Exhibit 10.1
AMENDMENT
TO
AMENDED AND RESTATED
LOAN AND SECURITY AGREEMENT
     THIS AMENDMENT to Amended and Restated Loan and Security Agreement (this
“Amendment”) is entered into on December 18, 2008, by and between SILICON VALLEY
BANK (“Bank”) and I-FLOW CORPORATION, a Delaware corporation (“Borrower”) whose
address is 20202 Windrow Drive, Lake Forest, California 92630.
Recitals
     A. Bank and Borrower have entered into that certain Amended and Restated
Loan and Security Agreement dated as of May 8, 2003, (as the same may from time
to time be amended, modified, supplemented or restated, 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, as herein set
forth, and Bank has agreed to the same, but only to the extent, in accordance
with the terms, subject to the conditions and in reliance upon the
representations and warranties set forth herein.
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. The Loan Agreement is amended as follows,
effective on the date hereof:
          2.1 Revolving Advances and Credit Extensions. Sections 2.1.1, 2.1.2,
2.1.3 and 2.1.4 of the Loan Agreement are amended and restated to read as
follows:
     “2.1.1 Revolving Advances.
“(a) Availability. Subject to the terms and conditions of this Agreement and to
deduction of Reserves, Bank shall make Advances not exceeding the Availability
Amount. Amounts borrowed hereunder may be repaid and, prior to the Revolving
Line Maturity Date, reborrowed, subject to the applicable terms and conditions
precedent herein.

-1-

--------------------------------------------------------------------------------

 

“(b) Streamline Period. Borrower may, at its option, elect not to have any
Advances outstanding during specified periods of time (each, a ‘Streamline
Period’). Initially, the Streamline Period shall be in effect. To terminate a
Streamline Period, Borrower shall provide Bank at least 30 days prior written
notice thereof together with such information relating to the Eligible Accounts
and other Collateral as Bank may specify. If a Streamline Period has been
terminated, then, at least 10 days prior to requesting that a Streamline Period
be put back into effect, Borrower shall give Bank written notice thereof,
specifying the date the Streamline Period is to begin. On or prior to the
Business Day immediately preceding the commencement of the Streamline Period,
Borrower will pay to Bank, by wire transfer, an amount sufficient to repay in
full all outstanding Advances, all accrued interest thereon, and all other
outstanding monetary Obligations. A Streamline Period may not be put into effect
if (i) there are outstanding Obligations in connection with Cash Management
Services, or (ii) there are any issued (even if undrawn) Letters of Credit.
During a Streamline Period, Borrower will not be permitted to incur Obligations
in connection with Cash Management Services, and no Letters of Credit will be
issued. During a Streamline Period, Borrower may not request any Advances, and
Bank shall have no obligation to make any Advances.
“(c) Termination; Repayment. The Revolving Line terminates on the Revolving Line
Maturity Date, when the principal amount of all Advances, the unpaid interest
thereon, and all other Obligations relating to the Revolving Line shall be
immediately due and payable.
“(d) Overadvance. If at any time or for any reason any Credit Extension(s) shall
exceed any limit thereon contained herein (such excess, an ‘Overadvance’),
Borrower shall immediately pay the amount of the excess in cash to Bank, without
notice or demand. Without limiting Borrower’s obligation to repay to Bank the
amount of any Overadvance, Borrower agrees to pay Bank interest on the
outstanding amount of any Overadvance, on demand, at the Default Rate.
     “2.1.2 Letters of Credit Sublimit.
“(a) As part of the Revolving Line, Bank shall issue or have issued Letters of
Credit for Borrower’s account, provided that, after giving effect to such
Letters of Credit: (1) the total of the amount of all outstanding Letters of
Credit (including drawn but unreimbursed Letters of Credit), plus an amount
equal to the Letter of Credit Reserves shall not exceed $1,500,000; and (2) the
total of

