10-Q

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

FORM 10-Q

(Mark one)

ýQUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended July 3, 2005

oTRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from                  to                 .

Commission file number:  0-51348

ev3 Inc.

(Exact name of registrant as specified in its charter)

Delaware	32-0138874
(State or other jurisdiction of incorporation or organization)	(IRS Employer Identification Number)

4600 Nathan Lane North
Plymouth, Minnesota 55442

(Address of principal executive offices)

(763) 398-7000

(Registrant’s telephone number including area code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. YES  o  NO  ý*

Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act).  YES  o  NO  ý

As of August 1, 2005, there were 49,116,454 shares of common stock, par value $0.01 per share, of the registrant outstanding.

*  The registrant has not been subject to the filing requirements for the past 90 days as the registration statement in connection with its initial public offering became effective on June 16, 2005.  The registrant has filed all reports required to be filed by Section 13 or
15(d) of the Securities Exchange Act of 1934 since such time.

ev3 Inc.

FORM 10-Q

For the Quarterly Period Ended July 3, 2005

TABLE OF CONTENTS

Description		Page
PART I.	FINANCIAL INFORMATION
ITEM 1.	Financial Statements	1
	Consolidated Balance Sheets as of July 3, 2005 (unaudited) and December 31, 2004	1
	Consolidated Statements of Operations for the three months and six months ended July 3, 2005 and July 4, 2004 (unaudited)	2
	Consolidated Statements of Cash Flows for the six months ended July 3, 2005 and July 4, 2004 (unaudited)	3
	Notes to the Consolidated Financial Statements	4
ITEM 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	16
ITEM 3.	Quantitative and Qualitative Disclosures About Market Risk	53
ITEM 4.	Controls and Procedures	54
PART II.	OTHER INFORMATION
ITEM 1.	Legal Proceedings	55
ITEM 2.	Unregistered Sales of Equity Securities and Use of Proceeds	57
ITEM 3.	Defaults Upon Senior Securities	58
ITEM 4	Submission of Matters to a Vote of Security Holders	59
ITEM 5.	Other Information	59
ITEM 6.	Exhibits	60
SIGNATURE PAGE		62
Exhibit Index		63

In this report, references to “ev3,” “the company,” “we,” “our” or “us,” unless the context otherwise requires, refer to ev3 Inc. and its subsidiaries.

All trademarks or trade names referred to in this report are the property of their respective owners.

PART I:FINANCIAL INFORMATION

ITEM I:FINANCIAL STATEMENTS

ev3 Inc.
CONSOLIDATED BALANCE SHEETS
(Dollars in thousands, except per share amounts)

	July 3, 2005			December 31, 2004
	(unaudited)
Assets
Current assets
Cash and cash equivalents	$	128,399		$	20,131
Accounts receivable, less allowance of $3,233 and $2,694, respectively	22,128			18,956
Inventories	28,219			22,500
Prepaid expenses and other assets	6,030			4,576
Other receivables	2,549			2,446
Total current assets	187,325			68,609
Restricted cash	3,074			2,638
Property and equipment, net	13,030			9,130
Goodwill	94,456			94,514
Other intangible assets, net	30,844			31,851
Other assets	4,017			5,304
Total assets	$	332,746		$	212,046
Liabilities and stockholders’ equity (deficit)
Current liabilities
Accounts payable	$	11,703		$	8,931
Accrued compensation and benefits	11,176			9,523
Accrued liabilities	14,300			13,821
Accrued acquisition consideration	—			3,750
Total current liabilities	37,179			36,025
Demand notes payable—related parties	—			299,453
Other long-term liabilities	561			702
Total liabilities	37,740			336,180
Commitments and contingencies	—			—
Class A preferred membership units: stated value $3.56; 24,040,718 units authorized; issued and outstanding: zero and 24,040,718, respectively	—			95,105
Class B preferred membership units: stated value $3.56; 41,077,336 units authorized; issued and outstanding: zero and 41,077,336, respectively	—			158,923
Minority interest	13,754			16,310
Stockholders’ equity (deficit)
Members’ capital	—			47,927
Common stock: $0.01 par value; 100,000,000 shares authorized; issued and outstanding: 48,910,654 and zero, respectively	489			—
Additional paid in capital	801,252			—
Accumulated deficit	(520,208		)	(440,705		)
Accumulated other comprehensive loss	(281		)	(1,694		)
Total stockholders’ equity (deficit)	281,252			(394,472		)
Total liabilities and stockholders’ equity (deficit)	$	332,746		$	212,046

The accompanying notes are an integral part of these consolidated financial statements.

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ev3 Inc.
CONSOLIDATED STATEMENTS OF OPERATIONS
(Dollars in thousands, except per share amounts)(unaudited)

	Three Months Ended						Six Months Ended
	July 3, 2005			July 4, 2004			July 3, 2005			July 4, 2004
Net sales	$	31,540		$	20,569		$	59,222		$	41,149
Operating expenses
Cost of goods sold (a)	12,785			9,368			24,894			18,157
Sales, general and administrative (a)	32,297			23,520			64,157			47,957
Research and development (a)	11,891			10,589			22,217			19,743
Amortization of intangible assets	2,548			2,447			5,203			4,978
(Gain) loss on sale or disposal of assets, net	111			(1		)	164			19
Acquired in-process research and development	868			—			868			—
Total operating expenses	60,500			45,923			117,503			90,854
Loss from operations	(28,960		)	(25,354		)	(58,281		)	(49,705		)
Other (income) expense
Gain on sale of investments, net	(878		)	(1,728		)	(4,611		)	(1,728		)
Interest expense, net	6,078			4,458			11,786			10,613
Minority interest in loss of subsidiary	(705		)	(1,315		)	(726		)	(5,072		)
Other expense, net	1,828			206			2,920			106
Loss before income taxes	(35,283		)	(26,975		)	(67,650		)	(53,264		)
Income tax benefit	(61		)	—			(59		)	—
Net loss	(35,222		)	(26,975		)	(67,591		)	(53,624		)
Accretion of preferred membership units to redemption value	5,635			5,869			12,061			11,804
Net loss attributable to common stockholders	$	(40,857	)	$	(32,844	)	$	(79,652	)	$	(65,428	)
Net loss per common share attributable to common stockholders (basic and diluted) (b)	$	(4.60	)	$	(18.29	)	$	(13.95	)	$	(37.36	)
Weighted average common shares outstanding (b)	8,877,898			1,795,745			5,711,852			1,751,092

(a) Includes stock based compensation charges of:
Cost of goods sold	$	135	$	47	$	247	$	98
Sales, general and administrative	591		206		1,045		1,373
Research and development	189		182		434		398
	$	915	$	435	$	1,726	$	1,869

(b) Net loss per common share attributable to common stockholders and the weighted average common shares outstanding reflect the June 21, 2005 1-for-6 reverse stock split for all periods presented.

The accompanying notes are an integral part of these consolidated financial statements.

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ev3 Inc.
CONSOLIDATED STATEMENTS OF CASH FLOWS 
(Dollars in thousands, except per share amounts)(unaudited)

	Six Months Ended
	July 3, 2005			July 4, 2004
Operating activities
Net loss	$	(67,591	)	$	(53,624	)
Adjustments to reconcile net loss to net cash used in operating activities
Depreciation and amortization	7,340			6,990
Provision for bad debts	327			278
Provision for inventory obsolescence	1,156			264
Acquired in-process research and development	868			—
Loss on disposal of assets	157			19
Amortization of beneficial conversion feature and non-cash interest expense	—			1,857
Gain on sale of investment	(4,611		)	(1,728		)
Stock compensation expense	1,726			1,869
Minority interest in loss of subsidiary	(726		)	(5,072		)
Increase (decrease) in cash resulting from changes in operating assets and liabilities
Accounts receivable	(3,965		)	(3,847		)
Inventories	(6,980		)	(4,534		)
Prepaids and other assets	102			(667		)
Accounts payable	3,024			3,672
Accrued expenses and other liabilities	2,509			292
Accrued interest on notes payable	12,156			8,752
Net cash used in operating activities	(54,508		)	(45,479		)
Investing activities
Purchase of property and equipment	(6,119		)	(1,483		)
Purchase of patents and licenses	(982		)	(571		)
Proceeds from sale of property and equipment	8			—
Proceeds from sale of investments	4,611			1,728
Acquisitions, net of cash acquired	(1,626		)	(3,750		)
Change in restricted cash	(221		)	(31		)
Other	894			—
Net cash used in investing activities	(3,435		)	(4,107		)
Financing activities
Issuance of demand notes payable	49,100			30,840
Payments on demand notes payable	(36,475		)	—
Proceeds from issuance of notes payable, net of costs	—			21,008
Proceeds from exercise of stock options	660			79
Proceeds from issuance of subsidiary stock to minority shareholders	227			178
Proceeds from initial public offering, net	152,713			—
Other	—			(827		)
Net cash provided by financing activities	166,225			51,278
Effect of exchange rate changes on cash	(14		)	(8		)
Net increase in cash and cash equivalents	108,268			1,684
Cash and cash equivalents, beginning of year	20,131			23,625
Cash and cash equivalents, end of year	$	128,399		$	25,309
Supplemental disclosure of non-cash activities:
Assets acquired in conjunction with MTI step acquisition (see Note 6)	$	7,536		$	—
Contribution of demand notes payable upon initial public offering (see Note 11)	$	324,230		$	—
Preferred membership units converted to common stock upon initial public offering (see Note 12)	$	266,089		$	—

The accompanying notes are an integral part of these consolidated financial statements.

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ev3 Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)

1. Description of Business

 ev3 Inc. (the “Company”) is a global medical device company focused on catheter-based, or endovascular, technologies for the minimally invasive treatment of vascular diseases and disorders. The Company develops, manufactures and markets a wide range of products that includes stents, embolic protection devices, thrombectomy devices, balloon angioplasty catheters, foreign object retrieval devices, guidewires, embolic coils, liquid embolics, microcatheters, and occlusion balloon systems. The Company markets its products in the United States, Europe, Canada, and Japan through a direct sales force, and through distributors in certain other international markets.

The Company holds ownership interests directly in two companies: ev3 Endovascular, Inc. (“ev3 Endovascular”) and Micro Investment, LLC (“MII”), a holding company that owns a controlling interest in Micro Therapeutics, Inc. (“MTI”), a publicly traded operating company. The Company’s majority equity holder, Warburg, Pincus Equity Partners, L.P. and certain of its affiliates (collectively “Warburg Pincus”), owns a majority, controlling interest in ev3 Inc.The Company is organized in two business segments: cardio peripheral and neurovascular. The Company manages its business and reports its operations internally and externally on this basis. The Company’s cardio peripheral segment contains products that are used in both cardiovascular and peripheral vascular procedures by cardiologists, radiologists, vascular surgeons and other endovascular specialists. The Company’s neurovascular segment contains products that are used primarily by neuro-radiologists and neurosurgeons for neurovascular procedures.

2. Basis of Presentation

The accompanying unaudited financial statements have been prepared by the Company in accordance with accounting principles generally accepted in the United States of America (U.S.) for interim financial information and pursuant to the instructions to Form 10-Q and Article 10 of Regulation S-X of the Securities and Exchange Commission.  Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements.  In the opinion of management, all adjustments (consisting of normal recurring adjustments) considered necessary for a fair presentation have been included.  The results for the three and six months ended July 3, 2005 are not necessarily indicative of the results that may be expected for the year ending December 31, 2005, or for any future period.  These financial statements and notes should be read in conjunction with the audited financial statements and the notes thereto included in the Company’s registration statement on Form S-1, initially filed with the Securities and Exchange Commission on April 5, 2005 (File No. 333-123851), as subsequently amended (the “Registration Statement”).

The consolidated financial statements of ev3 Inc. include the financial results of MTI, which ev3 Inc. consolidates for accounting purposes but is not wholly owned. On May 26, 2005, Warburg Pincus and The Vertical Group L.P. and certain of its affiliates (collectively “Vertical”) contributed all of the shares of MTI’s common stock directly owned by them to ev3 LLC in exchange for common membership units. These common membership units were subsequently converted into shares of ev3 Inc. common stock in connection with a subsequent merger of ev3 LLC with and into ev3 Inc. on June 21, 2005.  As a result of this merger, ev3 Inc. became the holding company of ev3 LLC’s subsidiaries.The merger of ev3 LLC with and into ev3 Inc. was accounted for as a combination under common control with the result that the financial statements for all periods presented were such that the historical financial statements of the group were carried forward without adjustment.

As the controlling shareholder of the Company, the contribution of the shares by Warburg Pincus, representing a 15.7% interest in MTI as of May 26, 2005, was accounted for as a transfer of assets between entities under common control resulting in the retention of historical based accounting. These consolidated financial statements give effect to the contribution of MTI shares owned by Warburg Pincus as though such contribution occurred in 2003 and 2004 when Warburg Pincus acquired its interest in MTI. The contribution of the MTI shares owned by Vertical, representing a 4.3% interest in MTI as of May 26, 2005, was accounted for under the purchase method of

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accounting on the contribution date (see Note 6).  As of July 3, 2005, ev3 Inc. owned 70.3% of the outstanding shares of common stock of MTI.  The consolidation of MTI for accounting purposes results in all of MTI’s assets and liabilities being included in the Company’s consolidated balance sheets. Although all of MTI’s assets are included in the Company’s consolidated balance sheets, not all of these assets would be available to the Company for distribution to its stockholders in the event of MTI’s liquidation.

Prior to the consummation of the Company’s initial public offering on June 21, 2005, the Company amended and restated its certificate of incorporation to authorize 100,000,000 shares of common stock, par value $0.01 per share, and 100,000,000 shares of preferred stock, par value $0.01 per share.  On June 21, 2005, immediately prior to the Company’s initial public offering, the Company completed a one-for-six reverse stock split of its outstanding common stock.  All share and per share amounts for all periods presented in these consolidated financial statements reflect this split.

The Company operates on a manufacturing calendar with its fiscal year always ending on December 31. Each quarter is 13 weeks, consisting of one five-week and two four-week periods.  Accordingly, the first three fiscal quarters in 2004 ended on April 4, July 4 and October 3.  The corresponding fiscal quarters in 2005 ended or end on April 3, July 3 and October 2.

3.  Stock Based Compensation

The Company accounts for its stock based compensation plans under the fair value recognition provisions of SFAS 123, Accounting for Stock Based Compensation.  Under the fair value method, compensation expense is measured at the grant date based on the estimated fair value of the award.  The fair value is estimated using the Black-Scholes option pricing model and is recognized over the service period, which is typically the vesting period.   The Company recognized compensation expense related to stock options of $915 thousand and $1.7 million for the three and six months ended July 3, 2005, respectively, as compared to the compensation expense related to stock options of $435 thousand and $1.9 million for the three and six months ended July 4, 2004, respectively.

The Company used the Black-Scholes option pricing model, with a minimum value pricing method, for measuring the fair value of its options granted for the year ended December 31, 2004 and for the three-month period ended April 3, 2005.  The minimum value pricing method does not take into consideration volatility. In accordance with SFAS 123, subsequent to April 5, 2005, the date of the Company’s initial filing of the registration statement relating to its initial public offering with the Securities and Exchange Commission, the Company used the Black-Scholes model, including a volatility assumption, to estimate the fair value of all option grants. Forfeitures and cancellations are recognized as they occur. Expense previously recognized related to options that are cancelled or forfeited prior to vesting is reversed in the period of the cancellation or forfeiture.

The fair value of options was estimated at the date of grant using the Black-Scholes option pricing model with the following assumptions by plan:  

	July 3, 2005				July 4, 2004
	ev3 Inc.		MTI		ev3 Inc.		MTI
Risk free interest rate	3.8	%	3.6	%	3.5	%	3.7	%
Expected dividend yield	0.0	%	0.0	%	0.0	%	0.0	%
Expected volatility	50.0	%	44.9	%	—		63.0	%
Expected option term	4 years		4 years		5 years		4 years

In accordance with the provisions of SFAS 123 and Emerging Issues Task Force Issue 96-18, Accounting for Equity Instruments that are Issued to Other than Employees for Acquiring, or in Conjunction with Selling, Goods or Services, the Company accounts for non-employee equity based awards, in which goods or services are the consideration received for the equity instruments issued, at their fair value. The assumptions used to determine fair value under the Black-Scholes pricing model are as disclosed above for ev3 Inc. and MTI as appropriate.

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4.  New Accounting Pronouncements

In November 2004, the FASB issued SFAS 151, Inventory Costs, An Amendment of Accounting Research Bulletin No. 43, Chapter 4, which adopts wording from the International Accounting Standards Board’s (“IASB”) IAS 2 Inventories in an effort to improve the comparability of cross-border financial reporting. The new standard indicates that abnormal freight, handling costs, and wasted materials (spoilage) are required to be treated as current period charges rather than as a portion of inventory cost. Additionally, the standard clarifies that fixed production overhead should be allocated based on the normal capacity of a production facility. The statement is effective for the Company beginning in 2006. Adoption is not expected to have a material impact on the Company’s consolidated earnings, financial position or cash flows.

On December 16, 2004, the FASB issued SFAS 123(R), Share-Based Payment, which is a revision of SFAS 123 and supersedes APB Opinion 25. SFAS 123(R) requires all share-based payments to employees, including grants of employee stock options, to be valued at fair value on the date of grant, and to be expensed over the applicable vesting period and is effective for the Company on January 1, 2006. The Company has not yet determined the impact of the provisions of SFAS 123(R) on its consolidated earnings, financial position or cash flows.

5. Liquidity and Capital Resources

On June 21, 2005, the Company completed an initial public offering in which it sold 11,765,000 shares of common stock at $14.00 per share for net cash proceeds of $152.7 million, net of underwriting discounts and other offering costs.  Immediately prior to the consummation of the offering, ev3 LLC merged with and into ev3 Inc. and 24,040,718 Class A preferred membership units, 41,077,336 Class B preferred membership units, and 18,799,962 common membership units of ev3 LLC were converted into 83,918,016 shares of common stock of ev3 Inc. (on a pre-split basis).  Immediately thereafter, the Company completed a one for six reverse stock split whereby the 83,918,016 shares of common stock were converted into 13,986,350 shares of common stock.  Prior to the consummation of the offering, and subsequent to the reverse stock split, the Company also issued 21,964,815 and 1,194,489 shares of common stock to Warburg Pincus and Vertical, respectively, in exchange for their contribution of $324.2 million aggregate principal amount of demand notes and accrued and unpaid interest thereon.  The remaining balance of the accrued and unpaid interest on the demand notes, totaling $36.5 million, was repaid using proceeds from the offering.

The following summarizes the changes in stockholders’ equity (deficit) since December 31, 2004:

(in thousands, except unit and share amounts)

			Members’			Common Stock			Additional Paid In		Accumulated Other Comprehensive			Accumulated			Total Stockholders’
	Units		Capital			Shares	Amount		Capital		Income (Loss)			Deficit			Deficit
Balance January 1, 2005	15,293,490		$	47,927		—	$	—	$	—	$	(1,694	)	$	(440,705	)	$	(394,472	)
Accretion of preferred membership units	—		—			—	—		—		—			(6,426		)	(6,426		)
Compensation expense on unit options	—		796			—	—		—		—			—			796
Exercise of unit options	495,809		651			—	—		—		—			—			651
Comprehensive loss:
Net loss											—			(32,369		)	(32,369		)
Cumulative translation adjustment											770			—			770
Comprehensive loss:											770			(32,369		)	(31,599		)
Balance April 3, 2005	15,789,299		$	49,374		—	$	—	$	—	$	(924	)	$	(479,500	)	$	(431,050	)
Accretion of preferred membership units	—		—			—	—		—		—			(5,635		)	(5,635		)
Compensation expense on unit/stock options	—		513			—	—		409		—			—			922
Exercise of unit options	6,331		9			—	—		—		—			—			9
Members’ contribution	3,004,332		8,404			—	—		—		—			—			8,404
Conversion of preferred / common membership units	(18,799,962	)	(58,300		)	83,918,016	839		323,550		—			—			266,089

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		Members’		Common Stock					Additional Paid In		Accumulated Other Comprehensive			Accumulated			Total Stockholders’
	Units	Capital		Shares		Amount			Capital		Income (Loss)			Deficit			Deficit
1-for-6 reverse common stock split	—	—		(69,931,666	)	(699		)	699		—			—			—
Contribution of demand notes	—	—		23,159,304		231			323,999		—			—			324,230
Common stock issued in conjunction with initial public offering	—	—		11,765,000		118			152,595		—			—			152,713
Comprehensive loss:
Net loss											—			(35,222		)	(35,222		)
Cumulative translation adjustment											643			—			643
Gain on change in ownership % of MTI											—			149			149
Comprehensive loss:											643			(35,073		)	(34,430		)
Balance July 3, 2005	—	$	—	48,910,654		$	489		$	801,252	$	(281	)	$	(520,208	)	$	281,252

Comprehensive loss consists of net loss, gains on changes of interest related to ownership changes in MTI, and the effects of foreign currency translation.  The components of comprehensive loss resulted in a decrease to our net loss of $792 thousand and $1.6 million for the three and six months ended July 3, 2005, respectively, and a decrease to our net loss of $47 thousand and $742 thousand for the three and six months ended July 4, 2004, respectively.

The Company’s future liquidity and capital requirements will be influenced by numerous factors, including clinical research and product development programs, receipt of and time required to obtain regulatory clearances and approvals, sales and marketing programs and continuing acceptance of the Company’s products in the marketplace. The Company believes that the resources generated through its initial public offering are sufficient to meet the Company’s liquidity requirements through the end of fiscal 2006; however, if the Company requires additional working capital, but is not able to raise additional funds, it may be required to significantly curtail or cease ongoing operations.

6. MTI Step Acquisitions

The Company, through its wholly owned subsidiary, MII, has acquired a controlling interest in MTI in various step investments.  MTI is a publicly held Delaware corporation that develops, manufactures and markets minimally invasive medical devices for diagnosis and treatment primarily of neurovascular diseases. The investments were accounted for using the step acquisition method prescribed by ARB 51, Consolidated Financial Statements. Step acquisition accounting requires the allocation of the excess purchase price to the fair value of net assets acquired. The excess purchase price is determined as the difference between the cash paid and the historical book value of the interest in net assets acquired.

On May 26, 2005, the shares of MTI’s common stock directly held by Warburg Pincus and Vertical were contributed to ev3 LLC in exchange for 10,804,500 and 3,004,332 common membership units, respectively.  These common membership units were subsequently converted into shares of ev3 Inc. common stock in connection with the subsequent merger of ev3 LLC with and into ev3 Inc. on June 21, 2005.  MTI shares contributed by Warburg Pincus, representing a 15.7% interest in MTI, have been accounted for as a transfer of assets between entities under common control and the consolidated financial statements give effect to the contribution by Warburg Pincus as though such contributions occurred in 2003 and 2004 when Warburg Pincus acquired its interest in MTI. Shares of MTI contributed by Vertical, representing a 4.3% interest, have been accounted for under the purchase method of accounting at the date of the contribution by Vertical.  As a result, the Company held an approximate interest in MTI of 70.3% and 66.0% at July 3, 2005 and December 31, 2004, respectively.

The number of membership units of ev3 LLC issued in exchange for the MTI shares directly held by Warburg Pincus and Vertical was determined based on fair value.  Fair value of the MTI shares contributed was measured as the average closing price per share of MTI’s common stock on the NASDAQ National Market System for the twenty trading days from and including the date the Company’s Registration Statement with respect to the Company’s initial public offering was first filed by the Company with the Securities and Exchange Commission. Fair value of

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ev3 LLC’s equity issued in exchange for the MTI shares was based on the midpoint of the range of estimated initial public offering prices per share, after consideration of the reverse stock split (See Note 2).

The following summarizes the allocation of the excess purchase price over historical book values arising from the May 26, 2005 contribution of MTI shares by Vertical (in thousands):

	May 26, 2005
Inventory	$	104
Developed technology	2,043
Customer relationships	894
Trademarks and tradenames	458
Acquired in-process research and development	868
Goodwill	2,066
Minority interest	2,021
Accrued liabilities	(50		)
Total	$	8,404

The acquired in-process research and development charge was estimated considering an appraisal and represents the estimated fair value of the in-process projects at the date of contribution of the MTI shares.  As of the acquisition date, the in-process projects had not yet reached technological feasibility and had no alternative use. The primary basis for determining technological feasibility of these projects is obtaining regulatory approval to market the products. Accordingly, the value attributable to these projects, which had yet to obtain regulatory approval, was expensed in conjunction with the acquisition. If the projects are not successful, or completed in a timely manner, the Company may not realize the financial benefits expected from these projects.

To the extent that investments in MTI by third party investors reduced the Company’s ownership interest, the difference between the carrying value of the interest indirectly sold by the Company, and the consideration paid by the third party investor is considered a change in interest transaction. The Company has adopted an accounting policy of recording change of interest gains or losses within equity as permitted by Staff Accounting Bulletin (“SAB”) 5H. Change of interest gains recorded in equity were $149 thousand and $149 thousand for the three and six months ended July 3, 2005, respectively, as compared with $71 thousand and $731 thousand for the three months and six months ended July 4, 2004, respectively.

7.  Inventories

 Inventory consists of the following (in thousands):

	July 3,			December 31,
	2005			2004
Raw materials	$	6,826		$	6,874
Work-in-progress	1,859			1,832
Finished goods	23,128			17,481
	31,813			26,187
Inventory reserve	(3,594		)	(3,687		)
Inventory, net	$	28,219		$	22,500

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8. Goodwill and Other Intangible Assets

 The changes in the carrying amount of goodwill by operating segment for the three and six months ended July 3, 2005 were as follows (in thousands):

	Cardio Peripheral			Neuro- vascular		Total
Balance as of January 1, 2005	$	73,431		$	21,083	$	94,514
Settlement of litigation over purchase price adjustments	(2,124		)	—		(2,124		)
Balance as of April 3, 2005	71,307			21,083		92,390
Goodwill related to MTI step acquisitions	—			2,066		2,066
Balance as of July 3, 2005	$	71,307		$	23,149	$	94,456

Other intangible assets consist of the following (in thousands):

	Weighted average useful life (in years)	July 3, 2005							December 31, 2004
		Gross Carrying Amount		Accumulated Amortization			Net Carrying Amount		Gross Carrying Amount		Accumulated Amortization			Net Carrying Amount
Patents and licenses	5.0	$	4,189	$	(1,762	)	$	2,427	$	3,496	$	(1,655	)	$	1,841
Developed technology	6.0	51,472		(26,986		)	24,486		47,836		(21,126		)	26,710
Trademarks and tradenames	5.0	3,085		(1,358		)	1,727		2,627		(1,041		)	1,586
Customer relationships	5.0	6,071		(3,867		)	2,204		5,177		(3,463		)	1,714
Other intangible assets		$	64,817	$	(33,973	)	$	30,844	$	59,136	$	(27,285	)	$	31,851

Intangible assets are amortized using methods which approximate the benefit provided by the utilization of the assets. Patents and licenses, developed technology and trademarks and tradenames are amortized on a straight line basis. Customer relationships are amortized using the double declining balance method. The Company continually evaluates the amortization period and carrying basis of intangible assets to determine whether later events and circumstances warrant a revised estimated useful life or reduction in value.

Total amortization of intangibles was $2.5 million and $5.2 million for the three and six months ended July 3, 2005, respectively, as compared to  $2.4 million and $5.0 million for the three and six months ended July 4, 2004.  The estimated amortization expense (inclusive of amortization expense already recorded for the six months ended July 3, 2005) for the five years ending December 31 is as follows (in thousands):

2005	$	10,568
2006	9,409
2007	7,140
2008	3,818
2009	1,369

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9. Investments

MTI had a licensing agreement and an approximate 14% interest in Genyx Medical, Inc. (“Genyx”). The carrying value of MTI’s investment in Genyx was $0 as of December 31, 2004, and MTI had no obligation to fund Genyx’s operations. In January 2005, MTI sold its interest in Genyx and recorded a gain of $3.7 million.

In connection with the 2002 sale of its investment in Enteric Medical Technologies, Inc., MTI has a right to receive certain contingent consideration.  In the three months ended July 3, 2005 and July 4, 2004, MTI received $878 thousand and $1.7 million, respectively, based upon the achievement of certain milestones.   These receipts were recognized as additional gain on sale of investment when received by MTI.

10. Accrued Liabilities

Accrued liabilities consist of the following (in thousands):

	July 3,		December 31,
	2005		2004
Accrued professional services	$	2,903	$	3,591
Accrued clinical studies	2,899		1,580
Office closure	1,919		2,698
Accrued other	6,589		5,952
Total accrued liabilities	$	14,300	$	13,821

11. Debt

At June 21, 2005, the closing date of the Company’s initial public offering, ev3 Endovascular had outstanding $316.0 million aggregate principal amount of demand notes plus $44.7 million of accrued and unpaid interest thereon.  These notes were payable to Warburg Pincus, our majority stockholder, and Vertical, our second largest stockholder.  Immediately prior to the Company’s initial public offering, the Company issued 21,964,815 and 1,194,489 shares of common stock to Warburg Pincus and Vertical, respectively, in exchange for their contribution of $324.2 million principal amount of the demand notes and a portion of the accrued and unpaid interest thereon.  Upon successful consummation of the initial public offering, the Company utilized $36.5 million of the net proceeds to repay the remaining accrued and unpaid interest, reducing the Company’s debt balance to zero at June 21, 2005.

On May 6, 2005, MTI entered into a Loan and Security Agreement with Silicon Valley Bank (“SVB”), which will expire on May 6, 2007. Pursuant to the terms of the Agreement, MTI may borrow up to the lesser of (i) $3.0 million or (ii) the sum of (a) 80% of MTI’s eligible accounts receivable, which exclude among other things accounts receivable relating to international sales, and (b) the lesser of (1) 30% of MTI’s eligible inventory, which excludes among other things inventory located outside of the United States, (2) 50% of outstanding loans under (a) above or (3) $750 thousand. All outstanding amounts under the Agreement bear interest at a variable rate equal to SVB’s prime rate plus 2%. The Agreement also contains customary covenants regarding operations of MTI’s business and financial covenants relating to minimum tangible net worth.  As of July 3, 2005, MTI had no borrowings under the Agreement.

12. Redeemable Convertible Preferred Membership Units

In connection with the merger of ev3 LLC with and into ev3 Inc., 24,040,718 Class A preferred membership units of ev3 LLC with a carrying value of $98.7 million and 41,077,336 Class B preferred membership units of ev3 LLC with a carrying value of $167.4 million were converted into common membership units of ev3 LLC, and

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subsequently into shares of the Company’s common stock, on a 1:1 basis.  The newly converted shares were then subject to a 1-for-6 reverse stock split (See Note 2).

Pursuant to the terms of the preferred membership units, prior to conversion they were being accreted to a redemption value and that accretion for the three and six months ended July 3, 2005 was $5.6 million and $12.1 million, respectively.  Accretion for the three and six months ended July 4, 2004 was $5.9 million and $11.8 million, respectively. Accretion was discontinued at the time of conversion.

13. Equity Based Compensation Plans

Upon consummation of the Company’s initial public offering, the ev3 LLC 2003 Incentive Plan was terminated with respect to options available for grant that were not granted prior to the offering and the ev3 Inc. 2005 Incentive Stock Plan became effective.  Subject to adjustment as provided in the plan, 2,000,000 shares of the Company’s common stock are available for issuance under the plan. Under the plan, the Company’s eligible employees, outside directors and consultants may be awarded options, stock grants, stock units or stock appreciation rights. The terms and conditions of an option, stock grant, stock unit or stock appreciation right (including any vesting or forfeiture conditions) are set forth in the certificate evidencing the grant.  During the three months ended July 3, 2005, options to purchase 56,859 shares of ev3 LLC common membership units were granted under the ev3 LLC 2003 Incentive Plan. In connection with the merger of ev3 LLC with and into ev3 Inc., these options were converted into options to purchase an equivalent number of shares of the Company’s common stock.   During the three months ended July 3, 2005, options to purchase 1,491,619 shares of the Company’s common stock were granted under the ev3 Inc. 2005 Incentive Stock Plan.     

14. Commitments and Contingencies

Letters of Credit

As of July 3, 2005, the Company had $2.4 million of outstanding letters of credit. These outstanding commitments are fully collateralized by restricted cash.

Contingencies

The Company’s acquisition agreements relating to the purchase of MitraLife, Appriva Medical, Inc. and Dendron GmbH require the Company to make additional payments to the sellers of these businesses if certain milestones related to regulatory steps in the product commercialization process are achieved. The potential milestone payments total $25.0 million, $175.0 million and $15.0 million with respect to the MitraLife, Appriva and Dendron acquisitions, respectively, during the period of 2003 to 2009. On September 29, 2004, the Company sold substantially all of the assets constituting the MitraLife business to Edwards Lifesciences and is no longer pursuing commercialization of the product line acquired in the MitraLife transaction.  As of the date that the Company sold these assets to Edwards Lifesciences, none of the milestones set forth in the Company’s agreement with the sellers of MitraLife had been met.  The Company has determined that it has no current obligations in respect of these milestone payments, and the Company does not believe that it is likely that it will have obligations with respect to these milestones in the future.  The Company has determined that the first milestone with respect to the Appriva agreement was not achieved by the January 1, 2005 milestone date and that the first milestone is not payable. It is possible that the Company will meet one or more of the remaining milestones with respect to the Appriva acquisition and could become obligated to make the corresponding milestone payments totaling $125.0 million in periods subsequent to 2005. Under the terms of the stock purchase agreement the Company entered into in connection with its acquisition of Dendron, the Company may be required to make additional payments which are contingent upon Dendron products achieving certain revenue targets between 2003 and 2008. In 2003, the $4.0 million revenue target for sales of Dendron products during 2003 was met. Accordingly, an additional payment to the former Dendron stockholders of $3.75 million was made in 2004. In 2004, the $5.0 million revenue target for sales of Dendron products during 2004 was met. Accordingly, a payment to the former Dendron stockholders of $3.75 million was accrued in 2004 and was paid during the second quarter of 2005. The Company may be required to make a final payment of $7.5 million, which is contingent upon Dendron products achieving annual revenues of

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$25 million in any year during the period between 2003 and 2008. Any such final payment would be due in the year following the year of target achievement.

The Company is from time to time subject to, and is presently involved in, litigation or other legal proceedings.

In September 2000, Dendron, which was acquired by MTI in 2002, was named as the defendant in three patent infringement lawsuits brought by the Regents of the University of California, as the plaintiff, in the District Court (Landgericht) in Dusseldorf, Germany. The complaints requested a judgment that Dendron’s EDC I coil device infringed three European patents held by the plaintiff and asked for relief in the form of an injunction that would prevent Dendron from producing and selling the devices within Germany and selling from Germany to customers abroad, as well as an award of damages caused by Dendron’s alleged infringement, and other costs, disbursements and attorneys’ fees. In August 2001, the court issued a written decision that the EDC I coil devices did infringe the plaintiff’s patents, enjoined Dendron from selling the devices within Germany and from Germany to customers abroad, and requested that Dendron disclose the individual products’ costs as the basis for awarding damages. In September 2001, Dendron appealed the decision. In addition, Dendron instituted challenges to the validity of each of these patents by filing opposition proceedings with the European Patent Office, or EPO, against one of the patents (MTI joined Dendron in this action in connection with its acquisition of Dendron), and by filing, with MTI, nullity proceedings with the German Federal Patents Court against the German component of the other two patents.  The opposition proceedings with the EPO on the one patent are complete, and the EPO has rejected the opposition and has upheld the validity of the one patent.

On July 4, 2001, the University of California filed another suit against Dendron alleging that the EDC I coil device infringed another European patent held by the plaintiff. The complaint was filed in the District Court of Dusseldorf, Germany seeking additional monetary and injunctive relief. In April 2002, the Court found that EDC I coil devices did infringe the plaintiff’s patent. The patent involved is the same patent that was involved in the case before the English Patents Court (see below) and that was ruled by a Dutch court to be invalid (see below).  The opposition proceedings on the patent are complete, and the EPO has rejected the opposition and has upheld the validity of the patent.  The case is under appeal and an oral hearing is scheduled to be held in the Dusseldorf Court of Appeal on March 9, 2006.

An accrual for the matters discussed above was included in the balance sheet of Dendron as of the date of its acquisition by MTI. As of July 3, 2005, approximately $800 thousand was recorded in accrued liabilities in our consolidated balance sheet. Dendron ceased all activities with respect to the EDC I coil device prior to MTI’s October 2002 acquisition of Dendron.

Concurrent with its acquisition of Dendron, MTI initiated a series of legal actions related to its Sapphire coils in the Netherlands and the United Kingdom, which included a cross-border action that was heard by a Dutch court, as further described below. The primary purpose of these actions was to assert both invalidity and non-infringement by MTI of certain patents held by others. The range of patents at issue are held by the Regents of the University of California, with Boston Scientific Corporation subsidiaries named as exclusive licensees, collectively referred to as the “patent holders,” related to detachable coils and certain delivery catheters.

In October 2003, the Dutch court ruled that the three patents at issue related to detachable coils are valid and that MTI’s Sapphire coils do infringe such patents. The Dutch court also ruled that the patent holders’ patent at issue related to the delivery catheter was invalid. Under the court’s ruling, MTI has been enjoined from engaging in infringing activities related to the Sapphire coils in most countries within the European Union, and may be liable for then-unspecified monetary damages for activities engaged in by MTI since September 27, 2002. In February 2005, MTI received an initial claim from the patent holders with respect to monetary damages, amounting to €3.6 million, or approximately $4.3 million as of July 3, 2005, with which MTI disagrees. Court hearings will be held regarding these claims. MTI has filed an appeal with the Dutch court, and believes that since the date of injunction in each separate country it is in compliance with the Dutch court’s injunction and MTI intends to continue such compliance. Because the Company believes that MTI has valid legal grounds for appeal, it has determined that a loss is not probable at this time as defined by SFAS 5, Accounting for Contingencies. However, there can be no assurance that the ultimate resolution of this matter will not result in a material adverse effect on the Company’s business, financial condition or results of operations.

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In January 2003, MTI initiated a legal action in the English Patents Court seeking a declaration that a patent held by the patent holders related to delivery catheters was invalid, and that MTI’s products did not infringe this patent. The patent in question was the U.K. designation of the same patent that was found by the Dutch court in October 2003 to be invalid, as discussed above. The patent holders counterclaimed for alleged infringement by MTI. In February 2005, the court approved an interim settlement between the parties under which the patent holders are required to surrender such patent to the U.K. Comptroller of Patents, and to pay MTI’s costs associated with the legal action, including interest. As a result, MTI received interim payments from the patent holders aggregating £500 thousand (equivalent to approximately $950 thousand based on the dates of receipt), which MTI recorded as a reduction of litigation expense upon receipt of such funds in February and March 2005. The parties intend to continue discussions regarding payment by the patent holders of the remaining costs incurred by MTI in such litigation. As a result of the interim settlement, MTI anticipates that it will no longer be involved in litigation in the United Kingdom, although no assurance can be given that no other litigation involving MTI may arise in the United Kingdom.

In the United States, concurrent with the FDA’s marketing clearance of the Sapphire line of embolic coils received in July 2003, MTI initiated a declaratory judgment action against the patent holders in the United States District Court for the Western District of Wisconsin. The action included assertions of non-infringement by MTI and invalidity of a range of patents held by the patent holders related to detachable coils and certain delivery catheters. In October 2003, the court dismissed MTI’s actions for procedural reasons without prejudice and without decision as to the merits of the parties’ positions. In December 2003, the University of California filed an action against MTI in the United States District Court for the Northern District of California alleging infringement by MTI with respect to a range of patents held by the University of California related to detachable coils and certain delivery systems. MTI has filed a counterclaim against the University of California asserting non-infringement by MTI, invalidity of the patents and inequitable conduct in the procurement of certain patents. In addition, MTI filed a claim against the University of California and Boston Scientific Corporation for violation of federal antitrust laws, with the result that the court has subsequently decided to add Boston Scientific as a party to the litigation. A trial date has not been set. Because these matters are in early stages, the Company cannot estimate the possible loss or range of loss, if any, associated with their resolution. However, there can be no assurance that the ultimate resolution of these matters will not result in a material adverse effect on the Company’s business, financial condition or results of operations.

In March 2005, Medtronic, Inc. contacted the Company to express its view that the Company’s Protégé stents infringe on one or more of Medtronic’s patents. The Company informed Medtronic that it disagrees with Medtronic’s assertions, and has since had several discussions with Medtronic.  No lawsuit with respect to this matter has been filed.  The Company also received notice from an individual claiming that he believes that the Company’s PLAATO device infringes on two of his patents.  The Company has informed this individual that it does not believe that its PLAATO device infringes on these patents.  On March 30, 2005, the Company was served with a complaint by Boston Scientific Corporation and one of its affiliates which claims that some of the Company’s products, including its SpideRX Embolic Protection Device, infringe certain of Boston Scientific’s patents.  This action was brought in the United States District Court for the District of Minnesota.  The Company has answered the complaint and intends to vigorously defend this action. Because these matters are in early stages, the Company cannot estimate the possible loss or range of loss, if any, associated with their resolution.  However, there can be no assurance that the ultimate resolution of these matters will not result in a material adverse effect on the Company’s business, financial condition or results of operations.

During 2002, the Company acquired Appriva Medical, Inc., a developer of a technology to reduce stroke in patients with atrial fibrillation which provided the platform for the Company’s current PLAATO device.  The acquisition agreement relating to the Company’s acquisition of Appriva contains four milestones to which payments relate.  The first milestone was required by its terms to be achieved by January 1, 2005 in order to trigger a payment equal to $50 million.  The Company has determined that the first milestone was not achieved by January 1, 2005 and that the first milestone is not payable.  On May 20, 2005, Michael Lesh, as an individual seller of Appriva stock and purporting to represent certain other sellers of Appriva stock, filed a complaint in the Superior Court of the State of Delaware with individually specified damages aggregating $70 million and other unspecified damages for several allegations, including that the Company, along with other defendants,  breached the acquisition agreement and an implied covenant of good faith and fair dealing by willfully failing to take the steps necessary to meet the first milestone under the agreement, and thereby also failing to meet certain other milestones, and further that one

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milestone was actually met.   The complaint also alleges fraud, negligent misrepresentation and violation of state securities laws in connection with the negotiation of the acquisition agreement.  The Company believes these allegations are without merit and intends to vigorously defend this action.  On August 5, 2005, the Company’s attorneys received a letter from attorneys representing certain other sellers of Appriva stock (who are not purported to be represented in the action filed by Lesh), asking the Company’s attorneys to enter into a dialogue regarding their assertions that certain milestones should have been paid. The Company believes their assertions are without merit. Failure to reach agreement with these new claimants on a resolution of the parties’ differences, could lead to additional litigation on this matter.  Because these matters are in early stages, the Company cannot estimate the possible loss or range of loss, if any, associated with their resolution. However, there can be no assurance that the ultimate resolution of these matters will not result in a material adverse effect on the Company’s business, financial condition or results of operations.

15. Segment and Geographic Information

  The following is segment and geographic information (in thousands):

	Three Months Ended						Six Months Ended
	July 3, 2005			July 4, 2004			July 3, 2005			July 4, 2004
Segment Data
Net sales
Cardio Peripheral
Stents	$	8,781		$	4,681		$	15,879		$	10,005
Thrombectomy and embolic protection	3,223			1,835			6,461			3,935
Procedural support and other	7,204			5,647			13,709			11,792
Total Cardio Peripheral	$	19,208		$	12,163		$	36,049		$	25,732
Neurovascular
Embolic products	4,219			3,209			8,197			5,487
Neuro access and delivery products	8,113			5,197			14,976			9,930
Total Neurovascular	$	12,332		$	8,406		$	23,173		$	15,417
Total net sales	$	31,540		$	20,569		$	59,222		$	41,149
Gross Profit
Cardio peripheral	$	10,314		$	6,307		$	19,001		$	14,337
Neurovascular	8,441			4,894			15,328			8,655
Total gross profit (1)	18,755			11,201			34,328			22,992
Operating expenses	47,715			36,555			92,609			72,697
Loss from Operations	$	(28,960	)	$	(25,354	)	$	(58,281	)	$	(49,705	)

(1) Gross profit for internal measurement purposes is defined as net sales less cost of goods sold excluding the amortization of intangible assets.

	July 3, 2005		December 31, 2004
Total assets
Cardio Peripheral	$	270,573	$	146,722
Neurovascular	62,173		65,324
Total assets	$	332,746	$	216,046

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	Three Months Ended				Six Months Ended
	July 3, 2005		July 4, 2004		July 3, 2005		July 4, 2004
Geographic Data
Net sales
United States	$	15,939	$	10,212	$	30,060	$	20,710
International	15,601		10,357		29,162		20,439
Total net sales	$	31,540	$	20,569	$	59,222	$	41,419

16. Earnings Per Share

The following outstanding convertible preferred units of ev3 LLC, convertible demand notes, and options of the Company and ev3 LLC were excluded from the computation of diluted earnings per share as they had an antidilutive effect.  In connection with the merger of ev3 LLC with and into ev3 Inc. immediately prior to the Company’s initial public offering,  each preferred membership unit of ev3 LLC was converted into a share of our common stock and each option to purchase common membership units of ev3 LLC was converted into an option to purchase an equivalent number of shares of the Company’s common stock (see Note 13).

	Three Months Ended		Six Months Ended
	July 3, 2005	July 4, 2004	July 3, 2005	July 4, 2004
Convertible preferred stock class A (assuming conversion using the contractual conversion ratio to common units)	—	24,040,718	—	24,040,718
Convertible preferred stock class B (assuming conversion using the contractual conversion ratio to common units)	—	41,077,336	—	41,077,336
Convertible demand notes (assuming conversion at stated value into common units)	—	64,611,847	—	64,611,847
Options	3,493,961	1,388,468	3,493,961	1,388,468
	3,493,961	131,118,369	3,493,961	131,118,369

17. Subsequent Events

On July 20, 2005, subsequent to the end of the fiscal quarter, the Company sold 205,800 shares of common stock pursuant to the over-allotment option granted to the underwriters in connection with its initial public offering.  Net proceeds to the Company from this sale totaled $2.5 million, after deducting underwriting discounts and commissions and offering expenses, and increased the Company’s outstanding shares to 49,116,454.

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ITEM 2.MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following management’s discussion and analysis of financial condition and results of operations describes the principal factors affecting the results of our operations, financial condition and changes in financial condition for the three and six months ended July 3, 2005.  You should read this discussion together with the accompanying unaudited consolidated financial statements, related notes and other financial information included herein. As discussed under the heading “Forward-Looking Statements” below, the following discussion and other portions of this report may contain predictions, estimates and other forward-looking statements that involve a number of risks and uncertainties, including those discussed under the heading “Risk Factors” below and elsewhere in this report. These risks could cause our actual results to differ materially from any future performance suggested in such forward-looking statements.

Overview

We are a global medical device company focused on catheter-based, or endovascular, technologies for the minimally invasive treatment of vascular diseases and disorders.  Our broad product portfolio is focused on applications in each of the three sub-markets of the endovascular device market: peripheral vascular, cardiovascular and neurovascular.  We sell over 100 products consisting of over 1,000 SKUs in these markets.  From 2000 to 2002, our investor group acquired certain of the assets in our cardio peripheral division to build the foundation of our current peripheral and cardiovascular product portfolios. During this period, our investor group also purchased certain neurovascular assets to expand our neurovascular product portfolio and, through a series of investments,  obtained our indirect controlling investment in Micro Therapeutics, Inc., or MTI.  Beginning in 2002, we entered into long-term, exclusive agreements to market or distribute MTI’s full product portfolio in Europe, Japan, Canada and the major markets of Asia Pacific and Latin America.  Since our last acquisition in 2002, we have dedicated significant capital and management effort to advance the acquired technologies and broaden our product lines in order to execute our strategies.

We have corporate infrastructure and direct sales capabilities in the United States, Canada, Europe and Japan and have established distribution relationships in other large international markets.  Our corporate headquarters is located in Plymouth, Minnesota and contains our manufacturing, research and development, and U.S. sales operations for our peripheral vascular and cardiovascular product lines.  MTI is headquartered in Irvine, California, which contains our manufacturing, research and development, and U.S. sales operations for our neurovascular product lines.  Outside of the United States, our primary offices are in Paris, France and Tokyo, Japan. During the three and six months ended July 3, 2005, approximately 49.5% and 49.2% of our net sales, respectively, were generated outside of the United States, as a result of which we are sensitive to risks related to fluctuation in exchange rates, which could affect our business results in the future.

Since our inception, we have focused on building our U.S. and international direct sales and marketing infrastructure that now includes a sales force of 199 direct sales representatives as of August 1, 2005 in the United States, Canada, Europe and Japan.  Our direct sales representatives accounted for approximately 87% and 88% of our net sales during the three and the six months ended July 3, 2005, respectively, with the balance generated by independent distributors.  In 2004,we increased our U.S. direct sales force from 44 to 82 and our Japan sales force from four to eleven.  In order to drive sales growth, we have invested heavily throughout our history in new product development, clinical trials to obtain regulatory approvals and the expansion of our global distribution system.  As a result, our costs and expenses have significantly exceeded our net sales, resulting in an accumulated deficit of $520.2 million at July 3, 2005.  Consequently, we have financed our operations through debt and equity offerings.  We expect to continue to generate operating losses for at least the next 18 months.

Our cash, cash equivalents and short-term investments available to fund current operations were $128.4 million and $20.1 million at July 3, 2005 and December 31, 2004, respectively.  We completed an initial public offering of our common stock on June 21, 2005 in which we sold 11,765,000 shares of our common stock at $14.00 per share, resulting in net proceeds to us of approximately $152.8 million, after deducting underwriting discounts and commissions and offering expenses.  We used $36.5 million of these net proceeds to repay a portion of the accrued and unpaid interest on certain demand notes held by Warburg, Pincus Equity Partners, L.P. and certain of its

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affiliates, which we refer to collectively as Warburg Pincus, and The Vertical Group L.P. and certain of its affiliates, which we refer to collectively as Vertical.  In addition, on July 20, 2005, we sold 205,800 shares of common stock pursuant to an over-allotment option granted to the underwriters which resulted in net proceeds to us of  $2.5 million, after deducting underwriting discounts and commissions and offering expenses.  We invested the remaining portion of the net proceeds in short-term, investment-grade, interest bearing securities.  We expect to use these funds for general corporate purposes, which may include funding the operations of MTI.  We expect our cash balance to decrease as we continue to use cash to fund our operations. We do not have any debt for borrowed money. We believe our cash, cash equivalents and short-term investments will be sufficient to meet our liquidity requirements through the end of fiscal 2006.  There can be no assurance, however, that we will be able to achieve such positive cash flow or that we will not need additional financing to fund our operations.

We believe the overall market for endovascular devices will grow as the demand for minimally invasive treatment of vascular diseases and disorders continues to increase. Our broad product portfolio is focused on applications that we estimate represented an addressable worldwide endovascular market opportunity of approximately $1.6 billion in 2004. We intend to capitalize on this market opportunity by the continued introduction of new products. We intend to originate these new products primarily through our internal research and development and clinical efforts, but we may supplement them with acquisitions or other external collaborations. Additionally, our growth has been, and will continue to be, impacted by our expansion into new geographic markets and the expansion of our direct sales organization in existing geographic markets

We report and manage our operations in two reportable business segments based on similarities in the products sold, customer base and distribution system.  Our cardio peripheral segment contains products that are used in both cardiovascular and peripheral vascular procedures by cardiologists, radiologists and vascular surgeons.  Our neurovascular segment contains products that are used primarily by neuro-radiologists and neurosurgeons.  Our sales activities and operations are aligned closely with our business segments.  We generally have dedicated cardio peripheral sales teams in the United States and Europe that target customers who often perform procedures in both anatomic areas (cardiovascular and peripheral vascular).  We generally have separate, dedicated neurovascular sales teams in the United States and Europe that are specifically focused on this customer base.

