SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
Quarterly Report Under Section 13 or 15(d) of
The Securities Exchange Act of 1934
For quarter ended: March 31, 2000 Commission File No. 0-11178
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UTAH MEDICAL PRODUCTS, INC.
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(Exact name of Registrant as specified in its charter)
UTAH 87-0342734
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
7043 South 300 West
Midvale, Utah 84047
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Address of principal executive offices
Registrant's telephone number: (801) 566-1200
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Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Sections 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports) and; (2) has been subject to such
filing requirements for the past 90 days. Yes X No
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The number of shares outstanding of the registrant's common stock as of May
10, 2000: 6,390,011
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UTAH MEDICAL PRODUCTS, INC.
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INDEX TO FORM 10-Q
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PART I - FINANCIAL INFORMATION PAGE
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Item 1. Financial Statements
Consolidated Condensed Balance Sheets as of
March 31, 2000 and December 31, 1999 1
Consolidated Condensed Statements of Income for the
three months ended March 31, 2000 and March 31, 1999 2
Consolidated Condensed Statements of Cash Flows for the
three months ended March 31, 2000 and March 31, 1999 3
Notes to Consolidated Condensed Financial Statements 4
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 6
PART II - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K 9
SIGNATURES 9
<PAGE>
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
UTAH MEDICAL PRODUCTS, INC. AND SUBSIDIARIES
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CONSOLIDATED CONDENSED BALANCE SHEETS AS OF
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MARCH 31, 2000 AND DECEMBER 31, 1999
------------------------------------
(in thousands - unaudited)
<TABLE>
<CAPTION>
MARCH 31, 2000 DECEMBER 31, 1999
- ---------------------------------------------------- ---------------- -------------------
<S> <C> <C>
ASSETS
- ----------------------------------------------------
CURRENT ASSETS:
Cash . . . . . . . . . . . . . . . . . . . . . . . . $ 976 $ 647
Accounts receivable - net. . . . . . . . . . . . . . 3,824 4,077
Inventories. . . . . . . . . . . . . . . . . . . . . 3,566 3,190
Other current assets . . . . . . . . . . . . . . . . 705 624
-------------------
Total current assets . . . . . . . . . . . . . . . . 9,071 8,538
PROPERTY AND EQUIPMENT - NET . . . . . . . . . . . . 10,550 11,013
INTANGIBLE ASSETS - NET. . . . . . . . . . . . . . . 8,087 8,205
---------------- -------------------
TOTAL. . . . . . . . . . . . . . . . . . . . . . . . $ 27,708 $ 27,756
================ ===================
LIABILITIES AND STOCKHOLDERS' EQUITY
- ----------------------------------------------------
CURRENT LIABILITIES:
Accounts payable . . . . . . . . . . . . . . . . . . $ 674 $ 544
Accrued expenses . . . . . . . . . . . . . . . . . . 2,165 2,117
Total current liabilities. . . . . . . . . . . . . . 2,839 2,661
NOTES PAYABLE. . . . . . . . . . . . . . . . . . . . 4,841 5,934
DEFERRED INCOME TAXES. . . . . . . . . . . . . . . . 354 372
---------------- -------------------
Total liabilities. . . . . . . . . . . . . . . . . . 8,034 8,967
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STOCKHOLDERS' EQUITY:
Preferred stock - $.01 par value; authorized - 5,000
shares; no shares issued or outstanding
Common stock - $.01 par value; authorized - 50,000
shares; issued - March 31, 2000, 6,442 shares
December 31, 1999, 6,453 shares. . . . . . . . . . 64 64
Cumulative foreign currency translation adjustment . (1,513) (1,250)
Retained earnings. . . . . . . . . . . . . . . . . . 21,123 19,975
Total stockholders' equity . . . . . . . . . . . . . 19,674 18,789
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TOTAL. . . . . . . . . . . . . . . . . . . . . . . . $ 27,708 $ 27,756
================ ===================
</TABLE>
see notes to consolidated condensed financial statements
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UTAH MEDICAL PRODUCTS, INC. AND SUBSIDIARIES
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CONSOLIDATED CONDENSED STATEMENTS OF INCOME FOR THE
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THREE MONTHS ENDED MARCH 31, 2000 AND MARCH 31, 1999
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(in thousands, except per share amounts)
(unaudited)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31,
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2000 1999
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<S> <C> <C>
NET SALES . . . . . . . . . . . . . $6,666 $7,018
COST OF SALES . . . . . . . . . . . 2,995 3,331
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GROSS MARGIN. . . . . . . . . . . . 3,671 3,687
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EXPENSES:
Selling, general and administrative 1,644 1,712
Research & development. . . . . . . 149 222
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Total . . . . . . . . . . . . . . . 1,793 1,934
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INCOME FROM OPERATIONS. . . . . . . 1,878 1,753
OTHER INCOME. . . . . . . . . . . . 38 115
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INCOME BEFORE INCOME TAX EXPENSE. . 1,916 1,868
INCOME TAX EXPENSE. . . . . . . . . 690 668
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NET INCOME. . . . . . . . . . . . . $1,226 $1,200
====== ======
EARNINGS PER COMMON AND
COMMON EQUIVALENT SHARE . . . . . $ 0.19 $ 0.15
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EARNINGS PER COMMON SHARE
ASSUMING FULL DILUTION. . . . . . $ 0.19 $ 0.15
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SHARES OUTSTANDING - BASIC. . . . . 6,447 7,939
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SHARES OUTSTANDING - DILUTED. . . . 6,469 7,939
====== ======
</TABLE>
see notes to consolidated condensed financial statements
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UTAH MEDICAL PRODUCTS, INC. AND SUBSIDIARIES
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CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
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FOR THE THREE MONTHS ENDED MARCH 31, 2000 AND MARCH 31, 1999
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(in thousands - unaudited)
<TABLE>
<CAPTION>
MARCH 31,
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2000 1999
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<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income. . . . . . . . . . . . . . . . . . . . . . . . . . $ 1,226 $ 1,200
-------- --------
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization . . . . . . . . . . . . . . 571 526
(Recovery of)/Provision for losses on accounts receivable 4 (3)
(Gain)/Loss on disposal of assets . . . . . . . . . . . . (1) 1
Deferred income taxes . . . . . . . . . . . . . . . . . . (34) (39)
Changes in operating assets and liabilities:
Accounts receivable - trade . . . . . . . . . . . . . . . 405 (142)
Accrued interest and other receivables. . . . . . . . . . (191) 216
Inventories . . . . . . . . . . . . . . . . . . . . . . . (371) 291
Prepaid expenses. . . . . . . . . . . . . . . . . . . . . (65) (63)
Accounts payable. . . . . . . . . . . . . . . . . . . . . 138 108
Accrued expenses. . . . . . . . . . . . . . . . . . . . . 57 164
Deferred revenue. . . . . . . . . . . . . . . . . . . . . 0 (2)
-------- --------
Total adjustments . . . . . . . . . . . . . . . . . . . . . . 514 1,057
-------- --------
Net cash provided by operating activities . . . . . . . . . . 1,739 2,257
-------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures for:
Property and equipment. . . . . . . . . . . . . . . . . . (125) (178)
Intangible assets . . . . . . . . . . . . . . . . . . . . (100) (1)
Proceeds from sale of property and equipment. . . . . . . . . 0 0
-------- --------
Net cash used in investing activities . . . . . . . . . . . . (225) (179)
-------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Common stock purchased and retired. . . . . . . . . . . . . . (78) (1,455)
Decrease in note payable. . . . . . . . . . . . . . . . . . . (1,093) (1,384)
-------- --------
Net cash used in financing activities . . . . . . . . . . . . (1,171) (2,839)
-------- --------
Effect of exchange rate changes on cash . . . . . . . . . . . (14) (11)
NET INCREASE (DECREASE) IN CASH . . . . . . . . . . . . . . . 329 (772)
CASH AT BEGINNING OF PERIOD . . . . . . . . . . . . . . . . . 647 1,367
-------- --------
CASH AT END OF PERIOD . . . . . . . . . . . . . . . . . . . . $ 976 $ 595
======== ========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid during the period for income taxes. . . . . . . . $ 463 $ 375
Interest. . . . . . . . . . . . . . . . . . . . . . . . . . $ 96 $ 40
</TABLE>
see notes to consolidated condensed financial statements
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UTAH MEDICAL PRODUCTS, INC.
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NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
----------------------------------------------------
(unaudited)
(1) The unaudited financial statements presented herein have been prepared
in accordance with the instructions to form 10-Q and do not include all of the
information and note disclosures required by generally accepted accounting
principles. These statements should be read in conjunction with the financial
statements and notes included in the Utah Medical Products, Inc. ("UTMD" or "the
Company") annual report on form 10-K for the year ended December 31, 1999.
Although the accompanying financial statements have not been examined by
independent accountants in accordance with generally accepted auditing
standards, in the opinion of management, such financial statements include all
adjustments (consisting only of normal recurring adjustments) necessary to
summarize fairly the Company's financial position and results of operations.
(2) Inventories at March 31, 2000 and December 31, 1999 (in thousands)
consisted of the following:
March 31, December 31,
2000 1999
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Finished goods $ 1,170 $ 846
Work-in-process 1,000 962
Raw materials 1,396 1,382
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Total $3,566 $3,190
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(3) The Company has adopted SFAS No. 130, "Reporting Comprehensive Income."
This standard requires companies to disclose certain changes in equity not
represented in net income such as foreign currency translation adjustments and
unrealized gains/losses on available-for-sale securities. These items are
components of other comprehensive income which, when added to net income,
represent total comprehensive income. The Company translates the currency of
its Ireland subsidiary which comprises the only element of other comprehensive
income. Total comprehensive income for the quarter ending March 31, 2000 was
(in thousands) $962.
(4) In June 1999, the Financial Accounting Standards Board (FASB) issued
Statement of Financial Accounting Standards (SFAS) No. 137, "Accounting for
Derivative Instruments and Hedging Activities- Deferral of the Effective Date of
FASB Statement No. 133." SFAS 133 establishes accounting and reporting
standards for derivative instruments and requires recognition of all derivatives
as assets or liabilities in the statement of financial position and measurement
of those instruments at fair value. SFAS 133 is now effective for fiscal years
beginning after June 15, 2000. UTMD believes that the adoption of SFAS 133 will
not have a material effect on the financial statements of the Company.
