Document:

EXHIBIT 10.15

 

 

 

SERIES 20    -     ACCOUNT CONTROL AGREEMENT

 

 

among

 

 

FORD CREDIT FLOORPLAN MASTER OWNER TRUST A,
 as Grantor

 

 

                                                              ,
  as Secured Party

 

 

and

 

 

                                                              ,
  as Financial Institution

 

 

Dated as of                                      , 20

 

 

 

TABLE OF CONTENTS

 

	
ARTICLE I   USAGE AND DEFINITIONS
    	
2
    
	
Section 1.1.
    	
Usage and Definitions
    	
2
    
	
 
    	
 
    	
 
    
	
ARTICLE II   ESTABLISHMENT OF COLLATERAL ACCOUNTS
    	
2
    
	
Section 2.1.
    	
Description of Accounts
    	
2
    
	
Section 2.2.
    	
Account Changes
    	
3
    
	
Section 2.3.
    	
Account Types
    	
3
    
	
Section 2.4.
    	
Securities Accounts
    	
3
    
	
 
    	
 
    	
 
    
	
ARTICLE III   SECURED PARTY CONTROL
    	
3
    
	
Section 3.1.
    	
Control of Collateral   Accounts
    	
3
    
	
Section 3.2.
    	
Investment Instructions
    	
3
    
	
Section 3.3.
    	
Conflicting Orders or   Instructions
    	
4
    
	
 
    	
 
    	
 
    
	
ARTICLE IV   SUBORDINATION OF LIEN; WAIVER OF SET-OFF
    	
4
    
	
Section 4.1.
    	
Subordination
    	
4
    
	
Section 4.2.
    	
Set-off and Recoupment
    	
4
    
	
 
    	
 
    	
 
    
	
ARTICLE V   REPRESENTATIONS, WARRANTIES AND COVENANTS
    	
4
    
	
Section 5.1.
    	
Financial Institution’s   Representations and Warranties
    	
4
    
	
Section 5.2.
    	
Financial Institution’s   Covenants
    	
5
    
	
 
    	
 
    	
 
    
	
ARTICLE VI   OTHER AGREEMENTS
    	
5
    
	
Section 6.1.
    	
Location of Financial   Institution
    	
5
    
	
Section 6.2.
    	
Reliance by Financial   Institution
    	
5
    
	
Section 6.3.
    	
Termination and   Replacement of Financial Institution
    	
5
    
	
Section 6.4.
    	
No Petition
    	
5
    
	
Section 6.5.
    	
Limitation of Liability
    	
6
    
	
Section 6.6.
    	
Conflict With Other   Agreement
    	
6
    
	
Section 6.7.
    	
Termination
    	
6
    
	
 
    	
 
    	
 
    
	
ARTICLE VII   MISCELLANEOUS
    	
6
    
	
Section 7.1.
    	
Amendment
    	
6
    
	
Section 7.2.
    	
Benefit of Agreement
    	
7
    
	
Section 7.3.
    	
Notices
    	
7
    
	
Section 7.4.
    	
GOVERNING LAW
    	
7
    
	
Section 7.5.
    	
Submission to   Jurisdiction
    	
8
    
	
Section 7.6.
    	
WAIVER OF JURY TRIAL
    	
8
    
	
Section 7.7.
    	
No Waiver; Remedies
    	
8
    
	
Section 7.8.
    	
Severability
    	
8
    
	
Section 7.9.
    	
Headings
    	
8
    
	
Section 7.10.
    	
Counterparts
    	
8
    

 

i

 

SERIES 20    -     ACCOUNT CONTROL AGREEMENT, dated as of                     , 20     (this “Agreement”), among FORD CREDIT FLOORPLAN MASTER OWNER TRUST A, a Delaware statutory trust, as grantor (the “Grantor”),                                                 , a                         , as Indenture Trustee for the benefit of the Series 20    -     Noteholders (in this capacity, the “Secured Party”), and                                                 , a                      in its capacity as both a “securities intermediary” as defined in Section 8-102 of the UCC and a “bank” as defined in Section 9-102 of the UCC (in these capacities, the “Financial Institution”).

 

BACKGROUND

 

The Grantor is engaging in a securitization transaction in which it will issue the Series 20    -     Notes under an Indenture Supplement to an Indenture and the Secured Party will hold funds in bank accounts for the benefit of the Series 20    -     Noteholders.

 

The parties are entering into this Agreement to perfect the security interest in the bank accounts.

 

The parties agree as follows:

 

ARTICLE I
 USAGE AND DEFINITIONS

 

Section 1.1.                                 Usage and Definitions.  Capitalized terms used but not defined in this Agreement are defined in (a) Appendix A to the Series 20    -     Indenture Supplement, dated as of                 , 20     (the “Indenture Supplement”), between the Grantor, as Issuer, and                                                 , as Indenture Trustee, or (b) Appendix A to (i) the Fifth Amended and Restated Sale and Servicing Agreement, dated as of August 1, 2001, as amended and restated as of December 1, 2010, among Ford Credit Floorplan Corporation, as Depositor, the Grantor, as Issuer, and Ford Motor Credit Company LLC, as Servicer, and (ii) the Fifth Amended and Restated Sale and Servicing Agreement, dated as of August 1, 2001, as amended and restated as of December 1, 2010, among Ford Credit Floorplan LLC, as Depositor, the Issuer and the Servicer.  Each Appendix A also contains usage rules that apply to this Agreement.  Each Appendix A is incorporated by reference into this Agreement.  References to the “UCC” mean the Uniform Commercial Code as in effect in the State of New York.