MTI, our public operating subsidiary, is focused on the neurovascular market.  However, a small portion of MTI’s sales relate to products sold into the cardio peripheral market, which we classify as cardio peripheral sales in our reporting.  In addition, some of MTI’s sales are generated at a transfer price to our international sales entities where they are resold by our sales organization.  For consolidated reporting, these intercompany sales are eliminated.  As a result, the neurovascular sales we report will be different from the sales that MTI reports publically. Based on MTI’s public financial statements, approximately 41.5% of our net sales and 6.2% of our net losses during the three months ended July 3, 2005 and 41.3% of our net sales and 3.3% of our net losses during the six months ended July 3, 2005 were attributable to MTI.

On January 28, 2005, we were formed as a subsidiary of ev3 LLC.  Immediately prior to the closing of our initial public offering on June 21, 2005, ev3 LLC merged with and into us, and we became the holding company for all of ev3 LLC’s subsidiaries.  Warburg Pincus and Vertical directly owned an aggregate of 9,704,819 shares of MTI’s common stock, or 20.0% of the outstanding shares of MTI’s common stock as of May 1, 2005. On May 26, 2005, pursuant to a contribution and exchange agreement dated as of April 4, 2005, Warburg Pincus and Vertical contributed these shares of MTI’s common stock to ev3 LLC in exchange for 10,804,500 and 3,004,332 common membership units of ev3 LLC, respectively.  As a result of the merger described above, as of July 3, 2005, we owned 34,041,578 shares of MTI’s common stock, or 70.3% of the outstanding shares of MTI’s common stock.

As the controlling stockholder, the contribution of the MTI shares by Warburg Pincus, representing a 15.7% interest in MTI as of May 26, 2005, was accounted for as a transfer of assets between entities under common control resulting in the retention of historical based accounting.  The consolidated financial statements included in this report give effect to the contribution of MTI shares owned by Warburg Pincus as though such contribution occurred in 2003 and 2004 when Warburg Pincus acquired its interest in MTI.  The contribution of the MTI shares owned by Vertical was accounted for under the purchase method of accounting on the contribution date. As of July 3, 2005 and December 31, 2004, we owned 70.3% and 66.0% of the outstanding shares of common stock of MTI, respectively. The following results of operations data include the financial results of MTI, which we consolidate for

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accounting purposes but is not wholly owned. The consolidation of MTI for accounting purposes results in all of MTI’s assets and liabilities being included in our consolidated balance sheets. Although all of MTI’s assets are included in our consolidated balance sheets, not all of these assets would be available to us for distribution to our stockholders in the event of MTI’s liquidation.

Immediately prior to the consummation of our initial public offering, we completed a one-for-six reverse stock split of our outstanding common stock.  All share and per share amounts for all periods presented in this report reflect this split.

Sales and Expense Components

The following is a description of the primary components of our net sales and expenses:

Net sales.    We derive our net sales from the sale of endovascular devices in two primary business segments: cardio peripheral and neurovascular devices. Most of our sales are generated by our global, direct sales force and are shipped and billed to hospitals or clinics throughout the world. In countries where we do not have a direct sales force, sales are generated by shipments to distributors who, in turn, sell to hospitals and clinics. In cases where our products are held in consignment at a customer’s location, we generate sales at the time the product is used in surgery rather than at shipment. We charge our customers for shipping and record shipping income as part of net sales.

Cost of goods sold.    We manufacture a substantial majority of the products that we sell. Our cost of goods sold consists primarily of direct labor, allocated manufacturing overhead, raw materials and components and excludes amortization of intangible assets, which is presented as a separate component of operating expenses.

Sales, general and administrative expenses.    Our selling and marketing expenses consist primarily of sales commissions and support costs for our global, direct distribution system, royalty and consulting expenses associated with our medical advisors, marketing costs and facility costs, including any costs related to closing facilities. General and administrative expenses consist primarily of salaries and benefits, compliance systems, accounting, finance, legal, information technology, human resources and freight expense that we pay to ship products to customers.

Research and development.    Research and development expense includes costs associated with the design, development, testing, deployment, enhancement and regulatory approval of our products. It also includes costs associated with design and execution of clinical trials and regulatory submissions.

Amortization of intangible assets.    Intangible assets, such as purchased completed technology, distribution channels, intellectual property, including trademarks and patents, are amortized over their estimated useful life. We amortize intangible assets over periods ranging from 5 to 8 years.

(Gain) loss on sale of assets, net.    (Gain) loss on sale of assets, net includes the difference between the proceeds received from the sale of an operating asset and its carrying value.

Acquired in-process research and development.    Acquired in-process research and development is related to value assigned to those projects acquired in business combinations or in the acquisition of assets for which the related products have not received regulatory approval and have no alternative future use.

Gain on sale of investments, net.    Gain on sale of investments, net includes the difference between the proceeds received from the sale of an investment and its carrying value. In addition, this caption includes losses from other than temporary declines in investments accounted for on a cost basis.

Interest expense, net.    Interest expense, net consists primarily of interest associated with loans from our principal investors, Warburg Pincus and Vertical.

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Minority interest in loss of subsidiary.    Minority interest in loss of subsidiary is the portion of MTI’s net losses allocated to minority stockholders.

Other expense, net.    Other expense, net primarily includes foreign exchange losses net of certain other expenses.

Income tax benefit.    Income tax benefit is generated in certain of our European subsidiaries. Due to our history of operating losses, we have not recorded a provision for U.S. income taxes through 2004 and the six months ended July 3, 2005.

Accretion of preferred membership units to redemption value.    Accretion of preferred membership units to redemption value represents the increase in carrying value of preferred membership units of ev3 LLC prior to ev3 LLC’s merger with and into us on June 21, 2005.  The increase in carrying value was based on the rights to which the preferred membership units were entitled related to a liquidation, dissolution or winding up of ev3 LLC. Accretion was recorded as a reduction to members’ equity and increased the loss attributable to common unit holders. Accretion was discontinued upon conversion of the preferred units to common membership units, and subsequently into shares of our common stock, on June 21, 2005, in connection with the merger.

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Results of Operations

The following table sets forth, for the periods indicated, our results of operations expressed as dollar amounts (in thousands), and the changes between the specified periods expressed as percent increases or decreases:

	Three Months Ended								Six Months Ended
	July 3,			July 4,			Percent		July 3,			July 4,			Percent
	2005			2004			Change		2005			2004			Change
Net sales	$	31,540		$	20,569		53.3	%	$	59,222		$	41,149		43.9	%
Operating expenses
Cost of goods sold (1)	12,785			9,368			36.5	%	24,894			18,157			37.1	%
Sales, general and administrative (1)	32,297			23,520			37.3	%	64,157			47,957			33.8	%
Research and development (1)	11,891			10,589			12.3	%	22,217			19,743			12.5	%
Amortization of intangible assets	2,548			2,447			4.1	%	5,203			4,978			4.5	%
(Gain) loss on sale or disposal of assets, net	111			(1		)	NM		164			19			763.2	%
Acquired in-process research and development	868			—			NM		868			—			NM
Total operating expenses	60,500			45,923			31.7	%	117,503			90,854			29.3	%
Loss from operations	(28,960		)	(25,354		)	14.2	%	(58,281		)	(49,705		)	17.3	%
Other (income) expense:
Gain on sale of investments, net	(878		)	(1,728		)	(49.2	)%	(4,611		)	(1,728		)	166.8	%
Interest expense, net	6,078			4,458			36.3	%	11,786			10,613			11.1	%
Minority interest in loss of subsidiary	(705		)	(1,315		)	(46.4	)%	(726		)	(5,072		)	(85.7	)%
Other expense, net	1,828			206			787.4	%	2,920			106			2654.7	%
Loss before income taxes	(35,283		)	(26,975		)	30.8	%	(67,650		)	(53,624		)	26.2	%
Income tax benefit	(61		)	—			NM		(59		)	—			NM
Net loss	(35,222		)	(26,975		)	30.6	%	(67,591		)	(53,624		)	26.0	%
Accretion of preferred membership units to redemption value (2)	5,635			5,869					12,061			11,804
Net loss attributable to common stockholders	$	(40,857	)	$	(32,844	)	24.4	%	$	(79,652	)	$	(65,428	)	21.7	%
Net loss per common share attributable to common stockholders (basic and diluted)	$	(4.60	)	$	(18.29	)			$	(13.95	)	$	(37.36	)
Weighted average common shares outstanding	8,877,898			1,795,745					5,711,852			1,751,092

(1) Includes stock based compensation charges of:
Cost of goods sold	$	135	$	47	$	247	$	98
Sales, general and administrative	591		206		1,045		1,373
Research and development	189		182		434		398
	$	915	$	435	$	1,726	$	1,869

(2)The accretion of preferred membership units to redemption value presented above is based on the rights to which the Class A and Class B preferred membership unit holders of ev3 LLC were entitled related to a liquidation, dissolution or winding up of ev3 LLC. Notwithstanding this accretion right, in connection with the merger of ev3 LLC with and into us, each membership unit representing a preferred equity interest in ev3 LLC was converted into the right to receive one share of our common stock and did not receive any additional rights with respect to the liquidation preference.  As a result, no further accretion related to these preferred units will be recorded.

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The following tables set forth, for the periods indicated, our net sales by segment and geography expressed as dollar amounts (in thousands) and the changes in net sales between the specified periods expressed as percentages:

	Three Months Ended						Six Months Ended
NET SALES BY SEGMENT	July 3, 2005		July 4, 2004		Percent Change		July 3, 2005		July 4, 2004		Percent Change
Cardio Peripheral
Stents	$	8,781	$	4,681	87.6	%	$	15,879	$	10,005	58.7	%
Thrombectomy and embolic protection	3,223		1,835		75.6	%	6,461		3,935		64.2	%
Procedural support and other	7,204		5,647		27.6	%	13,709		11,792		16.3	%
Total Cardio Peripheral	$	19,208	$	12,163	57.9	%	$	36,049	$	25,732	40.1	%
Neurovascular
Embolic products	4,219		3,209		31.5	%	8,197		5,487		49.4	%
Neuro access and delivery products	8,113		5,197		56.1	%	14,976		9,930		50.8	%
Total Neurovascular	$	12,332	$	8,406	46.7	%	$	23,173	$	15,417	50.3	%
Total net sales	$	31,540	$	20,569	53.3	%	$	59,222	$	41,149	43.9	%

	Three Months Ended						Six Months Ended
NET SALES BY GEOGRAPHY	July 3, 2005		July 4, 2004		Percent Change		July 3, 2005		July 4, 2004		Percent Change
United States	$	15,939	$	10,212	56.1	%	$	30,060	$	20,710	45.1	%
International
Before foreign exchange impact	15,146		10,357		46.2	%	28,212		20,439		38.0	%
Foreign exchange impact	455		—		—		950		—		—
Total	15,601		10,357		50.6	%	29,162		20,439		42.7	%
Total net sales	$	31,540	$	20,569	53.3	%	$	59,222	$	41,149	43.9	%

Comparison of the Three Months Ended July 3, 2005 to the Three Months Ended July 4, 2004

Net sales.    Net sales increased 53.3% to $31.5 million in the three months ended July 3, 2005 compared to $20.6 million in the three months ended July 4, 2004, primarily as a result of continued unit sales growth in the 23 new product introductions since October 1, 2004 and the expansion of our distribution system. We increased our U.S. direct sales force from 44 persons at the beginning of 2004 to 82 persons at the beginning of 2005, with most of the growth occurring in the fourth quarter of 2004. The sales force expansion was primarily to support new product introductions that began in late 2004 and continued in the first and second quarters of 2005. We introduced 16 new products in the first quarter of 2005 and 3 new products in the second quarter of 2005.  We expect to introduce additional new products during the remainder of the year.

Net sales of cardio peripheral products.    Net sales of cardio peripheral products increased 57.9% to $19.2 million in the three months ended July 3, 2005 compared to $12.2 million in the three months ended July 4, 2004. This sales growth was primarily the result of new product introductions and the expansion of our U.S. sales force in the fourth quarter of 2004 as described above, partially offset by sales declines in older generation products. Key new product launches since the second quarter of 2004 that contributed to the sales increase for the three months ended July 3, 2005 included the Protégé Long, Primus and ParaMount Mini stents, the SpideRX embolic protection system, the X-Sizer thrombectomy catheter system and Invatec percutaneous transluminal angioplasty, or PTA, balloon catheters.

Net sales in our stent product line increased 87.6% to $8.8 million in the three months ended July 3, 2005 compared to $4.7 million in the three months ended July 4, 2004. This increase is attributable to the introduction of the Protégé, Primus and ParaMount Mini families of stents into the U.S. and international markets during the previous twelve months, partially offset by sales declines in older generation products. Net sales of our thrombectomy and embolic protection devices increased 75.6% to $3.2 million in the three months ended July 3, 2005 compared to the

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three months ended July 4, 2004 largely due to the introduction of the SpideRX internationally and the introduction of the X-Sizer in the United States in late 2004.  Net sales in our procedural support and other product line increased 27.6% to $7.2 million in the three months ended July 3, 2005 compared to $5.6 million in the three months ended July 4, 2004.  This increase is primarily attributable to the increase in sales of our PTA balloons which were launched early in  2005.  We expect cardio peripheral net sales to increase during the remainder of 2005 primarily as a result of introducing several new products during the year, especially in our stent family, and continued market penetration from our recently expanded sales force.

Net sales of neurovascular products.    Net sales of our neurovascular products increased 46.7% to $12.3 million in the three months ended July 3, 2005 compared to $8.4 million in the three months ended July 4, 2004, primarily as a result of volume increases in the NXT families of embolic coils and continued penetration by our microcatheters and occlusion balloon systems. We experienced a 31.5% increase, or $1.0 million, in net sales of our embolic products in the three months ended July 3, 2005 over the comparable period in 2004 primarily due to volume increases in sales of the NXT coil family. Net sales of our neuro access and delivery products increased 56.1% to $8.1 million in the three months ended July 3, 2005 compared to the three months ended July 4, 2004 due primarily to volume increases across multiple product lines including the Echelon microcatheters, the Marathon microcatheter, and the HyperForm and HyperGlide occlusion balloon systems.

Net sales by geography.    Net sales in the United States increased 56.1% to $15.9 million in the three months ended July 3, 2005 compared to $10.2 million in the three months ended July 4, 2004. International net sales increased 50.6% to $15.6 million in the three months ended July 3, 2005 compared to $10.4 million in the three months ended July 4, 2004 and represented approximately 50% of company-wide sales in both periods. Our international net sales in the three months ended July 3, 2005 includes a favorable currency impact of approximately 3.0%, or $0.5 million, compared to the three months ended July 4, 2004,  principally resulting from the performance of the Euro against the U.S. dollar. Company-wide, 87% of our net sales were generated by our direct sales operations during the three months ended July 3, 2005 compared to 86% in the comparable period of 2004.  Our direct sales force operations in Europe contributed $3.0 million, or 57%, of the total international sales growth, with the remainder coming from our distribution operations in the Asia Pacific markets and our direct sales force operations in Japan.  The sales growth in our international markets was primarily a result of new product introductions and increased penetration.

Cost of goods sold.    Cost of goods sold increased 36.5% to $12.8 million in the three months ended July 3, 2005 compared to $9.4 million in the three months ended July 4, 2004 as a result of increased sales as discussed above. As a percentage of net sales, cost of goods sold decreased to 40.5% of net sales in the three months ended July 3, 2005 compared to 45.5% of net sales in the three months ended July 4, 2004. This decrease was attributable to improved yields in the manufacturing of recently released products related to increases in volumes and increased efficiencies associated with the consolidation of our manufacturing facilities. In our cardio peripheral segment, cost of goods sold as a percent of net sales decreased to 46.3% in the three months ended July 3, 2005 compared to 48.1% in the three months ended July 4, 2004.  This decrease was due primarily to leveraging fixed costs relative to higher sales and production. In our neurovascular segment, cost of goods sold as a percent of sales decreased to 31.6% in the three months ended July 3, 2005 compared to 41.8% in the three months ended July 4, 2004 due to increased production volume. We expect cost of goods sold as a percentage of net sales to continue to decline during 2005 due to higher volume in our manufacturing facilities and efficiency improvements from manufacturing initiatives.

Sales, general and administrative expense.    Sales, general and administrative expense increased 37.3% to $32.3 million in the three months ended July 3, 2005 compared to $23.5 million in the three months ended July 4, 2004. The increase was due to a $7.0 million increase in selling expenses primarily related to the increase in the U.S. direct sales force described above and an increase in expenses related to expanding our international sales presence, a $1.5 million increase in marketing and distribution expenses and $0.4 million of costs related to our initial public offering which did not occur in the second quarter of 2004.   These increases were partially offset by an approximately $1.2 million decrease in legal expenses at MTI. We expect sales, general and administrative expenses to decline as a percentage of net sales as we believe our current infrastructure can support a higher level of sales.

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Research and development.    Research and development expense increased 12.3% to $11.9 million in the three months ended July 3, 2005 compared to $10.6 million in the three months ended July 4, 2004. This increase was primarily due to a $0.9 million increase in clinical trial expenses in our cardio peripheral segment and a $0.8 million increase in product development expenses in our neurovascular segment, partially offset by a $0.5 million reduction in clinical and regulatory expenses in our neurovascular segment related to the completion of certain clinical trials.  The remaining $0.1 million increase is due to increases in other research and development expenses. Research and development expense, as a percentage of net sales, decreased to 38% for the three months ended July 3, 2005 from 51% for the three months ended July 4, 2004.  We expect research and development spending to decline both in total dollars and as a percentage of net sales as we complete several clinical trials during the second half of 2005 and we continue to expand our sales base.

Amortization of intangible assets.    Amortization of intangible assets increased 4.1% to $2.5 million in the three months ended July 3, 2005 compared to $2.4 million in the three months ended July 4, 2004.  This increase is primarily a result of additional amortizable intangible assets related to Vertical’s May 26, 2005 contribution to ev3 LLC of shares of MTI. This contribution was accounted for under the purchase method of accounting based upon the proportionate ownership contributed to ev3 LLC and resulted in an increase in amortizable intangible assets of approximately $3.4 million.

(Gain) loss on sale or disposal of assets, net.    (Gain) loss on sale or disposal of assets, net was immaterial in the three months ended July 3, 2005 and July 4, 2004.

Acquired in-process research and development.    We incurred a charge for acquired in-process research and development of $0.9 million in the three months ended July 3, 2005 as a result of the Vertical’s May 26, 2005 contribution to ev3 LLC of shares of MTI. This contribution was accounted for under the purchase method of accounting based upon the proportionate ownership contributed to ev3 LLC.  We did not incur charges for acquired in-process research and development expense in the three months ended July 4, 2004.  For a discussion of this amount, see Note 6 to our unaudited consolidated financial statements included in this report.

Gain on sale of investments, net.    Gain on sale of investments, net was  $0.9 million in the three months ended July 3,  2005 compared to $1.7 million in the three months ended July 4, 2004. The gains in both periods were the result of our receipt of milestone payments relating to the 2002 sale of an investment in Enteric Medical Technologies,  Inc.

Interest expense, net.    Interest expense, net increased 36.3% to $6.1 million in the three months ended July 3, 2005 compared to $4.5 million in the three months ended July 4, 2004.  The increase is due to additional borrowings of $85.9 million subsequent to the second quarter of 2004 which resulted in a higher average outstanding debt balance during the second quarter of 2005 as compared to the second quarter of 2004.

Minority interest in loss of subsidiary.    Minority interest in loss of subsidiary, which represents the portion of MTI’s losses allocated to minority investors, was $0.7 million in the three months ended July 3, 2005 compared to $1.3 million in the three months ended July 4, 2004. The decrease is due primarily to lower losses at MTI in the three months ended July 3, 2005 compared to the three months ended July 4, 2004.

Other expense, net.    Other expense, net was $1.8 million in the three months ended July 3, 2005 compared to other expense, net of $0.2 million in the three months ended July 4, 2004. The increase in other expense, net is primarily related to increases in foreign exchange losses in the three months ended July 3, 2005 compared to the three months ended July 4, 2004.

Income tax benefit.    We incurred a modest income tax benefit in the three months ended July 3, 2005 related to certain of our European sales offices and we incurred no income tax expense or benefit in the three months ended July 4, 2004.   We recorded no provision for U.S. income taxes in the three months ended July 3, 2005 or July 4, 2004 due to our history of operating losses.

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Accretion of preferred membership units to redemption value.    Accretion of preferred membership units to redemption value decreased 4.0% to $5.6 million in the three months ended July 3, 2005 compared to $5.9 million in the three months ended July 4, 2004 primarily due to the conversion of the preferred membership units into common membership units, and subsequently into shares of common stock, on June 21, 2005 in conjunction with the merger of ev3 LLC with and into us immediately prior to our initial public offering.  Accretion was discontinued upon conversion of the preferred units to common membership units.

Comparison of the Six Months Ended July 3, 2005 to the Six Months Ended July 4, 2004

Net sales.    Net sales increased 43.9% to $59.2 million in the six months ended July 3, 2005 compared to $41.1 million in the six months ended July 4, 2004, primarily as a result of new product introductions and the expansion of our distribution system during 2004. We increased our U.S. direct sales force from 44 persons at the beginning of 2004 to 82 persons at the beginning of 2005 with most of the growth occurring in the fourth quarter of 2004. The sales force expansion was primarily to support new product introductions that began in late 2004 and continued in the first and second quarters of 2005. We introduced 16 new products in the first quarter of 2005 and 3 new products in the second quarter of 2005.

Net sales of cardio peripheral products.    Net sales of cardio peripheral products increased 40.1% to $36.0 million in the six months ended July 3, 2005 compared to $25.7 million in the six months ended July 4, 2004. This sales growth was primarily the result of new product introductions and the expansion of our U.S. sales force in the fourth quarter of 2004 as described above, partially offset by sales declines in older generation products. Key new product launches that contributed to the sales increase for the six months ended July 3, 2005 included the Protégé Long and ParaMount Mini stents, SpideRX embolic protection system and the X-Sizer thrombectomy catheter.  Net sales in our stent product line increased 58.7% to $15.9 million in the six months ended July 3, 2005 compared to $10.0 million in the six months ended July 4, 2004. This increase is attributable to the introduction of the Protégé, Primus and ParaMount Mini families of stents into the U.S. and international markets during 2004, partially offset by sales declines in older generation products. Net sales of our thrombectomy and embolic protection devices increased 64.2% to $6.5 million in the six months ended July 3, 2005 compared to the six months ended July 4, 2004 largely due to the introduction of the SpideRX internationally and the introduction of the X-Sizer in the United States in late 2004. Net sales of our procedural support and other products increased 16.3% to $13.7 million in the six months ended July 3, 2005 compared to the six months ended July 4, 2004, largely due to the introduction of PTA balloon catheters in early 2005.

Net sales of neurovascular products.    Net sales of our neurovascular products increased 50.3% to $23.2 million in the six months ended July 3, 2005 compared to $15.4 million in the six months ended July 4, 2004, primarily as a result of volume increases in the NXT families of embolic coils and continued penetration by our microcatheters and occlusion balloon systems. Net sales of our neuro access and delivery products increased 50.8% to $15.0 million in the six months ended July 3, 2005 compared to the six months ended July 4, 2004 largely as a result of volume increases across multiple product lines including the Echelon microcatheters, the Marathon microcatheter, and the HyperForm and HyperGlide occlusion balloon systems.  Net sales of our embolic products increased 49.4% to $8.2 million in the six months ended July 3, 2005 compared to the six months ended July 4, 2004 primarily due to volume increases in sales of the NXT families of embolic coils.

Net sales by geography.    Net sales in the United States increased 45.1% to $30.1 million in the six months ended July 3, 2005 compared to $20.7 million in the six months ended July 4, 2004. International net sales increased 42.7% to $29.2 million in the six months ended July 3, 2005 compared to $20.4 million in six months ended July 4, 2004 and represented 49.2% of company-wide sales in the six months ended July 3, 2005 compared to 49.7% in the six months ended July 4, 2004. Our international net sales for the six months ended July 3, 2005 include a favorable currency impact of approximately 3.4%, or $1.0 million, compared to the six months ended July 4, 2004, principally resulting from the performance of the Euro against the U.S. dollar.   Our direct sales force operations in Europe contributed $5.2 million, or 60%, of the total international sales growth, with the remainder coming from our distribution operations in the Asia Pacific markets and our direct sales force operations in Japan.  The sales growth in our international markets was primarily a result of new product introductions and increased penetration.

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Cost of goods sold.    Cost of goods sold increased 37.1% to $24.9 million in the six months ended July 3, 2005 compared to $18.2 million in the six months ended July 4, 2004 primarily as a result of increased sales, as discussed above. As a percentage of net sales, cost of goods sold decreased to 42.0% of net sales in the six months ended July 3, 2005 compared to 44.1% of net sales in the six months ended July 4, 2004. This decrease was primarily attributable to initiatives in our neurovascular segment.   In our cardio peripheral segment, cost of goods sold as a percent of net sales increased to 47.3% in the six months ended July 3, 2005 compared to 44.3% in the six months ended July 4, 2004, primarily due to production scrap and other start up costs related to the introduction of new products.  In our neurovascular segment, cost of goods sold as a percent of net sales decreased to 33.9% in the six months ended July 3, 2005 compared to 43.9% in the six months ended July 4, 2004 due to increased production volume.

Sales, general and administrative expense.    Sales, general and administrative expense increased 33.8% to $64.2 million in the six months ended July 3, 2005 compared to $48.0 million in the six months ended July 4, 2004. The increase was due to a $12.1 million increase in selling expenses primarily related to the increase in the U.S. direct sales force described above and an increase in expenses related to expanding our international sales presence, a $2.0 million increase in marketing and distribution expenses and a $1.8 million increase in general and administrative expenses. These increases were partially offset by an approximately $1.0 million decrease in legal expenses at MTI.

Research and development.    Research and development expense increased 12.5% to $22.2 million in the six months ended July 3, 2005 compared to $19.7 million in the six months ended July 4, 2004.  This increase was primarily due to a $2.2 million increase in clinical trial expenses in our cardio peripheral segment and an $1.4 million increase in product development expenses primarily in our neurovascular segment, partially offset by a $1.2 million reduction in clinical and regulatory expenses in our neurovascular segment related to the completion of certain clinical trials.  The remaining $0.1 million increase is due to increases in other research and development expenses. Research and development expenses, as a percentage of net sales, decreased to 38% for the six months ended July 3, 2005 from 48% for the six months ended July 4, 2004.

Amortization of intangible assets.    Amortization of intangible assets increased 4.5% to $5.2 million in the six months ended July 3, 2005 compared to $5.0 million in the six months ended July 4, 2004. This increase is primarily a result of additional amortizable intangible assets related to Vertical’s May 26, 2005 contribution to ev3 LLC of shares of MTI. This contribution was accounted for under the purchase method of accounting based upon the proportionate ownership contributed to ev3 LLC and resulted in an increase in the amortizable intangible assets of approximately $3.4 million.

(Gain) loss on sale or disposal of assets, net.    (Gain) loss on sale or disposal of assets, net was immaterial in the six months ended July 3, 2005 and July 4, 2004.

Acquired in-process research and development.    During the six months ended July 3, 2005, we incurred a charge of $0.9 million for acquired in-process research and development as a result of Vertical’s contribution to ev3 LLC of shares of MTI.  This contribution was accounted for under the purchase method of accounting based upon the proportionate ownership contributed to ev3 LLC.  For a discussion of this amount, see Note 6 to our unaudited consolidated financial statements included in this report.  We did not incur charges for acquired in-process research and development expense during the six months ended July 4, 2004.

Gain on sale of investments, net.    Gain on sale of investments, net was  $4.6 million in the six months ended July 3, 2005 compared to $1.7 million in the six months ended July 4, 2004. During the six months ended July 3, 2005, we received a $3.7 million milestone payment related to the sale of our investment in Genyx Medical, Inc. and we received a $0.9 million milestone payment relating to the 2002 sale of an investment in Enteric Medical Technologies, Inc.  During the six months ended July 4, 2004, we received a $1.7 milestone payment relating to the 2002 sale of the investment in Enteric Medical Technologies, Inc.

Interest expense, net.    Interest expense, net increased 11.1% to $11.8 million in the six months ended July 3, 2005 compared to $10.6 million for the six months ended July 4, 2004.  Interest expense, net increased by $3.2 million,

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primarily due to additional borrowings of $85.9 million subsequent to the second quarter of 2004 which resulted in a higher average outstanding debt balance during the six months ended July 3, 2005 as compared to the six months ended July 4, 2004. The increase was partially offset by a $2.0 million charge incurred in the first six months of 2004 related to a beneficial conversion feature arising from the minority interests’ participation in two financings of MTI during the year.

Minority interest in loss of subsidiary.    Minority interest in loss of subsidiary, which represents the portion of MTI’s losses allocated to minority investors, was $0.7 million in the six months ended July 3, 2005 and $5.1 million in the six months ended July 4, 2004.  The decrease is primarily due to lower losses at MTI in the six months ended July 3, 2005 compared to the six months ended July 4, 2004.

Other expense, net.    Other expense, net was $2.9 million in the six months ended July 3, 2005 compared to $0.1 million in the six months ended July 4, 2004. This increase is primarily related to increases in foreign exchange losses in the six months ended July 3, 2005 compared to the six months ended July 4, 2004.

Income tax benefit.    We incurred a modest income tax benefit in the six months ended July 3, 2005 related to certain of our European sales offices and we incurred no income tax expense or benefit in the six months ended July 4, 2004. We recorded no provision for U.S. income taxes in the six months ended July 3, 2005 or July 4, 2004 due to our history of operating losses.

Accretion of preferred membership units to redemption value.    Accretion of preferred membership units to redemption value increased 2.2% to $12.1 million in the six months ended July 3, 2005 compared to $11.8 million in the six months ended July 4, 2004 due to higher carrying values of preferred investments during the six months ended July 3, 2005, offset by a decrease in accretion caused by conversion of the preferred membership units into common membership units, and subsequently into shares of common stock, on June 21, 2005 in connection with the merger of ev3 LLC with and into us immediately prior to our initial public offering.   Accretion was discontinued upon conversion of the preferred units to common membership units on June 21, 2005.

Liquidity and Capital Resources

Financing history.    Since inception, we have generated significant operating losses. These operating losses, including cumulative non-cash charges for acquired in-process research and development of $127 million since inception, have resulted in an accumulated deficit of $520.2 million as of July 3, 2005. Historically, our liquidity needs and the liquidity needs of MTI have been met separately. In general, MTI has been funded through equity private placements and the issuance of promissory notes, while we have been funded through a series of preferred investments and through the issuance of demand notes to private investors and most recently our initial public offering. We have negotiated an agreement with Warburg Pincus pursuant to which we have the first right to negotiate an investment in MTI to further fund MTI’s operations, if necessary, and we may elect to do so in the future. The following provides a discussion of our liquidity and capital resources including MTI, followed by a brief discussion of the liquidity and capital resources of MTI on an independent basis.

Cash and cash equivalents.    As of July 3, 2005, we had cash and cash equivalents of $128.4 million.

Balance Sheet Data (in thousands)	As of July 3, 2005		As of December 31, 2004
Cash and cash equivalents	$	128,399	$	20,131
Current assets	187,325		68,609
Total assets	332,746		212,046
Current liabilities excluding demand notes	37,179		36,025
Demand notes payable—related parties	—		299,453
Total liabilities	37,740		336,180
Preferred membership units	—		254,028
Total stockholders’ equity (deficit)	$	281,252	$	(394,472	)

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Contractual cash obligations.    At July 3, 2005, we had contractual cash obligations and commercial commitments as follows:

	Payments Due by Period
	Total		Less than 1 Year		1-3 Years		3-5 Years		More than 5 Years
	(dollars in thousands)
Purchase commitments(1)	$	50,299	$	11,406	$	38,893	$	—	$	—
Operating leases(2)	9,414		3,575		4,138		1,553		148
Total	$	59,713	$	14,981	$	43,031	$	1,553	$	148

(1)Represents commitments for minimum inventory purchases related to our distribution agreement with Invatec S.r.l. We do not have any other significant purchase obligations for the delivery of goods or services or other commercial commitments.

(2)The amounts reflected in the table above for operating leases represent future minimum lease payments under non-cancelable operating leases primarily for certain office space, warehouse space, computers and vehicles. Portions of these payments are denominated in foreign currencies and were translated in the tables above based on their respective U.S. dollar exchange rates at July 3, 2005. These future payments are subject to foreign currency exchange rate risk. In accordance with U.S. generally accepted accounting principles, or GAAP, our operating leases are not recognized in our consolidated balance sheet.

Operating activities.    Cash used in operations during the six months ended July 3, 2005 was $54.5 million, reflecting primarily the net losses during the period partially offset by non-cash charges for depreciation and amortization and non-cash interest expense presented as accrued interest on notes payable.  Our net loss also reflected $4.6 million of gain recognized on the sale of investments, as discussed below.  The increases in accounts receivable and inventories during the six months ended July 3, 2005 are related to increases in sales volume during the period and building inventory in preparation for new product launches.  We expect that operations will continue to consume cash during the remainder of 2005.

Investing activities.    Cash used by investing activities during the six months ended July 3, 2005 was $3.4 million primarily due to $6.1 million in purchases of property and equipment during the period and a $3.7 million milestone payment related to a previous acquisition.  The net use of cash from investing activities was reduced by the receipt of $3.7 million from the sale of certain assets by Genyx Medical, Inc., in which MTI holds a minority interest, the receipt of $2.1 million in a settlement of an acquisition dispute and a $0.9 million milestone payment related to the 2002 sale of an investment in Enteric Medical Technologies, Inc. Historically, our capital expenditures have consisted of purchased manufacturing equipment, research and testing equipment, computer systems and office furniture and equipment.  We continue to make investments in property and equipment and expect to incur an additional $8.0 million in capital expenditures during the balance of 2005.

Financing activities.    Cash provided by financing activities was $166.2 million during the six months ended July 3, 2005, consisting of $152.8 million of net proceeds received from our initial public offering in June 2005 and proceeds of $49.1 million from the issuance of demand notes.  These receipts were partially offset by the repayment of $36.5 million of accrued and unpaid interest on outstanding debt with a portion of the net proceeds from our initial public offering.

Other liquidity information.

On July 20, 2005, subsequent to the end of our second fiscal quarter, we sold 205,800 shares of common stock pursuant to the over-allotment option granted to the underwriters in connection with our initial public offering.  Net

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proceeds to us from this sale totaled $2.5 million, after deducting underwriting discounts and commissions and offering expenses.

The acquisition agreements relating to our purchase of MitraLife, Appriva Medical, Inc. and Dendron GmbH require us to make additional payments to the sellers of these businesses if certain milestones related to regulatory steps in the product commercialization process are achieved. The potential milestone payments total $25.0 million, $175.0 million and $15.0 million with respect to the MitraLife, Appriva and Dendron acquisitions, respectively, during the period of 2003 to 2009. We do not believe it is likely that we will have obligations with respect to the MitraLife milestones in the future. We have determined that the first milestone with respect to the Appriva agreement was not achieved by the January 1, 2005 milestone date and that the first milestone is not payable. It is possible that we will meet one or more of the remaining milestones with respect to the Appriva acquisition and could become obligated to make the corresponding milestone payments totaling $125.0 million in periods subsequent to 2005. Under the terms of the stock purchase agreement we entered into in connection with our acquisition of Dendron, we may be required to make additional payments which are contingent upon Dendron products achieving certain revenue targets between 2003 and 2008. In 2003, the $4.0 million revenue target for sales of Dendron products during 2003 was met. Accordingly, an additional payment to the former Dendron stockholders of $3.75 million was made in 2004. In 2004, the $5.0 million revenue target for sales of Dendron products during 2004 was met. Accordingly, a payment to the former Dendron stockholders of $3.75 million was accrued in 2004 and was paid during the second quarter of 2005. We may be required to make a final payment of $7.5 million, which is contingent upon Dendron products achieving annual revenues of $25 million in any year during the period between 2003 and 2008. Any such final payment would be due in the year following the year of target achievement.

Our future liquidity and capital requirements will be influenced by numerous factors, including clinical research and product development programs, receipt of and time required to obtain regulatory clearances and approvals, sales and marketing programs and continuing acceptance of our products in the marketplace. We believe that the resources generated through our initial public offering are sufficient to meet our liquidity requirements through the end of fiscal 2006; however, if we require additional working capital, but are not able to raise additional funds, we may be required to significantly curtail or cease ongoing operations.

On May 6, 2005, MTI entered into an asset-based credit agreement with a bank that, subject to customary covenants, can provide up to $3.0 million of cash funding based on MTI’s U.S. accounts receivable and inventory balances. The loan is collateralized by substantially all of MTI’s assets and expires in May 2007, as further described below.  MTI is also in discussions with the bank regarding a loan arrangement that would be based on balances of international accounts receivable and inventory, although there is no assurance that MTI will enter into a definitive agreement with the proposed lender.  In addition, MTI has received a support letter from Warburg Pincus pursuant to which Warburg Pincus has agreed to provide additional funding, up to $5.0 million, to MTI if needed to fund MTI’s operations. The Warburg Pincus commitment is effective through July 4, 2006 and will be reduced to the extent of proceeds, if any, that become available from a third party lender, including amounts available under the credit facility described above, or any amounts raised in a third party financing. We have negotiated an agreement with Warburg Pincus pursuant to which we have the first right to negotiate an investment in MTI to further fund MTI’s operations, if necessary, and we may elect to do so in the future. Pursuant to this agreement, we have agreed in principle with MTI to provide MTI with a credit facility of $3.3 million, consisting of a $2.3 million term loan and a $1.0 million letter of credit, bearing interest at a floating prime rate plus 2.3%, which will provide financing to support MTI’s facility expansion needs. We are in negotiations with MTI regarding the additional terms of this credit facility.

In the event that we require additional working capital to fund future operations, we may negotiate a financing arrangement with an independent institutional lender, sell notes to public or private investors or sell additional shares of stock. There is no assurance that any financing transaction will be available on terms acceptable to us, or at all, or that any financing transaction will not be dilutive to our stockholders. If we require additional working capital, but are not able to raise additional funds, we may be required to significantly curtail or cease our ongoing operations. From time to time, we may also sell a given technology or intellectual property having a development timeline or development cost that is inconsistent with our investment horizon or which does not adequately complement our existing product portfolio.  Our future liquidity and capital requirements will be influenced by numerous factors, including the extent and duration of future operating losses, the level and timing of future sales

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and expenditures, market acceptance of new products, the results and scope of ongoing research and development projects, competing technologies, market and regulatory developments, and the future course of intellectual property litigation. See Note 5 and Note 14 to our consolidated financial statements included in this report and Part II, Item II, “Legal Proceedings” in this report.

MTI Financings and Liquidity

As of July 3, 2005, we owned 70.3% of the outstanding shares of common stock of MTI and therefore consolidated MTI under generally accepted accounting principles. Although all of MTI’s assets are included in our consolidated balance sheets, not all of these assets would be available to us or our stockholders in the event of MTI’s liquidation. Because MTI has historically funded its operations independently from us, the following is a separate discussion of MTI’s financings and liquidity on a stand-alone basis. Historically, MTI has been funded through equity private placements and the issuance of promissory notes. In three separate transactions since 2002, MTI has sold 27.5 million shares of its common stock and received approximately $68 million in net proceeds.

In addition to its operations, MTI has received cash payments from two private medical device companies in which it owned a minority equity interest.  In January 2005, MTI received $3.7 million as a result of the consummation of a sale of certain assets by Genyx Medical, Inc.  In May 2004, MTI received $1.7 million of the amounts set aside in escrow in connection with Boston Scientific’s merger with Enteric Medical Technologies, Inc.  In May 2005, MTI received $878 thousand of the remaining portion of escrowed amounts under the merger agreement.  MTI expects to receive the remaining amount of approximately $850 thousand in May 2006, provided that no indemnification claims are made by Boston Scientific against the amounts in escrow.

Cash and cash equivalents.    As of July 3, 2005, MTI had cash and cash equivalents of $5.5 million.

Operating activities.    Cash used in MTI’s operations during the six months ended July 3, 2005 was $7.0 million, reflecting primarily the loss from operations, increases in trade receivables from third-party customers and inventories, increases in prepaid expenses, and increases in accounts payable and accrued compensation and decreases in accrued liabilities, which represent payments of bonuses earned during 2004 and employee termination benefits in connection with MTI’s December 2004 closure of its German facility, respectively. Partially offsetting such changes was a decrease in the amount receivable from us. We expect that MTI’s operations will continue to consume cash during the second half of 2005.

Investing activities.    Cash provided by MTI’s investing activities during the six months ended July 3, 2005 was $259 thousand, primarily resulting from the receipt of $3.7 million from the sale of assets of Genyx Medical, Inc, receipt of $878 thousand in connection with Boston Scientific’s acquisition of Enteric Medical Technologies, Inc., both described above, and the restoration to cash of certificates of deposit, aggregating $880 thousand, that had been segregated from cash balances during the period that such certificates of deposit served as collateral for bank letters of credit which expired in 2005. Cash provided by investing MTI’s activities during the six months ended July 3, 2005 was offset by a $3.7 million payment to the former Dendron stockholders and the acquisition of property and equipment and capitalized patents costs. While continued investments will be made by MTI in property and equipment, MTI had no significant capital expenditure commitments as of July 3, 2005.

Financing activities.    Cash provided by MTI’s financing activities was immaterial during the three months ended July 3, 2005.

Other liquidity information.

On May 6, 2005, MTI entered into an asset-based credit agreement with a bank that, subject to customary covenants, provides up to $3.0 million of cash funding based on MTI’s U.S. accounts receivable and inventory balances. The loan is collateralized by substantially all of MTI’s assets and expires in May 2007. MTI is also in discussions with the bank regarding a loan arrangement that would be based on balances of international accounts receivable and inventory, although there is no assurance that MTI will enter into a definitive agreement with the proposed lender. In addition, MTI has received a support letter from Warburg Pincus pursuant to which Warburg Pincus has agreed to

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provide additional funding of up to $5.0 million to MTI, if needed, to fund MTI’s operations. The Warburg Pincus commitment is effective through July 4, 2006 and will be reduced to the extent of proceeds, if any, that become available from a third party lender, including amounts available under the credit facility described above, or any amounts raised in a third party financing. We believe that MTI’s existing cash at July 3, 2005, and the proceeds under the funding commitment of Warburg Pincus, will be sufficient to fund MTI’s operations in 2005. There is no assurance that any additional financing transactions will be available on terms acceptable to MTI or us, or at all, or that any financing transactions will not be dilutive to current MTI stockholders or our stockholders. There is no assurance that MTI will achieve cash flow positive operations or that, if achieved, such cash flow positive operations will be sustainable.

In connection with its acquisition of Dendron, MTI may be required to make additional payments which are contingent upon Dendron products achieving certain revenue targets between 2003 and 2008, as described above under “—Liquidity and Capital Resources—Other Liquidity Information.” In addition, German taxing authorities have not audited the income tax returns of Dendron since MTI’s acquisition of Dendron in October 2002. While we believe that Dendron has made its tax filings in conformity with German tax regulations, we are unable to predict what, if any, areas of inquiry might be pursued by German tax authorities in connection with an audit in general, or specifically in connection with either MTI’s acquisition of Dendron or the subsequent closure of MTI’s German manufacturing facility or whether, or to what extent, Dendron will be subject to additional liability or tax.

Critical Accounting Policies and Estimates

We have adopted various accounting policies to prepare our consolidated financial statements in accordance with U.S. GAAP. Our most significant accounting policies are described in Note 3 to our consolidated financial statements included elsewhere in this report. The preparation of our consolidated financial statements in conformity with U.S. GAAP requires us to make estimates and assumptions that affect the amounts reported in our consolidated financial statements and accompanying notes. Our estimates and assumptions, including those related to bad debts, inventories, intangible assets, sales returns and discounts, and income taxes are updated as appropriate.

Certain of our more critical accounting policies require the application of significant judgment by management in selecting the appropriate assumptions for calculating financial estimates. By their nature, these judgments are subject to an inherent degree of uncertainty. These judgments are based on our historical experience, terms of existing contracts, our observance of trends in the industry, information provided by our physician customers, and information available from other outside sources, as appropriate. Different, reasonable estimates could have been used in the current period. Additionally, changes in accounting estimates are reasonably likely to occur from period to period. Both of these factors could have a material impact on the presentation of our financial condition, changes in financial condition or results of operations.

We believe that the following financial estimates are both important to the portrayal of our financial condition and results of operations and require subjective or complex judgments. Further, we believe that the items discussed below are properly recorded in our consolidated financial statements for all periods presented. Management has discussed the development, selection, and disclosure of our most critical financial estimates with the audit committee of our board of directors and our independent auditors. The judgments about those financial estimates are based on information available as of the date of our consolidated financial statements. Those financial estimates include:

Revenue Recognition

We recognize revenue in accordance with Securities and Exchange Commission Staff Accounting Bulletin No. 101, Revenue Recognition in Financial Statements, which requires that four basic criteria must be met before sales can be recognized: (1) persuasive evidence of an arrangement exists; (2) delivery has occurred or services have been rendered; (3) the price is fixed or determinable; and (4) collectibility is reasonably assured. These criteria are met at the time of shipment when risk of loss and title passes to the customer or distributor, unless a consignment arrangement exists. Sales from consignment arrangements are recognized upon written acknowledgement that the product has been used by the customer indicating that a sale is complete. Our terms of sale for regular sales are

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typically FOB shipping point, net 30 days. Regular sales include orders from customers for replacement of customer stock, replenishment of customer consignment product, orders for a scheduled case/surgery and stocking orders.

We allow customers to return defective or damaged products for credit. Our estimate for sales returns is based upon contractual commitments and historical return experience which we analyze both by distribution channel and by geography and is recorded as a reduction of sales. Historically our return experience has been low with return rates approximating 3% of sales.

Allowance for Doubtful Accounts

We make judgments as to our ability to collect outstanding receivables and provide allowance for a portion of receivables when collection becomes doubtful. Provisions are made based upon a specific review of all significant outstanding account balances and the overall quality and age of those balances not specifically reviewed. In determining the provision for invoices not specifically reviewed, we analyze historical collection experience and current economic trends. If the historical data used to calculate the allowance provided for doubtful accounts does not reflect our future ability to collect outstanding receivables or if the financial condition of customers were to deteriorate, resulting in impairment of their ability to make payments, an increase in the provision for doubtful accounts may be required. We maintain a large customer base that mitigates the risk of concentration with one customer. However, if the overall condition of the health care industry were to deteriorate, resulting in an impairment of our customers’ ability to make payments, significant additional allowances could be required.

Our accounts receivable balance was $22.1 million and $19.0 million, net of accounts receivable allowances, comprised of both allowances for doubtful accounts and sales returns of $3.2 million and $2.7 million, at July 3, 2005 and December 31, 2004, respectively.

Excess and Obsolete Inventory

We calculate an inventory reserve for estimated obsolescence or excess inventory based on historical turnover and assumptions about future demand for our products and market conditions. Our industry is characterized by regular new product development, and as such, our inventory is at risk of obsolescence following the introduction and development of new or enhanced products. Our estimates and assumptions for excess and obsolete inventory are reviewed and updated on a quarterly basis. The estimates we use for demand are also used for near-term capacity planning and inventory purchasing and are consistent with our sales forecasts. Future product introductions and related inventories may require additional reserves based upon changes in market demand or introduction of competing technologies. Increases in the reserve for excess and obsolete inventory result in a corresponding expense to cost of goods sold. Our reserve for excess and obsolete inventory was $3.6 million and $3.7 million at July 3, 2005 and December 31, 2004, respectively.

Valuation of Acquired In-Process Research and Development, Goodwill and Other Intangible Assets

When we acquire another company, the purchase price is allocated, as applicable, between acquired in-process research and development (IPR&D), other identifiable intangible assets, tangible net assets and goodwill as required by U.S. GAAP. In-process research and development is defined as the value assigned to those projects for which the related products have not received regulatory approval and have no alternative future use. Determining the portion of the purchase price allocated to in-process research and development and other intangible assets requires us to make significant estimates that may change over time. During the three months ended July 3, 2005, we recorded an IPR&D charge of $0.9 million related to the May 26, 2005 contribution to ev3 LLC by Vertical of certain shares of MTI directly held by Vertical.

The income approach was used to determine the fair values of the acquired IPR&D. This approach establishes fair value by estimating the after-tax cash flows attributable to the in-process project over its useful life and then discounting these after-tax cash flows back to the present value. Revenue estimates were based on relative market size, expected market growth rates and market share penetration. Gross margin estimates were based on the estimated cost of the product at the time of introduction and historical gross margins for similar products offered by

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us or by competitors in the marketplace. The estimated selling, general and administrative expenses were based on historical operating expenses of the acquired company as well as long-term expense levels based on industry comparables. The costs to complete each project were based on estimated direct project expenses as well as the remaining labor hours and related overhead costs. In arriving at the value of acquired in-process research and development projects, we considered the project’s stage of completion, the complexity of the work to be completed, the costs already incurred, the remaining costs to complete the project, the contribution of core technologies, the expected introduction date and the estimated useful life of the technology. The discount rate used to arrive at the present value of acquired in-process research and development as of the acquisition date was based on the time value of money and medical technology investment risk factors. The discount rates used ranged from 15% to 34%. We believe that the estimated acquired in-process research and development amounts determined represent the fair value at the date of acquisition and do not exceed the amount a third party would pay for the projects.

Goodwill represents the excess of the aggregate purchase price over the fair value of net assets, including IPR&D, of the acquired businesses. Goodwill is tested for impairment annually, or more frequently if changes in circumstance or the occurrence of events suggest an impairment exists. The test for impairment requires us to make several estimates about fair value, most of which are based on projected future cash flows. Our estimates associated with the goodwill impairment tests are considered critical due to the amount of goodwill recorded on our consolidated balance sheets and the judgment required in determining fair value amounts, including projected future cash flows. Goodwill was $94.5 million at July 3, 2005 and December 31, 2004.

 Other intangible assets consist primarily of purchased developed technology, patents, customer relationships and trademarks and are amortized over their estimated useful lives, ranging from 5 to 8 years. We review these intangible assets for impairment annually during our fourth fiscal quarter or as changes in circumstance or the occurrence of events suggest the remaining value may not be recoverable. Other intangible assets, net of accumulated amortization, were $30.8 million and $31.9 million at July 3, 2005 and December 31, 2004, respectively.

The evaluation of asset impairments related to goodwill and other intangible assets require us to make assumptions about future cash flows over the life of the assets being evaluated. These assumptions require significant judgment and actual results may differ from assumed or estimated amounts.

Accounting for Income Taxes

As part of the process of preparing our consolidated financial statements, we are required to determine our income taxes in each of the jurisdictions in which we operate. This process involves estimating our actual current tax expense together with assessing temporary differences resulting from recognition of items for income tax and accounting purposes. These differences result in deferred tax assets and liabilities, which are included on our consolidated balance sheets. We must then assess the likelihood that our deferred tax assets will be recovered from future taxable income and, to the extent we believe that recovery is not likely, we must establish a valuation allowance. To the extent we establish a valuation allowance or increase this allowance in a period, we must reflect this increase as an expense within the tax provision in our consolidated statement of operations.

Management’s judgment is required in determining our provision for income taxes, our deferred tax assets and liabilities and any valuation allowance recorded against our net deferred tax assets. We will continue to monitor the realizability of our deferred tax assets and adjust the valuation allowance accordingly.

Seasonality

Our business is seasonal in nature. Historically, demand for our products has been the highest in our fourth fiscal quarter. We traditionally experience lower sales volumes in our third fiscal quarter than throughout the rest of the year as a result of the European holiday schedule during the summer months.

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Off-Balance Sheet Arrangements

We do not have any off-balance sheet arrangements, as defined by the rules and regulations of the Securities and Exchange Commission.  As a result, we are not materially exposed to any financing, liquidity, market or credit risk that could arise if we had engaged in these arrangements.