(5) Forward-Looking Information
This report contains certain forward-looking statements and
information relating to the Company that are based on the beliefs of management
as well as assumptions made by, and information currently available to,
management. When used in this document, the words "anticipate," "believe,"
"should," "project," "estimate," "expect," "intend" and similar expressions, as
they relate to the Company or its management, are intended to identify
forward-looking statements. Such statements reflect the current view of the
Company respecting future events and are subject to certain risks,
uncertainties, and assumptions, including the risks and uncertainties noted
throughout the document. Although the Company has attempted to identify
important factors that could cause the actual results to differ materially,
there may be other factors that cause the forward statement not to come true as
anticipated, believed, projected, expected, or intended. Should one or more of
these risks or uncertainties materialize, or should underlying assumptions prove
incorrect, actual results may differ materially from those described herein as
anticipated, believed, projected, estimated, expected, or intended.
General risk factors that may impact the Company's revenues include
the market acceptance of competitive products, obsolescence caused by new
technologies, the possible introduction by competitors of new products that
claim to have many of the advantages of UTMD's products at lower prices, the
timing and market acceptance of UTMD's own new product introductions, UTMD's
ability to efficiently manufacture its products, including the reliability of
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suppliers, success in gaining access to important global distribution channels,
marketing success of UTMD's distribution and sales partners, budgetary
constraints, the timing of regulatory approvals for newly introduced products,
third party reimbursement, and access to U.S. hospital customers, as that access
is increasingly constrained by group purchasing decisions.
Risk factors, in addition to the risks outlined in the previous paragraph
that may impact the Company's assets and liabilities, as well as cash flows,
include risks inherent to companies manufacturing products used in health care
including claims resulting from the improper use of devices and other product
liability claims, defense of the Company's intellectual property, productive use
of assets in generating revenues, management of working capital including
inventory levels required to meet delivery commitments at a minimum cost, and
timely collection of accounts receivable.
Additional risk factors that may affect non-operating income include the
continuing viability of the Company's technology license agreements, actual cash
and investment balances, asset dispositions, and acquisition activities that may
require external funding.
(6) Events subsequent to March 31, 2000
On April 14, 2000, UTMD entered into a new unsecured revolving
line-of-credit agreement with Key Bank N.A. which replaces its prior
line-of-credit. Under the agreement, the Company may borrow up to $14,500,000
at a floating interest rate tied to Prime Rate or LIBOR, at UTMD's election.
Significant financial covenants under the line require the Company to maintain
minimum Current and Total Funded Debt to EBITDA ratios.
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<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
General
UTMD manufactures and markets a well-established range of specialty
medical devices. The general characteristics of UTMD's business have not
materially changed over the last several reporting periods. The Company's Form
10-K Annual Report for the year ended December 31, 1999 provides a detailed
description of products, technologies, markets, regulatory issues, business
initiatives, resources and business risks, among other details, and should be
read in conjunction with this report. Because of the relatively short span of
time, results for any given three month period in comparison with a previous
three month period may not be indicative of comparative results for the year as
a whole. Dollar amounts in the report are expressed in thousands, except
per-share amounts and where otherwise noted.
Analysis of Results of Operations
a) First Quarter (1Q) Overview
Sales in 1Q 2000 declined 5% from 1Q 1999, due to lower sales of
obstetrics products in the U.S., and lower sales of OEM products worldwide.
Despite the lower sales, operating profits improved 7% due to record gross
profit margins and tightly controlled operating expenses. Earnings per share
(EPS) were up 25% compared to 1Q 1999 due to share repurchases. With its strong
cash flow, UTMD was able to reduce its long term debt balance by $1.1 million,
allow finished goods inventories to increase by $0.4 million during a period of
softer than expected demand, and repurchase another 11,300 shares of its stock
in 1Q 2000.
b) Revenues
In 1Q 2000, sales to customers outside the U.S. grew 24% while
domestic sales, excluding component sales to Baxter, declined 9%. Sales of
components to Baxter declined 79% to $32 in 1Q 2000 from $148 in 1Q 1999.
In the U.S., obstetrics product sales decreased 12% due to end of
millennium overstocking and increased competition, while electro surgery/
gynecology/ urology product sales and neonatal product sales remained about the
same. Blood pressure monitoring components excluding sales to Baxter/ OEM
molding products declined 20% as a result of fluctuation in customer ordering
patterns, for no apparent reasons.
Foreign sales of obstetrics products, electro surgery/ gynecology products,
neonatal products and blood pressure monitoring (BPM) components and accessories
increased 17%, 92%, 117% and 14% respectively.
Global obstetrics product sales which decreased 11% in 1Q 2000 represented
46% of total sales. Obstetrics sales were $3,041 in 1Q 2000, compared to $3,402
in 1Q 1999. Global gynecology/ electro surgery/ urology product sales which grew
9% in 1Q 2000 represented 17% of total revenues. Gyn/ES/Uro sales were $1,125
in 1Q 2000, compared to $1,036 in 1Q 1999. Neonatal product sales which grew 6%
represented 13% of total sales. Neonatal product sales were $872 in 1Q 2000,
compared to $826 in 1Q 1999. BPM and accessories sales including sales to
Baxter which declined 7% represented 24% of global consolidated 1Q 2000 sales.
Sales of BPM and accessories products in 1Q 2000 were $1,629, compared to $1,753
in 1Q 1999.
c) Gross Profit
UTMD's gross profit margin (GPM) in 1Q 2000 was 55.1% compared to
52.5% in 1Q 1999. Gross margin improvements were led by control of
manufacturing overhead costs and lower direct materials costs. During the rest
of 2000, offsetting influences are expected to result in GPM of about 54%.
Expected favorable influences include growth in sales activity without a similar
increase in overhead expenses and a continued emphasis on reengineering products
to reduce costs. Unfavorable influences are expected to be continued
competitive pressure on pricing and higher wage rates and other benefits costs
for production employees. UTMD management believes that consistently achieving
an average GPM above 50% is crucial to successfully support the significant
sales and marketing, research and development, and administrative expenses
associated with an innovative medical device company in a highly complex and
competitive marketplace.
d) Operating Profit
1Q 2000 operating profits increased 7% to $1,878 from $1,753 in 1Q
1999. Total operating expenses, including sales and marketing (S&M) expenses,
research and development (R&D) expenses and general and administrative (G&A)
expenses, were $1,793 or 26.9% of sales in 1Q 2000 compared to $1,934 or 27.6%
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of sales in 1Q 1999. Reducing operating expenses as a percentage of sales with
lower sales is a significant achievement for the quarter.
S&M expenses in 1Q 2000 were $877 or 13.2% of sales compared to $973 or
13.9% of sales in 1Q 1999. S&M expenses are dominated by the costs of
promoting, selling and providing customer support of UTMD's direct sales of
products in the U.S. Although total 1Q 2000 sales decreased 5%, including OEM
and overseas sales where third parties underwrite significant S&M costs of
selling UTMD's products, the U.S. direct sales portion decreased 9%. Total S&M
expenses were reduced 10% in conjunction with managing expenses relative to the
actual performance of UTMD's domestic direct S&M resources.
R&D expenses in 1Q 2000 were $148 or 2.2% of sales compared to $222 or 3.2%
of sales in 1Q 1999. The mid-year 1999 termination of internal efforts
committed to UTMD's fetal pH monitoring project, which represented about half of
R&D spending in 1H 1999, was responsible for the decline. Current R&D projects
include continuing development of the Fowler Endocurette, enhancements to the
Gesco neonatal product line, and improvements to UTMD's other established
products. R&D improvements in materials and configuration of components was
evident in UTMD's improved GPMs. At UTMD, R&D resources are kept involved in
the direct support of manufacturing, as UTMD finds it makes long-term sense to
keep its most technical people involved with products and the processes for
making them throughout their life cycles.
G&A expenses in 1Q 2000 were $767 or 11.5% of sales compared to $739 or
10.5% of 1Q 1999 sales. Year 2000 G&A expenses are expected to be consistent
with 1999, and in 1Q 2000 were within expected limits of normal quarterly
fluctuation.
e) Non-operating income
Royalty income from licensing UTMD's technology to other companies was
partially offset by interest expenses and bank fees on the revolving
line-of-credit in 1Q 2000. Non-operating income in 1Q 2000 was $38, compared to
$115 in 1Q 1999. Royalties received in 1Q 2000 were $44 less than in the prior
year's quarter. Interest expenses and bank fees associated with the
line-of-credit were $98 in 1Q 2000 compared to $43 in 1Q 1999. Assuming a
minimal change in current interest rates and no new borrowing to finance an
extraordinary capital requirement, net non-operating income will increase in
each successive quarter in 2000 as the line-of-credit balance declines.
f) Earnings Before Income Taxes
1Q 2000 earnings before income taxes (EBT) were 28.7% of sales
compared to 26.6% in 1Q 1999. UTMD was able to increase EBT 3% relative to 1Q
1999 even though sales were down 5% because of improvement accomplished in gross
margin combined with tight control of operating expenses. If sales activity
increases, UTMD expects it can increase EBT at a faster rate.
g) Net Income and EPS
UTMD's after tax net income expressed as a percentage of sales was
18.4% for 1Q 2000 compared to 17.1% for 1Q 1999. Net income expressed in
dollars was up 2% at $1,226, compared to $1,200 in 1Q 1999. The effective
income tax rate in 1Q 2000 was 36.0% compared to 35.8% in 1Q 1999.
Diluted 1Q 2000 earnings per share (EPS) were up 25% to $.19 compared to
$.15 in 1Q 1999. 1Q 2000 weighted average number of diluted common shares (the
number used to calculate diluted EPS) were 6,469 compared to 7,939 shares in 1Q
1999. Actual outstanding common shares as of the end of 1Q 2000 were 6,442.
UTMD's trailing twelve months' EPS were $.81, up 35% from the prior twelve month
period of time.
h) Return on Shareholders' Equity (ROE)
ROE in 1Q 2000 was 22% compared to 19% in 1Q 1999.
i) Cash flows
EBITDA is a measure of UTMD's ability to generate cash. First quarter
2000 EBITDA was $2,584, up from $2,438 in 1Q 1999, or as a ratio of sales, 39%
in 1Q 2000 compared to 35% in 1Q 1999. UTMD used EBITDA to allow purchase of
$125 worth of assets to sustain facilities, equipment and tooling in good
working order, investment of $100 in new intangible assets, repurchase $78 worth
of it shares, as well as a decrease in its bank revolving line-of-credit balance
by $1,093 during 1Q 2000.
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Net cash provided by operating activities, including adjustments for
depreciation and other non-cash operating expenses, along with changes in
working capital, totaled $1,739 in 1Q 2000, compared to $2,257 in 1Q 1999. Net
working capital changes used $28 in 1Q 2000 cash compared to providing $572 in
1Q 1999, with the largest change (adjusted for exchange rate changes) coming
from higher finished goods inventories, which UTMD increased in lieu of cutting
production rates in order to maintain production efficiencies during a period of
temporary soft demand.
