-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, O53Dm51tiNiJR6IsaEhU2fMTTzdhlTNTxR7/0Wv0Q1N8pcNgwEDRIUNkEqCQydbk UR/7YkULBzJv/CNENkZ6Yg== 0000950134-06-016379.txt : 20060817 0000950134-06-016379.hdr.sgml : 20060817 20060817104511 ACCESSION NUMBER: 0000950134-06-016379 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20060815 ITEM INFORMATION: Entry into a Material Definitive Agreement ITEM INFORMATION: Financial Statements and Exhibits FILED AS OF DATE: 20060817 DATE AS OF CHANGE: 20060817 FILER: COMPANY DATA: COMPANY CONFORMED NAME: ATS MEDICAL INC CENTRAL INDEX KEY: 0000824068 STANDARD INDUSTRIAL CLASSIFICATION: ORTHOPEDIC, PROSTHETIC & SURGICAL APPLIANCES & SUPPLIES [3842] IRS NUMBER: 411595629 STATE OF INCORPORATION: MN FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 000-18602 FILM NUMBER: 061039730 BUSINESS ADDRESS: STREET 1: 3905 ANNAPOLIS LA STREET 2: SUITE 105 CITY: MINNEAPOLIS STATE: MN ZIP: 55447 BUSINESS PHONE: 6125537736 MAIL ADDRESS: STREET 1: 3905 ANNAPOLIS LANE STREET 2: SUITE 105 CITY: MINNEAPOLIS STATE: MN ZIP: 55447 FORMER COMPANY: FORMER CONFORMED NAME: ATS MEDCIAL INC DATE OF NAME CHANGE: 19920803 8-K 1 c07847e8vk.txt FORM 8-K ================================================================================ UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 8-K CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Date of Report: August 15, 2006 (Date of earliest event reported) ATS MEDICAL, INC. (Exact name of registrant as specified in its charter) Commission File Number: 0-18602 --------------------------- Minnesota 41-1595629 (State or other jurisdiction of (IRS Employer Identification No.) incorporation) 3905 Annapolis Lane N. Minneapolis, Minnesota 55447 (Address of principal executive offices, including zip code) (763) 553-7736 (Registrant's telephone number, including area code) Not Applicable (Former name or former address, if changed since last report) Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions: [ ] Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) [ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) [ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) [ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) ================================================================================ Item 1.01 Entry into a Material Definitive Agreement. Effective as of July 28, 2004, ATS Medical Sales, Inc. ("AMSI") and ATS Medical, Inc. (the "Company") entered into a Loan and Security Agreement (the "Agreement") with Silicon Valley Bank (the "Bank"), establishing a secured revolving credit facility for $8.5 million. Under the Agreement, the Company received a $2.5 million three-year term loan as well as a two-year $6.0 million line of credit. The credit facility contains two financial covenants: a liquidity ratio and a required minimum tangible net worth. The term loan carries an interest rate of prime plus 1.0% with a minimum of 5.25%. The line of credit carries an interest rate of prime plus 1.5% with a minimum rate of 5.75%. On March 24, 2005, the Bank, AMSI and the Company entered into an agreement to amend the two financial covenants contained in the Agreement ("Amendment No. 1"). On March 29, 2006, the Company entered into another amendment to the Agreement ("Amendment No. 2") whereby the Bank agreed to waive the prohibition set forth in Section 7.3 of the Agreement with respect to the Company's pending acquisition ("Acquisition") of 3F Therapeutics, Inc., and the Bank consented to such acquisition. Second, the Bank agreed to provide for advances of up to $1,500,000 that the Company may use to finance or refinance eligible equipment purchased on or after June 1, 2005 and on or before May 31, 2006. Such equipment advances will be amortized over a 60 month period and carry an interest rate of prime plus 1.75%. Third, Amendment No. 2 amended the Agreement to provide that the maximum aggregate advances may not exceed $8,600,000. Fourth, Amendment No. 2 changed the tangible net worth requirements under the Agreement to be at least $40 million. The liquidity ratio, which is the ratio of unrestricted cash (and equivalents) of the Company on deposit with the Bank plus the Company's Eligible Accounts (as defined in the Agreement), divided by Current Liabilities (as defined in the Agreement), remains unchanged and is required to be equal to or greater than 2.00 to 1.00. Lastly, Amendment No. 2 provided that the Company would pay a $28,667 amendment fee to the Bank in consideration for the Bank's entering into Amendment No. 2. On August 15, 2006, the Company entered into an Amendment to the Agreement ("Amendment No. 3") whereby the ending date by which the Company may purchase eligible equipment pursuant to the new $1,500,000 advance amount was extended from May 31, 2006 to October 31, 2006. Second, the date by which the Company agreed to provide financial statements reflecting the impact of the Acquisition