CREDIT AGREEMENT
Exhibit 10.1
THIS CREDIT AGREEMENT (this "Agreement") is entered into as of November 4, 2013 (the “Closing Date”), by and between SURMODICS, INC., a Minnesota corporation ("Borrower"), and XXXXX FARGO BANK, NATIONAL ASSOCIATION ("Bank").
Borrower has requested that Bank extend or continue credit to Borrower as described below, and Bank has agreed to provide such credit to Borrower on the terms and conditions contained herein.
ARTICLE I
(a) Line of Credit. Subject to the terms and conditions of this Agreement, Bank hereby agrees to make advances to Borrower from time to time up to and including November 4, 2016, not to exceed at any time the aggregate principal amount of Twenty Million Dollars ($20,000,000) ("Line of Credit"), the proceeds of which shall be used for general corporate purposes, including working capital, capital expenditures, Permitted Acquisitions and stock repurchases. Borrower's obligation to repay advances under the Line of Credit shall be evidenced by a promissory note dated as of the Closing Date ("Revolving Line of Credit Note"), all terms of which are incorporated herein by this reference.
(b) Borrowing and Repayment. Borrower may from time to time during the term of the Line of Credit borrow, partially or wholly repay its outstanding borrowings, and reborrow, subject to all of the limitations, terms and conditions contained herein or in the Revolving Line of Credit Note; provided however, that the total outstanding borrowings under the Line of Credit shall not at any time exceed the maximum principal amount available thereunder, as set forth above. If, at any time, the outstanding borrowings under the Line of Credit exceed the maximum amount permitted under this Section 1.1, Borrower shall promptly pay to Bank in cash such excess.
(c) Termination or Reduction of Line of Credit. Borrower shall have the right, upon not less than three (3) business days’ notice to Bank, to terminate the Line of Credit or, from time to time, to reduce the amount of the Line of Credit; provided that no such termination or reduction of the Line of Credit shall be permitted if, after giving effect thereto and to any prepayments of borrowings made on the effective date thereof, outstanding borrowings under the Line of Credit would exceed the aggregate principal amount of the Line of Credit. Any such reduction shall reduce permanently the Line of Credit then in effect.
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(a) Interest. The outstanding principal balance hereunder shall bear interest at the rate of interest set forth in the Revolving Line of Credit Note or other instrument or document executed in connection herewith or therewith.
(b) Computation and Payment. Interest shall be computed on the basis of a three hundred sixty (360) day year, actual days elapsed. Interest shall be payable at the times and place set forth in the Revolving Line of Credit Note or other instrument or document required hereby.
(c) Unused Commitment Fee. Borrower shall pay to Bank a fee equal to one fifth of one percent (0.20%) per annum (computed on the basis of a three hundred sixty (360) day year, actual days elapsed) on the average daily unused amount of the Line of Credit, which fee shall be calculated on a quarterly basis by Bank and shall be due and payable by Borrower in arrears on the last day of each fiscal quarter.
As security for all indebtedness and other obligations of Borrower to Bank, Borrower hereby grants to Bank security interests of first priority in all Borrower's personal property (other than Intellectual Property), as more fully described in that certain Security Agreement (the “Collateral”) between Borrower and Bank dated as of the date hereof (the “Security Agreement”).
All of the foregoing shall be evidenced by and subject to the terms of such security agreements, financing statements, and other documents as Bank shall reasonably require, all in form and substance satisfactory to Bank. Borrower shall pay to Bank immediately upon demand the full amount of all reasonable charges, costs and expenses (to include fees paid to third parties and all allocated costs of Bank personnel), expended or incurred by Bank in connection with any of the foregoing security, including without limitation, filing and recording fees and costs of appraisals, and audits.
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As used herein, “Subsidiary” is, as to any person or entity, a corporation, partnership, limited liability company or other entity of which shares of stock or other ownership interests having ordinary voting power (other than stock or such other ownership interests having such power only by reason of the happening of a contingency) to elect a majority of the board of directors or other managers of such corporation, partnership or other entity are at the time owned, or the management of which is otherwise controlled, directly or indirectly through one or more intermediaries, or both, by such person or entity.