 

ARTICLE II
 ESTABLISHMENT OF COLLATERAL ACCOUNTS

 

Section 2.1.                                 Description of Accounts.  The Financial Institution has established the following accounts (each, a “Collateral Account”):

 

“Series 20    -     Principal Funding Account —                                                  as Indenture Trustee, as secured party for Ford Credit Floorplan Master Owner Trust A for Series 20    -    “ with account number          .

 

“Series 20    -     Reserve Account —                                                  as Indenture Trustee, as secured party for Ford Credit Floorplan Master Owner Trust A for Series 20    -    “ with account number          .

 

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“Series 20    -     Accumulation Period Reserve Account –                                              as Indenture Trustee, as secured party for Ford Credit Floorplan Master Owner Trust A for Series 20    -    “ with account number          .

 

Section 2.2.                                 Account Changes.  Neither the Financial Institution nor the Grantor will change the name or account number of a Collateral Account without the consent of the Secured Party.  The Financial Institution will promptly notify the Servicer of any changes.  This Agreement will apply to each successor account to a Collateral Account, which will also be a Collateral Account.

 

Section 2.3.                                 Account Types.  The Financial Institution agrees that each Collateral Account is, and will be maintained as, either a “securities account” (as defined in Section 8-501 of the UCC) or a “deposit account” (as defined in Section 9-102(a)(29) of the UCC).

 

Section 2.4.                                 Securities Accounts.  If a Collateral Account is a securities account, the Financial Institution agrees that:

 

(a)                                 Financial Assets.  It will promptly credit each item of property (whether cash, investment property, security, instrument or other financial asset) delivered to the Financial Institution under the Indenture Supplement to the Collateral Account and treat each item of property as a “financial asset” (within the meaning of Section 8-102(a)(9) of the UCC); and

 

(b)                                 Registration and Indorsement.  It will ensure that all financial assets (other than cash) credited to the Collateral Account are registered in the name of the Financial Institution, indorsed to the Financial Institution or in blank or credited to another securities account maintained in the name of the Financial Institution and that no financial asset credited to the Collateral Account is registered in the name of the Grantor, payable to the order of the Grantor or specially indorsed to the Grantor unless it has been indorsed to the Financial Institution or in blank.

 

ARTICLE III
 SECURED PARTY CONTROL

 

Section 3.1.                                 Control of Collateral Accounts.  To establish “control” of the Collateral Accounts by the Secured Party under Sections 9-104 and 9-106 of the UCC, the Financial Institution agrees to comply with any order or instruction from the Secured Party directing the deposit, withdrawal, transfer or redemption of the cash or other financial assets credited to a Collateral Account (a “Secured Party Order”) without the need for consent by the Grantor or any other Person.

 

Section 3.2.                                 Investment Instructions.  If (a) the Financial Institution has not received a Secured Party Order for the investment of funds in a Collateral Account by 11:00 a.m. New York time (or another time agreed to by the Financial Institution) on the Business Day before a Payment Date or (b) the Financial Institution receives notice from the Indenture Trustee that a Default or Event of Default has occurred and is continuing for the Series 20    -     Notes, the Financial Institution will invest and reinvest funds in the Collateral Account according to the last investment instruction received, if any.  If no prior investment instructions have been received or if the instructed investments are no longer available or permitted, the Indenture Trustee will

 

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notify the Servicer and request new investment instructions, and the funds will remain uninvested until new investment instructions are received.

 

Section 3.3.                                 Conflicting Orders or Instructions.  If the Financial Institution receives conflicting orders or instructions from the Secured Party and the Grantor or any other Person, the Financial Institution will follow the orders or instructions of the Secured Party and not the Grantor or such other Person.

 

ARTICLE IV
 SUBORDINATION OF LIEN; WAIVER OF SET-OFF

 

Section 4.1.                                 Subordination.  If the Financial Institution has, or later obtains, a security interest in a Collateral Account (or any portion of a Collateral Account), the Financial Institution agrees that the security interest will be subordinate to the security interest of the Secured Party.

 

Section 4.2.                                 Set-off and Recoupment.  The cash, investment property, security, instrument or other financial assets credited to a Collateral Account will not be subject to deduction, set-off, recoupment, banker’s lien, or other right in favor of a Person other than the Secured Party.  However, the Financial Institution may set off (a) the customary fees and expenses for the routine maintenance and operation of the Collateral Account due to the Financial Institution, (b) the face amount of checks credited to the Collateral Account but subsequently returned unpaid due to uncollected or insufficient funds and (c) advances made to settle an investment of funds in the Collateral Account.

 

ARTICLE V
 REPRESENTATIONS, WARRANTIES AND COVENANTS

 

Section 5.1.                                 Financial Institution’s Representations and Warranties.  The Financial Institution represents and warrants to the Grantor and the Secured Party as follows:

 

(a)                                 Enforceability.  This Agreement is the legal, valid and binding obligation of the Financial Institution.

 

(b)                                 No Agreements with Grantor.  There are no agreements between the Financial Institution and the Grantor relating to a Collateral Account other than this Agreement, the Indenture Supplement and the other Series 20    -     Transaction Documents.

 

(c)                                  No Other Agreements.  The Financial Institution has not entered into an agreement relating to a Collateral Account in which it has agreed to comply with “entitlement orders” (as defined in Section 8-102(a)(8) of the UCC) or “instructions” (within the meaning of Section 9-104 of the UCC) of any Person other than the Secured Party.

 

(d)                                 No Limitations.  The Financial Institution has not entered into an agreement limiting or conditioning the Financial Institution’s obligation to comply with any Secured Party Order.

 

4

 

(e)                                  No Liens.  Except for the claims and interests of the Secured Party and the Grantor, the Financial Institution does not know of a lien on, or claim to, or interest in, a Collateral Account or in the cash or other financial assets credited to a Collateral Account.

