REPLACEMENT PROMISSORY NOTE
Revolving Line of Credit
Variable Rate
March 14, 2000
Borrowers: Merit Medical Systems, Inc., Merit Holdings, Inc., and Sentir
Semiconductor, Inc.
Lender: Zions First National Bank
Amount: $35,000,000.00
Maturity: July 31, 2006
For value received, Borrowers promise to pay to the order of Lender at
its Commercial Banking Department in Salt Lake City, Utah, the sum of
thirty-five million dollars ($35,000,000.00) or such other principal balance as
may be outstanding hereunder in lawful money of the United States with interest
thereon calculated and payable as provided herein.
This Replacement Promissory Note shall be a revolving line of credit
under which Borrowers may repeatedly draw and repay funds, so long as no default
has occurred hereunder or under the Amended and Restated Loan Agreement dated
August 11, 1999, between Lender and Borrowers (as amended or otherwise modified
from time to time, the "Loan Agreement") and so long as the aggregate,
outstanding principal balance at any time does not exceed the Reducing Available
Borrowing Base (as defined in the Loan Agreement). Disbursements under this
Replacement Promissory Note shall be made in accordance with the Loan Agreement.
In connection with each request for an advance under this Replacement
Promissory Note, the applicable Borrower shall specify whether the advance shall
bear interest based on the Prime Rate (as defined below) or the LIBOR Rate (as
defined below) and, if the LIBOR Rate is selected, the applicable Interest
Period (as defined below). The specification made by such Borrower may not be
changed without consent of Lender. If no specification is made by such Borrower,
the advance shall bear interest based on the Prime Rate.
Interest on advances based on the Prime Rate shall be calculated as
follows:
1. Interest shall be at a variable rate computed on the basis of
a three hundred sixty (360) day year as follows: the Prime
Rate of Lender from time to time in effect plus the Prime Rate
Performance Percent (as defined below) per annum, adjusted as
of the date of any change in the Prime Rate.
2. The Prime Rate Performance Percent shall be determined as
follows:
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(a) If the Performance Pricing Ratio (as defined in
the Loan Agreement) is equal to or greater than three to one
(3.0:1), the Prime Rate Performance Percent will be zero (0).
(b) If the Performance Pricing Ratio is equal to or
greater than two to one (2.0:1) but less than three to one
(3.0:1), the Prime Rate Performance Percent will be minus
fifteen-hundredths (-.15).
(c) If the Performance Pricing Ratio is less than two
to one (2.0:1), the Prime Rate Performance Percent will be
minus thirty-five hundredths (-.35).
The Prime Rate Performance Percent shall be
determined based upon the most recent quarterly or annual
financial statements of Borrowers provided pursuant to the
Loan Agreement and shall be adjusted as of the first day of
the month following the month in which Borrowers are required
to deliver such reports to Lender pursuant to the Loan
Agreement.
3. Prime Rate means an index which is determined daily by the
published commercial loan variable rate index held by any two
of the following banks: Chase Manhattan Bank, Wells Fargo Bank
N. A., and Bank of America N. T. & S. A. In the event no two
of the above banks have the same published rate, the bank
having the median rate will establish Lender's Prime Rate. If,
for any reason beyond the control of Lender, any of the
aforementioned banks becomes unacceptable as a reference for
the purpose of determining the Prime Rate used herein, Lender
may, five days after posting notice in Lender's bank offices,
substitute another comparable bank for the one determined
unacceptable. As used in this paragraph, "comparable bank"
shall mean one of the ten largest commercial banks
headquartered in the United States of America. This definition
of Prime Rate is to be strictly interpreted and is not
intended to serve any purpose other than providing an index to
determine the variable interest rate used herein. It is not
the lowest rate at which Lender may make loans to any of its
customers, either now or in the future.
Interest on advances based on the LIBOR Rate shall be calculated as
follows:
1. Interest shall be at a rate computed on the basis of a three
hundred sixty (360) day year equal to the LIBOR Rate of Lender
for the applicable Interest Period plus the LIBOR Rate
Performance Percent (as defined below).
2. The LIBOR Rate Performance Percent shall be determined as
follows:
(a) If the Performance Pricing Ratio (as defined in
the Loan Agreement) is equal to or greater than three to one
(3.0:1), the LIBOR Rate Performance Percent will be one and
sixty-five hundredths (1.65).
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(b) If the Performance Pricing Ratio is equal to or
greater than two to one (2.0:1) but less than three to one
(3.0:1), the LIBOR Rate Performance Percent will be one and
five-tenths (1.50).
