FIRST AMENDMENT TO CREDIT AGREEMENT
Exhibit 10.1
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FIRST AMENDMENT TO CREDIT AGREEMENT
This First Amendment To Credit Agreement (this “Amendment”) is entered into as of
February 28, 2011, by and among SurModics, Inc., a Minnesota corporation (the “Borrower”),
the financial institutions from time to time party to the Credit Agreement (defined below) (the
“Lenders”) and Xxxxx Fargo Bank, National Association, a national banking association (in
its individual capacity, “Xxxxx Fargo”), and Xxxxx Fargo as sole lead arranger and as
administrative agent for the Lenders (in such administrative agent capacity, the “Agent”).
RECITALS
A. Borrower is currently indebted to Lenders pursuant to the terms and conditions of that
certain Credit Agreement between Borrower and Lenders dated as of February 27, 2009, as amended
from time to time (“Credit Agreement”).
B. Lenders and Borrower have agreed to certain changes in the terms and conditions set forth
in the Credit Agreement and have agreed to amend the Credit Agreement to reflect said changes.
NOW, THEREFORE, for valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree that the Credit Agreement shall be amended as follows:
1. Defined Terms. Capitalized terms used in this Amendment that are defined in the Credit
Agreement shall have the same meanings as defined therein, unless otherwise defined herein. In
addition the following definitions set forth in the Credit Agreement shall be deleted in their
entirety and replaced with the following:
“Acquisition Limit” means $15,000,000.
“Federal Funds Rate” means, for any day, the rate per annum equal to the weighted
average of the rates on overnight Federal funds transactions with members of the Federal
Reserve System arranged by Federal funds brokers for the immediately preceding day, as
published by the Federal Reserve Bank of New York; provided that if no such rate is so
published on any day, then the Federal Funds Rate for such day shall be the rate most
recently published.
“Floating Rate” means with respect to any Floating Rate Advances, a fluctuating rate
equal to the highest of: (i) the Prime Rate in effect on such day, (ii) a rate determined by
Bank to be two and a half percent (2.50%) above the LIBOR Base Rate applicable to a 30-day
Interest Period, and (iii) the Federal Funds Rate plus one and one-half of one percent
(1.50%).
“Revolving Loan Commitment” means $15,000,000.00.
“Quick Ratio” means for any period the aggregate of unrestricted cash, and unrestricted
Marketable Securities (including any “available for sale” Marketable Securities classified
as long term for balance sheet purposes and the fair market value of any Marketable
Securities classified as “held to maturity” for balance sheet purposes) divided by total
current liabilities (including any non-current portion of revolving debt and any outstanding
letters of credit), as determined in accordance with GAAP.
“Termination Date” means the earliest of (a) Xxxxx 00, 0000, (x) the date on which the
Revolving Loan Commitment is terminated by Borrower pursuant to Section 2.11 hereof, or (c)
the date on which the Revolving Loan Commitment is terminated by the Lender pursuant to
Section 7.2 hereof.
2. Revolving Loan Facility. Section 2.1(a) of the Credit Agreement is hereby deleted in its
entirety and replaced with the following:
(a) Revolving Loan Facility. On the terms and subject to conditions hereof, each
Lender severally agrees to make revolving credit loans (“Revolving Loans”) to the
Borrower from time to time from the date hereof to the Termination Date in an
aggregate principal amount at any one time outstanding which, when added to such
Lender’s Pro Rata Share of the Letter of Credit Obligations then outstanding, does
not exceed the amount of such Lender’s Commitment; provided, however, that no
Advance will be made in any amount and no Letter of Credit will be issued which,
after giving effect thereto, would cause the Total Outstandings to exceed the
Revolving Loan Commitment.
3. Increases to Revolving Loan Commitment. Notwithstanding anything to the contrary contained
in the Credit Agreement, the provisions of Section 2.1(a)(iii) of the Credit Agreement are hereby
suspended until further written notice from Agent to Borrower. Borrower acknowledges and agrees
that until such notice is received from the Agent, Borrower shall not request any increases to the
Revolving Loan Commitment.