 

Section 5.2.                                 Financial Institution’s Covenants.

 

(a)                                 Statements, Confirmations and Other Correspondence.  The Financial Institution will promptly deliver copies of statements, confirmations and correspondence about the Collateral Accounts and the cash or other financial assets credited to a Collateral Account to the Grantor and the Secured Party.

 

(b)                                 Notice of Claim.  If a Person asserts a lien, encumbrance or claim against a Collateral Account (or in the cash or other financial assets credited to a Collateral Account), the Financial Institution will promptly notify the Secured Party.

 

(c)                                  Negative Covenants.  Until the termination of this Agreement, the Financial Institution will not enter into (i) an agreement relating to a Collateral Account in which it agrees to comply with entitlement orders or instructions of any Person other than the Secured Party or (ii) an agreement limiting or conditioning the Financial Institution’s obligation to comply with Secured Party Orders.

 

ARTICLE VI
 OTHER AGREEMENTS

 

Section 6.1.                                 Location of Financial Institution.  For purposes of the UCC, New York will be the location of (i) the bank for purposes of Sections 9-301, 9-304 and 9-305 of the UCC and (ii) the securities intermediary for purposes of Sections 9-301 and 9-305 and Section 8-110 of the UCC.

 

Section 6.2.                                 Reliance by Financial Institution.  The Financial Institution is not obligated to investigate or inquire whether the Secured Party may deliver a Secured Party Order.  The Financial Institution may rely on communications (including Secured Party Orders) believed by it in good faith to be genuine and given by the proper party.

 

Section 6.3.                                 Termination and Replacement of Financial Institution.  The Financial Institution may terminate its rights and obligations under this Agreement if the Secured Party resigns or is removed as Indenture Trustee under the Indenture Supplement and the Indenture.  The Grantor may terminate the rights and obligations of the Financial Institution if the Financial Institution ceases to be a Qualified Institution.  No termination of the Financial Institution will be effective until new Collateral Accounts are established with, and the cash and other financial assets credited to the Collateral Accounts are transferred to, another securities intermediary who has agreed to accept the obligations of the Financial Institution under this Agreement or a similar agreement.

 

Section 6.4.                                 No Petition.  Each party agrees that, before the date that is one year and one day (or, if longer, any applicable preference period) after payment in full of (a) all securities issued by either Depositor or by a trust for which either Depositor was a depositor or (b) the Notes, it will not start or pursue against, or join any other Person in starting or pursuing against,

 

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(i) either Depositor or (ii) the Issuer, respectively, any bankruptcy, reorganization, arrangement, insolvency or liquidation proceedings or other proceedings under any bankruptcy or similar law.  This Section 6.4 will survive the termination of this Agreement.

 

Section 6.5.                                 Limitation of Liability.

 

(a)                                 Financial Institution.  The Financial Institution will not be liable under this Agreement, except for (i) its own willful misconduct, bad faith or negligence or (ii) breach of its representations and warranties in this Agreement.  The Financial Institution will not be liable for special, indirect or consequential losses or damages (including lost profit), even if the Financial Institution has been advised of the likelihood of the loss or damage and regardless of the form of action.

 

(b)                                 Secured Party.  In performing its obligations under this Agreement, the Secured Party is subject to, and entitled to the benefits of, the terms of the Indenture Supplement and the Indenture that apply to the Indenture Trustee.

 

(c)                                  Owner Trustee.  This Agreement has been signed on behalf of the Grantor by                                          , not in its individual capacity, but solely in its capacity as Owner Trustee of the Grantor.  In no event will                                           in its individual capacity or a beneficial owner of the Grantor be liable for the Grantor’s obligations under this Agreement.  For all purposes under this Agreement, the Owner Trustee is subject to, and entitled to the benefits of, the Trust Agreement.

 

Section 6.6.                                 Conflict With Other Agreement.  If there is a conflict between this Agreement and any other agreement relating to a Collateral Account, this Agreement will govern.

 

Section 6.7.                                 Termination.  This Agreement will terminate on the date the security interests of the Secured Party in each Collateral Account are terminated under the Indenture Supplement and the Indenture and the Secured Party has notified the Financial Institution of the termination of the security interest.  The termination of this Agreement will not terminate a Collateral Account or change the obligations of the Financial Institution to the Grantor relating to a Collateral Account.

 

ARTICLE VII
 MISCELLANEOUS

 

Section 7.1.                                 Amendment.

 

(a)                                 Amendments.  The parties may amend this Agreement:

 

(i)                                     to clarify an ambiguity, correct an error or correct or supplement any term of this Agreement that may be defective or inconsistent with the other terms of this Agreement, in each case without the consent of the Series 20    -     Noteholders or any other Person;

 

6

 

(ii)                                  to add, change or eliminate terms of this Agreement, in each case without the consent of the Series 20    -     Noteholders or any other Person, if the Administrator delivers an Officer’s Certificate to the Grantor, the Owner Trustee and the Indenture Trustee stating that the amendment will not have a material adverse effect on the Series 20    -     Noteholders; or

 

(iii)                               to add, change or eliminate terms of this Agreement for which an Officer’s Certificate is not or cannot be delivered under Section 7.1(a)(ii), with the consent of the Series 20    -     Noteholders of a majority of the Note Balance of each Class of Series 20    -     Notes Outstanding (with each affected Class voting separately, except that all Series 20    -     Noteholders of Class A Notes will vote together as a single class).

 

(b)                                 Notice of Amendments.  The Administrator will notify the Rating Agencies in advance of any amendment.  Promptly after the execution of an amendment, the Administrator will deliver a copy of the amendment to the Rating Agencies.

 

Section 7.2.                                 Benefit of Agreement.  This Agreement is for the benefit of and will be binding on the parties and their permitted successors and assigns.  No other Person will have any right or obligation under this Agreement.

