Second Amendment to Loan And Security Agreement
Exhibit 99.1
THIS SECOND AMENDMENT to Loan and Security Agreement (this “Amendment”) is entered into as of April
30, 2009, by and between SILICON VALLEY BANK (“Bank”), CARDIOVASCULAR SYSTEMS, INC., a Delaware
corporation (“Borrower”), whose address is 000 Xxxxxx Xxxxx, Xxxxx Xxxx, XX 00000.
Recitals
A. Bank and Borrower have entered into that certain Loan and Security Agreement dated
September 12, 2008, as modified by that certain Assumption Agreement and First Amendment to Loan
and Security Agreement dated as of February 25, 2009 (as so modified and as the same may otherwise
be amended, modified, supplemented or restated in writing from time to time, the “Loan Agreement”).
B. Bank has extended credit to Borrower for the purposes permitted in the Loan Agreement.
C. Borrower has requested that the Loan Agreement and other Loan Documents be amended and
supplemented to make certain changes to, among other things, the composition of certain term loans
under the Loan Agreement and, in connection therewith, the release of certain guaranties and a
standby loan purchase agreement, a modification of the financial covenant structure and various
other provisions of the Loan Agreement, all as more fully set forth herein.
D. Bank has agreed to so amend and supplement the Loan Agreement and other the 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. Modifications Regarding Loan Documents.
2.1 Amended Section 2.1.3. Section 2.1.3 of the Loan Agreement is hereby amended to read as
follows:
“2.1.3 Term Loan B
Term Loan B will be repaid with proceeds from Term Loan C as provided in
Section 2.1.5 and, upon the effectiveness of such repayment in full, there
shall be no further loan availability under Term Loan B for additional
advances and Term Loan B shall therefore no longer be considered an active
or available loan facility. Further, upon the payment in full of the Term
Loan B and all related Obligations, the Term Loan B Promissory Notes shall
be deemed cancelled. Finally, in connection with the termination of the
Term Loan B facility, the related Limited Guaranties and the Standby
Purchase Agreement shall be terminated concurrently therewith pursuant to
and subject to the terms and provisions of separate documentation.
2.2 New Section 2.1.5. A new section is hereby added to the Loan Agreement that is entitled
“Section 2.1.5 Term Loan C”, that shall be deemed placed immediately following Section 2.1.4, and
which shall read as follows:
2.1.5 Term Loan C
(a) Availability. Bank shall make a term loan to Borrower in the
amount of $5,500,000 (the “Term Loan C Commitment Amount” and such loan
being the “Term Loan C”) within five (5) days from the date of the April
2009 Amendment subject to the satisfaction of the terms and conditions of
this Agreement, the proceeds of which shall be used exclusively to repay
the Term Loan B Obligations. No portion of the Term Loan C may be
re-borrowed after repayment.
(b) Repayment. Borrower shall pay Bank accrued interest on the
Term Loan C beginning on the first day of the calendar month following the
month during which the Term Loan C is made and continuing on the same day
of each succeeding month. Borrower shall repay the Term Loan C in 30
equal monthly payments of principal and accrued interest, each in the
amount necessary to fully amortize the Term Loan C over such period (such
amount to be calculated by Bank), commencing on June 1, 2009 and
continuing on the first day of each month thereafter until November 1,
2011 (“Term Loan C Maturity Date”) on which date the entire unpaid
principal balance of the Term Loan C, plus the Term Loan C Final Payment,
plus any and all accrued and unpaid interest, and plus all other sums, if
any, that shall have become due and payable hereunder with respect to the
Term Loan C, shall be paid.
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(c) Permitted Prepayment. At Borrower’s option, so long as an
Event of Default has not occurred and is not continuing, Borrower shall
have the option to prepay all, but not less than all, of the Term Loan C,
provided Borrower (i) provides written notice to Bank of its
election to prepay the Term Loan C at least thirty (30) days prior to such
prepayment, and (ii) pays, on the date of the prepayment (A) all accrued
and unpaid interest with respect to the Term Loan C through the date the
prepayment is made; (B) all unpaid principal with respect to the Term Loan
C; (C) a fee equal to the Term Loan C Make-Whole Premium; (D) the Term
Loan C Final Payment; and (E) all other sums, if any, that shall have
become due and payable hereunder with respect to the Term Loan C. Without
limitation on the fact that such amounts shall be due on the date of the
prepayment, they shall bear interest from the date due until paid at a
rate equal to the highest rate applicable to the Term Loan C.
(d) Fee and Final Payment Due Upon Acceleration. If all or any
portion of the Term Loan C has become due and payable according to the
terms hereof because of the occurrence and continuance of an Event of
Default, Borrower shall pay to Bank on the date that it has become due and
payable according to the terms hereof, in addition to any other sums
owing, a fee equal to the Term Loan C Make-Whole Premium, plus the Term
Loan C Final Payment. Without limitation on the fact that such amounts
shall be due as set forth in the preceding sentence, they shall bear
interest from the date due until paid at a rate equal to the highest rate
applicable to the Term Loan C.”
