WAIVER
Exhibit
10.69
THIS WAIVER (this “Agreement”) is made
and entered into as of this 16th day of January, 2009 by
and among ARTHROCARE CORPORATION, a Delaware corporation (the “Borrower”), the
Subsidiaries thereof party hereto (the “Subsidiary
Guarantors”), the lenders party to the Credit Agreement referred to below
(the “Lenders”), and BANK
OF AMERICA, N.A., as Administrative Agent, Swing Line Lender and L/C Issuer (the
“Administrative
Agent”).
Statement of
Purpose
The Lenders agreed to extend certain
credit facilities to the Borrower pursuant to the Credit Agreement dated as of
January 13, 2006 (as amended by that certain First Amendment dated as of
December 18, 2007, that certain Second Amendment and Consent dated as of
November 26, 2008 (the “Second Amendment”),
and as further amended, restated, supplemented or otherwise modified from time
to time, the “Credit
Agreement”), by and among the Borrower, the Lenders and the
Administrative Agent.
The
Borrower previously advised the Administrative Agent and the Lenders that it
would be restating its financial statements for fiscal years 2006, 2007 and the
first quarter of 2008 as more fully described in the Borrower’s 8-K filing of
July 24, 2008. More recently, the Borrower advised the Administrative
Agent and the Lenders that it would be restating its financial statements for
fiscal years 2000 through and including 2007 and the first quarter of 2008 as
more fully described in the Borrower’s 8-K filing of December 19, 2008 (such
financial restatements, collectively, the “Restatement”). In
letter agreements dated July 29, 2008 and September 15, 2008, respectively, and
in the Second Amendment, the Administrative Agent, on behalf of and at the
direction of Lenders constituting Required Lenders, consented to extensions of
the deadlines for delivery of the June 30, 2008 and September 30, 2008 financial
statements (collectively, the “Required Financial
Statements”) to the earliest of (a) the end of business on Xxxxx 0, 0000,
(x) the date on which the Borrower shall have received notice from The NASDAQ
Stock Market, LLC (“NASDAQ”) that its
common stock shall be delisted from The NASDAQ Global Select Market, (c) the
date that the common stock of the Borrower is delisted from The NASDAQ Global
Select Market and (d) the date on which the Borrower shall have received notice
from NASDAQ that its requested extension of time for delivery of its June 30,
2008 and September 30, 2008 financial statements to February 9, 2009 has been
denied (such extension, the “Third Extension” and
such additional time period ending in accordance with the foregoing, the “Third Extension
Period”).
On
January 14, 2009, the Borrower notified the Administrative Agent that it
received a letter dated January 14, 2009 from NASDAQ stating that its common
stock will be delisted from The NASDAQ Global Select Market. As such,
the Third Extension Period ended on January 14, 2009 and the Borrower was,
therefore, required to deliver the Required Financial Statements on January 14,
2009. The Borrower did not deliver the Required Financial Statements
on January 14, 2009 and, therefore, an Event of Default has occurred under Section 8.01(b) of
the Credit Agreement from the Borrower’s failure to comply in a timely manner
with the requirements set forth in Section 6.01 of the
Credit Agreement. The Borrower has requested that the Lenders agree
to waive such Event of Default.
Subject
to and in accordance with the terms and conditions set forth herein, the Lenders
party hereto are willing to agree to the Borrower’s requests.
NOW, THEREFORE, for good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged by
the parties hereto, such parties agree as follows:
Section
1. Definitions. All
capitalized terms used and not defined herein shall have the meanings assigned
thereto in the Credit Agreement.
Section
2. Waiver. Pursuant
to Section
10.01 of the Credit Agreement and subject to the terms and conditions set
forth herein, including, without limitation the requirements set forth below and
the conditions to effectiveness set forth in Section 4 of this Agreement, the
Administrative Agent and the Lenders party hereto hereby waive any Default or
Event of Default arising under Section 8.01(b) of
the Credit Agreement as a result of any breach that may have occurred under
Section 6.01 of
the Credit Agreement solely as a result of the Borrower’s failure to deliver the
Required Financial Statements prior to the termination of the Third Extension
Period (such agreement, the “Waiver”); provided, that the
Waiver shall be deemed null and void and an Event of Default shall be deemed to
have occurred as of January 14, 2009 if each of the following conditions is not
met:
(a) the
Required Financial Statements shall be delivered to the Administrative Agent and
the Lenders in accordance with Section 6.01 on or
prior to the end of business on March 2, 2009; and
(b) the
Administrative Agent and the Lenders shall have received each financial
statement subject to restatement under the Restatement (such financials, the
“Restatement Financial
Statements”) on or prior to the end of business on March 2,
2009.