As used herein, “Material Subsidiary” means as of the last day of each of month, any of Borrower’s direct or indirect Subsidiaries with consolidated assets of at least five percent (5.00%) of the total consolidated assets of Borrower and each of its Subsidiaries, provided further that each of SurModics SMP, LLC, DRB #10, LLC and DRB #11, LLC is not a Material Subsidiary.
As used herein, “Foreign Subsidiary” means any Subsidiary not organized under the laws of any political subdivision of the United States.
ARTICLE II
Borrower makes the following representations and warranties to Bank, which representations and warranties shall survive the execution of this Agreement and shall continue in full force and effect until the full and final payment, and satisfaction and discharge, of all obligations of Borrower to Bank subject to this Agreement.
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(a) Borrower is not an “investment company” or a company “controlled” by an “investment company” under the Investment Company Act. Borrower is not engaged as one of its important activities in extending credit for margin stock (under Regulations T and U of the Federal Reserve Board of Governors). Borrower has not violated any laws, ordinances or rules, including the Federal Fair Labor Standards Act, the violation of which could reasonably be expected to have a material adverse effect. Borrower has obtained all consents, approvals and authorizations of, made all declarations or filings with, and given all notices to, all government authorities that are necessary to continue its businesses as currently conducted where the failure to have such authorizations could have a material adverse effect on Borrower.
(b) Borrower is in compliance with (i) the Trading with the Enemy Act, as amended, and each of the foreign assets control regulations of the United States Treasury Department (31 CFR, Subtitle B, Chapter V, as amended) and any other enabling legislation or executive order relating thereto, and (ii) the Uniting And Strengthening America By Providing Appropriate Tools Required To Intercept And Obstruct Terrorism (USA Patriot Act of 2001) and the USA PATRIOT Improvement and Reauthorization Act of 2005 (Pub. L. 109-177) (the “Patriot Act”). No part of the proceeds of the Line of Credit or any other extension of credit from Bank from time to time, will be used, directly or indirectly, for any payments to any governmental official or employee, political party, official of a political party, candidate for political office, or anyone else acting in an official capacity, in order to obtain, retain or direct business or obtain any improper advantage, in violation of the United States Foreign Corrupt Practices Act of 1977, as amended.
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(c) Borrower (i) is not a person whose property or interest in property is blocked or subject to blocking pursuant to Section 1 of Executive Order 13224 of September 23, 2001 Blocking Property and Prohibiting Transactions With Persons Who Commit, Threaten to Commit, or Support Terrorism (66 Fed. Reg. 49079 (2001), (ii) does not engage in any dealings or transactions prohibited by Section 2 of such executive order, or is otherwise associated with any such person in any manner violative of Section 2, and (iii) is not a person on the list of Specially Designated Nationals and Blocked Persons or subject to the limitations or prohibitions under any other U.S. Department of Treasury’s Office of Foreign Assets Control regulation or executive order.
ARTICLE III
(a) Approval of Bank Counsel. All legal matters incidental to the extension of credit by Bank shall be reasonably satisfactory to Bank's counsel.
(b) Documentation. Bank shall have received, in form and substance reasonably satisfactory to Bank, each of the following, duly executed:
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(i)
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this Agreement, the Security Agreement and the Revolving Line of Credit Note or other instrument or document required hereby; |
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(ii)
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a Certificate of Incumbency from each of Borrower and SurModics IVD, Inc.; |
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(iii)
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Corporate Resolutions: Borrowing; |
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(iv)
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a Perfection Certificate from each of Borrower and SurModics IVD, Inc., together with the duly executed original signatures thereto; |
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(v)
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a Continuing Guaranty and Security Agreement from SurModics IVD, Inc., together with Resolutions to Guaranty; |
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(vi)
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the original share or membership interest certificate(s) for each of SurModics IVD, Inc., SurModics SMP, LLC, DRB #10, LLC and DRB #11, LLC, together with assignments separate from certificate; and |
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(vii)
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such other documents as Bank may require under any other Section of this Agreement. |
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(c) Insurance. Borrower shall have delivered to Bank evidence of insurance coverage on all Borrower's property, in form, substance, amounts, covering risks and issued by companies reasonably satisfactory to Bank, and where required by Bank, with loss payable endorsements in favor of Bank.