Financing activities in 1Q 2000 used cash of $1,093 to reduce the bank
line-of-credit. In addition, 11,300 shares of stock were repurchased at a total
cost of $78. No stock was issued in the first quarter of either 2000 or 1999.
On April 14, 2000, UTMD entered into a new unsecured revolving line-of-credit
agreement with Key Bank N.A. which replaces its prior line-of-credit. Under the
agreement, the Company may borrow up to $14,500,000 at a floating interest rate
tied to Prime Rate or LIBOR, at UTMD's election. Covenants under the line
include maintaining minimum Current and Total Funded Debt to EBITDA ratios.
Management believes that capital spending in 1Q 2000 was at a sufficient
rate to sustain current operations. In addition to sustaining capital
expenditures, UTMD expects to use cash during the rest of 2000 for selective
infusions of technological, marketing or product manufacturing rights to broaden
the Company's product offerings, for continued share repurchases when the price
of the stock remains undervalued, and, if available for a reasonable price,
acquisitions that strategically fit UTMD's business and are accretive to
performance. The revolving credit line will continue to be used for liquidity
when the timing of acquisitions or repurchases of stock require a large amount
of cash in a short period of time.
j) Assets and Liabilities
1Q 2000 ending total assets were essentially the same as at December
31, 1999. Current assets increased as a result of higher inventory and cash
balances while net fixed assets declined because depreciation exceeded
replacement purchases. Net intangible assets declined because amortization of
goodwill and intellectual property exceeded new acquisitions. 1Q 2000 ending
net intangible assets represent 29% of total assets.
Average inventory turns decreased in 1Q 2000 to 3.5 times, compared to 3.8
times in 1999, due to lower sales and higher finished goods inventories.
Inventories were allowed to increase $376 during 1Q 2000 based on UTMD's belief
that the sales decrease was temporary. If sales increase during the remainder
of 2000, management expects to be able to achieve its target of 4.0 inventory
turns. March 31, 2000 accounts receivable (A/R) balances declined 6%, slightly
more than sales. Calculated days in receivables at 49 for 1Q 2000 did not
change from year-end 1999. The working capital increase of $355 was essentially
due to the increase in finished goods inventory.
At the end of 1Q 2000, UTMD's total debt ratio decreased to 29% of total
assets from 32% at the end of 1999, due to the reduction in the line-of-credit
balance.
k) Management's Outlook.
UTMD has built and continues to successfully defend a dominant medical
device market franchise in the most special areas of hospitals caring for
mothers and their babies, with innovative and highly effective products.
UTMD's small but effective direct U.S. sales team continues to evolve as a
key resource for achieving UTMD's objectives to help identify clinician needs,
responsively provide excellent solutions for those needs, and assure timely
support for customers' use of UTMD's solutions. In the remaining part of 2000,
UTMD will investigate ways to expand its U.S. sales coverage through improving
its relationships with national distributors who can access customers in ways
not available to UTMD's direct sales force, through partnering with other
manufacturers where a broader product offering can leverage marketing efforts
and through initiatives to effectively employ Internet technology.
Internationally, UTMD will continue to build on the success of its effective
distribution partners.
Consistent with its view of the nature of the medical device industry as a
whole, UTMD believes it can achieve significant top line growth through
selective acquisitions, and plans to do so without diluting shareholder
interest. In UTMD's case, management does not intend to achieve top line growth
at the expense of bottom line growth. Internal R&D will continue to be used
primarily to improve and augment existing or acquired product lines.
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PART II - OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
a) Exhibits:
SEC
Exhibit # Reference # Title of Document
- ---------- ------------ -------------------
1 10 Business Loan Agreement, dated April 14, 2000
Between Utah Medical Products, Inc. and Key
Bank National Association
2 27 Financial data schedule
b) Reports on Form 8-K:
During the quarter ended March 31, 2000, the Company filed no reports
on Form 8-K.
SIGNATURES
Pursuant to the requirements of the Securities Exchanges Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
UTAH MEDICAL PRODUCTS, INC.
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REGISTRANT
Date: By:
------------------------------
Kevin L. Cornwell
CEO and CFO
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EXHIBIT 1
BUSINESS LOAN AGREEMENT, DATED APRIL 14, 2000
BETWEEN UTAH MEDICAL PRODUCTS, INC.
AND KEYBANK NATIONAL ASSOCIATION
FILED IN ELECTRONIC FORMAT
BUSINESS LOAN AGREEMENT
BORROWER: UTAH MEDICAL PRODUCTS, INC LENDER: KEYBANK NATIONAL ASSOCIATION
7043 SOUTH 300 WEST CENTRAL COMMERCIAL BANKING CENTER
MIDVALE, UT 84047 P.O. BOX 30815
505 MAIN ST, SUITE 2007
SALT LAKE CITY, UT 84130-0815
THIS BUSINESS LOAN AGREEMENT BETWEEN UTAH MEDICAL PRODUCTS, INC. ("BORROWER")
AND KEYBANK NATIONAL ASSOCIATION ("LENDER") IS MADE AND EXECUTED ON THE
FOLLOWING TERMS AND CONDITIONS. BORROWER HAS RECEIVED PRIOR COMMERCIAL LOANS
FROM LENDER OR HAS APPLIED TO LENDER FOR A COMMERCIAL LOAN OR LOANS AND OTHER
FINANCIAL ACCOMMODATIONS, INCLUDING THOSE WHICH MAY BE DESCRIBED ON ANY EXHIBIT
OR SCHEDULE ATTACHED TO THIS AGREEMENT. ALL SUCH LOANS AND FINANCIAL
ACCOMMODATIONS, TOGETHER WITH ALL FUTURE LOANS AND FINANCIAL ACCOMMODATIONS FROM
LENDER TO BORROWER, ARE REFERRED TO IN THIS AGREEMENT INDIVIDUALLY AS THE "LOAN"
AND COLLECTIVELY AS THE "LOANS." BORROWER UNDERSTANDS AND AGREES THAT: (A) IN
GRANTING, RENEWING, OR EXTENDING ANY LOAN, LENDER IS RELYING UPON BORROWER'S
REPRESENTATIONS, WARRANTIES, AND AGREEMENTS, AS SET FORTH IN THIS AGREEMENT; (B)
THE GRANTING, RENEWING, OR EXTENDING OF ANY LOAN BY LENDER AT ALL TIMES SHALL BE
SUBJECT TO LENDER'S SOLE JUDGMENT AND DISCRETION; AND (C) ALL SUCH LOANS SHALL
BE AND SHALL REMAIN SUBJECT TO THE FOLLOWING TERMS AND CONDITIONS OF THIS
AGREEMENT.
TERM. This Agreement shall be effective as of APRIL 14, 2000, and shall
continue thereafter until all Indebtedness of Borrower to Lender has been
performed in full and the parties terminate this Agreement in writing.
DEFINITIONS. The following words shall have the following meanings when used in
this Agreement. Terms not otherwise defined in this Agreement shall have the
meanings attributed to such terms in the Uniform Commercial Code. All references
to dollar amounts shall mean amounts in lawful money of the United States of
America.
AGREEMENT. The word "Agreement" means this Business Loan Agreement, as
this Business Loan Agreement may be amended or modified from time to time,
together with all exhibits and schedules attached to this Business Loan
Agreement from time to time.
BORROWER. The word "Borrower" means UTAH MEDICAL PRODUCTS, INC. The word
"Borrower" also includes, as applicable, all subsidiaries and affiliates of
Borrower as provided below in the paragraph titled "Subsidiaries and
Affiliates."
CERCLA. The word "CERCLA" means the Comprehensive Environmental Response,
Compensation, and Liability Act of 1980, as amended.
COLLATERAL. The word Collateral" means and includes without limitation all
property and assets granted as collateral security for a Loan, whether real or
personal property, whether granted directly or indirectly, whether granted now
or in the future, and whether granted in the form of a security interest,
mortgage, deed of trust, assignment, pledge, chattel mortgage, chattel trust,
factors lien, equipment trust, conditional sale, trust receipt, lien, charge,
lien or title retention contract, lease or consignment intended as a security
device, or any other security or lien interest whatsoever, whether created by
law, contract, or otherwise.
ERISA. The word "ERISA" means the Employee Retirement Income Security Act
of 1974, as amended.
EVENT OF DEFAULT. The words "Event of Default" mean and include without
limitation any of the Events of Default set forth below in the section titled
"EVENTS OF DEFAULT."
GRANTOR. The word "Grantor" means and includes without limitation each and
all of the persons or entities granting a Security Interest in any Collateral
for the Indebtedness, including without limitation all Borrowers granting such a
Security Interest.
GUARANTOR. The word "Guarantor" means and includes without limitation each
and all of the guarantors, sureties, and accommodation parties in connection
with any Indebtedness.
INDEBTEDNESS. The word "Indebtedness" means and includes without
limitation all Loans, together with all other obligations, debts and liabilities
of Borrower to Lender, or any one or more of them, as well as all claims by
Lender against Borrower, or any one or more of them; whether now or hereafter
existing, voluntary or involuntary, due or not due, absolute or contingent,
liquidated or unliquidated; whether Borrower may be liable individually or
jointly with others; whether Borrower may be obligated as a guarantor, surety,
or otherwise; whether recovery upon such Indebtedness may be or hereafter may
become barred by any statute of limitations; and whether such Indebtedness may
be or hereafter may become otherwise unenforceable.
LENDER. The word "Lender" means KEYBANK NATIONAL ASSOCIATION, its
successors and assigns.
LOAN. The word "Loan" or "Loans" means and includes without limitation any
and all commercial loans and financial accommodations from Lender to Borrower,
whether now or hereafter existing, and however evidenced, including without
limitation those loans and financial accommodations described herein or
described on any exhibit or schedule attached to this Agreement from time to
time.
NOTE. The word "Note" means and includes without limitation Borrowers
promissory note or notes, if any, evidencing Borrowers Loan obligations in favor
of Lender, as well as any substitute, replacement or refinancing note or notes
therefor.
PERMITTED LIENS. The words "Permitted Liens" mean: (a) liens and security
interests securing Indebtedness owed by Borrower to Lender; (b) liens for taxes,
assessments, or similar charges either not yet due or being contested in good
faith; (c) liens of material men, mechanics, warehousemen, or carriers, or other
like liens arising in the ordinary course of business and securing obligations
which are not yet delinquent; (d) purchase money liens or purchase money
security interests upon or in any property acquired or held by Borrower in the
ordinary course of business to secure indebtedness outstanding on the date of
this Agreement or permitted to be incurred under the paragraph of this Agreement
titled "Indebtedness and Liens"; (e) liens and security interests which, as of
the date of this Agreement, have been disclosed to and approved by the Lender in
writing; and (I) those liens and security interests which in the aggregate
constitute an immaterial and insignificant monetary amount with respect to the
net value of Borrower's assets.