Recent Accounting Pronouncements

In November 2004, the Financial Accounting Standards Board, or FASB, issued Statement of Financial Accounting Standards, or SFAS, 151, Inventory Costs, An Amendment of Accounting Research Bulletin No. 43, Chapter 4, which adopts wording from the International Accounting Standards Board’s, or IASB, IAS 2 Inventories in an effort to improve the comparability of cross-border financial reporting. The new standard indicates that abnormal freight, handling costs and wasted materials (spoilage) are required to be treated as current period charges rather than as a portion of inventory cost. Additionally, the standard clarifies that fixed production overhead should be allocated based on the normal capacity of a production facility. The statement is effective for us beginning in 2006. Adoption is not expected to have a material impact on our consolidated earnings, financial position or cash flows.

On December 16, 2004, the FASB issued SFAS 123(R), Share-Based Payment, which is a revision of SFAS 123, Accounting for Stock-Based Compensation, and supersedes APB Opinion 25, Accounting for Stock Issued to Employees. SFAS 123(R) requires all share-based payments to employees, including grants of employee stock options, to be valued at fair value on the date of grant, and to be expensed over the applicable vesting period and is effective for us on January 1, 2006. We have not yet determined the impact of the provisions of SFAS 123(R) on our consolidated earnings, financial position or cash flows.

Forward-Looking Statements

This quarterly report on Form 10-Q contains not only historical information, but also forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934 and are subject to the safe harbor created by those sections.  In addition, we or others on our behalf may make forward-looking statements from time to time in oral presentations, including telephone conferences and/or web casts open to the public, in press releases or reports, on our Internet web site or otherwise.  All statements other than statements of historical facts included in this report that address activities, events or developments that we expect, believe or anticipate will or may occur in the future are forward-looking statements including, in particular, the statements about ev3’s plans (including MTI), objectives, strategies and prospects regarding, among other things, the financial condition, results of operations and business of ev3 Inc. and its subsidiaries.  We have identified some of these forward-looking statements with words like “believe,” “may,” “could,” “might,” “forecast,” “possible,” “potential,” “project,” “will,” “should,” “expect,” “intend,” “plan,” “predict,” “anticipate,” “estimate,” “approximate” or “continue” and other words and terms of similar meaning.  These forward-looking statements may be contained in the notes to our consolidated financial statements and elsewhere in this report, including under the caption “Management’s Discussion and Analysis of Financial Condition and Results of Operations”.

We wish to caution readers not to place undue reliance on any forward-looking statement that speaks only as of the date made and to recognize that forward-looking statements are predictions of future results, which may not occur as anticipated.  Actual results could differ materially from those anticipated in the forward-looking statements and from historical results, due to the risks and uncertainties described under the heading “Risk Factors” below, as well as others that we may consider immaterial or do not anticipate at this time. Although we believe that the expectations reflected in our forward-looking statements are reasonable, we do not know whether our expectations will prove correct.  Our expectations reflected in our forward-looking statements can be affected by inaccurate assumptions we might make or by known or unknown risks and uncertainties, including those described below under the heading “Risk Factors”.  The risks and uncertainties described under the heading “Risk Factors” below are not exclusive and further information concerning us and our business, including factors that potentially could materially affect our financial results or condition, may emerge from time to time.  We assume no obligation to update forward-looking statements to reflect actual results or changes in factors or assumptions affecting such forward-looking statements.  We advise you, however, to consult any further disclosures we make on related subjects in our annual reports on

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Form 10-K, quarterly reports on Form 10-Q and current reports on Form 8-K we file with or furnish to the Securities and Exchange Commission.

Risk Factors

We have a history of operating losses and negative cash flow.

Our operations to date have consumed substantial amounts of cash, and we expect this condition to continue.  We had an accumulated deficit of $520.2 million at July 3, 2005.  Our ability to achieve cash flow positive operations will be influenced by many factors, including the extent and duration of our future operating losses, the level and timing of future sales and expenditures, market acceptance of new products, the results and scope of ongoing research and development projects, competing technologies, market and regulatory developments and the future course of intellectual property litigation.  If adequate cash flow is not available to us, our business will be negatively impacted.

Some of our products are emerging technologies or have been recently introduced into the market and may not achieve market acceptance once they are introduced into their markets, which could adversely affect our business.

Even if we are successful in developing safe and effective products that receive regulatory approval, our products may not gain market acceptance.  Our market share for our existing products may not grow, and our products that have yet to be introduced may not be accepted in the market.  We will need to invest in significant training and education of our physician customers to achieve market acceptance of our products with no assurance of success.  In order for any of our products to be accepted, we must address the needs of potential customers and our customers must believe our products are effective and commercially beneficial.  However, even if customers accept our products, this acceptance may not translate into sales if our competitors have developed similar products that our customers prefer.  If our products do not gain market acceptance or if our customers prefer our competitors’ products, our business could be adversely affected.

Delays in product introductions could adversely affect our net sales.

The endovascular device market is highly competitive and designs change often to adjust to patent constraints and to changing market preferences.  Therefore, product life cycles are relatively short.  As a result, any delays in our product launches may significantly impede our ability to enter or compete in a given market and may reduce the sales that we are able to generate from these products.  We may experience delays in any phase of a product launch, including during research and development, clinical trials, manufacturing, marketing and the education process.  In addition, our suppliers of products that we do not manufacture can suffer similar delays, which could cause delays in our product introductions.  If we suffer delays in product introductions, our net sales could be adversely affected.

If third parties claim that we infringe upon their intellectual property rights, we may incur liabilities and costs and may have to redesign or discontinue selling the affected product.

The medical device industry is litigious with respect to patents and other intellectual property rights. Companies operating in our industry routinely seek patent protection for their product designs, and many of our principal competitors have large patent portfolios.  Companies in the medical device industry have used intellectual property litigation to gain a competitive advantage.  Whether a product infringes a patent involves complex legal and factual issues, the determination of which is often uncertain.  We face the risk of claims that we have infringed on third parties’ intellectual property rights.  Prior to launching major new products in our key markets, we normally evaluate existing intellectual property rights. However, our competitors may also have filed for patent protection which is not as yet a matter of public knowledge or claim trademark rights that have not been revealed through our availability searches.  Our efforts to identify and avoid infringing on third parties’ intellectual property rights may not always be successful.  Any claims of patent or other intellectual property infringement, even those without merit, could:

•be expensive and time consuming to defend;

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•result in us being required to pay significant damages to third parties;

•cause us to cease making or selling products that incorporate the challenged intellectual property;

•require us to redesign, reengineer or rebrand our products, if feasible;

•require us to enter into royalty or licensing agreements in order to obtain the right to use a third party’s intellectual property, which agreements may not be available on terms acceptable to us or at all;

•divert the attention of our management; or

•result in our customers or potential customers deferring or limiting their purchase or use of the affected products until resolution of the litigation.

In addition, new patents obtained by our competitors could threaten a product’s continued life in the market even after it has already been introduced.

We are currently a party to a number of intellectual property claims, the resolution of which could have a material adverse effect on our business and results of operations.

We cannot assure you that we do not infringe any patents or other proprietary rights held by third parties. In that regard, in March 2005, Medtronic, Inc. contacted us to express its view that our Protégé stents infringe on one or more of its patents.  We informed Medtronic that we disagree with its assertions, and have since had several discussions with Medtronic.  No lawsuit with respect to this matter has been filed. We also received notice from an individual regarding our Percutaneous Left Atrial Appendage Transcatheter Occlusion device, or PLAATO®, which is designed to reduce the risk of stroke by occluding the left atrial appendage, a small pocket attached to the heart’s left upper chamber that has limited functional use and is the location of a majority of blood clots in the heart.  The individual claims that he believes our PLAATO device infringes on two of his patents.  We have informed this individual that we do not believe that our PLAATO device infringes on these patents.  In March 2005, we were served with a complaint by Boston Scientific Corporation and one of its affiliates which claims that some of our products, including our SpideRX Embolic Protection Device, infringe on certain of Boston Scientific’s patents.  Boston Scientific is seeking monetary damages from us and to enjoin us from the alleged infringement.  We have answered the complaint, and we intend to vigorously defend this action. Because these matters are in early stages, we cannot estimate the possible loss or range of loss, if any, associated with their resolution.  However, there can be no assurance that the ultimate resolution of these matters will not result in a material adverse effect on our business, financial condition or results of operations.  If our products were found to infringe on any proprietary rights of a third party, we could be required to pay significant damages or license fees to the third party or cease production, marketing and distribution of those products, which could in turn have a material adverse effect on our business, financial condition and results of operations. Litigation may also be necessary to enforce patent rights we hold or to protect trade secrets or techniques we own.

We may also be subject to disputes as to the ownership of patents that we may develop with other companies.  Such disputes could result in the enjoining of sales of our products or our being required to pay commercially unreasonable licensing fees.  If this occurs, our net sales or the cost of selling the infringing product, and therefore our results of operations, would be negatively affected.

MTI is involved in several patent disputes.  Prior to MTI’s acquisition of Dendron GmbH, Dendron became involved in litigation in Europe involving patents covering certain of its products, which litigation is still active.  Concurrent with its acquisition of Dendron, MTI initiated a series of legal actions in the Netherlands and the United Kingdom with the primary purpose of asserting both invalidity and non-infringement by it of certain patents held by others with respect to detachable coils and certain delivery systems.  In addition, the patent holders against whom MTI initiated the actions in the Netherlands and the United Kingdom have initiated legal actions against MTI in the United States that allege infringement by MTI of certain patents held by them.  An adverse determination in a judicial or administrative proceeding or failure to obtain licenses, if necessary, could prevent MTI from

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manufacturing and selling its products, which would in turn have an adverse effect on our business and results of operations.

If there is a disruption in the supply of the products of Invatec S.r.l. that we distribute or if our relationship with Invatec is impaired, our net sales and results of operations would be adversely impacted.

We have entered into an agreement with Invatec S.r.l., or Invatec, an Italian manufacturer of endovascular medical devices which prior to our arrangement have not been marketed or sold under the Invatec brand in the United States, to distribute Invatec’s branded products throughout the United States.  Although our contract with Invatec gives us the exclusive right to market Invatec’s products using the Invatec brand in the United States, Invatec retained the right to sell its products into the United States under other brands, which it currently does.  In 2004, we increased our U.S. cardio peripheral sales force by adding 40 new sales representatives partially in reliance on this agreement and have invested significantly in regulatory, intellectual property and clinical activities to support the introduction of Invatec’s products in the United States.  Our success in marketing the Invatec products will depend on these new sales personnel becoming proficient in the product line, building physician relationships and executing sales orders.  If we are unable to market Invatec’s products successfully or if our agreement with Invatec is terminated, our net sales and results of operations would suffer.  If we do not meet our performance requirements under the agreement, the agreement may be terminated by Invatec and we may be obligated to make substantial payments to Invatec.  In addition, even if we market Invatec’s products successfully, if Invatec is unable to produce enough of its products to meet our demands, including if Invatec sells its inventory to our competitors rather than to us for marketing under their own brands, we may not be able to meet our customers’ demands and our net sales and results of operations may suffer.  We also may not be successful in managing the larger inventory and greater variety of product offerings that we will experience in connection with the Invatec relationship and our net sales and results of operations may be adversely impacted.

If our patents and other intellectual property rights do not adequately protect our products, we may lose market share to our competitors and be unable to operate our business profitably.

Our success depends significantly on our ability to protect our proprietary rights to the technologies used in our products.  We rely on patent protection, as well as a combination of copyright and trademark laws and nondisclosure, confidentiality and other contractual arrangements to protect our proprietary technology.  However, these legal means afford only limited protection and may not adequately protect our rights or permit us to gain or keep any competitive advantage.  In addition, we cannot be assured that any of our pending patent applications will result in the issuance of a patent to us.  The United States Patent and Trademark Office, or PTO, may deny or require significant narrowing of claims in our pending patent applications, and patents issued as a result of the pending patent applications, if any, may not provide us with significant commercial protection or be issued in a form that is advantageous to us.  We could also incur substantial costs in proceedings before the PTO.  These proceedings could result in adverse decisions as to the priority of our inventions and the narrowing or invalidation of claims in issued patents.  Our issued patents and those that may be issued in the future may be challenged, invalidated or circumvented, which could limit our ability to stop competitors from marketing related products. Although we have taken steps to protect our intellectual property and proprietary technology, there is no assurance that third parties will not be able to design around our patents.  We also rely on unpatented proprietary technology.  We cannot assure you that we can meaningfully protect all our rights in our unpatented proprietary technology or that others will not independently develop substantially equivalent proprietary products or processes or otherwise gain access to our unpatented proprietary technology. We seek to protect our know-how and other unpatented proprietary technology, in part with confidentiality agreements and intellectual property assignment agreements with our employees, independent distributors and consultants.  However, such agreements may not be enforceable or may not provide meaningful protection for our proprietary information in the event of unauthorized use or disclosure or other breaches of the agreements or in the event that our competitors discover or independently develop similar or identical designs or other proprietary information.  In addition, we rely on the use of registered trademarks with respect to the brand names of some of our products.  We also rely on common law trademark protection for some brand names, which are not protected to the same extent as our rights in the use of our registered trademarks.

Furthermore, the laws of foreign countries may not protect our intellectual property rights to the same extent as the laws of the United States.  For example, foreign countries generally do not allow patents to cover methods for performing surgical procedures.  If we cannot adequately protect our intellectual property rights in these foreign

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countries, our competitors may be able to compete more directly with us, which could adversely affect our competitive position and our business.

We also hold licenses from third parties that are necessary to utilize certain technologies used in the design and manufacturing of some of our products.  The loss of such licenses would prevent us from manufacturing, marketing and selling these products, which could harm our business.

We manufacture our products at single locations.  Any disruption in these manufacturing facilities or any patent infringement claims with respect to our manufacturing process could adversely affect our business and results of operations.

We have relied to date principally on our manufacturing facility in Plymouth, Minnesota and our former facility in New Brighton, Minnesota, and MTI’s facility in Irvine, California.  We closed our New Brighton facility in July 2005 and moved its operations to our Plymouth facility.  The Plymouth and Irvine facilities and the manufacturing equipment we use to produce our products would be difficult to replace and could require substantial lead-time to repair or replace.  Our facilities may be affected by natural or man-made disasters.  In the event one of our two facilities was affected by a disaster, we would be forced to rely on third-party manufacturers if we could not shift production to our other manufacturing facility.  In the case of a device with a pre-market approval application we may be required to obtain prior FDA or notified body approval of an alternate manufacturing facility, which could delay or prevent our marketing of the affected product until such approval is obtained.  Although we believe we possess adequate insurance for damage to our property and the disruption of our business from casualties, such insurance may not be sufficient to cover all of our potential losses and may not continue to be available to us on acceptable terms, or at all.  It is also possible that one of our competitors could claim that our manufacturing process violates an existing patent.  If we were unsuccessful in defending such a claim, we may be forced to stop production at one or both of our manufacturing facilities in the United States and to seek alternative facilities.  Even if we are able to identify such alternative facilities, we may incur additional costs and we may experience a disruption in the supply of our products until those facilities are available.  Any disruption in our manufacturing capacity could have an adverse impact on our ability to produce sufficient inventory of our products or may require us to incur additional expenses in order to produce sufficient inventory, and therefore may adversely affect our net sales and results of operations.  Any disruption or delay at our manufacturing facilities could impair our ability to meet the demand of our customers and our customers may cancel orders or purchase products from our competitors, which could adversely affect our business and results of operations.

If we lose the services of our chief executive officer or other key personnel, we may not be able to manage our operations and meet our strategic objectives.

Our future success depends, in large part, on the continued service of James M. Corbett, our president and chief executive officer.  Mr. Corbett’s continuation with us is integral to our future success, based on his significant expertise and knowledge of our business and products.  Although we have key person insurance with respect to Mr. Corbett, any loss or interruption of the services of Mr. Corbett could significantly reduce our ability to effectively manage our operations and implement our strategy.  Also, we depend on the continued service of key managerial, scientific, sales and technical personnel, as well as our ability to continue to attract and retain additional highly qualified personnel.  We compete for such personnel with other companies, academic institutions, government entities and other organizations.  Any loss or interruption of the services of our other key personnel, employee slowdowns, strikes or similar actions could also significantly reduce our ability to effectively manage our operations and meet our strategic objectives because we cannot assure you that we would be able to find an appropriate replacement should the need arise.

We also compete for experienced medical device sales personnel.  If we are unable to hire and retain qualified sales personnel, our sales could be negatively impacted.

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Our dependence on key suppliers puts us at risk of interruptions in the availability of our products, which could reduce our net sales and adversely affect our results of operations. In addition, increases in prices for raw material and components used in our products could adversely affect our results of operations.

We rely on a limited number of suppliers for the raw materials and components used in our products.  Our raw materials and components are generally acquired through purchase orders placed in the ordinary course of business, and we do not have any guaranteed or contractual supply arrangements with many of our key or single source suppliers.  In addition, we also rely on independent contract manufacturers for some of our products. Independent manufacturers have possession of and in some cases hold title to molds for certain manufactured components of our products.  Our dependence on third-party suppliers involves several risks, including limited control over pricing, availability, quality and delivery schedules, as well as manufacturing yields and costs.  Suppliers of raw materials and components may decide, or be required, for reasons beyond our control to cease supplying raw materials and components to us. Shortages of raw materials, quality control problems, production capacity constraints or delays by our contract manufacturers could negatively affect our ability to meet our production obligations and result in increased prices for affected parts.  Any such shortage, constraint or delay may result in delays in shipments of our products or components, which could adversely affect our net sales and results of operations.

In addition, the Food and Drug Administration, or FDA, and foreign regulations may require additional testing of any raw materials or components from new suppliers prior to our use of these materials or components.  In the case of a device with a pre-market approval application, we may be required to obtain prior FDA approval of a new supplier, which could delay or prevent our access or use of such raw materials or components or our marketing of affected products until such approval is granted.  In the case of a device with clearance under Section 510(k) of the Federal Food, Drug and Cosmetic Act, which we refer to as a 510(k), we may be required to submit a new 510(k) if a change in a raw material or component supplier results in a change in a material or component supplied that is not within the 510(k) cleared device specifications.  If we need to establish additional or replacement suppliers for some of these components, our access to the components might be delayed while we qualify such suppliers and obtain any necessary FDA approvals.  Our suppliers of finished goods are also subject to regulatory inspection and scrutiny.  Any adverse regulatory finding or action against those suppliers could impact their ability to supply us goods for distribution and sale.

We or MTI may require additional capital in the future, which may not be available or may be available only on unfavorable terms.

Our and MTI’s capital requirements depend on many factors, including the amount of expenditures on intellectual property and technologies, the number of clinical trials which we conduct and new product development.  To the extent that our or MTI’s existing capital is insufficient to meet these requirements and cover any losses, we will need to raise additional funds through financings or borrowings or curtail our growth and reduce our assets.  From time to time we may also sell a given technology or intellectual property having a development timeline or development cost that is inconsistent with our investment horizon or which does not adequately complement our existing product portfolio.  We and MTI have each historically relied on financing from Warburg Pincus and Vertical, but there can be no assurance that Warburg Pincus, Vertical or other investors will provide such financing in the future.  Any equity or debt financing, if available at all, may be on terms that are not favorable to us. Equity financings could result in dilution to our stockholders, and the securities issued in future financings may have rights, preferences and privileges that are senior to those of our common stock.  If our need for capital arises because of significant losses, the occurrence of these losses may make it more difficult for us to raise the necessary capital.  In addition, because MTI is not our wholly owned subsidiary, our creditors are limited in their ability to satisfy their claims against us by seeking recourse to MTI’s assets, which could impair our ability to obtain financing.

We may experience conflicts of interest with MTI with respect to business opportunities and other matters.

Our neurovascular operations are comprised of our interest in and relationships with MTI.  MTI is a public company whose stock is traded on the NASDAQ National Market System.  We own 70.3% of the outstanding shares of common stock of MTI based on the number of shares outstanding as of July 3, 2005. In addition, our board of directors is comprised of seven persons, four of whom are also members of the board of directors of MTI.  These directors are James M. Corbett, Richard B. Emmitt, Dale A. Spencer and Elizabeth H. Weatherman.  Our

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relationships with MTI are significant elements of our business.  Under a number of agreements that we have entered into with MTI, we:

•are a distributor of certain of MTI’s products;

•perform inventory and administrative services with respect to finished goods inventory of certain of MTI’s neurovascular products;

•provide MTI with marketing, sales solicitation, inventory management, accounting, invoicing, collection and administrative services in certain countries other than the United States and Canada; and

•provide MTI distributor management services in certain countries other than the United States and Canada where MTI has an existing third-party distributor for its products.

Although MTI is our controlled subsidiary, it is not our wholly owned subsidiary, and conflicts of interest may arise with respect to transactions involving business dealings between us and MTI, potential acquisitions of businesses or products, development of products and other matters with respect to which our best interests and the best interests of our stockholders may conflict with the best interests of the public stockholders of MTI.  Because a portion of MTI is owned by minority stockholders, we cannot treat MTI as we would a wholly owned subsidiary.  With respect to our transactions with MTI, although we have formed a special committee of our board of directors that consists of all of the non-MTI directors to alleviate conflict of interest concerns, we cannot assure you that we will negotiate terms that are as favorable to us as if such transactions were with an unaffiliated third party or that any conflicts of interest will be resolved in our favor.  Further, the fiduciary duties of the members of MTI’s board of directors may result in actions that are not in our stockholders’ best interests.  Because of its importance to our business, we may elect to fund MTI’s operations in circumstances in which we undertake a large amount of risk but which will benefit all of MTI’s stockholders, including its public stockholders, and from which we may only receive the economic benefit in proportion to our ownership interest in MTI.  In addition, we are required to share any dividends that are declared by MTI on its common stock or other distributions of its assets with MTI’s public stockholders on a pro rata basis, which will restrict our ability to access any funds and assets held by MTI.

The value of our interest in MTI may decline or our interest in MTI could be diluted.

Any decline in the market price of MTI’s common stock on the NASDAQ National Market System will cause the value of the shares of MTI’s common stock which we own to decline.  MTI has not been profitable since its founding and may continue to incur significant losses and negative cash flows in the future, which could negatively impact the market price of its common stock and the value of the MTI shares that we own.  For example, MTI may engage in equity financings or acquisitions of businesses or assets using equity that result in the dilution of our interest in MTI.  Although we have the right to provide financing to MTI before Warburg Pincus or Vertical, if we decline to exercise this right, Warburg Pincus or Vertical may also elect to provide financing directly to MTI in the future. In the event that MTI raises additional capital through equity offerings to Warburg Pincus, Vertical or other investors, our ownership interest in MTI could be diluted.

Our sales would decline if our customers or their patients cannot obtain third party reimbursement for their purchases of our products.

Sales of our products depend in part on the reimbursement by governmental and private health care payors to our physician customers or their patients for the purchase and use of our products.  In the United States, health care providers that purchase our products generally rely on third-party payors, principally federal Medicare, state Medicaid and private health insurance plans, to pay for all or a portion of the cost of endovascular procedures.  Reimbursement systems in international markets vary significantly by country, and by region within some countries, and reimbursement approvals must be obtained on a country-by-country basis and can take up to 18 months or longer.  Many international markets have government-managed health care systems that govern reimbursement for new devices and procedures.  In most markets, there are private insurance systems as well as government-managed systems.  Additionally, some foreign reimbursement systems provide for limited payments in a given period and

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therefore result in extended payment periods.  Any delays in obtaining, or an inability to obtain, reimbursement approvals could have a material adverse effect on our business.  In addition, if the reimbursement policies of domestic or foreign governmental or private health care payors were to change, our customers would likely change their purchasing patterns and/or the frequency of their purchases of the affected products. Additionally, payors continue to review their coverage policies carefully for existing and new therapies and can, without notice, deny coverage for treatments that include the use of our products.  Our business would be negatively impacted to the extent any such changes reduce reimbursement for our products.

In addition, some health care providers in the United States have adopted or are considering a managed care system in which the providers contract to provide comprehensive health care for a fixed cost per person.  Health care providers may attempt to control costs by authorizing fewer elective surgical procedures or by requiring the use of the least expensive devices possible, which could adversely affect the demand for our products or the price at which we can sell our products.

We also sell a number of our products to physician customers who may elect to use these products in ways that are not within the scope of the approval or clearance given by the FDA, often referred to as “off-label” use.  In the event that governmental or private health care payors limit reimbursement for products used off-label, sales of our products and our business would be materially adversely affected.

Our products and facilities are subject to extensive regulation with which compliance is costly and which exposes us to penalties for non-compliance.  We may not be able to obtain required regulatory approvals for our products in a cost-effective manner or at all, which could adversely affect our business and results of operations.

The production and marketing of our products and our ongoing research and development, preclinical testing and clinical trial activities are subject to extensive regulation and review by numerous governmental authorities both in the United States and abroad. U.S. and foreign regulations applicable to medical devices are wide-ranging and govern, among other things, the testing, marketing and pre-market review of new medical devices, in addition to regulating manufacturing practices, reporting, advertising, exporting, labeling and record keeping procedures.  We are required to obtain FDA approval or clearance before we can market our products in the United States and certain foreign countries.  The regulatory process requires significant time, effort and expenditures to bring our products to market, and we cannot assure that any of our products will be approved for sale.  Any failure to obtain regulatory approvals or clearances could prevent us from successfully marketing our products, which could adversely affect our business and results of operations.  Our failure to comply with applicable regulatory requirements could result in governmental agencies:

•imposing fines and penalties on us;

•preventing us from manufacturing or selling our products;

•bringing civil or criminal charges against us;

•delaying the introduction of our new products into the market;

•recalling or seizing our products; or

•withdrawing or denying approvals or clearances for our products.

If any or all of the foregoing were to occur, we may not be able to meet the demands of our customers and our customers may cancel orders or purchase products from our competitors, which could adversely affect our business and results of operations.

Even if regulatory approval or clearance of a product is granted, the approval or clearance could limit the uses for which the product may be labeled and promoted, which may limit the market for our products.  Further, for a marketed product, its manufacturer and manufacturing facilities are subject to periodic reviews and inspections by FDA and foreign regulatory authorities.  Subsequent discovery of problems with a product, manufacturer or facility

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may result in restrictions on the product, manufacturer or facility, including withdrawal of the product from the market or other enforcement actions.  In addition, regulatory agencies may not agree with the extent or speed of corrective actions relating to product or manufacturing problems.

We are currently conducting clinical studies of some of our products under an investigational device exemption.  Clinical studies must be conducted in compliance with regulations of the FDA and those of regulatory agencies in other countries in which we conduct clinical studies.  The data collected from these clinical investigations will ultimately be used to support market clearance for these products.  There is no assurance that regulatory bodies will accept the data from these clinical studies or that they will ultimately allow market clearance for these products.

When required, with respect to the products we market in the United States we have obtained pre-market notification clearance under Section 510(k), but we do not believe certain modifications we have made to our products require us to submit new 510(k) notifications.  However, if the FDA disagrees with us and requires us to submit a new 510(k) notification for modifications to our existing products, we may be subject to enforcement actions by the FDA and be required to stop marketing the products while the FDA reviews the 510(k) notification.  If the FDA requires us to go through a lengthier, more rigorous examination than we had expected, our product introductions or modifications could be delayed or canceled, which could cause our sales to decline.  In addition, the FDA may determine that future products will require the more costly, lengthy and uncertain pre-market approval application process. Products that are approved through a pre-market approval application generally need FDA approval before they can be modified.  If we fail to submit changes to products developed under investigational device exemptions or pre-market approval applications in a timely or adequate manner, we may become subject to regulatory actions.

Because we are subject to extensive regulation in the countries in which we operate, we are subject to the risk that regulations could change in a way that would expose us to additional costs, penalties or liabilities.  For example, in the United States we sell a number of our products to physicians who may elect to use these products in ways that are not within the scope of the approval or clearance given by the FDA or for other than FDA-approved indications, often referred to as “off-label” use.  There are laws and regulations prohibiting the promotion of products for such off-label use which restrict our ability to market our products and could affect our growth.  Although we have strict policies against the unlawful promotion of products for off-label use and we train our employees on these policies, it is possible that one or more of our employees will not follow the policies, or that regulations would change in a way that may hinder our ability to sell such products or make it more costly to do so, which could expose us to financial penalties as well as loss of approval to market and sell the affected products.  If we want to market any of our products for use in ways for which they are not currently approved, we may need to conduct clinical trials and obtain approval from appropriate regulatory bodies, which could be time-consuming and costly.  In addition, off-label use may not be safe or effective and may result in unfavorable outcomes to patients, resulting in potential liability to us.  Penalties or liabilities stemming from off-label use could have a material adverse effect on our results of operations.  In addition, if physicians cease or lessen their use of products for other than FDA-approved indications, sales of our products could decline, which could materially adversely affect our net sales and results of operations.

If additional regulatory requirements are implemented in the foreign countries in which we sell our products, the cost of developing or selling our products may increase.  For example, in Japan, new regulations became effective on April 1, 2005 which increase the regulatory and quality assurance requirements for both our manufacturing facilities and our offices located in Japan in order to obtain and maintain regulatory approval to market our products there.  While parts of the new regulations are still being defined, we expect that the new regulations will result in higher costs and delays in securing approval to market our products in Japan. In addition, we depend on our distributors outside the United States in seeking regulatory approval to market our devices in other countries and we are therefore dependent on persons outside of our direct control to secure such approvals.  For example, we are highly dependent on distributors in emerging markets such as China and Brazil for regulatory submissions and approvals and do not have direct access to health care agencies in those markets to ensure timely regulatory approvals or prompt resolution of regulatory or compliance matters.  If our distributors fail to obtain the required approvals or do not do so in a timely manner, our net sales from our international operations and our results of operations may be adversely affected.

In addition, our business, properties and products are subject to foreign, federal, state and local laws and regulations relating to the protection of the environment, natural resources and worker health and safety and the use,

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management, storage, and disposal of hazardous substances, wastes, and other regulated materials. Because we own and operate real property, various environmental laws also may impose liability on us for the costs of cleaning up and responding to hazardous substances that may have been released on our property, including releases unknown to us.  These environmental laws and regulations also could require us to pay for environmental remediation and response costs at third-party locations where we disposed of or recycled hazardous substances.  The costs of complying with these various environmental requirements, as they now exist or may be altered in the future, could adversely affect our financial condition and results of operations.

A number of our products are in clinical trials.  If these trials are unsuccessful, or if the FDA or other regulatory agencies do not accept the results of such trials, these products may not successfully come to market and our business prospects may suffer.

Several of our products are in the early stages of development.  Some of our products only recently emerged from clinical trials and others have not yet reached the clinical trial stage.  We currently have four ongoing clinical trials relating to four products that we expect to contribute significantly to our net sales in the future.  These trials include the CREATE trial designed to evaluate the use of our SpideRX Embolic Protection Devices and our Protégé Self-Expanding Stent System in carotid artery stenting procedures in patients who are high risk candidates for carotid endarterectomy, as well as our PLAATO system designed for stroke reduction.  We cannot assure you that we will be successful in reaching the endpoints in these trials or, if we do, that the FDA or other regulatory agencies will accept the results and approve the devices for sale.  Further, we continually evaluate the potential financial benefits and costs of our clinical trials and the products being evaluated in them.  If we determine that the costs associated with attaining regulatory approval of a product exceed the potential financial benefits of that product or if the projected development timeline is inconsistent with our investment horizon, we may choose to stop a clinical trial and/or the development of a product.

Our ability to market our products in the United States will depend upon a number of factors, including our ability to demonstrate the safety and efficacy of our products with valid clinical data.  Our ability to market our products outside of the United States is also subject to regulatory approval, including our ability to demonstrate the safety of our products in the clinical setting.  Our products may not be found to be safe and, where required, effective in clinical trials and may not ultimately be approved for marketing by U.S. or foreign regulatory authorities.  Our failure to develop safe and effective products that are approved for sale on a timely basis would have a negative impact on our net sales.  In particular, if we do not reach the endpoints or obtain FDA approval with respect to our products, our future growth may be significantly hampered. In addition, some of the products for which we are currently conducting trials are already approved for sale outside of the United States.  As a result, while our trials are ongoing, unfavorable data may arise in connection with usage of our products outside the United States which could adversely impact the approval of such products in the United States.  Conversely, unfavorable data from clinical trials in the United States may adversely impact sales of our products outside of the United States.

The risks inherent in operating internationally and the risks of selling and shipping our products and of purchasing our components and products internationally may adversely impact our net sales, results of operations and financial condition.

We derive a significant portion of our net sales from operations in international markets.  For the the six months ended July 3, 2005 and July 4, 2004, 49.2% and  49.7% of our net sales, respectively, were derived from our international operations.  Our international distribution system consists of eight direct sales offices and approximately 50 stocking distribution partners. In addition, we purchase some components and products on the international market.  The sale and shipping of our products and services across international borders, as well as the purchase of components and products from international sources, subject us to extensive U.S. and foreign governmental trade regulations. Compliance with such regulations is costly and exposes us to penalties for non-compliance.  We are reviewing our trade control practices as part of our ongoing commitment to further enhance our compliance policies and procedures.  As part of this review, we have identified instances in which we may have incorrectly reported information about certain shipments imported into the United States and Europe.  While we believe that no monies are owed to any government as a result of these potential reporting errors other than processing fees of a nonmaterial amount, we may incur penalties, additional fees, interest and duty payments if the customs regulators disagree with our assessment.  Any failure to comply with applicable legal and regulatory obligations could impact us in a variety of ways that include, but are not limited to, significant criminal, civil and

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administrative penalties, including imprisonment of individuals, fines and penalties, denial of export privileges, seizure of shipments, restrictions on certain business activities, and exclusion or debarment from government contracting.  Also, the failure to comply with applicable legal and regulatory obligations could result in the disruption of our shipping and sales activities.

In addition, most of the countries in which we sell our products are, to some degree, subject to political, economic and/or social instability.  Our international sales operations expose us and our representatives, agents and distributors to risks inherent in operating in foreign jurisdictions.  These risks include:

•the imposition of additional U.S. and foreign governmental controls or regulations;

•the imposition of costly and lengthy new export licensing requirements;

•the imposition of U.S. and/or international sanctions against a country, company, person or entity with whom the company does business that would restrict or prohibit continued business with the sanctioned country, company, person or entity;

•economic instability;

•a shortage of high-quality sales people and distributors;

•loss of any key personnel that possess proprietary knowledge, or who are otherwise important to our success in certain international markets;

•changes in third-party reimbursement policies that may require some of the patients who receive our products to directly absorb medical costs or that may necessitate the reduction of the selling prices of our products;

•changes in duties and tariffs, license obligations and other non-tariff barriers to trade;

•the imposition of new trade restrictions;

•the imposition of restrictions on the activities of foreign agents, representatives and distributors;

•scrutiny of foreign tax authorities which could result in significant fines, penalties and additional taxes being imposed on us;

•pricing pressure that we may experience internationally;

•laws and business practices favoring local companies;

•longer payment cycles;

•difficulties in enforcing agreements and collecting receivables through certain foreign legal systems;

•difficulties in enforcing or defending intellectual property rights; and

•exposure to different legal and political standards due to our conducting business in over 50 countries.

We cannot assure you that one or more of the factors will not harm our business.  Any material decrease in our international sales would adversely impact our net sales, results of operations and financial condition.  Our international sales are predominately in Europe.  In Europe, health care regulation and reimbursement for medical

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devices vary significantly from country to country.  This changing environment could adversely affect our ability to sell our products in some European countries.

Fluctuations in foreign currency exchange rates could result in declines in our reported net sales and earnings.

Because the majority of our international sales are denominated in local currencies and not in U.S. dollars, our reported net sales and earnings are subject to fluctuations in foreign exchange rates.  Our international net sales were favorably affected by the impact of foreign currency fluctuations totaling $1.4 million in the six months ended July 4, 2004 and $1.0 million in the six months ended July 3, 2005.  However, we cannot assure you that we will benefit from the impact of foreign currency fluctuations in the future and foreign currency fluctuations in the future may adversely affect our net sales and earnings.  At present, we do not engage in hedging transactions to protect against uncertainly in future exchange rates between particular foreign currencies and the U.S. dollar.

We may become obligated to make large milestone payments that are not currently reflected in our financial statements in certain circumstances, which would negatively impact our cash flows from operations.

Pursuant to the acquisition agreements relating to our purchase of MitraLife and Appriva Medical, Inc. in January 2002 and August 2002, respectively, we agreed to make certain additional payments to the sellers of these businesses in the event that we achieve contractually defined milestones.  Generally, in each case, these milestone payments become due upon the completion of specific regulatory steps in the product commercialization process.  With respect to the MitraLife acquisition, the maximum potential milestone payments totaled $25 million, and with respect to the Appriva acquisition, the maximum potential milestone payments totaled $175 million.

On September 29, 2004, we sold substantially all of the assets constituting the MitraLife business to Edwards Lifesciences and we are no longer pursuing commercialization of the product line acquired in the MitraLife transaction.  As of the date that we sold these assets to Edwards Lifesciences, none of the milestones set forth in our agreement with the sellers of MitraLife had been met.  We have determined that we have no current obligations in respect of these milestone payments, and we do not believe that it is likely that we will have obligations with respect to these milestones in the future.  Although we do not believe it is likely that these milestone payment obligations will become due in the future, it is possible that the former stockholders of MitraLife could disagree and make a claim for such payments.  Any such dispute could be costly, result in payments in such amounts being made and divert our management’s time and attention away from our business.

The Appriva acquisition agreement contains four milestones to which payments relate.  The first milestone was required by its terms to be achieved by January 1, 2005 in order to trigger a payment equal to $50 million.  We have determined that the first milestone was not achieved by January 1, 2005 and that the first milestone is not payable, although it is possible that we could meet one or more of the remaining milestones with respect to the Appriva acquisition and could become obligated to make the corresponding milestone payments totaling $125 million.  On May 20, 2005 Michael Lesh,  as an individual seller of Appriva stock and purporting to represent certain other sellers of Appriva stock, filed a complaint in the Superior Court of the State of Delaware with individually specified damages aggregating $70 million and other unspecified damages for several allegations, including that we, along with other defendants,  breached the acquisition agreement and an implied covenant of good faith and fair dealing by willfully failing to take the steps necessary to meet the first milestone under the agreement,  and thereby also failing to meet certain other milestones, and further that one milestone was actually met.   The complaint also alleges fraud, negligent misrepresentation and violation of state securities laws in connection with the negotiation of the acquisition agreement.  We believe these allegations are without merit and intend to vigorously defend this action.  However, the defense and resolution of this or any similar dispute could be costly and may divert our management’s time and attention away from our business. On August 5, 2005, our attorneys received a letter from attorneys representing certain other sellers of Appriva stock (who are not purported to be represented in the action filed by Lesh), asking our attorneys to enter into a dialogue regarding their assertions that certain milestone payments should have been made. We believe their assertions are without merit. Failure to reach agreement with these new claimants on a resolution of our differences could lead to additional litigation on this matter.  In the event any such milestone payments become due and/or any other damages become payable, our costs would increase correspondingly which would negatively impact our cash flow from operations.

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We rely on our independent sales distributors and sales associates to market and sell our products outside of the United States, Canada, Europe and Japan.

Sales of our products in locations outside of the United States, Canada, Europe and Japan represented 12% and 15% of our net sales in the six months ended July 3, 2005 and July 4, 2004, respectively.  Our success outside of the United States, Canada, Europe and Japan depends largely upon marketing arrangements with independent sales distributors and sales associates, in particular their sales and service expertise and relationships with the customers in the marketplace.  Independent distributors and sales associates may terminate their relationship with us, or devote insufficient sales efforts to our products.  We do not control our independent distributors and they may not be successful in implementing our marketing plans. In addition, many of our independent distributors outside of the United States, Canada, Europe and Japan initially obtain and maintain foreign regulatory approval for sale of our products in their respective countries.  Our failure to maintain our existing relationships with our independent distributors and sales associates outside of the United States, Canada, Europe and Japan, or our failure to recruit and retain additional skilled independent sales distributors and sales associates in these locations, could have an adverse effect on our operations.  We have experienced turnover with some of our independent distributors in the past that has adversely affected our short-term financial results while we transitioned to new independent distributors.  Similar occurrences could happen in the future.

If physicians do not recommend and endorse our products, our sales may decline or we may be unable to increase our sales and profits.

In order for us to sell our products, physicians must recommend and endorse them.  We may not obtain the necessary recommendations or endorsements from physicians.  Acceptance of our products depends on educating the medical community as to the distinctive characteristics, perceived benefits, safety, clinical efficacy and cost-effectiveness of our products compared to products of our competitors, and on training physicians in the proper application of our products.  If we are not successful in obtaining the recommendations or endorsements of physicians for our products, our sales may decline or we may be unable to increase our sales and profits.

If we fail to comply with the U.S. Federal Anti-Kickback Statute and similar state laws, we could be subject to criminal and civil penalties and exclusion from the Medicare and Medicaid programs, which could have a material adverse effect on our business and results of operations.

A provision of the Social Security Act, commonly referred to as the Federal Anti-Kickback Statute, prohibits the offer, payment, solicitation or receipt of any form of remuneration in return for referring, ordering, leasing, purchasing or arranging for or recommending the ordering, purchasing or leasing of items or services payable by Medicare, Medicaid or any other Federal health care program.  The Federal Anti-Kickback Statute is very broad in scope and many of its provisions have not been uniformly or definitively interpreted by existing case law or regulations.  In addition, most of the states in which our products are sold have adopted laws similar to the Federal Anti-Kickback Statute, and some of these laws are even broader than the Federal Anti-Kickback Statute in that their prohibitions are not limited to items or services paid for by a Federal health care program but, instead, apply regardless of the source of payment.  Violations of the Federal Anti-Kickback Statute may result in substantial civil or criminal penalties and exclusion from participation in Federal health care programs.

All of our financial relationships with health care providers and others who provide products or services to Federal health care program beneficiaries are potentially governed by the Federal Anti-Kickback Statute and similar state laws.  We believe our operations are in material compliance with the Federal Anti-Kickback Statute and similar state laws.  However, we cannot assure you that we will not be subject to investigations or litigation alleging violations of these laws, which could be time-consuming and costly to us and could divert management’s attention from operating our business, which could have a material adverse effect on our business.  In addition, if our arrangements were found to violate the Federal Anti-Kickback Statute or similar state laws, it could have a material adverse effect on our business and results of operations.

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Our business strategy relies on assumptions about the market for our products, which, if incorrect, would adversely affect our business prospects and profitability.

We are focused on the market for endovascular devices used to treat vascular diseases and disorders.  We believe that the aging of the general population and increasingly inactive lifestyles will continue and that these trends will increase the need for our products. However, the projected demand for our products could materially differ from actual demand if our assumptions regarding these trends and acceptance of our products by the medical community prove to be incorrect or do not materialize or if drug therapies gain more widespread acceptance as a viable alternative treatment, which in each case would adversely affect our business prospects and profitability.

If MTI’s manufacturing facility does not have sufficient capacity or if MTI experiences a delay in the proposed relocation of its existing manufacturing facility, the production of our neurovascular products may be delayed.

The expansion of MTI’s manufacturing capacity will be necessary in the future.  MTI is currently in discussion with a prospective landlord for the leasing of a larger facility, which will include significantly greater manufacturing capacity.  MTI expects to incur approximately $3.0 million for facilities, tooling and equipment, regulatory approvals and leasehold improvements for the new facility.  We expect to enter into definitive agreements with MTI to lend MTI up to $3.3 million for the payment of the expenses associated with the relocation.  If MTI is not able to achieve the expected improved efficiencies from its new manufacturing facility or if MTI experiences any delay in completing its relocation or regulatory qualification of its new facility, the production of our neurovascular products may be delayed and our net sales and business could be materially adversely affected.

Our business, net sales and results of operations may suffer if we do not pass the required regulatory inspections for our new location for manufacturing peripheral stents.

We closed our New Brighton, Minnesota manufacturing facility in July 2005 and are currently in the process of integrating our manufacturing operations formerly located in New Brighton, Minnesota, where we manufactured our peripheral stent product line, with our manufacturing operations in Plymouth, Minnesota.  We will be required to pass regulatory inspections of the FDA, and possibly other regulatory agencies of countries in which we sell our products, in connection with the new manufacturing operations in Plymouth.  If we do not pass these inspections or do not pass them on our expected schedule, we may not have sufficient inventory of various products, which may result in a backlog of orders, customer dissatisfaction and a reduction in sales. Consequently, our business, net sales and results of operations may suffer.  In addition, we are required to submit a pre-market approval supplement application to the FDA for approval of the change in manufacturing facilities for any devices marketed under a pre-market approval application. If we do not obtain timely approval of any required supplement application, our business, net sales and results of operations may also be negatively impacted.

One of our families of products generates a large portion of our net sales. Our net sales and business prospects would be adversely affected if sales of this product were to decline.

We are dependent on our Protégé GPS family of stents, which generated more than 10% of our net sales in fiscal 2004 and more than 15% of our net sales in the six months ended July 3, 2005.  If our Protégé GPS stents were to no longer be available for sale in any key market because of regulatory, intellectual property or any other reason, our net sales from these products and from products that typically constitute ancillary purchases would significantly decline.  A significant decline in our net sales could also negatively impact our product development activities and therefore our business prospects.

In March 2005, Medtronic, Inc. contacted us to express its view that our Protégé stents infringe on one or more of its patents, as described above.  We informed Medtronic that we disagree with its assertions, and have since had several discussions with Medtronic.  No lawsuit with respect to this matter has been filed.

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We are exposed to product liability claims that could have an adverse effect on our business and results of operations.

The manufacture and sale of medical devices exposes us to significant risk of product liability claims, some of which may have a negative impact on our business.  Our existing products were developed relatively recently and defects or risks that we have not yet identified may give rise to product liability claims. In addition, we have recently initiated a new quality control system and a new manufacturing model which has not been in effect long enough for us to have the confidence that any errors or mistakes in implementation have been corrected.  Our existing product liability insurance coverage may be inadequate to protect us from any liabilities we may incur or we may not be able to maintain adequate product liability insurance at acceptable rates.  If a product liability claim or series of claims is brought against us for uninsured liabilities or in excess of our insurance coverage and it is ultimately determined that we are liable, our business could suffer.  Additionally, we could experience a material design or manufacturing failure in our products, a quality system failure, other safety issues or heightened regulatory scrutiny that would warrant a recall of some of our products.  A recall of some of our products could also result in increased product liability claims.  Further, while we train our physician customers on the proper usage of our products, we cannot ensure that they will implement our instructions accurately.  If our products are used incorrectly by our customers, injury may result and this could give rise to product liability claims against us.  Any losses that we may suffer from any liability claims, and the effect that any product liability litigation may have upon the reputation and marketability of our products, may divert management’s attention from other matters and may have a negative impact on our business and our results of operations.

Our net sales could decline significantly if drug-eluting stents become a dominant therapy in the peripheral vascular stent market and we are not able to develop or acquire a drug-eluting stent to market and sell.

The peripheral vascular market is currently comprised exclusively of bare metal, or non drug-eluting, stents.  However, there are clinical situations in the periphery in which a drug-eluting stent may demonstrate clinical superiority over bare metal stents.  To the extent that our peripheral stent customers seek stents with drug coatings and we do not market and sell a drug-eluting peripheral stent or one that achieves market acceptance, we may not be able to compete as effectively with those of our competitors that are able to develop and sell a drug-eluting stent, and our peripheral stent sales could decline.  If our peripheral stent sales were to decline, we could experience a significant decline in sales of some of our other products which are routinely purchased in conjunction with stent purchases.

If we are unable to continue to develop and market new products and technologies, we may experience a decrease in demand for our products or our products could become obsolete, and our business would suffer.

We are continually engaged in product development and improvement programs, and new products represent a significant component of our growth rate.  We may not be able to compete effectively with our competitors unless we can keep up with existing or new products and technologies in the endovascular device market. If we do not continue to introduce new products and technologies, or if those products and technologies are not accepted, we may not be successful and our business would suffer.  Moreover, many of our clinical trials have durations of several years and it is possible that competing therapies, such as drug therapies, may be introduced while our products are still undergoing clinical trials.  This could reduce the potential demand for our products and negatively impact our business prospects. Additionally, our competitors’ new products and technologies may beat our products to market, may be more effective or less expensive than our products or render our products obsolete.

The marketing of our products requires a significant amount of time and expense and we may not have the resources to successfully market our products, which would adversely affect our business and results of operations.

The marketing of our products requires a significant amount of time and expense in order to identify the physicians who may use our products, invest in training and education, and employ a sales force that is large enough to interact with the targeted physicians.  In addition, the marketing of our products requires interaction with many subspecialists who are moving into new practice areas and may require more training and education from our personnel than would be required with physicians who are not expanding their practice areas.  We may not have adequate resources to market our products successfully against larger competitors which have more resources than

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we do. If we cannot market our products successfully, our business and results of operations would be adversely affected.

We face competition from other companies, many of which have substantially greater resources than we do and may be able to develop more effective products or offer their products at lower prices than we can, which could adversely impact our business, net sales and results of operations.  Consolidation in the medical technology industry would exacerbate these risks.

The markets in which we compete are highly competitive, subject to change and significantly affected by new product introductions and other activities of industry participants.  The markets for our products are also dominated by a small number of large companies, and we are a much smaller company relative to our primary competitors.  Our products compete with other medical devices, including Invatec manufactured products sold in the United States under other brand names, surgical procedures and pharmaceutical products.  A number of the companies in the medical technology industry, including manufacturers of peripheral vascular, cardiovascular and neurovascular products, have substantially greater capital resources, larger customer bases, broader product lines, larger sales forces, greater marketing and management resources, larger research and development staffs and larger facilities than ours and have established reputations with our target customers, as well as worldwide distribution channels that are more effective than ours. In addition, the industry has recently experienced some consolidation.  Consolidation could make the competitive environment more difficult for smaller companies.  Because of the size of the vascular disease market opportunity, competitors and potential competitors have historically dedicated and will continue to dedicate significant resources to aggressively promote their products. New product developments that could compete with us more effectively are likely because the vascular disease market is characterized by extensive research efforts and technological progress.  Competitors may develop technologies and products that are safer, more effective, easier to use, less expensive or more readily accepted than ours.  Their products could make our technology and products obsolete or noncompetitive.  Our competitors may also be able to achieve more efficient manufacturing and distribution operations than we can and may offer lower prices than we could offer profitably.  We expect that as our products mature, we will be able to produce our products in a more cost effective manner and therefore be able to compete more effectively, but it is possible that we may not achieve such cost reductions.  Any of these competitive factors could adversely impact our business, net sales and results of operations.

We also compete with other manufacturers of medical devices for clinical sites to conduct human trials.  If we are not able to locate clinical sites on a timely or cost-effective basis, this could impede our ability to conduct trials of our products and, therefore, our ability to obtain required regulatory clearance or approval.

We rely on our management information systems for inventory management, distribution and other functions and to maintain our research and development and clinical data.  If our information systems fail to adequately perform these functions or if we experience an interruption in their operation, our business and results of operations could be adversely affected.

The efficient operation of our business is dependent on our management information systems.  We rely on our management information systems to effectively manage accounting and financial functions; manage order entry, order fulfillment and inventory replenishment processes; and to maintain our research and development and clinical data.  The failure of our management information systems to perform as we anticipate could disrupt our business and product development and could result in decreased sales, increased overhead costs, excess inventory and product shortages, causing our business and results of operations to suffer.  In addition, our management information systems are vulnerable to damage or interruption from:

•earthquake, fire, flood and other natural disasters;

•terrorist attacks and attacks by computer viruses or hackers; and

•power loss or computer systems, Internet, telecommunications or data network failure.

Any such interruption could adversely affect our business and results of operations.

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Existing or future acquisitions of businesses could negatively affect our results of operations if we fail to integrate the acquired businesses successfully into our existing operations or if we discover previously undisclosed liabilities.