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(a) Compliance. The representations and warranties contained herein and in each of the other Loan Documents shall be true on and as of the date of the signing of this Agreement and in all material respects (except that such materiality qualifier shall not be applicable to any representation and warranties that are already qualified or modified by materiality in the text thereof) on the date of each extension of credit by Bank pursuant hereto, with the same effect as though such representations and warranties had been made on and as of each such date (except to the extent that such representations and warranties relate solely to such earlier date, in which case such representation and warranty shall continue to be true and correct as of such earlier date), and on each such date no Event of Default as defined herein, and no condition, event or act which with the giving of notice or the passage of time or both would constitute such an Event of Default, shall have occurred and be continuing or shall exist.
(b) Documentation. Bank shall have received all additional documents which may be required in connection with such extension of credit.
(c) Financial Condition. There shall have been no material adverse change, as determined by Bank, in the financial condition or business of Borrower, nor any material decline, as determined by Bank, in the market value of any collateral required hereunder or a substantial or material portion of the assets of Borrower.
ARTICLE IV
Borrower covenants that so long as Bank remains committed to extend credit to Borrower pursuant hereto, or any liabilities (whether direct or contingent (other than inchoate indemnity obligations and obligations that have been cash collateralized pursuant to the terms of the Security Agreement), liquidated or unliquidated) of Borrower to Bank under any of the Loan Documents remain outstanding, and until payment in full or cash collateralization pursuant to the terms of the Security Agreement of all obligations of Borrower under the Loan Documents other than contingent indemnification obligations, Borrower shall, unless Bank otherwise consents in writing:
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(a) not later than ninety (90) days after and as of the end of each fiscal year, CPA audited consolidated financial statements of Borrower, prepared by Deloitte & Touche LLP or another CPA firm reasonably acceptable to Bank, together with an unqualified opinion with respect to the financial statements prepared by such CPA firm, which financial statements shall include a balance sheet, income statement, statement of cash flows, auditor’s report and all supporting schedules;
(b) not later than forty five (45) days after and as of the end of each quarter, a consolidated financial statement of Borrower, prepared by Borrower, to include a balance sheet, income statement and cash flow statement;
(c) contemporaneously with each annual and quarterly financial statement of Borrower required hereby, a Compliance Certificate executed by the president, chief financial officer or controller of Borrower, including a certification that said financial statements are accurate and that there exists no Event of Default nor any condition, act or event which with the giving of notice or the passage of time or both would constitute an Event of Default;
(d) as soon as available after approval thereof by Borrower’s Board of Directors, but no later than sixty (60) days after the last day of each of Borrower’s fiscal years, Borrower’s financial projections for the then current fiscal year as approved by Borrower’s Board of Directors; and
(e) from time to time such other information as Bank may reasonably request.
Documents required to be delivered pursuant to Section 4.3(a) and Section 4.3(b) (to the extent any such documents are included in materials otherwise filed with the Securities and Exchange Commission) may be delivered electronically to Bank, and if so delivered, shall be deemed to have been delivered to Bank on the date on which Borrower files such documents with the Securities and Exchange Commission.