RELATED DOCUMENTS. The words "Related Documents" mean and include without
limitation all promissory notes, credit agreements, loan agreements,
environmental agreements, guaranties, security agreements, mortgages, deeds of
trust, and all other instruments, agreements and documents, whether now or
hereafter existing, executed in connection with the Indebtedness.
SECURITY AGREEMENT. The words "Security Agreement" mean and include
without limitation any agreements, promises, covenants, arrangements,
understandings or other agreements, whether created by law, contract, or
otherwise, evidencing, governing, representing, or creating a Security Interest.
SECURITY INTEREST. The words "Security Interest" mean and include without
limitation any type of collateral security, whether in the form of a lien
charge, mortgage, deed of trust, assignment, pledge, chattel mortgage, chattel
trust, factor's lien, equipment trust, conditional sale, trust receipt, lien or
title retention contract, lease or consignment intended as a security device, or
any other security or lien interest whatsoever, whether created by law,
contract, or otherwise.
SARA. The word "SARA" means the Superfund Amendments and Reauthorization
Act of 1986 as now or hereafter amended.
CONDITIONS PRECEDENT TO EACH ADVANCE. Lenders obligation to make the initial
Loan Advance and each subsequent Loan Advance under this Agreement shall be
subject to the fulfillment to Lender's satisfaction of all of the conditions set
forth in this Agreement and in the Related Documents.
LOAN DOCUMENTS. Borrower shall provide to Lender in form satisfactory to
Lender the following documents for the Loan: (a) the Note, (b) Security
Agreements granting to Lender security interests in the Collateral, (c)
Financing Statements perfecting Lender's Security Interests; (d) evidence of
insurance as required below; and (e) any other documents required under this
Agreement or by Lender or its counsel, including without limitation any
guaranties described below.
BORROWER'S AUTHORIZATION. Borrower shall have provided in form and
substance satisfactory to Lender properly certified resolutions, duly
authorizing the execution and delivery of this Agreement, the Note and the
Related Documents, and such other authorizations and other documents and
instruments as Lender or its counsel, in their sole discretion, may require.
PAYMENT OF FEES AND EXPENSES. Borrower shall have paid to Lender all fees,
charges, and other expenses which are then due and payable as specified in this
Agreement or any Related Document.
REPRESENTATIONS AND WARRANTIES. The representations and warranties set
forth in this Agreement, in the Related Documents, and in any document or
certificate delivered to Lender under this Agreement are true and correct.
NO EVENT OF DEFAULT. There shall not exist at the time of any advance a
condition which would constitute an Event of Default under this Agreement.
REPRESENTATIONS AND WARRANTIES. Borrower represents and warrants to Lender, as
of the date of this Agreement, as of the date of each disbursement of Loan
proceeds, as of the date of any renewal, extension or modification of any Loan,
and at all times any Indebtedness exists:
ORGANIZATION. Borrower is a corporation which is duly organized, validly
existing, and in good standing under the laws of the State of Utah and is
validly existing and in good standing in all states in which Borrower is doing
business. Borrower has the full power and authority to own its properties and to
transact the businesses in which it is presently engaged or presently proposes
to engage. Borrower also is duly qualified as a foreign corporation and is in
good standing in all states in which the failure to so qualify would have a
material adverse effect on its businesses or financial condition.
AUTHORIZATION. The execution, delivery, and performance of this Agreement
and all Related Documents by Borrower, to the extent to be executed, delivered
or performed by Borrower, have been duly authorized by all necessary action by
Borrower; do not require the consent or approval of any other person, regulatory
authority or governmental body; and do not conflict with, result in a violation
of, or constitute a default under (a) any provision of its articles of
incorporation or organization, or bylaws, or any agreement or other instrument
binding upon Borrower or (b) any law, governmental regulation, court decree, or
order applicable to Borrower.
FINANCIAL INFORMATION. Each financial statement of Borrower supplied to
Lender truly and completely disclosed Borrower's financial condition as of the
date of the statement, and there has been no material adverse change in
Borrower's financial condition subsequent to the date of the most recent
financial statement supplied to Lender. Borrower has no material contingent
obligations except as disclosed in such financial statements.
LEGAL EFFECT. This Agreement constitutes, and any instrument or agreement
required hereunder to be given by Borrower when delivered will constitute,
legal, valid and binding obligations of Borrower enforceable against Borrower in
accordance with their respective terms.
PROPERTIES. Except as contemplated by this Agreement or as previously
disclosed in Borrower's financial statements or in writing to Lender and as
accepted by Lender, and except for property tax liens for taxes not presently
due and payable, Borrower owns and has good title to all of Borrower's
properties free and clear of all Security Interests, and has not executed any
security documents or financing statements relating to such properties. All of
Borrower's properties are titled in Borrower's legal name, and Borrower has not
used, or filed a financing statement under, any other name for at least the last
five (5) years.
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HAZARDOUS SUBSTANCES. The terms "hazardous waste," "hazardous substance,"
"disposal," "release," and "threatened release," as used in this Agreement,
shall have the same meanings as set forth in the "CERCLA," "SARA," the Hazardous
Materials Transportation Act, 49 U.S.C. Section 1801, et seq., the Resource
Conservation and Recovery Act, 42 U.S.C. Section 6901, et seq., or other
applicable state or Federal laws, rules, or regulations adopted pursuant to any
of the foregoing. Except as disclosed to and acknowledged by Lender in writing,
Borrower represents and warrants that (a) During the period of Borrower's
ownership of the properties, there has been no use, generation, manufacture,
storage, treatment, disposal, release or threatened release of any hazardous
waste or substance by any person on, under, about or from any of the properties.
(b) Borrower has no knowledge of, or reason to believe that there has been (i)
any use, generation, manufacture, storage, treatment, disposal, release, or
threatened release of any hazardous waste or substance on, under, about or from
the properties by any prior owners or occupants of any of the properties, or
(ii) any actual or threatened litigation or claims of any kind by any person
relating to such matters. (c) Neither Borrower nor any tenant, contractor, agent
or other authorized user of any of the properties shall use, generate,
manufacture, store, treat, dispose of, or release any hazardous waste or
substance on, under, about or from any of the properties; and any such activity
shall be conducted in compliance with all applicable federal, state, and local
laws, regulations, and ordinances, including without limitation those laws,
regulations and ordinances described above. Borrower authorizes Lender and its
agents to enter upon the properties to make such inspections and tests as Lender
may deem appropriate to determine compliance of the properties with this section
of the Agreement. Any inspections or tests made by Lender shall be at Borrower's
expense and for Lender's purposes only and shall not be construed to create any
responsibility or liability on the part of Lender to Borrower or to any other
person. The representations and warranties contained herein are based on
Borrower's due diligence in investigating the properties for hazardous waste and
hazardous substances. Borrower hereby (a) releases and waives any future claims
against Lender for indemnity or contribution in the event Borrower becomes
liable for cleanup or other costs under any such laws, and (b) agrees to
indemnify and hold harmless Lender against any and all claims, losses,
liabilities, damages, penalties, and expenses which Lender may directly or
indirectly sustain or suffer resulting from a breach of this section of the
Agreement or as a consequence of any use, generation, manufacture, storage,
disposal, release or threatened release of a hazardous waste or substance on the
properties. The provisions of this section of the Agreement, including the
obligation to indemnify, shall survive the payment of the Indebtedness and the
termination or expiration of this Agreement and shall not be affected by
Lender's acquisition of any interest in any of the properties, whether by
foreclosure or otherwise.
LITIGATION AND CLAIMS. No litigation, claim, investigation, administrative
proceeding or similar action (including those for unpaid taxes) against Borrower
is pending or threatened, and no other event has occurred which may materially
adversely affect Borrower's financial condition or properties, other than
litigation, claims, or other events, if any, that have been disclosed to and
acknowledged by Lender in writing.
TAXES. To the best of Borrowers knowledge, all tax returns and reports of
Borrower that are or were required to be filed, have been filed, and all taxes,
assessments and other governmental charges have been paid in full, except those
presently being or to be contested by Borrower in good faith in the ordinary
course of business and for which adequate reserves have been provided.
LIEN PRIORITY. Unless otherwise previously disclosed to Lender in writing,
Borrower has not entered into or granted any Security Agreements, or permitted
the filing or attachment of any Security Interests on or affecting any of the
Collateral directly or indirectly securing repayment of Borrowers Loan and Note,
that would be prior or that may in any way be superior to Lender's Security
Interests and rights in and to such Collateral.
BINDING EFFECT. This Agreement, the Note, all Security Agreements directly
or indirectly securing repayment of Borrower's Loan and Note and all of the
Related Documents are binding upon Borrower as well as upon Borrowers
successors, representatives and assigns, and are legally enforceable in
accordance with their respective terms.
COMMERCIAL PURPOSES. Borrower intends to use the Loan proceeds solely for
business or commercial related purposes.
EMPLOYEE BENEFIT PLANS. Each employee benefit plan as to which Borrower
may have any liability complies in all material respects with all applicable
requirements of law and regulations, and (i) no Reportable E~Event nor
Prohibited Transaction (as defined in ERISA) has occurred with respect to any
such plan, (ii) Borrower has not withdrawn from any such plan or initiated steps
to do so, (iii) no steps have been taken to terminate any such plan, and (iv)
there are no unfunded liabilities other than those previously disclosed to
Lender in writing.
LOCATION OF BORROWER'S OFFICES AND RECORDS. Borrowers place of business,
or Borrowers Chief executive office, if Borrower has more than one place of
business, is located at 7043 SOUTH 300 WEST, MIDVALE, UT 84047. Unless Borrower
has designated otherwise in writing this location is also the office or offices
where Borrower keeps its records concerning the Collateral.
INFORMATION. All information heretofore or contemporaneously herewith
furnished by Borrower to Lender for the purposes of or in connection with this
Agreement or any transaction contemplated hereby is, and all information
hereafter furnished by or on behalf of Borrower to Lender will be, true and
accurate in every material respect on the date as of which such information is
dated or certified; and none of such information is or will be incomplete by
omitting to state any material fact necessary to make such information not
misleading.