In order to build our core technology platform, we have acquired several businesses since our inception and we may acquire additional businesses in the future.  Our ability to grow through acquisitions depends upon our ability to identify, negotiate, complete and integrate suitable acquisitions and to obtain any necessary financing.  Even if we complete acquisitions, we may experience:

•difficulties in integrating any acquired companies, personnel and products into our existing business;

•delays in realizing projected efficiencies, cost savings, revenue synergies and other benefits of the acquired company or products;

•inaccurate assessment of undisclosed, contingent or other liabilities or problems;

•diversion of our management’s time and attention from other business concerns;

•limited or no direct prior experience in new markets or countries we may enter;

•higher costs of integration than we anticipated; or

•difficulties in retaining key employees of the acquired business who are necessary to manage these acquisitions.

In addition, an acquisition could materially impair our operating results and liquidity by causing us to incur debt or reallocate amounts of capital from other operating initiatives or requiring us to amortize acquisition expenses and acquired assets or incur non-recurring charges as a result of incorrect estimates made in the accounting for acquisitions.  We may also discover deficiencies in internal controls, data adequacy and integrity, product quality, regulatory compliance and product liabilities which we did not uncover prior to our acquisition of such businesses, which could result in us becoming subject to penalties or other liabilities.  Any difficulties in the integration of acquired businesses or unexpected penalties or liabilities in connection with such businesses could have a material adverse effect on our results of operations and financial condition. These risks could be heightened if we complete several acquisitions within a relatively short period of time.

If MTI fails to timely report its financial results or produce its financial statements, we may not be able to timely report our financial results or comply with Securities and Exchange Commission reporting and certification requirements, and our stock price may decline.

As the owner of a controlling interest in MTI, we consolidate the financial results of MTI in our consolidated financial statements.  MTI accounted for a material portion of our net sales and gross profit in the six months ended July 3, 2005 and July 4, 2004. As a result, our ability to report our financial results, produce our consolidated financial statements and file required reports with the Securities and Exchange Commission, or the SEC, in a timely manner will require MTI to provide us with its financial results and financial statements in a timely manner.  If MTI fails to timely produce its financial results and financial statements, we may not be able to report our financial results or comply with SEC reporting requirements.  In addition, if the officers of MTI are not able to make the certifications required under the Sarbanes-Oxley Act of 2002, or the Sarbanes-Oxley Act, and SEC rules, our officers may not be able to make their required certifications.  As a result, we may be subject to SEC enforcement action and civil litigation, and our stock price may decline.

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If we become profitable, we cannot assure you that our net operating losses will be available to reduce our tax liability.

Our ability to use, or the amount of, our net operating losses, may be limited or reduced.  The businesses purchased by us in 2001 and 2002 experienced “ownership changes” within the meaning of Section 382 of the Internal Revenue Code.  Generally, a change of more than 50 percentage points in the ownership of a company’s shares, by value, over the three-year period ending on the date the shares were acquired constitutes an ownership change, and these ownership changes limit our ability to use the acquired company’s net operating losses.  Furthermore, the number of shares of our common stock issued in our initial public offering may be sufficient, taking into account prior or future shifts in our ownership over a three-year period, to cause us to undergo an ownership change.  As a result, our ability to use our existing net operating losses that are not currently subject to limitation to offset U.S. federal taxable income if we become profitable may also become subject to substantial limitations.  Further, the amount of our net operating losses could be reduced if any tax deductions taken by us are limited or disallowed by the Internal Revenue Service.  All of these limitations could potentially result in increased future tax liability for us.

One of our principal stockholders and its affiliates will be able to influence matters requiring stockholder approval and could discourage the purchase of our outstanding shares at a premium.

As of August 1, 2005, Warburg Pincus beneficially owned approximately 76% of our outstanding common stock.  This concentration of ownership may have the effect of delaying, preventing or deterring a change in control of our company, could deprive our stockholders of an opportunity to receive a premium for their common stock as part of a sale or merger of our company and may negatively affect the market price of our common stock. Transactions that could be affected by this concentration of ownership include proxy contests, tender offers, mergers or other purchases of common stock that could give you the opportunity to realize a premium over the then-prevailing market price for shares of our common stock.

As a result of Warburg Pincus’ share ownership and representation on our board of directors, Warburg Pincus will be able to influence all affairs and actions of our company, including matters requiring stockholder approval, such as the election of directors and approval of significant corporate transactions.  The interests of our principal stockholder may differ from the interests of the other stockholders.  For example, Warburg Pincus could oppose a third party offer to acquire us that you might consider attractive, and the third party may not be able or willing to proceed unless Warburg Pincus supports the offer.  In addition, if our board of directors supports a transaction requiring an amendment to our certificate of incorporation, Warburg Pincus is currently in a position to defeat any required stockholder approval of the proposed amendment.  If our board of directors supports an acquisition of us by means of a merger or a similar transaction, the vote of Warburg Pincus alone is currently sufficient to approve or block the transaction under Delaware law. In each of these cases and in similar situations, you may disagree with Warburg Pincus as to whether the action opposed or supported by Warburg Pincus is in the best interest of our stockholders.

Our equity investors may have conflicts of interests with you or us in the future.

Our equity investors prior to our initial public offering, including Warburg Pincus, may make investments in companies and from time to time acquire and hold interests in businesses that compete directly or indirectly with us.  These other investments may:

•create competing financial demands on our equity investors;

•create potential conflicts of interest; and

•require efforts consistent with applicable law to keep the other businesses separate from our operations.

These equity investors may also pursue acquisition opportunities that may be complementary to our business and, as a result, those acquisition opportunities may not be available to us.  Furthermore, these equity investors may have an interest in our company pursuing acquisitions, divestitures, financings or other transactions that, in their judgment, could enhance their equity investment, even though such transactions might involve risks to our stockholders.  In

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addition, these equity investors’ rights to vote or dispose of equity interests in our company are not subject to restrictions in favor of our company other than as may be required by applicable law.

We are a “controlled company” within the meaning of the NASDAQ National Market System rules and, as a result, are exempt from certain corporate governance requirements.

Because Warburg Pincus controls more than 50% of the voting power of our common stock, we are considered to a “controlled company” for the purposes of the NASDAQ National Market System quotation requirements.  As such, we are permitted, and have elected, to opt out of the NASDAQ National Market System quotation requirements that would otherwise require our board of directors to have a majority of independent directors, our board nominations to be selected, or recommended for the board’s selection either by a nominating committee comprised entirely of independent directors or by a majority of our independent directors and our compensation committee to be comprised entirely of independent directors.  Accordingly, you may not have the same protections afforded to stockholders of companies that are subject to all of the NASDAQ National Market System corporate governance requirements.

Our corporate documents and Delaware law contain provisions that could discourage, delay or prevent a change in control of our company.

Provisions in our amended and restated certificate of incorporation and amended and restated bylaws may discourage, delay or prevent a merger or acquisition involving us that our stockholders may consider favorable.  For example, our amended and restated certificate of incorporation authorizes our board of directors to issue up to 100 million shares of “blank check” preferred stock.  Without stockholder approval, the board of directors has the authority to attach special rights, including voting and dividend rights, to this preferred stock.  With these rights, preferred stockholders could make it more difficult for a third party to acquire us.  In addition, our amended and restated certificate of incorporation provides for a staggered board of directors, whereby directors serve for three year terms, with approximately one third of the directors coming up for reelection each year.  Having a staggered board will make it more difficult for a third party to obtain control of our board of directors through a proxy contest, which may be a necessary step in an acquisition of us that is not favored by our board of directors.

We are also subject to the anti-takeover provisions of Section 203 of the Delaware General Corporation Law.  Under these provisions, if anyone becomes an “interested stockholder,” we may not enter into a “business combination” with that person for three years without special approval, which could discourage a third party from making a takeover offer and could delay or prevent a change of control.  For purposes of Section 203, “interested stockholder” means, generally, someone owning 15% or more of our outstanding voting stock or an affiliate of ours that owned 15% or more of our outstanding voting stock during the past three years, subject to certain exceptions as described in Section 203.  Under one such exception, Warburg Pincus does not constitute an “interested stockholder.”

The requirements of being a public company may strain our resources and distract management.

As a public company, we are subject to the reporting requirements of the Securities Exchange Act of 1934, as amended, or the Exchange Act, and the Sarbanes-Oxley Act.  These requirements may place a strain on our people, systems and resources.  The Exchange Act requires that we file annual, quarterly and current reports with respect to our business and financial condition.  The Sarbanes-Oxley Act requires that we maintain effective disclosure controls and procedures and internal controls over financial reporting.  In order to maintain and improve the effectiveness of our disclosure controls and procedures and internal controls over financial reporting, significant resources and management oversight will be required.  This may divert management’s attention from other business concerns, which could have a material adverse effect on our business, financial condition, results of operations and cash flows.

We will incur increased costs as a result of being a public company.

As a public company, we will incur significant legal, accounting and other expenses that we did not incur as a private company.  In addition, the Sarbanes-Oxley Act, as well as new rules subsequently implemented by the SEC and the NASDAQ National Market System, have required changes in corporate governance practices of public

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companies.  We expect these new rules and regulations to increase our legal and financial compliance costs significantly and to make some activities more time-consuming and costly.  For example, in anticipation of becoming a public company, we created additional board committees and adopted policies regarding internal controls and disclosure controls and procedures.  In addition, we will incur additional costs associated with our public company reporting requirements.  We may need to hire additional accounting and financial staff with appropriate public company experience and technical accounting knowledge, and we cannot assure you that we will be able to do so in a timely fashion or without incurring material costs.  We also expect these new rules and regulations to make it more difficult and more expensive for us to obtain director and officer liability insurance and we may be required to accept reduced policy limits and coverage or incur substantially higher costs to obtain the same or similar coverage.  As a result, it may be more difficult for us to attract and retain qualified persons to serve on our board of directors or as executive officers.  We are currently evaluating and monitoring developments with respect to these new rules, and we cannot predict or estimate the amount of additional costs we may incur or the timing of such costs.

If we are unable to successfully address the material weakness in our internal controls, our ability to report our financial results on a timely and accurate basis may be adversely affected.

In connection with their audits of our consolidated financial statements for the years ended December 31, 2003 and 2004, our independent registered public accounting firm reported two conditions, which together constituted a material weakness in the internal controls over our ability to produce financial statements free from material misstatements.  A material weakness is a control deficiency, or combination of control deficiencies, that results in more than a remote likelihood that a material misstatement of the annual or interim financial statements will not be prevented or detected.  Our independent registered public accounting firm reported to us that we did not have a sufficient number of senior level financial personnel, and our controls over non-routine transactions did not ensure that accounting considerations were identified and appropriately recorded.  These two conditions, in combination, constituted a material weakness in our internal controls.

Our management and audit committee agreed that the conditions identified by our independent registered public accounting firm constituted a material weakness.   We developed a plan to address this material weakness that included the addition of a new chief financial officer, a director of external reporting and additional professional accounting personnel.  On an interim basis, the Company engaged two senior financial consultants in the fourth quarter of 2004 to provide an immediate expansion in our technical finance and accounting resources.  These individuals were retained through June 2005 to ensure adequate time for transition to our new full-time employees.  During the six months ended July 3, 2005, we hired a new chief financial officer, effective April 2005, who has 19 years of experience in the medical device manufacturing industry working for both public and private companies.  We also hired a new controller in April 2005, who came to us from a Big Four public accounting firm and has significant experience in both public and private accounting.  The controller oversees external reporting with assistance from a newly promoted senior analyst. Our prior controller, who has been with us for approximately four years, has become our Director of International Finance.  In May 2005, we added an additional senior staff level accounting position.   With the addition of these individuals, we believe that we have sufficient, skilled personnel to reasonably ensure that we have the ability to produce financial statements free from material misstatements.  We have also engaged a consulting firm to assist us in assessing our system of internal controls and remediating any control deficiencies. We will continue to assess the adequacy and appropriateness of our financial staff and adjust accordingly as changes in our business warrant.

Except as described above, there was no change in our internal control over financial reporting that occurred during our quarter ended July 3, 2005 that has materially affected, or is reasonably likely to materially affect our internal control over financial reporting.

We have had only limited operating experience with the remedial measures we have made to date and we cannot provide assurance that the measures we have taken to date or any future measures will adequately remediate the material weakness reported by our independent registered public accounting firm. In addition, we cannot be certain that additional material weaknesses in our internal controls will not be discovered in the future.  Any failure to remediate the material weakness reported by our independent registered public accounting firm or to implement required new or improved controls, or difficulties encountered in their implementation, could harm our operating results, cause us to fail to meet our reporting obligations or result in material misstatements in our consolidated

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financial statements.  Any such failure also could adversely affect the results of the periodic management evaluations and annual auditor attestation reports regarding the effectiveness of our “internal control over financial reporting” that will be required when the Securities and Exchange Commission’s rules under Section 404 of the Sarbanes-Oxley Act become applicable to us beginning with our annual report on Form 10-K for the year ending December 31, 2006 to be filed in early 2007.  Inadequate internal controls could also cause investors to lose confidence in our reported financial information, which could cause our stock price to decline.

We will be exposed to risks relating to evaluations of controls required by Section 404 of the Sarbanes-Oxley Act.

Changing laws, regulations and standards relating to corporate governance and public disclosure, including the Sarbanes-Oxley Act and related regulations implemented by the SEC and the NASDAQ National Market System, are creating uncertainty for public companies, increasing legal and financial compliance costs and making some activities more time consuming.  We will be evaluating our internal controls systems to allow management to report on, and our independent auditors to attest to, our internal controls.  We will be performing the system and process evaluation and testing (and any necessary remediation) required to comply with the management certification and auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act.  While we anticipate being able to fully implement the requirements relating to internal controls and all other aspects of Section 404 by our December 31, 2006 deadline, we cannot be certain as to the timing of completion of our evaluation, testing and remediation actions or the impact of the same on our operations since there is presently no precedent available by which to measure compliance adequacy.  If we are not able to implement the requirements of Section 404 in a timely manner or with adequate compliance, we may be subject to sanctions or investigation by regulatory authorities, including the SEC or the NASDAQ National Market System.  This type of action could adversely affect our financial results or investors’ confidence in our company and our ability to access capital markets, and could cause our stock price to decline.  In addition, the controls and procedures that we will implement may not comply with all of the relevant rules and regulations of the SEC and the NASDAQ National Market System.  If we fail to develop and maintain effective controls and procedures, we may be unable to provide the required financial information in a timely and reliable manner.

ITEM 3.QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

We are exposed to various market risks, which are potential losses arising from adverse changes in market rates and prices, such as interest rates and foreign exchange fluctuations.  We do not enter into derivatives or other financial instruments for trading or speculative purposes.

Interest Rate Risk

We currently have little exposure to a change in interest rates.  Our borrowings to date have all been at a fixed rate of interest.  We have no variable rate debt or lease obligations.

Foreign Currency Exchange Rate Risk

Fluctuations in the rate of exchange between the U.S. dollar and foreign currencies could adversely affect our financial results.  In the three and six months ended July 3, 2005, approximately 37% and 38%, respectively, of our net sales were denominated in foreign currencies.  We expect that foreign currencies will continue to represent a similarly significant percentage of our net sales in the future.  Selling, marketing and administrative costs related to these sales are largely denominated in the same respective currency, thereby limiting our transaction risk exposure.  We therefore believe that the risk of a significant impact on our operating income from foreign currency fluctuations is minimal.  However, for sales not denominated in U.S. dollars, if there is an increase in the rate at which a foreign currency is exchanged for U.S. dollars, it will require more of the foreign currency to equal a specified amount of U.S. dollars than before the rate increase.  In such cases and if we price our products in the foreign currency, we will receive less in U.S. dollars than we did before the rate increase went into effect.  If we price our products in U.S. dollars and competitors price their products in local currency, an increase in the relative strength of the U.S. dollar could result in our price not being competitive in a market where business is transacted in the local currency.

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Approximately 67% and 68% of our net sales denominated in foreign currencies in the three and six months ended July 3, 2005, respectively, were derived from European Union countries and were denominated in the Euro.  Additionally, we have significant intercompany receivables from our foreign subsidiaries, which are denominated in foreign currencies, principally the Euro.  Our principal exchange rate risk therefore exists between the U.S. dollar and the Euro.  Fluctuations from the beginning to the end of any given reporting period result in the remeasurement of our foreign currency-denominated receivables and payables, generating currency transaction gains or losses that impact our non-operating income/expense levels in the respective period and are reported in other (income) expense, net in our consolidated financial statements.  We recorded a $1.9 million and $3.1 million foreign currency transaction loss in the three and six months ended July 3, 2005, respectively, related to the translation of our foreign denominated net receivables into U.S. dollars.  We do not currently hedge our exposure to foreign currency exchange rate fluctuations.  We may, however, hedge such exposure to foreign currency exchange rates in the future.

ITEM 4.CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

We maintain disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended) that are designed to ensure that information required to be disclosed by us in the reports we file or submit under the Securities Exchange Act of 1934, as amended, is recorded, processed, summarized, and reported, within the time periods specified in the Securities and Exchange Commission’s rules and forms and that such information is accumulated and communicated to our management, including our principal executive and principal financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.  In designing and evaluating the disclosure controls and procedures, we recognize that any controls and procedures, no matter how well designed and operated can provide only reasonable assurance of achieving the desired control objectives and we necessarily are required to apply our judgment in evaluating the cost-benefit relationship of possible controls and procedures.  Our management evaluated, with the participation of our Chief Executive Officer and Chief Financial Officer, the effectiveness of the design and operation of our disclosure controls and procedures as of the end of the period covered in this quarterly report on Form 10-Q.  Based on that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were effective as of the end of such period.

Changes in Internal Control Over Financial Reporting

In connection with their audits of our consolidated financial statements for the years ended December 31, 2003 and 2004, our independent registered public accounting firm reported two conditions, which together constitute a material weakness in the internal controls over our ability to produce financial statements free from material misstatements.  Our independent registered public accounting firm reported to our board of directors that we did not have a sufficient number of senior level financial personnel, and our controls over non-routine transactions did not ensure that accounting considerations are identified and appropriately recorded.  These two conditions, in combination, constituted a material weakness in our internal controls.

We developed a plan to address this material weakness that included the addition of a new chief financial officer, a director of external reporting and additional professional accounting personnel.  On an interim basis, we engaged two senior financial consultants in the fourth quarter of 2004 to provide an immediate expansion in our technical finance and accounting resources.  These individuals were retained through June 2005 to ensure adequate time for transition to our new full-time employees.  During the six months ended July 3, 2005, we hired a new chief financial officer, effective April 2005, who has 19 years of experience in the medical device manufacturing industry working for both public and private companies.  We also hired a new controller in April 2005, who came to us from a Big Four public accounting firm and has significant experience in both public and private accounting.  The controller oversees external reporting with assistance from a newly promoted senior analyst.  Our prior controller, who has been with us for approximately four years, has become our Director of International Finance.  In May 2005, we added an additional senior staff level accounting position.   With the addition of these individuals, we believe that we have sufficient, skilled personnel to reasonably ensure that we have the ability to produce financial statements free from material misstatements.  We have also engaged a consulting firm to assist us in assessing our system of internal controls and remediating any control deficiencies.   We will continue to assess the adequacy and

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appropriateness of our financial staff and adjust accordingly as changes in our business warrant.  However, given the lack of tenure of these individuals with our company, we will need additional time in order to demonstrate that we have adequately remediated this material weakness.

Except as described above, there was no change in our internal control over financial reporting that occurred during our quarter ended July 3, 2005 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

PART II - OTHER INFORMATION

ITEM 1.LEGAL PROCEEDINGS

We are from time to time subject to, and are presently involved in, litigation or other legal proceedings.

In September 2000, Dendron, which was acquired by MTI in 2002, was named as the defendant in three patent infringement lawsuits brought by the Regents of the University of California, as the plaintiff, in the District Court (Landgericht) in Dusseldorf, Germany.  The complaints requested a judgment that Dendron’s EDC I coil device infringed three European patents held by the plaintiff and asked for relief in the form of an injunction that would prevent Dendron from producing and selling the devices within Germany and selling from Germany to customers abroad, as well as an award of damages caused by Dendron’s alleged infringement, and other costs, disbursements and attorneys’ fees.  In August 2001, the court issued a written decision that EDC I coil devices did infringe the plaintiff’s patents, enjoined Dendron from selling the devices within Germany and from Germany to customers abroad, and requested that Dendron disclose the individual products’ costs as the basis for awarding damages.  In September 2001, Dendron appealed the decision.  In addition, Dendron instituted challenges to the validity of each of these patents by filing opposition proceedings with the European Patent Office, or EPO, against one of the patents (MTI joined Dendron in this action in connection with its acquisition of Dendron), and by filing, with MTI, nullity proceedings with the German Federal Patents Court against the German component of the other two patents.  The opposition proceedings with the EPO on the one patent are complete, and the EPO has rejected the opposition and has upheld the validity of the one patent.

On July 4, 2001, the University of California filed another suit against Dendron alleging that the EDC I coil device infringed another European patent held by the plaintiff.  The complaint was filed in the District Court of Dusseldorf, Germany seeking additional monetary and injunctive relief.  In April 2002, the Court found that EDC I coil devices did infringe the plaintiff’s patent.  The patent involved is the same patent that was involved in the case before the English Patents Court (see below) and that was ruled by a Dutch court to be invalid (see below).  The opposition proceedings on the patent are complete, and the EPO has rejected the opposition and has upheld the validity of the patent.  The case is under appeal and an oral hearing is scheduled to be held in the Dusseldorf Court of Appeal on March 9, 2006.

An accrual for the matters discussed above was included in the balance sheet of Dendron as of the date of its acquisition by MTI. As of July 3, 2005, approximately $800 thousand was recorded in accrued liabilities in our consolidated financial statements included in this report.  Dendron ceased all activities with respect to the EDC I coil device prior to MTI’s October 2002 acquisition of Dendron.

Concurrent with its acquisition of Dendron, MTI initiated a series of legal actions related to its Sapphire coils in the Netherlands and the United Kingdom, which included a cross-border action that was heard by a Dutch court, as further described below.  The primary purpose of these actions was to assert both invalidity and non-infringement by MTI of certain patents held by others.  The range of patents at issue are held by the Regents of the University of California, with Boston Scientific Corporation subsidiaries named as exclusive licensees, collectively referred to as the “patent holders,” related to detachable coils and certain delivery catheters.

In October 2003, the Dutch court ruled the three patents at issue related to detachable coils are valid and that MTI’s Sapphire coils do infringe such patents.  The Dutch court also ruled that the patent holders’ patent at issue related to the delivery catheter was invalid.  Under the court’s ruling, MTI has been enjoined from engaging in infringing activities related to the Sapphire coils in most countries within the European Union, and may be liable for then-

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unspecified monetary damages for activities engaged in by MTI since September 27, 2002.  In February 2005, MTI received an initial claim from the patent holders with respect to monetary damages, amounting to €3.6 million, or approximately $4.3 million as of July 3, 2005, with which MTI disagrees.  Court hearings will be held regarding these claims.  MTI has filed an appeal with the Dutch court, and believes that since the date of injunction in each separate country it is in compliance with the Dutch court’s injunction and MTI intends to continue such compliance. Because we believe that MTI has valid legal grounds for appeal, we have determined that a loss is not probable at this time as defined by SFAS 5, Accounting for Contingencies.  However, there can be no assurance that the ultimate resolution of this matter will not result in a material adverse effect on our business, financial condition or results of operations.

In January 2003, MTI initiated a legal action in the English Patents Court seeking a declaration that a patent held by the patent holders related to delivery catheters was invalid, and that MTI’s products did not infringe this patent.  The patent in question was the U.K. designation of the same patent that was found by the Dutch court in October 2003 to be invalid, as discussed above.  The patent holders counterclaimed for alleged infringement by MTI. In February 2005, the court approved an interim settlement between the parties under which the patent holders are required to surrender such patent to the U.K. Comptroller of Patents, and to pay MTI’s costs associated with the legal action, including interest.  As a result, MTI received interim payments from the patent holders aggregating £500 (equivalent to approximately $0.9 million based on the dates of receipt), which MTI recorded as a reduction of litigation expense upon receipt of such funds in February and March 2005.  The parties intend to continue discussions regarding payment by the patent holders of the remaining costs incurred by MTI in such litigation.  As a result of the interim settlement, MTI anticipates that it will no longer be involved in litigation in the United Kingdom, although no assurance can be given that no other litigation involving MTI may arise in the United Kingdom.

In the United States, concurrent with the FDA’s marketing clearance of the Sapphire line of embolic coils received in July 2003, MTI initiated a declaratory judgment action against the patent holders in the United States District Court for the Western District of Wisconsin.  The action included assertions of non-infringement by MTI and invalidity of a range of patents held by the patent holders related to detachable coils and certain delivery catheters.  In October 2003, the court dismissed MTI’s actions for procedural reasons without prejudice and without decision as to the merits of the parties’ positions.  In December 2003, the University of California filed an action against MTI in the United States District Court for the Northern District of California alleging infringement by MTI with respect to a range of patents held by the University of California related to detachable coils and certain delivery systems. MTI has filed a counterclaim against the University of California asserting non-infringement by MTI, invalidity of the patents and inequitable conduct in the procurement of certain patents.  In addition, MTI filed a claim against the University of California and Boston Scientific Corporation for violation of federal antitrust laws, with the result that the court has subsequently decided to add Boston Scientific as a party to the litigation.  A trial date has not been set. Because these matters are in early stages, we cannot estimate the possible loss or range of loss, if any, associated with their resolution.  However, there can be no assurance that the ultimate resolution of these matters will not result in a material adverse effect on our business, financial condition or results of operations.

In March 2005, Medtronic, Inc. contacted us to express its view that our Protégé stents infringe on one or more of its patents. We informed Medtronic that we disagree with its assertions, and have since had several discussions with Medtronic.  No lawsuit with respect to this matter has been filed. We also received notice from an individual claiming that he believes that our PLAATO device infringes on two of his patents.  We have informed this individual that we do not believe that our PLAATO device infringes on these patents.  On March 30, 2005, we were served with a complaint by Boston Scientific Corporation and one of its affiliates which claims that some of our products, including our SpideRX Embolic Protection Device, infringe certain of Boston Scientific’s patents.  This action was brought in the United States District Court for the District of Minnesota.  We have answered the complaint and intend to vigorously defend this action. Because these matters are in early stages, we cannot estimate the possible loss or range of loss, if any, associated with their resolution.  However, there can be no assurance that the ultimate resolution of these matters will not result in a material adverse effect on our business, financial condition or results of operations.

The acquisition agreement relating to our acquisition of Appriva Medical, Inc. contains four milestones to which payments relate.  The first milestone was required by its terms to be achieved by January 1, 2005 in order to trigger a payment equal to $50 million.  We have determined that the first milestone was not achieved by January 1, 2005

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and that the first milestone is not payable.  On May 20, 2005, Michael Lesh,  as an individual seller of Appriva stock and purporting to represent certain other sellers of Appriva stock, filed a complaint in the Superior Court of the State of Delaware with individually specified damages aggregating $70 million and other unspecified damages for several allegations, including that we, along with other defendants, breached the acquisition agreement and an implied covenant of good faith and fair dealing by willfully failing to take the steps necessary to meet the first milestone under the agreement, and thereby also failing to meet certain other milestones, and further that one milestone was actually met.   The complaint also alleges fraud, negligent misrepresentation and violation of state securities laws in connection with the negotiation of the acquisition agreement.  We believe these allegations are without merit and intend to vigorously defend this action.  On August 5, 2005 our attorneys received a letter from attorneys representing certain other sellers of Appriva stock (who are not purported to be represented in the action filed by Lesh), asking our attorneys to enter into a dialogue regarding their assertions that certain milestones should have been paid. We believe their assertions are without merit. Failure to reach agreement with these new claimants on a resolution of our differences could lead to additional litigation on this matter.  Because these matters are in an early stages, we cannot estimate the possible loss or range of loss, if any, associated with their resolution. However, there can be no assurance that the ultimate resolution of these matters will not result in a material adverse effect on our business, financial condition or results of operations.

ITEM 2.UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

Recent Sales of Unregistered Equity Securities

Pursuant to a contribution and exchange agreement dated as of April 4, 2005, on May 26, 2005, ev3 LLC issued 13,808,832 common membership units to Warburg, Pincus Equity Partners, L.P. and certain of its affiliates, Vertical Fund I, L.P. and Vertical Fund II, L.P. (collectively, the “Contributors”) in exchange for the contribution to ev3 LLC by the Contributors of an aggregate of 9,704,819 shares of the common stock of MTI.

Pursuant to a merger agreement dated as of April 4, 2005, in connection with the merger of ev3 LLC with and into us, on June 21, 2005, we issued an aggregate of 83,918,016 shares of our common stock to the holders of units of membership interests in ev3 LLC.

Pursuant to a note contribution and exchange agreement dated as of April 4, 2005, on June 21, 2005, we issued an aggregate of 23,159,304 shares of our common stock to the Contributors in exchange for the contribution to us by the Contributors of $316.0 million aggregate principal amount of demand notes of ev3 Endovascular, Inc., our wholly owned subsidiary, plus $8.2 million of accrued and unpaid interest thereon.

Pursuant to the exercise of options to purchase membership units of ev3 LLC under the ev3 LLC 2003 incentive plan, ev3 LLC issued 1,057 membership units to various current and former employees during the three months ended July 3, 2005. These membership units were subsequently converted into shares of our common stock in connection with the merger of ev3 LLC with and into us.

Except as described above, there were no other unregistered sales by us of equity securities during the quarter ended July 3, 2005.

No underwriting commissions or discounts were paid with respect to the sales of the unregistered securities described above.  In addition, all of the above sales were made in reliance on Rule 701, Regulation D and Section 4(2) under the Securities Act of 1933, as amended (the “Securities Act”).  With regard to our reliance upon the exemptions under Regulation D and Section 4(2) under the Securities Act, certain inquiries of the purchasers were made by us to establish that such sales qualified for such exemptions from the registration requirements.  With regard to our reliance upon the Rule 701 exemption, all such issuances were to employees, former employees or independent consultants.

Use of Proceeds

On June 15, 2005, our registration statement on Form S-1 (Registration No. 333-123851) was declared effective.  Pursuant to the registration statement, we registered (1) 11,765,000 shares of our common stock, par value $0.01 per

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share, to be sold in our initial public offering and (2) 1,764,750 shares of our common stock, all or a portion of which were to be sold upon the exercise of the underwriters’ over-allotment option (including up to 35,900 shares to be sold by a selling stockholder).  On June 21, 2005, we completed the sale of 11,765,000 shares of common stock to the public at an initial public offering price of $14.00 per share.  Piper Jaffray & Co., Banc of America Securities LLC, Bear, Stearns & Co. Inc. and Thomas Weisel Partners LLC acted as underwriters for our initial public offering.  On July 20, 2005, the underwriters purchased an additional 205,800 shares of common stock from us and 4,200 shares of common stock from the selling stockholder pursuant to the exercise of their over-allotment option.  As a result, an aggregate of 11,975,000 shares of our common stock were sold before the termination of our initial public offering.  The aggregate public offering price for the 11,970,800 shares of common stock sold by us and the 4,200 shares of common stock sold by the selling stockholder was $167.6 million.  The underwriters received an underwriting discount of (1) $0.70 per share for the 11,765,000 shares sold by us on June 21, 2005 and (2) $0.98 per share for the 205,800 sold by us and the 4,200 shares sold by the selling stockholder on July 20, 2005 pursuant to the underwriters’ over-allotment option.

Our initial public offering resulted in gross proceeds to us of $167.6 million.  Expenses related to the initial public offering were as follows:  approximately $8.4 million for underwriting discounts and commissions and approximately $3.9 million for other expenses, for total expenses of approximately $12.3 million.  None of the offering expenses resulted in direct or indirect payments to any of our directors, officers or their associates, to persons owning 10% or more of our common stock or to any of our affiliates.  All of the offering expenses were paid to others.

After deduction of offering expenses, we received net proceeds of approximately $155.3 million in our initial public offering, including shares sold by us pursuant to the underwriters’ over-allotment option.  As of July 3, 2005, the proceeds from our initial public offering and available cash were used as follows:  $36.5 million of the net proceeds were used to repay a portion of the accrued and unpaid interest on the demand notes and the remaining net proceeds were invested in short-term, investment-grade, interest bearing securities.  We cannot predict whether the proceeds will yield a favorable return. Other than $36.5 million of the net proceeds used to repay a portion of the accrued and unpaid interest on demand notes held by Warburg Pincus, which is our majority stockholder, and Vertical, which is one of our stockholders, none of the net proceeds from our initial public offering have resulted in direct or indirect payments to directors, officers or their associates, to persons who owned 10% or more of our common stock or to any of our affiliates.

We expect to use the remaining $119 million in net proceeds from our initial public offering for general corporate purposes, which may include funding the operations of MTI.  We do not currently have any more specific plans with respect to the use of these net proceeds.  Our management has broad discretion as to the use of the net proceeds.  While we have no present understandings, commitments or agreements to enter into any potential acquisitions, we may use a portion of the net proceeds for the acquisition of, or investment in, technologies or products that complement our business.  As required by Securities and Exchange Commission regulations, we will provide further detail on our use of the net proceeds from our initial public offering in future periodic reports.

Issuer Purchases of Equity Securities

We did not purchase any shares of our common stock or other securities registered pursuant to Sections 12 of the Securities Exchange Act of 1934, as amended, during the quarter ended July 3, 2005, and our board of directors has not authorized any repurchase plan or program for purchase of our shares of common stock or other securities on the open market or otherwise.

ITEM 3.DEFAULTS UPON SENIOR SECURITIES

Not applicable.

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ITEM 4.SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

In connection with our preparations for our initial public offering, our stockholders took action by written consent pursuant to Section 228 of the Delaware General Corporation Law on three occasions during our quarter ended July 3, 2005.

On March 1, 2005, ev3 LLC, our sole stockholder at that time, acted by written consent to: (1) approve our initial public offering; (2) approve the merger of ev3 LLC with and into us and the related merger agreement; (3) approve a stock contribution and exchange agreement pursuant to which certain of ev3 LLC’s members agreed to contribute shares of common stock of MTI to ev3 LLC in exchange for membership units of ev3 LLC; (4) approve a note contribution and exchange agreement pursuant to which certain of ev3 LLC’s members agreed to contribute to us demand notes of ev3 Endovascular, Inc. in exchange for shares of our common stock; (5) increase the size of our board of directors from five (5) members to seven (7) members; and (6) approve the election of Haywood D. Cochrane and Douglas W. Kohrs to our board of directors, with James M. Corbett, Richard B. Emmitt, Dale A. Spencer, Thomas E. Timbie and Elizabeth H. Weatherman continuing as directors.

On June 6, 2005, ev3 LLC, our sole stockholder at that time, acted by written consent to: (1) approve an Amended and Restated Certificate of Incorporation pursuant to which, among other things, we are authorized to issue 100,000,000 shares of our common stock; (2) approve certain indemnification agreements between us and each of our directors and executive officers and certain of our other officers and employees; and (3) approve the ev3 Inc. 2005 Incentive Stock Plan, a form of option grant notice and the reservation of 2,000,000 shares of our common stock for issuance pursuant to grants made under the 2005 Incentive Stock Plan.

On June 21, 2005, stockholders holding 83,039,611 outstanding shares of our common stock (on a pre-split basis), representing 99% of our outstanding shares of common stock at such time, acted by written consent to approve a one for six reverse stock split of our common stock prior to the consummation of our initial public offering and a Certificate of Amendment to our Amended and Restated Certificate of Incorporation effecting such reverse stock split.

ITEM 5.OTHER INFORMATION

On June 16, 2005, we entered into an Underwriting Agreement (the “Underwriting Agreement”) with Piper Jaffray & Co. (“Piper Jaffray”) and Banc of America Securities LLC (“BAS” and together with Piper Jaffray, the “Representatives”) as representatives of the several underwriters (the “Underwriters”) named in Schedule A thereto and Dale A. Spencer, one of our directors, as a selling stockholder (the “Selling Stockholder”).  Pursuant to the Underwriting Agreement, among other things, we agreed to issue and sell to the Underwriters an aggregate of 11,765,000 shares of our common stock, par value $0.01 per share, at a purchase price, after deducting underwriting discounts and commissions, of $13.30 per share, in our initial public offering of our common stock.  We also granted the Underwriters an option to purchase up to 1,728,850 additional shares of our common stock and the Selling Stockholder granted the Underwriters an option to purchase up to 35,900 shares of our common stock at a purchase price, after deducting underwriting discounts and commissions, of $13.02 per share, to cover over-allotments, if any.  On June 21, 2005, we closed our initial public offering, resulting in net proceeds to us of approximately $152.8 million, after deducting underwriting discounts and commissions and estimated offering expenses.  Warburg Pincus and Vertical purchased 3,196,750 and 168,250 shares of our common stock, respectively, in the offering.  On July 15, 2005, the Underwriters exercised a portion of the over-allotment option.  Pursuant to this exercise, on July 20, 2005, we sold an additional 205,800 shares of our common stock and the Selling Stockholder sold 4,200 shares of our common stock at a purchase price of $13.02 per share, resulting in additional net proceeds to us of approximately $2.5 million, after deducting underwriting discounts and commissions and estimated offering expenses.

As described in our final prospectus in connection with our initial public offering, on June 21, 2005, we entered into a registration rights agreement with certain of our stockholders, directors, officers and employees, including, among others, Warburg Pincus, The Vertical Group, Dale A. Spencer, James M. Corbett, Stacy Enxing Seng and L. Cecily Hines, who we refer to as the holders, with respect to shares of our common stock held by them. Pursuant to the registration rights agreement, we agreed to:

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•use our reasonable best efforts to effect up to two registered offerings of at least $10 million each upon the demand of the holders of not less than a majority of the shares of our common stock then held by the holders;

•use our best efforts to effect up to three registrations of at least $1 million each on Form S-3, once we become eligible to use such form, if any holder so requests; and

•maintain the effectiveness of each such registration statement for a period of 120 days or until the distribution of the registrable securities pursuant to the registration statement is complete.

Pursuant to the registration rights agreement, the holders also have incidental or “piggyback” registration rights with respect to any registrable shares, subject to certain volume and marketing restrictions imposed by the underwriters of the offering with respect to which the rights are exercised.  We also agreed to use our best efforts to qualify for the use of Form S-3 for secondary sales.  These rights were waived in connection with our initial public offering through December 13, 2005, subject to extension in certain circumstances.  We agreed to bear the expenses, including the fees and disbursements of one legal counsel for the holders, in connection with the registration of the registrable securities, except for any underwriting commissions relating to the sale of the registrable securities.

On August 16, 2005, our board of directors approved amendments (the “Amendments”) to Sections 3.01 and 3.02 of our amended and restated bylaws for the purpose of reflecting the classification of our board of directors contained in our amended and restated certificate of incorporation.  The Amendments were effective as of such date.  The Amendments are reflected in the amended and restated bylaws filed as Exhibit 3.3 to this report, which are incorporated by reference herein.

ITEM 6.EXHIBITS

The following exhibits are being filed or furnished with this quarterly report on Form 10-Q:

Exhibit No.	Description
2.1	Agreement and Plan of Merger, dated as of April 4, 2005, by and between ev3 LLC and ev3 Inc. (Incorporated by reference to Exhibit 2.1 to ev3’s Registration Statement on Form S-1 (File No. 333-123851), filed with the Securities and Exchange Commission on April 5, 2005)
2.2	Contribution and Exchange Agreement, dated as of April 4, 2005, by and among the institutional stockholders listed on Schedule I thereto, ev3 LLC, ev3 Inc. and Micro Therapeutics, Inc. (Incorporated by reference to Exhibit 2.2 to ev3’s Registration Statement on Form S-1 (File No. 333-123851), filed with the Securities and Exchange Commission on April 5, 2005)
2.3	Note Contribution and Exchange Agreement, dated as of April 4, 2005, by and among the noteholders listed on Schedule I thereto and ev3 Inc. (Incorporated by reference to Exhibit 2.3 to ev3’s Registration Statement on Form S-1 (File No. 333-123851), filed with the Securities and Exchange Commission on April 5, 2005)
3.1	Amended and Restated Certificate of Incorporation of ev3 Inc. (Incorporated by reference to Exhibit 3.1 to ev3’s Amendment No. 5 to Registration Statement on Form S-1 (File No. 333-123851), filed with the Securities and Exchange Commission on June 14, 2005)
3.2	Amendment to Amended and Restated Certificate of Incorporation of ev3 Inc. (Incorporated by reference to Exhibit 99.1 to ev3’s Current Report on Form 8-K (File No. 000-51348), filed with the Securities and Exchange Commission on June 27, 2005)
3.3	Amended and Restated Bylaws of ev3 Inc. (Filed herewith)
4.1	Form of Stock Certificate (Incorporated by reference to Exhibit 4.1 to ev3’s Amendment No. 4 to Registration Statement on Form S-1 (File No. 333-123851), filed with the Securities and Exchange Commission on June 2, 2005)
4.2	Registration Rights Agreement, dated as of June 21, 2005, by and among ev3 Inc., Warburg, Pincus Equity Partners, L.P., Warburg, Pincus Netherlands Equity Partners I, C.V., Warburg, Pincus Netherlands Equity Partners III, C.V., Vertical Fund I, L.P., Vertical Fund II, L.P. and certain other investors party thereto. (Filed herewith)

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Exhibit No.	Description
10.1	Underwriting Agreement, dated as of June 16, 2005, by and among ev3 Inc., Piper Jaffray & Co., Banc of America Securities LLC and Dale A. Spencer (Filed herewith)
10.2	Corporate Opportunity Agreement, dated as of April 4, 2005, by and among the institutional stockholders listed on Schedule I thereto and ev3 Inc. (Incorporated by reference to Exhibit 10.32 to ev3’s Registration Statement on Form S-1 (File No. 333-123851), filed with the Securities and Exchange Commission on April 5, 2005)
10.3	First Amendment to Amended and Restated Sales Representative Agreement, dated April 6, 2005, by and between Micro Therapeutics, Inc. and ev3 International, Inc. (Incorporated by reference to Exhibit 10.52 to Micro Therapeutics’ Current Report on Form 8-K (File No. 000-06523), filed with the Securities and Exchange Commission on April 7, 2005)
10.4	ev3 Inc. Amended and Restated 2005 Incentive Stock Plan (Filed herewith)
10.5	Loan and Security Agreement, dated May 6, 2005, by and between Micro Therapeutics, Inc. and Silicon Valley Bank (Incorporated by reference to Exhibit 10.56 to Micro Therapeutics’ Current Report on Form 8-K (File No. 000-06523), filed with the Securities and Exchange Commission on May 10, 2005)
31.1	Certification of Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 and SEC Rule 13a-14(a) (Filed herewith)
31.2	Certification of Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 and SEC Rule 13a-14(a) (Filed herewith)
32.1	Certification of Chief Executive Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (Furnished herewith)
32.2	Certification of Chief Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (Furnished herewith)

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, hereunto duly authorized.

August 17, 2005	ev3 Inc.
	By:	/s/ James M. Corbett
		James M. Corbett
		President and Chief Executive Officer
		(principal executive officer)
	By:	/s/ Patrick D. Spangler
		Patrick D. Spangler
		Chief Financial Officer and Treasurer
		(principal financial and accounting officer)

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ev3 Inc.
QUARTERLY REPORT ON FORM 10-Q
EXHIBIT INDEX

Exhibit No.	Description	Method of Filing
2.1	Agreement and Plan of Merger, dated as of April 4, 2005, by and between ev3 LLC and ev3 Inc.	Incorporated by reference to Exhibit 2.1 to ev3’s Registration Statement on Form S-1 (File No. 333-123851), filed with the Securities and Exchange Commission on April 5, 2005
2.2	Contribution and Exchange Agreement, dated as of April 4, 2005, by and among the institutional stockholders listed on Schedule I thereto, ev3 LLC, ev3 Inc. and Micro Therapeutics, Inc.	Incorporated by reference to Exhibit 2.2 to ev3’s Registration Statement on Form S-1 (File No. 333-123851), filed with the Securities and Exchange Commission on April 5, 2005
2.3	Note Contribution and Exchange Agreement, dated as of April 4, 2005, by and among the noteholders listed on Schedule I thereto and ev3 Inc.	Incorporated by reference to Exhibit 2.3 to ev3’s Registration Statement on Form S-1 (File No. 333-123851), filed with the Securities and Exchange Commission on April 5, 2005
3.1	Amended and Restated Certificate of Incorporation of ev3 Inc.	Incorporated by reference to Exhibit 3.1 to ev3’s Amendment No. 5 to Registration Statement on Form S-1 (File No. 333-123851), filed with the Securities and Exchange Commission on June 14, 2005
3.2	Amendment to Amended and Restated Certificate of Incorporation of ev3 Inc.	Incorporated by reference to Exhibit 99.1 to ev3’s Current Report on Form 8-K (File No. 000-51348), filed with the Securities and Exchange Commission on June 27, 2005
3.3	Amended and Restated Bylaws of ev3 Inc.	Filed herewith.
4.1	Form of Stock Certificate	Incorporated by reference to Exhibit 4.1 to ev3’s Amendment No. 4 to Registration Statement on Form S-1 (File No. 333-123851), filed with the Securities and Exchange Commission on June 2, 2005
4.2	Registration Rights Agreement, dated as of June 21, 2005, by and among ev3 Inc., Warburg, Pincus Equity Partners, L.P., Warburg, Pincus Netherlands Equity Partners I, C.V., Warburg, Pincus Netherlands Equity Partners III, C.V., Vertical Fund I, L.P., Vertical Fund II, L.P. and certain other investors party thereto	Filed herewith.
10.1	Underwriting Agreement, dated as of June 16, 2005, by and among ev3 Inc., Piper Jaffray & Co., Banc of America Securities LLC and Dale A. Spencer	Filed herewith.

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Exhibit No.	Description	Method of Filing
10.2	Corporate Opportunity Agreement, dated as of April 4, 2005, by and among the institutional stockholders listed on Schedule I thereto and ev3 Inc.	Incorporated by reference to Exhibit 10.32 to ev3’s Registration Statement on Form S-1 (File No. 333-123851), filed with the Securities and Exchange Commission on April 5, 2005
10.3	First Amendment to Amended and Restated Sales Representative Agreement, dated April 6, 2005, by and between Micro Therapeutics, Inc. and ev3 International, Inc.	Incorporated by reference to Exhibit 10.52 to Micro Therapeutics’ Current Report on Form 8-K (File No. 000-06523), filed with the Securities and Exchange Commission  on April 7, 2005
10.4	ev3 Inc. Amended and Restated 2005 Incentive Stock Plan	Filed herewith
10.5	Loan and Security Agreement, dated May 6, 2005, by and between Micro Therapeutics, Inc. and Silicon Valley Bank	Incorporated by reference to Exhibit 10.56 to Micro Therapeutics’ Current Report on Form 8-K (File No. 000-06523), filed with the Securities and Exchange Commission  on May 10, 2005
31.1	Certification of Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 and SEC Rule 13a-14	Filed herewith.
31.2	Certification of Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 and SEC Rule 13a-14	Filed herewith.
32.1	Certification of Chief Executive Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002	Furnished herewith.
32.2	Certification of Chief Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002	Furnished herewith.

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EX-3.3

Exhibit 3.3

ev3 Inc.

Incorporated under the laws

of the State of Delaware

AMENDED AND RESTATED

BY-LAWS

As adopted on August 16, 2005

ev3 Inc.

AMENDED AND RESTATED BY-LAWS

TABLE OF CONTENTS

AMENDED AND RESTATED

BYLAWS

OF

ev3 Inc.

ARTICLE I
OFFICES

SECTION 1.01  Registered Office.

ev3 Inc. (the “Corporation”) shall at all times maintain a registered office in the State of Delaware.  The registered office and registered agent of the Corporation shall be fixed in the Corporation’s Certificate of Incorporation and may be changed from time to time by the Corporation in the manner specified by law.

SECTION 1.02  Other Offices.

The Corporation may also have offices at such other places both within and without the State of Delaware as the board of directors of the Corporation (the “Board of Directors”) may from time to time determine or the business of the Corporation may require.

ARTICLE II
MEETINGS OF STOCKHOLDERS

SECTION 2.01  Place of Meetings.

Meetings of the stockholders for the election of directors or for any other purpose will be held at such time and place, either within or without the State of Delaware as designated from time to time by the Board of Directors and stated in the notice of the meeting or in a duly executed waiver of notice thereof.  The Board of Directors may, in its sole discretion, determine that a meeting of stockholders shall not be held at any place, but may instead be held solely by means of remote communication as authorized by Section 211(a) of the Delaware General Corporation Law (the “DGCL”).

SECTION 2.02  Annual Meeting.

(A) Annual meetings of stockholders will be held each year on such date and at such time as designated by the Board of Directors.  At the annual meeting, and in accordance with the Certificate of Incorporation, stockholders shall elect a Board of Directors and transact such other business as may properly be brought before the

meeting.  Written notice of the annual meeting stating the place, date and hour of the meeting, and the means of remote communication, if any, by which stockholders and proxyholders may be deemed to be present in person and vote at such meeting, shall be given to each stockholder entitled to vote at such meeting not less than ten (10) days nor more than sixty (60) days before the date of the meeting.

(B) Nominations of persons for election to the Board of Directors and the proposal of business to be considered by the stockholders may be made at an annual meeting of stockholders (1) pursuant to the Corporation’s notice of meeting delivered pursuant to Section 6.01 of these Bylaws, (2) by or at the direction of the Chairman of the Board of Directors or (3) by any stockholder of the Corporation who is entitled to vote at the meeting who complied with the notice procedures set forth in paragraphs (B), (C) and (D) of this Section 2.02 and who was a stockholder of record at the time such notice is delivered to the Secretary of the Corporation.

(C) For nominations or other business to be properly brought before an annual meeting by a stockholder pursuant to clause (3) of paragraph (B) of this Section 2.02, the stockholder must have given timely notice thereof in writing to the Secretary of the Corporation at the principal executive offices of the Corporation not less than ninety (90) days nor more than one hundred and twenty (120) days prior to the first anniversary of the date on which the Corporation first mailed its proxy materials for the preceding year’s annual meeting; provided, however, that in the event that the date of the annual meeting is changed by more than thirty (30) days from the anniversary date of the previous year’s meeting, notice by the stockholder to be timely must be so delivered not earlier than one hundred and twenty (120) days prior to such annual meeting and not later than the close of business on the later of the ninetieth (90th) day prior to such annual meeting or the tenth (10th) day following the day on which public announcement of the date of such meeting is first made.  Public announcement of an adjournment of an annual meeting shall not commence a new time period for the giving of a stockholder’s notice.

(D) Such stockholder’s notice also shall set forth: (1) as to each person whom the stockholder proposes to nominate for election or re-election as a director all information relating to such person that is required to be disclosed in solicitations of proxies for election of directors, or is otherwise required, in each case pursuant to Regulation 14A under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), including such person’s written consent to being named in the proxy statement as a nominee and to serving as a director if elected; (2) as to any other business that the stockholder proposes to bring before the meeting, a brief description of the business desired to be brought before the meeting, the text of any resolution proposed to be adopted at the meeting, the reasons for conducting such business at the meeting, any material interest in such business of such stockholder and the beneficial owner, if any, on whose behalf the proposal is made, and a representation that the stockholder is a stockholder of record and intends to appear in person or by proxy at the annual meeting to bring the business proposed in the notice before the meeting; and (3) as to the stockholder giving the notice and the beneficial owner, if any, on whose behalf the nomination or proposal is made (a) the name and address of such stockholder, as they appear on the Corporation’s stock transfer books, and of such beneficial owner and (b) the class, series and number of

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shares of the Corporation which are owned beneficially and of record by such stockholder and such beneficial owner.