 

Section 7.3.                                 Notices.

 

(a)                                 Notices to Parties.  Notices, requests, directions, consents, waivers or other communications to or from the parties must be in writing and will be considered received by the recipient:

 

(i)                                     for overnight mail, on delivery or, for registered first class mail, postage prepaid, three days after deposit in the mail properly addressed to the recipient;

 

(ii)                                  for a fax, when receipt is confirmed by telephone, reply email or reply fax from the recipient;

 

(iii)                               for an email, when receipt is confirmed by telephone or reply email from the recipient; and

 

(iv)                              for an electronic posting to a password-protected website to which the recipient has access, on delivery of an email (without the requirement of confirmation of receipt) stating that the electronic posting has been made.

 

(b)                                 Notice Addresses.  A notice, request, direction, consent, waiver or other communication must be addressed to the recipient at its address stated in Schedule B to the Sale and Servicing Agreements, which address the party may change by notifying the other parties.

 

Section 7.4.                                 GOVERNING LAW.  THIS AGREEMENT AND EACH COLLATERAL ACCOUNT WILL BE GOVERNED BY AND CONSTRUED ACCORDING TO THE LAWS OF THE STATE OF NEW YORK.

 

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Section 7.5.                                 Submission to Jurisdiction.  Each party submits to the nonexclusive jurisdiction of the United States District Court for the Southern District of New York and of any New York State Court sitting in New York, New York for legal proceedings relating to this Agreement.  Each party irrevocably waives, to the fullest extent permitted by law, any objection that it may now or in the future have to the venue of a proceeding brought in such a court and any claim that the proceeding was brought in an inconvenient forum.

 

Section 7.6.                                 WAIVER OF JURY TRIAL.  EACH PARTY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, THE RIGHT TO TRIAL BY JURY IN LEGAL PROCEEDINGS RELATING TO THIS AGREEMENT.

 

Section 7.7.                                 No Waiver; Remedies.  No party’s failure or delay in exercising a power, right or remedy under this Agreement will operate as a waiver.  No single or partial exercise of a power, right or remedy will preclude any other or further exercise of the power, right or remedy or the exercise of any other power, right or remedy.  The powers, rights and remedies under this Agreement are in addition to any powers, rights and remedies under law.

 

Section 7.8.                                 Severability.  If a part of this Agreement is held invalid, illegal or unenforceable, then it will be deemed severable from the remaining Agreement and will not affect the validity, legality or enforceability of the remaining Agreement.

 

Section 7.9.                                 Headings.  The headings in this Agreement are included for convenience and will not affect the meaning or interpretation of this Agreement.

 

Section 7.10.                          Counterparts.  This Agreement may be executed in multiple counterparts.  Each counterpart will be an original and all counterparts will together be one document.

 

[Remainder of Page Left Blank]

 

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EXECUTED BY:

 

	
 
    	
FORD CREDIT FLOORPLAN   MASTER OWNER TRUST A, as Grantor
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
                                                                                 ,   not in its individual   capacity but solely as Owner Trustee of Ford Credit Floorplan Master Owner   Trust A
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
 
    	
Name:
    
	
 
    	
 
    	
Title:
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
                                                       ,
    
	
 
    	
 
    	
as   Secured Party
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
 
    	
Name:
    
	
 
    	
 
    	
Title:
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
                                                       ,
    
	
 
    	
 
    	
as   Financial Institution
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
 
    	
Name:
    
	
 
    	
 
    	
Title:
    

 

[Signature Page to Series 20    -     Account Control Agreement]srdx-ex1034_316.htm

 
Exhibit 10.34
CHANGE OF CONTROL AGREEMENT

 

Parties:Surmodics, Inc.

(“Company”)

9924 West 74th Street

Eden Prairie, MN 55344-3523

 

Ms. Teri Woodwick Sides

(“Executive”)

7462 Narcissus Lane N.

Maple Grove, MN 55311

 

 

Date:October 30, 2018

 

RECITALS:

 

1.Executive serves as the Senior Vice President, Chief Marketing Officer of the Company, and Executive has extensive knowledge and experience relating to the Company’s business.

 

2.The parties recognize that a “Change of Control” may materially change or diminish Executive’s responsibilities and substantially frustrate Executive’s commitment to the Company.

 

3.The parties further recognize that it is in the best interests of the Company and its stockholders to provide certain benefits payable upon a “Change of Control Termination” to encourage Executive to continue in her position in the event of a Change of Control.

 

4.The parties further desire to provide certain benefits payable upon a termination of Executive’s employment following a Change of Control.

 

5.The parties further recognize that it is in the best interests of the Company to protect confidential, proprietary, and trade secret information of the Company, to prevent unfair competition by former executives of the Company following separation of their employment with the Company, and to secure cooperation from former executives with respect to matters related to their employment with the Company.  

 

AGREEMENTS:

 

1.Term of Agreement.  Except as otherwise provided herein, this Agreement shall commence on the date executed by the parties and shall continue in effect until the twelve-month anniversary of the date on which a Change of Control occurs.  Notwithstanding the foregoing, if at any time during the term of this Agreement and prior to a Change of Control, Executive’s employment with the Company terminates for any reason or no reason, or if Executive no longer serves as an executive officer of the Company, this Agreement shall immediately terminate, and 

 

 

Executive shall not be entitled to any of the compensation and benefits described in this Agreement.  Any rights and obligations accruing before the termination or expiration of this Agreement shall survive to the extent necessary to enforce such rights and obligations.