4. Margins/Letter of Credit Fee/Unused Commitment Fee Percentage. Section 2.4(c) of the
Credit Agreement is hereby deleted in its entirety and replaced with the following:
(c) The “Margins,” “Letter of Credit Fee” and “Unused Commitment Fee
Percentage” from February 28, 2011 through and including the first adjustment
occurring as specified below shall be 2.00% for LIBOR Advances, and Letters of
Credit and 0.250% for the Unused Commitment Fee Percentage. Commencing on the third
Business Day after the Borrower delivers financial statements pursuant to Section
5.1, for each fiscal quarter (each a “Margin/Fee Adjustment Date”), the Margins, the
Letter of Credit Fee and Unused Commitment Fee Percentage shall be adjusted, on the
basis of the ratio of Borrower’s Funded Debt to EBITDA (as calculated at the end of
the previous calendar quarter in accordance with Section 5.2(a)), in accordance with
the
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following table, provided however that the Margin accruing on then existing
LIBOR Advances shall not be adjusted.
Funded Debt to | Letter of | Unused Commitment | ||||||||||
EBITDA | LIBOR Advances | Credit Fees | Fee Percentage | |||||||||
< 0.75 |
2.00 | % | 2.00 | % | 0.25 | % | ||||||
≥ 0.75 < 1.25 |
2.25 | % | 2.25 | % | 0.375 | % | ||||||
≥ 1.25 |
2.50 | % | 2.50 | % | 0.50 | % |
Notwithstanding the foregoing, no reduction in the Margins will be made if a Default
or an Event of Default exists at the time that such reduction would otherwise be
made. If Borrower fails to deliver its financial statements in accordance with
Section 5.1, the Margins and fees due under this Section 2.5(c) shall adjust to the
highest ratio set forth in the table above beginning on the date that delivery of
such financial statement was due under Section 5.1, below.
5. Minimum Net Income. Section 5.2(c) of the Credit Agreement is hereby deleted in its
entirety and replaced with the following:
5.2(c) Minimum EBITDA. The Borrower shall achieve, on a consolidated basis, EBITDA
each fiscal quarter of not less than $750,000.
6. Dividends and Distributions. The following is hereby added to the Credit Agreement as
Section 6.12:
6.12 Limitations on Restricted Payments. Declare or pay any dividend on, or make
any payment or other distribution on account of, or purchase, redeem, retire or
otherwise acquire (directly or indirectly), or set apart assets for a sinking or
other analogous fund for the purchase, redemption, retirement or other acquisition
of, any class of its capital stock or the capital stock of any of its Subsidiaries,
or make any distribution of cash, property or assets to the holders of shares of
capital stock of Borrower or any Subsidiary thereof (all of the foregoing, the
“Restricted Payments”), except:
a. the Borrower or any Subsidiary thereof may pay dividends in shares
of its own capital stock;
b. any Subsidiary of the Borrower may pay cash dividends to the
Borrower; and
c. so long as no Default or Event of Default has occurred and is
continuing or would result therefrom, Borrower may make Restricted Payments:
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(i) without limitation, so long as no Advances are outstanding under
the Revolving Loan Facility, and
(ii) after an Advance is made under the Revolving Loan Facility, in an
aggregate amount (including all Restricted Payments made on or after
February 28, 2011) not to exceed $15,000,000; provided, however, if Borrower
has made Restricted Payments equal to or exceeding $15,000,000 prior to
taking or requesting an Advance under the Revolving Loan Facility, Borrower
shall not make any additional Restricted Payments without prior written
consent of the Agent.