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(a) Total Leverage Ratio. Total Funded Debt to EBITDA not greater than 2.00 to 1.00 as of each fiscal quarter end, determined on a rolling 4-quarter basis, with "Funded Debt" defined as the sum of all obligations for borrowed money (including subordinated debt) plus all capital lease obligations and with “EBITDA” defined as net profit of Borrower and its Subsidiaries on a consolidated basis before tax plus (i) interest expense (net of capitalized interest expense), (ii) depreciation expense, (iii) amortization expense, (iv) non-cash stock compensation expense, (v) in an amount not to exceed Three Million Dollars ($3,000,000) for each 4-quarter period determined on a rolling 4-quarter basis, non-cash gain/loss related to strategic investments, and (vi) in an amount not to exceed Two Hundred Fifty Thousand Dollars ($250,000) for each 4-quarter period determined on a rolling 4-quarter basis, cash and non-cash expenses related to discontinued operations and one-time cash and non-cash expenses. To the extent that EBITDA is calculated for any fiscal period in which a person or business unit has been acquired by Borrower in any Permitted Acquisition for any portion of such period being tested, EBITDA shall include the “actual” EBITDA of such acquired person or business unit for the relevant time period prior to such person or business being acquired to the extent necessary to calculate EBITDA for such entire period.
(b) EBITDA. EBITDA of not less than Fifteen Million Dollars ($15,000,000) as of each fiscal quarter end, determined on a rolling 4-quarter basis.
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ARTICLE V
Borrower further covenants that so long as Bank remains committed to extend credit to Borrower pursuant hereto, or any liabilities (whether direct or contingent (other than inchoate indemnity obligations and obligations that have been cash collateralized pursuant to the terms of the Security Agreement), liquidated or unliquidated) of Borrower to Bank under any of the Loan Documents remain outstanding, and until payment in full or cash collateralization pursuant to the terms of the Security Agreement of all obligations of Borrower under the Loan Documents (other than contingent indemnification obligations), Borrower will not without Bank's prior written consent:
As used herein, “Indebtedness” shall be construed in its most comprehensive sense and shall include any and all advances, debts, obligations and liabilities of Borrower, heretofore, now or hereafter made, incurred or created, whether voluntary or involuntary and however arising, whether due or not due, absolute or contingent, liquidated or unliquidated, determined or undetermined, including under any swap, derivative, foreign exchange, hedge, deposit, treasury management or other similar transaction or arrangement, and whether Borrower may be liable individually or jointly with others, or whether recovery upon such Indebtedness may be or hereafter becomes unenforceable but excluding any trade payables in the ordinary course of business or earn-outs or purchase price adjustments.
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As used herein, “Permitted Indebtedness” shall mean: (i) Indebtedness of Borrower in favor of Bank arising under this Credit Agreement, the Revolving Line of Credit Note or other instrument or documents executed in connection therewith with Bank or Bank’s affiliates; (ii) Indebtedness existing as of the Closing Date and disclosed to Bank in writing on or prior to such date; (iii) Indebtedness secured by a Lien described in clause (vi) of the definition of Permitted Liens below, provided (A) such Indebtedness does not exceed the lesser of the cost or fair market value of the equipment financed with such Indebtedness, (B) such Indebtedness does not exceed Five Hundred Thousand Dollars ($500,000) in the aggregate at any given time, and (C) the holder of such Indebtedness agrees to waive any rights of set off such holder may have with respect to such Indebtedness in the deposit or investment accounts of Borrower and its subsidiaries on terms reasonably satisfactory to Bank; (iv) any Indebtedness incurred by Borrower that is either (A) unsecured Indebtedness or (B) Indebtedness subordinated to the Indebtedness owing by Borrower to Bank (and identified as being such by Bank), provided that in the case of both (A) and (B), (X) such Indebtedness is on terms and in form and substance satisfactory to Bank and (Y) in an amount not to exceed Forty Million Dollars ($40,000,000) in the aggregate; (v) Indebtedness incurred for the acquisition of supplies or inventory on normal trade credit; (vi) unsecured Indebtedness consisting of swaps, derivatives, or foreign exchanges in connection with hedge transactions (defined as the net obligations under any such arrangement) with a financial institution other than Bank or Bank’s affiliates or any deposit or treasury management obligations with a financial institution outside of Bank or Bank’s affiliates so long as in each case, such Indebtedness does not exceed One Million Dollars ($1,000,000) in the aggregate at any given time, (vii) purchase money Indebtedness secured by a Lien described in clause (vii) of the definition of Permitted Liens below in an amount not to exceed Two Million Dollars ($2,000,000), provided that the incurrence of such Indebtedness would not cause Borrower to be in default under Section 4.9(a), (viii) extensions, refinancings, modifications, amendments and restatements of any item of Permitted Indebtedness described in (i) through (vii) above; and (ix) any other Indebtedness permitted in writing by Bank.