(c) If the Performance Pricing Ratio is less than two
to one (2.0:1), the LIBOR Rate Performance Percent will be one
and four-tenths (1.40).
The LIBOR Rate Performance Percent shall be
determined based upon the most recent quarterly or annual
financial statements of Borrowers provided pursuant to the
Loan Agreement and shall remain in effect for the applicable
Interest Period.
3. The LIBOR Rate applicable to any Interest Period means the
rate per annum quoted by Lender as its LIBOR Rate. The LIBOR
Rate shall be related to quotes for the London Interbank
Offered Rate from the British Bankers Association Interest
Settlement Rates, Lasser Marshall Inc., or other comparable
services for the applicable Interest Period. This definition
of LIBOR Rate is to be strictly interpreted and is not
intended to serve any purpose other than providing an index to
determine the interest rate used herein. The LIBOR Rate of
Lender may not necessarily be the same as the quoted London
Interbank Offered Rate quoted by any particular institution or
service applicable to any Interest Period.
4. Banking Business Day means any day other than a Saturday,
Sunday or other day on which commercial banks in the State of
Utah are authorized or required to close and a day on which
dealings in dollar deposits are also carried on in the London
Interbank market and banks are open for business in London.
5. Dollars and the sign "$" mean lawful money of the United
States.
6. Interest Period means, with respect to any LIBOR Rate advance,
the period commencing on the date such advance is made and
ending, as the applicable Borrower may select, on the
numerically corresponding day in the first, second, third,
sixth, twelfth, twenty-fourth, thirty-sixth, forty-eighth, or
sixtieth calendar month thereafter, except that each such
Interest Period that commences on the last Banking Business
Day of a calendar month (or on any day for which there is no
numerically corresponding day in the appropriate subsequent
calendar month) shall end on the last Banking Business Day of
the appropriate subsequent calendar month; provided that all
of the foregoing provisions relating to Interest Periods are
subject to the following:
(a) No Interest Period may extend beyond the
termination of the Loan Agreement;
(b) No Interest Period may extend beyond the
aforesaid Maturity Date or such later date to which it is
extended; and
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(c) If an Interest Period would end on a day
that is not a Banking Business Day, such Interest Period shall
be extended to the next Banking Business Day unless such
Banking Business Day would fall in the next calendar month, in
which event such Interest Period shall end on the immediately
preceding Banking Business Day.
7. Notwithstanding any other provision in this Replacement
Promissory Note, if the adoption of any applicable law, rule,
or regulation, or any change therein, or any change in the
interpretation or administration thereof by any governmental
authority, central bank, or comparable agency charged with the
interpretation or administration thereof, or compliance by
Lender with any request or directive (whether or not having
the force of law) of any such authority, central bank, or
comparable agency shall make it unlawful or impossible for
Lender to maintain or fund advances based on the LIBOR Rate,
then upon notice to Borrowers by Lender the outstanding
principal amount of the advances based on the LIBOR Rate,
together with interest accrued thereon, shall, at the election
of Lender, be (1) immediately converted to an advance based on
Prime Rate; (2) repaid immediately upon demand of Lender if
such change or compliance with such request, in the judgment
of Lender, requires immediate repayment; or (3) repaid at the
expiration of the last Interest Period to expire before the
effective date of any such change or request.
8. Notwithstanding anything to the contrary herein, if Lender
determines (which determination shall be conclusive) that:
(a) Quotations of interest rates for the relevant
deposits referred to in the definition of LIBOR Rate are not
being provided in the relevant amounts or for the relative
maturities for purposes of determining the LIBOR Rate; or
(b) The LIBOR Rate does not accurately cover the
cost to Lender of making or maintaining advances based on the
LIBOR Rate, then Lender may give notice thereof to Borrowers,
whereupon until Lender notifies Borrowers that the
circumstances giving rise to such suspension no longer exist,
(1) the obligation of Lender to make advances based on the
LIBOR Rate shall be suspended; and (2) Borrowers shall repay
in full the then outstanding principal amount of each advance
based on LIBOR Rate together with accrued interest thereon, on
the last day of the then current Interest Period applicable to
such advance, or, at Borrowers' option, convert the advances
based on LIBOR Rate to advances based on Prime Rate on the
last day of the then current Interest Period applicable to
such advance.