-2-

--------------------------------------------------------------------------------

 

the amount of all outstanding Letters of Credit (including drawn but
unreimbursed Letters of Credit), plus an amount equal to the Letter of Credit
Reserves, plus the FX Reserve, plus amounts used for Cash Management Services,
and plus the outstanding principal balance of any Advances (including any
amounts used for Cash Management Services) shall not exceed the lesser of
(i) the Maximum Dollar Amount, or (ii) the Borrowing Base. The aggregate amounts
utilized hereunder shall at all times reduce the amount otherwise available for
Advances under the Revolving Line. If, on the Revolving Line Maturity Date,
there are any outstanding Letters of Credit, then on such date Borrower shall
provide to Bank cash collateral in an amount equal to 105% of the face amount of
all such Letters of Credit plus all interest, fees, and costs due or to become
due in connection therewith (as estimated by Bank in its good faith business
judgment), to secure all of the Obligations relating to said Letters of Credit.
All Letters of Credit shall be in form and substance acceptable to Bank in its
sole discretion and shall be subject to the terms and conditions of Bank’s
standard Application and Letter of Credit Agreement (the ‘Letter of Credit
Application’). Borrower agrees to execute any further documentation in
connection with the Letters of Credit as Bank may reasonably request. Borrower
further agrees to be bound by the regulations and interpretations of the issuer
of any Letters of Credit guarantied by Bank and opened for Borrower’s account or
by Bank’s interpretations of any Letter of Credit issued by Bank for Borrower’s
account, and Borrower understands and agrees that Bank shall not be liable for
any error, negligence, or mistake, whether of omission or commission, in
following Borrower’s instructions or those contained in the Letters of Credit or
any modifications, amendments, or supplements thereto.
“(b) The obligation of Borrower to immediately reimburse Bank for drawings made
under Letters of Credit shall be absolute, unconditional, and irrevocable, and
shall be performed strictly in accordance with the terms of this Agreement, such
Letters of Credit, and the Letter of Credit Application.
“(c) Borrower may request that Bank issue a Letter of Credit payable in a
Foreign Currency. If a demand for payment is made under any such Letter of
Credit, Bank shall treat such demand as an Advance to Borrower of the equivalent
of the amount thereof (plus fees and charges in connection therewith such as
wire, cable, SWIFT or similar charges) in Dollars at the then-prevailing rate of
exchange in San Francisco, California, for sales of the Foreign Currency for
transfer to the country issuing such Foreign Currency.

-3-

--------------------------------------------------------------------------------

 

“(d) To guard against fluctuations in currency exchange rates, upon the issuance
of any Letter of Credit payable in a Foreign Currency, Bank shall create a
reserve (the ‘Letter of Credit Reserve’) under the Revolving Line in an amount
equal to ten percent (10%) of the face amount of such Letter of Credit. The
amount of the Letter of Credit Reserve may be adjusted by Bank from time to time
to account for fluctuations in the exchange rate. The availability of funds
under the Revolving Line shall be reduced by the amount of such Letter of Credit
Reserve for as long as such Letter of Credit remains outstanding.
“2.1.3 Foreign Exchange Sublimit. As part of the Revolving Line, Borrower may
enter into foreign exchange contracts with Bank under which Borrower commits to
purchase from or sell to Bank a specific amount of Foreign Currency (each, a ‘FX
Forward Contract’) on a specified date (the ‘Settlement Date’); provided that,
after giving effect to such FX Forward Contracts and the FX Reserve applicable
thereto, the total of the amount of all outstanding Letters of Credit (including
drawn but unreimbursed Letters of Credit), plus an amount equal to the Letter of
Credit Reserves, plus the FX Reserve, plus amounts used for Cash Management
Services, and plus the outstanding principal balance of any Advances (including
any amounts used for Cash Management Services) shall not exceed the lesser of
(i) the Maximum Dollar Amount, or (ii) the Borrowing Base. FX Forward Contracts
shall have a Settlement Date of at least one (1) FX Business Day after the
contract date and shall be subject to a reserve of ten percent (10%) of each
outstanding FX Forward Contract in a maximum aggregate amount equal to
$1,500,000 (the ‘FX Reserve’). The aggregate amount of FX Forward Contracts at
any one time may not exceed ten (10) times the amount of the FX Reserve. The
amount otherwise available for Credit Extensions under the Revolving Line shall
be reduced by an amount equal to ten percent (10%) of each outstanding FX
Forward Contract (the ‘FX Reduction Amount’). Any amounts needed to fully
reimburse Bank will be treated as Advances under the Revolving Line and will
accrue interest at the interest rate applicable to Advances.
“2.1.4 Cash Management Services Sublimit. Borrower may use up to $1,500,000 of
the Revolving Line for Bank’s cash management services which may include
merchant services, direct deposit of payroll, business credit card, and check
cashing services identified in Bank’s various cash management services
agreements (collectively, the ‘Cash Management Services’), provided that, after
giving effect to such utilization, the total of the amount of all outstanding
Letters of Credit (including drawn but unreimbursed Letters of Credit), plus an
amount equal to the Letter of Credit Reserves, plus the FX Reserve, plus amounts
utilized for Cash Management Services, and plus the outstanding principal
balance of any Advances (including any amounts used for Cash Management
Services)