SURVIVAL OF REPRESENTATIONS AND WARRANTIES. Borrower understands and
agrees that Lender, without independent investigation, is relying upon the above
representations and warranties in extending Loan Advances to Borrower. Borrower
further agrees that the foregoing representations and warranties shall be
continuing in nature and shall remain in full force and effect until such time
as Borrower's Indebtedness shall be paid in full, or until this Agreement shall
be terminated in the manner provided above, whichever is the last to occur.
AFFIRMATIVE COVENANTS. Borrower covenants and agrees with Lender that, while
this Agreement is in effect, Borrower will:
LITIGATION. Promptly inform Lender in writing of (a) all material adverse
changes in Borrowers financial condition, and (b) all existing and all
threatened litigation, claims, investigations, administrative proceedings or
similar actions affecting Borrower or any Guarantor which could materially
affect the financial condition of Borrower or the financial condition of any
Guarantor.
FINANCIAL RECORDS. Maintain its books and records in accordance with
generally accepted accounting principles, applied on a consistent basis, and
permit Lender to examine and audit Borrower's books and records at all
reasonable times.
FINANCIAL STATEMENTS. Furnish Lender with, as soon as available, but in no
event later than one hundred twenty (120) days after the end of each fiscal
year, Borrowers balance sheet and income statement for the year ended, audited
by a certified public accountant satisfactory to Lender, and, as soon as
available, but in no event later than forty five (45) days after the end of each
fiscal quarter, Borrowers balance sheet and profit and loss statement for the
period ended, prepared and certified as correct to the best knowledge and belief
by Borrowers chief financial officer or other officer or person acceptable to
Lender. All financial reports required to be provided under this Agreement shall
be prepared in accordance with generally accepted accounting principles, applied
on a consistent basis, and certified by Borrower as being true and correct
ADDITIONAL INFORMATION. Furnish such additional information and
statements, lists of assets and liabilities, agings of receivables and payables,
inventory schedules, budgets, forecasts, tax returns, and other reports with
respect to Borrowers financial condition and business operations as Lender may
request from time to time.
INSURANCE. Maintain fire and other risk insurance, public liability
insurance, and such other insurance as Lender may require with respect to
Borrower's properties and operations, in form, amounts, coverages and with
insurance companies reasonably acceptable to Lender. Borrower, upon request of
Lender, will deliver to Lender from time to time the policies or certificates of
insurance in form satisfactory to Lender, including stipulations that coverages
will not be canceled or diminished without at least ten (10) days' prior written
notice to Lender. Each insurance policy also shall include all endorsement
providing that coverage in favor of Lender will not be impaired in any way by
any act, omission or default of Borrower or any other person. In connection with
all policies covering assets in which Lender holds or is offered a security
interest for the Loans, Borrower will provide Lender with such loss payable or
other endorsements as Lender may require.
<PAGE>
INSURANCE REPORTS. Furnish to Lender, upon request of Lender, reports on
each existing insurance policy showing such information as Lender may reasonably
request, including without limitation the following: (a) the name of the
insurer; (b) the risks insured; (c) the amount of the policy; (d) the properties
insured; (e) the then current property values on the basis of which insurance
has been obtained, and the manner of determining those values; and (f) the
expiration date of the policy. In addition, upon request of Lender (however not
more often than annually), Borrower will have all independent appraiser
satisfactory to Lender determine, as applicable, the actual cash value or
replacement cost of any Collateral. The cost of such appraisal shall be paid by
Borrower.
GUARANTIES. Prior to disbursement of any Loan proceeds, furnish executed
guaranties of the Loans in favor of Lender, executed by the guarantor named
below, on Lenders forms, and in the amount and under the conditions spelled out
in those guaranties.
GUARANTOR AMOUNT
--------- ------
COLUMBIA MEDICAL, INC. UNLIMITED
OTHER AGREEMENTS. Comply with all terms and conditions of all other
agreements, whether now or hereafter existing, between Borrower and any other
party and notify Lender immediately in writing of any default in connection with
any other such agreements.
LOAN PROCEEDS. Use all Loan proceeds solely for Borrower's business
operations, unless specifically consented to the contrary by Lender in writing.
TAXES, CHARGES AND LIENS. Pay and discharge when due all of its
indebtedness and obligations, including without limitation all assessments,
taxes, governmental charges, levies and liens, of every kind and nature, imposed
upon Borrower or its properties, income, or profits, prior to the date on which
penalties would attach, and all lawful claims that, if unpaid, might become a
lien or charge upon any of Borrower's properties, income, or profits. Provided
however, Borrower will not be required to pay and discharge any such assessment,
tax, charge, levy, lien or claim so long as (a) the legality of the same shall
be contested in good faith by appropriate proceedings, and (b) Borrower shall
have established on its books adequate reserves with respect to such contested
assessment, tax, charge, levy, lien, or claim in accordance with generally
accepted accounting practices. Borrower, upon demand of Lender, will furnish to
Lender evidence of payment of the assessments, taxes, charges, levies, liens and
claims and will authorize the appropriate governmental official to deliver to
Lender at any time a written statement of any assessments, taxes, charges,
levies, liens and claims against Borrower's properties, income, or profits.
PERFORMANCE. Perform and comply with all terms, conditions, and provisions
set forth in this Agreement and in the Related Documents in a timely manner, and
promptly notify Lender if Borrower learns of the occurrence of any event which
constitutes an Event of Default under this Agreement or under any of the Related
Documents.
OPERATIONS. Maintain executive and management personnel with substantially
the same qualifications and experience as the present executive and management
personnel; provide written notice to Lender of any change in executive and
management personnel; conduct its business affairs in a reasonable and prudent
manner and in compliance with all applicable federal, state and municipal laws,
ordinances, rules and regulations respecting its properties, charters,
businesses and operations, including without limitation, compliance with the
Americans With Disabilities Act and with all minimum funding standards and other
requirements of ERISA and other laws applicable to Borrower's employee benefit
plans.
INSPECTION. Permit employees or agents of Lender at any reasonable time to
inspect any and all Collateral for the Loan or Loans and Borrower's other
properties and to examine or audit Borrowers books, accounts, and records and to
make copies and memoranda of Borrower's books, accounts, and records. If
Borrower now or at any time hereafter maintains any records (including without
limitation computer generated records and computer software programs for the
generation of such records) in the possession of a third party, Borrower, upon
request of Lender, shall notify such party to permit Lender free access to such
records at all reasonable times and to provide Lender with copies of any records
it may request, all at Borrower's expense.
COMPLIANCE CERTIFICATE. Unless waived in writing by Lender, provide Lender
at least annually and at the time of each disbursement of Loan proceeds with a
certificate executed by Borrower's chief financial officer, or other officer or
person acceptable to Lender, certifying that the representations and warranties
set forth in this Agreement are true and correct as of the date of the
certificate and further certifying that, as of the date of the certificate, no
Event of Default exists under this Agreement.
ENVIRONMENTAL COMPLIANCE AND REPORTS. Borrower shall comply in all
respects with all environmental protection federal, state and local laws,
statutes, regulations and ordinances; not cause or permit to exist, as a result
of an intentional or unintentional action or omission on its part or on the part
of any third party, on property owned and/or occupied by Borrower, any
environmental activity where damage may result to the environment, unless such
environmental activity is pursuant to and in compliance with the conditions of a
permit issued by the appropriate federal, state or local governmental
authorities; shall furnish to Lender promptly and in any event within thirty
(30) days after receipt thereof a copy of any notice, summons, lien, citation,
directive, letter or other communication from any governmental agency or
instrumentality concerning any intentional or unintentional action or omission
on Borrowers part in connection with any environmental activity whether or not
there is damage to the environment and/or other natural resources.
ADDITIONAL ASSURANCES. Make, execute and deliver to Lender such promissory
notes, mortgages, deeds of trust, security agreements, financing statements,
instruments, documents and other agreements as Lender or its attorneys may
reasonably request to evidence and secure the Loans and to perfect all Security
Interests.
NEGATIVE COVENANTS. Borrower covenants and agrees with Lender that while this
Agreement is in effect, Borrower shall not, without the prior written consent of
Lender:
CONTINUITY OF OPERATIONS. (a) Engage in any business activities
substantially different than those in which Borrower is presently engaged,
(b)cease operations, liquidate, merge, transfer, or consolidate with any other
entity, change ownership, change its name, dissolve or transfer or sell
Collateral out of the ordinary course of business, (c) pay any dividends on
Borrower's stock (other than dividends payable in its stock),provided, however
that notwithstanding the foregoing, but only so long as no Event of Default has
occurred and is continuing or would result from the payment of dividends, if
Borrower is a "Subchapter S Corporation" (as defined in the Internal Revenue
Code of 1986, as amended), Borrower may pay cash dividends on its stock to its
shareholders from time to time in amounts necessary to enable the shareholders
to pay income taxes and make estimated income tax payments to satisfy their
liabilities under federal and state law which arise solely from their status as
Shareholders of a Subchapter S Corporation because of their ownership of shares
of stock of Borrower.
LOANS, ACQUISITIONS AND GUARANTIES. (a) Loan, invest in or advance money
or assets, or (b) incur any obligation as surety or guarantor other than in the
ordinary course of business.
CESSATION OF ADVANCES. If Lender has made any commitment to make any Loan to
Borrower, whether under this Agreement or under any other agreement, Lender
shall have no obligation to make Loan Advances or to disburse Loan proceeds if:
(a) Borrower or any Guarantor is in default under the terms of this Agreement or
any of the Related Documents or any other agreement that Borrower or any
Guarantor has with Lender; (b) Borrower or any Guarantor becomes insolvent,
files a petition in bankruptcy or similar proceedings, or is adjudged a
bankrupt; (c) there occurs a material adverse change in Borrower's financial
condition, in the financial condition of any Guarantor, or in the value of any
Collateral securing any Loan; (d) any Guarantor seeks, claims or otherwise
attempts to limit, modify or revoke such Guarantor's guaranty of the Loan or any
other loan with Lender; or (e) Lender in good faith deems itself insecure, even
though no Event of Default shall have occurred.
ADDITIONAL COVENANTS. Borrower covenants and agrees with Lender that, while
this Agreement is in effect, Borrower will:
CURRENT RATIO. Borrower shall maintain a ratio of Current Assets to Current
Liabilities in excess of 2.00 to 1.00; calculated at the end of each Quarter.
The words "Current Assets" shall be as defined by GAAP minus prepaid expenses.
The words "Current Liabilities" shall be as defined by GAAP.
INDEBTEDNESS AND LIENS. Borrower shall not (a) Except for trade debt incurred
in the normal course of business and indebtedness to Lender contemplated by this
Agreement, create, incur or assume additional indebtedness for borrowed money,
including capital leases, in excess of the aggregate amount $1,000,000.00, (b)
except as allowed as a Permitted Lien, sell, transfer, mortgage, assign, pledge,
lease, grant, a security interest in, or encumber any of Borrower's assets, or
(c) sell with recourse any of Borrower's accounts, except to Lender.
