses to
Borrower’s loan account or any of Borrower’s deposit accounts maintained with Bank.
11. 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.
[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.
| SILICON VALLEY BANK | CARDIOVASCULAR SYSTEMS, INC. | |||||||||||||
| (fka Replidyne, Inc.) | ||||||||||||||
| By: | /s/ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ | By: | /s/ ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ | |||||||||||
| Name: | ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ | Name | ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ | |||||||||||
| Title: | Deal Team Leader | Title: | Chief Financial Officer | |||||||||||
| CSI MINNESOTA, INC. | ||||||||||||||
| (fka Cardiovascular Systems, Inc.) | ||||||||||||||
| By: | /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇ | |||||||||||||
| Name: | ▇▇▇▇▇ ▇. ▇▇▇▇▇▇ | |||||||||||||
| Title: | Chief Executive Officer | |||||||||||||
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