was extended to the 30 days following the date of the closing of the Acquisition. Using these financial statements, the tangible net worth financial covenant shall then be reset, provided that it shall not be reset to less than $40,000,000. Lastly, Amendment No. 3 provided that the Company would pay a $1,000 fee to the Bank in consideration for the Bank's entering into this Amendment. A copy of the Agreement was filed as Exhibit 10.1 to the Company's Form 10-Q for the quarterly period ended September 30, 2004, a copy of Amendment No. 1 was filed as Exhibit 10.1 to the Company's Current Report on Form 8-K filed on March 30, 2005, and a copy of Amendment No.2 was filed as Exhibit 10.1 to the Company's Current Report on Form 8-K filed on March 30, 2006. A copy of Amendment No. 3 is attached hereto as Exhibit 10.1 and is incorporated herein by reference. The description in this Current Report on Form 8-K of Amendment No. 3 is qualified in its entirety by reference to the attached copy of the Amendment. Item 9.01 Financial Statements and Exhibits. (d) The following exhibit is being filed with this report: 10.1 Amendment, dated August 15, 2006, to the Loan and Security Agreement between Silicon Valley Bank and the Company, dated July 28, 2004. SIGNATURE 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. ATS MEDICAL, INC. By: /s/ Michael D. Dale ----------------------------- Michael D. Dale Chief Executive Officer Date: August 17, 2006 EXHIBIT INDEX 10.1 Amendment, dated August 15, 2006, to the Loan and Security Agreement between Silicon Valley Bank and the Company, dated July 28, 2004. EX-10.1 2 c07847exv10w1.txt AMENDMENT TO LOAN AND SECURITY AGREEMENT Exhibit 10.1 AMENDMENT TO LOAN AND SECURITY AGREEMENT THIS AMENDMENT to Loan and Security Agreement (this "Amendment") is entered as of August 15, 2006, by and between Silicon Valley Bank ("Bank") and ATS Medical, Inc., a Minnesota corporation (the "Borrower") whose address is 3905 Annapolis Lane, Suite 105, Minneapolis, Minnesota 55447. RECITALS A. Bank and Borrower have entered into that certain Loan and Security Agreement dated as of July 28, 2004 (as amended, modified, supplemented or restated from time to time, the "Loan Agreement"). B. Bank has extended credit to Borrower for the purposes permitted in the Loan Agreement. C. Borrower has requested that Bank amend the Loan Agreement to (i) extend the dates for delivery of certain invoices and the repayment of any Excess New Equipment Advance, and (ii) make certain other revisions to the Loan Agreement as more fully set forth herein. D. Bank has agreed to so amend certain provisions of the Loan Agreement, but only to the extent, in accordance with the terms, subject to the conditions and in reliance upon the representations and warranties set forth below. AGREEMENT NOW, THEREFORE, in consideration of the foregoing recitals and other good and valuable consideration, the receipt and adequacy of which is hereby acknowledged, and intending to be legally bound, the parties hereto agree as follows: 1. Definitions. Capitalized terms used but not defined in this Amendment shall have the meanings given to them in the Loan Agreement. 2. Amendments to Loan Agreement. 2.1 Section 2.1.6(a) (Purchase Dates). The second sentence of Section 2.1.6(a) reads as follows: The New Equipment Advance may only be used to finance or refinance Eligible Equipment purchased on or after June 1, 2005 1 and on or before May 31, 2006 ("New Equipment Advance Eligible Equipment"). Said sentence is hereby amended to read as follows: The New Equipment Advance may only be used to finance or refinance Eligible Equipment purchased on or after June 1, 2005 and on or before October 31, 2006 ("New Equipment Advance Eligible Equipment"). 2.2 Section 2.1.6(a) (Excess Payment Date). The fourth sentence of Section 2.1.6(a) reads as follows: If on June 30, 2006 the outstanding amount of the New Equipment Advance exceeds the aggregate Eligible Equipment Invoice Amounts for which Borrower has provided Bank with invoices, then Borrower shall immediately pay the amount of such excess (the "Excess New Equipment Advance") to Bank. Said sentence is hereby amended to read as follows: If on October 31, 2006 the outstanding amount of the New Equipment Advance exceeds the aggregate Eligible Equipment Invoice Amounts for which Borrower has provided Bank with invoices, then Borrower shall immediately pay the amount of such excess (the "Excess New Equipment Advance") to Bank. 2.3 Updated Financial Statements and TNW Covenant. Pursuant to the Amendment to Loan and Security Agreement dated March 29, 2006 among Bank and Borrower, Borrower agreed that (a) Borrower would provide Bank with updated financial statements by June 1, 2006, which financial statements would reflect the impact of the Acquisition (as defined therein), and (b) the Tangible Net Worth financial covenant would then be reset based upon such updated financial statements. Such agreement by Borrower is hereby amended to read as follows: (a) Borrower shall provide Bank with updated financial statements 30 days following the closing of the Acquisition (as defined in such Amendment), which financial statements shall reflect the impact of the Acquisition, and (b) the Tangible Net Worth financial covenant shall then be reset based upon such updated financial statements (provided that it shall not be reset to less than $40,000,000). 