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MMSI > SEC Filings for MMSI > Form 8-K on 10-Oct-2013All Recent SEC Filings

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Form 8-K for MERIT MEDICAL SYSTEMS INC


10-Oct-2013

Entry into a Material Definitive Agreement, Regulation FD Disclosure, F


Item 1.01 Entry into a Material Definitive Agreement.

On October 4, 2013, Merit Medical Systems, Inc. ("Merit") entered into a First Amendment to Amended and Restated Credit Agreement, dated as of October 4, 2013 (the "Amendment"), by and among Merit, certain subsidiaries of Merit, the lenders who are party to the Amendment (collectively, the "Lenders") and Wells Fargo Bank, National Association ("Wells Fargo"), as administrative agent for the Lenders. The Amendment sets forth the terms and conditions upon which Merit, Wells Fargo and the other parties to the Amendment have agreed to amend Merit's Amended and Restated Credit Agreement, dated December 19, 2012, by and among Merit, the Lenders and Wells Fargo (the "Credit Agreement"). Among other provisions, the Amendment provides for an increase in Merit's borrowing capacity under the Credit Agreement by $40,000,000. The Credit Agreement, after giving effect to the Amendment (the "Amended Credit Agreement"), sets forth the agreement of the Lenders to make revolving credit loans to Merit in an aggregate amount of $215,000,000 on the terms and subject to the conditions set forth in the Amended Credit Agreement. The Lenders have previously made a term loan to Merit in the amount of $100,000,000, repayable in quarterly installments in the amounts provided in the Credit Agreement until the maturity date of December 19, 2017, at which time the term loan, together with accrued interest thereon, is required to be paid in full. In addition, certain mandatory prepayments are required to be made upon the occurrence of certain events described in the Amended Credit Agreement. Wells Fargo has agreed to make "Swingline" loans from time to time through the maturity date of December 19, 2017 in amounts equal to the difference between the amounts actually loaned by the Lenders and the aggregate credit commitment.

On December 19, 2017, all principal, interest and other amounts outstanding under the Amended Credit Agreement are payable in full. At any time prior to the maturity date, Merit may repay any amounts owing under all revolving credit loans, term loans, and all Swingline loans in whole or in part, subject to certain minimum thresholds, without premium or penalty, other than breakage costs.

The term loan and any revolving credit loans made under the Credit Agreement bear interest at adjustable interest rates, based upon Merit's Consolidated Total Leverage Ratio (as defined in the Amended Credit Agreement) for the applicable period. Merit may elect to have interest on term loans and revolving credit loans computed based on the base rate (described below), the LIBOR Rate (as defined in the Amended Credit Agreement or the LIBOR Market Index Rate (as defined in the Amended Credit Agreement). Base rate loans bear interest at a rate equal to the base rate plus not less than 0.25% nor more than 2.50%, based upon the Consolidated Total Leverage Ratio for the applicable period. LIBOR Rate and LIBOR Market Index loans bear interest at a rate equal to the LIBOR Rate or LIBOR Market Index Rate, as applicable, plus not less than 1.25% nor more than 3.50%, based upon the Consolidated Total Leverage Ratio for the applicable period. As of October 4, 2013, term loans and revolving credit loans under the Amended Credit Agreement bore interest, at the election of Merit, at either (y) the base rate plus 2.25%, or (z) the LIBOR Rate or LIBOR Market Index Rate plus 3.25%. Swingline loans bear interest at the LIBOR Market Index Rate plus not less than1.25% nor more than 3.50%. As of October 4, 2013, Swingline loans bore interest at the LIBOR Market Index Rate plus 3.25%. Interest on each loan featuring the base rate or the LIBOR Market Index Rate is due and payable on the last business day of each calendar month; interest on each loan featuring the LIBOR Rate is due and payable on the last day of each interest period selected by Merit when selecting the LIBOR Rate as the benchmark for interest calculation. For purposes of the Amended Credit Agreement, the base rate means the highest of (i) the prime rate (as announced by Wells Fargo), (ii) the federal funds rate plus 0.50%, or (iii) LIBOR for an interest period of one month plus 1.0%. Merit's obligations under the Amended Credit Agreement and all loans made thereunder are secured by a security interest in the assets of Merit and certain of its subsidiaries (including the SAFEGUARD® and AIR-BAND™ products and the assets of Radial Assist, LLC referenced in Item 7.01 below) pursuant to a separate collateral agreement entered into in conjunction with the Credit Agreement.