 

2.Change of Control.  For purposes of this Agreement, “Change of Control” shall mean any one or more of the following events occurring after the date of this Agreement:

 

	
 
	
(a)
	
The purchase or other acquisition by any one person, or more than one person acting as a group, of stock of the Company that, together with stock held by such person or group, constitutes more than 50% of the total combined value or total combined voting power of all classes of stock issued by the Company; provided, however, that if any one person or more than one person acting as a group is considered to own more than 50% of the total combined value or total combined voting power of such stock, the acquisition of additional stock by the same person or persons shall not be considered a Change of Control; 

 

	
 
	
(b)
	
A merger or consolidation to which the Company is a party if the individuals and entities who were shareholders of the Company immediately prior to the effective date of such merger or consolidation have, immediately following the effective date of such merger or consolidation, beneficial ownership (as defined in Rule 13d-3 under the Securities Exchange Act of 1934) of less than fifty percent (50%) of the total combined voting power of all classes of securities issued by the surviving entity for the election of directors of the surviving corporation;

 

	
 
	
(c)
	
Any one person, or more than one person acting as a group, acquires or has acquired during the twelve (12) month period ending on the date of the most recent acquisition by such person or persons, direct or indirect beneficial ownership (as defined in Rule 13d-3 under the Securities Exchange Act of 1934) of stock of the Company constituting thirty-five percent (35%) or more of the total combined voting power of all classes of stock issued by the Company;

 

	
 
	
(d)
	
The purchase or other acquisition by any one person, or more than one person acting as a group, of substantially all of the total gross value of the assets of the Company during the twelve-month period ending on the date of the most recent purchase or other acquisition by such person or persons.  For purposes of this Section 2(d), “gross value” means the value of the assets of the Company or the value of the assets being disposed of, as the case may be, determined without regard to any liabilities associated with such assets; 

 

 

 
 

 

	
 
	
(e)
	
A change in the composition of the Board of the Company at any time during any consecutive twelve (12) month period such that the “Continuity Directors” cease for any reason to constitute at least a fifty percent (50%) majority of the Board. For purposes of this event, “Continuity Directors” means those members of the Board who either:

 

	
 
	
(1)
	
were directors at the beginning of such consecutive twelve (12) month period; or

 

	
 
	
(2)
	
were elected by, or on the nomination or recommendation of, at least a two-thirds (2/3) majority of the then-existing Board of Directors.

	

	
 

	

	
In all cases, the determination of whether a Change of Control has occurred shall be made in accordance with the Internal Revenue Code of 1986, as amended (the “Code”), Section 409A and the regulations, notices and other guidance of general applicability issued thereunder.  

 

3.Change of Control Termination.  For purposes of this Agreement, “Change of Control Termination” shall mean any of the following events occurring upon or within twelve (12) months after a Change of Control:

 

	
 
	
(a)
	
The termination of Executive’s employment by the Company for any reason, with or without cause, except for termination resulting from conduct by Executive constituting (i) a felony involving moral turpitude under either federal law or the law of the state of the Company’s incorporation, or (ii) Executive’s willful failure to fulfill her employment duties with the Company; provided, however, that for purposes of this clause (ii), an act or failure to act by Executive shall not be “willful” unless it is done, or omitted to be done, in bad faith and without any reasonable belief that Executive’s action or omission was in the best interests of the Company; or

 

	
 
	
(b)
	
The termination of employment with the Company by Executive for “Good Reason.”  Such termination shall be accomplished by, and effective upon, Executive giving written notice to the Company of her decision to terminate.  “Good Reason” shall mean a good faith determination by Executive, in Executive’s sole and absolute judgment, that any one or more of the following events has occurred, at any time during the term of this Agreement or after a Change of Control; provided, however, that such event shall not constitute Good Reason if Executive has expressly consented to such event in writing or if Executive fails to provide written notice of her decision to terminate, which notice describes the event giving rise to the resignation, within ninety (90) days of the occurrence of such event and the 

 

 
 

 

	
 
		
Company has not cured the event within thirty (30) days after receiving such notice from Executive.

 

	
 
	
(1)
	
A material change in Executive’s duties, responsibilities, or authority, or any removal of Executive from or any failure to re-elect Executive to any position which has the effect of materially diminishing Executive’s duties, responsibility or authority; 

 

	
 
	
(2)
	
A material reduction, in the aggregate, by the Company in Executive’s base salary (as increased from time to time), variable pay opportunities (including short and long-term cash incentives and equity-based compensation), or the employee benefits to which Executive is entitled to participate in irrespective of any standard waiting periods with respect to the same, unless such material reduction is generally applicable to all executive officers of the Company;

 

	
 
	
(3)
	
A requirement imposed by the Company on Executive that results in Executive being based at a location that is outside of a fifty (50) mile radius of Executive’s prior job location; or

 

	
 
	
(4)
	
Any material breach by the Company of any employment agreement between Executive and the Company.

 

Termination for “Good Reason” shall not include Executive’s death or a termination for any reason other than one of the events specified in clauses (1) through (4) above.

 

For purposes of Section 4 of this Agreement only, with respect to the timing of payments thereunder, “Change of Control Termination” shall mean the date of Executive’s “separation from service” with the Company within the meaning of Section 409A(a)(2)(A)(i) of the Code (with “Company” for purposes of this paragraph to include any business entity that is treated as a single employer with the Company under the rules of Section 414(b) and (c) of the Code).