-4-

--------------------------------------------------------------------------------

 

shall not exceed the lesser of (i) the Maximum Dollar Amount, or (ii) the
Borrowing Base. Any amounts Bank pays on behalf of Borrower for any Cash
Management Services will be treated as Advances under the Revolving Line and
will accrue interest at the interest rate applicable to Advances.”
          2.2 Interest.
               (a) Delete LIBOR Option. Sections 2.2A, 3.5, 3.6 and 3.7 of the
Loan Agreement, all of which relate to LIBOR Advances, are hereby deleted from
the Loan Agreement. All references in the Loan Agreement to “LIBOR Advances” are
hereby deleted from the Loan Agreement, and all Advances shall be Prime Rate
Advances. In addition, the definitions of the following terms, all of which
relate to LIBOR Advances, are hereby deleted from the Loan Agreement:
“Continuation Date”, “Conversion Date”, “Interest Period”, “Interest Rate
Determination Date”, “LIBOR Rate”, “LIBOR Rate Margin”, “LIBOR”, “LIBOR
Advance”, “Notice of Conversion/Continuation”, “Regulatory Change”, “Reserve
Requirement”.
               (b) Interest Provisions. Section 2.3 of the Loan Agreement is
hereby amended to read as follows:
     “2.3 Payment of Interest on the Credit Extensions.
“(a) Interest Rate; Advances. Subject to Section 2.3(b), the principal amount
outstanding under the Revolving Line shall accrue interest at a per annum rate
equal to one percentage point above the Prime Rate, provided that the interest
rate in effect on any day shall not be less than four percent per annum, which
interest shall be payable monthly.
“(b) Default Rate. Immediately upon the occurrence and during the continuance of
an Event of Default, Obligations shall bear interest at a rate per annum which
is five percentage points above the rate which is otherwise applicable to the
Obligations (the ‘Default Rate’). Payment or acceptance of the increased
interest rate provided in this Section 2.3(b) is not a permitted alternative to
timely payment and shall not constitute a waiver of any Event of Default or
otherwise prejudice or limit any rights or remedies of Bank.
“(c) Adjustment to Interest Rate. Changes to the interest rate of any Credit
Extension based on changes to the Prime Rate shall be effective on the effective
date of any change to the Prime Rate and to the extent of any such change.
“(d) 360-Day Year. Interest shall be computed on the basis of a 360-day year for
the actual number of days elapsed.

-5-

--------------------------------------------------------------------------------

 

“(e) Debit of Accounts. Bank may debit any of Borrower’s deposit accounts for
principal and interest payments or any other amounts Borrower owes Bank when
due. These debits shall not constitute a set-off.
“(f) Payment; Interest Computation. Interest is payable monthly on the last
calendar day of each month. In computing interest on the Obligations, all
Payments received after 12:00 p.m. Pacific time on any day shall be deemed
received on the next Business Day. Bank shall not, however, be required to
credit Borrower’s account for the amount of any item of payment which is
unsatisfactory to Bank in its good faith business judgment, and Bank may charge
Borrower’s Designated Deposit Account for the amount of any item of payment
which is returned to Bank unpaid.”
          2.3 Financial Covenants. Section 6.7 of the Loan Agreement is hereby
amended in its entirety to read as follows:
“6.7 Financial Covenants. Borrower shall maintain at all times during the
effectiveness of this Agreement, on a consolidated basis, tested quarterly
during the term hereof (unless otherwise indicated below):
“(a) Quick Ratio. A ratio of Quick Assets to Modified Current Liabilities of at
least 1.20 to 1.00, commencing with the fiscal quarter ending September 30,
2008, and continuing each fiscal quarter thereafter.
“(b) Adjusted Net Profit. Positive Adjusted Net Profit each fiscal quarter
commencing with the fiscal quarter ending December 31, 2008, and continuing each
fiscal quarter thereafter, subject to the following exception: for the fiscal
quarter ending March 31, 2009 only, Borrower shall be permitted to have a net
loss not to exceed $750,000 (computed in the same manner as Adjusted Net
Profit).”
          2.4 Permitted Stock Repurchase. The portion of Section 7.6 of the Loan
Agreement, which presently reads as follows:
“Pay any dividends or make any distribution or payment or redeem, retire or
purchase any capital stock.”
is hereby amended in its entirety to read as follows:
“Pay any dividends or make any distribution or payment or redeem, retire or
purchase any capital stock, except that Borrower may repurchase shares of its
capital stock in compliance with applicable law, for an aggregate purchase price
not to exceed