As used herein, “Permitted Licenses” shall mean (a) licenses of over-the-counter software that is commercially available to the public, and (b) non-exclusive and exclusive licenses for the use of the Intellectual Property of Borrower or any of its Subsidiaries entered into in the ordinary course of business, provided, that, with respect to each such license described in clause (b), (i) such licenses could not reasonably be expected to have a material adverse effect on the financial condition or operations of Borrower; and (ii) all upfront payments, royalties, milestone payments or other proceeds arising from the licensing agreement that are payable to Borrower or any of its Subsidiaries are paid to a deposit account that is governed by an account control agreement or an account pursuant to which Bank has control.
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As used herein, “Lien” shall mean, with respect to any property, any security interest, mortgage, pledge, lien, claim, charge or other encumbrance in, of, or on such property or the income therefrom, including, without limitation, the interest of a vendor or lessor under a conditional sale agreement, capital lease or other title retention agreement, or any agreement to provide any of the foregoing, and the filing of any financing statement or similar instrument under the Uniform Commercial Code or comparable law of any jurisdiction.
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As used herein, “Permitted Liens” shall mean and include: (i) Liens in favor of Bank; (ii) Liens existing as of the Closing Date and disclosed to Bank in writing on or prior to such date; (iii) other Liens subordinated to the Liens in favor of Bank through subordination agreements in form and substance satisfactory to Bank; (iv) Liens of carriers, warehousemen, mechanics, materialmen, vendors, and landlords incurred in the ordinary course of business for sums not overdue or being contested in good faith, provided provision is made to the reasonable satisfaction of Bank for the eventual payment thereof if subsequently found payable; (v) leases or subleases and non-exclusive licenses or sublicenses granted in the ordinary course of Borrower’s business; (vi) Liens upon or in any equipment which was acquired or held by Borrower to secure the purchase price of such equipment (and any accessions, attachments, replacements or improvements thereon) or Indebtedness incurred solely for the purpose of financing the acquisition of such equipment (and any accessions, attachments, replacements or improvements thereon); (vii) Liens existing on any equipment (and any accessions, attachments, replacements or improvements thereon) at the time of its acquisition (including in connection with a Permitted Acquisition), provided that the Lien is confined solely to the property so acquired and any accessions, attachments, replacements or improvements thereon, and the proceeds of such equipment (and any accessions, attachments, replacements or improvements thereon); (viii) provided that Borrower complies with Section 4.11 hereof, bankers’ Liens, rights of setoff and similar Liens incurred on deposits or securities accounts made in the ordinary course of business to the extent Bank has a security interest in such accounts; (ix) Liens arising from judgments, decrees or attachments in circumstances not constituting an Event of Default; (x) Liens for taxes, in circumstances not constituting an Event of Default, and not at the time delinquent or thereafter payable without penalty or being contested in good faith, provided provision is made to the reasonable satisfaction of Bank for the eventual payment thereof if subsequently found payable; (xi) Liens in favor of customs and revenue authorities arising as a matter of law to secure payments of customs duties in connection with the importation of goods; (xii) Liens arising from precautionary UCC filings regarding true operating leases; (xiii) Liens securing subordinated debt permitted by clause (iv) of the definition of “Permitted Indebtedness”; (xiv) in the case of any of Borrower’s property, covenants, restrictions, rights and easements and minor irregularities in title which do not materially interfere with its business or operations as presently conducted; and (xx) any other Liens permitted in writing by Bank.
SECTION 5.9 AGREEMENTS NOT TO ENCUMBER. Agree with any person other than Bank not to grant or allow to exist a Lien upon any of its property, including real property and Intellectual Property (as defined below), or covenant to any other person that Borrower in the future will refrain from creating, incurring, assuming or allowing any Lien with respect to any of Borrower’s property, including real property and Intellectual Property.