7. Consent to Disposition of Subsidiary. Notwithstanding the prohibitions contained in
Section 6.2 of the Credit Agreement, Xxxxx Fargo, in its capacity as Agent and as a Lender, hereby
consents to the Borrower’s disposition of the Stock or all or substantially all of the assets of
SurModics Pharmaceuticals, Inc. to one or more third parties. Borrower hereby agrees to give Agent
ten (10) days written notice prior to the consummation of any sale related to SurModics
Pharmaceuticals, Inc. and further agrees to deliver such documentation related to any such sale as
may be requested by the Agent.
8. Waiver of Default. The Borrower is in default of the following existing provision of the
Credit Agreement (collectively, the “Existing Default”):
Required | ||||||||
Section/Covenant | Performance | Actual Performance | ||||||
5.2(c) — Minimum Net Income |
||||||||
Fiscal Quarter Ended September 30,
2010 |
$ | 750,000 | ($876,492 | ) | ||||
Fiscal Year Ended September 30, 2010 |
$ | 5,000,000 | $ | 4,548,198 |
Upon the terms and conditions set forth in this Amendment, the Bank hereby waives the Existing
Default. This waiver shall be effective only in this specific instance and for the specific
purpose for which it is provided, and this waiver shall not entitle the Borrower to any other or
further waiver in any similar or other circumstances.
9. No Other Changes. Except as specifically provided herein, all terms and conditions of the
Credit Agreement remain in full force and effect, without waiver or modification. All terms
defined in the Credit Agreement shall have the same meaning when used in this Amendment. This
Amendment and the Credit Agreement shall be read together, as one document.
10. Conditions Precedent. This Amendment shall be effective when the Lender shall have
received an executed original hereof, and such other matters as the Lender may require, each in
substance and form acceptable to the Lender in its sole discretion.
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11. Representations and Warranties. The Borrower hereby represents and warrants to the Lender
as follows:
(a) The Borrower has all requisite power and authority to execute this Amendment and any
other agreements or instruments required hereunder and to perform all of its obligations
hereunder, and this Amendment and all such other agreements and instruments has been duly
executed and delivered by the Borrower and constitute the legal, valid and binding
obligation of the Borrower, enforceable in accordance with its terms, not subject to any
defense, right of setoff or counterclaim, and to the extent any of the same so exist, each
is hereby absolutely and forever waived and released.
(b) The execution, delivery and performance by the Borrower of this Amendment and any other
agreements or instruments required hereunder have been duly authorized by all necessary
corporate action and do not (i) require any authorization, consent or approval by any
governmental department, commission, board, bureau, agency or instrumentality, domestic or
foreign, (ii) violate any provision of any law, rule or regulation or of any order, writ,
injunction or decree presently in effect, having applicability to the Borrower, or the
articles of incorporation or by-laws of the Borrower, or (iii) result in a breach of or
constitute a default under any indenture or loan or credit agreement or any other agreement,
lease or instrument to which the Borrower is a party or by which it or its properties may be
bound or affected.
(c) All of the representations and warranties contained in Article II of the Credit
Agreement are correct on and as of the date hereof as though made on and as of such date,
except to the extent that such representations and warranties relate solely to an earlier
date. Borrower further certifies that as of the date of this Amendment there exists no
Event of Default as defined in the Credit Agreement, nor any condition, act or event which
with the giving of notice or the passage of time or both would constitute any such Event of
Default.
12. Release. Borrower, and each Guarantor, by executing the Acknowledgment and Agreement of
Guarantors below, hereby absolutely and unconditionally releases and forever discharges Bank, and
any and all participants, parent corporations, subsidiary corporations, affiliated corporations,
insurers, indemnitors, successors and assigns thereof, together with all of the present and former
directors, officers, agents and employees of any of the foregoing, from any and all claims, demands
or causes of action of any kind, nature or description, whether arising in law or equity or upon
contract or tort or under any state or federal law or otherwise, which Borrower has had, now has or
has made claim to have against any such person for or by reason of any act, omission, matter, cause
or thing whatsoever arising from the beginning of time to and including the date of this Amendment,
whether such claims, demands and causes of action are matured or unmatured or known or unknown.