TOTAL FUNDED DEBT TO EBITDA RATIO. Borrower shall maintain a ratio of Total
Funded Debt to EBITDA of not greater than 2.5 to 1.0; calculated for the period
of the previous four financial quarters as of the end of each Quarter. The
letters "EBITDA" mean, calculated for the period of the previous four fiscal
quarters, the net earnings of Borrower plus the aggregate amounts deducted in
determining such--net income in respect of interest expenses, taxes,
depreciation and amortization; but not, however, giving effect to extraordinary
losses or gains in calculating net income. The words "Total Funded Debt" mean,
the sum without duplication for a Borrower and/or any of its subsidiaries of (1)
all indebtedness for borrowed money, whether maturing in less than or more than
one year, plus (2) all bonds, notes, debentures or similar debt instruments plus
(3) all capitalized lease obligations plus (4) the present value of all basic
rental obligations under any synthetic lease plus (5) indebtedness of a second
person secured by a lien on any property owned by a first person, whether or not
such indebtedness has been assumed plus (6) the full outstanding balance of
trade receivables sold with full or limited recourse, provided that if the
structure of any receivables sales program provides for "over-collateralization"
,the outstanding balance of the trade receivables attributable to the
over-collateralization" may be excluded plus (7) the stated value, or
liquidation value, if higher, of all redeemable stock or such person.
RIGHT OF SETOFF. Borrower grants to Lender a contractual security interest in,
and hereby assigns, conveys, delivers, pledges, and transfers to Lender all
Borrower's right, title and interest in and to, Borrower's accounts with Lender
(whether checking, savings, or some other account), including without limitation
all accounts held jointly with someone else and all accounts Borrower may open
in the future, excluding however all IRA and Keogh accounts, and all trust
accounts for which the grant of a security interest would be prohibited by law.
Borrower authorizes Lender, to the extent permitted by applicable law, to charge
or setoff all sums owing on the Indebtedness against any and all such accounts.
EVENTS OF DEFAULT. Each of the following shall constitute an Event of Default
under this Agreement:
DEFAULT ON INDEBTEDNESS. Failure of Borrower to make any payment when
due on the Loans.
OTHER DEFAULTS. Failure of Borrower or any Grantor to comply with or to
perform when due any other term, obligation, covenant or condition contained in
this Agreement or in any of the Related Documents, or failure of Borrower to
comply with or to perform any other term, obligation, covenant or condition
contained in any other agreement between Lender and Borrower.
DEFAULT IN FAVOR OF THIRD PARTIES. Should Borrower or any Grantor default
under any loan, extension of credit, security agreement, purchase or sales
agreement, or any other agreement, in favor of any other creditor or person that
may materially affect any of Borrower's property or Borrower's or any Grantor's
ability to repay the Loans or perform their respective obligations under this
Agreement or any of the Related Documents.
FALSE STATEMENTS. Any warranty, representation or statement made or
furnished to Lender by or on behalf of Borrower or any Grantor under this
Agreement or the Related Documents is false or misleading in any material
respect at the time made or furnished, or becomes false or misleading at any
time thereafter.
DEFECTIVE COLLATERALIZATION. This Agreement or any of the Related
Documents ceases to be in full force and effect (including failure of any
Security Agreement to create a valid and perfected Security Interest) at any
time and for any reason.
INSOLVENCY. The dissolution or termination of Borrower's existence as a
going business, the insolvency of Borrower, the appointment of a receiver for
any part of Borrowers property, any assignment for the benefit of creditors, any
type of creditor workout, or the commencement of any proceeding under any
bankruptcy or insolvency laws by or against Borrower.
CREDITOR OR FORFEITURE PROCEEDINGS. Commencement of foreclosure or
forfeiture proceedings, whether by judicial proceeding, self-help, repossession
or any other method, by any creditor of Borrower, any creditor of any Grantor
against any collateral securing the Indebtedness, or by any governmental agency.
This includes a garnishment, attachment, or levy on or of any of Borrowers
deposit accounts with Lender. However, this Event of Default shall not apply if
there is a good faith dispute by Borrower or Grantor, as the case may be, as to
the validity or reasonableness of the claim which is the basis of the creditor
or forfeiture proceeding, and if Borrower or Grantor gives Lender written notice
of the creditor or forfeiture proceeding and furnishes reserves or a surety bond
for the creditor or forfeiture proceeding satisfactory to Lender.
EVENTS AFFECTING GUARANTOR. Any of the preceding events occurs with
respect to any Guarantor of any of the Indebtedness or any Guarantor dies or
becomes incompetent, or revokes or disputes the validity of, or liability under,
any Guaranty of the Indebtedness. Lender, at its option, may, but shall not be
required to, permit the Guarantor's estate to assume unconditionally the
obligations arising under the guaranty in a manner satisfactory to Lender, and,
in doing so, cure the Event of Default.
ADVERSE CHANGE. A material adverse change occurs in Borrower's financial
condition, or Lender believes the prospect of payment or performance of the
Indebtedness is impaired.
INSECURITY. Lender, in good faith, deems itself insecure.
RIGHT TO CURE. If any default, other than a Default on Indebtedness, is
curable and if Borrower or Grantor, as the case may be, has not been given a
notice of a similar default within the preceding twelve (12) months, it may be
cured (and no Event of Default will have occurred) if Borrower or Grantor, as
the case may be, after receiving written notice from Lender demanding cure of
such default: (a) cures the default within fifteen (15) days; or (b) if the cure
requires more than fifteen (15) days, immediately initiates steps which Lender
deems in Lenders sole discretion to be sufficient to cure the default and
thereafter continues and completes all reasonable and necessary steps sufficient
to produce compliance as soon as reasonably practical.
EFFECT OF AN EVENT OF DEFAULT. If any Event of Default shall occur, except
where otherwise provided in this Agreement or the Related Documents, all
commitments and obligations of Lender under this Agreement or the Related
Documents or any other agreement immediately will terminate (including any
obligation to make Loan Advances or disbursements), and, at Lender's option, all
Indebtedness immediately will become due and payable, all without notice of any
kind to Borrower, except that in the case of an Event of Default of the type
described in the "Insolvency" subsection above, such acceleration shall be
automatic and not optional. In addition, Lender shall have all the rights and
remedies provided in the Related Documents or available at law, in equity, or
otherwise. Except as may be prohibited by applicable law, all of Lender's rights
and remedies shall be cumulative and may be exercised singularly or
concurrently. Election by Lender to pursue any remedy shall not exclude pursuit
of any other remedy, and an election to make expenditures or to take action to
perform an obligation of Borrower or of any Grantor shall not affect Lender's
right to declare a default and to exercise its rights and remedies.
MISCELLANEOUS PROVISIONS. The following miscellaneous provisions are a part of
this Agreement:
AMENDMENTS. This Agreement, together with any Related Documents,
constitutes the entire understanding and agreement of the parties as to the
matters set forth in this Agreement. No alteration of or amendment to this
Agreement shall be effective unless given in writing and signed by the party or
parties sought to be charged or bound by the alteration or amendment.
APPLICABLE LAW. THIS AGREEMENT HAS BEEN DELIVERED TO LENDER AND ACCEPTED
BY LENDER IN THE STATE OF UTAH. IF THERE IS A LAWSUIT, BORROWER AGREES UPON
LENDER'S REQUEST TO SUBMIT TO THE JURISDICTION OF THE COURTS OF SALT LAKE
COUNTY, THE STATE OF UTAH. LENDER AND BORROWER HEREBY WAIVE THE RIGHT TO ANY
JURY TRIAL IN ANY ACTION, PROCEEDING, OR COUNTERCLAIM BROUGHT BY EITHER LENDER
OR BORROWER AGAINST THE OTHER. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED
IN ACCORDANCE WITH THE LAWS OF THE STATE OF UTAH.
CAPTION HEADINGS. Caption headings in this Agreement are for convenience
purposes only an& are not to be used to interpret or define the provisions of
this Agreement.
CONSENT TO LOAN PARTICIPATION. Borrower agrees and consents to Lender's
sale or transfer, whether now or later, of one or more participation interests
in the Loans to one or more purchasers, whether related or unrelated to Lender.
Lender may provide, without any limitation whatsoever, to any one or more
purchasers, or potential purchasers, any information or knowledge Lender may
have about Borrower or about any other matter relating to the Loan, and Borrower
hereby waives any rights to privacy it may have with respect to such matters.
Borrower additionally waives any and all notices of sale of participation
interests, as well as all notices of any repurchase of such participation
interests. Borrower also agrees that the purchasers of any such participation
interests will be considered as the absolute owners of such interests in the
Loans and will have all the rights granted under the participation agreement or
agreements governing the sale of such participation interests. Borrower further
waives all rights of offset or counterclaim that it may have now or later
against Lender or against any purchaser of such a participation interest and
unconditionally agrees that either Lender or such purchaser may enforce
Borrower's obligation under the Loans irrespective of the failure or insolvency
of any holder of any interest in the Loans. Borrower further agrees that the
purchaser of any such participation interests may enforce its interests
irrespective of any personal claims or defenses that Borrower may have against
Lender.
NOTICES. All notices required to be given under this Agreement shall be
given in writing, may be sent by telefacsimile (unless otherwise required by
law), and shall be effective when actually delivered or when deposited with a
nationally recognized overnight courier or deposited in the United States mail,
first class, postage prepaid, addressed to the party to whom the notice is to be
given at the address shown above. An a may change its address for notices under
this Agreement by giving formal written notice to the other parties, specifying
that the purpose of the notice is to change the party's address. To the extent
permitted by applicable law, if there is more than one Borrower, notice to any
Borrower will constitute notice to all Borrowers. For notice purposes, Borrower
will keep Lender informed at all times of Borrower's current address(es).
SEVERABILITY. If a court of competent jurisdiction finds any provision of
this Agreement to be invalid or unenforceable as to any person or circumstance,
such finding shall not render that provision invalid or unenforceable as to any
other persons or circumstances. If feasible, any such offending provision shall
be deemed to be modified to be within the limits of enforceability or validity;
however, if the offending provision cannot be so modified, it shall be stricken
and all other provisions of this Agreement in all other respects shall remain
valid and enforceable.