 

4.Compensation and Benefits.  Upon a termination of Executive’s employment for any reason, Executive shall be entitled to receive all salary and other compensation earned by Executive through the date of such termination at the rate in effect immediately prior to such termination, and all other amounts to which Executive may be entitled to receive under any compensation plan maintained by the Company, subject to any distribution requirements contained in such compensation plans.  In addition, subject to the conditions and limitations contained in this Agreement, upon a Change of Control Termination, Executive shall be entitled to all of the following compensation and benefits:

 

 

 
 

 

	
 
	
(a)
	
Within five (5) business days after a Change of Control Termination, the Company shall pay to Executive a severance payment equal to two (2) times the sum of (i) Executive’s base salary as of the date of the Change of Control Termination, and (ii) an amount equal to Executive’s target short-term incentive opportunity for the year in which the Change of Control Termination occurs;

 

	
 
	
(b)
	
The Company shall continue to provide Executive, at the Company’s expense, with coverage under its life, health, or dental benefit plans at a level comparable to the benefits which Executive was receiving or entitled to receive immediately prior to the Change of Control Termination or, if greater, at a level comparable to the benefits which Executive was receiving immediately prior to the event which constituted Good Reason.  Such coverage shall continue for eighteen (18) months following such Change of Control Termination or, if earlier, until Executive is eligible to be covered for such benefits through her employment with another employer or continuation coverage under Section 4980B (COBRA) otherwise ends;

 

	
 
	
(c)
	
All outstanding Options or Stock Appreciation Rights shall become immediately exercisable, and the risks of forfeiture on any outstanding Restricted Stock Awards or Restricted Stock Unit Awards shall immediately lapse.  For purposes of this Agreement, “Option,” “Stock Appreciation Rights,” “Restricted Stock Awards” and “Restricted Stock Unit Awards” shall have the meaning set forth in the Surmodics, Inc. 2009 Equity Incentive Plan, or any successor plan; and

 

	
 
	
(d)
	
All shares or units subject to all outstanding Performance Awards shall become immediately vested and payable at the target performance objectives set forth in said Performance Awards.  For purposes of this Agreement, “Performance Awards” and “Performance Period” shall have the meaning set forth in the Surmodics, Inc. 2009 Equity Incentive Plan, or any successor plan.

 

The parties intend that the payment described in Section 4(a) shall be excluded from deferred compensation as a “short-term deferral” under Treas. Reg. § 1.409A-1(b)(4).  The parties intend that the continuation of health and dental benefits described in Section 4(b) shall be excluded from deferred compensation pursuant to the medical benefits exception for separation pay plans under Treas. Reg. § 1.409A-1(b)(9)(v)(B).  

 

The parties intend that the continuation of life insurance benefits described in Section 4(b) shall be excluded from deferred compensation as separation pay due to an involuntary separation from service under Treas. Reg. § 1.409A-1(b)(9)(iii), and the amounts payable for such continuation of life insurance coverage shall not 

 

 
 

 

exceed two times the lesser of (x) Executive’s annualized compensation based on the annual rate of pay for services to the Company for the calendar year prior to the calendar year in which the Change of Control Termination occurs (adjusted for any increase during the year that was expected to continue indefinitely if Executive had not separated from service) or (y) the compensation limit under Section 401(a)(17) of the Code for the year in which the Change of Control Termination occurs.  Further, in no event shall the benefits described in Section 4(b) extend beyond December 31st of the second calendar year following the calendar year in which the Change of Control Termination occurs.  

 

Notwithstanding the foregoing, if any of the payments described in Section 4 above are subject to the requirements of Code Section 409A and the Company determines that Executive is a “specified employee” as defined in Code Section 409A as of the date of the Change of Control Termination, such payments shall not be paid or commence earlier than the date that is six months after the Change of Control Termination, but shall be paid or commence during the calendar year following the year in which the Change of Control Termination occurs and within 30 days of the earliest possible date permitted under Code Section 409A. 

 

5.Limitation on Change of Control Payments.  This Section 5 applies only in the event the Company determines that this Agreement is subject to the limitations of Code Section 280G, or any successor provision, and the regulations issued thereunder.  The intent of this Section 5 is to reduce any Change of Control Benefits, as defined below, that would otherwise be characterized as a “parachute payment” as defined in Code Section 280G and be subject to an additional excise tax under Code Section 4999 by the minimum amount necessary to avoid characterization as a parachute payment and avoid the imposition of the excise tax, but only if doing so would provide a more favorable net after-tax result to the Executive than if the Change in Control Benefits were not reduced and the Executive were subject to the excise tax.  

 

	
 
	
(a)
	
In the event the Change of Control Benefits payable to Executive would collectively constitute a “parachute payment” as defined in Code Section 280G, and if the “net after-tax amount” of such parachute payment to Executive is less than what the net after-tax amount to Executive would be if the Change of Control Benefits otherwise constituting the parachute payment were limited to the maximum “parachute value” of Change of Control Benefits that Executive could receive without giving rise to any liability for any excise tax imposed by Section 4999 of the Code (the “Excise Tax”), then the Change of Control Benefits otherwise constituting the parachute payment shall be reduced so that the parachute value of all Change of Control Benefits, in the aggregate, will equal the maximum parachute value of all Change of Control Benefits that Executive can receive without any Change of Control Benefits being subject to the Excise Tax.  Should such a reduction in Change of Control Benefits be required, Executive shall be entitled, subject to the following sentence, to designate 

 

 
 

 

	
 
		
those Change of Control Benefits under this Agreement or the other arrangements that will be reduced or eliminated so as to achieve the specified reduction in Change of Control Benefits to Executive and avoid characterization of such Change of Control Benefits as a parachute payment.  The Company will provide Executive with all information reasonably requested by Executive to permit Executive to make such designation.  To the extent that Executive’s ability to make such a designation would cause any of the Change of Control Benefits to become subject to any additional tax under Code Section 409A, or if Executive fails to make such a designation within ten business days of receiving the requested information from the Company, then the Company shall achieve the necessary reduction in the Change of Control Benefits by reducing them in the following order: (a) reduction of cash payments payable under this Agreement; (b) reduction of other payments and benefits to be provided to Executive; (c) cancellation or reduction of accelerated vesting of equity-based awards that are subject to performance-based vesting conditions; and (d) cancellation or reduction of accelerated vesting of equity-based awards that are subject only to service-based vesting conditions.  If the acceleration of the vesting of Executive’s equity-based awards is to be cancelled or reduced, such acceleration of vesting shall be reduced or cancelled in the reverse order of the date of grant.