13. No Other Waiver. Except as set forth herein, the execution of this Amendment and
acceptance of any documents related hereto shall not be deemed to be a waiver of any Default or
Event of Default under the Credit Agreement or breach, default or event of default under any
security agreement or other document held by the Bank, whether or not known to the Bank and whether
or not existing on the date of this Amendment.
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14. Miscellaneous. This Amendment and the Acknowledgment and Agreement of Guarantors and the
Acknowledgment and Agreement of Subordinated Creditor may be executed in any number of
counterparts, and by e-mail or facsimile, each of which when so executed and delivered shall be
deemed an original and all of which counterparts, taken together, shall constitute one and the same
instrument.
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IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be executed as of the day
and year first written above.
BORROWER: SURMODICS, INC. |
||||
By: | /s/ Xxxxxxx X. Xxxxxx | |||
Name: | Xxxxxx X. Xxxxxx | |||
Title: | Senior Vice President and Chief Financial Officer |
Address: 0000 Xxxx 00xx Xxxxxx
Xxxx Xxxxxxx, XX 00000-0000
Xxxx Xxxxxxx, XX 00000-0000
E-mail: xxxxxxx@xxxxxxxxx.xxx
Facsimile: (000) 000-0000
XXXXX FARGO BANK, NATIONAL ASSOCIATION, as Agent and a Lender |
||||
By: | /s/ Xxxxxx X. Xxxxx | |||
Name: | Xxxxxx X. Xxxxx | |||
Title: | Assistant Vice President |
Address: Regional Commercial Banking
MAC N9307-013
0000 Xxxxxx Xxxxxx Xxxxx
Xxxxxxxxxxx, XX 00000
MAC N9307-013
0000 Xxxxxx Xxxxxx Xxxxx
Xxxxxxxxxxx, XX 00000
E-mail: xxxxxx.x.xxxxx@xxxxxxxxxx.xxx
Facsimile: (000) 000-0000
[Signature Page to First Amendment to Credit Agreement dated as of February 28, 2011]
ACKNOWLEDGMENT AND AGREEMENT OF GUARANTORS
The undersigned, each a guarantor of the indebtedness to SurModics, Inc. a Minnesota
corporation (the “Borrower”) to the financial institutions from time to time party to the Credit
Agreement (the “Lenders”), pursuant to his or its separate Continuing Guaranty, hereby (i)
acknowledges receipt of the foregoing First Amendment to Credit Agreement (the “First Amendment”);
(ii) consents to the terms (including without limitation the waiver set forth in Paragraph 7 of the
First Amendment) and execution thereof; (iii) reaffirms his, her or its obligations to the Lenders
pursuant to the terms of his, her or its respective Guaranty; (iv) acknowledges that the Lenders
may amend, restate, extend, renew or otherwise modify the Credit Agreement and any indebtedness or
agreement of the Borrower, or enter into any agreement or extend additional or other credit
accommodations, without notifying or obtaining the consent of the undersigned and without impairing
the liability of the undersigned under the Guaranty for all of the Borrower’s present and future
indebtedness to the Lender; and (v) acknowledges to and agrees with the Lenders that no events,
conditions or circumstances have arisen or exist as of the date hereof which would give the
Guarantor the right to assert a defense, counterclaim and/or setoff to any claim by the Lenders for
the payment and performance of the obligations of each of such parties under the Guaranty, or to
the extent that any such defense, counterclaim and/or setoff exist as of the date hereof, the same
are hereby absolutely and forever waived and released.
Dated: February 28, 2011 | Biofx Laboratories, Inc. |
|||
By: | /s/ Xxxxx X. Xxxxxxxx | |||
Name: | Xxxxx X. Xxxxxxxx | |||
Its: Secretary | ||||
Surmodics Pharmaceuticals, Inc. |
||||
By: | /s/ Xxxxxx X. Xxxxxx | |||
Name: | Xxxxxx X. Xxxxxx | |||
Its: President | ||||