(E) Only such persons who are nominated in accordance with the procedures set forth in this Section 2.02 shall be eligible for election to serve as directors and only such business shall be conducted at a meeting of stockholders as shall have been brought before the meeting in accordance with the procedures set forth in this Section.  Except as otherwise provided by law, the Certificate of Incorporation or these Bylaws, the chairman of the meeting shall have the power and duty to determine whether a nomination or any business proposed to be brought before the meeting was made or proposed, as the case may be, in accordance with the procedures set forth in these Bylaws and, if any proposed nomination or business is not in compliance with these Bylaws, to declare that such defective proposal or nomination shall be disregarded.  The chairman of the meeting of stockholders shall, if the facts warrant, determine and declare to the meeting that any nomination or business was not properly brought before the meeting and in accordance with the provisions of these Bylaws, and if he or she should so determine, the chairman shall so declare to the meeting, and any such nomination or business not properly brought before the meeting shall not be transacted.

(F) Nothing in these Bylaws shall be deemed to affect any rights of the holders of any class or series of stock having a preference over the common stock as to dividends or upon liquidation to elect directors under specified circumstances.  Notwithstanding the foregoing provisions of this Section 2.02, a stockholder shall also comply with all applicable requirements of the Exchange Act and the rules and regulations promulgated thereunder with respect to the matters set forth in this Section 2.02.

Whenever used in these Bylaws, “public announcement” shall mean disclosure (a) in a press release released by the Corporation, provided such press release is released by the Corporation following its customary procedures, is reported by the Dow Jones News Service, Associated Press or comparable national news service, or is generally available on internet news sites, or (b) in a document publicly filed by the Corporation with the Securities and Exchange Commission pursuant to Section 13, 14 or 15(d) of the Exchange Act.

SECTION 2.03  Special Meetings.

Subject to the rights of the holders of any series of preferred stock and except as otherwise provided by applicable law or by the Certificate of Incorporation, special meetings of stockholders, for any purpose or purposes, may be called by (i) the Board of Directors of the Corporation, (ii) the Chairman of the Board of Directors or (iii) the President and Chief Executive Officer and shall be called by the President and Chief Executive Officer at the request of one or more stockholders holding shares of common stock representing more than 50% of the combined voting power of the outstanding common stock then entitled to vote.  Such request will state the purpose or purposes of the proposed meeting.  Written notice of a special meeting stating the place, date and hour of the meeting, the means of remote communication, if any, by which stockholders and proxy holders may be deemed to be present in person and vote at such meeting, and

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the purpose or purposes for which the meeting is called will be given not less than ten (10) days nor more than sixty (60) days before the date of the meeting to each stockholder entitled to vote at such meeting.  Business transacted at any special meeting of stockholders shall be limited to the purposes stated in the notice.

SECTION 2.04  Notice of Meetings.

Notice of any meeting of stockholders shall be given in accordance with Section 6.01 of these Bylaws.  Notice of any meeting of stockholders may be waived in accordance with Section 6.02 of these Bylaws.

SECTION 2.05  Quorum.

Subject to the rights of the holders of any series of preferred stock and except as otherwise provided by applicable law or by the Certificate of Incorporation, the holders representing a majority of the combined voting power of the capital stock issued and outstanding and entitled to vote at a meeting, present in person or represented by proxy, shall constitute a quorum at all meetings of the stockholders for the transaction of business.  If, however, such quorum is not present or represented at any meeting of the stockholders, the Chairman of the meeting or stockholders representing a majority of the capital stock entitled to vote at the meeting, present in person or by proxy, shall have the power to adjourn the meeting from time to time, without notice other than announcement at the meeting, until a quorum is present or represented.  At such adjourned meeting at which a quorum is present or represented, any business may be transacted that might have been transacted at the meeting as originally noticed.  If the adjournment is for more than thirty (30) days, or if after the adjournment a new record date is fixed for the adjourned meeting, a notice of the adjourned meeting will be given to each stockholder entitled to vote at the meeting.  The stockholders present at a duly called meeting at which a quorum was originally present may continue to transact business until adjourned, notwithstanding the withdrawal of enough stockholders to leave less than a quorum present.

SECTION 2.06  Voting.

Subject to the rights of the holders of any series of preferred stock and except as otherwise required by applicable law, the Certificate of Incorporation or these Bylaws, any question brought before any meeting of stockholders will be decided by the vote of the holders of at least a majority of the voting power of the capital stock represented and entitled to vote thereat.  Except as otherwise provided in the Certificate of Incorporation, each stockholder represented at a meeting of stockholders is entitled to cast one vote for each share of the capital stock entitled to vote thereat held by such stockholder.  Such votes may be cast in person or by proxy, but no proxy will be voted on or after three years from its date, unless such proxy provides for a longer period.  The Board of Directors, in its discretion, or the officer of the Corporation presiding at a meeting of stockholders, in his discretion, may require that any votes cast at such meeting be cast by written ballot.

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SECTION 2.07  Consent of Stockholders in Lieu of Meeting.

Unless otherwise provided in the Certificate of Incorporation, any action required or permitted to be taken at any annual or special meeting of stockholders of the Corporation may be taken without a meeting, without prior notice and without a vote, if a consent in writing, setting forth the action so taken, shall be signed by the holders of outstanding stock having not less than the minimum number of votes that would be necessary to authorize or take such action at a meeting at which all shares entitled to vote thereon were present and voted.

SECTION 2.08  List of Stockholders Entitled to Vote.

The officer of the Corporation who has charge of the stock ledger of the Corporation shall prepare and make, at least ten (10) days before every meeting of stockholders, a complete list of the stockholders entitled to vote at the meeting, arranged in alphabetical order, and showing the address of each stockholder (but not the electronic mail address or other electronic contact information, unless the Board of Directors so directs) and the number of shares registered in the name of each stockholder. Such list shall be open to the examination of any stockholder, for any purpose germane to the meeting, during ordinary business hours, for a period of at least ten (10) days prior to the meeting, either at a place within the city where the meeting is to be held, which place will be specified in the notice of the meeting, or, if not so specified, at the place where the meeting is to be held.  This list shall also be produced and kept at the time and place of the meeting during the whole time thereof, and may be inspected by any stockholder of the Corporation who is present.

SECTION 2.09  Stock Ledger.

The stock ledger of the Corporation is the only evidence as to the stockholders who are entitled to examine the stock ledger, the list required by Section 2.08, or the books of the Corporation, or to vote in person or by proxy at any meeting of stockholders.

ARTICLE III
DIRECTORS

SECTION 3.01  Number of Directors.

Subject to any rights of holders of preferred stock to elect directors under specified circumstances, the number of directors which shall constitute the whole Board of Directors shall be fixed from time to time solely pursuant to a resolution adopted by a majority of the Corporation’s directors then in office; provided that the Board of Directors shall consist of at least five members.  No reduction of the authorized number of directors shall have the effect of removing any director before that director’s term of office expires.  The Board of Directors shall be divided into three classes to be designated as Class I, Class II and Class III.  In the event of any increase or decrease in the authorized number of directors, the newly created or eliminated directorships resulting from such increase or decrease shall be apportioned by the Board of Directors among the three classes of directors so as to maintain such classes as nearly equal in number as

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possible.  The directors, other than the first Board of Directors, chosen to succeed those whose terms are expiring shall be elected at the annual meeting of stockholders, shall be identified as being of the same class as the directors whom they succeed, and shall be elected for a term ending at the time of the third succeeding annual meeting of stockholders, or thereafter in each case when their respective successors are duly elected and qualified.

SECTION 3.02  Vacancies.

Any director may resign at any time upon written notice to the Corporation. Vacancies and newly created directorships resulting from any increase in the authorized number of directors may be filled by an affirmative vote of the majority of the directors then in office, though less than a quorum, or by a sole remaining director and the director so chosen shall hold office for the remainder of the full term of the class of directors in which the vacancy occurred or to which the new directorship is apportioned, and until such director’s successor shall have been duly elected and qualified.  If there are no directors in office, then an election of directors may be held in the manner provided by law.

When one or more directors resigns and the resignation is effective at a future date, a majority of the directors then in office, including those who have so resigned, shall have the power to fill such vacancy or vacancies, the vote thereon to take effect when such resignation or resignations shall become effective, and each director so chosen shall hold office as provided in this Section 3.02 in the filling of other vacancies.

SECTION 3.03  Duties and Powers.

The business of the Corporation shall be managed by or under the direction of its Board of Directors, which may exercise all such powers of the Corporation and do all such lawful acts and things as are not by statute or by the Certificate of Incorporation or by these Bylaws directed or required to be exercised or done by the stockholders.

SECTION 3.04  Meetings.

The Board of Directors of the Corporation may hold meetings, both regular and special, either within or without the State of Delaware.  Regular meetings of the Board of Directors may be held without notice at such time and at such place as shall from time to time be determined by the Board of Directors. Special meetings of the Board of Directors may be called by the Chairman, if there is one, the President and Chief Executive Officer, or a majority of directors.   Notice thereof stating the place, date and hour of the meeting will be given to each director either by mail not less than forty-eight (48) hours before the date of the meeting, by telephone, telegraph, cable, wireless or other form of electronic communication with twenty-four (24) hours notice, or on such shorter notice as the person or persons calling such meeting may deem necessary or appropriate in the circumstances.

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SECTION 3.05  Quorum.

Except as may be otherwise specifically provided by applicable law, the Certificate of Incorporation or these Bylaws, at all meetings of the Board of Directors, a majority of the entire Board of Directors shall constitute a quorum for the transaction of business and the act of a majority of the directors present at any meeting at which there is a quorum is an act of the Board of Directors.  If a quorum is not present at any meeting of the Board of Directors, the directors present thereat may adjourn the meeting from time to time, without notice other than announcement at the meeting, until a quorum is present.

SECTION 3.06  Actions of the Board of Directors in Lieu of a Meeting.

Unless otherwise restricted by the Certificate of Incorporation or these Bylaws, any action required or permitted to be taken at any meeting of the Board of Directors of the Corporation or of any committee thereof may be taken without a meeting, if all members of the Board of Directors or committee, as the case may be, consent thereto in writing or by electronic transmission, and the writing or writings or electronic transmission or transmissions are filed with the minutes of proceedings of the Board of Directors or committee. Such filing shall be in paper form if the minutes are maintained in paper form and shall be in electronic form if the minutes are maintained in electronic form.

SECTION 3.07  Meetings by Means of Conference Telephone.

Unless otherwise provided by the Certificate of Incorporation or these Bylaws, members of the Board of Directors of the Corporation, or any committee designated by the Board of Directors, may participate in a meeting of the Board of Directors or such committee by means of a conference telephone or similar communications equipment by means of which all persons participating in the meeting can hear each other.  Participation in a meeting pursuant to this Section 3.07 shall constitute presence in person at such meeting.

SECTION 3.08  Committees.

The Board of Directors may, by resolution passed by a majority of the entire Board of Directors, designate one or more committees, each committee to consist of one or more of the directors of the Corporation.  The Board of Directors may designate one or more directors as alternate members of any committee, who may replace any absent or disqualified member at any meeting of any such committee.  In the absence or disqualification of a member of a committee, and in the absence of a designation by the Board of Directors of an alternate member to replace the absent or disqualified member, the member or members thereof present at any meeting and not disqualified from voting, whether or not such member or members constitute a quorum, may unanimously appoint another member of the Board of Directors to act at the meeting in the place of any absent or disqualified member.  Any committee, to the extent permitted by applicable law and

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provided in the resolution of the Board of Directors or these Bylaws establishing such committee, shall have and may exercise all the lawfully delegable powers, duties and authority of the Board of Directors in the management of the business and affairs of the Corporation.  Each committee will keep regular minutes and report to the Board of Directors when required.  Each committee will comply with all applicable provisions of the Sarbanes-Oxley Act of 2002, the rules and regulations of the Securities and Exchange Commission and the rules and requirements of the NASDAQ National Market (“NASDAQ”) or the New York Stock Exchange (“NYSE”), as applicable, and will have the right to retain independent legal counsel and advisors at the Corporation’s expense.

Each member of a committee of the Board of Directors shall serve a term on the committee coexistent with such member’s term on the Board of Directors.  The Board of Directors, subject to the provisions of Section 3.12, may at any time increase or decrease the number of members of a committee or terminate the existence of a committee.  The membership of a committee member shall terminate on the date of such member’s death, resignation or removal.  The Board of Directors may at any time for any reason remove any individual committee member and the Board of Directors may fill any committee vacancy created by death, resignation, removal or increase in the number of members of the committee.

Meetings and actions of committees shall be governed by, and held and taken in accordance with the provisions of:

(i)Section 3.04 (Meetings);

(ii)Section 3.05 (Quorum);

(iii)Section 3.06 (Actions in Lieu of a Meeting); and

(iv)Section 3.07 (Meetings by means of Conference Telephone)

with such changes in the context of those bylaws as are necessary to substitute the committee and its members for the Board and its members.  Notwithstanding the foregoing:

(i)the time of regular meetings of committees may be determined   either by resolution of the Board or by resolution of the committee;

(ii)special meetings of committees may also be called by resolution of the Board; and

(iii)notice of special meetings of committees shall also be given to all alternate members, who shall have the right to attend all meetings of the committee.  The Board may adopt rules for the government if any committee is not consistent with the provisions of these bylaws.

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SECTION 3.09  Compensation.

The directors may be paid their expenses, if any, of attendance at each meeting of the Board of Directors and may be paid a fixed sum for attendance at each meeting of the Board of Directors or a stated salary as director.  No such payment will preclude any director from serving the Corporation in any other capacity and receiving compensation therefor.  Members of special or standing committees may be allowed like compensation for attending committee meetings.

SECTION 3.10  Interested Directors.

No contract or transaction between the Corporation and one or more of its directors or officers, or between the Corporation and any other corporation, partnership, association, or other organization in which one or more of its directors or officers are directors or officers, or have a financial interest, will be void or voidable solely for this reason, or solely because the director or officer is present at or participates in the meeting of the Board of Directors or committee thereof which authorizes the contract or transaction, or solely because his or their votes are counted for such purpose if (i) the material facts as to his or their relationship or interest and as to the contract or transaction are disclosed or are known to the Board of Directors or the committee, and the Board of Directors or committee in good faith authorizes the contract or transaction by the affirmative votes of a majority of the disinterested directors, even though the disinterested directors be less than a quorum; or (ii) the material facts as to his or their relationship or interest and as to the contract or transaction are disclosed or are known to the stockholders entitled to vote thereon, and the contract or transaction is specifically approved in good faith by vote of the stockholders; or (iii) the contract or transaction is fair as to the Corporation as of the time it is authorized, approved or ratified, by the Board of Directors, a committee thereof or the stockholders.  Common or interested directors may be counted in determining the presence of a quorum at a meeting of the Board of Directors or of a committee which authorizes the contract or transaction.

SECTION 3.11  Election and Removal of Directors.

Any or all of the directors (other than the directors elected by the holders of any class or classes of preferred stock of the Corporation, voting separately as a class or classes, as the case may be) may be removed at any time only for cause by the affirmative vote of a majority in voting power of all shares of the Corporation entitled to vote generally in the election of directors, voting as a single class.

SECTION 3.12  Corporate Governance Compliance.

Without otherwise limiting the powers of the Board of Directors and provided that shares of capital stock of the Corporation are listed for trading on either the NYSE or the NASDAQ, the Corporation shall comply with the corporate governance rules and requirements of the NYSE and the NASDAQ, as applicable.

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SECTION 3.13  Audit Committee.

The Board of Directors shall establish an Audit Committee whose principal purpose will be to oversee the Corporation’s and its subsidiaries’ accounting and financial reporting processes, internal systems of control, independent auditor relationships and audits of consolidated financial statements of the Corporation and its subsidiaries.  The Audit Committee will also determine the appointment of the independent auditors of the Corporation and any change in such appointment and ensure the independence of the Corporation’s auditors.  In addition, the Audit Committee will assume such other duties and responsibilities as the Board of Directors may confer upon the committee from time to time.  In the event of any inconsistency between this Section 3.13 and the Certificate of Incorporation, the terms of the Certificate of Incorporation will govern.

SECTION 3.14  Compensation Committee.

The Board of Directors shall establish a Compensation Committee whose principal duties will be to review employee compensation policies and programs as well as the compensation of the President and Chief Executive Officer and other executive officers of the Corporation, to recommend to the Board of Directors a compensation program for outside members of the Board of Directors, as well as such other duties and responsibilities as the Board of Directors may confer upon the committee from time to time.  In the event of any inconsistency between this Section 3.14 and the Certificate of Incorporation, the terms of the Certificate of Incorporation shall govern.

ARTICLE IV
OFFICERS

SECTION 4.01  General.

The officers of the Corporation will be elected by the Board of Directors.  The Board of Directors, in its discretion, may elect a Chairman of the Board of Directors, a President and Chief Executive Officer, a Secretary, a Chief Financial Officer, Vice Presidents or Assistant Vice Presidents, Assistant Secretaries, Assistant Treasurers and such other officers as determined by the Board of Directors from time to time in accordance with Section 4.11 of these Bylaws.  Any number of offices may be held by the same person, unless otherwise prohibited by applicable law, the Certificate of Incorporation or these Bylaws.  The officers of the Corporation need not be stockholders or directors of the Corporation.

SECTION 4.02  Election.

The Board of Directors at its first meeting held after each annual meeting of stockholders will elect the officers of the Corporation who will hold their offices for such terms and will exercise such powers and perform such duties as determined from time to time by the Board of Directors.  All officers of the Corporation will hold office until their successors are chosen and qualified, or until their earlier resignation or removal.  Any officer elected by the Board of Directors may be removed at any time by the affirmative

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vote of a majority of the Board of Directors.  Any vacancy occurring in any office of the Corporation will be filled by the Board of Directors.  The salaries of all officers of the Corporation will be fixed by the Board of Directors.

SECTION 4.03  Voting Securities Owned by the Corporation.

Powers of attorney, proxies, waivers of notice of meeting, consents and other instruments relating to securities owned by the Corporation may be executed in the name of and on behalf of the Corporation by the President and Chief Executive Officer, any Vice President or any other person authorized by the Board of Directors, the President and Chief Executive Officer and any such officer may, in the name of and on behalf of the Corporation, take all such action as any such officer deems advisable to vote in person or by proxy at any meeting of security holders of any corporation in which the Corporation owns securities and at any such meeting will possess and may exercise any and all rights and power incident to the ownership of such securities and which, as the owner thereof, the Corporation might have exercised and possessed if present.  The Board of Directors may, by resolution, from time to time confer like powers upon any other person or persons.

SECTION 4.04  Chairman of the Board of Directors.

The Chairman of the Board of Directors, if there is one, will preside at all meetings of the stockholders and of the Board of Directors.  The Chairman of the Board of Directors also will perform such other duties and may exercise such other powers as from time to time may be assigned to him by these Bylaws or by the Board of Directors.

SECTION 4.05  President and Chief Executive Officer.

Subject to the control of the Board of Directors and any supervisory powers the Board of Directors may give to the Chairman of the Board of Directors, the President and Chief Executive Officer shall, together with the Vice Presidents of the Corporation, have general supervision, direction, and control of the business and affairs of the Corporation and shall see that all orders and resolutions of the Board of Directors are carried into effect.  The President and Chief Executive Officer shall execute all bonds, mortgages, contracts and other instruments of the Corporation except where required or permitted by law to be otherwise signed and executed and except that the other officers of the Corporation may sign and execute documents when so authorized by these Bylaws or the Board of Directors.  The President and Chief Executive Officer shall, together with the Vice Presidents of the Corporation, also perform all duties incidental to this office that may be required by law and all such other duties as are properly required of this office by the Board of Directors or assigned to him by the Bylaws.  In the absence of the Chairman of the Board of Directors, the President and Chief Executive Officer shall preside at all meetings of the Board of Directors and of stockholders.

SECTION 4.06  Vice Presidents.

At the request of the President and Chief Executive Officer or in the event of a vacancy or in the event of his inability to act (and if there be no Chairman of the Board of

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Directors), the Vice President or the Vice Presidents if there is more than one (in the order designated by the Board of Directors) will perform the duties of the President and Chief Executive Officer, and when so acting, will have all the powers of and be subject to all the restrictions upon the President and Chief Executive Officer.  Each Vice President will perform such other duties and have such other powers as the Board of Directors from time to time may prescribe.  If there is no Chairman of the Board of Directors and no Vice President, the Board of Directors will designate the officer of the Corporation who, in the event of a vacancy or in the event of the inability of the President and Chief Executive Officer to act, will perform the duties of the President and Chief Executive Officer, and when so acting, will have all the powers of and be subject to all the restrictions upon the President and Chief Executive Officer .

SECTION 4.07  Secretary.

The Secretary will attend all meetings of the Board of Directors and all meetings of stockholders and record all the proceedings thereat in a book or books to be kept for that purpose; the Secretary also will perform like duties for the standing committees when required.  The Secretary will give, or cause to be given, notice of all meetings of the stockholders and special meetings of the Board of Directors, and will perform such other duties as may be prescribed by the Board of Directors or President and Chief Executive Officer, under whose supervision he will be.  If there is no Secretary, or the Secretary is unable or refuses to cause to be given notice of all meetings of the stockholders and special meetings of the Board of Directors, and if there be no Assistant Secretary, then either the Board of Directors or the President and Chief Executive Officer may choose another officer to cause such notice to be given.

The Secretary will have custody of the seal of the Corporation and the Secretary or any Assistant Secretary, if there is one, will have authority to affix the same to any instrument requiring it and when so affixed, it may be attested by the signature of the Secretary or by the signature of any such Assistant Secretary.  The Board of Directors may give general authority to any other officer to affix the seal of the Corporation and to attest the affixing by his signature.  The Secretary will see that all books, reports, statements, certificates and other documents and records required by law to be kept or filed are properly kept or filed, as the case may be.

SECTION 4.08  Assistant Secretaries.

Except as may be otherwise provided in these Bylaws, Assistant Secretaries, if there are any, will perform such duties and have such powers as from time to time may be assigned to them by the Board of Directors, the President and Chief Executive Officer, any Vice President, if there is one, or the Secretary, and in the absence of the Secretary or in the event of his disability or refusal to act, will perform the duties of the Secretary, and when so acting, will have all the powers of and be subject to all the restrictions upon the Secretary.

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SECTION 4.09  Chief Financial Officer.

The Chief Financial Officer, subject to the order of the Board of Directors, shall have the care and custody of the moneys, funds, valuable papers and documents of the Corporation (other than his own bond, if any, which shall be in the custody of the President and Chief Executive Officer), and shall have, under the supervision of the Board of Directors, all the powers and duties commonly incident to his office.  He shall deposit all funds of the Corporation in such bank or banks, trust company or trust companies, or with such firm or firms doing a banking business as may be designated by the Board of Directors or be the President and Chief Executive Officer if the Board does not do so.  He may endorse for deposit or collection all checks, notes, and similar instruments payable to the Corporation or to its order.  He shall keep accurate books of account of the Corporation’s transactions, which shall be the property of the Corporation, and together with all of he property of the Corporation in his possession, shall be subject at all times to the inspection and control of the Board of Directors.  The Chief Financial Officer shall be subject in every way to the order of the Board of Directors, and shall render to the Board of Directors and/or the President and Chief Executive Officer of the Corporation, whenever they may require it, an account of all his transactions and of the financial condition of the Corporation.  In addition to the foregoing, the Chief Financial Officer shall have such duties as may be prescribed or determined from time to time by the Board of Directors or by the President and Chief Executive Officer if the Board of Directors does not do so.

SECTION 4.10  Assistant Treasurer.

The Assistant Treasurer, or if there shall be more than one, the Assistant Treasurers in the order determined by the Board of Directors (or if there be no such determination, then in the order of their election) shall, in the absence of the Chief Financial Officer or in the event of his inability or refusal to act, perform the duties and exercise the powers of the President and Chief Executive Officer and shall perform such other duties and have such other powers as the Board of Directors may from time to time prescribe.

SECTION 4.11  Other Officers.

Such other officers as the Board of Directors may choose will perform such duties and have such powers as from time to time may be assigned to them by the Board of Directors.  The Board of Directors may delegate to any other officer of the Corporation the power to choose such other officers and to prescribe their respective duties and powers.

SECTION 4.12  Resignations.

Any officer many resign at any time by giving written notice to the Board of Directors or to the President and Chief Executive Officer or to the Secretary.  Any such resignation shall be effective when received by the person or persons to whom such notice is given, unless a later time is specified therein, in which event the resignation

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shall become effective at such later time.  Unless otherwise specified in such notice, the acceptance of any such resignation shall not be necessary to make it effective.

SECTION 4.13  Removal. 

Any officer may be removed from office at any time, with or without cause, by the vote or written consent of a majority of the directors in office at the time, or by any committee or superior officers upon whom such power of removal may have been conferred by the Board of Directors.  In addition, any officer appointed by the President and Chief Executive Officer may be removed from office at any time, with or without cause, by the President and Chief Executive Officer.

SECTION 4.14  Compensation. 

The compensation of the officers shall be fixed from time to time by the Board of Directors, and no officer shall be prevented from receiving such compensation by reason of the fact that such officer is also a director of the Corporation.

SECTION 4.15  Authority and Duties of Officers.

In addition to the foregoing authority and duties, all officers of the Corporation shall respectively have such authority and perform such duties in the management of the business of the Corporation as may be designated from time to time by the Board of Directors.

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ARTICLE VSTOCK

SECTION 5.01  Form of Certificates.

The Corporation may issue certificates to evidence the shares of its stock, if and to the extent such certificates are issued, they will be signed, in the name of the Corporation by (i) the Chairman of the Board of Directors, the President and Chief Executive Officer, or a Vice President and (ii) the Chief Financial Officer or an Assistant Treasurer, the Secretary, or an Assistant Secretary, of the Corporation or other officer designated by the Board of Directors, certifying the number of shares owned by him in the Corporation.

SECTION 5.02  Signatures.

Where a stock certificate is countersigned by (i) a transfer agent other than the Corporation or its employee, or (ii) a registrar other than the Corporation or its employee, any other signature on the certificate may be a facsimile.  In case any officer, transfer agent or registrar who has signed or whose facsimile signature has been placed upon a certificate has ceased to be such officer, transfer agent or registrar before such certificate is issued, it may be issued by the Corporation with the same effect as if he were such officer, transfer agent or registrar at the date of issue.

SECTION 5.03  Lost Certificates.

The Board of Directors may direct a new certificate to be issued in place of any stock certificate theretofore issued by the Corporation alleged to have been lost, stolen or destroyed, upon the making of an affidavit of that fact by the person claiming the stock certificate to be lost, stolen or destroyed.  When authorizing such issue of a new certificate, the Board of Directors may, in its discretion and as a condition precedent to the issuance thereof, require the owner of such lost, stolen or destroyed certificate, or his legal representative, to advertise the same in such manner as the Board of Directors shall require or to give the Corporation a bond in such sum as it may direct as indemnity against any claim that may be made against the Corporation with respect to the certificate alleged to have been lost, stolen or destroyed.

SECTION 5.04  Transfers.

Stock of the Corporation is transferable in the manner prescribed by law, the Certificate of Incorporation of the Corporation and in these Bylaws.  If shares intended to be transferred are represented by stock certificates, transfers of stock will be made on books of the Corporation only by the person named in the certificate or by his attorney lawfully constituted in writing and upon the surrender of the certificate therefor, which will be canceled before a new certificate is issued.

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SECTION 5.05  Record Date.

In order that the Corporation may determine the stockholders entitled to notice of or to vote at any meeting of stockholders or any adjournment thereof, or entitled to receive payment of any dividend or other distribution or allotment of any rights, or entitled to exercise any rights in respect of any change, conversion or exchange of stock, or for the purpose of any other lawful action, the Board of Directors may fix, in advance, a record date, which shall not be more than sixty (60) days nor less than ten (10) days before the date of such meeting, nor more than sixty (60) days prior to any other action.  A determination of stockholders of record entitled to notice of or to vote at a meeting of stockholders will apply to any adjournment of the meeting; provided, however, that the Board of Directors may fix a new record date for the adjourned meeting.

SECTION 5.06  Beneficial Owners.

The Corporation is entitled to recognize the exclusive right of a person registered on its books as the owner of shares or owner-in-trust of shares to receive dividends, and to vote as such owner, and to hold liable for calls and assessments a person registered on its books as the owner of shares, and is not bound to recognize any equitable or other claim to or interest in such share or shares on the part of any other person, whether or not it has express or other notice thereof, except as otherwise provided by law.

ARTICLE VI
NOTICES

SECTION 6.01  Notices.

Whenever written notice is required to be given under applicable provisions of the DGCL, the Certificate of Incorporation or these Bylaws, to any director, member of a committee or stockholder, except as otherwise provided in these Bylaws, such notice may be given personally, or by mailing a copy of such notice, postage prepaid, directly to such director, member of a committee or stockholder to his or her address as it appears in the records of the Corporation or by transmitting such notice thereof to him or her by facsimile, cable or, to the extent permissable under Section 232 of the DGCL, other electronic transmission to the number or address specified in the records of the Corporation.

SECTION 6.02  Waivers of Notice.

Whenever any notice is required to be given under any provision of the DGCL, the Certificate of Incorporation or these Bylaws, to any director, member of a committee or stockholder, a waiver thereof in writing, signed by the person or persons entitled to said notice, or a waiver by electronic transmission by the person entitled to notice, whether before or after the time of the event for which notice is given, will be deemed equivalent thereto.  Attendance of a person at a meeting shall constitute a waiver of notice of such meeting, except when the person attends a meeting for the express purpose of objecting, at the beginning of the meeting, to the transaction of any business because the meeting is not lawfully called or convened.

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ARTICLE VII
GENERAL PROVISIONS

SECTION 7.01  Dividends.

Dividends upon the capital stock of the Corporation, subject to the provisions of the Certificate of Incorporation, if any, may be declared by the Board of Directors at any regular or special meeting, and may be paid in cash, in property or in shares of the capital stock.  Before payment of any dividend, there may be set aside out of any funds of the Corporation available for dividends such sum or sums as the Board of Directors from time to time, in its absolute discretion, deems proper as a reserve or reserves to meet contingencies, or for equalizing dividends, or for repairing or maintaining any property of the Corporation, or for any proper purpose, and the Board of Directors may modify or abolish any such reserve.

SECTION 7.02  Disbursements.

All checks or demands for money and notes of the Corporation will be signed by such officer or officers or such other person or persons as the Board of Directors may from time to time designate.

SECTION 7.03  Fiscal Year.

Unless otherwise fixed by resolution of the Board of Directors, the fiscal year of the Corporation will begin on January 1st and end on December 31^st in each calendar year.

SECTION 7.04  Corporate Seal.

The corporate seal will have inscribed thereon the name of the Corporation, the year of its organization and the words “Corporate Seal, Delaware.” The seal may be used by causing it or a facsimile thereof to be impressed or affixed or reproduced or otherwise.

ARTICLE VIII
INDEMNIFICATION

SECTION 8.01  Insurance.

To the fullest extent permitted by applicable law, the Corporation may purchase and maintain insurance on behalf of any person who is or was a director, officer, employee or agent of the Corporation, or is or was serving at the request of the Corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise against any liability asserted against such person and incurred by such person in any such capacity, or arising out of his status as such, whether or not the Corporation would have the power or the obligation to indemnify such person against such liability under the provisions its Certificate of Incorporation or otherwise.

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ARTICLE IX
AMENDMENTS

SECTION 9.01  Amendments.

These Bylaws may be altered, amended or repealed, in whole or in part, or new Bylaws may be adopted, in each case, by the affirmative vote of the holders of at least a majority of the outstanding shares entitled to vote for the Board of Directors, provided that an amendment to Sections 2.02, 2.03, 2.04 and 3.11 herein and this Section 9.01 shall require the consent of the holders of at least two-thirds of the outstanding shares entitled to vote for the Board of Directors, or by a majority of the Board of Directors.  The fact that such power has been so conferred upon the directors shall not divest the stockholders of the power, nor limit their power to adopt, amend or repeal the Bylaws.  Notice of such alteration, amendment, repeal or adoption of new Bylaws will be contained in the notice of such meeting of stockholders or Board of Directors.

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EX-4.2

Exhibit 4.2

Execution Copy

REGISTRATION RIGHTS AGREEMENT

REGISTRATION RIGHTS AGREEMENT, dated as of June 21, 2005 (the “Agreement”), among the institutional investors whose names and addresses appear from time to time on Schedule I hereto (the “Institutional Investors”); the investors whose names and addresses appear from time to time on Schedule II hereto (the “Management Investors”); and ev3 Inc., a Delaware corporation (the “Company”).  The Institutional Investors and the Management Investors are hereinafter collectively referred to as the “Investors.”

R E C I T A L S

WHEREAS, the Investors were formerly members of ev3 LLC, a Delaware limited liability company (“ev3 LLC”);

WHEREAS, in contemplation of an Initial Public Offering (as defined below), ev3 LLC merged with and into the Company (the “Merger”);

WHEREAS, as a result of the Merger, the Investors are holders of common stock, par value $0.01 per share (“Common Stock”), of the Company; and

WHEREAS, the Company has agreed to grant the Investors certain registration rights; and

WHEREAS, the Company and the Investors desire to define the registration rights of the Investors on the terms and subject to the conditions herein set forth.

NOW, THEREFORE, in consideration of the foregoing premises and for other good and valuable consideration, the parties hereby agree as follows:

SECTION 1.  DEFINITIONS

As used in this Agreement, the following terms have the respective meaning set forth below:

Commission:  shall mean the Securities and Exchange Commission or any other federal agency at the time administering the Securities Act;

Exchange Act:  shall mean the Securities Exchange Act of 1934, as amended (or any successor act), and the rules and regulations promulgated thereunder;

Holder:  shall mean any holder of Registrable Securities;

Initial Public Offering:  shall mean the initial public offering of shares of Common Stock pursuant to a registration under the Securities Act;

Initiating Holder:  shall mean any Holder or Holders who in the aggregate are Holders of more than 50% of the then outstanding Registrable Securities;

Person:  shall mean an individual, partnership, joint-stock company, corporation, trust or unincorporated organization, and a government or agency or political subdivision thereof;

Register, Registered and Registration:  shall mean a registration effected by preparing and filing a registration statement in compliance with the Securities Act (and any post-effective amendments filed or required to be filed) and the declaration or ordering of effectiveness of such registration statement;

Registrable Securities:  shall mean (A) shares of Common Stock held by the Investors, (B) any additional shares of Common Stock acquired by the Investors and (C) any stock of the Company issued to the Investors as a dividend or other distribution with respect to, or in exchange for or in replacement of, the shares of Common Stock referred to in clause (A) or (B);

Registration Expenses:  shall mean all expenses incurred by the Company in compliance with Section 2(a), (b) and (c) hereof, including, without limitation, all registration and filing fees, printing expenses, fees and disbursements of counsel for the Company, fees and expenses of one counsel for all of the Holders, blue sky fees and expenses and the expense of any special audits incident to or required by any such registration (but excluding the compensation of regular employees of the Company, which shall be paid in any event by the Company);

Securities Act:  shall mean the Securities Act of 1933, as amended (or any successor act), and the rules and regulations promulgated thereunder;

Security, Securities:  shall have the meaning set forth in Section 2(1) of the Securities Act; and

Selling Expenses:  shall mean all underwriting discounts and selling commissions applicable to the sale of Registrable Securities and all fees and disbursements of counsel for each of the Holders other than fees and expenses of one counsel for all the Holders.

SECTION 2.  REGISTRATION RIGHTS

(a)           Requested Registration.

(i)            Request for Registration.  If the Company shall receive from an Initiating Holder, at any time after the Initial Public Offering, a written request that the Company

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effect any registration with respect to all or a part of the Registrable Securities, the Company will:

(1)           promptly give written notice of the proposed registration, qualification or compliance to all other Holders; and

(2)           as soon as practicable, use its reasonable best efforts to effect such registration (including, without limitation, the execution of an undertaking to file post-effective amendments, appropriate qualification under applicable blue sky or other state securities laws and appropriate compliance with applicable regulations issued under the Securities Act) as may be so requested and as would permit or facilitate the sale and distribution of all or such portion of such Registrable Securities as are specified in such request, together with all or such portion of the Registrable Securities of any Holder or Holders joining in such request as are specified in a written request received by the Company within ten (10) business days after written notice from the Company is given under Section 2(a)(i)(1) above; provided that the Company shall not be obligated to effect, or take any action to effect, any such registration pursuant to this Section 2(a):

(A)          In any particular jurisdiction in which the Company would be required to execute a general consent to service of process in effecting such registration, qualification or compliance, unless the Company is already subject to service in such jurisdiction and except as may be required by the Securities Act or applicable rules or regulations thereunder;

(B)           After the Company has effected two (2) such registrations pursuant to this Section 2(a) and such registrations have been declared or ordered effective and the sales of such Registrable Securities shall have closed;

(C)           If the Registrable Securities requested by all Holders to be registered pursuant to such request do not have an anticipated aggregate public offering price (before any underwriting discounts and commissions) of not less than $10,000,000; or

(D)          If the Company shall furnish to the Initiating Holder a certificate signed by the President of the Company stating that in the good faith judgment of the Board of Directors of the Company it would be materially detrimental to the Company or its stockholders for such registration statement to be filed in the near future, in which case the Company’s obligation to use its reasonable best efforts to comply with this Section 2(a) shall be deferred for one or more periods not to exceed ninety (90) days in the aggregate in any twelve-month period.

The registration statement filed pursuant to the request of the Initiating Holders may, subject to the provisions of Section 2(a)(ii) below, include other securities of the Company which are held by Persons who, by virtue of agreements with the Company, are entitled to include their

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securities in any such registration (“Other Stockholders”).  In the event any Institutional Investor requests a registration pursuant to this Section 2(a) in connection with a distribution of Registrable Securities to its partners or members, the registration shall provide for the resale by such partners or members, if requested by such Institutional Investor.

The registration rights set forth in this Section 2 may be assigned, in whole or in part, to any transferee of Registrable Securities (who shall be bound by all obligations of this Agreement).

(ii)           Underwriting.  If the Initiating Holders intend to distribute the Registrable Securities covered by their request by means of an underwriting, then they shall so advise the Company as a part of their request made pursuant to Section 2(a).

If Other Stockholders request inclusion in such registration, then the Holders shall offer to include the securities of such Other Stockholders in the underwriting and may condition such offer on their acceptance of the further applicable provisions of this Section 2.  The Holders whose shares are to be included in such registration and the Company shall (together with all Other Stockholders proposing to distribute their securities through such underwriting) enter into an underwriting agreement in customary form with the representative of the underwriter or underwriters selected for such underwriting by the Initiating Holders and reasonably acceptable to the Company.  Notwithstanding any other provision of this Section 2(a), if the representative advises the Holders in writing that marketing factors require a limitation on the number of shares to be underwritten, the securities of the Company held by Other Stockholders shall be excluded from such registration to the extent so required by such limitation.  If, after the exclusion of such shares, further reductions are still required, the number of shares included in the registration by each Holder (other than the Institutional Investors) shall be reduced on a pro rata basis (based on the number of shares held by such Holder), by such minimum number of shares as is necessary to comply with such request.  If, after exclusion of such shares, further reductions are still required, the number of shares included in the registration by Institutional Investors shall be reduced on a pro rata basis by such minimum number of shares as is necessary to comply with such request.  No Registrable Securities or any other securities excluded from the underwriting by reason of the underwriter’s marketing limitation shall be included in such registration.  If any Other Stockholder who has requested inclusion in such registration as provided above disapproves of the terms of the underwriting, such Person may elect to withdraw therefrom by providing prompt written notice to the Company, the underwriter and the Initiating Holders.  The securities so withdrawn shall also be withdrawn from registration.  If the underwriter has not limited the number of Registrable Securities or other securities to be underwritten, then the Company and officers and directors of the Company may include its or their securities for its or their own account in such registration if the representative so agrees and if the number of Registrable Securities and other securities which would otherwise have been included in such registration and underwriting will not thereby be limited.

(b)           Company Registration.

(i)            Inclusion in Registration.  If, after the Initial Public Offering, the Company shall determine to register any of its equity securities either for its own account or for the account of Other Stockholders, other than a registration relating solely to

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employee benefit plans, or a registration relating solely to a Commission Rule 145 transaction, or a registration on any registration form which does not permit secondary sales or does not include substantially the same information as would be required to be included in a registration statement covering the sale of Registrable Securities, the Company will:

(1)           promptly give to each of the Holders a written notice thereof (which shall include a list of the jurisdictions in which the Company intends to attempt to qualify such securities under the applicable blue sky or other state securities laws); and

(2)           include in such registration (and any related qualification under blue sky laws or other compliance), and in any underwriting involved therein, all the Registrable Securities specified in a written request or requests, made by the Holders within fifteen (15) days after receipt of the written notice from the Company described in Section 2(b)(i) above, except as set forth in Section 2(b)(ii) below.  Such written request may specify all or a part of the Holders’ respective Registrable Securities.  In the event any Holder requests inclusion in a registration pursuant to this Section 2(b) in connection with a distribution of Registrable Securities to its partners or members, the registration shall provide for the resale by such partners or members, if requested by such Holder.

(ii)           Underwriting.  If the registration of which the Company gives notice is for a registered public offering involving an underwriting, the Company shall so advise each of the Holders as a part of the written notice given pursuant to Section 2(b)(i)(1).  In such event, the right of each of the Holders to registration pursuant to this Section 2(b) shall be conditioned upon such Holders’ participation in such underwriting and the inclusion of such Holders’ Registrable Securities in the underwriting to the extent provided herein.  The Holders whose shares are to be included in such registration shall (together with the Company and the Other Stockholders distributing their securities through such underwriting) enter into an underwriting agreement in customary form with the representative of the underwriter or underwriters selected for underwriting by the Company.  Notwithstanding any other provision of this Section 2(b), if the representative determines that marketing factors require a limitation on the number of shares to be underwritten, the representative may (subject to the allocation priority set forth below) limit the number of Registrable Securities to be included in the registration and underwriting to not less than twenty five percent (25%) of the shares included therein (based on the number of shares).  The Company shall immediately advise all holders of securities requesting registration of such limitation, and the number of such shares of securities that are entitled to be included in the registration and underwriting shall be allocated in the following manner:  The securities of the Company held by officers, directors and Other Stockholders of the Company (other than Registrable Securities and other than securities held by holders who by contractual right demanded such registration (“Demanding Holders”)) shall be excluded from such registration and underwriting to the extent required by such limitation, and, if a limitation on the number of shares is still required, the number of shares that may be included in the registration and underwriting by each of the Holders and Demanding Holders shall be reduced, on a pro rata basis (based on the number of shares held by such Holder), by such minimum number of shares

5

as is necessary to comply with such limitation.  If any of the Holders or any officer, director or Other Stockholder disapproves of the terms of any such underwriting, he may elect to withdraw therefrom by providing prompt written notice to the Company and the underwriter.  Any Registrable Securities or other securities excluded or withdrawn from such underwriting shall be withdrawn from such registration.

(c)           Form S-3.  Following the Initial Public Offering, the Company shall use its best efforts to qualify for registration on Form S-3 for secondary sales.  After the Company has qualified for the use of Form S-3, the Holders shall have the right to request three (3) registrations on Form S-3 (such requests shall be in writing and shall state the number of shares of Registrable Securities to be disposed of and the intended method of disposition of shares by such holders), provided that the Company shall not be obligated to effect, or take any action to effect, any such registration pursuant to this Section 2(c):

(i)            Unless the Holder or Holders requesting registration propose to dispose of shares of Registrable Securities having an aggregate price to the public (before deduction of underwriting discounts and expenses of sale) of more than $1,000,000;

(ii)           Within 180 days of the effective date of the most recent registration pursuant to this Section 2(c) in which securities held by the requesting Holder could have been included for sale or distribution; or

(iii)          In any particular jurisdiction in which the Company would be required to execute a general consent to service of process in effecting such registration, qualification or compliance, unless the Company is already subject to service in such jurisdiction and except as may be required by the Securities Act or applicable rules or regulations thereunder.

(iv)          If the Company shall furnish to the Holder or Holders requesting registration a certificate signed by the President of the Company stating that in the good faith judgment of the Board of Directors of the Company it would be materially detrimental to the Company or its stockholders for such registration statement to be filed in the near future, in which case the Company’s obligation to use its best efforts to comply with this Section 2(c) shall be deferred for one or more periods not to exceed ninety (90) days in the aggregate in any twelve-month period.

The Company shall give written notice to all Holders of the receipt of a request for registration pursuant to this Section 2(c) and shall provide a reasonable opportunity for other Holders to participate in the registration, provided that if the registration is for an underwritten offering, the terms of Section 2(a)(ii) shall apply to all participants in such offering.  Subject to the foregoing, the Company will use its best efforts to effect promptly the registration of all shares of Registrable Securities on Form S-3 to the extent requested by the Holder or Holders thereof for purposes of disposition.  In the event any Holder requests a registration pursuant to this Section 2(c) in connection with a distribution of Registrable Securities to its partners or members, the

6

registration shall provide for the resale by such partners or members, if requested by such Holder.

(d)           Company Control.  The Company may decline to file a registration statement referenced in Section 2(b), or withdraw such registration statement after filing but prior to the effectiveness of the registration statement, provided that the Company shall promptly notify each Holder participating in the offering covered by such registration statement in writing of any such action.  The Holders shall not be permitted to sell any securities pursuant to Section 2(b) or 2(c) at any time that the Board of Directors of the Company determines in good faith that it would be materially detrimental to the Company or its stockholders for sales of securities to be made, provided that (1) the Company shall promptly notify each Holder in writing of any such action and (2) in the case of Section 2(c), such periods shall not exceed ninety (90) days in the aggregate in any twelve-month period.

(e)           Expenses of Registration.  All Registration Expenses incurred in connection with any registration, qualification or compliance pursuant to this Section 2 shall be borne by the Company, and all Selling Expenses shall be borne by the Holders of the securities so registered pro rata on the basis of the number of their shares so registered.

(f)            Registration Procedures.  In the case of each registration effected by the Company pursuant to this Section 2, the Company will keep the Holders, as applicable, advised in writing as to the initiation of each registration and as to the completion thereof.  At its expense, the Company will:

(i)            keep such registration effective for a period of one hundred twenty (120) days or until the Holders (or in the case of a distribution to the partners or members of such Holder, such partners or members), as applicable, have completed the distribution described in the registration statement relating thereto, whichever first occurs; provided, however, that (A) such 120-day period shall be extended for a period of time equal to the period during which the Holders, partners or members, as applicable, refrain from selling any securities included in such registration in accordance with provisions in Section 2(j) hereof; and (B) in the case of any registration of Registrable Securities on Form S-3 which are intended to be offered on a continuous or delayed basis, such 120-day period shall be extended until all such Registrable Securities are sold, provided that Rule 415, or any successor rule under the Securities Act, permits an offering on a continuous or delayed basis, and provided further that applicable rules under the Securities Act governing the obligation to file a post-effective amendment permit, in lieu of filing a post-effective amendment which (y) includes any prospectus required by Section 10(a) of the Securities Act or (z) reflects facts or events representing a material or fundamental change in the information set forth in the registration statement, the incorporation by reference of information required to be included in (y) and (z) above to be contained in periodic reports filed pursuant to Section 12 or 15(d) of the Exchange Act in the registration statement;

7

(ii)           furnish such number of prospectuses and other documents incident thereto as each of the Holders, as applicable, from time to time may reasonably request;

(iii)          notify each Holder of Registrable Securities covered by such registration at any time when a prospectus relating thereto is required to be delivered under the Securities Act of the happening of any event as a result of which the prospectus included in such registration statement, as then in effect, includes an untrue statement of a material fact or omits to state a material fact required to be stated therein or necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading; and

(iv)          furnish, on the date that such Registrable Securities are delivered to the underwriters for sale, if such securities are being sold through underwriters or, if such securities are not being sold through underwriters, on the date that the registration statement with respect to such securities becomes effective, (1) an opinion, dated as of such date, of the counsel representing the Company for the purposes of such registration, in form and substance as is customarily given to underwriters in an underwritten public offering and reasonably satisfactory to a majority in interest of the Holders participating in such registration, addressed to the underwriters, if any, and to the Holders participating in such registration and (2) a letter, dated as of such date, from the independent certified public accountants of the Company, in form and substance as is customarily given by independent certified public accountants to underwriters in an underwritten public offering and reasonably satisfactory to a majority in interest of the Holders participating in such registration, addressed to the underwriters, if any, and if permitted by applicable accounting standards, to the Holders participating in such registration.

(g)           Indemnification.

(i)            To the fullest extent permitted by law, the Company will indemnify each of the Holders, as applicable, each of its officers, directors, partners and members, and each Person controlling each of the Holders, with respect to each registration which has been effected pursuant to this Section 2, and each underwriter, if any, and each Person who controls any underwriter, against all claims, losses, damages and liabilities (or actions in respect thereof) arising out of or based on any untrue statement (or alleged untrue statement) of a material fact contained in any prospectus, offering circular or other document (including any related registration statement, notification or the like) incident to any such registration, qualification or compliance, or based on any omission (or alleged omission) to state therein a material fact required to be stated therein or necessary to make the statements therein (in the case of a prospectus, in light of the circumstances under which they were made) not misleading, or any violation by the Company of the Securities Act or the Exchange Act or any rule or regulation thereunder applicable to the Company and relating to action or inaction required of the Company in connection with any such registration, qualification or compliance, and will reimburse each of the Holders, each of its officers, directors, partners and members, and each Person controlling each of the Holders, each such underwriter and each Person who controls any such underwriter, for any legal and any other expenses reasonably incurred in connection

8

with investigating and defending any such claim, loss, damage, liability or action, provided that the Company will not be liable in any such case to the extent that any such claim, loss, damage, liability or expense arises out of or is based on any untrue statement or omission based upon written information furnished to the Company by the Holders or underwriter and stated to be specifically for use therein.

(ii)           Each of the Holders will, if Registrable Securities held by it are included in the securities as to which such registration, qualification or compliance is being effected, indemnify the Company, each of its directors and officers and each underwriter, if any, of the Company’s securities covered by such a registration statement, each Person who controls the Company or such underwriter, each Other Stockholder and each of their officers, directors, partners and members, and each Person controlling such Other Stockholder against all claims, losses, damages and liabilities (or actions in respect thereof) arising out of or based on any untrue statement (or alleged untrue statement) of a material fact contained in any such registration statement, prospectus, offering circular or other document made by such Holder in writing, or any omission (or alleged omission) to state therein a material fact required to be stated therein or necessary to make the statements by such Holder therein (in the case of a prospectus, in light of the circumstances under which they were made) not misleading, and will reimburse the Company and such Other Stockholders, directors, officers, partners, members, Persons, underwriters or control Persons for any legal or any other expenses reasonably incurred in connection with investigating or defending any such claim, loss, damage, liability or action, in each case to the extent, but only to the extent, that such untrue statement (or alleged untrue statement) or omission (or alleged omission) is made in such registration statement, prospectus, offering circular or other document in reliance upon and in conformity with written information furnished to the Company by such Holder and stated to be specifically for use therein; provided, however, that the obligations of each of the Holders hereunder shall be limited to an amount equal to the net proceeds to such Holder of securities sold as contemplated herein.

(iii)          Each party entitled to indemnification under this Section 2(g) (the “Indemnified Party”) shall give notice to the party required to provide indemnification (the “Indemnifying Party”) promptly after such Indemnified Party has actual knowledge of any claim as to which indemnity may be sought, and shall permit the Indemnifying Party to assume the defense of any such claim or any litigation resulting therefrom; provided that counsel for the Indemnifying Party, who shall conduct the defense of such claim or any litigation resulting therefrom, shall be approved by the Indemnified Party (whose approval shall not unreasonably be withheld) and the Indemnified Party may participate in such defense at such party’s expense (unless the Indemnified Party shall have reasonably concluded that there may be a conflict of interest between the Indemnifying Party and the Indemnified Party in such action, in which case the fees and expenses of counsel shall be at the expense of the Indemnifying Party), and provided further that the failure of any Indemnified Party to give notice as provided herein shall not relieve the Indemnifying Party of its obligations under this Section 2 unless the Indemnifying Party is materially prejudiced thereby.  No Indemnifying Party, in the defense of any such claim or litigation shall, except with the consent of each Indemnified

9

Party, consent to entry of any judgment or enter into any settlement which does not include as an unconditional term thereof the giving by the claimant or plaintiff to such Indemnified Party of a release from all liability in respect to such claim or litigation.  Each Indemnified Party shall furnish such information regarding itself or the claim in question as an Indemnifying Party may reasonably request in writing and as shall be reasonably required in connection with the defense of such claim and litigation resulting therefrom.