SUBSIDIARIES AND AFFILIATES OF BORROWER. To the extent the context of any
provisions of this Agreement makes it appropriate, including without limitation
any representation, warranty or covenant, the word "Borrower" as used herein
shall include all subsidiaries and affiliates of Borrower. Notwithstanding the
foregoing however, under no circumstances shall this Agreement be construed to
require Lender to make any Loan or other financial accommodation to any
subsidiary or affiliate of Borrower.
SUCCESSORS AND ASSIGNS. All covenants and agreements contained by or on
behalf of Borrower shall bind its successors and assigns and shall inure to the
benefit of Lender, its successors and assigns. Borrower shall not, however, have
the right to assign its rights under this Agreement or any interest therein,
without the prior written consent of Lender.
SURVIVAL. All warranties, representations, and covenants made by Borrower
in this Agreement or in any certificate or other instrument delivered by
Borrower to Lender under this Agreement shall be considered to have been relied
upon by Lender and will survive the making of the Loan and delivery to Lender of
the Related Documents, regardless of any investigation made by Lender or on
Lender's behalf.
TIME IS OF THE ESSENCE. Time is of the essence in the performance of
this Agreement.
WAIVER. Lender shall not be deemed to have waived any rights under
this Agreement unless such waiver is given in writing and signed by Lender. No
delay or omission on the part of Lender in exercising any right shall operate as
a waiver of such right or any other right. A waiver by Lender of a provision of
this Agreement shall not prejudice or constitute a waiver of Lender's right
otherwise to demand strict compliance with that provision or any other provision
of this Agreement. No prior waiver by Lender, nor any course of dealing between
Lender and Borrower, or between Lender and any Grantor, shall constitute a
waiver of any of Lender's rights or of any obligations of Borrower or of any
Grantor as to any future transactions. Whenever the consent of Lender is
required under this Agreement, the granting of such consent by Lender in any
instance shall not constitute continuing consent in subsequent instances where
such consent is required, and in all cases such consent may be granted or
withheld in the sole discretion of Lender.
FINAL AGREEMENT. Borrower understands that this Agreement and the related
loan documents are the final expression of the agreement between Lender and
Borrower and may not be contradicted by evidence of any alleged oral agreement.
BORROWER ACKNOWLEDGES HAVING READ ALL THE PROVISIONS OF THIS BUSINESS LOAN
AGREEMENT, AND BORROWER AGREES TO ITS TERMS. THIS AGREEMENT IS DATED AS OF
APRIL 14, 2000.
BORROWER:
UTAH MEDICAL PRODUCTS, INC.
By: /s/ Kevin L. Cornwell
----------------------------
KEVIN L. CORNWELL, CHAIRMAN & CEO
LENDER:
KEYBANK NATIONAL ASSOCIATION
By: /s/ John P. Norawong
--------------------------
Authorized Officer
PROMISSORY NOTE
BORROWER: UTAH MEDICAL PRODUCTS, INC. LENDER: KEYBANK NATIONAL ASSOCIATION
7043 SOUTH 300 WEST CENTRAL COMMERCIAL BANKING CENTER
MIDVALE, UT 84047 P.O. BOX 30815
505 MAIN ST, SUITE 2007
SALT LAKE CITY, UT 84130-0815
PRINCIPAL AMOUNT: $14,500,000.00 INITIAL RATE: 8.000%
DATE OF NOTE: APRIL 14, 2000
PROMISE TO PAY. UTAH MEDICAL PRODUCTS, INC. ("BORROWER") PROMISES TO PAY TO
KEYBANK NATIONAL ASSOCIATION ("LENDER"), OR ORDER, IN LAWFUL MONEY OF THE UNITED
STATES OF AMERICA, THE PRINCIPAL AMOUNT OF FOURTEEN MILLION FIVE HUNDRED
THOUSAND & 00/100 DOLLARS ($14,500,000.00) OR SO MUCH AS MAY BE OUTSTANDING,
TOGETHER WITH INTEREST ON THE UNPAID OUTSTANDING PRINCIPAL BALANCE OF EACH
ADVANCE. INTEREST SHALL BE CALCULATED FROM THE DATE OF EACH ADVANCE UNTIL
REPAYMENT OF EACH ADVANCE.
PAYMENT. BORROWER WILL PAY THIS LOAN ON DEMAND, OR IF NO DEMAND IS MADE, IN ONE
PAYMENT OF ALL OUTSTANDING PRINCIPAL PLUS ALL ACCRUED UNPAID INTEREST ON APRIL
14, 2002. IN ADDITION, BORROWER WILL PAY REGULAR MONTHLY PAYMENTS OF ACCRUED
UNPAID INTEREST BEGINNING MAY 15, 2000, AND ALL SUBSEQUENT INTEREST PAYMENTS ARE
DUE ON THE SAME DAY OF EACH MONTH AFTER THAT. Interest on this Note is computed
on a 365/360 simple interest basis; that is, by applying the ratio of the annual
interest rate over a year of 360 days, times the outstanding principal balance,
times the actual number of days the principal balance is outstanding. Borrower
will pay Lender at Lender's address shown above or at such other place as Lender
may designate in writing. Unless otherwise agreed or required by applicable law,
payments will be applied first to accrued unpaid interest, then to principal,
and any remaining amount to any unpaid collection costs and late charges.
VARIABLE INTEREST RATE. The interest rate on this Note is subject to change
from time to time based on changes in an index which is the Prime Rate announced
by Lender (the "Index'). The interest rate will change automatically and
correspondingly on the date of each announced change of the Index by Lender. The
Index is not necessarily the lowest rate charged by Lender on its loans and is
set by Lender in its sole discretion. If the Index becomes unavailable during
the term of this loan, the Lender may designate a substitute index after
notifying Borrower. Lender will tell Borrower the current Index rate upon
Borrower's request. Borrower understands that Lender may make loans based on
other rates as well. The interest rate change will not occur more often than
each day that the Index changes. THE INDEX CURRENTLY IS 9.000% PER ANNUM. THE
INTEREST RATE TO BE APPLIED TO THE UNPAID PRINCIPAL BALANCE OF THIS NOTE WILL BE
AT A RATE OF 1.000 PERCENTAGE POINT UNDER THE INDEX, RESULTING IN AN INITIAL
RATE OF 8.000% PER ANNUM. NOTICE: Under no circumstances will the interest rate
on this Note be more than the maximum rate allowed by applicable law.
PREPAYMENT. Borrower may pay without penalty all or a portion of the amount
owed earlier than it is due. Early payments will not, unless agreed to by Lender
in writing, relieve Borrower of Borrower's obligation to continue to make
payments of accrued unpaid interest. Rather, they will reduce the principal
balance due.
LATE CHARGE. If a payment is 10 DAYS OR MORE LATE, Borrower will be charged
5.000% OF THE REGULARLY SCHEDULED PAYMENT OR $50.00, WHICHEVER IS GREATER.
DEFAULT. Borrower will be in default if any of the following happens: (a)
Borrower fails to make any payment when due. (b) Borrower breaks any promise
Borrower has made to Lender, or Borrower fails to comply with or to perform when
due any other term, obligation, covenant, or condition contained in this Note or
any agreement related to this Note, or in any other agreement or loan Borrower
has with Lender. (c) Borrower defaults under any loan, extension of credit,
security agreement, purchase or sales agreement, or any other agreement, in
favor of any other creditor or person that may materially affect any of
Borrower's property or Borrower's ability to repay this Note or perform
Borrower's obligations under this Note or any of the Related Documents. (d) Any
representation or statement made or furnished to Lender by Borrower or on
Borrower's behalf is false or misleading in any material respect either now or
at the time made or furnished. (e) Borrower becomes insolvent, a receiver is
appointed for any part of Borrower's property, Borrower makes an assignment for
the benefit of creditors, or any proceeding is commenced either by Borrower or
against Borrower under any bankruptcy or insolvency laws. (f) Any creditor tries
to take any of Borrower's property on or in which Lender has a lien or security
interest. This includes a garnishment of any of Borrower's accounts with Lender.
(g) Any guarantor dies or any of the other events described in this default
section occurs with respect to any guarantor of this Note. (h) A material
adverse change occurs in Borrower's financial condition, or Lender believes the
prospect of payment or performance of the Indebtedness is impaired. (i) Lender
in good faith deems itself insecure.
If any default, other than a default in payment, is curable and if Borrower has
not been given a notice of a breach of the same provision of this Note within
the preceding twelve (12) months, it may be cured (and no event of default will
have occurred) if Borrower, after receiving written notice from Lender demanding
cure of such default: (a) cures the default within fifteen (15) days; or (b) if
the cure requires more than fifteen (15) days, immediately initiates steps which
Lender deems in Lender's sole discretion to be sufficient to cure the default
and thereafter continues and completes all reasonable and necessary steps
sufficient to produce compliance as soon as reasonably practical.
<PAGE>
LENDER'S RIGHTS. Upon default, Lender may declare the entire unpaid principal
balance on this Note and all accrued unpaid interest immediately due, without
notice, and then Borrower will pay that amount. Upon default, including failure
to pay upon final maturity, Lender, at its option, may also, if permitted under
applicable law, increase the variable interest rate on this Note 3.000
percentage points. The interest rate will not exceed the maximum rate permitted
by applicable law. Lender may hire or pay someone else to help collect this Note
if Borrower does not pay. Borrower also will pay Lender that amount. This
includes, subject to any limits under applicable law, Lender's reasonable
attorneys' fees and Lender's legal expenses whether or not there is a lawsuit,
including reasonable attorneys' fees and legal expenses for bankruptcy
proceedings (including efforts to modify or vacate any automatic stay or
injunction), appeals, and any anticipated post-judgment collection services. If
not prohibited by applicable law, Borrower also will pay any court costs, in
addition to all other sums provided by law. THIS NOTE HAS BEEN DELIVERED TO
LENDER AND ACCEPTED BY LENDER IN THE STATE OF UTAH. IF THERE IS A LAWSUIT,
BORROWER AGREES UPON LENDER'S REQUEST TO SUBMIT TO THE JURISDICTION OF THE
COURTS OF SALT LAKE COUNTY, THE STATE OF UTAH. LENDER AND BORROWER HEREBY WAIVE
THE RIGHT TO ANY JURY TRIAL IN ANY ACTION, PROCEEDING, OR COUNTERCLAIM BROUGHT
BY EITHER LENDER OR BORROWER AGAINST THE OTHER. THIS NOTE SHALL BE GOVERNED BY
AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF UTAH.
RIGHT OF SETOFF. Borrower grants to Lender a contractual security interest in,
and hereby assigns, conveys, delivers, pledges, and transfers to Lender all
Borrower's right, title and interest in and to, Borrower's accounts with Lender
(whether checking. savings, or some other account) including without limitation
all accounts held jointly with someone else and all accounts Borrower may open
in the future, excluding however all IRA and Keogh accounts, and all trust
accounts for which the grant of a security interest would be prohibited by law.