As used herein, “Intellectual Property” shall mean any copyright rights, copyright applications, copyright registrations and like protections in each work of authorship and derivative work, whether published or unpublished, any patents, patent applications and like protections, including improvements, divisions, continuations, renewals, reissues, extensions, and continuations-in-part of the same, trademarks, service marks and, to the extent permitted under applicable law, any applications therefor, whether registered or not, know-how, trade secret rights, rights to unpatented inventions, or any claims for damages by way of any past, present and future infringement of any of the foregoing.
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ARTICLE VI
SECTION 6.1. The occurrence of any of the following shall constitute an "Event of Default" under this Agreement:
(a) Borrower shall fail to pay when due any principal, interest, fees or other amounts payable under any of the Loan Documents or any other note, contract, instrument or document between Borrower and Bank.
(b) Any financial statement or certificate furnished to Bank in connection with, or any representation or warranty made by Borrower or any other party under this Agreement or any other Loan Document shall prove to be incorrect, false or misleading in any material respect when furnished or made.
(c) Any default in the performance of or compliance with any obligation, agreement or other provision contained herein or in any other Loan Document (other than those specifically described as an “Event of Default” in this Section 6.1 and Section 3.3), and with respect to any such default that by its nature can be cured, such default shall continue for a period of thirty (30) days from its occurrence.
(d) Any default in the payment or performance of any obligation, or any defined event of default, under the terms of any contract, instrument or document (other than any of the Loan Documents) pursuant to which Borrower or any guarantor hereunder (referred to herein as a "Third Party Obligor") has incurred any debt or other liability to any person or entity having an outstanding principal amount in excess of One Million Dollars ($1,000,000).
(e) Borrower or any Third Party Obligor shall become insolvent, or shall suffer or consent to or apply for the appointment of a receiver, trustee, custodian or liquidator of itself or any of its property, or shall generally fail to pay its debts as they become due, or shall make a general assignment for the benefit of creditors; Borrower or any Third Party Obligor shall file a voluntary petition in bankruptcy, or seeking reorganization, in order to effect a plan or other arrangement with creditors or any other relief under the Bankruptcy Reform Act, Title 11 of the United States Code, as amended or recodified from time to time ("Bankruptcy Code"), or under any state or federal law granting relief to debtors, whether now or hereafter in effect; or Borrower or any Third Party Obligor shall file an answer admitting the jurisdiction of the court and the material allegations of any involuntary petition; or Borrower or any Third Party Obligor shall be adjudicated a bankrupt, or an order for relief shall be entered against Borrower or any Third Party Obligor by any court of competent jurisdiction under the Bankruptcy Code or any other applicable state or federal law relating to bankruptcy, reorganization or other relief for debtors.
(f) The filing of a notice of judgment lien against Borrower or any Third Party Obligor in an amount in excess, either individually or in the aggregate for all such filings, of One Million Dollars ($1,000,000); or the recording of any abstract of judgment against Borrower or any Third Party Obligor in an amount in excess, either individually or in the aggregate for all such filings, of One Million Dollars ($1,000,000) in any county in which Borrower or such Third Party Obligor has an interest in real property; or the service of a notice of levy and/or of a writ of attachment or execution, or other like process, against the assets of Borrower or any Third Party Obligor to the extent that such lien or process is not released, vacated or fully bonded within thirty (30) days after its issuance or levy; or the entry of a judgment against Borrower or any Third Party Obligor in excess of One Million Dollars ($1,000,000) (to the extent not fully covered by insurance as to which the insurance company has acknowledged coverage); or any involuntary petition or proceeding pursuant to the Bankruptcy Code or any other applicable state or federal law relating to bankruptcy, reorganization or other relief for debtors is filed or commenced against Borrower or any Third Party Obligor and continues undismissed or unstayed for thirty (30) days, or an order for relief is entered in any such proceedings.