-6-

--------------------------------------------------------------------------------

 

$10,000,000 in any calendar year (on a non-cumulative basis), commencing with
the 2008 calendar year.”
          2.5 Financial Statements, Reports, Certificates. Section 6.2 of the
Loan Agreement is hereby amended in its entirety to read as follows:
          “6.2 Financial Statements, Reports, Certificates.
“(a) Borrower will deliver to Bank: (i) as soon as available, but no later than
five days after the earlier to occur of the date each of the Reports 10-Q and
10-K of Borrower is filed or required to be filed with the Securities and
Exchange Commission, each of such 10-Q and 10-K Reports and all other documents
and information filed in connection therewith; (ii) a prompt report of any legal
actions pending or threatened against Borrower or any Subsidiary that could
result in damages or costs to Borrower or any Subsidiary of $250,000 or more
(except for product liability claims asserting chondrolysis of the shoulder, as
to which Borrower will keep Bank generally advised on an aggregate basis), on a
joint basis for all such entities; (iii) budgets, sales projections, operating
plans or other financial information Bank reasonably requests, including without
limitation annual financial projections for the each fiscal year within 90 days
after commencement of such fiscal year, as approved by Borrower’s board of
directors, together with any related business forecasts used in the preparation
of such annual financial projections; and (iv) prompt notice of any material
change in the composition of the Intellectual Property or knowledge of an event
that materially adversely affects the value of the Intellectual Property.
“(b) Concurrently with the delivery of the financial reports set forth in clause
(a)(i) above, Borrower will deliver to Bank a Compliance Certificate signed by a
Responsible Officer in the form of Exhibit D hereto.
“(c) Borrower shall allow Bank to audit Borrower’s Collateral and its books and
records at Borrower’s expense, provided that such audits will not be conducted
more frequently than once during the 90-day period ending February 28, 2009, and
not more frequently than once in each succeeding twelve-month period, provided
that (i) such audits will not be conducted more frequently than twice in any
succeeding twelve-month period in which, at any time, a Streamline Period is not
in effect, and (ii) there

-7-

--------------------------------------------------------------------------------

 

shall be no restriction on such audits if any Default or Event of Default has
occurred and is continuing.
“(d) During any period in which a Streamline Period is not in effect, Borrower
will deliver to Bank the following additional reports, in form acceptable to
Bank:
“(i) as soon as available, but no later than 30 days after the last day of each
month, a company prepared consolidating balance sheet and income statement
covering Borrower’s consolidated operations during the period certified by a
Responsible Officer, accompanied by a Compliance Certificate signed by a
Responsible Officer in the form of Exhibit D hereto; and
“(ii) within 20 days after the end of each month, (A) monthly accounts
receivable agings, aged by invoice date, (B) monthly accounts payable agings,
aged by invoice date, and outstanding or held check registers, if any, and
(C) monthly reconciliations of accounts receivable agings (aged by invoice
date), transaction reports, general ledger, and Borrowing Base certificate.”
          2.6 Defined Terms. The following definitions are hereby added to
Section 13.1 of the Loan Agreement, and, to the extent any of the following
terms are already defined in Section 13.1 of the Loan Agreement, they are
amended to read as set forth below:
“‘Adjusted Net Profit’ means net profit (a) excluding the effects of non-cash
charges related to stock compensation expense, FIN45, FIN48 and FAS5, and (b)
including any income from discontinued operations, with all of the foregoing as
determined in accordance with GAAP, consistently applied.”
“‘Advance’ or ‘Advances’ means an advance (or advances) under the Revolving
Line.”
“‘Availability Amount’ is (a) the lesser of (i) the Maximum Dollar Amount or
(ii) or the amount available under the Borrowing Base, minus (b) the amount of
all outstanding Letters of Credit (including drawn but unreimbursed Letters of
Credit) plus an amount equal to the Letter of Credit Reserve, minus (c) the FX
Reserve, minus (d) any amounts used for Cash Management Services, and minus
(e) the outstanding principal balance of any Advances.”