Borrower authorizes Lender, to the extent permitted by applicable law, to charge
or setoff all sums owing on this Note against any and all such accounts.
LINE OF CREDIT. This Note evidences a revolving line of credit Advances under
this Note may be requested orally by Borrower or by an authorized person. Lender
may, but need not, require that all oral requests be confirmed in writing. All
communications, instructions, or directions by telephone or otherwise to Lender
are to be directed to Lender's office shown above. The following party or
parties are authorized to request advances under the line of credit until Lender
receives from Borrower at Lender's address shown above written notice of
revocation of their authority: KEVIN L. CORNWELL, CHAIRMAN & CEO. Borrower
agrees to be liable for all sums either: (a) advanced in accordance with the
instructions of an authorized person or (b) credited to any of Borrower's
accounts with Lender. The unpaid principal balance owing on this Note at any
time may be evidenced by endorsements on this Note or by Lender's internal
records, including daily computer print-outs. Lender will have no obligation to
advance funds under this Note if: (a) Borrower or any guarantor is in default
under the terms of this Note or any agreement that Borrower or any guarantor has
with Lender, including any agreement made in connection with the signing of this
Note; (b) Borrower or any guarantor ceases doing business or is insolvent; (c)
any guarantor seeks, claims or otherwise attempts to limit, modify or revoke
such guarantor's guarantee of this Note or any other loan with Lender; (d)
Borrower has applied funds provided pursuant to this Note for purposes other
than those authorized by Lender; or (e) Lender in good faith deems itself
insecure under this Note or any other agreement between Lender and Borrower.
ADDITIONAL PROVISION. Any advance that Lender in its sole discretion may permit
after the final payment date provided in the Note will be due on demand and
otherwise subject to the terms of this Note.
LIBOR ADDENDUM - 1 MONTH. An exhibit, titled 'LIBOR ADDENDUM - 1 MONTH, is
attached to this Note and by this reference is made a part of this Note just as
if all the provisions, terms and conditions of the Exhibit had been fully set
forth in this Note.
GENERAL PROVISIONS. This Note is payable on demand. The inclusion of specific
default provisions or rights of Lender shall not preclude Lender's right to
declare payment of this Note on its demand. Lender may delay or forgo enforcing
any of its rights or remedies under this Note without losing them. Borrower and
any other person who signs, guarantees or endorses this Note, to the extent
allowed by law, waive presentment, demand for payment, protest and notice of
dishonor. Upon any change in the terms of this Note, and unless otherwise
expressly stated in writing, no party who signs this Note, whether as maker,
guarantor, accommodation maker or endorser, shall be released from liability.
All such parties agree that Lender may renew or extend (repeatedly and for any
length of time) this loan, or release any party or guarantor or collateral; or
impair, fail to realize upon or perfect Lender's security interest in the
collateral; and take any other action deemed necessary by Lender without the
consent of or notice to anyone. All such parties also agree that Lender may
modify this loan without the consent of or notice to anyone other than the party
with whom the modification is made.
PRIOR TO SIGNING THIS NOTE, BORROWER READ AND UNDERSTOOD ALL THE PROVISIONS OF
THIS NOTE, INCLUDING THE VARIABLE INTEREST RATE PROVISIONS. BORROWER AGREES TO
THE TERMS OF THE NOTE AND ACKNOWLEDGES RECEIPT OF A COMPLETED COPY OF THE NOTE.
BORROWER:
UTAH MEDICAL PRODUCTS, INC.
BY: /S/ KEVIN L. CORNWELL
---------------------------------
KEVIN L CORNWELL, CHAIRMAN & CEO
LIBOR ADDENDUM - 1 MONTH
BORROWER: UTAH MEDICAL PRODUCTS, INC. LENDER: KEYBANK NATIONAL ASSOCIATION
7043 SOUTH 300 WEST CENTRAL COMMERCIAL BANKING CENTER
MIDVALE, UT 84047 P.O. BOX 30815
505 MAIN ST, SUITE 2007
SALT LAKE CITY, UT 84130-0815
THIS LIBOR ADDENDUM - 1 MONTH IS ATTACHED TO AND BY THIS REFERENCE IS MADE A
PART OF EACH PROMISSORY NOTE OR CREDIT AGREEMENT, DATED APRIL 14, 2000, AND
EXECUTED IN CONNECTION WITH A LOAN OR OTHER FINANCIAL ACCOMMODATIONS BETWEEN
KEYBANK NATIONAL ASSOCIATION AND UTAH MEDICAL PRODUCTS, INC
LIBOR ADDENDUM
(Line of Credit One-Month Rate)
1. DEFINITIONS: For the purposes of this Addendum, the following definitions
will apply:
"Business Day" means a day on which dealings are carried on in the
London interbank eurodollar market.
"LIBOR Interest Period" means the period commencing on the date an
advance bearing interest at the LIBOR Rate is made, continued, or converted and
continuing for one month, with successive periods commencing on the same day of
each month thereafter;
"LIBOR Rate" means the rate per annum calculated by the Lender in good
faith, which Lender determines with reference to the rate per annum (rounded
upwards to the next higher whole multiple of 1/16% if such rate is not such a
multiple) at which deposits in United States dollars are offered by prime banks
in the London interbank eurodollar market two Business Days prior to the day on
which such rate is calculated by Bank, in an amount comparable to the amount of
such advance and with a maturity equal to the LIBOR Interest Period;
"LIBOR Reserve Requirements" means, for any advance bearing interest
at the LIBOR Rate, the maximum reserves (whether basic, supplemental, marginal,
emergency, or otherwise) prescribed by the Board of Governors of the Federal
Reserve System (or any successor) with respect to liabilities or assets
consisting of or including Eurocurrency liabilities" (as defined in Regulation D
of the Board of Governors of the Federal Reserve System) having a term equal to
the term of such advance.
"Margin' means ONE AND FORTY FIVE ONE-HUNDREDTHS percent (1.45 %).
Note Rate" means the interest rate provided for in the Note based on
the Lender's Prime Rate (as defined in the Note).
2. INTEREST RATE. Notwithstanding anything contained in the Note to the
contrary, advances under the Note shall bear interest at a fixed rate of
interest equal to the LIBOR Rate plus the Margin for the duration of a LIBOR
Interest Period; provided that no such advance shall be in an amount of less
than $100,000.00, and provided further that no LIBOR Interest Period may extend
beyond the maturity date of the Note. Upon the expiration of the initial LIBOR
Interest Period, Borrower may elect a new LIBOR Rate or the Note Rate. If
Borrower fails to make an election, the advances will bear interest at the LIBOR
Rate plus the Margin for consecutive LIBOR Interest Periods until an election is
made. During any LIBOR Interest Period, Borrower shall continue to make interest
payments as required by the Note.
3. INCREASED COSTS. If, because of the introduction of or any change in, or
because of any judicial, administrative, or other governmental interpretation
of, any law or regulation, there shall be any increase in the cost to Lender of
making, funding, maintaining, or allocating capital to any advance bearing
interest at the LIBOR Rate, including a change in LIBOR Reserve Requirements,
then Borrower shall, from time to time upon demand by Lender, pay to Lender
additional amounts sufficient to compensate Lender for such increased cost.
4. ILLEGALITY. lf, because of the introduction of or any change in, or
because of any judicial, administrative, or other governmental interpretation
of, any law or regulation, it becomes unlawful for Lender to make, fund, or
maintain any advance at the LIBOR Rate, then Lender's obligation to make, fund,
or maintain any such advance shall terminate and each affected outstanding
advance shall be converted to the Note Rate on the earlier of the termination
date for each LIBOR Interest Period or the date the making, funding, or
maintaining of each such advance becomes unlawful.
5. REIMBURSEMENT OF COSTS. If Borrower repays any advance bearing interest
at the LIBOR Rate prior to the end of the applicable LIBOR Interest Period,
including without limitation a prepayment under paragraphs 3 or 4 above,
Borrower shall reimburse Lender on demand for any resulting loss or expense
incurred by Lender, including without limitation any loss or expense incurred in
obtaining, liquidating or reemploying deposits from third parties. A statement
as to the amount of such loss or expense, prepared in good faith and in
reasonable detail by Lender and submitted by Lender to the Borrower, shall be
conclusive and binding for all purposes absent manifest error in computation.
Calculation of all amounts payable to Lender under this paragraph shall be made
as though Lender shall have actually funded the relevant advance through
deposits or other funds acquired from third parties for such purpose; provided,
however, that Lender may fund any advance bearing interest at the LIBOR Rate in
any manner it sees fit and the foregoing assumption shall be utilized only for
purposes of calculation of amounts payable under this paragraph. Lender will be
entitled to receive the reimbursement provided for herein regardless of whether
the prepayment is voluntary or involuntary (including demand or acceleration of
the Note upon Borrower's default).
THIS LIBOR ADDENDUM - 1 MONTH IS EXECUTED ON APRIL 14, 2000.
BORROWER:
UTAH MEDICAL PRODUCTS, INC.
BY: /S/ KEVIN L. CORNWELL
-----------------------------
KEVIN L. CORNWELL, CHAIRMAN & CE0
LENDER:
KEYBANK NATIONAL ASSOCIATION
BY: /S/ JOHN P. NORAWONG
--------------------------
AUTHORIZED OFFICER
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM BALANCE
SHEETS AS OF MARCH 31, 2000 AND STATEMENTS OF OPERATIONS FOR THE THREE MONTHS
ENDED MARCH 31, 2000 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS
</LEGEND>
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-2000
<PERIOD-START> JAN-01-2000
<PERIOD-END> MAR-31-2000
<CASH> 976000
<SECURITIES> 0
<RECEIVABLES> 3637000
<ALLOWANCES> (57000)
<INVENTORY> 3566000
<CURRENT-ASSETS> 9071000
<PP&E> 21822000
<DEPRECIATION> (11272000)
<TOTAL-ASSETS> 27708000
<CURRENT-LIABILITIES> 2839000
<BONDS> 4841000
0
0
<COMMON> 64000
<OTHER-SE> 19610000
<TOTAL-LIABILITY-AND-EQUITY> 27708000
<SALES> 6666000
<TOTAL-REVENUES> 6666000
<CGS> 2995000
<TOTAL-COSTS> 2995000
<OTHER-EXPENSES> 1793000
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 1916000
<INCOME-TAX> 690000
<INCOME-CONTINUING> 1226000
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1226000
<EPS-BASIC> .19
<EPS-DILUTED> .19
</TABLE>