3. LIMITATION OF AMENDMENTS. 3.1 The amendments set forth in SECTION 2, above, are effective for the purposes set forth herein and shall be limited precisely as written and shall not be deemed to (a) be a consent to any amendment, waiver or modification of any other term or condition of any Loan Document, or (b) otherwise prejudice any right or remedy which Bank may now have or may have in the future under or in connection with any Loan Document. 3.2 This Amendment shall be construed in connection with and as part of the Loan Documents and all terms, conditions, representations, warranties, covenants and agreements set forth in the Loan Documents, except as herein amended, are hereby ratified and confirmed and shall remain in full force and effect. 4. REPRESENTATIONS AND WARRANTIES. To induce Bank to enter into this Amendment, Borrower hereby represents and warrants to Bank as follows: 4.1 Immediately after giving effect to this Amendment (a) the representations and warranties contained in the Loan Documents are true, accurate and complete in all material respects as of the date hereof (except to the extent such representations and warranties relate to an earlier date, in which case they are true and correct as of such date), and (b) no Event of Default has occurred and is continuing; 4.2 Borrower has the power and authority to execute and deliver this Amendment and to perform its obligations under the Loan Agreement, as amended by this Amendment; 4.3 The organizational documents of Borrower delivered to Bank on the Effective Date remain true, accurate and complete and have not been amended, supplemented or restated and are and continue to be in full force and effect; 4.4 The execution and delivery by Borrower of this Amendment and the performance by Borrower of its obligations under the Loan Agreement, as amended by this Amendment, have been duly authorized; 4.5 The execution and delivery by Borrower of this Amendment and the performance by Borrower of its obligations under the Loan Agreement, as amended by this Amendment, do not and will not contravene (a) any law or regulation binding on or affecting Borrower, (b) any contractual restriction with a Person binding on Borrower, (c) any order, judgment or decree of any court or other governmental or public body or authority, or subdivision thereof, binding on Borrower, or (d) the organizational documents of Borrower; 4.6 The execution and delivery by Borrower of this Amendment and the performance by Borrower of its obligations under the Loan Agreement, as amended by this Amendment, do not require any order, consent, approval, license, authorization or validation of, or filing, recording or registration with, or exemption by any governmental or public body or authority, or subdivision thereof, binding on Borrower, except as already has been obtained or made; and 4.7 This Amendment has been duly executed and delivered by Borrower and is the binding obligation of Borrower, enforceable against Borrower in accordance with its terms, except as such enforceability may be limited by bankruptcy, insolvency, reorganization, liquidation, moratorium or other similar laws of general application and equitable principles relating to or affecting creditors' rights. 5. COUNTERPARTS. This Amendment may be executed in any number of counterparts and all of such counterparts taken together shall be deemed to constitute one and the same instrument. 6. FEES AND EXPENSES. In consideration for Bank entering into this Amendment, Borrower shall concurrently pay Bank a fee in the amount of $1,000, which fee is deemed fully earned on the date hereof, and shall be non-refundable and in addition to all interest and other fees payable to Bank under the Loan Documents. Without limitation on the terms of the Loan Documents, Borrower agrees to reimburse Bank for all its costs and expenses (including reasonable attorneys' fees) incurred in connection with this Amendment. Bank is authorized to charge said fees, costs and expenses to Borrower's loan account or any of Borrower's deposit accounts maintained with Bank. [Signature page follows.] IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be duly executed and delivered as of the date first written above. BANK BORROWER Silicon Valley Bank ATS Medical, Inc. By: /s/ Charles Roehl By: /s/ Deborah K. Chapman Name: Charles Roehl Name: Deborah K. Chapman Title: VP -- Relationship Manager Title: Controller -----END PRIVACY-ENHANCED MESSAGE-----