 

	
 
	
(b)
	
For purposes of this Section 5, a “net after-tax amount” shall be determined by taking into account all applicable income, excise and employment taxes, whether imposed at the federal, state or local level, including the Excise Tax, and the “parachute value” of the Change of Control Benefits means the present value as of the date of the Change of Control for purposes of Code Section 280G of the portion of such Change of Control Benefits that constitutes a parachute payment under Code Section 280G(b)(2).   

 

	
 
	
(c)
	
For purposes of this Section 5, “Change of Control Benefits” shall mean any payment, benefit or transfer of property in the nature of compensation paid to or for the benefit of Executive under any arrangement which is considered contingent on a Change of Control for purposes of Code Section 280G, including, without limitation, any and all of the Company’s salary, incentive payments, restricted stock, stock option, equity-based compensation or benefit plans, programs or other arrangements, and shall include benefits payable under this Agreement.

 

	
 
	
(d)
	
For clarity, the Company shall have no obligation to provide any “tax gross-up” payment related to the Excise Tax in the event the Change of Control Benefits that would otherwise be characterized as a parachute payment are not reduced as set forth in Section 5(a) above and Executive is subject to the Excise Tax.

 

 
 

 

 

6.Withholding Taxes.  The Company shall be entitled to deduct from all payments or benefits provided for under this Agreement any federal, state or local income and employment-related taxes required by law to be withheld with respect to such payments or benefits.

 

7.Post-Termination Obligations and Conditions.

 

	
 
	
(a)
	
In the event of termination of Executive’s employment, the sole obligation of the Company under this Agreement will be its obligation to make the payments called for by Sections 4 and 5 hereof, as the case may be, and the Company will have no other obligation to Executive or to Executive’s beneficiary or estate.

	
 
	
(b)
	
Notwithstanding the foregoing provisions of Section 4, the Company will not be obligated to make any payments to Executive under Sections 4(a) through 4(d) unless: (i) Executive has signed a release of claims in favor of the Company and its affiliates and related entities, and their directors, officers, insurers, employees and agents, provided such release shall not require Executive to release claims Executive may have for indemnification from the Company or rights of Executive under this Agreement; (ii) all applicable rescission periods provided by law for releases of claims shall have expired and Executive shall have signed and not rescinded the release of claims; and (iii) Executive is in strict compliance with the terms of this Agreement as of the dates of such payments.

	
 
	
(c)
	
Immediately upon termination of Executive’s employment with the Company for any reason, Executive will resign all positions then held as a director or officer of the Company and of any affiliated entity of the Company.

	
 
	
(d)
	
Upon termination of Executive’s employment with the Company, Executive shall promptly deliver to the Company any and all Company records and any and all Company property in Executive’s possession or under Executive’s control, including, without limitation, manuals, books, blank forms, documents, letters, memoranda, notes, notebooks, reports, printouts, computer disks, computer tapes, source codes, data, tables or calculations and all copies thereof, documents that in whole or in part contain any trade secrets or confidential, proprietary or other secret information of the Company and all copies thereof, and keys, access cards, access codes, passwords, credit cards, personal computers, telephones, and other electronic equipment belonging to the Company.

	
 
	
(e)
	
Following termination of Executive’s employment with the Company for any reason, Executive will, upon reasonable request of the Company or its designee, cooperate with the Company in connection with the transition of 

 

 
 

 

	
 
		
Executive’s duties and responsibilities for the Company; consult with the Company regarding business matters that Executive was directly and substantially involved with while employed by the Company; and be reasonably available, with or without subpoena, to be interviewed, review documents or things, give depositions, testify, or engage in other reasonable activities in connection with any litigation or investigation, with respect to matters that Executive then has or may have knowledge of by virtue of Executive’s employment by or service to the Company or any related entity; provided, however, that: (i) the Company shall not unreasonably request such cooperation of Executive; (ii) the Company shall reimburse Executive or pay directly any reasonable expenses actually incurred in connection with such cooperation and assistance by Executive; and (iii) Executive shall not be required to assist or cooperate with the Company to the extent such assistance or cooperation would prevent Executive from performing, or would materially interfere with Executive’s performance of, the duties or responsibilities of her then-current occupation.

	
 
	
(f)
	
Executive will not at any time disparage, defame, or besmirch the reputation, character, image, products, or services of the Company or any of its affiliates, or the reputation or character of any of its current or former directors, officers, employees, or agents; provided that nothing in this Section 7(f) is intended to prevent or interfere with Executive making any required or reasonable communications with, or providing information to, any governmental, law enforcement, or stock exchange agency or representative, or in connection with any governmental investigation, court, administrative or arbitration proceeding.

	
 
	
(g)
	
The Company will direct its executive officers to not at any time disparage, defame, or besmirch the reputation, character or image of Executive; provided that nothing in this Section 7(g) is intended to prevent or interfere with the Company or its executive officers from making any required or reasonable communications with, or providing information to, any governmental, law enforcement, or stock exchange agency or representative, or in connection with any governmental investigation, court, administrative or arbitration proceeding.