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(g) The dissolution or liquidation of Borrower or any Third Party Obligor; or Borrower or any such Third Party Obligor, or any of its directors, stockholders or members, shall take action seeking to effect the dissolution or liquidation of Borrower or such Third Party Obligor (other than any transaction with Borrower permitted by Section 5.4 or any dissolution or liquidation pursuant to which the assets of any Third Party Obligor are entirely contributed to Borrower).
(h) Any change in control of Borrower, with “change in control” defined as any event or series of events whereby any person or “group” (as such term is used in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934, but excluding any employee benefit plan of such person or its subsidiaries, and any person or entity acting in its capacity as trustee, agent or other fiduciary or administrator of any such plan) is or becomes the “beneficial owner” (as defined in Rules 13d-3 and 13d-5 under the Securities Exchange Act of 1934) directly or indirectly of more than thirty-five percent (35%) or more of the common stock of Borrower.
ARTICLE VII
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BORROWER:
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SURMODICS, INC.
0000 Xxxx 00xx Xxxxxx
Xxxx Xxxxxxx, XX 00000
Attn: Xxxxxx X.X. XxXxxxxx
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BANK:
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XXXXX FARGO BANK, NATIONAL ASSOCIATION
000 Xxxxxxxx Xxxxxx, Xxxxx 000
Xxxx Xxxx, XX 00000
Attn: Loan Team Manager
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or to such other address as any party may designate by written notice to all other parties. Each such notice, request and demand shall be deemed given or made as follows: (a) if sent by hand delivery, upon delivery; (b) if sent by mail, upon the earlier of the date of receipt or three (3) days after deposit in the U.S. mail, first class and postage prepaid; and (c) if sent by telecopy, upon receipt.
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SECTION 7.10. GOVERNING LAW. This Agreement shall be governed by and construed in accordance with the laws of the State of California.
(a) Arbitration. The parties hereto agree, upon demand by any party, to submit to binding arbitration all claims, disputes and controversies between or among them (and their respective employees, officers, directors, attorneys, and other agents), whether in tort, contract or otherwise in any way arising out of or relating to (i) any credit subject hereto, or any of the Loan Documents, and their negotiation, execution, collateralization, administration, repayment, modification, extension, substitution, formation, inducement, enforcement, default or termination; or (ii) requests for additional credit.
(b) Governing Rules. Any arbitration proceeding will (i) proceed in a location in California selected by the American Arbitration Association (“AAA”); (ii) be governed by the Federal Arbitration Act (Title 9 of the United States Code), notwithstanding any conflicting choice of law provision in any of the documents between the parties; and (iii) be conducted by the AAA, or such other administrator as the parties shall mutually agree upon, in accordance with the AAA’s commercial dispute resolution procedures, unless the claim or counterclaim is at least One Million Dollars ($1,000,000) exclusive of claimed interest, arbitration fees and costs in which case the arbitration shall be conducted in accordance with the AAA’s optional procedures for large, complex commercial disputes (the commercial dispute resolution procedures or the optional procedures for large, complex commercial disputes to be referred to herein, as applicable, as the “Rules”). If there is any inconsistency between the terms hereof and the Rules, the terms and procedures set forth herein shall control. Any party who fails or refuses to submit to arbitration following a demand by any other party shall bear all costs and expenses incurred by such other party in compelling arbitration of any dispute. Nothing contained herein shall be deemed to be a waiver by any party that is a bank of the protections afforded to it under 12 U.S.C. §91 or any similar applicable state law.
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(c) No Waiver of Provisional Remedies, Self-Help and Foreclosure. The arbitration requirement does not limit the right of any party to (i) foreclose against real or personal property collateral; (ii) exercise self-help remedies relating to collateral or proceeds of collateral such as setoff or repossession; or (iii) obtain provisional or ancillary remedies such as replevin, injunctive relief, attachment or the appointment of a receiver, before during or after the pendency of any arbitration proceeding. This exclusion does not constitute a waiver of the right or obligation of any party to submit any dispute to arbitration or reference hereunder, including those arising from the exercise of the actions detailed in sections (i), (ii) and (iii) of this paragraph.