The Amended Credit Agreement contains customary covenants, representations and warranties and other terms customary for revolving credit loans of this nature. In this regard, the Amended Credit Agreement requires Merit to not, among other things, (a) permit the Consolidated Total Leverage Ratio (as defined in the Amended Credit Agreement) to be greater than 4.75 to 1 as of the fiscal quarter ending December 31, 2013; greater than 4.00 to 1 as of the fiscal quarter ending March 31, 2014; greater than 3.75 to 1 as of the


fiscal quarter ending June 30, 2014; greater than 3.50 to 1 as of the fiscal quarter ending September 30, 2014; greater than 3.25 to 1 as of the fiscal quarter ending December 31, 2014; greater than 3.00 as of any fiscal quarter ending during 2015; greater than 2.75 to 1 as of any fiscal quarter ending during 2016, or greater than 2.50 to 1 as of any fiscal quarter ending thereafter; (b) for any period of four consecutive fiscal quarters, permit the ratio of Consolidated EBITDA (as defined in the Credit Agreement and subject to certain adjustments) to Consolidated Fixed Charges to be less than 1.75 to 1; or
(c) subject to certain adjustments, permit Consolidated Net Income for certain periods to be less than $0. Additionally, the Amended Credit Agreement contains various negative covenants with which Merit must comply, including, but not limited to, limitations respecting: the incurrence of indebtedness, the creation of liens on its property, mergers or similar combinations or liquidations, asset dispositions, and other provisions customary in similar types of agreements.

Under the Amended Credit Agreement, upon the occurrence of an Event of Default, Merit may be required to repay all outstanding indebtedness immediately. An Event of Default includes (a) a default in the payment of principal of loans and reimbursement obligations under the Amended Credit Agreement, (b) a determination that any representation, warranty, certification or statement of fact in the Amended Credit Agreement or any other loan document associated therewith was materially incorrect or misleading when made, (c) the default by any Credit Party in the performance of any covenant or agreement set forth in the Amended Credit Agreement, (d) the default by any Credit Party in the payment of other indebtedness that exceeds $10,000,000, (e) the occurrence of any Change in Control (as defined in the Amended Credit Agreement, (f) the entry of any Credit Party into a bankruptcy proceeding, subject to certain conditions, and other default provisions that are customary in similar type agreements.

Pursuant to the terms of the Amended Credit Agreement, the revolving credit loan availability will be automatically and permanently reduced to (i) $190,000,000 on March 31, 2014 and (ii) $175,000,000 on October 1, 2014. If the revolving credit loan is in excess of such amounts on such dates, the Amended Credit Agreement obligates Merit to immediately pay down all amounts in excess of the reduced credit availability. Merit's failure to pay down the revolving credit loan below such amounts would constitute a default under the terms of the Amended Credit Agreement. Upon the consummation of the sale, if any, of Merit's facility in Pearland, Texas, the Amended Credit Agreement requires Merit to pay 100% of the net proceeds of such sale to the Lenders. Any such payment would be applied to payment of the revolving loan credit facility, and result in a corresponding permanent reduction in the revolving credit loan availability.

If an Event of Default occurs, then, to the extent permitted in the Amended Credit Agreement, the Lenders may direct the Administrative Agent to, or the Administrative Agent may, with the consent of Lenders holding more than 50% of the aggregate outstanding principal amount of the loans, as applicable, terminate the Revolving Credit Commitment, accelerate the repayment of any outstanding loans and exercise all rights and remedies available to such Lenders under the Amended Credit Agreement and applicable law. In the case of an Event of Default that exists due to the occurrence of certain involuntary or voluntary bankruptcy, insolvency or reorganization events of Merit, the Credit Facility will automatically terminate and the repayment of any outstanding loans shall be automatically accelerated.

As of September 30, 2013, Merit had borrowed $251,157,250 under the Credit Agreement, as in effect prior to the execution of the Amendment.

The foregoing summary of the principal terms of the Amended Credit Agreement is not complete and is qualified in its entirety by the actual terms and conditions of the Amended Credit Agreement, a copy of which Merit intends to file as an exhibit to its Quarterly Report on Form 10-Q for the period ended September 30, . . .



Item 7.01 Regulation FD

On October 7, 2013, Merit issued press releases entitled "Merit Medical Acquires Pressure-Assisted Hemostatic Devices From Datascope Corp." and "Merit Medical Acquires Assets of Radial Assist." Copies of such press releases are included as Exhibit 99.1 and Exhibit 99.2, respectively, to this Current Report on Form 8-K and are incorporated herein by reference.




Item 9.01. Financial Statements and Exhibits

(d) Exhibits

99.1 Press Release issued by Merit Medical Systems, Inc., dated October 7, 2013, entitled "Merit Medical Acquires Pressure-Assisted Hemostatic Devices From Datascope Corp."

99.2 Press Release issued by Merit Medical Systems, Inc., dated October 7, 2013, entitled "Merit Medical Acquires Assets of Radial Assist."


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