(iv)          If the indemnification provided for in this Section 2(g) is held by a court of competent jurisdiction to be unavailable to an Indemnified Party with respect to any loss, liability, claim, damage or expense referred to herein, then the Indemnifying Party, in lieu of indemnifying such Indemnified Party hereunder, shall contribute to the amount paid or payable by such Indemnified Party as a result of such loss, liability, claim, damage or expense in such proportion as is appropriate to reflect the relative fault of the Indemnifying Party on the one hand and of the Indemnified Party on the other in connection with the statements or omissions which resulted in such loss, liability, claim, damage or expense, as well as any other relevant equitable considerations.  The relative fault of the Indemnifying Party and of the Indemnified Party shall be determined by reference to, among other things, whether the untrue (or alleged untrue) statement of a material fact or the omission (or alleged omission) to state a material fact relates to information supplied by the Indemnifying Party or by the Indemnified Party and the parties’ relative intent, knowledge, access to information and opportunity to correct or prevent such statement or omission.

(v)           Notwithstanding the foregoing, to the extent that the provisions on indemnification and contribution contained in the underwriting agreement entered into in connection with any underwritten public offering contemplated by this Agreement are in conflict with the foregoing provisions, the provisions in such underwriting agreement shall be controlling.

(vi)          The foregoing indemnity agreement of the Company and Holders is subject to the condition that, insofar as they relate to any loss, claim, liability or damage arising out of a statement made in or omitted from a preliminary prospectus but eliminated or remedied in the amended prospectus on file with the Commission at the time the registration statement in question becomes effective or the amended prospectus filed with the Commission pursuant to Commission Rule 424(b) (the “Final Prospectus”), such indemnity or contribution agreement shall not inure to the benefit of any underwriter or Holder if a copy of the Final Prospectus was furnished to the underwriter and was not furnished to the Person asserting the loss, liability, claim or damage at or prior to the time such action is required by the Securities Act.

(h)           Information by the Holders.

(i)            Each of the Holders holding securities included in any registration shall furnish to the Company such information regarding such Holder and the distribution proposed by such Holder as the Company may reasonably request in writing and as shall

10

be reasonably required in connection with any registration, qualification or compliance referred to in this Section 2.

(ii)           In the event that, either immediately prior to or subsequent to the effectiveness of any registration statement, any Holder shall distribute Registrable Securities to its partners or members, such Holder shall so advise the Company and provide such information as shall be necessary to permit an amendment to such registration statement to provide information with respect to such partners or members, as selling securityholders.  Promptly following receipt of such information, the Company shall file an appropriate amendment to such registration statement reflecting the information so provided.  Any incremental expense to the Company resulting from such amendment shall be borne by such Holder.

(i)            Rule 144 Reporting.

With a view to making available the benefits of certain rules and regulations of the Commission which may permit the sale of restricted securities to the public without registration, the Company agrees to:

(i)            make and keep public information available as those terms are understood and defined in Rule 144 under the Securities Act (“Rule 144”), at all times from and after ninety (90) days following the effective date of the first registration under the Securities Act filed by the Company for an offering of its securities to the general public;

(ii)           use its best efforts to file with the Commission in a timely manner all reports and other documents required of the Company under the Securities Act and the Exchange Act at any time after it has become subject to such reporting requirements; and

(iii)          so long as the Holder owns any Registrable Securities, furnish to the Holder upon request, a written statement by the Company as to its compliance with the reporting requirements of Rule 144 (at any time from and after ninety (90) days following the effective date of the first registration statement filed by the Company for an offering of its securities to the general public), and of the Securities Act and the Exchange Act (at any time after it has become subject to such reporting requirements), a copy of the most recent annual or quarterly report of the Company, and such other reports and documents so filed as the Holder may reasonably request in availing itself of any rule or regulation of the Commission allowing the Holder to sell any such securities without registration.

(j)            “Market Stand-off” Agreement.  Each of the Holders agrees, if requested by the Company and an underwriter of equity securities of the Company, not to sell or otherwise transfer or dispose of any Registrable Securities held by such Holder during (A) the 180-day period following the effective date of a registration statement of the Company filed under the Securities Act, provided that (i) such agreement only applies to the Initial Public Offering and (ii) all officers and directors of the Company enter into similar agreements and (B) the 90-day period following the effective date of a registration statement of the Company filed under the Securities Act, provided that (i) such agreement only applies to the first two registration

11

statements of the Company filed after the Initial Public Offering and (ii) all officers and directors of the Company enter into similar agreements.

If requested by the underwriters, the Holders shall execute a separate agreement to the foregoing effect.  The Company may impose stop-transfer instructions with respect to the shares (or securities) subject to the foregoing restriction until the end of said 180-day period or 90-day period, as applicable.  The provisions of this Section 2(j) shall be binding upon any transferee who acquires Registrable Securities.

(k)           Termination.  The registration rights set forth in this Section 2 shall not be available to any Holder if, (i) in the opinion of counsel to the Company, all of the Registrable Securities then owned by such Holder could be sold in any 90-day period pursuant to Rule 144 (without giving effect to the provisions of Rule 144(k)) or (ii) all of the Registrable Securities held by such Holder have been sold in a registration pursuant to the Securities Act or pursuant to Rule 144.

SECTION 3.  MISCELLANEOUS

(a)           Directly or Indirectly.  Where any provision in this Agreement refers to action to be taken by any Person, or which such Person is prohibited from taking, such provision shall be applicable whether such action is taken directly or indirectly by such Person.

(b)           Governing Law.  This Agreement shall be governed by and construed in accordance with the laws of the State of Delaware applicable to contracts made and to be performed entirely within such State.

(c)           Section Headings.  The headings of the sections and subsections of this Agreement are inserted for convenience only and shall not be deemed to constitute a part thereof.

(d)           Notices.

(i)            All communications under this Agreement shall be in writing and shall be delivered by hand or facsimile or mailed by overnight courier or by registered or certified mail, postage prepaid:

(1)           if to the Company, at: ev3 Inc., 4600 Nathan Lane North, Plymouth, Minnesota  55442 (facsimile: (763) 398-7240), Attention: L. Cecily Hines, or at such other address or facsimile number as it may have furnished the Investors in writing.

(2)           if to the Institutional Investors, at the address or facsimile number listed on Schedule I hereto, or at such other address or facsimile number as may have been

12

furnished the Company in writing, with a copy to Willkie Farr & Gallagher, 787 Seventh Avenue, New York, NY 10019 (facsimile: (212) 728-8111), Attention: Steven J. Gartner, Esq.

(3)           if to the Management Investors, at the address or facsimile number listed on Schedule II hereto, or at such other address or facsimile number as may have been furnished the Company in writing.

(ii)           Any notice so addressed shall be deemed to be given: if delivered by hand or facsimile, on the date of such delivery; if mailed by courier, on the first business day following the date of such mailing; and if mailed by registered or certified mail, on the third business day after the date of such mailing.

(e)           Reproduction of Documents.  This Agreement and all documents relating thereto, including, without limitation, any consents, waivers and modifications which may hereafter be executed may be reproduced by the Holders by any photographic, photostatic, microfilm, microcard, miniature photographic or other similar process and the Holders may destroy any original document so reproduced.  The parties hereto agree and stipulate that any such reproduction shall be admissible in evidence as the original itself in any judicial or administrative proceeding (whether or not the original is in existence and whether or not such reproduction was made by the Holders in the regular course of business) and that any enlargement, facsimile or further reproduction of such reproduction shall likewise be admissible in evidence.

(f)            Successors and Assigns.  This Agreement shall inure to the benefit of and be binding upon the successors and assigns of each of the parties.

(g)           Entire Agreement; Amendment and Waiver.  This Agreement constitutes the entire understanding of the parties hereto and supersedes all prior understanding among such parties.  This Agreement may be amended, and the observance of any term of this Agreement may be waived, with (and only with) the written consent of the Company and the Holders holding a majority of the then outstanding Registrable Securities.

(h)           Severability.  In the event that any part or parts of this Agreement shall be held illegal or unenforceable by any court or administrative body of competent jurisdiction, such determination shall not affect the remaining provisions of this Agreement which shall remain in full force and effect.

(i)            Counterparts.  This Agreement may be executed in one or more counterparts (including by facsimile), each of which shall be deemed an original and all of which together shall be considered one and the same agreement.

13

IN WITNESS WHEREOF, the undersigned have executed this Agreement as of the date first set forth above.

ev3 Inc.
By:		/s/ James M. Corbett
Name:						James M. Corbett
Title:						President and Chief Executive Officer
WARBURG, PINCUS EQUITY PARTNERS, L.P.
By:				Warburg Pincus Partners LLC,
				its General Partner
				By:					Warburg Pincus & Co.,
									its Managing Member
By:		/s/ Elizabeth H. Weatherman
Name:					Elizabeth H. Weatherman
Title:					Partner
WARBURG, PINCUS NETHERLANDS EQUITY PARTNERS I, C.V.
By:			Warburg Pincus Partners LLC
			its General Partner
			By:					Warburg Pincus & Co.,
								its Managing Member
By:	/s/ Elizabeth H. Weatherman
	Name:						Elizabeth H. Weatherman
	Title:						Partner

WARBURG, PINCUS NETHERLANDS EQUITY PARTNERS III, C.V.
By:					Warburg Pincus Partners LLC,
					its General Partner
					By:			Warburg Pincus & Co.,
								its Managing Member
By:	/s/ Elizabeth H. Weatherman
	Name:						Elizabeth H. Weatherman
	Title:						Partner
VERTICAL FUND I, L.P.
By:			Vertical Group, L.P.,
			General Partner
By:		/s/ Richard B. Emmitt
		Name:				Richard B. Emmitt
		Title:				General Partner
VERTICAL FUND II, L.P.
By:				Vertical Group, L.P.,
				General Partner

By:	/s/ Richard B. Emmitt
	Name:	Richard B. Emmitt
	Title:	General Partner

/s/ James M. Corbett

James M. Corbett

L. Cecily Hines

Stacy Enxing Seng

Paul Kapsner

Paul Buckman

/s/ Dale Spencer

Dale Spencer

Rick Olson

Megan Becker

Piet van den Bosch

Bruce Krattenmaker

Mojdeh Poul

Stewart M. Kume

Paresh A. Gandhi

Chandra Coughlin

Martin Hieb

Thuzar Han

Karen Yahnke

Chad Roue

Michele Roggemann

SCHEDULE I

Institutional Investors

Institutional Investor’s Name and Address

Warburg, Pincus Equity Partners, L.P.
c/o Warburg Pincus & Co.
466 Lexington Avenue
New York, NY 10017
Facsimile: (212) 716-5068
Attention: Sean D. Carney

Elizabeth H. Weatherman

Warburg, Pincus Netherlands Equity Partners
I, C.V.
c/o Warburg Pincus & Co.
466 Lexington Avenue
New York, NY 10017
Facsimile: (212) 716-5068
Attention: Sean D. Carney

Elizabeth H. Weatherman

Warburg, Pincus Netherlands Equity Partners
III, C.V.
c/o Warburg Pincus & Co.
466 Lexington Avenue
New York, NY 10017
Facsimile: (212) 716-5068
Attention: Sean D. Carney

Elizabeth H. Weatherman

Vertical Fund I, L.P.
c/o Vertical Group, L.P.
25 Deforest Avenue
Summit, New Jersey 07901
Facsimile: (908) 273-9434
Attention: John Runnells

Vertical Fund II, L.P.
c/o Vertical Group, L.P.
25 Deforest Avenue
Summit, New Jersey 07901
Facsimile: (908) 273-9434
Attention: John Runnells

SCHEDULE II

Management Investors

Managment Investor’s Name and Address

James M. Corbett

c/o ev3 Inc.

4600 Nathan Lane North

Plymouth, Minnesota  55442

Facsimile: (763) 398-7000

L. Cecily Hines

c/o ev3 Inc.

4600 Nathan Lane North

Plymouth, Minnesota  55442

Facsimile: (763) 398-7000

Stacy Enxing Seng

c/o ev3 Inc.

4600 Nathan Lane North

Plymouth, Minnesota  55442

Facsimile: (763) 398-7000

Paul Kapsner

c/o ev3 Inc.

4600 Nathan Lane North

Plymouth, Minnesota  55442

Facsimile: (763) 398-7000

Paul Buckman

c/o ev3 Inc.

4600 Nathan Lane North

Plymouth, Minnesota  55442

Facsimile: (763) 398-7000

Dale A. Spencer

503 North Ferndale Road

Wayzata, Minnesota  55391

Rick Olson

c/o ev3 Inc.

4600 Nathan Lane North

Plymouth, Minnesota  55442

Facsimile: (763) 398-7000

Megan Becker

c/o ev3 Inc.

4600 Nathan Lane North

Plymouth, Minnesota  55442

Facsimile: (763) 398-7000

Piet van den Bosch

c/o ev3 Inc.

4600 Nathan Lane North

Plymouth, Minnesota  55442

Facsimile: (763) 398-7000

Bruce Krattenmaker

c/o ev3 Inc.

4600 Nathan Lane North

Plymouth, Minnesota  55442

Facsimile: (763) 398-7000

Mojdeh Poul

c/o ev3 Inc.

4600 Nathan Lane North

Plymouth, Minnesota  55442

Facsimile: (763) 398-7000

Stewart M. Kume

c/o ev3 Inc.

4600 Nathan Lane North

Plymouth, Minnesota  55442

Facsimile: (763) 398-7000

Paresh A. Gandhi

c/o ev3 Inc.

4600 Nathan Lane North

Plymouth, Minnesota  55442

Facsimile: (763) 398-7000

Chandra Coughlin

c/o ev3 Inc.

4600 Nathan Lane North

Plymouth, Minnesota  55442

Facsimile: (763) 398-7000

Martin Hieb

c/o ev3 Inc.

4600 Nathan Lane North

Plymouth, Minnesota  55442

Facsimile: (763) 398-7000

Thuzar Han

c/o ev3 Inc.

4600 Nathan Lane North

Plymouth, Minnesota  55442

Facsimile: (763) 398-7000

Karen Yahnke

c/o ev3 Inc.

4600 Nathan Lane North

Plymouth, Minnesota  55442

Facsimile: (763) 398-7000

Chad Roue

c/o ev3 Inc.

4600 Nathan Lane North

Plymouth, Minnesota  55442

Facsimile: (763) 398-7000

Michele Roggemann

c/o ev3 Inc.

4600 Nathan Lane North

Plymouth, Minnesota  55442

Facsimile: (763) 398-7000

EX-10.1

Exhibit 10.1

ev3 Inc.
11,765,000 Shares

Common Stock

UNDERWRITING AGREEMENT

dated June 16, 2005

Piper Jaffray & Co.

Banc of America Securities LLC

UNDERWRITING AGREEMENT

June 16, 2005

PIPER JAFFRAY & CO.

BANC OF AMERICA SECURITIES LLC

As Representatives of the several Underwriters

c/o PIPER JAFFRAY & CO.

800 Nicollet Mall

Minneapolis, MN 55402

Ladies and Gentlemen:

Introductory.  ev3 Inc., a Delaware corporation (the “Company”), proposes to issue and sell to the several underwriters named in Schedule A (the “Underwriters”) an aggregate of 11,765,000 shares (the “Firm Common Shares”) of its Common Stock, par value $0.01 per share (the “Common Stock”).  In addition, the Company has granted to the Underwriters an option to purchase up to an additional 1,728,850 shares of Common Stock and the stockholder of the Company named in Schedule B (in his individual capacity and not in his capacity as a director of the Company) (the “Selling Stockholder”) has granted to the Underwriters an option to purchase up to an additional 35,900 shares of Common Stock, all as provided in Section 2.  The additional 1,728,850 shares that may be sold by the Company and the additional 35,900 shares that may be sold by the Selling Stockholder pursuant to such option are collectively called the “Optional Common Shares”.  The Firm Common Shares and, if and to the extent such option is exercised, the Optional Common Shares are collectively called the “Common Shares”.  Piper Jaffray & Co. (“Piper”) and Banc of America Securities LLC (“BAS”) have agreed to act as representatives of the several Underwriters (in such capacity, the “Representatives”) in connection with the offering and sale of the Common Shares.

The Company and the Underwriters agree that up to 588,250 of the Firm Common Shares to be purchased by the Underwriters (the “Directed Shares”) shall be reserved for sale by the Underwriters to certain eligible directors, officers and employees of the Company and persons having business relationships with the Company (collectively, the “Participants”), as part of the distribution of the Common Shares by the Underwriters (the “Directed Share Program”) subject to the terms of this Agreement, the applicable rules, regulations and interpretations of the NASD, Inc. (the “NASD”) and all other applicable laws, rules and regulations.  One of the Underwriters (the “Designated Underwriter”) shall be selected to process the sales to the Participants under the Directed Share Program.  To the extent that such Directed Shares are not orally confirmed for purchase by the Participants by the end of the first business day after the date of this Agreement, such Directed Shares may be offered to the public as part of the public offering contemplated hereby.

The Company has prepared and filed with the Securities and Exchange Commission (the “Commission”) a registration statement on Form S-1 (File No. 333-123851), which contains a

form of prospectus to be used in connection with the public offering and sale of the Common Shares.  Such registration statement, as amended, including the financial statements, exhibits and schedules thereto, in the form in which it was declared effective by the Commission under the Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder (collectively, the “Securities Act”), including any information deemed to be a part thereof at the time of effectiveness pursuant to Rule 430A under the Securities Act, is called the “Registration Statement.”  Any registration statement filed by the Company pursuant to Rule 462(b) under the Securities Act is called the “Rule 462(b) Registration Statement”, and from and after the date and time of filing of the Rule 462(b) Registration Statement the term “Registration Statement” shall include the Rule 462(b) Registration Statement.  Such prospectus, in the form first used by the Underwriters to confirm sales of the Common Shares, is called the “Prospectus”.  The preliminary prospectus, dated as of May 27, 2005, included in the Registration Statement before it became effective under the Securities Act and any prospectus filed with the Commission by the Company with the consent of the Underwriters pursuant to Rule 424(a) under the Securities Act is hereinafter called the “Preliminary Prospectus.”  All references in this Agreement to the Registration Statement, the Rule 462(b) Registration Statement, the Preliminary Prospectus or the Prospectus, or any amendments or supplements to any of the foregoing, shall include any copy thereof filed with the Commission pursuant to its Electronic Data Gathering, Analysis and Retrieval System (“EDGAR”).

The Company, ev3 LLC, a Delaware limited liability company (“ev3 LLC”), and the Selling Stockholder hereby confirm their respective agreements with the Underwriters as follows:

Section 1.  Representations and Warranties.

A.  Representations and Warranties of the Company and ev3 LLC.  The Company and ev3 LLC hereby jointly and severally represent, warrant and covenant to each Underwriter as follows:

(a)  Compliance with Registration Requirements.  The Registration Statement has been declared effective by the Commission under the Securities Act and any Rule 462(b) Registration Statement is effective.  The Company has complied with all requests of the Commission for additional or supplemental information.  No stop order suspending the effectiveness of the Registration Statement or any Rule 462(b) Registration Statement is in effect and no proceedings for such purpose have been instituted or are pending or, to the best knowledge of the Company, are contemplated or threatened by the Commission.  The Preliminary Prospectus when filed with the Commission complied, and the Prospectus when filed with the Commission will comply, in all material respects with the Securities Act and, if filed by electronic transmission pursuant to EDGAR (except as may be permitted by Regulation S-T under the Securities Act), was or will be, as the case may be, identical to the copy thereof delivered to the Underwriters for use in connection with the offer and sale of the Common Shares.  The Registration Statement complies, and any Rule 462(b)

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Registration Statement and any post-effective amendments or supplements to the Registration Statement, when they become effective and at all times during the Prospectus Delivery Period, will comply, in all material respects with the requirements of the Securities Act.  The Registration Statement did not contain, and any Rule 462(b) Registration Statement or any post-effective amendments thereto will not contain, as of their respective effective dates and at all times during the Prospectus Delivery Period, an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading, except in each case if the Company notifies the Representatives in writing of an event or condition as a result of which it is necessary to amend or supplement the Registration Statement in order to make the statements therein not misleading and the Company so amends or supplements the Registration Statement in compliance with the terms of this Agreement.  The Prospectus (including any Prospectus wrapper), as amended or supplemented, as of its date and at all times during the Prospectus Delivery Period (as defined below), did not and will not contain any untrue statement of a material fact or omit to state a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading, except in each case if the Company notifies the Representatives in writing of an event or condition as a result of which it is necessary to amend or supplement the Prospectus in order to make the statements therein, in the light of the circumstances under which they were made, not misleading and the Company so amends or supplements the Prospectus in compliance with the terms of this Agreement.  The representations and warranties set forth in the three immediately preceding sentences do not apply to statements in or omissions from the Registration Statement, any Rule 462(b) Registration Statement, or any post-effective amendment thereto, or the Prospectus (including any Prospectus wrapper), or any amendments or supplements thereto, made in reliance upon and in conformity with information relating to any Underwriter furnished to the Company in writing by the Representatives expressly for use therein.  There are no contracts or other documents of ev3 LLC, the Company or their respective subsidiaries required to be described in the Prospectus or to be filed as exhibits to the Registration Statement which have not been described or filed as required.

(b)  Offering Materials Furnished to Underwriters.  The Company has delivered to the Representatives two complete copies of the manually signed Registration Statement and of each consent and certificate of experts filed as a part thereof, and conformed copies of the Registration Statement (without exhibits) and copies of the Preliminary Prospectus and the Prospectus, as amended or supplemented, in such quantities and at such places as the Representatives have reasonably requested for each of the Underwriters.

(c)  Distribution of Offering Material By the Company.  The Company has not distributed and will not distribute, prior to the later of the Second Closing Date

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(as defined below) and the completion of the Prospectus Delivery Period (as defined below), any offering material in connection with the offering and sale of the Common Shares other than the Preliminary Prospectus, the Prospectus or the Registration Statement.

(d)  The Underwriting Agreement.  This Agreement has been duly authorized, executed and delivered by, and is a valid and binding agreement of, ev3 LLC and the Company, enforceable against each of ev3 LLC and the Company in accordance with its terms, except as may be limited by bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the rights and remedies of creditors generally and by the effect of general principles of equity and except that any rights to indemnity and contribution pursuant to Sections 8 and 9 hereof may be limited by federal and state securities laws and public policy considerations.

(e)  Authorization of the Common Shares.  The Common Shares to be purchased by the Underwriters from the Company have been duly authorized for issuance and sale pursuant to this Agreement and, when issued and delivered by the Company against payment therefor pursuant to this Agreement, will be validly issued, fully paid and nonassessable.

(f)  No Applicable Registration or Other Similar Rights.  There are no persons with registration or other similar rights to have any equity or debt securities registered for sale under the Registration Statement or included in the offering contemplated by this Agreement, other than the Selling Stockholder with respect to the Optional Common Shares included in the Registration Statement, except for such rights as have been duly waived or have been described in the Prospectus.

(g)  No Material Adverse Change.  Except as otherwise disclosed in the Prospectus, subsequent to the respective dates as of which information is given in the Prospectus: (i) there has been no material adverse change, or any development that could reasonably be expected to result in a material adverse change, in the condition, financial or otherwise, or in the earnings, business, operations or prospects, whether or not arising from transactions in the ordinary course of business, of ev3 LLC, the Company and their respective subsidiaries, considered as one entity (any such change is called a “Material Adverse Change”); (ii) ev3 LLC, the Company and their respective subsidiaries, considered as one entity, have not incurred any material liability or obligation, indirect, direct or contingent, not in the ordinary course of business nor entered into any material transaction or agreement not in the ordinary course of business; and (iii) there has been no dividend or distribution of any kind declared, paid or made by ev3 LLC or the Company or, except for dividends paid to ev3 LLC, the Company or any of their respective

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subsidiaries, any of their respective subsidiaries on any class of their respective capital stock or repurchase or redemption by the Company or any of its subsidiaries of any class of their respective capital stock.

(h)  Independent Accountants.  PricewaterhouseCoopers LLP and Ernst & Young LLP, which have expressed their respective opinions with respect to certain portions (as indicated therein) of the combined consolidated financial statements (which term as used in this Agreement includes the related notes thereto) filed with the Commission as a part of the Registration Statement and included in the Prospectus, are each an independent registered public accounting firm as required by the Securities Act.

(i)  Preparation of the Financial Statements.  The combined consolidated financial statements filed with the Commission as a part of the Registration Statement and included in the Prospectus present fairly the consolidated financial position of ev3 LLC and its subsidiaries as of and at the dates indicated and the results of their operations and cash flows for the periods specified.  The financial statement schedule included in the Registration Statement presents fairly the information required to be stated therein.  Such combined consolidated financial statements and financial statement schedule have been prepared in conformity with generally accepted accounting principles as applied in the United States applied on a consistent basis throughout the periods involved, except as may be expressly stated in the related notes thereto.  No other financial statements or supporting schedules are required to be included in the Registration Statement.  The combined consolidated financial data set forth in the Prospectus under the captions “Prospectus Summary - Summary Combined Consolidated Financial Data,” “Selected Combined Consolidated Financial Data” and “Capitalization” fairly present the information set forth therein on a basis consistent with that of the combined consolidated financial statements contained in the Registration Statement.

(j)  Incorporation and Good Standing of ev3 LLC, the Company and their Subsidiaries.  Each of ev3 LLC, the Company and each of their respective subsidiaries has been duly formed, incorporated or organized and is validly existing as a limited liability company, corporation or other entity in good standing under the laws of the jurisdiction of its formation, incorporation or organization and has limited liability company, corporate or other power and authority to own, lease and operate its properties and to conduct its business as it is currently conducted and as described in the Prospectus and, in the case of ev3 LLC and the Company, to enter into and perform their obligations under this Agreement.  Each of ev3 LLC, the Company and each of their respective subsidiaries is duly qualified as a foreign limited liability company or corporation to transact business and is in good standing in each jurisdiction in which such qualification is required, whether by reason of the ownership or leasing of property or the conduct of business, except for such jurisdictions where the failure to

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so qualify or to be in good standing would not, individually or in the aggregate, result in a Material Adverse Change.  All of the issued and outstanding capital stock of each subsidiary of ev3 LLC and the Company has been duly authorized and validly issued, is fully paid and nonassessable and is owned by ev3 LLC or the Company, directly or through their respective subsidiaries, free and clear of any security interest, mortgage, pledge, lien, encumbrance or claim, except for such security interests, mortgages, pledges, liens, encumbrances or claims (1) which would not individually or in the aggregate result in a Material Adverse Change or (2) pursuant to that certain Loan and Security Agreement, dated as of May 6, 2005, between Silicon Valley Bank and Micro Therapeutics, Inc., a Delaware corporation (“MTI”); provided, however, with respect to MTI, either ev3 LLC or the Company (i) directly owns 9,704,819 shares of the common stock of MTI and (ii) indirectly owns 24,336,759 shares of the common stock of MTI.  Neither ev3 LLC nor the Company owns or controls, directly or indirectly, any corporation, association or other entity other than the subsidiaries listed in Exhibit 21.1 to the Registration Statement, except for any such corporation, association or other entity which is not a “significant subsidiary” as defined by Rule 1-02 of Regulation S-X under the Securities Act.

(k)  Capitalization and Other Capital Stock Matters.  (i) The authorized, issued and outstanding membership units of ev3 LLC is as set forth in the Prospectus under the column “Actual ev3 LLC” under the caption “Capitalization”; (ii) the authorized, issued and outstanding Common Stock of the Company after giving effect to the merger of ev3 LLC with and into the Company (the “Merger”) is as set forth in the Prospectus under the column “Pro Forma for MTI Share Contribution and Merger ev3 Inc.” under the caption “Capitalization”; (iii) the authorized, issued and outstanding Common Stock of the Company after giving effect to the “reorganization transactions” (as defined in the Prospectus) and the reverse stock split (as set forth in the Prospectus) is as set forth in the Prospectus under the column “Pro Forma for Reorganization Transactions and Reverse Stock Split ev3 Inc.” under the caption “Capitalization”; and (iv) the authorized, issued and outstanding Common Stock of the Company after giving effect to the “reorganization transactions” (as defined in the Prospectus), the reverse stock split (as set forth in the Prospectus) and the sale of the Firm Common Shares is as set forth in the Prospectus under the column “Pro Forma As Adjusted ev3 Inc.” under the caption “Capitalization”, in each case, other than for subsequent issuances, if any, pursuant to employee benefit plans described in the Prospectus or upon exercise of outstanding convertible securities, options or warrants described in the Prospectus.  The Common Stock (including the Common Shares) conforms in all material respects to the description thereof contained in the Prospectus.  All of the issued and outstanding shares of Common Stock have been duly authorized and validly issued, are fully paid and nonassessable and have been issued in compliance with federal and state securities laws as of the First Closing Date and as of the

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Second Closing Date, if applicable.  As of the First Closing Date and as of the Second Closing Date, if applicable, all of the issued and outstanding shares of Common Stock owned by the Selling Stockholder will have been duly authorized and validly issued, and will be fully paid and nonassessable and have been issued in compliance with federal and state securities laws.  None of the outstanding membership units of ev3 LLC or shares of Common Stock were issued in violation of any preemptive rights, rights of first refusal or other similar rights to subscribe for or purchase securities of ev3 LLC or the Company which were not properly waived.  Except as set forth in that certain Option, Contribution and Exchange Agreement, dated as of August 29, 2003, by and among ev3 LLC and certain of its members party thereto and in the Holders Agreement, dated as of August 29, 2003, among the investors named therein and the Company, there are no authorized or outstanding options, warrants, preemptive rights, rights of first refusal or other rights to purchase, or equity or debt securities convertible into or exchangeable or exercisable for, any capital stock of the Company or any of its subsidiaries other than those described in the Prospectus or issued or granted after the date thereof.  The description of ev3 LLC’s and the Company’s stock option, stock bonus and other stock plans or arrangements, and the options or other rights granted thereunder, set forth in the Prospectus accurately and fairly presents in all material respects the information required to be shown with respect to such plans, arrangements, options and rights.

(l)  Quotation.  The Common Shares have been approved for inclusion on the NASDAQ National Market, subject only to official notice of issuance.

(m)  Non-Contravention of Existing Instruments; No Further Authorizations or Approvals Required.  Neither ev3 LLC, the Company nor any of their respective subsidiaries is in violation of its charter, by-laws or other organizational documents or is in default (or, with the giving of notice or lapse of time, would be in default) (“Default”) under any indenture, mortgage, loan or credit agreement, note, contract, lease or other instrument to which ev3 LLC, the Company or any of their respective subsidiaries is a party or by which any of them may be bound, or to which any of the property or assets of ev3 LLC, the Company or any of their respective subsidiaries is subject (each, an “Existing Instrument”), except for such Defaults as would not, individually or in the aggregate, result in a Material Adverse Change.  Each of ev3 LLC’s and the Company’s execution, delivery and performance of this Agreement and consummation of the transactions contemplated hereby and by the Prospectus (i) have been duly authorized by all necessary corporate action and will not result in any violation of the provisions of, with respect to ev3 LLC, its operating agreement or other organizational documents, and with respect to the Company, its charter or by-laws, or the organizational documents of any of their subsidiaries, (ii) will not conflict with or constitute a breach of, or Default under, or result in the creation or imposition of any lien, charge or encumbrance upon any property or assets of ev3 LLC, the Company or any of their respective subsidiaries pursuant to, or require

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the consent of any other party to, any Existing Instrument, except for such consents which have been obtained and for such conflicts, breaches, Defaults, liens, charges or encumbrances as would not, individually or in the aggregate, result in a Material Adverse Change and (iii) will not result in any violation of any law, administrative regulation or administrative or court decree applicable to ev3 LLC, the Company or any of their respective subsidiaries except for such violations as would not, individually or in the aggregate, result in a Material Adverse Change.  No consent, approval, authorization or other order of, or registration or filing with, any court or other governmental or regulatory authority or agency, is required for ev3 LLC’s or the Company’s execution, delivery and performance of this Agreement and consummation of the transactions contemplated hereby and by the Prospectus, except (i) such as have been obtained or made by ev3 LLC and the Company and are in full force and effect under the Securities Act and applicable state securities or blue sky laws and (ii) for the filing of the Certificate of Merger contemplated by the Agreement and Plan of Merger, dated as of April 4, 2005 (filed as Exhibit 2.1 to the Registration Statement), which Certificate of Merger will be filed on or before the First Closing Date.

(n)  No Material Actions or Proceedings.  Except as otherwise disclosed in the Prospectus, there are no legal or governmental actions, suits or proceedings (including, without limitation, any actions, suits or proceedings by the Food and Drug Administration (the “FDA”)) pending or, to the best of ev3 LLC’s and the Company’s knowledge, threatened (i) against ev3 LLC, the Company or any of their respective subsidiaries, (ii) which has as the subject thereof any officer or director of, or property owned or leased by, ev3 LLC or the Company or any of their respective subsidiaries or (iii) relating to environmental or discrimination matters, where in any such case (A) there is a reasonable possibility that such action, suit or proceeding would be determined adversely to ev3 LLC, the Company or such subsidiary and (B) any such action, suit or proceeding, if so determined adversely, would reasonably be expected to result in a Material Adverse Change or materially and adversely affect the Company’s ability to consummate the transactions contemplated by this Agreement.  No labor dispute with the employees of ev3 LLC, the Company or any of any of their respective subsidiaries exists or, to the best of ev3 LLC’s and the Company’s knowledge, is threatened or imminent which would, individually or in the aggregate, be reasonably expected to result in a Material Adverse Change.

(o)  Intellectual Property Rights.  Each of ev3 LLC, the Company and their respective subsidiaries own or possess sufficient trademarks, trade names, patent rights, copyrights, domain names, licenses, approvals, trade secrets and other similar rights (collectively, “Intellectual Property Rights”) reasonably necessary to conduct their businesses as now conducted, except as such failure to own, possess or acquire such rights would not have a Material Adverse Change and the expected expiration of any of such Intellectual Property Rights would not result in a Material Adverse

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Change.  Except as disclosed in the Prospectus, none of ev3 LLC, the Company or any of their respective subsidiaries has received any notice of infringement or conflict with asserted Intellectual Property Rights of others, which infringement or conflict, if the subject of an unfavorable decision, would result in a Material Adverse Change.  None of ev3 LLC, the Company or any of their respective subsidiaries is a party to or bound by any options, licenses or agreements with respect to the Intellectual Property Rights of any other person or entity that are required to be described in the Prospectus and are not described in all material respects.  None of the Intellectual Property Rights owned by ev3 LLC, the Company or any of their respective subsidiaries have been obtained or are being used by ev3 LLC, the Company or any of their respective subsidiaries in violation of any contractual obligation binding on ev3 LLC, the Company, any of their respective subsidiaries or, to ev3 LLC’s or the Company’s knowledge, any of their respective officers, directors or employees or otherwise in violation of the rights of any persons, except where such violations would not, individually or in the aggregate, result in a Material Adverse Change.

(p)  All Necessary Permits, etc.  Each of ev3 LLC, the Company and each of their respective subsidiaries possess such valid and current certificates, authorizations or permits issued by the appropriate state, federal or foreign regulatory agencies or bodies necessary to conduct their respective businesses, except where the failure to so possess would not, individually or in the aggregate, result in a Material Adverse Change and none of ev3 LLC, the Company or any of their respective subsidiaries has received any notice of proceedings relating to the revocation or modification of, or non-compliance with, any such certificate, authorization or permit which, individually or in the aggregate, if the subject of an unfavorable decision, ruling or finding, would result in a Material Adverse Change.

(q)  Title to Properties.  ev3 LLC, the Company and each of their respective subsidiaries has good and marketable title to all the properties (whether real or personal) and assets reflected as owned in the financial statements referred to in Section 1(A)(i) above, in each case free and clear of any security interests, mortgages, liens, encumbrances, equities, claims and other defects to title, except such as are described in the Prospectus or would not, individually or in the aggregate, be reasonably expected to result in a Material Adverse Change.  The real property, improvements, equipment and personal property held under lease by ev3 LLC, the Company or any subsidiary are held under valid and enforceable leases, with such exceptions as would not, individually or in the aggregate, be reasonably expected to result in a Material Adverse Change.

(r)  Tax Law Compliance.  Each of ev3 LLC, the Company and their respective subsidiaries have filed all necessary federal, state and foreign income and franchise tax returns required to be filed through the date hereof and have paid all taxes

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due thereon and, if due and payable, any related or similar assessment, fine or penalty levied against any of them, except in each case as would not, individually or in the aggregate, result in a Material Adverse Change or which ev3 LLC, the Company or any such subsidiary is contesting in good faith.  As of the First Closing Date and the Second Closing Date, if any, ev3 LLC, the Company and their respective subsidiaries will have filed all necessary federal, state and foreign income and franchise tax returns required to be filed through the First Closing Date and the Second Closing Date , as applicable, and have paid all taxes due thereon and, if due and payable, any related or similar assessment, fine or penalty levied against any of them, except in each case as would not, individually or in the aggregate, result in a Material Adverse Change or which ev3 LLC, the Company or any such subsidiary is contesting in good faith.  ev3 LLC has made adequate charges, accruals and reserves in the applicable financial statements referred to in Section 1(A)(i) above in respect of all federal, state and foreign income and franchise taxes for all periods as to which the tax liability of ev3 LLC, the Company or any of their respective subsidiaries has not been finally determined.

(s)  Company Not an “Investment Company.”  The Company is not and, after giving effect to the offering and the sale of the Common Shares and the application of the proceeds thereof as described in the Prospectus, will not be, an “investment company” within the meaning of the Investment Company Act of 1940, as amended (the “Investment Company Act”).

(t)  Insurance.  Each of ev3 LLC,  the Company and their respective subsidiaries are insured with policies in such amounts and with such deductibles and covering such risks as are generally deemed adequate and customary for their businesses including, but not limited to, policies covering real and personal property owned or leased by ev3 LLC, the Company or their respective subsidiaries against theft, damage, destruction and acts of vandalism.  Neither ev3 LLC nor the Company has any reason to believe that it or any of their respective subsidiaries will not be able (i) to renew its existing insurance coverage as and when such policies expire or (ii) to obtain comparable coverage from similar institutions as may be necessary or appropriate to conduct its business as now conducted and at a cost that would not result in a Material Adverse Change.  Neither of ev3 LLC, the Company nor any of their respective subsidiaries has been denied any insurance coverage which it has sought or for which it has applied.

(u)  No Price Stabilization or Manipulation.  The Company has not taken and will not take, directly or indirectly, any action designed to or that might be reasonably expected to cause or result in stabilization or manipulation of the price of the Common Stock to facilitate the sale or resale of the Common Shares.

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(v)  Related Party Transactions.  There are no business relationships or related-party transactions involving ev3 LLC, the Company or any of their respective subsidiaries or any other person required to be described in the Prospectus which have not been described as required.

(w)  Disclosure Controls and Procedures.  The Company is aware of no reason that its quarterly report on Form 10-Q for the quarter ended July 3, 2005 would not (1) be accompanied by the certifications required to be filed or submitted by the Company’s chief executive officer and chief financial officer pursuant to the Sarbanes-Oxley Act of 2002 and the rules and regulations thereunder or (2) contain a statement to the effect that the Company’s principal executive officer and principal financial officer concluded as of the end of the period covered by such report that the Company’s disclosure controls and procedures were effective such that the information relating to the Company, including its consolidated subsidiaries, required to be disclosed in the Company’s reports filed with the Commission (i) is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the Commission, and (ii) is accumulated and communicated to the Company’s management, including its principal executive officer and principal financial and accounting officer, as appropriate to allow timely decisions regarding required disclosure.

(x)  No Unlawful Contributions or Other Payments.  None of ev3 LLC, the Company, their respective subsidiaries or, to the best of ev3 LLC’s and the Company’s knowledge, any employee or agent of ev3 LLC, the Company or any of their respective subsidiaries, has made any contribution or other payment to any official of, or candidate for, any federal, state or foreign office in violation of any law or of the character required to be disclosed in the Prospectus.

(y)  Company’s Accounting System.  Except as disclosed in the Prospectus, each of ev3 LLC and the Company maintains a system of accounting controls sufficient to provide reasonable assurances that (i) transactions are executed in accordance with management’s general or specific authorization; (ii) transactions are recorded as necessary to permit preparation of financial statements of ev3 LLC and the Company in conformity with generally accepted accounting principles as applied in the United States and to maintain accountability for assets; (iii) access to assets is permitted only in accordance with management’s general or specific authorization; and (iv) the recorded accountability for assets is compared with existing assets at reasonable intervals and appropriate action is taken with respect to any differences.

(z)  Compliance with Environmental Laws.  Except as would not, individually or in the aggregate, result in a Material Adverse Change (i) none of ev3 LLC, the Company or any of their respective subsidiaries is in violation of any

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applicable federal, state, local or foreign law or regulation relating to pollution or protection of human health or the environment (including, without limitation, ambient air, surface water, groundwater, land surface or subsurface strata) or wildlife, including without limitation, applicable laws and regulations relating to emissions, discharges, releases or threatened releases of chemicals, pollutants, contaminants, wastes, toxic substances, hazardous substances, petroleum and petroleum products (collectively, “Materials of Environmental Concern”), or otherwise relating to the manufacture, processing, distribution, use, treatment, storage, disposal, transport or handling of Materials of Environment Concern (collectively, “Environmental Laws”), which violation includes, but is not limited to, noncompliance with any applicable permits or other governmental authorizations required for the operation of the business of ev3 LLC, the Company or their respective subsidiaries under applicable Environmental Laws, nor has ev3 LLC, the Company or any of their respective subsidiaries received any written communication, whether from a governmental authority, citizens group, employee or otherwise, that alleges that ev3 LLC, the Company or any of their respective subsidiaries is in violation of any applicable Environmental Law; (ii) there is no claim, action or cause of action filed with a court or governmental authority, no investigation with respect to which ev3 LLC or the Company has received written notice, and no written notice by any person or entity alleging potential liability for investigatory costs, cleanup costs, governmental responses costs, natural resources damages, property damages, personal injuries, attorneys’ fees or penalties arising out of, based on or resulting from the presence, or release into the environment, of any Material of Environmental Concern at any location owned, leased or operated by ev3 LLC, the Company or any of their respective subsidiaries, now or in the past (collectively, “Environmental Claims”), pending or, to the best of ev3 LLC’s or the Company’s knowledge, threatened against ev3 LLC, the Company or any of their respective subsidiaries or any person or entity whose liability for any Environmental Claim ev3 LLC, the Company or any of their respective subsidiaries has retained or assumed either contractually or by operation of law; and (iii) to ev3 LLC’s and the Company’s knowledge, there are no past or present actions, activities, circumstances, conditions, events or incidents related to ev3 LLC, the Company or any of their respective subsidiaries, including, without limitation, the release, emission, discharge, presence or disposal of any Material of Environmental Concern, that would result in a violation of any Environmental Law or form the basis of a potential Environmental Claim against ev3 LLC, the Company or any of their respective subsidiaries or against any person or entity whose liability for any Environmental Claim ev3 LLC, the Company or any of their respective subsidiaries has retained or assumed either contractually or by operation of law.

(aa)  ERISA Compliance.  ev3 LLC, the Company, their respective subsidiaries and any “employee benefit plan” (as defined under Section 3(3) of the Employee Retirement Income Security Act of 1974, as amended, and the regulations

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and published interpretations thereunder (collectively, “ERISA”)) established or maintained by ev3 LLC, the Company, their respective subsidiaries or their “ERISA Affiliates” (as defined below) are in compliance with ERISA, except where the failure to be so in compliance would not result in a Material Adverse Change.  “ERISA Affiliate” means, with respect to ev3 LLC, the Company or a subsidiary, any member of any group of organizations described in Sections 414(b), (c), (m) or (o) of the Internal Revenue Code of 1986, as amended, and the regulations and published interpretations thereunder (the “Code”) of which ev3 LLC, the Company or such subsidiary is a member.  No “reportable event” (as defined under ERISA) has occurred or is reasonably expected to occur with respect to any “employee benefit plan” established or maintained by ev3 LLC, the Company, their subsidiaries or any of their ERISA Affiliates, except where such occurrence would not have a Material Adverse Change.  No “employee benefit plan” established or maintained by ev3 LLC, the Company, their respective subsidiaries or any of their ERISA Affiliates, if such “employee benefit plan” were terminated, would have any “amount of unfunded benefit liabilities” (as defined under ERISA), except where such liabilities would not have a Material Adverse Change.  None of ev3 LLC, the Company, their respective subsidiaries nor any of their ERISA Affiliates has incurred or reasonably expects to incur any material liability under (i) Title IV of ERISA with respect to termination of, or withdrawal from, any “employee benefit plan” or (ii) Sections 412, 4971, 4975 or 4980B of the Code, except where such liabilities would not have a Material Adverse Change.  Each “employee benefit plan” established or maintained by ev3 LLC, the Company or their respective subsidiaries or any of their ERISA Affiliates that is intended to be qualified under Section 401(a) of the Code satisfies the qualification requirements under Section 401(a) of the Code except where the failure to satisfy such requirements would not result in a Material Adverse Change and, to the knowledge of ev3 LLC and the Company, nothing has occurred, whether by action or failure to act, which would cause the loss of such qualification under Section 401(a) of the Code.

(bb)  Brokers.  Other than as contemplated by this Agreement, there is no broker, finder or other party that is entitled to receive from ev3 LLC, the Company or their respective subsidiaries any brokerage or finder’s fee or other fee or commission as a result of any transactions contemplated by this Agreement.

(cc)  No Outstanding Loans or Other Indebtedness.  There are no material outstanding loans, advances (except normal advances for business expenses in the ordinary course of business) or guarantees or indebtedness by ev3 LLC or the Company to or for the benefit of any of the officers or directors of the Company except as disclosed in the Prospectus.

(dd)  Compliance with Laws.  Neither ev3 LLC nor the Company has been advised, nor has reason to believe, that it and each of their respective subsidiaries

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are not conducting business in compliance with all applicable laws, rules and regulations of the jurisdictions in which it is conducting business, including, without limitation, the rules and regulations of the FDA, the Federal Food, Drug and Cosmetic Act, as amended, the Biologic Products provisions of the Public Health Service Act, as amended, and the Comprehensive Drug Abuse Prevention and Control Act of 1970, as amended, except as disclosed in the Prospectus or except where failure to be so in compliance would not result in a Material Adverse Change.

(ee)  FDA Proceedings.  To the best of ev3 LLC’s and the Company’s knowledge, there are no rulemakings or similar proceedings before the FDA or any similar entity in any other jurisdiction which involve ev3 LLC, the Company or any of their respective subsidiaries or any of the processes or products which the Prospectus discloses ev3 LLC, the Company or any of their respective subsidiaries has developed, is developing or proposes to develop, or uses or proposes to use which, if the subject of an action unfavorable to ev3 LLC, the Company or any of their subsidiaries, would result in a Material Adverse Change.

Any certificate signed by an officer of the Company and delivered to the Representatives or to counsel for the Underwriters shall be deemed to be a representation and warranty by the Company to each Underwriter as to the matters set forth therein.

Each of ev3 LLC and the Company acknowledge that the Underwriters and, for purposes of the opinions to be delivered pursuant to Section 5 hereof, counsel to the Company and counsel to the Underwriters, will rely upon the accuracy and truthfulness of the foregoing representations and hereby consents to such reliance.

B.  Representations and Warranties of the Selling Stockholder.  The Selling Stockholder represents, warrants and covenants to each Underwriter as follows:

(a)  The Underwriting Agreement.  This Agreement has been duly authorized, executed and delivered by or on behalf of the Selling Stockholder and is a valid and binding agreement of the Selling Stockholder, enforceable against the Selling Stockholder in accordance with its terms, except as may be limited by bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the rights and remedies of creditors generally and by the effect of general principles of equity and except that any rights to indemnity and contribution pursuant to Sections 8 and 9 hereof may be limited by federal and state securities laws and public policy considerations.

(b)  The Custody Agreement and Power of Attorney.  Each of the (i) Custody Agreement signed by the Selling Stockholder and the Company, as custodian (the “Custodian”), relating to the deposit of the Common Shares to be sold by the

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Selling Stockholder (the “Custody Agreement”) and (ii) Power of Attorney appointing certain individuals named therein as the Selling Stockholder’s attorneys-in-fact (each, an “Attorney-in-Fact”) to the extent set forth therein relating to the transactions contemplated hereby and by the Prospectus (the “Power of Attorney”), of the Selling Stockholder has been duly authorized, executed and delivered by the Selling Stockholder and is a valid and binding agreement of the Selling Stockholder, enforceable against the Selling Stockholder in accordance with its terms, except as rights to indemnification thereunder may be limited by applicable law and except as the enforcement thereof may be limited by bankruptcy, insolvency, reorganization, moratorium or other similar laws relating to or affecting the rights and remedies of creditors or by general equitable principles.

(c)  Title to Common Shares to be Sold; All Authorizations Obtained.  The Selling Stockholder has good and valid title to all of the membership units of ev3 LLC which will be converted into Common Shares in connection with the Merger and may be sold by the Selling Stockholder pursuant to this Agreement.  On the First Closing Date and the Second Closing Date (as defined below), as applicable, the Selling Stockholder will have, good and valid title to all of the Common Shares which may be sold by the Selling Stockholder pursuant to this Agreement on such date and the legal right and power, and all authorizations and approvals required by law to enter into this Agreement and its Custody Agreement and Power of Attorney, to sell, transfer and deliver all of the Common Shares which may be sold by the Selling Stockholder pursuant to this Agreement and to comply with its other obligations hereunder and thereunder.

(d)  Delivery of the Common Shares to be Sold.  Delivery of and payment for the Common Shares which are sold by the Selling Stockholder pursuant to this Agreement will pass good and valid title to such Common Shares, free and clear of any security interest, mortgage, pledge, lien, encumbrance or other claim.

(e)  Non-Contravention; No Further Authorizations or Approvals Required.  The execution and delivery by the Selling Stockholder of, and the performance by the Selling Stockholder of its obligations under, this Agreement, the Custody Agreement and the Power of Attorney will not contravene or conflict with, result in a breach of, or constitute a Default under, or require the consent of any other party to any agreement or instrument to which the Selling Stockholder is a party or by which it is bound or under which it is entitled to any right or benefit, any provision of applicable law or any judgment, order, decree or regulation applicable to the Selling Stockholder of any court, regulatory body, administrative agency, governmental body or arbitrator having jurisdiction over the Selling Stockholder.  No consent, approval, authorization or other order of, or registration or filing with, any court or other governmental authority or agency, is required for the consummation by the Selling

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Stockholder of the transactions contemplated in this Agreement, except such as have been obtained or made and are in full force and effect under the Securities Act, applicable state securities or blue sky laws and from the NASD.

(f)  No Registration or Other Similar Rights.  The Selling Stockholder does not have any registration or other similar rights to have any equity or debt securities registered for sale by the Company under the Registration Statement or included in the offering contemplated by this Agreement, except for such rights as are described in the Prospectus under “Shares Eligible for Future Sale” and “Certain Relationships and Related Party Transactions—Registration Rights Agreement”.

(g)  No Further Consents, etc.  No consent, approval or waiver is required under any instrument or agreement to which the Selling Stockholder is a party or by which it is bound or under which it is entitled to any right or benefit, in connection with the offering, sale or purchase by the Underwriters of any of the Common Shares which may be sold by the Selling Stockholder under this Agreement or the consummation by the Selling Stockholder of any of the other transactions contemplated hereby.

