On September 14, 2020, Surmodics, Inc. (the "Company") entered into a secured revolving credit facility pursuant to a Loan and Security Agreement (the "Loan Agreement") with Bridgewater Bank (the "Bank"). The Loan Agreement provides for availability under a secured revolving line of credit of up to $25 million (the "Loan").  Availability under the Loan is subject to a borrowing base that equals 80% of the margin value of securities collateral that has been pledged to the Bank.  The Loan will initially mature on September 14, 2021, but the maturity date may be extended by the Company for up to two extension periods of twelve months subject to certain conditions set forth in the Loan Agreement.  The Company's obligations under the Loan Agreement are secured by substantially all of its and its material subsidiaries' assets, other than intellectual property, real estate and foreign assets, including equity in foreign subsidiaries. The Company has also pledged the stock of certain of its subsidiaries to secure such obligations.

 

Interest under the Loan Agreement accrues at a rate per annum equal to the greater of (i) 3.25% per annum and (ii) the 90-day interest rate yield for U.S. Government Treasury Securities plus 2.75% per annum. A facility fee is payable on unused commitments at a rate of 0.075% quarterly.

The Loan Agreement contains affirmative and negative covenants customary for a transaction of this type which, among other things, require the Company to meet certain financial tests, including (i) minimum liquidity of not less than (A) $20 million beginning with the fiscal quarter ending on September 30, 2020 and continuing through the fiscal quarter ending on September 30, 2021 and (B) $15 million beginning with the fiscal quarter ending on December 31, 2021 and continuing through the fiscal quarter on September 30, 2023, (ii) minimum current ratio of not less than 2.50 to 1.00, (iii) minimum adjusted EBITDA, determined as of the last day of each fiscal quarter for the four-quarter period then ending, of not less than $4 million at any time (subject to an exception if the Company fails to achieve this level for one quarter, but achieves the minimum EBITDA covenant for the next quarter) and (iv) minimum tangible net worth of not less than $20 million. The Loan Agreement also contains covenants which, among other things, limit the Company's ability to incur additional debt, make certain investments, create or permit certain liens, create or permit restrictions on the ability of subsidiaries to pay dividends or make other distributions, consolidate or merge and engage in other activities customarily restricted in such agreements, in each case subject to exceptions permitted by the Loan Agreement. The Loan Agreement also contains customary events of default, the occurrence of which would permit the Bank to terminate its commitment and accelerate the loans.

 

The Bank may perform commercial banking and financial services for the Company and its subsidiaries for which it will receive customary fees.

 

The foregoing description of the Loan Agreement is qualified in its entirety by reference to such document, which is attached hereto as Exhibit 10.1 and is incorporated herein by reference.

 

The information set forth under Item 1.01 above is hereby incorporated by reference into this Item 2.03.

 

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

	SURMODICS, INC.
Date:  September 15, 2020	/s/  Gordon S. Weber
	Gordon S. Weber
	Senior Vice President of Legal, General Counsel and Secretary