-8-

--------------------------------------------------------------------------------

 

“‘Borrowing Base’ is up to 80% of Eligible Accounts, as determined by Bank from
Borrower’s most recent Transaction Report; provided, however, that Bank may
decrease the foregoing percentage in its good faith business judgment based on
events, conditions, contingencies, or risks which, as determined by Bank, may
adversely affect Collateral.”
“‘Business Day’ is any day that is not a Saturday, Sunday or a day on which Bank
is closed.”
“‘Eligible Accounts’ means Accounts which arise in the ordinary course of
Borrower’s business, which meet all Borrower’s representations and warranties in
Section 5.2. Bank reserves the right at any time and from time to time, to
adjust any of the criteria set forth below and to establish new criteria in its
good faith business judgment. Unless Bank agrees otherwise in writing, Eligible
Accounts shall not include:
“(a) Accounts that the Account Debtor has not paid within ninety (90) days of
invoice date regardless of invoice payment period terms;
“(b) Accounts owing from an Account Debtor, fifty percent (50%) or more of whose
Accounts have not been paid within ninety (90) days of invoice date;
“(c) Accounts billed in the United States and owing from an Account Debtor which
does not have its principal place of business in the United States unless such
Accounts are otherwise Eligible Accounts and (i) are covered in full by credit
insurance satisfactory to Bank, less any deductible, or (ii) are supported by
letter(s) of credit acceptable to Bank, or (iii) are in an aggregate amount not
exceeding $3,500,000, or (iv) are otherwise approved by Bank in writing;
“(d) Accounts billed or payable outside of the United States unless the Bank has
a first priority, perfected security interest or other enforceable Lien in such
Accounts, in a manner satisfactory to Bank in its sole discretion;
“(e) Accounts owing from an Account Debtor to the extent that Borrower is
indebted or obligated in any manner to the Account Debtor (as creditor, lessor,
supplier or otherwise — sometimes called ‘contra’ accounts, accounts payable,
customer deposits or credit accounts), with the exception of customary credits,
adjustments and/or discounts given to an Account Debtor by Borrower in the
ordinary course of its business;
“(f) Accounts for which the Account Debtor is Borrower’s Affiliate, officer,
employee, or agent;

-9-

--------------------------------------------------------------------------------

 

“(g) Accounts with credit balances over ninety (90) days from invoice date;
“(h) Accounts owing from an Account Debtor, including Affiliates, whose total
obligations to Borrower exceed twenty-five percent (25%) of all Accounts, for
the amounts that exceed that percentage, unless Bank approves the same in
writing;
“(i) Accounts owing from an Account Debtor which is a United States government
entity or any department, agency, or instrumentality thereof, except for
(i) such Accounts as to which Borrower has assigned its payment rights to Bank
and the assignment has been acknowledged under the Federal Assignment of Claims
Act of 1940, as amended, and (ii) such Accounts which in the aggregate do not
exceed $750,000;
“(j) Accounts for demonstration or promotional equipment, or in which goods are
consigned, or sold on a ‘sale guaranteed’, ‘sale or return’, ‘sale on approval’,
or other terms if Account Debtor’s payment may be conditional;
“(k) Accounts owing from an Account Debtor that has not been invoiced or where
goods or services have not yet been rendered to the Account Debtor (sometimes
called memo billings or pre-billings);
“(l) Accounts subject to contractual arrangements between Borrower and an
Account Debtor where payments shall be scheduled or due according to completion
or fulfillment requirements where the Account Debtor has a right of offset for
damages suffered as a result of Borrower’s failure to perform in accordance with
the contract (sometimes called contracts accounts receivable, progress billings,
milestone billings, or fulfillment contracts);
“(m) Accounts owing from an Account Debtor the amount of which may be subject to
withholding based on the Account Debtor’s satisfaction of Borrower’s complete
performance (but only to the extent of the amount withheld; sometimes called
retainage billings);
“(n) Accounts subject to trust provisions, subrogation rights of a bonding
company, or a statutory trust;
“(o) Accounts owing from an Account Debtor that has been invoiced for goods that
have not been shipped to the Account Debtor unless Bank, Borrower, and the
Account Debtor have entered into an agreement acceptable to Bank in its sole
discretion