2.3 New Subsection 2.3(a)(iv). A new subsection is hereby added to Section 2.3(a) to
immediately follow Section 2.3(a)(iii), which new subsection shall read as follows:
“(iv) Term Loan C. Subject to Section 2.3(b), the principal amount
outstanding under the Term Loan C shall accrue interest at a per annum rate
equal to 9.00%, which interest shall be payable monthly.”
2.4 Revised Section 2.4(a). Section 2.4(a) of the Loan Agreement is hereby amended to read as
follows:
“(a) Commitment Fee. Fully earned, non-refundable commitment fees
of $67,000 on the anniversary of the date of the April 2009 Amendment;
and”
2.5 Revised Section 2.4(c). Section 2.4(c) of the Loan Agreement is hereby amended to read as
follows:
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“Unused Revolving Line Facility Fee”. A fee, payable monthly, in
arrears, on a calendar year basis, in an amount equal to 0.375% per annum
of the average unused portion of the Revolving Line, as determined by
Bank. The unused portion of the Revolving Line, for the purposes of this
calculation, shall include amounts reserved under the Cash Management
Services Sublimit for products provided, although amounts deducted under
the Availability Amount relating to Term Loan C shall not be considered
“unused” for purposes of determining the “Unused Revolving Line Facility
Fee”. Borrower shall not be entitled to any credit, rebate or repayment
of any such fee previously earned by Bank pursuant to this Section
notwithstanding any termination of this Agreement, or suspension or
termination of Bank’s obligation to make loans and advances hereunder,
including during any Streamline Period; and ”
2.6 Modified Section 6.2(a)(vii). Section 6.2(a)(vii) is hereby amended to read as follows:
“(vii) as soon as available, and in any event within 90 days following the
end of Borrower’s fiscal year, annual financial statements certified by,
and with an unqualified opinion of, independent certified public
accountants acceptable to Bank.”
2.7 Modified Section 6.8(a). Section 6.8(a) of the Loan Agreement is hereby amended to read
as follows:
“(a) Maintain all of its and all of its Subsidiaries’ operating and other
deposit accounts, securities accounts, and any other 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, provided, further, that
the aggregate minimum amount that Borrower shall maintain in such accounts
with Bank shall not be less at any time than the outstanding principal
amount of Term Loan A from time to time.”
2.8 Modified Section 6.9. Section 6.9 of the Loan Agreement is hereby amended and restated in
its entirety to read as follows:
“6.9 Financial Covenants. Borrower shall maintain at all times, to be
tested as of the last day of each month, unless otherwise noted, on a
consolidated basis:
(a) Liquidity Ratio. A Liquidity Ratio of greater than 1.25 to
1.00 to be tested as of the last day of each month during which any
Obligations consisting of Advances or any portion of the Term Loan C are
outstanding. In addition, if, at the time an Advance is
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requested by the Borrower, the Liquidity Ratio has not been tested with
respect to the monthly financial statements of Borrower most recently
received by Bank, then the Liquidity Ratio shall be tested with respect to
such financial statements prior to the Advance being made.
(b) Performance to Plan. Within fifteen days of the last day of
each month, Borrower’s net revenue with respect to the then ending three
month period shall be equal to at least 85% of Borrower’s projected
revenue for such then ending three month period as set forth and as
corresponding thereto as set forth in the Applicable Projections.
Further, Borrower shall supply to Bank supplemental financial projections
to Bank for its 2010 fiscal year as soon as they are available, but in no
event shall such projections be delivered to Bank later than June 30,
2009. Borrower shall supply to Bank supplemental financial projections
for its 2011 fiscal year as soon as they are available as well, but in no
event shall such projections be delivered to Bank later than June 30,
2010. In all instances, such projections shall be in form and substance
determined to be acceptable to by Bank in its sole discretion.”
2.9 Modification of Events of Defaults. Given the Limited Guaranties and the Standby Purchase
Agreement are being released in connection with the effectiveness of this Amendment, it is hereby
agreed that Section 8.11 of the Loan Agreement regarding an Event of Default consisting of the
termination of the Standby Purchase Agreement is deemed eliminated and shall no longer be
considered an Event of Default under the Loan Agreement effective upon the effectiveness of this
Amendment. Further, it is also agreed that the termination of the Limited Guaranties in connection
herewith shall not be deemed an Event of Default under the Loan Agreement.
2.10 April 2009 Amendment. A new definition “April 2009 Amendment” is hereby added to Section
13.1 of the Loan Agreement, is deemed placed therein in its proper alphabetical order, and shall
read as follows:
“April 2009 Amendment” shall mean that certain Second Amendment to Loan
and Security Agreement dated as of April 30, 2009 between Borrower and
Bank.
2.11 Applicable Projections. A new definition “Applicable Projections” is hereby added to
Section 13.1 of the Loan Agreement, is deemed placed therein in its proper alphabetical order, and
shall read as follows:
“Applicable Projections” are annual projections (including income
statements, balance sheets and cash flow statements, by month) for the
2009 fiscal year of Borrower, as approved by
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Borrower’s board of directors, together with any related business
forecasts used in the preparation of such annual financial projections
that were submitted to Bank on February 19, 2009. The term “Applicable
Projections” shall include projections of Borrower for later periods of
time in accordance with the applicable covenants relating thereto as set
forth in this Agreement.