(h)  Disclosure Made by the Selling Stockholder in the Prospectus.  All information about the Selling Stockholder furnished by or with the approval of the Selling Stockholder in writing expressly for use in the Registration Statement is, and on the First Closing Date and the Second Closing Date will be, true, correct and complete in all material respects, and does not, and on the First Closing Date and the Second Closing Date will not, contain any untrue statement of a material fact or omit to state any material fact necessary to make such information not misleading.  All information about the Selling Stockholder furnished by or with the approval of the Selling Stockholder in writing expressly for use in the Prospectus is, and on the First Closing Date and the Second Closing Date will be, true, correct and complete in all material respects, and does not, and on the First Closing Date and the Second Closing Date will not, contain any untrue statement of a material fact or omit to state any material fact necessary to make such information, in light of the circumstances under which they were made, not misleading.  The Selling Stockholder confirms as accurate the number of shares of Common Stock set forth opposite the Selling Stockholder’s name in the Prospectus under the caption “Principal and Selling Stockholders” (both prior to and after giving effect to the sale of the Common Shares).

(i)  No Price Stabilization or Manipulation.  The Selling Stockholder has not taken and will not take, directly or indirectly, any action designed to or that might be reasonably expected to cause or result in stabilization or manipulation of the price of the Common Stock to facilitate the sale or resale of the Common Shares.

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(j)  Confirmation of ev3 LLC and Company Representations and Warranties.  The Selling Stockholder has no reason to believe that the representations and warranties of either ev3 LLC or the Company contained in Section 1(A) hereof are not true and correct in all material respects, is familiar with the Registration Statement and the Prospectus and has no knowledge of any material fact, condition or information not disclosed in the Registration Statement or the Prospectus which has had or may have a Material Adverse Change and is not prompted to sell shares of Common Stock by any information concerning ev3 LLC or the Company which is not set forth in the Registration Statement and the Prospectus.

Any certificate signed by or on behalf of the Selling Stockholder and delivered to the Representatives or to counsel for the Underwriters pursuant to Section 5(k) hereof shall be deemed to be a representation and warranty by the Selling Stockholder to each Underwriter as to the matters covered thereby.

The Selling Stockholder acknowledges that the Underwriters and, for purposes of the opinions to be delivered pursuant to Section 5 hereof, counsel to the Company and counsel to the Underwriters, will rely upon the accuracy and truthfulness of the foregoing representations and hereby consents to such reliance.

Section 2.  Purchase, Sale and Delivery of the Common Shares.

(a)  The Firm Common Shares.  The Company agrees to issue and sell to the several Underwriters the Firm Common Shares upon the terms herein set forth.  On the basis of the representations, warranties and agreements herein contained, and upon the terms but subject to the conditions herein set forth, the Underwriters agree, severally and not jointly, to purchase from the Company the respective number of Firm Common Shares set forth opposite their names on Schedule A, plus any additional number of Firm Common Shares which the Underwriters may become obligated to purchase pursuant to the provisions of Section 10 hereof.  The purchase price per Firm Common Share to be paid by the several Underwriters to the Company shall be $13.30 per share.

(b)  The First Closing Date.  Delivery of certificates for the Firm Common Shares to be purchased by the Underwriters and payment therefor shall be made at the offices of King & Spalding LLP, 1185 Avenue of the Americas, New York, NY 10036 (or such other place as may be agreed to by the Company and the Representatives) at 9:00 a.m. New York time, on the third (fourth, if the determination of the purchase price of the Firm Common Shares occurs after 4:30 p.m. New York time) business day after the date hereof (unless another time and date shall be agreed to by the Representatives and the Company) (the time and date of such closing are called the “First Closing Date”).  The Company hereby acknowledges that circumstances

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under which the Representatives may provide notice to postpone the First Closing Date as originally scheduled include, but are in no way limited to, any determination by the Company or the Representatives to recirculate to the public copies of an amended or supplemented Prospectus or a delay as contemplated by the provisions of Section 10.

(c)  The Optional Common Shares; the Second Closing Date.  In addition, on the basis of the representations, warranties and agreements herein contained, and upon the terms but subject to the conditions herein set forth, the Company hereby grants an option to the several Underwriters to purchase, severally and not jointly, up to an aggregate of 1,728,850 Optional Common Shares from the Company and the Selling Stockholder hereby grants an option to the several Underwriters to purchase, severally and not jointly, up to an aggregate of 35,900 Optional Common Shares from the Selling Stockholder.  The purchase price per Optional Common Share to be paid by the several Underwriters to the Company and the Selling Stockholder shall be $13.02 per share.  The option granted hereunder is for use by the Underwriters solely in covering any over-allotments in connection with the sale and distribution of the Firm Common Shares.  No Optional Common Shares shall be sold or delivered unless the Firm Common Shares previously have been, or simultaneously are, sold and delivered.  The option granted hereunder may be exercised at any time (but not more than once) upon notice by the Representatives to the Company and the Selling Stockholder, which notice may be given at any time within 30 days from the date of the Prospectus.  Such notice shall set forth (i) the aggregate number of Optional Common Shares as to which the Underwriters are exercising the option, (ii) the names and denominations in which the certificates for the Optional Common Shares are to be registered and (iii) the time, date and place at which such certificates will be delivered (which time and date may be simultaneous with, but not earlier than, the First Closing Date; and in such case the term “First Closing Date” shall refer to the time and date of delivery of certificates for the Firm Common Shares and the Optional Common Shares).  Such time and date of delivery, if subsequent to the First Closing Date, is called the “Second Closing Date” and shall be determined by the Representatives and shall not be earlier than three nor later than five full business days after delivery of such notice of exercise.  If any Optional Common Shares are to be purchased, (a) each Underwriter agrees, severally and not jointly, to purchase the number of Optional Common Shares (subject to such adjustments to eliminate fractional shares as the Representatives may determine) that bears the same proportion to the total number of Optional Common Shares to be purchased as the number of Firm Common Shares set forth on Schedule A opposite the name of such Underwriter bears to the total number of Firm Common Shares and (b) the Company and the Selling Stockholder agree, severally and not jointly, to sell the number of Optional Common Shares (subject to such adjustments to eliminate fractional shares as the Representatives may determine) that bears the same proportion to the total number of Optional Common Shares to be sold as the number of Optional Common Shares set

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forth in Schedule B opposite the name of the Selling Stockholder (or, in the case of the Company, as the number of Optional Common Shares to be sold by the Company as set forth in the paragraph “Introductory” of this Agreement) bears to the total number of Optional Common Shares.  The Representatives may cancel the option at any time prior to any notice of exercise of such option and prior to the expiration of such option by giving written notice of such cancellation to the Company and the Selling Stockholder.

(d)  Public Offering of the Common Shares.  The Representatives hereby advise the Company and the Selling Stockholder that the Underwriters intend to offer for sale to the public, as described in the Prospectus, their respective portions of the Common Shares as soon after this Agreement has been executed and the Registration Statement has been declared effective as the Representatives, in their sole judgment, have determined is advisable and practicable.

(e)  Payment for the Common Shares.  Payment for the Common Shares to be sold by the Company shall be made at the First Closing Date (and, if applicable, at the Second Closing Date) by wire transfer of immediately available funds to the order of the Company.  Payment for the Common Shares to be sold by the Selling Stockholder shall, if applicable, be made at the First Closing Date or Second Closing Date, as applicable, by wire transfer of immediately available funds to the order of the Custodian.

It is understood that the Representatives have been authorized, for their own accounts and the accounts of the several Underwriters, to accept delivery of and receipt for, and make payment of the purchase price for, the Firm Common Shares and any Optional Common Shares the Underwriters have agreed to purchase.  Piper and BAS, individually and not as the Representatives of the Underwriters, may (but shall not be obligated to) make payment for any Common Shares to be purchased by any Underwriter whose funds shall not have been received by the Representatives by the First Closing Date or the Second Closing Date, as the case may be, for the account of such Underwriter, but any such payment shall not relieve such Underwriter from any of its obligations under this Agreement.

The Selling Stockholder hereby agrees that (i) it will pay all applicable stock transfer taxes, stamp duties and other similar taxes, if any, payable upon the sale or delivery of the Common Shares to be sold by the Selling Stockholder to the several Underwriters, in connection with the performance of the Selling Stockholder’s obligations hereunder and the respective Underwriters will pay any such taxes involved in further transfers and (ii) the Custodian is authorized to deduct for such payment any such amounts from the proceeds to the Selling Stockholder hereunder and to hold such amounts for the account of the Selling Stockholder with the Custodian under the Custody Agreement.

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(f)  Delivery of the Common Shares.  The Company shall deliver, or cause to be delivered, to the Representatives for the accounts of the several Underwriters certificates for the Firm Common Shares at the First Closing Date, against the irrevocable release of a wire transfer of immediately available funds for the amount of the purchase price therefor.  The Company and the Selling Stockholder shall also deliver, or cause to be delivered, to the Representatives for the accounts of the several Underwriters, certificates for the Optional Common Shares the Underwriters have agreed to purchase from them at the First Closing Date or the Second Closing Date, as the case may be, against the irrevocable release of a wire transfer of immediately available funds for the amount of the purchase price therefor.  The certificates for the Common Shares shall be registered in such names and denominations as the Representatives shall have requested at least two full business days prior to the First Closing Date (or the Second Closing Date, as the case may be) and the form of certificate shall be made available for inspection on the business day preceding the First Closing Date (or the Second Closing Date, as the case may be) at a location in New York City as the Representatives may designate.  Time shall be of the essence, and delivery at the time and place specified in this Agreement is a further condition to the obligations of the Underwriters.

(g)  Delivery of Prospectus to the Underwriters.  Not later than 12:00 p.m. on the second business day following the date the Common Shares are first released by the Underwriters for sale to the public, the Company shall deliver or cause to be delivered, copies of the Prospectus in such quantities and at such places as the Representatives shall request.

Section 3.  Additional Covenants.

A.  Covenants of the Company.  The Company further covenants and agrees with each Underwriter as follows:

(a)  Representatives’ Review of Proposed Amendments and Supplements.  During such period beginning on the date hereof and ending on the later of the First Closing Date or such date, as in the opinion of counsel for the Underwriters, the Prospectus is no longer required by law to be delivered in connection with sales by an Underwriter or dealer (the “Prospectus Delivery Period”), prior to amending or supplementing the Registration Statement (including any registration statement filed under Rule 462(b) under the Securities Act) or the Prospectus, the Company shall furnish to the Representatives for review a copy of each such proposed amendment or supplement, and the Company shall not file any such proposed amendment or supplement to which the Representatives reasonably object.

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(b)  Securities Act Compliance.  After the date of this Agreement and during the Prospectus Delivery Period, the Company shall promptly advise the Representatives in writing (i) of the receipt of any comments of, or requests for additional or supplemental information from, the Commission, (ii) of the time and date of any filing of any post-effective amendment to the Registration Statement or any amendment or supplement to the Preliminary Prospectus or the Prospectus, (iii) of the time and date that any post-effective amendment to the Registration Statement becomes effective and (iv) of the issuance by the Commission of any stop order suspending the effectiveness of the Registration Statement or any post-effective amendment thereto or of any order preventing or suspending the use of the Prospectus, or of any proceedings to remove, suspend or terminate from listing or quotation the Common Stock from any securities exchange upon which it is listed for trading or included or designated for quotation, or of the threatening or initiation of any proceedings for any of such purposes. If the Commission shall enter any such stop order at any time, the Company will use its commercially reasonable efforts to obtain the lifting of such order as soon as is reasonably possible.  Additionally, the Company agrees that it shall comply with the provisions of Rules 424(b) and 430A, as applicable, under the Securities Act and will use its commercially reasonable efforts to confirm that any filings made by the Company under such Rule 424(b) were received in a timely manner by the Commission.

(c)  Amendments and Supplements to the Prospectus and Other Securities Act Matters.  If, during the Prospectus Delivery Period, any event shall occur or condition exist as a result of which it is necessary to amend or supplement the Prospectus in order to make the statements therein, in the light of the circumstances when the Prospectus is delivered to a purchaser, not misleading, or if in the reasonable opinion of counsel for the Underwriters it is otherwise necessary to amend or supplement the Prospectus to comply with the Securities Act, the Company agrees to promptly prepare (subject to Section 3(A)(a) hereof), file with the Commission and furnish at its own expense to the Underwriters and to dealers, amendments or supplements to the Prospectus so that the statements in the Prospectus as so amended or supplemented will not, in the light of the circumstances when the Prospectus is delivered to a purchaser, be misleading or so that the Prospectus, as amended or supplemented, will comply with the Securities Act.

(d)  Copies of any Amendments and Supplements to the Prospectus.  The Company agrees to furnish the Representatives, without charge, during the Prospectus Delivery Period, as many copies of the Prospectus and any amendments and supplements thereto as the Representatives may reasonably request.

(e)  Blue Sky Compliance.  The Company shall cooperate with the Representatives and counsel for the Underwriters to qualify or register the Common

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Shares for sale under (or obtain exemptions from the application of) the state securities or blue sky laws or Canadian provincial Securities laws or other foreign laws of those jurisdictions reasonably designated by the Representatives, shall comply with such laws and shall continue such qualifications, registrations and exemptions in effect so long as required for the distribution of the Common Shares.  Notwithstanding the preceding sentence, the Company shall not be required to qualify as a foreign corporation or to take any action that would subject it to general service of process in any such jurisdiction where it is not presently qualified or where it would be subject to taxation as a foreign corporation. The Company will advise the Representatives promptly of the suspension of the qualification or registration of (or any such exemption relating to) the Common Shares for offering, sale or trading in any jurisdiction or any initiation or threat of any proceeding for any such purpose, and in the event of the issuance of any order suspending such qualification, registration or exemption, the Company shall use its commercially reasonable efforts to obtain the withdrawal thereof as soon as is reasonably possible.

(f)  Use of Proceeds.  The Company shall apply the net proceeds from the sale of the Common Shares sold by it in the manner described under the caption “Use of Proceeds” in the Prospectus.

(g)  Transfer Agent.  The Company shall engage and maintain, at its expense, a registrar and transfer agent for the Common Stock.

(h)  Earnings Statement.  The Company will timely file such reports pursuant to the Exchange Act as are necessary to make generally available to its security holders and to the Representatives as soon as practicable an earnings statement (which need not be audited) covering the twelve-month period ending July 2, 2006 that satisfies the provisions of Section 11(a) of the Securities Act.

(i)  Periodic Reporting Obligations.  During the Prospectus Delivery Period the Company shall file, on a timely basis, with the Commission and the NASDAQ National Market all reports and documents required to be filed under the Exchange Act. Additionally, the Company shall report the use of proceeds from the issuance of the Common Shares as may be required under Rule 463 under the Securities Act.

(j)  Company to Provide Interim Financial Statements.  Prior to the Closing Date, the Company will furnish the Underwriters, as soon as they have been prepared by or are available to the Company, a copy of any unaudited interim financial statements of the Company for any period subsequent to the period covered by the most recent financial statements appearing in the Registration Statement and the Prospectus.

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(k)  Quotation.  The Company will use its best efforts to include, subject to notice of issuance, the Common Shares on the NASDAQ National Market.

(l)  Agreement Not to Offer or Sell Additional Securities.  During the period commencing on the date hereof and ending on the 180th day following the date of the Prospectus, the Company will not, without the prior written consent of Piper and BAS (which consent may be withheld at the sole discretion of Piper and BAS), directly or indirectly, sell, offer, contract or grant any option to sell, pledge, transfer or establish an open “put equivalent position” within the meaning of Rule 16a-1(h) under the Exchange Act, or otherwise dispose of or transfer, or announce the offering of, or file any registration statement under the Securities Act in respect of, any shares of Common Stock, options or warrants to acquire shares of the Common Stock or securities exchangeable or exercisable for or convertible into shares of Common Stock or publicly announce the intention to do any of the foregoing (other than as contemplated by this Agreement with respect to the Common Shares); provided, however, that the Company may (a) issue shares of its Common Stock or options to purchase its Common Stock, or Common Stock upon exercise of options or warrants, pursuant to any warrant, stock option, stock bonus or other stock plan or arrangement described in the Prospectus, but only if (i) the holders of such warrants, shares, options, or shares issued upon exercise of such warrants or options have executed a lock up agreement in the form of Exhibit E hereto or (ii) such warrants, shares, options or shares issued upon exercise of such warrants or options are not exercisable by their terms during the period commencing on the date hereof and ending on the 180^th day following the date of the Prospectus, as such period may be extended pursuant to this Section 3A(l), or (b) file a registration statement on Form S-8 with respect to the shares of Common Stock subject to the stock options issued or to be issued pursuant to any stock option, stock bonus or other stock plan or arrangement described in the Prospectus, or (c) issue shares of its Common Stock or options to purchase its Common Stock to the extent the Company is required to do so in connection with the transactions contemplated by each of the Note Contribution and Exchange Agreement, dated as of April 4, 2005 (filed as Exhibit 2.3 to the Registration Statement) and the Agreement and Plan of Merger, dated as of April 4, 2005 (filed as Exhibit 2.1 to the Registration Statement).  Notwithstanding the foregoing, if (x) during the last 17 days of the 180-day restricted period the Company issues an earnings release or material news or a material event relating to the Company occurs, or (y) prior to the expiration of the 180-day restricted period, the Company announces that it will release earnings results during the 16-day period beginning on the last day of the 180-day period, the restrictions imposed in this clause shall continue to apply until the expiration of the 18-day period beginning on the issuance of the earnings release or the occurrence of the material news or material event.

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(m)  Future Reports to the Representatives.  During the period of five years hereafter the Company will furnish to the Representatives at 800 Nicollet Mall, Minneapolis, MN 55402 Attention: Equity Capital Markets: (i) as soon as practicable after the end of each fiscal year, copies of the Annual Report of the Company containing the balance sheet of the Company as of the close of such fiscal year and statements of income, stockholders’ equity and cash flows for the year then ended and the opinion thereon of the Company’s independent public or certified public accountants; (ii) as soon as practicable after the filing thereof, copies of each proxy statement, Annual Report on Form 10-K, Quarterly Report on Form 10-Q, Current Report on Form 8-K or other report filed by the Company with the Commission, the NASD or any securities exchange; and (iii) as soon as available, copies of any report or communication of the Company mailed generally to holders of its capital stock; provided, however, that the Company shall not be required to furnish copies of such reports, documents or communications that are filed with the Commission and available through EDGAR.

(n)  Investment Limitation.  The Company shall not invest, or otherwise use the proceeds received by the Company from its sale of the Common Shares, in such a manner as would require the Company or any of its subsidiaries to register as an investment company under the Investment Company Act.

(o)  No Manipulation of Price.  The Company will not take, directly or indirectly, any action designed to cause or result in, or that has constituted or might reasonably be expected to constitute, the stabilization or manipulation of the price of any securities of the Company to facilitate the sale or resale of the Common Shares.

(p)  Directed Share Program.  In connection with the Directed Share Program, the Company will ensure that the Directed Shares will be restricted to the extent required by the NASD or the NASD rules from sale, transfer, assignment, pledge or hypothecation for a period of three months following the date of the effectiveness of the Registration Statement.  The Designated Underwriter will notify the Company as to which Participants will need to be so restricted.  The Company will direct the transfer agent to place stop transfer restrictions upon such securities for such period of time.  Should the Company release, or seek to release, from such restrictions any of the Directed Shares, the Company agrees to reimburse the Underwriters for any reasonable expenses (including, without limitation, reasonable legal expenses) they incur in connection with such release.

B.  Covenant of the Selling Stockholder.  The Selling Stockholder further covenants and agrees with each Underwriter:

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(a)  Delivery of Forms W-8 and W-9.  To deliver to the Representative prior to the First Closing Date a properly completed and executed United States Treasury Department Form W-8 (if the Selling Stockholder is a non-United States person) or Form W-9 (if the Selling Stockholder is a United States Person).

Piper and BAS, on behalf of the several Underwriters, may, in their sole discretion, waive in writing the performance by the Company or the Selling Stockholder of any one or more of the foregoing covenants or extend the time for their performance.  Notwithstanding the foregoing, Piper and BAS, for the benefit of each of the other Representatives, agree not to consent to any action proposed to be taken by the Company, the Selling Stockholder or any other holder of the Company’s securities that would otherwise be prohibited by, or to waive compliance by the Company, the Selling Stockholder or any such other security holder with the provisions of Section 3(A)(l) above or any lock-up agreement delivered pursuant to Section 5(m) below without giving each of the other Underwriters such prior notice as each of the Representatives deem acceptable to permit compliance by the Representatives and other Underwriters with applicable provisions of NASD Conduct Rule 2711(f) restricting publication and distribution of research and public appearances by research analysts before and after the expiration, waiver or termination of a lock-up agreement.

Section 4.  Payment of Expenses.  The Company agrees to pay all costs, fees and expenses incurred in connection with the performance by the Company of its obligations hereunder and in connection with the transactions contemplated hereby, including without limitation (i) all expenses incident to the issuance and delivery of the Common Shares (including all printing and engraving costs), (ii) all fees and expenses of the registrar and transfer agent of the Common Stock, (iii) all necessary issue, transfer and other stamp taxes in connection with the issuance and sale of the Common Shares to the Underwriters, (iv) all fees and expenses of the Company’s counsel, independent public or certified public accountants and other advisors engaged by the Company, (v) all costs and expenses incurred in connection with the preparation, printing, filing, shipping and distribution of the Registration Statement (including financial statements, exhibits, schedules, consents and certificates of experts), the Preliminary Prospectus and the Prospectus (including any Prospectus wrapper), and all amendments and supplements thereto, and this Agreement, (vi) all filing fees, attorneys’ fees and expenses reasonably incurred by the Company or the Underwriters in connection with qualifying or registering (or obtaining exemptions from the qualification or registration of) all or any part of the Common Shares for offer and sale under the state securities or blue sky laws or the provincial securities laws of Canada, and, if requested by the Representatives, preparing and printing a “Blue Sky Survey” or memorandum, and any supplements thereto, advising the Underwriters of such qualifications, registrations and exemptions, (vii) the filing fees incident to, and the reasonable fees and expenses of counsel for the Underwriters in connection with, the NASD’s review and approval of the Underwriters’ participation in the offering and distribution of the Common Shares, (viii) the fees and expenses associated with including the Common Stock on the NASDAQ National Market, (ix) all other fees, costs and expenses referred to in Item 13 of Part II of the Registration Statement, (x) the fees and expenses of the Custodian, (xi) all costs and expenses of the Underwriters, including the reasonable fees and disbursements of counsel for the Underwriters, in

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connection with matters related to the Directed Shares which are designated by the Company for sale to Participants, and (xii) any travel expenses of the Company’s officers and employees and any other expenses of the Company in connection with attending or hosting meetings with prospective purchasers of the Common Shares, provided that the Company and the Underwriters agree that expenses for any charter air travel in connection with such meetings shall be borne equally by the Company and the Underwriters.  Except as provided in this Section 4, Section 6, Section 8 and Section 9 hereof, the Underwriters shall pay their own expenses, including the fees and disbursements of their counsel.

The Selling Stockholder further agrees with each Underwriter to pay (directly or by reimbursement) all fees and expenses incident to the performance of their obligations under this Agreement which are not otherwise specifically provided for herein, including but not limited to (i) fees and expenses of counsel and other advisors for the Selling Stockholder and (ii) expenses and taxes incident to the sale and delivery of the Common Shares to be sold by the Selling Stockholder to the Underwriters hereunder (which taxes, if any, may be deducted by the Custodian under the provisions of Section 2 of this Agreement).

Section 5.  Conditions of the Obligations of the Underwriters.  The obligations of the several Underwriters to purchase and pay for the Common Shares as provided herein on the First Closing Date and, with respect to the Optional Common Shares, the Second Closing Date, shall be subject to the accuracy of the representations and warranties on the part of ev3 LLC, the Company and the Selling Stockholder set forth in Sections 1(A) and 1(B) hereof as of the date hereof and the Company and the Selling Stockholder as of the First Closing Date as though then made and, with respect to the Optional Common Shares, as of the Second Closing Date as though then made, to the timely performance by the Company and the Selling Stockholder of their respective covenants and other obligations hereunder, and to each of the following additional conditions:

(a)  Accountants’ Comfort Letters.  On the date hereof, the Representatives shall have received from each of PricewaterhouseCoopers LLP and Ernst & Young LLP, independent registered public accounting firms for the Company, a letter dated the date hereof addressed to the Underwriters, in form and substance satisfactory to the Representatives, containing statements and information of the type ordinarily included in accountant’s “comfort letters” to underwriters, delivered according to Statement of Auditing Standards No. 72 (or any successor bulletin), with respect to the audited and unaudited financial statements and certain financial information contained in the Registration Statement and the Prospectus (and the Representatives shall have received an additional two conformed copies of such accountants’ letter for each of the several Underwriters).

(b)  Compliance with Registration Requirements; No Stop Order; No Objection from NASD.  For the period from and after effectiveness of this Agreement

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and prior to the First Closing Date and, with respect to the Optional Common Shares, the Second Closing Date:

(i)  the Company shall have filed the Prospectus with the Commission (including the information required by Rule 430A under the Securities Act) in the manner and within the time period required by Rule 424(b) under the Securities Act; or the Company shall have filed a post-effective amendment to the Registration Statement containing the information required by such Rule 430A, and such post-effective amendment shall have become effective;

(ii)  no stop order suspending the effectiveness of the Registration Statement, any Rule 462(b) Registration Statement, or any post-effective amendment to the Registration Statement, shall be in effect and no proceedings for such purpose shall have been instituted or threatened by the Commission; and

(iii)  the NASD shall have raised no objection to the fairness and reasonableness of the underwriting terms and arrangements.

(c)  No Material Adverse Change.  For the period from and after the date of this Agreement and prior to the First Closing Date and, with respect to the Optional Common Shares, the Second Closing Date, in the judgment of the Representatives there shall not have occurred any Material Adverse Change.

(d)  Opinions of Counsel for the Company.  On each of the First Closing Date and the Second Closing Date the Representatives shall have received the opinion of (i) King & Spalding LLP, counsel for the Company, dated as of such closing date, the form of which is attached as Exhibit A-1 (and the Representatives shall have received an additional two conformed copies of such counsel’s legal opinion for each of the several Underwriters) and (ii) Oppenheimer Wolff & Donnelly LLP, special counsel for the Company, dated as of such closing date, the form of which is attached as Exhibit A-2 (and the Representatives shall have received an additional two conformed copies of such counsel’s legal opinion for each of the several Underwriters).

(e)  Opinion of Special Regulatory Counsel for the Company.  On each of the First Closing Date and the Second Closing Date the Representatives shall have received the opinion of (i) King & Spalding LLP, special U.S. regulatory counsel for the Company, dated as of such closing date, the form of which is attached as Exhibit B-1 (and the Representatives shall have received an additional two conformed copies of such counsel’s legal opinion for each of the several Underwriters) and (ii)Taylor Wessing, special foreign regulatory counsel for the Company, dated as of such closing date, the form of which is attached as Exhibit B(2) (and the Representatives shall have

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received an additional two conformed copies of such counsel’s legal opinion for each of the several Underwriters).

(f)  Opinion of Special Patent Counsel for the Company.  On each of the First Closing Date and the Second Closing Date the Representatives shall have received the opinion of King & Spalding LLP, special patent counsel for the Company, dated as of such closing date, the form of which is attached as Exhibit C (and the Representatives shall have received an additional two conformed copies of such counsel’s legal opinion for each of the several Underwriters).

(g)  Opinion of Counsel for the Underwriters.  On each of the First Closing Date and the Second Closing Date the Representatives shall have received the favorable opinion of Willkie Farr & Gallagher LLP, counsel for the Underwriters, dated as of such closing date, in form and substance satisfactory to the Underwriters (and the Representatives shall have received an additional two conformed copies of such counsel’s legal opinion for each of the several Underwriters).

(h)  Officers’ Certificate.  On each of the First Closing Date and the Second Closing Date the Representatives shall have received a written certificate executed by the Chairman of the Board, Chief Executive Officer or President of the Company and the Chief Financial Officer or Chief Accounting Officer of the Company, dated as of such closing date, to the effect set forth in subsection (b)(ii) of this Section 5, and further to the effect that:

(i)  for the period from and after the date of this Agreement and prior to such closing date, there has not occurred any Material Adverse Change;

(ii)  the representations and warranties of the Company set forth in Section 1(A) of this Agreement are true and correct with the same force and effect as though expressly made on and as of such closing date;

(iii)  the Company has complied with all of its covenants and agreements hereunder and satisfied all the conditions on its part to be performed or satisfied hereunder at or prior to such closing date; and

(iv)  the transactions contemplated by the Note Contribution and Exchange Agreement, dated as of April 4, 2005 (filed as Exhibit 2.3 to the Registration Statement) and the Agreement and Plan of Merger, dated as of April 4, 2005 (filed as Exhibit 2.1 to the Registration Statement) have been consummated in accordance with the terms of such agreements.

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(i)  Bring-down Comfort Letters.  On each of the First Closing Date and the Second Closing Date the Representatives shall have received from each of PricewaterhouseCoopers LLP and Ernst & Young LLP, independent registered public accounting firms for the Company, a letter dated such date, in form and substance satisfactory to the Representatives, to the effect that they reaffirm the statements made in the letter furnished by them pursuant to subsection (a) of this Section 5, except that the specified date referred to therein for the carrying out of procedures shall be no more than three business days prior to the First Closing Date or Second Closing Date, as the case may be (and the Representatives shall have received an additional two conformed copies of such accountants’ letter for each of the several Underwriters).

(j)  Opinion of Counsel for the Selling Stockholder.  On each of the First Closing Date and the Second Closing Date the Representatives shall have received the favorable opinion of Oppenheimer Wolff & Donnelly LLP, counsel for the Selling Stockholder, dated as of such Closing Date, the form of which is attached as Exhibit D (and the Representatives shall have received an additional two conformed copies of such counsel’s legal opinion for each of the several Underwriters).

(k)  Selling Stockholder’s Certificate.  On each of the First Closing Date and the Second Closing Date the Representatives shall receive a written certificate executed by the Selling Stockholder, dated as of such closing date, to the effect that:

(i)  the representations, warranties and covenants of the Selling Stockholder set forth in Section 1(B) of this Agreement are true and correct with the same force and effect as though expressly made by the Selling Stockholder on and as of such closing date; and

(ii)  the Selling Stockholder has complied with all the agreements and satisfied all the conditions on its part to be performed or satisfied at or prior to such closing date.

(l)  Selling Stockholder’s Documents.  On the date hereof, the Company and the Selling Stockholders shall have furnished for review by the Representatives copies of the Power of Attorney and Custody Agreement executed by the Selling Stockholder and such further information, certificates and documents as the Representatives may reasonably request.

(m)  Lock-Up Agreement from Certain Securityholders of the Company.  On or prior to the date hereof, the Company shall have furnished to the Representatives an agreement in the form of Exhibit E hereto from the persons on Exhibit F hereto, and such agreement shall be in full force and effect on each of the First Closing Date and the Second Closing Date.

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(n)  Additional Documents.  On or before each of the First Closing Date and the Second Closing Date, the Representatives and counsel for the Underwriters shall have received such information, documents and opinions as they may reasonably require for the purposes of enabling them to pass upon the issuance and sale of the Common Shares as contemplated herein, or in order to evidence the accuracy of any of the representations and warranties, or the satisfaction of any of the conditions or agreements, herein contained.

If any condition specified in this Section 5 is not satisfied when and as required to be satisfied, this Agreement may be terminated by the Representatives by notice to the Company and the Selling Stockholder at any time on or prior to the First Closing Date and, with respect to the Optional Common Shares, at any time prior to the Second Closing Date, which termination shall be without liability on the part of any party to any other party, except that Section 4, Section 6, Section 8 and Section 9 shall at all times be effective and shall survive such termination.

Section 6.  Reimbursement of Underwriters’ Expenses.  If this Agreement is terminated by the Representatives pursuant to Section 5, Section 7, Section 10 (to the extent the termination pursuant to Section 10 is not as a result of (a) a default by an Underwriter that is a Representative (a “Defaulting Representative”) or (b) a default by a Defaulting Representative and one or more other defaulting Underwriters that is not a Defaulting Representative), Section 11 or Section 17, or if the sale to the Underwriters of the Common Shares on the First Closing Date is not consummated because of any refusal, inability or failure on the part of the Company or the Selling Stockholder to perform any agreement herein or to comply with any provision hereof, the Company agrees to reimburse the Representatives and the other Underwriters (or such Underwriters as have terminated this Agreement with respect to themselves), severally, upon demand for all out-of-pocket expenses that shall have been reasonably incurred by the Representatives and the Underwriters in connection with the proposed purchase and the offering and sale of the Common Shares, including but not limited to fees and disbursements of counsel, printing expenses, travel expenses, postage, facsimile and telephone charges.

Section 7.  Effectiveness of this Agreement.  This Agreement shall not become effective until the later of (i) the execution of this Agreement by the parties hereto and (ii) notification by the Commission to the Company and the Representatives of the effectiveness of the Registration Statement under the Securities Act.

Prior to such effectiveness, this Agreement may be terminated by any party by notice to each of the other parties hereto, and any such termination shall be without liability on the part of (a) the Company or the Selling Stockholder to any Underwriter, except that if this Agreement is terminated by the Company or the Selling Stockholder, the Company and the Selling Stockholder shall be obligated to reimburse the expenses of the Representatives and the Underwriters pursuant to Sections 4 and 6 hereof, (b) any Underwriter to the Company or the Selling Stockholder, or (c) any

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party hereto to any other party except that the provisions of Section 8 and Section 9 shall at all times be effective and shall survive such termination.

Section 8.  Indemnification.

(a)  Indemnification of the Underwriters by the Company.  The Company agrees to indemnify and hold harmless each Underwriter, its officers and employees, and each person, if any, who controls any Underwriter within the meaning of Section 15 of the Securities Act against any loss, claim, damage, liability or expense, as incurred, to which such Underwriter or such controlling person may become subject, under the Securities Act, the Exchange Act or other federal or state statutory law or regulation, or at common law or otherwise (including in settlement of any litigation, if such settlement is effected with the written consent of the Company), insofar as such loss, claim, damage, liability or expense (or actions in respect thereof as contemplated below) arises out of or is based (i) upon any untrue statement or alleged untrue statement of a material fact contained in the Registration Statement, or any amendment thereto, including any information deemed to be a part thereof pursuant to Rule 430A under the Securities Act, or the omission or alleged omission therefrom of a material fact required to be stated therein or necessary to make the statements therein not misleading; or (ii) upon any untrue statement or alleged untrue statement of a material fact contained in the Preliminary Prospectus or the Prospectus (or any amendment or supplement thereto) , or the omission or alleged omission therefrom of a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading; or (iii) in whole or in part upon any inaccuracy in the representations and warranties of ev3 LLC and the Company contained herein; or (iv) in whole or in part upon any failure of the Company to perform its obligations hereunder or under law ; and to reimburse each Underwriter and each such controlling person for any and all expenses (including the fees and disbursements of counsel chosen by Piper and BAS) as such expenses are reasonably incurred by such Underwriter or such controlling person in connection with investigating, defending, settling, compromising or paying any such loss, claim, damage, liability, expense or action; provided, however, that the foregoing indemnity agreement shall not apply to any loss, claim, damage, liability or expense to the extent, but only to the extent, arising out of or based upon any untrue statement or alleged untrue statement or omission or alleged omission made in reliance upon and in conformity with written information furnished to the Company by the Representatives expressly for use in the Registration Statement, the Preliminary Prospectus or the Prospectus (or any amendment or supplement thereto); and provided, further, that with respect to the Preliminary Prospectus, the foregoing indemnity agreement shall not inure to the benefit of any Underwriter from whom the person asserting any loss, claim, damage, liability or expense purchased Common Shares, or any person controlling such Underwriter, if copies of the Prospectus were timely delivered to the

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Underwriter pursuant to Section 2 and a copy of the Prospectus (as then amended or supplemented, if the Company shall have furnished any amendments or supplements thereto) was not sent or given by or on behalf of such Underwriter to such person, if required by law so to have been delivered, at or prior to the written confirmation of the sale of the Common Shares to such person, and if the Prospectus (as so amended or supplemented) would have cured the defect giving rise to such loss, claim, damage, liability or expense. The indemnity agreement set forth in this Section 8(a) shall be in addition to any liabilities that the Company may otherwise have.

(b)  Indemnification of the Underwriters by the Selling Stockholder. The Selling Stockholder agrees to indemnify and hold harmless each Underwriter, its officers and employees, and each person, if any, who controls any Underwriter within the meaning of Section 15 of the Securities Act against any loss, claim, damage, liability or expense, as incurred, to which such Underwriter or such controlling person may become subject, under the Securities Act, the Exchange Act or other federal or state statutory law or regulation, or at common law or otherwise (including in settlement of any litigation, if such settlement is effected with the written consent of the Selling Stockholder), insofar as such loss, claim, damage, liability or expense (or actions in respect thereof as contemplated below) arises out of or is based (i) upon any untrue statement or alleged untrue statement of a material fact contained in the Registration Statement, or any amendment thereto, including any information deemed to be a part thereof pursuant to Rule 430A under the Securities Act, or the omission or alleged omission therefrom of a material fact required to be stated therein or necessary to make the statements therein not misleading but only to the extent that the untrue statement or alleged untrue statement or omission or alleged omission was made in reliance upon and in conformity with information relating to the Selling Stockholder furnished in writing to the Company by or with the approval of the Selling Stockholder expressly for use in the Registration Statement or any amendments or supplements thereto; or (ii) upon any untrue statement or alleged untrue statement of a material fact contained in the Preliminary Prospectus or the Prospectus (or any amendment or supplement thereto), or the omission or alleged omission therefrom of a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading but only to the extent that the untrue statement or alleged untrue statement or omission or alleged omission was made in reliance upon and in conformity with information relating to the Selling Stockholder furnished in writing to the Company by or with the approval of the Selling Stockholder expressly for use in the Registration Statement, the Preliminary Prospectus, the Prospectus or any amendments or supplements thereto; (iii) in whole or in part upon any inaccuracy in the representations and warranties of the Selling Stockholder contained herein; or (iv) in whole or in part upon any failure of the Selling Stockholder to perform its obligations hereunder or under law; and to reimburse each Underwriter and each such controlling person for any and all expenses (including the

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fees and disbursements of one counsel chosen by BAS and Piper) as such expenses are reasonably incurred by such Underwriter or such controlling person in connection with investigating, defending, settling, compromising or paying any such loss, claim, damage, liability, expense or action; provided, however, that the foregoing indemnity agreement shall not apply to any loss, claim, damage, liability or expense to the extent, but only to the extent, arising out of or based upon any untrue statement or alleged untrue statement or omission or alleged omission made in reliance upon and in conformity with written information furnished to the Selling Stockholders by the Representatives expressly for use in any the Registration Statement, the Preliminary Prospectus or the Prospectus (or any amendment or supplement thereto); and provided, further, that with respect to the Preliminary Prospectus, the foregoing indemnity agreement shall not inure to the benefit of any Underwriter from whom the person asserting any loss, claim, damage, liability or expense purchased Common Shares, or any person controlling such Underwriter, if copies of the Prospectus were timely delivered to the Underwriter pursuant to Section 2 and a copy of the Prospectus (as then amended or supplemented, if the Selling Stockholder shall have furnished any amendments or supplements thereto) was not sent or given by or on behalf of such Underwriter to such person, if required by law so to have been delivered, at or prior to the written confirmation of the sale of the Common Shares to such person, and if the Prospectus (as so amended or supplemented) would have cured the defect giving rise to such loss, claim, damage, liability or expense.  Each Underwriter hereby acknowledges that the only information that the Selling Stockholder furnished to the Company expressly for use in the Registration Statement, the Preliminary Prospectus or the Prospectus (or any amendment or supplement thereto) are the respective statements concerning the Selling Stockholder set forth in the table under the caption “Principal and Selling Stockholders” in the Prospectus and associated footnotes thereto.  The liability of the Selling Stockholder under the indemnity agreement contained in this paragraph 8(b) shall be limited to an amount equal to the net proceeds received by the Selling Stockholder from the offering of the Optional Common Shares sold by the Selling Stockholder pursuant to this Agreement.

(c)  Indemnification of the Company, its Directors and Officers and the Selling Stockholder.  Each Underwriter agrees, severally and not jointly, to indemnify and hold harmless the Company, each of its directors, each of its officers who signed the Registration Statement, the Selling Stockholder and each person, if any, who controls the Company or the Selling Stockholder within the meaning of Section 15 of the Securities Act against any loss, claim, damage, liability or expense, as incurred, to which the Company, or any such director, officer, Selling Stockholder or controlling person may become subject, under the Securities Act, the Exchange Act, or other federal or state statutory law or regulation, or at common law or otherwise (including in settlement of any litigation, if such settlement is effected with the written consent of such Underwriter), insofar as such loss, claim, damage, liability or expense (or actions

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in respect thereof as contemplated below) arises out of or is based upon any untrue or alleged untrue statement of a material fact contained in the Registration Statement, the Preliminary Prospectus or the Prospectus (or any amendment or supplement thereto), or arises out of or is based upon the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, in each case to the extent, but only to the extent, that such untrue statement or alleged untrue statement or omission or alleged omission was made in the Registration Statement, the Preliminary Prospectus, the Prospectus (or any amendment or supplement thereto), in reliance upon and in conformity with written information furnished to the Company and the Selling Stockholder by the Representatives expressly for use therein; and to reimburse the Company, or any such director, officer, Selling Stockholder or controlling person for any legal and other expense reasonably incurred by the Company, or any such director, officer, Selling Stockholder or controlling person in connection with investigating, defending, settling, compromising or paying any such loss, claim, damage, liability, expense or action.  Each of the Company and the Selling Stockholder hereby acknowledges that the only information that the Underwriters have furnished to the Company and the Selling Stockholder expressly for use in the Registration Statement, the Preliminary Prospectus or the Prospectus (or any amendment or supplement thereto) are the statements set forth in the table in the first paragraph and in the third, seventh, fourteenth, fifteenth and seventeenth through twenty-third paragraphs under the caption “Underwriting” in the Prospectus; and the Underwriters confirm that such statements are correct.  The indemnity agreement set forth in this Section 8(c) shall be in addition to any liabilities that each Underwriter may otherwise have.

(d)  Notifications and Other Indemnification Procedures.  Promptly after receipt by an indemnified party under this Section 8 of notice of the commencement of any action, such indemnified party will, if a claim in respect thereof is to be made against an indemnifying party under this Section 8, notify the indemnifying party in writing of the commencement thereof, but the omission so to notify the indemnifying party will not relieve it from any liability which it may have to any indemnified party for contribution or otherwise than under the indemnity agreement contained in this Section 8 or to the extent it is not prejudiced as a proximate result of such failure. In case any such action is brought against any indemnified party and such indemnified party seeks or intends to seek indemnity from an indemnifying party, the indemnifying party will be entitled to participate in, and, to the extent that it shall elect, jointly with all other indemnifying parties similarly notified, by written notice delivered to the indemnified party promptly after receiving the aforesaid notice from such indemnified party, to assume the defense thereof with counsel reasonably satisfactory to such indemnified party; provided, however, if the defendants in any such action include both the indemnified party and the indemnifying party and the indemnified party shall have reasonably concluded that a conflict may

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arise between the positions of the indemnifying party and the indemnified party in conducting the defense of any such action or that there may be legal defenses available to it and/or other indemnified parties which are different from or additional to those available to the indemnifying party, the indemnified party or parties shall have the right to select separate counsel to assume such legal defenses and to otherwise participate in the defense of such action on behalf of such indemnified party or parties. Upon receipt of notice from the indemnifying party to such indemnified party of such indemnifying party’s election so to assume the defense of such action and approval by the indemnified party of counsel, the indemnifying party will not be liable to such indemnified party under this Section 8 for any legal or other expenses subsequently incurred by such indemnified party in connection with the defense thereof unless (i) the indemnified party shall have employed separate counsel in accordance with the proviso to the next preceding sentence (it being understood, however, that the indemnifying party shall not be liable for the expenses of more than one separate counsel (together with local counsel), approved by the indemnifying parties (Piper and BAS in the case of Section 8(c) and Section 9), representing the indemnified parties who are parties to such action) or (ii) the indemnifying party shall not have employed counsel satisfactory to the indemnified party to represent the indemnified party within a reasonable time after notice of commencement of the action, in each of which cases the fees and expenses of counsel shall be at the expense of the indemnifying party.

(e)  Settlements.  The indemnifying party under this Section 8 shall not be liable for any settlement of any proceeding effected without its written consent, but if settled with such consent or if there be a final judgment for the plaintiff, the indemnifying party agrees to indemnify the indemnified party against any loss, claim, damage, liability or expense by reason of such settlement or judgment.  Notwithstanding the foregoing sentence, if at any time an indemnified party shall have requested an indemnifying party to reimburse the indemnified party for fees and expenses of counsel as contemplated by Section 8(d) hereof, the indemnifying party agrees that it shall be liable for any settlement of any proceeding effected without its written consent if (i) such settlement is entered into more than 30 days after receipt by such indemnifying party of the aforesaid request and (ii) such indemnifying party shall not have reimbursed the indemnified party in accordance with such request prior to the date of such settlement. No indemnifying party shall, without the prior written consent of the indemnified party, such consent not to be unreasonably withheld, effect any settlement, compromise or consent to the entry of judgment in any pending or threatened action, suit or proceeding in respect of which any indemnified party is or could have been a party and indemnity was or could have been sought hereunder by such indemnified party, unless such settlement, compromise or consent includes an unconditional release of such indemnified party from all liability on claims that are the subject matter of such action, suit or proceeding.

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(f)  Indemnification for Directed Shares.  In connection with the offer and sale of the Directed Shares, the Company agrees, promptly upon a request in writing, to indemnify and hold harmless the Underwriters from and against any and all losses, liabilities, claims, damages and expenses incurred by them as a result of the failure of the Participants to pay for and accept delivery of Directed Shares which, by the end of the first business day following the date of this Agreement, were subject to a properly confirmed agreement to purchase.  The Company agrees to indemnify and hold harmless the Designated Underwriter, its officers and employees, and each person, if any, who controls the Designated Underwriter within the meaning of the Securities Act or the Exchange Act against any loss, claim, damage, liability or expense, as incurred, to which such Designated Underwriter or such controlling person may become subject, (i) under the laws or regulations of foreign jurisdictions where Directed Shares have been offered; (ii) which is caused by any untrue statement or alleged untrue statement of a material fact contained in any material prepared by or with the consent of the Company for distribution to Participants in connection with the Directed Share Program or caused by any omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading; (iii) which is caused by the failure of any Participant to pay for and accept delivery of Directed Shares that such Participant agreed to purchase; (iv) which is related to any Prospectus wrapper delivered in connection with the reservation and sale of Directed Shares; (v) which is caused by the violation of any applicable laws or regulations of federal, state or foreign jurisdictions where Directed Shares have been offered; or (vi) which is related to, arising out of, or in connection with the Directed Share Program, other than losses, claims, damages, liabilities or expenses that are finally judicially determined to have resulted from the bad faith or gross negligence of the Designated Underwriters.  The indemnity agreement set forth in this paragraph shall be in addition to any liabilities that the Company may otherwise have.

Section 9.  Contribution.  If the indemnification provided for in Section 8 is for any reason held to be unavailable to or otherwise insufficient to hold harmless an indemnified party in respect of any losses, claims, damages, liabilities or expenses referred to therein, then each indemnifying party shall contribute to the aggregate amount paid or payable by such indemnified party, as incurred, as a result of any losses, claims, damages, liabilities or expenses referred to therein (i) in such proportion as is appropriate to reflect the relative benefits received by the Company and the Selling Stockholder, on the one hand, and the Underwriters, on the other hand, from the offering of the Common Shares pursuant to this Agreement or (ii) if the allocation provided by clause (i) above is not permitted by applicable law, in such proportion as is appropriate to reflect not only the relative benefits referred to in clause (i) above but also the relative fault of the Company and the Selling Stockholder, on the one hand, and the Underwriters, on the other hand, in connection with the statements or omissions or inaccuracies in the representations and warranties herein which resulted in such losses, claims, damages, liabilities or expenses, as well as any other relevant equitable considerations.  The relative benefits received by the Company and the Selling Stockholder, on the

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one hand, and the Underwriters, on the other hand, in connection with the offering of the Common Shares pursuant to this Agreement shall be deemed to be in the same respective proportions as the total net proceeds from the offering of the Common Shares pursuant to this Agreement (before deducting expenses) received by the Company and the Selling Stockholder, and the total underwriting discount received by the Underwriters, in each case as set forth on the front cover page of the Prospectus bear to the aggregate initial public offering price of the Common Shares as set forth on such cover.  The relative fault of the Company and the Selling Stockholder, on the one hand, and the Underwriters, on the other hand, shall be determined by reference to, among other things, whether any such untrue or alleged untrue statement of a material fact or omission or alleged omission to state a material fact or any such inaccurate or alleged inaccurate representation or warranty relates to information supplied by the Company or the Selling Stockholder, on the one hand, or the Underwriters, on the other hand, and the parties’ relative intent, knowledge, access to information and opportunity to correct or prevent such statement or omission.

The amount paid or payable by a party as a result of the losses, claims, damages, liabilities and expenses referred to above shall be deemed to include, subject to the limitations set forth in Section 8(d), any legal or other fees or expenses reasonably incurred by such party in connection with investigating or defending any action or claim.  The provisions set forth in Section 8(d) with respect to notice of commencement of any action shall apply if a claim for contribution is to be made under this Section 9; provided, however, that no additional notice shall be required with respect to any action for which notice has been given under Section 8(d) for purposes of indemnification.

The Company, the Selling Stockholder and the Underwriters agree that it would not be just and equitable if contribution pursuant to this Section 9 were determined by pro rata allocation (even if the Underwriters were treated as one entity for such purpose) or by any other method of allocation which does not take account of the equitable considerations referred to in this Section 9.

Notwithstanding the provisions of this Section 9, no Underwriter shall be required to contribute any amount in excess of the underwriting commissions received by such Underwriter in connection with the Common Shares underwritten by it and distributed to the public. No person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution from any person who was not guilty of such fraudulent misrepresentation. The Underwriters’ obligations to contribute pursuant to this Section 9 are several, and not joint, in proportion to their respective underwriting commitments as set forth opposite their names in Schedule A. For purposes of this Section 9, each officer and employee of an Underwriter and each person, if any, who controls an Underwriter within the meaning of the Securities Act and the Exchange Act shall have the same rights to contribution as such Underwriter, and each director of the Company, each officer of the Company who signed the Registration Statement, and each person, if any, who controls the Company with the meaning of the Securities Act and the Exchange Act shall have the same rights to contribution as the Company.

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Notwithstanding any other provision of this Agreement, the liability of the Selling Stockholder to contribute pursuant to Section 9 shall be limited to the net proceeds received by the Selling Stockholder from the offering of the Optional Common Shares sold by the Selling Stockholder pursuant to this Agreement.

Section 10.  Default of One or More of the Several Underwriters.  If, on the First Closing Date or the Second Closing Date, as the case may be, any one or more of the several Underwriters shall fail or refuse to purchase Common Shares that it or they have agreed to purchase hereunder on such date, and the aggregate number of Common Shares which such defaulting Underwriter or Underwriters agreed but failed or refused to purchase does not exceed 10% of the aggregate number of the Common Shares to be purchased on such date, the other Underwriters shall be obligated, severally, in the proportions that the number of Firm Common Shares set forth opposite their respective names on Schedule A bears to the aggregate number of Firm Common Shares set forth opposite the names of all such non-defaulting Underwriters, or in such other proportions as may be specified by the Representatives with the consent of the non-defaulting Underwriters, to purchase the Common Shares which such defaulting Underwriter or Underwriters agreed but failed or refused to purchase on such date. If, on the First Closing Date or the Second Closing Date, as the case may be, any one or more of the Underwriters shall fail or refuse to purchase Common Shares and the aggregate number of Common Shares with respect to which such default occurs exceeds 10% of the aggregate number of Common Shares to be purchased on such date, and arrangements satisfactory to the Representatives and the Company for the purchase of such Common Shares are not made within 48 hours after such default, this Agreement shall terminate without liability of any party to any other party except that the provisions of Section 4, Section 6 (to the extent the termination pursuant to Section 10 is not as a result of (a) a default by a Defaulting Representative or (b) a default by a Defaulting Representative and one or more other defaulting Underwriters that is not a Defaulting Representative), Section 8 and Section 9 shall at all times be effective and shall survive such termination. In any such case either the Representatives or the Company shall have the right to postpone the First Closing Date or the Second Closing Date, as the case may be, but in no event for longer than seven days in order that the required changes, if any, to the Registration Statement and the Prospectus or any other documents or arrangements may be effected.

