LOAN EXTENSION AND MODIFICATION AGREEMENT
(REVOLVING LINE OF CREDIT)
In consideration of the promises contained in this Loan Extension and
Modification Agreement (the "Agreement"), MERIT MEDICAL SYSTEMS, INC., a Utah
corporation ("Merit Medical"), and ZIONS FIRST NATIONAL BANK, a national
association ("Zions Bank"), each referred to as a "Party" and both collectively
referred to as the "Parties" to this Agreement, agree as follows:
1. Merit Medical has a revolving line of credit (the "Line of Credit")
with Zions Bank in the current maximum principal amount of $8,500,000.00,
evidenced and governed by the following documents, among others (collectively
the "Loan Documents"):
A. Loan Agreement, dated October 10, 1995 (the "Loan
Agreement");
B. Promissory Note, dated October 10, 1995, in the
original maximum principal amount of $8,500,000.00
(the "Note");
C. Trust Deed with Assignment of Rents, dated October
10, 1995, and recorded on October 18, 1995, as Entry
No. 6192795 in Book 7251 beginning at Page 0903 of
the official records of the Salt Lake County Recorder
(the "Trust Deed"); and
D. Security Agreement, dated October 10, 1995,
whereby Merit Medical granted to Zions Bank a
security interest in, among other things, all of
its inventory, accounts, general intangibles
(including without limitation certain patents
described in the Security Agreement), equipment,
furnishings and fixtures, all as more particularly
described in the Security Agreement (the "Security
Agreement").
2. The Line of Credit matured on September 1, 1997, on which date all
amounts owing on the Line of Credit became immediately due and payable.
3. Merit Medical failed to pay off the Line of Credit on September 1,
1997, as agreed, and now have requested Zions Bank to extend the maturity of the
Line of Credit until October 1, 1998, and to modify the terms of the Line of
Credit by: (a) increasing the maximum principal amount of the Line of Credit to
$10,500.00; (b) reducing the interest rate by .25%; (c) increasing the maximum
amount of raw materials and finished goods used to calculate the limitation on
advances under the Line of Credit from $3,000,000.00 to $3,500,000.00; (d)
increasing the ratio of total liabilities to tangible net worth from [1.0 to
1.0] to [1.10 to 1.0]; and (e) increasing the minimum working capital
requirement from $7,000,000.00 to $9,000,000.00. Zions Bank is willing to do so,
subject to the terms and conditions of this Agreement, which include not
interrupting or otherwise adversely affecting the priority of Zions Bank's lien
and security interests created under and evidenced by the Trust Deed and the
Security Agreement.
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Modification Agreement
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4. The Parties represent and warrant to each other that, in deciding to
enter into this Agreement, they each:
A. made their own due diligence investigation and
evaluation;
B. had all of the information they needed;
C. did not rely on any statements, acts or omissions
except as expressly set forth in this Agreement;
D. were not acting under any duress, compulsion or
undue influence; and
E. were (or had the opportunity to be) advised by
independent legal counsel.
5. By this Agreement, the Line of Credit and the Loan Documents are
modified as follows:
A. The maturity date of the Line of Credit is extended
from September 1, 1997, to October 1, 1998. All
amounts owing on the Line of Credit shall become
immediately due and payable on October 1, 1998.
B. The maximum principal amount of the Line of Credit is
increased from $8,500,000.00 to $10,500,000.00.
C. The interest rates specified in the Note shall be
reduced by .25%, or in other words from .25% above
the Base Rate (as defined in the Note) to the Base
Rate, and from 3.10 above the LIBOR Rate (as defined
in the Note) to 2.85% above the LIBOR Rate.
D. The maximum amount of raw materials and finished
goods used to calculate the limitation on advances
under the Line of Credit are increased from
$3,000,000.00 to $3,500,000.00.
E. Effective beginning with the calendar quarter which
ends March 31, 1998, the allowable ratio of total
liabilities to tangible net worth is increased from
[1.0 to 1.0] to [1.10 to 1.0].
F. The minimum working capital which Merit Medical is
required to maintain during the term of the Line of
Credit is increased from $7,000,000.00 to
$9,000,000.00.
6. Contemporaneous with the execution and delivery of this Agreement,
Merit Medical shall execute and deliver to Zions Bank a Supplemental Trust Deed,
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Modification Agreement
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in a form acceptable to Zions Bank, whereby the Trust Deed is supplemented to
state the increased maximum principal amount of the Line of Credit.