Section
3. Additional
Agreements Regarding Availability. It is hereby agreed and
acknowledged by the parties hereto that the Administrative Agent and the Lenders
shall have a period of up to forty-five days after their receipt of the
Restatement Financial Statements and the Required Financial Statements (such
period, the “Review
Period”) to review such financial statements. During the
Review Period, the Borrower shall not request any Credit Extension (other than a
continuation or conversion of an existing Eurocurrency Rate Loan or the
extension/renewal of an existing Letter of Credit) and no request for any Credit
Extension will be required to be honored by the Administrative Agent or the
Lenders (other than a continuation or conversion of an existing Eurocurrency
Rate Loan or the extension/renewal of an existing Letter of
Credit). Furthermore, upon review thereof, if the Restatement
Financial Statements and/or the Required Financial Statements are not
satisfactory to the Required Lenders in their sole discretion, the Required
Lenders may, in their sole discretion, extend the prohibition on the Borrower’s
ability to request (and the Lenders obligations to honor) Credit Extensions for
an indefinite period of time and/or require a permanent reduction in the
Aggregate Commitments.
Section
4. Effectiveness. The
provisions of this Agreement shall become effective upon the satisfaction of
each of the following conditions:
(a) Executed
Documents. The Administrative Agent shall have received a duly
executed counterpart of this Agreement from the Administrative Agent, the Loan
Parties and the Required Lenders.
(b) Mandatory
Prepayment. The Borrower shall have prepaid Committed Loans in
an aggregate principal amount of not less than $10,000,000, together with all
accrued interest on such amount and any additional amounts required pursuant to
Section 3.05 of
the Credit Agreement. Such prepayment shall be applied to the
Committed Loans of the Lenders in accordance with their respective Applicable
Percentages. It is hereby agreed and acknowledged that the Aggregate
Commitments shall not be permanently reduced by such prepayment.
(c) Work
Fee. The Borrower shall have paid to the Administrative Agent
(or its applicable affiliates), for the account of each Lender (including the
Administrative Agent) that executes and delivers this Agreement to the
Administrative Agent (or its counsel) on or prior to 2:00 p.m. (Eastern Time) on
January 16, 2009, a work fee in an amount equal to $7,500 for each such
Lender.
(d) Fees and
Expenses. The Administrative Agent shall have been reimbursed
for all fees and out-of-pocket charges and other expenses incurred in connection
with this Agreement, including, without limitation, the reasonable fees and
disbursements of counsel for the Administrative Agent.
(e) Other
Documents. The Administrative Agent shall have received any
other documents (including, without limitation, resolutions adopted by each Loan
Party with respect to this Agreement) or instruments reasonably requested by the
Administrative Agent in connection with the execution of this
Agreement.
Section
5. Limited
Effect. Except as expressly provided herein, the Credit
Agreement and the other Loan Documents shall remain unmodified and in full force
and effect and this Agreement shall not waive, affect, or diminish any right of
the Administrative Agent and the Lenders to demand strict compliance and
performance with the Credit Agreement and the other Loan
Documents. In furtherance thereof, the Administrative Agent and the
Lenders hereby reserve all rights and remedies, and shall be entitled, to pursue
at any time and from time to time, without notice, demand or any other action,
any and all rights and remedies provided under the Credit Agreement and/or the
other Loan Documents, at law, in equity or otherwise, whether or not with
respect to any existing Events of Default (other than the Event of Default
waived pursuant to Section 2 hereof), all in the sole and absolute discretion of
the Administrative Agent and the Lenders. Except as expressly set
forth in Sections 2 and 3 of this Agreement, neither this Agreement nor any
other communication between the Administrative Agent and/or the Lenders, on the
one hand, and the Borrower, on the other hand, shall be construed as a consent,
waiver, forbearance or other modification with respect to any term, condition or
other provision of the Agreement and/or any other Loan
Document. Neither this Agreement, any other communication between the
Administrative Agent and/or the Lenders, on the one hand, and the Borrower, on
the other hand, nor any act or omission on the part of the Administrative Agent
and/or the Lenders constitutes, or shall be deemed to constitute, a course of
conduct or a course of dealing so as to justify an expectation by the Borrower
that the Administrative Agent and the Lenders will not exercise any rights or
remedies available to them with respect to any existing Event of Default (other
than the Event of Default waived pursuant to Section 2 hereof) or any subsequent
Event of Default or an expectation by the Borrower that the Administrative Agent
and the Lenders will waive any existing Event of Default (other than the Event
of Default waived pursuant to Section 2 hereof) or any subsequent Event of
Default. References in the Credit Agreement to “this Agreement” (and
indirect references such as “hereunder”, “hereby”, “herein”, and “hereof”) and
in any Loan Document to the Credit Agreement shall be deemed to be references to
the Credit Agreement as modified hereby.