As used in this Agreement, the term “Underwriter” shall be deemed to include any person substituted for a defaulting Underwriter under this Section 10.  Any action taken under this Section 10 shall not relieve any defaulting Underwriter from liability in respect of any default of such Underwriter under this Agreement.

Section 11.  Termination of this Agreement.  Prior to the First Closing Date this Agreement may be terminated by the Representatives by notice given to the Company if at any time (i) trading or quotation in any of the Company’s securities shall have been suspended or limited by the Commission or by the NASDAQ National Market, or trading in securities generally on either the NASDAQ Stock Market or the New York Stock Exchange shall have been suspended or limited, or minimum or maximum prices shall have been generally established on any of such stock exchanges

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by the Commission or the NASD; (ii) a general banking moratorium shall have been declared by any of federal or New York, Delaware or California authorities; (iii) there shall have occurred any outbreak or escalation of national or international hostilities or any crisis or calamity, or any change in the United States or international financial markets, or any substantial change or development involving a prospective substantial change in United States’ or international political, financial or economic conditions, as in the judgment of the Representatives is material and adverse and makes it impracticable to market the Common Shares in the manner and on the terms described in the Prospectus or to enforce contracts for the sale of securities; (iv) in the commercially reasonable judgment of the Representatives there shall have occurred any Material Adverse Change; or (v) the Company shall have sustained a loss by strike, fire, flood, earthquake, accident or other calamity of such character as in the reasonable judgment of the Representatives may interfere materially with the conduct of the business and operations of the Company regardless of whether or not such loss shall have been insured.  Any termination pursuant to this Section 11 shall be without liability on the part of (a) the Company or the Selling Stockholder to any Underwriter, except that the Company and the Selling Stockholder shall be obligated to reimburse the expenses of the Representatives and the Underwriters pursuant to Sections 4 and 6 hereof, (b) any Underwriter to the Company or the Selling Stockholder or (c) of any party hereto to any other party except that the provisions of Section 8 and Section 9 shall at all times be effective and shall survive such termination.

Section 12.  Representations and Indemnities to Survive Delivery.  The respective indemnities, agreements, representations, warranties and other statements of ev3 LLC, the Company, their respective officers, the Selling Stockholder and the several Underwriters set forth in or made pursuant to this Agreement shall remain operative and in full force and effect, regardless of (i) any investigation, or statement as to the results thereof, made by or on behalf of any Underwriter, the officers or employees of any Underwriter or any person controlling any Underwriter, ev3 LLC, the Company, the officers or employees of ev3 LLC and the Company or any person controlling ev3 LLC or the Company, or the Selling Stockholder, (ii) acceptance of the Common Shares and payment for them hereunder and (iii) termination of this Agreement.

Section 13.  Notices.  All communications hereunder shall be in writing and shall be mailed, hand delivered or telecopied and confirmed to the parties hereto as follows:

If to the Representatives:

Piper Jaffray & Co.
800 Nicollet Mall
Suite 800
Minneapolis, MN 55402
Facsimile:  (415) 277-1551
Attention:   Jeffrey A. Hoffman

and

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Banc of America Securities LLC
9 West 57th Street
New York, NY 10019
Facsimile:  (212) 933-2217
Attention:  Thomas M. Morrison

with a copy to:

Banc of America Securities LLC
9 West 57th Street
New York, New York 10019
Facsimile:  (212) 583-8567
Attention:  Legal Department

with a copy to:

Willkie Farr & Gallagher LLP
787 Seventh Avenue
New York, NY 10019
Facsimile:  (212) 728-9222
Attention:  Steven J. Gartner, Esq.

If to the Company:

ev3 Inc.
4600 Nathan Lane North
Plymouth, MN 55442
Facsimile:  (763) 398-7240
Attention:  L. Cecily Hines, Esq.

with a copy to:

King & Spalding LLP
1185 Avenue of the Americas LLP
New York, NY 10036
Facsimile:  (212) 556-2222
Attention:   Tracy Kimmel, Esq.

If to the Selling Stockholder:

Dale A. Spencer
503 North Ferndale
Wayzata, MN 55391

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Facsimile:  (952) 449-9011

and

ev3 Inc.

4600 Nathan Lane North

Plymouth, MN 55442

Facsimile:  (763) 398-7240
Attention:  L. Cecily Hines, Esq.

with a copy to:

Oppenheimer Wolff & Donnelly LLP

Plaza VII Building, Suite 3300

45 South Seventh Street

Minneapolis, MN 55402

Facsimile:  (612) 607-7100

Attention: D. William Kaufman Esq.

Any party hereto may change the address for receipt of communications by giving written notice to the others.

Section 14.  Successors.  This Agreement will inure to the benefit of and be binding upon the parties hereto, including any substitute Underwriters pursuant to Section 10 hereof, and to the benefit of the employees, officers and directors and controlling persons referred to in Section 8 and Section 9, and in each case their respective successors, and personal representatives, and no other person will have any right or obligation hereunder. The term “successors” shall not include any purchaser of the Common Shares as such from any of the Underwriters merely by reason of such purchase.

Section 15.  Partial Unenforceability.  The invalidity or unenforceability of any Section, paragraph or provision of this Agreement shall not affect the validity or enforceability of any other Section, paragraph or provision hereof. If any Section, paragraph or provision of this Agreement is for any reason determined to be invalid or unenforceable, there shall be deemed to be made such minor changes (and only such minor changes) as are necessary to make it valid and enforceable.

Section 16.  Governing Law Provisions.

(a)  GOVERNING LAW.  THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF NEW YORK APPLICABLE TO AGREEMENTS MADE AND TO BE PERFORMED IN SUCH STATE.

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(b)  Consent to Jurisdiction.  Any legal suit, action or proceeding arising out of or based upon this Agreement or the transactions contemplated hereby may be instituted in the federal courts of the United States of America located in the City of Minneapolis and County of Hennepin or the courts of the State of Minnesota in each case located in the City of Minneapolis and County of Hennepin (collectively, the “Specified Courts”), and each party irrevocably submits to the exclusive jurisdiction (except for proceedings instituted in regard to the enforcement of a judgment of any such court, as to which such jurisdiction is non-exclusive) of such courts in any such suit, action or proceeding.  Service of any process, summons, notice or document by mail to such party’s address set forth above shall be effective service of process for any suit, action or other proceeding brought in any such court.  The parties irrevocably and unconditionally waive any objection to the laying of venue of any suit, action or other proceeding in the Specified Courts and irrevocably and unconditionally waive and agree not to plead or claim in any such court that any such suit, action or other proceeding brought in any such court has been brought in an inconvenient forum.

Section 17.  Failure of the Selling Stockholder to Sell and Deliver Optional Common Shares.If the Selling Stockholder shall fail to sell and deliver to the Underwriters the Common Shares to be sold and delivered by the Selling Stockholder pursuant to this Agreement at the First Closing Date or the Second Closing Date, then the Underwriters shall have the right, by written notice from the Representatives to the Company and the Selling Stockholder, to postpone the First Closing Date or the Second Closing Date, as the case may be, but in no event for longer than seven days in order that the required changes, if any, to the Registration Statement and the Prospectus or any other documents or arrangements may be effected.

Section 18.  General Provisions.  This Agreement constitutes the entire agreement of the parties to this Agreement and supersedes all prior written or oral and all contemporaneous oral agreements, understandings and negotiations with respect to the subject matter hereof.  This Agreement may be executed in two or more counterparts, each one of which shall be an original, with the same effect as if the signatures thereto and hereto were upon the same instrument. This Agreement may not be amended or modified unless in writing by all of the parties hereto, and no condition herein (express or implied) may be waived unless waived in writing by each party whom the condition is meant to benefit. The Section headings herein are for the convenience of the parties only and shall not affect the construction or interpretation of this Agreement.

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Each of the parties hereto acknowledges that it is a sophisticated business person who was adequately represented by counsel during negotiations regarding the provisions hereof, including, without limitation, the indemnification provisions of Section 8 and the contribution provisions of Section 9, and is fully informed regarding said provisions. Each of the parties hereto further acknowledges that the provisions of Sections 8 and 9 hereto fairly allocate the risks in light of the ability of the parties to investigate the Company, its affairs and its business in order to assure that adequate disclosure has been made in the Registration Statement, the Preliminary Prospectus and the Prospectus (and any amendments and supplements thereto), as required by the Securities Act and the Exchange Act.

[SIGNATURE PAGE FOLLOWS]

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If the foregoing is in accordance with your understanding of our agreement, kindly sign and return to the Company and the Custodian the enclosed copies hereof, whereupon this instrument, along with all counterparts hereof, shall become a binding agreement in accordance with its terms.

Very truly yours,
EV3 INC.
By:	/s/ James M. Corbett
	Name: James M. Corbett
	Title: President and Chief Executive Officer
EV3 LLC

By:	/s/ James M. Corbett
	Name: James M. Corbett
	Title: President and Chief Executive Officer
/s/ Dale A. Spencer
Dale A. Spencer

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The foregoing Underwriting Agreement is hereby confirmed and accepted by the Representatives as of the date first above written.

PIPER JAFFRAY & CO.
BANC OF AMERICA SECURITIES LLC
Acting as Representatives of the
several Underwriters named in
the attached Schedule A.
PIPER JAFFRAY & CO.
By:	/s/ Jeff Hoffman
	Managing Director
BANC OF AMERICA SECURITIES LLC
By:	/s/ Gray Hampton
	Managing Director

SCHEDULE A

UNDERWRITERS	NUMBER OF FIRM COMMON SHARES TO BE PURCHASED
Piper Jaffray & Co.	4,117,750
Banc of America Securities LLC	4,117,750
Bear, Stearns & Co. Inc.	2,353,000
Thomas Weisel Partners LLC	1,176,500
Total	11,765,000

SCHEDULE B

Selling Stockholder	Maximum Number of Optional Common Shares to be Sold
Dale A. Spencer 503 North Ferndale Wayzata, MN 55391	35,900

EX-10.4

Exhibit 10.4

ev3 Inc.

AMENDED AND RESTATED

2005 INCENTIVE STOCK PLAN

(as amended through July 25, 2005)

TABLE OF CONTENTS

§ 1. BACKGROUND AND PURPOSE
§ 2. DEFINITIONS
2.1	Affiliate
2.2	Board
2.3	Change Effective Date
2.4	Change in Control
2.5	Code
2.6	Committee
2.7	Company
2.8	Director
2.9	Eligible Employee
2.10	Fair Market Value
2.11	ISO
2.12	1933 Act
2.13	1934 Act
2.14	Non-ISO
2.15	Option
2.16	Option Certificate
2.17	Option Price
2.18	Parent
2.19	Plan
2.20	Rule 16b-3
2.21	SAR Value
2.22	Stock
2.23	Stock Appreciation Right
2.24	Stock Appreciation Right Certificate
2.25	Stock Grant
2.26	Stock Grant Certificate
2.27	Stock Unit Grant
2.28	Subsidiary
2.29	Ten Percent Shareholder
§ 3. SHARES AND GRANT LIMITS
3.1	Shares Reserved
3.2	Source of Shares
3.3	Use of Proceeds
3.4	Grant Limits
§ 4. EFFECTIVE DATE
§ 5. COMMITTEE

§ 6. ELIGIBILITY
§ 7. OPTIONS
7.1	Committee Action
7.2	$100,000 Limit
7.3	Option Price
7.4	Payment
7.5	Exercise
§ 8. STOCK APPRECIATION RIGHTS
8.1	Committee Action
8.2	Terms and Conditions
8.3	Exercise
§ 9. STOCK GRANTS
9.1	Committee Action
9.2	Conditions
9.3	Dividends, Voting Rights and Creditor Status
9.4	Satisfaction of Forfeiture Conditions
9.5	Income Tax Deduction
§ 10. NON-TRANSFERABILITY
10.1	General Rule
10.2	Transfers to Family Members
§ 11. SECURITIES REGISTRATION
§ 12. LIFE OF PLAN
§ 13. ADJUSTMENT
13.1	Capital Structure
13.2	Available Shares
13.3	Transactions Described in § 424 of the Code
13.4	Fractional Shares
§ 14. CHANGE IN CONTROL
§ 15. AMENDMENT OR TERMINATION
§ 16. MISCELLANEOUS
16.1	Shareholder Rights
16.2	No Contract of Employment
16.3	Withholding
16.4	Construction
16.5	Other Conditions
16.6	Rule 16b-3
16.7	Coordination with Employment Agreements and Other Agreements

§ 1.
BACKGROUND AND PURPOSE

The purpose of this Plan is to promote the interest of the Company by authorizing the Committee to grant Options and Stock Appreciation Rights and to make Stock Grants and Stock Unit Grants to Eligible Employees and Directors or consultants in order (1) to attract and retain Eligible Employees, Directors or consultants, (2) to provide an additional incentive to each Eligible Employee, Director or consultant to work to increase the value of Stock and (3) to provide each Eligible Employee, Director or consultant with a stake in the future of the Company which corresponds to the stake of each of the Company’s shareholders.

§ 2.
DEFINITIONS

2.1           Affiliate — means any organization (other than a Subsidiary) that would be treated as under common control with the Company under § 414(c) of the Code if “50 percent” were substituted for “80 percent” in the income tax regulations under § 414(c) of the Code.

2.2           Board — means the Board of Directors of the Company.

2.3           Change Effective Date — means either the date which includes the “closing” of the transaction which makes a Change in Control effective if the Change in Control is made effective through a transaction which has a “closing” or the date a Change in Control is reported in accordance with applicable law as effective to the Securities and Exchange Commission if the Change in Control is made effective other than through a transaction which has a “closing”.

2.4           Change in Control — means a change in control of the Company occurring after the effective date of this Plan of a nature that would be required to be reported in response to Item 6(e) of Schedule 14A of Regulation 14A (or in response to any similar item on any similar schedule or form) promulgated under the 1934 Act, whether or not the Company is then subject to such reporting requirement; provided, however, that, without limitation, a Change in Control shall include:  (i) the acquisition (other than from the Company) after the date hereof by any person, entity or “group” within the meaning of Section 13(d)(3) or 14(d)(2) of the 1934 Act (excluding, for this purpose, the Company or its subsidiaries, any employee benefit plan of the Company or its subsidiaries which acquires beneficial ownership of voting securities of the Company, any qualified institutional investor who meets the requirements of Rule 13d-1(b)(1) promulgated under the 1934 Act, Warburg Pincus LLC and its affiliates, and The Vertical Group, L.P. and its affiliates) of beneficial ownership (within the meaning of Rule 13d-3 promulgated under the 1934 Act) of 20% or more of either the then-outstanding shares of common stock or the combined voting power of the Company’s then-outstanding capital stock entitled to vote generally in the election of directors; (ii) individuals who, as of the date hereof, constitute the Board (the “Incumbent Board”) ceasing for any reason to constitute at least a majority of the Board, provided that any person becoming a director subsequent to the date hereof whose election, or nomination for election by the Company’s stockholders was approved by a vote of at least a majority of the directors then comprising the Incumbent Board (other than an

2

election or nomination of an individual whose initial assumption of office is in connection with an actual or threatened election contest relating to the election of the directors of the Company) shall be, for purposes of this Agreement, considered as though such person were a member of the Incumbent Board; or (iii) approval by the stockholders of the Company of (A) a reorganization, merger, or consolidation, in each case, with respect to which persons who were the stockholders of the Company immediately prior to such reorganization, merger, or consolidation do not, immediately thereafter, own more than 50% of the combined voting power entitled to vote generally in the election of directors of the reorganized, merged, consolidated or other surviving corporation’s then-outstanding voting securities, (B) a liquidation or dissolution of the Company, or (C) the sale of all or substantially all of the assets of the Company.

2.5           Code — means the Internal Revenue Code of 1986, as amended.

2.6           Committee — means a committee of the Board which shall have at least 2 members, each of whom shall be appointed by and shall serve at the pleasure of the Board and at least 2 of whom shall come within the definition of a “non-employee director” under Rule 16b-3, or if no such committee of the Board has been appointed, the Board as a whole.

2.7           Company — means ev3 Inc. and any successor to ev3 Inc.

2.8           Director — means any member of the Board who is not an employee of the Company or a Parent or Subsidiary or affiliate (as such term is defined in Rule 405 of the 1933 Act) of the Company.

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2.9           Eligible Employee — means an employee of the Company or any Subsidiary or Parent or Affiliate to whom the Committee decides for reasons sufficient to the Committee to make a grant under this Plan.

2.10         Fair Market Value — means either (a) the closing price on any date for a share of Stock as reported by The Wall Street Journal or, if The Wall Street Journal no longer reports such closing price, such closing price as reported by a newspaper or trade journal selected by the Committee or, if no such closing price is available on such date, (b) such closing price as so reported in accordance with § 2.10(a) for the immediately preceding business day, or, if no newspaper or trade journal reports such closing price or if no such price quotation is available, (c) the price which the Committee acting in good faith determines through any reasonable valuation method that a share of Stock might change hands between a willing buyer and a willing seller, neither being under any compulsion to buy or to sell and both having reasonable knowledge of the relevant facts.

2.11         ISO — means an option granted under this Plan to purchase Stock which is intended to satisfy the requirements of § 422 of the Code.

2.12         1933 Act — means the Securities Act of 1933, as amended.

2.13         1934 Act — means the Securities Exchange Act of 1934, as amended.

2.14         Non-ISO — means an option granted under this Plan to purchase Stock which is intended to fail to satisfy the requirements of § 422 of the Code.

2.15         Option — means an ISO or a Non-ISO which is granted under § 7.

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2.16         Option Certificate — means the certificate (whether in electronic or written form) which sets forth the terms and conditions of an Option granted under this Plan.

2.17         Option Price — means the price which shall be paid to purchase one share of Stock upon the exercise of an Option granted under this Plan.

2.18         Parent — means any corporation which is a parent corporation (within the meaning of § 424(e) of the Code) of the Company.

2.19         Plan — means this ev3 Inc. 2005 Incentive Stock Plan as effective as of the date approved by the shareholders of the Company and as amended from time to time thereafter.  For each grant of an Option to an Eligible Employee, Director or consultant who is a resident of France, the Plan shall include the terms of the addendum titled, “Terms and Conditions for French Option Grants”, which shall supercede the terms of the Plan to the extent that the terms of such addendum conflict with the terms of the Plan.

2.20         Rule 16b-3 — means the exemption under Rule 16b-3 to Section 16(b) of the 1934 Act or any successor to such rule.

2.21         SAR Value — means the value assigned by the Committee to a share of Stock in connection with the grant of a Stock Appreciation Right under § 8.

2.22         Stock — means the common stock of the Company.

2.23         Stock Appreciation Right — means a right which is granted under § 8 to receive the appreciation in a share of Stock.

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2.24         Stock Appreciation Right Certificate -- means the certificate (whether in electronic or written form) which sets forth the terms and conditions of a Stock Appreciation Right which is not granted as part of an Option.

2.25         Stock Grant — means a grant under § 9 which is designed to result in the issuance of the number of shares of Stock described in such grant rather than a payment in cash based on the Fair Market Value of such shares of Stock.

2.26         Stock Grant Certificate — means the certificate (whether in electronic or written form) which sets forth the terms and conditions of a Stock Grant or a Stock Unit Grant.

2.27         Stock Unit Grant — means a grant under § 9 which is designed to result in the payment of cash based on the Fair Market Value of the number of shares of Stock described in such grant rather than the issuance of the number of shares of Stock described in such grant.

2.28         Subsidiary — means a corporation which is a subsidiary corporation (within the meaning of § 424(f) of the Code) of the Company.

2.29         Ten Percent Shareholder — means a person who owns (after taking into account the attribution rules of § 424(d) of the Code) more than ten percent of the total combined voting power of all classes of stock of either the Company, a Subsidiary or Parent.

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§ 3.
SHARES AND GRANT LIMITS

3.1           Shares Reserved.  There shall (subject to § 13) be reserved for issuance under this Plan 2,000,000 shares of Stock; provided, however that no more than 2,000,000 shares of Stock may be issued in connection with the exercise of ISOs.

3.2           Source of Shares.  The shares of Stock described in § 3.1 shall be reserved to the extent that the Company deems appropriate from authorized but unissued shares of Stock and from shares of Stock which have been reacquired by the Company.  All shares of Stock described in § 3.1 shall remain available for issuance under this Plan until issued pursuant to the exercise of an Option or a Stock Appreciation Right or issued pursuant to a Stock Grant, and any such shares of stock which are issued pursuant to an Option, a Stock Appreciation Right or a Stock Grant which are forfeited thereafter shall again become available for issuance under this Plan.  Finally, if the Option Price under an Option is paid in whole or in part in shares of Stock or if shares of Stock are tendered to the Company in satisfaction of any condition to a Stock Grant, such shares thereafter shall become available for issuance under this Plan and shall be treated the same as any other shares available for issuance under this Plan.

3.3           Use of Proceeds.  The proceeds which the Company receives from the sale of any shares of Stock under this Plan shall be used for general corporate purposes and shall be added to the general funds of the Company.

3.4           Grant Limits.  No Eligible Employee, Director or consultant in any calendar year shall be granted an Option to purchase (subject to § 13) more than 250,000 shares of Stock or a Stock Appreciation Right based on the appreciation with respect to (subject to § 13) more than 250,000 shares of Stock, and no Stock Grant or

7

Stock Unit Grant shall be made to any Eligible Employee, Director or consultant in any calendar year where the Fair Market Value of the Stock subject to such grant on the date of the grant exceeds $10,000,000.  No more than 500,000 non-forfeitable shares of Stock shall (subject to § 13) be issued pursuant to Stock Grants under § 9.

§ 4.
EFFECTIVE DATE

The effective date of this Plan shall be the date the shareholders of the Company (acting at a duly called meeting of such shareholders) approve the adoption of this Plan.

§ 5.
COMMITTEE

This Plan shall be administered by the Committee.  The Committee acting in its absolute discretion shall exercise such powers and take such action as expressly called for under this Plan and, further, the Committee shall have the power to interpret this Plan and (subject to § 14 and § 15 and Rule 16b-3) to take such other action in the administration and operation of this Plan as the Committee deems equitable under the circumstances, which action shall be binding on the Company, on each affected Eligible Employee, Director or consultant and on each other person directly or indirectly affected by such action.  Furthermore, the Committee as a condition to making any grant under this Plan to any Eligible Employee, Director or consultant shall have the right to require him or her to execute an agreement which makes the Eligible Employee, Director or consultant subject to non-competition provisions and other restrictive covenants which run in favor of the Company.

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§ 6.ELIGIBILITY

Only Eligible Employees who are employed by the Company or a Subsidiary or Parent shall be eligible for the grant of ISOs under this Plan.  All Eligible Employees, Directors and consultants shall be eligible for the grant of Non-ISOs and Stock Appreciation Rights and for Stock Grants and Stock Unit Grants under this Plan.

§ 7.
OPTIONS

7.1           Committee Action.  The Committee acting in its absolute discretion shall have the right to grant Options to Eligible Employees, Directors and consultants under this Plan from time to time to purchase shares of Stock, but the Committee shall not (subject to § 13) take any action, whether through amendment, cancellation, replacement grants, or any other means, to reduce the Option Price of any outstanding Options absent the approval of the Company’s shareholders.  Each grant of an Option to an Eligible Employee, Director or consultant shall be evidenced by an Option Certificate, and each Option Certificate shall set forth whether the Option is an ISO or a Non-ISO and shall set forth such other terms and conditions of such grant as the Committee acting in its absolute discretion deems consistent with the terms of this Plan; however, (a) if the Committee grants an ISO and a Non-ISO to an Eligible Employee on the same date, the right of the Eligible Employee to exercise the ISO shall not be conditioned on his or her failure to exercise the Non-ISO and (b) if the only condition to exercise of the Option is the completion of a period of service, such period of service shall be no less than the one (1) year periodwhich starts on the date as of which the

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Option is granted unless the Committee determines that a shorter period of service (or no period of service) better serves the Company’s interest.

7.2           $100,000 Limit.  No Option shall be treated as an ISO to the extent that the aggregate Fair Market Value of the Stock subject to the Option which would first become exercisable in any calendar year exceeds $100,000.  Any such excess shall instead automatically be treated as a Non-ISO.  The Committee shall interpret and administer the ISO limitation set forth in this § 7.2 in accordance with § 422(d) of the Code, and the Committee shall treat this § 7.2 as in effect only for those periods for which § 422(d) of the Code is in effect.

7.3           Option Price.  The Option Price for each share of Stock subject to an Option shall be no less than the Fair Market Value of a share of Stock on the date the Option is granted; provided, however, if the Option is an ISO granted to an Eligible Employee who is a Ten Percent Shareholder, the Option Price for each share of Stock subject to such ISO shall be no less than 110% of the Fair Market Value of a share of Stock on the date such ISO is granted.

7.4           Payment.  The Option Price shall be payable in full upon the exercise of any Option and, at the discretion of the Committee, an Option Certificate can provide for the payment of the Option Price either in cash, by check or in Stock which has been held for at least 6 months and which is acceptable to the Committee, or through any cashless exercise procedure which is effected by an unrelated broker through a sale of Stock in the open market and which is acceptable to the Committee, or in any combination of such forms of payment.  Any payment made in Stock shall be treated as equal to the Fair Market Value of such Stock on the date the certificate for

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such Stock (or proper evidence of such certificate) is presented to the Committee or its delegate in such form as acceptable to the Committee.

7.5Exercise.

(a)Exercise Period.  Each Option granted under this Plan shall be exercisable in whole or in part at such time or times as set forth in the related Option Certificate, but no Option Certificate shall make an Option exercisable on or after the earlier of

(1)the date which is the fifth anniversary of the date the Option is granted, if the Option is an ISO and the Eligible Employee is a Ten Percent Shareholder on the date the Option is granted, or

(2)the date which is the tenth anniversary of the date the Option is granted, if the Option is (a) a Non-ISO or (b) an ISO which is granted to an Eligible Employee who is not a Ten Percent Shareholder on the date the Option is granted.

(b)Termination of Status as Eligible Employee or Director.  Subject to § 7.5(a), an Option Certificate may provide for the exercise of an Option after an Eligible Employee’s, Director’s or consultant’s status as such has terminated for any reason whatsoever, including death or disability.

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§ 8.
STOCK APPRECIATION RIGHTS

8.1           Committee Action.  The Committee acting in its absolute discretion shall have the right to grant Stock Appreciation Rights to Eligible Employees, Directors and consultants under this Plan from time to time, and each Stock Appreciation Right grant shall be evidenced by a Stock Appreciation Right Certificate or, if such Stock Appreciation Right is granted as part of an Option, shall be evidenced by the Option Certificate for the related Option.

8.2Terms and Conditions.

(a)Stock Appreciation Right Certificate.  If a Stock Appreciation Right is granted independent of an Option, such Stock Appreciation Right shall be evidenced by a Stock Appreciation Right Certificate, and such certificate shall set forth the number of shares of Stock on which the Eligible Employee’s, Director’s or consultant’s right to appreciation shall be based and the SAR Value of each share of Stock.  Such SAR Value shall be no less than the Fair Market Value of a share of Stock on the date that the Stock Appreciation Right is granted.  The Stock Appreciation Right Certificate shall set forth such other terms and conditions for the exercise of the Stock Appreciation Right as the Committee deems appropriate under the circumstances, but no Stock Appreciation Right Certificate shall make a Stock Appreciation Right exercisable on or after the date

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which is the tenth anniversary of the date such Stock Appreciation Right is granted.

(b)Option Certificate.  If a Stock Appreciation Right is granted together with an Option, such Stock Appreciation Right shall be evidenced by an Option Certificate, the number of shares of Stock on which the Eligible Employee’s, Director’s or consultant’s right to appreciation shall be based shall be the same as the number of shares of Stock subject to the related Option, and the SAR Value for each such share of Stock shall be no less than the Option Price under the related Option.  Each such Option Certificate shall provide that the exercise of the Stock Appreciation Right with respect to any share of Stock shall cancel the Eligible Employee’s, Director’s or consultant’s right to exercise his or her Option with respect to such share and, conversely, that the exercise of the Option with respect to any share of Stock shall cancel the Eligible Employee’s, Director’s or consultant’s right to exercise his or her Stock Appreciation Right with respect to such share.  A Stock Appreciation Right which is granted as part of an Option shall be exercisable only while the related Option is exercisable.  The Option Certificate shall set forth such other terms and conditions for the exercise of the Stock Appreciation Right as the Committee deems appropriate under the circumstances.

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(c)Minimum Period of Service.  If the only condition to exercise of a Stock Appreciation Right is the completion of a period of service, such period of service shall be no less than the one (1) year period which starts on the date as of which the Stock Appreciation Right is granted unless the Committee determines that a shorter period of service (or no period of service) better serves the Company’s interest.

8.3Exercise.  A Stock Appreciation Right shall be exercisable only when the Fair Market Value of a share of Stock on which the right to appreciation is based exceeds the SAR Value for such share, and the payment due on exercise shall be based on such excess with respect to the number of shares of Stock to which the exercise relates.  An Eligible Employee, Director or consultant upon the exercise of his or her Stock Appreciation Right shall receive a payment from the Company in cash or in Stock issued under this Plan, or in a combination of cash and Stock, and the number of shares of Stock issued shall be based on the Fair Market Value of a share of Stock on the date the Stock Appreciation Right is exercised.  The Committee acting in its absolute discretion shall have the right to determine the form and time of any payment under this § 8.3.

§ 9.
STOCK GRANTS

9.1           Committee Action.  The Committee acting in its absolute discretion shall have the right to make Stock Grants and Stock Unit Grants to Eligible Employees, Directors or consultants.  Each Stock Grant and each Stock Unit Grant shall be

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evidenced by a Stock Grant Certificate, and each Stock Grant Certificate shall set forth the conditions, if any, under which Stock will be issued under the Stock Grant or cash will be paid under the Stock Unit Grant and the conditions under which the Eligible Employee’s, Director’s or consultant’s interest in any Stock which has been issued will become non-forfeitable.

9.2           Conditions.

(a)Conditions to Issuance of Stock.  The Committee acting in its absolute discretion may make the issuance of Stock under a Stock Grant subject to the satisfaction of one, or more than one, condition which the Committee deems appropriate under the circumstances for Eligible Employees, Directors or consultants generally or for an Eligible Employee, a Director or a consultant in particular, and the related Stock Grant Certificate shall set forth each such condition and the deadline for satisfying each such condition.  Stock subject to a Stock Grant shall be issued in the name of an Eligible Employee, Director or consultant only after each such condition, if any, has been timely satisfied, and any Stock which is so issued shall be held by the Company pending the satisfaction of the forfeiture conditions, if any, under § 9.2(b) for the related Stock Grant.

(b)Conditions on Forfeiture of Stock or Cash Payment.  The Committee acting in its absolute discretion may make any cash payment due under a Stock Unit Grant or Stock issued in the

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name of an Eligible Employee, Director or consultant under a Stock Grant non-forfeitable subject to the satisfaction of one, or more than one, objective employment, performance or other condition that the Committee acting in its absolute discretion deems appropriate under the circumstances for Eligible Employees, Directors or consultants generally or for an Eligible Employee, a Director or a consultant in particular, and the related Stock Grant Certificate shall set forth each such  condition, if any, and the deadline, if any, for satisfying each such condition.  An Eligible Employee’s, Director’s or consultant’s non-forfeitable interest in the shares of Stock underlying a Stock Grant or the cash payable under a Stock Unit Grant shall depend on the extent to which he or she timely satisfies each such condition.  If a share of Stock is issued under this § 9.2(b) before an Eligible Employee’s, Director’s or consultant’s interest in such share of Stock is non-forfeitable, (1) such share of Stock shall not be available for re-issuance under § 3 until such time, if any, as such share of Stock thereafter is forfeited as a result of a failure to timely satisfy a forfeiture condition and (2) the Company shall have the right to condition any such issuance on the Eligible Employee, Director or consultant first signing an irrevocable stock power in favor of the Company with respect to the forfeitable shares of Stock issued to such Eligible Employee, Director or consultant in

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order for the Company to effect any forfeiture called for under the related Stock Grant Certificate.

(c)Minimum Period of Service.  If the only condition to the forfeiture of a Stock Grant or a Stock Unit Grant is the completion of a period of service, such period of service shall be no less than the three (3) year period which starts on the date as of which the Stock Grant or Stock Unit Grant is made unless the Committee determines that a shorter period of service (or no period of service) better serves the Company’s interest.

9.3Dividends, Voting Rights and Creditor Status.

(a)Cash Dividends.  Except as otherwise set forth in a Stock Grant Certificate, if a dividend is paid in cash on a share of Stock after such Stock has been issued under a Stock Grant but before the first date that an Eligible Employee’s, Director’s or consultant’s interest in such Stock (1) is forfeited completely or (2) becomes completely non-forfeitable, the Company shall pay such cash dividend directly to such Eligible Employee, Director or consultant.

(b)Stock Dividends.  If a dividend is paid on a share of Stock in Stock after such Stock has been issued under a Stock Grant but before the first date that an Eligible Employee’s, Director’s or consultant’s interest in such Stock (1) is forfeited completely or (2) becomes completely non-forfeitable, the Company shall hold such dividend

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Stock subject to the same conditions under § 9.2(b) as the related Stock Grant.

(c)Other.  If a dividend (other than a dividend described in § 9.3(a) or § 9.3(b)) is paid with respect to a share of Stock after such Stock has been issued under a Stock Grant but before the first date that an Eligible Employee’s, Director’s or consultant’s interest in such Stock (1) is forfeited completely or (2) becomes completely non-forfeitable, the Company shall distribute or hold such dividend in accordance with such rules as the Committee shall adopt with respect to each such dividend.

(d)Voting.  Except as otherwise set forth in a Stock Grant Certificate, an Eligible Employee, Director or consultant shall have the right to vote the Stock issued under his or her Stock Grant during the period which comes after such Stock has been issued under a Stock Grant but before the first date that an Eligible Employee’s, Director’s or consultant’s interest in such Stock (1) is forfeited completely or (2) becomes completely non-forfeitable.

(e)General Creditor Status.  Each Eligible Employee and each Director and each consultant to whom a Stock Unit grant is made shall be no more than a general and unsecured creditor of the Company with respect to any cash payable under such Stock Unit Grant.

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9.4           Satisfaction of Forfeiture Conditions.  A share of Stock shall cease to be subject to a Stock Grant at such time as an Eligible Employee’s, Director’s or consultant’s interest in such Stock becomes non-forfeitable under this Plan, and the certificate or other evidence of ownership representing such share shall be transferred to the Eligible Employee, Director or consultant as soon as practicable thereafter.

9.5Income Tax Deduction.

(a)General.  The Committee shall (where the Committee under the circumstances deems in the Company’s best interest) either (1) make Stock Grants and Stock Unit Grants to Eligible Employees subject to at least one condition related to one, or more than one, performance goal based on the performance goals described in § 9.5(b) which seems likely to result in the Stock Grant or Stock Unit Grant qualifying as “performance-based compensation” under § 162(m) of the Code or (2) make Stock Grants and Stock Unit Grants to Eligible Employees under such other circumstances as the Committee deems likely to result in an income tax deduction for the Company with respect such Stock Grant or Stock Unit Grant.  A performance goal may be set in any manner determined by the Committee, including looking to achievement on an absolute or relative basis in relation to peer groups or indexes.

(b)Performance Goals.  A performance goal is described in this § 9.5(b) if such goal relates to (1) the Company’s return over capital costs or increases in return over capital costs, (2) the Company’s

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total earnings or the growth in such earnings, (3) the Company’s consolidated earnings or the growth in such earnings, (4) the Company’s earnings per share or the growth in such earnings, (5) the Company’s net earnings or the growth in such earnings, (6) the Company’s earnings before interest expense, taxes, depreciation, amortization and other non-cash items or the growth in such earnings, (7) the Company’s earnings before interest and taxes or the growth in such earnings, (8) the Company’s consolidated net income or the growth in such income, (9) the value of the Company’s common stock or the growth in such value, (10) the Company’s stock price or the growth in such price, (11) the Company’s return on assets or the growth on such return, (12) the Company’s cash flow or the growth in such cash flow, (13) the Company’s total shareholder return or the growth in such return, (14) the Company’s expenses or the reduction of such expenses, (15) the Company’s sales growth, (16) the Company’s overhead ratios or changes in such ratios, (17) the Company’s expense-to-sales ratios or the changes in such ratios, or (18) the Company’s economic value added or changes in such value added.

(c)Adjustments.  When the Committee determines whether a performance goal has been satisfied for any period, the Committee may exclude any or all “extraordinary items” as determined under U.S. generally accepted accounting principles and any other

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unusual or non-recurring items, including, without limitation, the charges or costs associated with restructurings of the Company, discontinued operations, and the cumulative effects of accounting changes.  The Committee may also adjust any performance goal for a period as it deems equitable in recognition of unusual or non-recurring events affecting the Company, changes in applicable tax laws or accounting principles, or such other factors as the Committee may determine (including, without limitation, any adjustments that would result in the Company’s paying non-deductible compensation to an Eligible Employee).

§ 10.
NON-TRANSFERABILITY

10.1         General Rule.  Except as provided in § 10.2, no Option, Stock Grant, Stock Unit Grant or Stock Appreciation Right shall be transferable by an Eligible Employee, Director or consultant other than by will or by the laws of descent and distribution, and any Option or Stock Appreciation Right shall be exercisable during an Eligible Employee’s, Director’s or consultant’s lifetime only by the Eligible Employee, Director or consultant.  The person or persons to whom an Option or Stock Grant or Stock Unit Grant or Stock Appreciation Right is transferred by will or by the laws of descent and distribution or pursuant to § 10.2, thereafter shall be treated as the Eligible Employee, Director or consultant.

10.2         Transfers to Family Members.  An Option or Stock Grant, Stock Unit Grant or Stock Appreciation Right may be transferred by an Eligible Employee,

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Director or consultant to a “family member” (as defined for purposes of Form S-8 under the 1933 Act) of such Eligible Employee, Director or consultant or to a trust exclusively for the benefit of one or more of such family members of such Eligible Employee, Director or consultant; provided such transfer is made as a gift without consideration, and such transfer complies with applicable securities laws.

§ 11.
SECURITIES REGISTRATION

As a condition to the receipt of shares of Stock under this Plan, the Eligible Employee, Director or consultant shall, if so requested by the Company, agree to hold such shares of Stock for investment and not with a view of resale or distribution to the public and, if so requested by the Company, shall deliver to the Company a written statement satisfactory to the Company to that effect.  Furthermore, if so requested by the Company, the Eligible Employee, Director or consultant shall make a written representation to the Company that he or she will not sell or offer for sale any of such Stock unless a registration statement shall be in effect with respect to such Stock under the 1933 Act and any applicable state securities law or he or she shall have furnished to the Company an opinion in form and substance satisfactory to the Company of legal counsel satisfactory to the Company that such registration is not required.  Certificates or other evidence of ownership representing the Stock transferred upon the exercise of an Option or Stock Appreciation Right or upon the lapse of the forfeiture conditions, if any, on any Stock Grant may at the discretion of the Company bear a legend to the effect  that such Stock has not been registered under the 1933 Act or any applicable state securities law and that such Stock cannot be sold or offered for

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sale in the absence of an effective registration statement as to such Stock under the 1933 Act and any applicable state securities law or an opinion in form and substance satisfactory to the Company of legal counsel satisfactory to the Company that such registration is not required.

§ 12.
LIFE OF PLAN

No Option or Stock Appreciation Right shall be granted or Stock Grant or Stock Unit Grant made under this Plan on or after the earlier of:

(1)the tenth anniversary of the effective date of this Plan (as determined under § 4), in which event this Plan otherwise thereafter shall continue in effect until all outstanding Options and Stock Appreciation Rights have been exercised in full or no longer are exercisable and all Stock issued under any Stock Grants under this Plan have been forfeited or have become non-forfeitable, or

(2)the date on which all of the Stock reserved under § 3 has (as a result of the exercise of Options or Stock Appreciation Rights granted under this Plan or the satisfaction of the forfeiture conditions, if any, on Stock Grants) been issued or no longer is available for use under this Plan, in which event this Plan also shall terminate on such date.

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§ 13.
ADJUSTMENT

13.1         Capital Structure.  The grant caps described in § 3.4, the number, kind or class (or any combination thereof) of shares of Stock subject to outstanding Options and Stock Appreciation Rights granted under this Plan and the Option Price of such Options and the SAR Value of such Stock Appreciation Rights as well as the number, kind or class (or any combination thereof) of shares of Stock subject to outstanding Stock Grants and Stock Unit Grants made under this Plan shall be adjusted by the Committee in a reasonable and equitable manner to preserve immediately after

(a)any equity restructuring or change in the capitalization of the Company, including, but not limited to, spin offs, stock dividends, large non-reoccurring dividends, rights offerings or stock splits, or

(b)any other transaction described in § 424(a) of the Code which does not constitute a Change in Control of the Company

the aggregate intrinsic value of each such outstanding Option, Stock Appreciation Right, Stock Grant and Stock Unit Grant immediately before such restructuring or recapitalization or other transaction.

13.2         Available Shares.  If any adjustment is made with respect to any outstanding Option, Stock Appreciation Right, Stock Grant or Stock Unit Grant under § 13.1, then the Committee shall adjust the number, kind or class (or any combination thereof) of shares of Stock reserved under § 3.1 so that there is a sufficient number, kind and class of shares of Stock available for issuance pursuant to each such Option, Stock Appreciation Right, Stock Grant and Stock Unit Grant as adjusted under § 13.1 without seeking the approval of the Company’s shareholders for such adjustment unless such approval is required under applicable law or the rules of the stock exchange on

24

which shares of Stock are traded.  Furthermore, the Committee shall have the absolute discretion to further adjust such number, kind or class (or any combination thereof) of shares of Stock reserved under § 3.1 in light of any of the events described in § 13.1(a) and § 13.1(b) to the extent the Committee acting in good faith determines that a further adjustment would be appropriate and proper under the circumstances and in keeping with the purposes of this Plan without seeking the approval of the Company’s shareholders for such adjustment unless such approval is required under applicable law or the rules of the stock exchange on which shares of Stock are traded.

13.3         Transactions Described in § 424 of the Code.   If there is a  corporate transaction described in § 424(a) of the Code which does not constitute a Change in Control of the Company, the Committee as part of any such transaction shall have the right to make Stock Grants, Stock Unit Grants and Option and Stock Appreciation Right grants (without regard to any limitations set forth under 3.4 of this Plan) to effect the assumption of, or the substitution for, outstanding stock grants, stock unit grants and option and stock appreciation right grants previously made by any other corporation to the extent that such corporate transaction calls for such substitution or assumption of such outstanding stock grants, stock unit grants and stock option and stock appreciation right grants.  Furthermore, if the Committee makes any such grants as part of any such transaction, the Committee shall have the right to increase the number of shares of Stock available for issuance under § 3.1 by the number of shares of Stock subject to such grants without seeking the approval of the Company’s shareholders for such adjustment unless such approval is required under applicable law or the rules of the stock exchange on which shares of Stock are traded.

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13.4         Fractional Shares.  If any adjustment under this § 13 would create a fractional share of Stock or a right to acquire a fractional share of Stock under any Option, Stock Appreciation Right or Stock Grant, such fractional share shall be disregarded and the number of shares of Stock reserved under this Plan and the number subject to any Options or Stock Appreciation Right grants and Stock Grants shall be the next lower number of shares of Stock, rounding all fractions downward.  An adjustment made under this § 13 by the Committee shall be conclusive and binding on all affected persons.

§ 14.
CHANGE IN CONTROL

If there is a Change in Control of the Company, then as of the Change Effective Date for such Change in Control any and all conditions to the exercise of all outstanding Options and Stock Appreciation Rights on such date and any and all outstanding issuance and forfeiture conditions on any Stock Grants and Stock Unit Grants on such date automatically shall be deemed 100% satisfied as of such Change Effective Date, and the Board shall have the right (to the extent expressly required as part of such transaction) to cancel such Options, Stock Appreciation Rights, Stock Grants and Stock Unit Grants after providing each Eligible Employee, Director and consultant a reasonable period to exercise his or her Options and Stock Appreciation Rights and to take such other action as necessary or appropriate to receive the Stock subject to any Stock Grants and the cash payable under any Stock Unit Grants; provided, if any issuance or forfeiture condition described in this § 14 relates to satisfying any performance goal and there is a target for such goal, such issuance or

26

forfeiture condition shall be deemed satisfied under this § 14 only to the extent of such target unless such target has been exceeded before the Change Effective Date, in which event such issuance or forfeiture condition shall be deemed satisfied to the extent such target had been so exceeded.  A Change in Control shall affect a Stock Appreciation Right or a Stock Unit Grant which is subject to § 409A of the Code only if the Change in Control meets the requirements for a Change in Control under § 409A of the Code.

§ 15.
AMENDMENT OR TERMINATION

This Plan may be amended by the Board from time to time to the extent that the Board deems necessary or appropriate; provided, however, (a) no amendment shall be made absent the approval of the shareholders of the Company to the extent such approval is required under applicable law or the rules of the stock exchange on which shares of Stock are listed and (b) no amendment shall be made to § 14 on or after the date of any Change in Control which might adversely affect any rights which otherwise would vest on the related Change Effective Date.  The Board also may suspend granting Options or Stock Appreciation Rights or making Stock Grants or Stock Unit Grants under this Plan at any time and may terminate this Plan at any time; provided, however, the Board shall not have the right unilaterally to modify, amend or cancel any Option or Stock Appreciation Right granted or Stock Grant made before such suspension or termination unless (1) the Eligible Employee, Director or consultant consents in writing to such modification, amendment or cancellation or (2) there is a dissolution or liquidation of the Company or a transaction described in § 13.1 or § 14.

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§ 16.
MISCELLANEOUS

16.1         Shareholder Rights.  No Eligible Employee, Director or consultant shall have any rights as a shareholder of the Company as a result of the grant of an Option or a Stock Appreciation Right pending the actual delivery of the Stock subject to such Option or Stock Appreciation Right to such Eligible Employee, Director or consultant.  An Eligible Employee’s, Director’s or consultant’s rights as a shareholder in the shares of Stock which remain subject to forfeiture under § 9.2(b) shall be set forth in the related Stock Grant Certificate.

16.2         No Contract of Employment.  The grant of an Option or a Stock Appreciation Right or a Stock Grant or Stock Unit Grant to an Eligible Employee, Director or consultant under this Plan shall not constitute a contract of employment or a right to continue to serve on the Board and shall not confer on an Eligible Employee, Director or consultant any rights upon his or her termination of employment or service in addition to those rights, if any, expressly set forth in this Plan or the related Option Certificate, Stock Appreciation Right Certificate, or Stock Grant Certificate.

16.3         Withholding.  Each Option, Stock Appreciation Right, Stock Grant and Stock Unit Grant shall be made subject to the condition that the Eligible Employee, Director or consultant consents to whatever action the Committee directs to satisfy the minimum statutory federal and state tax withholding requirements, if any, which the Company determines are applicable to the exercise of such Option or Stock Appreciation Right or to the satisfaction of any forfeiture conditions with respect to Stock subject to a Stock Grant or Stock Unit Grant issued in the name of the Eligible

28

Employee, Director or consultant.  No withholding shall be effected under this Plan which exceeds the minimum statutory federal and state withholding requirements.

16.4         Construction.  All references to sections (§) are to sections (§) of this Plan unless otherwise indicated.  This Plan shall be construed under the laws of the State of Delaware.  Each term set forth in § 2 shall, unless otherwise stated, have the meaning set forth opposite such term for purposes of this Plan and, for purposes of such definitions, the singular shall include the plural and the plural shall include the singular.  Finally, if there is any conflict between the terms of this Plan and the terms of any Option Certificate, Stock Appreciation Right Certificate or Stock Grant Certificate, the terms of this Plan shall control.

16.5         Other Conditions.  Each Option Certificate, Stock Appreciation Right  Certificate or Stock Grant Certificate may require that an Eligible Employee, Director or consultant (as a condition to the exercise of an Option or a Stock Appreciation Right or the issuance of Stock subject to a Stock Grant) enter into any agreement or make such representations prepared by the Company, including (without limitation) any agreement which restricts the transfer of Stock acquired pursuant to the exercise of an Option or a Stock Appreciation Right or a Stock Grant or provides for the repurchase of such Stock by the Company.

16.6         Rule 16b-3.  The Committee shall have the right to amend any Option, Stock Grant or Stock Appreciation Right to withhold or otherwise restrict the transfer of any Stock or cash under this Plan to an Eligible Employee, Director or consultant as the Committee deems appropriate in order to satisfy any condition or

29

requirement under Rule 16b-3 to the extent Rule 16 of the 1934 Act might be applicable to such grant or transfer.

16.7         Coordination with Employment Agreements and Other Agreements.  If the Company enters into an employment agreement or other agreement with an Eligible Employee, Director or consultant which expressly provides for the acceleration in vesting of an outstanding Option, Stock Appreciation Right, Stock Grant or Stock Unit Grant or for the extension of the deadline to exercise any rights under an outstanding Option, Stock Appreciation Right, Stock Grant or Stock Unit Grant, any such acceleration or extension shall be deemed effected pursuant to, and in accordance with, the terms of such outstanding Option, Stock Appreciation Right, Stock Grant or Stock Unit Grant and this Plan even if such employment agreement or other agreement is first effective after the date the outstanding Option or Stock Appreciation Right was granted or the Stock Grant or Stock Unit Grant was made.

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EX-31.1

Exhibit 31.1

Certification of CEO Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
and SEC Rule 13a-14(a)

I, James M. Corbett, certify that:

1.             I have reviewed this quarterly report on Form 10-Q of ev3 Inc.;

2.             Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.             Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.             The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:

(a)           Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b)           Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(c)           Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.             The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a)           All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b)           Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: August 17, 2005	/s/ James M. Corbett
	James M. Corbett
	President and Chief Executive Officer
	(principal executive officer)

EX-31.2

Exhibit 31.2

Certification of CFO Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
and SEC Rule 13a-14(a)

I, Patrick D. Spangler, certify that:

1.             I have reviewed this quarterly report on Form 10-Q of ev3 Inc.;

2.             Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.             Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.             The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:

(a)           Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b)           Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(c)           Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.             The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a)           All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b)           Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: August 17, 2005	/s/ Patrick D. Spangler
	Patrick D. Spangler
	Chief Financial Officer and Treasurer
	(principal financial officer)

EX-32.1

Exhibit 32.1

Certification of CEO Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002

In connection with the Quarterly Report of ev3 Inc. (the “Company”) on Form 10-Q for the quarterly period ended July 3, 2005 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, James M. Corbett, President and Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to the best of my knowledge:

(1)           The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2)           The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: August 17, 2005	/s/ James M. Corbett
	James M. Corbett
	President and Chief Executive Officer
	(principal executive officer)

EX-32.2

Exhibit 32.2

Certification of CFO Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002

In connection with the Quarterly Report of ev3 Inc. (the “Company”) on Form 10-Q for the quarterly period ended July 3, 2005 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Patrick D. Spangler, Chief Financial Officer and Treasurer of the Company, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to the best of my knowledge:

(1)           The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2)           The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: August 17, 2005	/s/ Patrick D. Spangler
	Patrick D. Spangler
	Chief Financial Officer and Treasurer
	(principal financial officer)