(d) Arbitrator Qualifications and Powers. Any arbitration proceeding in which the amount in controversy is Five Million Dollars ($5,000,000) or less will be decided by a single arbitrator selected according to the Rules, and who shall not render an award of greater than Five Million Dollars ($5,000,000). Any dispute in which the amount in controversy exceeds Five Million Dollars ($5,000,000) shall be decided by majority vote of a panel of three arbitrators; provided however, that all three arbitrators must actively participate in all hearings and deliberations. The arbitrator will be a neutral attorney licensed in the State of California or a neutral retired judge of the state or federal judiciary of California, in either case with a minimum of ten years’ experience in the substantive law applicable to the subject matter of the dispute to be arbitrated. The arbitrator will determine whether or not an issue is arbitratable and will give effect to the statutes of limitation in determining any claim. In any arbitration proceeding the arbitrator will decide (by documents only or with a hearing at the arbitrator's discretion) any pre-hearing motions which are similar to motions to dismiss for failure to state a claim or motions for summary adjudication. The arbitrator shall resolve all disputes in accordance with the substantive law of California and may grant any remedy or relief that a court of such state could order or grant within the scope hereof and such ancillary relief as is necessary to make effective any award. The arbitrator shall also have the power to award recovery of all costs and fees, to impose sanctions and to take such other action as the arbitrator deems necessary to the same extent a judge could pursuant to the Federal Rules of Civil Procedure, the California Rules of Civil Procedure or other applicable law. Judgment upon the award rendered by the arbitrator may be entered in any court having jurisdiction. The institution and maintenance of an action for judicial relief or pursuit of a provisional or ancillary remedy shall not constitute a waiver of the right of any party, including the plaintiff, to submit the controversy or claim to arbitration if any other party contests such action for judicial relief.
(e) Discovery. In any arbitration proceeding, discovery will be permitted in accordance with the Rules. All discovery shall be expressly limited to matters directly relevant to the dispute being arbitrated and must be completed no later than twenty (20) days before the hearing date. Any requests for an extension of the discovery periods, or any discovery disputes, will be subject to final determination by the arbitrator upon a showing that the request for discovery is essential for the party's presentation and that no alternative means for obtaining information is available.
(f) Class Proceedings and Consolidations. No party hereto shall be entitled to join or consolidate disputes by or against others in any arbitration, except parties who have executed any Loan Document, or to include in any arbitration any dispute as a representative or member of a class, or to act in any arbitration in the interest of the general public or in a private attorney general capacity.
(g) Payment Of Arbitration Costs And Fees. The arbitrator shall award all costs and expenses of the arbitration proceeding.
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(h) Reserved.
(i) Miscellaneous. To the maximum extent practicable, the AAA, the arbitrators and the parties shall take all action required to conclude any arbitration proceeding within 180 days of the filing of the dispute with the AAA. No arbitrator or other party to an arbitration proceeding may disclose the existence, content or results thereof, except for disclosures of information by a party required in the ordinary course of its business or by applicable law or regulation. If more than one agreement for arbitration by or between the parties potentially applies to a dispute, the arbitration provision most directly related to the Loan Documents or the subject matter of the dispute shall control. This arbitration provision shall survive termination, amendment or expiration of any of the Loan Documents or any relationship between the parties.
(j) Small Claims Court. Notwithstanding anything herein to the contrary, each party retains the right to pursue in Small Claims Court any dispute within that court’s jurisdiction. Further, this arbitration provision shall apply only to disputes in which either party seeks to recover an amount of money (excluding attorneys’ fees and costs) that exceeds the jurisdictional limit of the Small Claims Court.
[Balance of Page Intentionally Left Blank]
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SURMODICS, INC.
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XXXXX FARGO BANK,
NATIONAL ASSOCIATION
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| By: /s/ Xxxx XxXxxxxx | By: | ||
| Name: Xxxx XxXxxxxx |
Name:
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Title: Chief Financial Officer and Vice President
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Title: | ||
[Signature Page to Credit Agreement]
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