2.12 Availability Amount. The definition of “Availability Amount” contained in Section 13.1
of the Loan Agreement is hereby amended to read as follows:
“Availability Amount” is (a) the lesser of (i) the Maximum Dollar Amount
or (ii) the amount available under the Borrowing Base, minus (b) the
outstanding principal balance of any Advances, minus (c) any amounts used
for Cash Management Services and minus (d) amounts outstanding with
respect to Term Loan C.
2.13 Maximum Dollar Amount. The definition of “Maximum Dollar Amount” contained in Section
13.1 of the Loan Agreement is hereby amended to read as follows:
“Maximum Dollar Amount” is Ten Million Dollars ($10,000,000).
2.14 Revolving Line Maturity Date. The definition of “Revolving Line Maturity Date” contained
in Section 13.1 of the Loan Agreement is hereby amended to read as follows:
“Revolving Line Maturity Date” is April 30, 2011.
2.15 Term Loan C Commitment Amount. A new definition “Term Loan C Commitment Amount.” is
hereby added to Section 13.1 of the Loan Agreement, is deemed placed therein in its proper
alphabetical order, and shall read as follows:
“Term Loan C Commitment Amount” shall have the meaning set forth in
Section 2.1.5.
2.16 Term Loan C. A new definition “Term Loan C” is hereby added to Section 13.1 of the Loan
Agreement, is deemed placed therein in its proper alphabetical order, and shall read as follows:
“Term Loan C” shall have the meaning set forth in Section 2.1.5.
2.17 Term Loan C Final Payment. A new definition “Term Loan C Final Payment” is hereby added
to Section 13.1 of the Loan Agreement, is deemed placed therein in its proper alphabetical order,
and shall read as follows:
“Term Loan C Final Payment” is a payment (in addition to and not a
substitution for the regular monthly payments of principal
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plus accrued interest) due with respect to the Term Loan C on the earlier
to occur of (a) the Term Loan C Maturity Date, (b) the acceleration of
Term Loan C, or (c) the prepayment of the Term Loan C, equal to the Term
Loan C Commitment Amount multiplied by one percent (1.00%).
2.18 “Term Loan C Make-Whole Event Date”. A new definition “Term Loan C Make-Whole Event
Date” is hereby added to Section 13.1 of the Loan Agreement, is deemed placed therein in its proper
alphabetical order, and shall read as follows:
“Term Loan C Make-Whole Event Date” shall mean (a) in the case of a
prepayment pursuant to Section 2.1.5 hereof, the date of such prepayment,
and (b) in the case of all or a portion of the Term Loan C becoming due
and payable according to the terms hereof because of the occurrence and
continuance of an Event of Default, the date such amount of the Term Loan
C has become due and payable according to the terms hereof.
2.19 “Term Loan C Make-Whole Premium”. A new definition “Term Loan C Make-Whole Premium” is
hereby added to Section 13.1 of the Loan Agreement, is deemed placed therein in its proper
alphabetical order, and shall read as follows:
“Term Loan C Make-Whole Premium” is an amount equal to 3% of the Term Loan
C Commitment Amount if the Make-Whole Event Date occurs on or before the
first anniversary of the date of the April 2009 Amendment; 2% of the Term
Loan C Commitment Amount if the Make-Whole Event Date occurs after the
first anniversary of the date of the April 2009 Amendment but on or before
the second anniversary of the date of the April 2009 Amendment; 1% of Term
Loan C Commitment Amount if the Make-Whole Event Date occurs after the
second anniversary of the date of the April 2009 Amendment but before the
Term Loan C Maturity Date.
2.20 “Term Loan C Maturity Date”. A new definition “Term Loan C Maturity Date” is hereby
added to Section 13.1 of the Loan Agreement, is deemed placed therein in its proper alphabetical
order, and shall read as follows:
“Term Loan C Maturity Date” shall have the meaning set forth in Section
2.1.5.
3. Limitation of Amendments.
3.1 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 or condition of any Loan Document, or
(b) otherwise prejudice any right or remedy
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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, warrants and agrees 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 in all material respects 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 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;
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,
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reorganization, liquidation, moratorium or other similar laws of general application and
equitable principles relating to or affecting creditors’ rights.
5. Fee; Expenses. Borrower shall pay to Bank an amendment and restructuring fee in connection
herewith of $18,500, which shall be in addition to interest and to all other amounts payable under
the Loan Agreement and which shall not be refundable. 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.
[Signature Page Follows]
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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.
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. | |||||||||||||
| By: | /s/ Xxxx X. Xxxxx | By: | /s/ Xxxxxxxx X. Xxxxxxxxx | |||||||||||
| Name: Title: |
Xxxx X. Xxxxx Relationship Manager |
Name: Title: |
Xxxxxxxx X. Xxxxxxxxx Chief Financial Officer |
|||||||||||