7. Except as expressly modified by this Agreement, all of the terms and
conditions of the Line of Credit and the Loan Documents shall remain in full
force and effect, and, as modified by this Agreement, the Line of Credit shall
continue to be secured as provided in the Loan Documents.
8. Zions Bank has incurred approximately $675.00 in attorney fees and
expenses in connection with this Agreement and a Loan Assumption Agreement to be
executed and delivered at the same time as this Agreement, which amount
(together with any additional attorney fees and expenses incurred by Zions Bank)
shall be paid by Merit Medical contemporaneous with the execution of this
Agreement. Additionally, contemporaneous with the execution of this Agreement,
Merit Medical shall pay to Zions Bank a loan modification and extension fee of
$26,250.00.
9. Except for express contractual obligations of Zions Bank, Merit
Medical forever releases Zions Bank and all of its parent, subsidiary and
affiliated corporations and entities, past, present and future, and each of
them, as well as their respective partners, directors, officers, agents,
servants, employees and attorneys, past, present and future, and each of them,
from any and all claims, demands, damages, losses, liabilities and causes of
action, of whatever kind or nature, whether known or unknown, whether suspected
or unsuspected, and whether related, directly or indirectly, or wholly unrelated
to the subject matter of this Agreement.
10. ARBITRATION DISCLOSURES:
A. ARBITRATION IS FINAL AND BINDING ON THE PARTIES
AND SUBJECT TO ONLY VERY LIMITED REVIEW BY A
COURT.
B. IN ARBITRATION THE PARTIES ARE WAIVING THEIR RIGHT
TO LITIGATE IN COURT, INCLUDING THEIR RIGHT TO A
JURY TRIAL.
C. DISCOVERY IN ARBITRATION IS MORE LIMITED THAN
DISCOVERY IN COURT.
D. ARBITRATORS ARE NOT REQUIRED TO INCLUDE FACTUAL
FINDINGS OR LEGAL REASONING IN THEIR AWARDS. THE
RIGHT TO APPEAL OR SEEK MODIFICATION OF ARBITRATORS'
RULINGS IS VERY LIMITED.
E. A PANEL OF ARBITRATORS MIGHT INCLUDE AN ARBITRATOR
WHO IS OR WAS AFFILIATED WITH THE BANKING
INDUSTRY.
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Modification Agreement
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F. IF YOU HAVE QUESTIONS ABOUT ARBITRATION, CONSULT
YOUR ATTORNEY OR THE AMERICAN ARBITRATION
ASSOCIATION.
ARBITRATION AGREEMENT
G. Any claim or controversy ("Dispute") between or
among the Parties, including but not limited to
Disputes arising out of or relating to the Line of
Credit, the Loan Documents, this Agreement, or any
agreement, document, obligation or transaction
contemplated by this Agreement, this paragraph 10
(the "Arbitration Agreement"), or any related
agreements or instruments relating hereto or
delivered in connection herewith (the "Related
Documents"), and including but not limited to a
Dispute based on or arising from an alleged tort,
shall at the request of any Party be resolved by
binding arbitration in accordance with the
applicable arbitration rules of the American
Arbitration Association ("the Administrator").
The provisions of this Arbitration Agreement shall
survive any termination, amendment, or expiration
of this Agreement, the Loan Documents or the
Related Documents.
H. The arbitration proceedings shall be conducted in
Salt Lake City, Utah, at a place to be determined
by the Administrator. The Administrator and the
arbitrator(s) shall have the authority to the
extent practicable to take any action to require
the arbitration proceeding to be completed and the
arbitrator(s)' award issued within one-hundred-
fifty (150) days of the filing of the Dispute with
the Administrator. The arbitrator(s) shall have
the authority to impose sanctions on any Party
that fails to comply with time periods imposed by
the Administrator or the arbitrator(s), including
the sanction of summarily dismissing any Dispute
or defense with prejudice. The arbitrator(s)
shall have the authority to resolve any Dispute
regarding the terms of this Agreement, this
Arbitration Agreement, the Loan Documents or the
Related Documents, including any claim or
controversy regarding the arbitrability of any
Dispute. All limitations periods applicable to
any Dispute or defense, whether by statute or
agreement, shall apply to any arbitration
proceeding hereunder and the arbitrator(s) shall
have the authority to decide whether any Dispute
or defense is barred by a limitations period and,
if so, to summarily dismiss any Dispute or defense
on that basis. The doctrines of compulsory
counterclaim, res judicata, and collateral
estoppel shall apply to any arbitration proceeding
hereunder so that a Party must state as a
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Modification Agreement
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counterclaim in the arbitration proceeding any claim
or controversy which arises out of the transaction or
occurrence that is the subject matter of the Dispute.