Section
6. Reaffirmation
of Security Documents. Each Loan Party hereby confirms that
each of the Security Documents to which it is a party shall continue to be in
full force and effect and are hereby ratified and reaffirmed in all
respects.
Section
7. Representations
and Warranties/No Default.
(a) By
its execution hereof, each Loan Party hereby certifies that after giving effect
to this Agreement, no Default or Event of Default has occurred and is continuing
as of the date hereof or would result after giving effect to the transactions
contemplated hereunder.
(b) By
its execution hereof, the Borrower hereby (i) represents and warrants that all
statements made by or on behalf of the Borrower related to the Restatement in
all annual, regular, periodic and special reports that the Borrower has filed
with the SEC on or prior to the date of this Agreement are true, correct and
complete in all material respects and (ii) confirms and agrees that, from the
date of this Agreement through and including the date upon which the
Administrative Agent and the Lenders receive the Required Financial Statements
and the Restatement Financial Statements (such date, the “Delivery Date”), (A)
it has, and will have, sufficient liquidity (exclusive of any further requests
for Credit Extensions) to meet all of its anticipated expenditures and (B) it
will not request any Credit Extension on or prior to the Delivery Date (other
than a continuation or conversion of an existing Eurocurrency Rate Loan or the
extension/renewal of an existing Letter of Credit).
(c) By
its execution hereof, each Loan Party hereby represents and warrants that such
Person has all requisite power and authority and has taken all necessary
corporate action to authorize the execution, delivery and performance of this
Agreement and each other document executed in connection herewith to which it is
a party in accordance with their respective terms.
(d) This
Agreement and each other document executed in connection herewith has been duly
executed and delivered by the duly authorized officers of each Loan Party, and
each such document constitutes the legal, valid and binding obligation of such
Loan Party, enforceable in accordance with its terms.
Section
8. GOVERNING
LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
Section
9. Counterparts. This
Agreement may be executed in counterparts (and by different parties
hereto in different counterparts), each of which shall constitute an original,
but all of which when taken together shall constitute a single
contract. Delivery of an executed counterpart of a signature page of
this Agreement by telecopy shall be effective as delivery of a manually executed
counterpart of this Agreement.
[Signature
Pages Follow]
IN
WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed as of the date and year first above written.
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ARTHROCARE
CORPORATION, as Borrower
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By:
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/s/ Xxxxxxx X. Xxxxx | |
| Name: Xxxxxxx X. Xxxxx | ||
| Title: President and CEO | ||
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ARTHROCARE
MEDICAL CORPORATION, as
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|
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Subsidiary
Guarantor
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|
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By:
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/s/ Xxxxxxx X.
Xxxxx
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| Name: Xxxxxxx X. Xxxxx | |
| Title: President and CEO | |
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BANK
OF AMERICA, N.A., as Administrative Agent
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By:
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/s/ Xxxxxxxx
Xxxxxx-Xxxxx
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| Name: Xxxxxxxx Xxxxxx-Xxxxx | |
| Title: Assistant Vice President | |
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BANK
OF AMERICA, N.A., as Lender
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By:
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/s/
Xxxxxx Xxxxxx
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| Name: Xxxxxx Xxxxxx | |
| Title: Senior Vice President | |
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UNION
BANK OF CALIFORNIA, N.A., as Lender
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By:
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/s/ Xxxxx X. Xxxxx
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| Name: Xxxxx X. Xxxxx | |
| Title: Vice President | |