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On or before the last day of the applicable Interest Period for which
an advance has been made, the applicable Borrower shall specify whether the
outstanding balance owing on the advance shall bear interest after the
applicable Interest Period based on the Prime Rate or the LIBOR Rate and, if the
LIBOR Rate is selected, the applicable Interest Period. The specification made
by such Borrower may not be changed without consent of Lender. If no
specification is made by such Borrower, the advance shall bear interest based on
the Prime Rate.
Principal and interest on advances based on the Prime Rate shall be
payable as follows: Interest accrued is to be paid monthly commencing September
1, 1999 and on the same day of each month thereafter. All principal and unpaid
interest shall be paid in full on July 31, 2005.
Principal and interest on advances based on the LIBOR Rate shall be
payable as follows: Interest accrued is to be paid monthly commencing September
1, 1999 and on the same day of each month thereafter and on the last day of the
Interest Period. All principal and unpaid interest shall be paid in full upon
the earlier of maturity of the applicable Interest Period or July 31, 2005.
As to all advances, whether based on the Prime Rate or the LIBOR Rate:
1. Interest shall accrue from the date of disbursement of the
principal amount or portion thereof until paid, both before
and after judgment, in accordance with the terms set forth
herein.
2. All payments shall be applied first to accrued interest and
the remainder, if any, to principal. Lender may apply payments
to Prime Rate based or LIBOR Rate based advances in any order
determined by Lender in its sole discretion.
3. Notwithstanding anything to the contrary herein, all principal
and unpaid interest shall be paid in full on July 31, 2005.
4. Upon default in payment of any principal or interest when due,
whether due at stated maturity, by acceleration, or otherwise,
all outstanding principal shall bear interest at a default
rate from the date when due until paid, both before and after
judgment, which default rate shall be three percent (3.0%) per
annum above the Prime Rate.
If, at any time prior to the maturity of this Replacement Promissory
Note, this Replacement Promissory Note shall have a zero balance owing, this
Replacement Promissory Note shall not be deemed satisfied or terminated but
shall remain in full force and effect for future draws unless terminated upon
other grounds.
Borrowers may prepay all or any portion of all Prime Rate based
advances at any time without penalty. Any prepayment of a LIBOR Rate based
advance shall be subject to a prepayment fee if the Original LIBOR Rate is
greater than the Current LIBOR Rate on the prepayment date. The prepayment fee
shall be an amount equal to the prepaid principal amount multiplied by the
product of the Original LIBOR Rate less the Current LIBOR Rate multiplied by the
number of years and fractional portion of a year remaining until maturity of the
Interest Period. Current LIBOR Rate means the LIBOR Rate in effect on the date
the prepayment is made for the Interest Period from that prepayment date to the
date of maturity of the Interest Period. Original LIBOR Rate means the LIBOR
Rate in effect on the date the LIBOR Rate based advance which is being prepaid
was made for the Interest Period selected by the applicable Borrower for that
advance. Any prepayment received by Lender after 2:00 p.m. mountain standard or
daylight time (whichever is in effect on the date the prepayment is received)
shall be deemed received on the following Banking Business Day.
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This Replacement Promissory Note is made in accordance with the Loan
Agreement and is secured by the collateral identified in and contemplated by the
Loan Agreement.
If default occurs in the payment of any principal or interest when due,
or if any Event of Default (as defined in the Loan Agreement) occurs under the
Loan Agreement, time being the essence hereof, then the entire unpaid balance,
with interest as aforesaid, shall, at the election of the holder hereof and
without notice of such election, become immediately due and payable in full.
If this Replacement Promissory Note becomes in default or payment is
accelerated, Borrowers agree to pay to the holder hereof all collection costs,
including reasonable attorney fees and legal expenses, in addition to all other
sums due hereunder.
This Replacement Promissory Note is issued in replacement of the
promissory note dated August 11, 1999 issued by the Borrowers to Lender in the
original principal amount of $28,000,000.00.
All obligations of Borrowers under this Replacement Promissory Note
shall be joint and several.
Borrowers and all endorsers, sureties and guarantors hereof hereby
jointly and severally waive presentment for payment, demand, protest, notice of
protest, notice of protest and of non- payment and of dishonor, and consent to
extensions of time, renewal, waivers or modifications without notice and further
consent to the release of any collateral or any part thereof with or without
substitution.
Borrowers:
Merit Medical Systems, Inc.
By:
Title:
Merit Holdings, Inc.
By:
Title:
Sentir Semiconductor, Inc.
By:
Title:
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