| Item 1.01 | Entry into a Material Definitive Agreement. |
Share Purchase Agreement
On October 31, 2023, Lombardi Sub, LLC, a Delaware limited liability company (the “Purchaser”) and an indirect wholly-owned subsidiary of Inari Medical, Inc. (the “Company”, “we” or “us”), the Company, as guarantor of Purchaser’s financial obligations, LimFlow S.A., a French limited liability company (société anonyme) (“LimFlow”), equity holders of LimFlow (the “Sellers”) and Shareholder Representative Services LLC, a Colorado limited liability company (the “Seller Representative”), entered into a Share Purchase Agreement (the “Purchase Agreement”). Pursuant to the terms and conditions of the Purchase Agreement, Purchaser will purchase all of the equity interests of LimFlow (the “Transaction”) for an initial purchase price of $250,000,000, subject to adjustment based on the working capital, indebtedness, cash and transaction expenses of LimFlow. Additional contingent payments of up to $165,000,000 will be payable as follows: (i) up to $140,000,000 based on net revenue generated from the sale of LimFlow’s transcatheter arterialization of deep veins therapy system (the “LimFlow System”) for the period of 2024 through 2026 and (ii) up to $25,000,000 based on the achievement of certain reimbursement milestones relative to the LimFlow System.
The consummation of the Transaction, expected in the fourth quarter of 2023, is subject to the satisfaction of certain customary closing conditions.
The Purchase Agreement contains representations, warranties and other covenants made by each party that are customary for transactions of this nature. Under the Purchase Agreement, Purchaser, LimFlow and Sellers have agreed to enter into certain other agreements in connection with the Transaction, including with respect to certain Sellers, restrictions on competing with the business of LimFlow for a specified period of time after the closing, employee non-solicitation, confidentiality and non-disparagement covenants.
The Purchase Agreement contains customary indemnification provisions for Purchaser and Sellers, including obligations for Purchaser and Sellers to indemnify the other party for losses related to certain breaches of representations and warranties or covenants and fraud or, with respect to the Sellers, pre-closing tax liabilities and other specified items.
The Purchase Agreement may be terminated prior to the consummation of the Transaction by the mutual written consent of Purchaser and Seller Representative and in certain other circumstances, including if the closing has not occurred on or prior to January 31, 2024. The Company believes the Transaction will satisfy the income test described in Regulation S-X under the Securities Exchange Act of 1934, as amended, at above 75% and, consequently, the Company expects to file the required historical financial statements of LimFlow and corresponding pro forma financial statements within approximately 75 days of the closing of the Transaction.
The foregoing summary of the Purchase Agreement is qualified in its entirety by reference to the actual text of the Purchase Agreement, a copy of which is filed herewith as Exhibit 2.1.
Amendment to Credit Agreement
On November 1, 2023, the Company, Inari Medical International, Inc., a Delaware corporation and wholly-owned subsidiary of the Company, Inari Medical Latin America, Inc., a Delaware corporation and wholly-owned subsidiary of the Company, each of the lenders signatory thereto (the “Lenders”) and Bank of America, N.A. (as the agent for the Lenders, the “Agent”) entered into an amendment (the “Amendment”) to the Loan, Guaranty and Security Agreement, dated as of September 4, 2020 (together with the Amendment and as otherwise amended, restated or otherwise modified prior to the date hereof, the “Amended Credit Agreement”). Capitalized terms not otherwise defined herein shall have the meanings set forth in the Amended Credit Agreement.
The Amendment, among other things, (i) increases the amount available under the revolving credit facility from (A) the lesser of $40.0 million and the amount of the borrowing base to (B) the lesser of $75.0 million and the amount of the borrowing base, (ii) provides that advances under the Amended Credit Agreement will bear interest at a rate per annum equal to the BSBY Rate or Base Rate, at the option of the Borrowers, plus a margin that ranges from 0.60% to 1.10% in the case of Base Rate loans and 1.60% to 2.10% in the case of BSBY Rate loans depending on average daily availability, in each case with a floor of 0%, (iii) increases the letter of credit subline from $10.0 million to $18.75 million, (iv) qualifies the term Restricted Investment to exclude Investments (not to exceed $25.0 million and subject to certain Liquidity conditions) in Inari Medical Costa Rica Sociedad Anonima, a wholly-owned subsidiary of the Company, and (v) includes a limited consent of the Agent and the Lenders to the proposed Transaction, subject to certain liquidity conditions related to earn-outs paid in connection therewith, and the Permitted LimFlow Acquisition Debt related to any equipment financing or other Debt obtained in connection with the proposed Transaction (in the aggregate amount not less than $25,000,000).