-10-

--------------------------------------------------------------------------------

 

wherein the Account Debtor acknowledges that (i) it has title to and has
ownership of the goods wherever located, (ii) a bona fide sale of the goods has
occurred, and (iii) it owes payment for such goods in accordance with invoices
from Borrower (sometimes called ‘bill and hold’ accounts);
“(p) Accounts owing from an Account Debtor with respect to which Borrower has
received Deferred Revenue (but only to the extent of such Deferred Revenue);
“(q) Accounts that represent non-trade receivables or that are derived by means
other than in the ordinary course of Borrower’s business;
“(r) Accounts for which Borrower has permitted Account Debtor’s payment to
extend beyond 90 days;
“(s) Accounts subject to chargebacks or others payment deductions taken by an
Account Debtor (but only to the extent the chargeback is determined invalid and
subsequently collected by Borrower);
“(t) Accounts in which the Account Debtor disputes liability or makes any claim
(but only up to the disputed or claimed amount), or if the Account Debtor is
subject to an Insolvency Proceeding, or becomes insolvent, or goes out of
business;
“(u) Accounts for which Bank in its good faith business judgment determines
collection to be doubtful; and
“(v) other Accounts Bank deems ineligible in the exercise of its good faith
business judgment.”
“‘Maximum Dollar Amount’ is Twenty Million Dollars ($20,000,000).”
“‘Modified Current Liabilities’ are the aggregate amount of Borrower’s Current
Liabilities (excluding deferred tax liabilities, litigation charges, and any
liabilities under Financial Accounting Standards Board Interpretation
(FIN) No. 45 and No. 48 classified as Current Liabilities).”
“‘Revolving Advance’ or ‘Revolving Advances’ means an Advance or Advances.”
“‘Revolving Line’ is an Advance or Advances in an aggregate amount of up to the
Maximum Dollar Amount outstanding at any time.”
“‘Revolving Line Maturity Date’ is December 17, 2009.”

-11-

--------------------------------------------------------------------------------

 

          2.7 Compliance Certificate. The form of Compliance Certificate,
Exhibit D to the Loan Agreement is hereby amended in its entirety to read as set
forth on Exhibit D hereto.
     3. Limited Waiver. Bank waives the requirement that Borrower comply with
the adjusted net loss financial covenant set forth in Section 6.7 (ii) of the
Loan Agreement for the fiscal quarter ending September 30, 2008. This waiver
does not constitute a waiver of Borrower’s obligation to meet said financial
covenant at any other applicable date, nor does it constitute a waiver of any of
the other terms or provisions of the Loan Agreement, or any other documents,
instruments or agreements, whether or not similar to the foregoing.
     4. Limitation of Amendments.
          4.1 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.
          4.2 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.
     5. Representations and Warranties. To induce Bank to enter into this
Amendment, Borrower hereby represents and warrants to Bank as follows:
          5.1 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;
          5.2 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;
          5.3 The organizational documents of Borrower delivered to Bank remain
true, accurate and complete and have not been amended, supplemented or restated
and are and continue to be in full force and effect;
          5.4 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;

-12-

--------------------------------------------------------------------------------

 

          5.5 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;
          5.6 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 either Borrower, except as already has been obtained or
made; and
          5.7 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.
     6. Counterparts. This Amendment may be executed in any number of
counterparts and all of such counterparts taken together shall be deemed to
constitute one and the same instrument.
     7. Effectiveness. This Amendment shall be deemed effective upon (a) the due
execution and delivery to Bank of this Amendment by each party hereto, and
(b) Borrower’s payment of an amendment fee in an amount equal to $50,000 (which
is fully earned on the date hereof, is in addition to all interest and all other
fees and is non-refundable).
[Signature page follows.]
-4

-13-

--------------------------------------------------------------------------------

 

     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       I-FLOW CORPORATION    
 
                   
By:
  /s/ Robert Anderson       By:   /s/ James R. Talevich    
 
                   
 
  Name: Robert Anderson
Title:   Senior Relationship Manager           Name: James R. Talevich
Title:   Chief Financial Officer    

[Signature Page— Amendment to Amended and Restated Loan and Security Agreement]

-14-