8.Successors and Assigns.  This Agreement shall inure to the benefit of and shall be enforceable by Executive, her heirs and the personal representative of her estate, and shall be binding upon and inure to the benefit of the Company and its successors and assigns.  The Company will require the transferee of any sale of all or substantially all of the business and assets of the Company or the survivor of any merger, consolidation or other transaction expressly to agree to honor this Agreement in the same manner and to the same extent that the Company would be required to perform this Agreement if no such event had taken place.  Failure of the 

 

 
 

 

Company to obtain such agreement before the effective date of such event shall be a material breach of this Agreement within the meaning of Section 3(b)(4) of this Agreement.  

 

9.Notices.  For the purpose of this Agreement, notices and all other communications provided for in the Agreement shall be in writing and shall be deemed to have been duly given when delivered or mailed by United States certified or registered mail, return receipt requested, postage prepaid, addressed to the respective addresses set forth on the first page of this Agreement or to such other address as either party may have furnished to the other in writing in accordance herewith, except that notice of change of address shall be effective only upon receipt.  All notices to the Company shall be directed to the attention of the Board of Directors of the Company.

 

10.Captions.  The headings or captions set forth in this Agreement are for convenience only and shall not affect the meaning or interpretation of this Agreement.

 

11.Governing Law.  The validity, interpretation, construction and performance of this Agreement shall be governed by the laws of the State of Minnesota. 

 

12.Construction.  Wherever possible, each term and provision of this Agreement shall be interpreted in such manner as to be effective and valid under applicable law.  If any term or provision of this Agreement is invalid or unenforceable under applicable law, (a) the remaining terms and provisions shall be unimpaired, and (b) the invalid or unenforceable term or provision shall be deemed replaced by a term or provision that is valid and enforceable and that comes closest to expressing the intention of the unenforceable term or provision.  

 

13.Amendment; Waivers.  This Agreement may not be modified, amended, waived or discharged in any manner except by an instrument in writing signed by both parties hereto.  The waiver by either party of compliance with any provision of this Agreement by the other party shall not operate or be construed as a waiver of any other provision of this Agreement, or of any subsequent breach by such party of a provision of this Agreement.  

 

14.Section 409A. This Agreement is intended to satisfy, or be exempt from, the requirements of Section 409A(a)(2), (3) and (4) of the Code, including current and future guidance and regulations interpreting such provisions, and should be interpreted accordingly.

 

15.Non-Competition, Invention, Non-Disclosure Agreement.  Executive acknowledges and agrees that Executive shall continue to comply with the terms of Executive’s Non-Competition, Invention, Non-Disclosure Agreement with the Company, dated October 30, 2018 (the “Non-Competition Agreement”), a copy of which has been provided to Executive with this Agreement.  Executive specifically acknowledges that the consideration Executive received in exchange for signing the Non-Competition Agreement was adequate.  Executive further acknowledges that the Company would not enter into this Agreement without having the protections it has under the Non-Competition Agreement and therefore the consideration Executive is receiving in exchange for signing this Agreement constitutes additional consideration that the Company is providing in 

 

 
 

 

exchange for Executive agreeing to remain bound by the obligations under the Non-Competition Agreement.

 

16.Entire Agreement.  This Agreement sets forth Executive’s sole and exclusive remedy with respect to severance benefits payable to Executive upon a Change of Control Termination, and except for the Non-Competition Agreement supersedes all prior or contemporaneous negotiations, commitments, agreements (written or oral) and writings between the Company and Executive with respect to the subject matter hereof, including but not limited to any negotiations, commitments, agreements or writings relating to any severance benefits payable to Executive, and constitutes the entire agreement and understanding between the parties hereto.  All such other negotiations, commitments, agreements and writings will have no further force or effect, and the parties to any such other negotiation, commitment, agreement or writing will have no further rights or obligations thereunder.

 

16.Counterparts.  This Agreement may be executed in several counterparts, each of which shall be deemed to be an original but all of which together shall constitute one and the same instrument.

 

17.Arbitration.  Any dispute arising out of or relating to this Agreement or the alleged breach of it, or the making of this Agreement, including claims of fraud in the inducement, shall be discussed between the disputing parties in a good faith effort to arrive at a mutual settlement of any such controversy.  If, notwithstanding, such dispute cannot be resolved, such dispute shall be settled by binding arbitration.  Judgment upon the award rendered by the arbitrator may be entered in any court having jurisdiction thereof.  The arbitrator shall be a retired state or federal judge or an attorney who has practiced securities or business litigation for at least 10 years.  If the parties cannot agree on an arbitrator within 20 days, any party may request that the chief judge of the District Court for Hennepin County, Minnesota, select an arbitrator.  Arbitration will be conducted pursuant to the provisions of this Agreement, and the commercial arbitration rules of the American Arbitration Association, unless such rules are inconsistent with the provisions of this Agreement.  Limited civil discovery shall be permitted for the production of documents and taking of depositions.  Unresolved discovery disputes may be brought to the attention of the arbitrator who may dispose of such dispute.  The arbitrator shall have the authority to award any remedy or relief that a court of this state could order or grant; provided, however, that punitive or exemplary damages shall not be awarded.  Unless otherwise ordered by the arbitrator, the parties shall share equally in the payment of the fees and expenses of the arbitrator.  The arbitrator may award to the prevailing party, if any, as determined by the arbitrator, all of the prevailing party’s costs and fees, including the arbitrator’s fees, and expenses, and the prevailing party’s travel expenses, out-of-pocket expenses and reasonable attorneys’ fees.  Unless otherwise agreed by the parties, the place of any arbitration proceedings shall be Hennepin County, Minnesota.  

 

 

[SIGNATURE PAGE TO FOLLOW]

 

 
 

 

 

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed and delivered as of the day and year first above written.

 

SURMODICS, INC.

 

 

By:  /s/ Gary R. Maharaj

Its:  President and CEO

 

 

/s/ Teryl L. W. Sides

Executive

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