The arbitrator(s) may in the arbitrator(s)'
discretion and at the request of any Party: (1)
consolidate in a single arbitration proceeding any
other claim or controversy involving another Party
that is substantially related to the Dispute where
that other Party is bound by an arbitration clause
with the Lender, such as borrowers, guarantors,
sureties, and owners of collateral; (2) consolidate
in a single arbitration proceeding any other claim or
controversy that is substantially similar to the
Dispute; and (3) administer multiple arbitration
claims or controversies as class actions in
accordance with the provisions of Rule 23 of the
Federal Rules of Civil Procedure.
I. The arbitrator(s) shall be selected in accordance
with the rules of the Administrator from panels
maintained by the Administrator. A single
arbitrator shall be knowledgeable in the subject
matter of the Dispute. Where three arbitrators
conduct an arbitration proceeding, the Dispute
shall be decided by a majority vote of the three
arbitrators, at least one of whom must be
knowledgeable in the subject matter of the Dispute
and at least one of whom must be a practicing
attorney. The arbitrator(s) shall award recovery
of all costs and fees (including attorneys' fees
and costs, arbitration administration fees and
costs, and arbitrator(s)' fees). The
arbitrator(s), either during the pendency of the
arbitration proceeding or as part of the
arbitration award, also may grant provisional or
ancillary remedies including but not limited to
injunctive relief, foreclosure, sequestration,
attachment, replevin, garnishment, or the
appointment of a receiver.
J. Judgment upon an arbitration award may be entered
in any court having jurisdiction, subject to the
following limitation: the arbitration award is
binding upon the parties only if the amount does
not exceed four million dollars ($4,000,000.00);
if the award exceeds that limit, any Party may
demand the right to a court trial. Such a demand
must be filed with the Administrator within thirty
(30) days following the date of the arbitration
award; if such a demand is not made within that
time period, the amount of the arbitration award
shall be binding. The computation of the total
amount of an arbitration award shall include
amounts awarded for attorneys' fees and costs,
arbitration administration fees and costs, and
arbitrator(s)' fees.
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Modification Agreement
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K. No provision of this Arbitration Agreement, nor
the exercise of any rights hereunder, shall limit
the right of any Party to: (1) judicially or non-
judicially foreclose against any real or personal
property collateral or other security; (2)
exercise self-help remedies, including but not
limited to repossession and setoff rights; or (3)
obtain from a court having jurisdiction thereover
any provisional or ancillary remedies including
but not limited to injunctive relief, foreclosure,
sequestration, attachment, replevin, garnishment,
or the appointment of a receiver. Such rights can
be exercised at any time, before initiation of or
during an arbitration proceeding, except to the
extent such action is contrary to the arbitration
award. The exercise of such rights shall not
constitute a waiver of the right to submit any
Dispute to arbitration, and any claim or
controversy related to the exercise of such rights
shall be a Dispute to be resolved under the
provisions of this Arbitration Agreement.
L. Notwithstanding the applicability of any other law to
this Agreement, the Loan Documents, the Arbitration
Agreement, or the Related Documents between or among
the Parties, the Federal Arbitration Act, 9 U.S.C.
ss. 1 et seq., shall apply to the construction and
interpretation of this Arbitration Agreement.
11. This Agreement and the Loan Documents, as modified by this
Agreement, constitute the entire agreement between the Parties with respect to
the Line of Credit, and may not be altered or amended except by written
agreement signed by both of the Parties. PURSUANT TO UTAH CODE SECTION 25-5-4,
MERIT MEDICAL IS NOTIFIED THAT THIS AGREEMENT AND THE LOAN DOCUMENTS, AS
MODIFIED BY THIS AGREEMENT, ARE A FINAL EXPRESSION OF THE AGREEMENTS BETWEEN THE
PARTIES, AND MAY NOT BE CONTRADICTED BY EVIDENCE OF ANY ALLEGED ORAL AGREEMENT.
12. This Agreement is made pursuant to and shall be construed in
accordance with the laws of the State of Utah.
DATED: 10 October , 1997.
MERIT MEDICAL SYSTEMS, INC.
By: /s/ Xxxx Xxxxxxx
Title: CFO, Secretary
ZIONS FIRST NATIONAL BANK
By: /s/Grant P.
Title: Vice President
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