EXHIBIT 10.2
FIFTH AMENDMENT TO CREDIT AND SECURITY AGREEMENT
This Amendment, dated as of September 10, 1998, is made by and
between MEDICAL GRAPHICS CORPORATION, a Minnesota corporation (the "Borrower")
and NORWEST BUSINESS CREDIT, INC., a Minnesota corporation (the "Lender").
Recitals
The Borrower and the Lender have entered into a Credit and
Security Agreement dated as of March 31, 1997 as amended by First Amendment to
Credit and Security Agreement dated as of July 10, 1997, Second Amendment to
Credit and Security Agreement dated as of November 12, 1997, Third Amendment to
Credit and Security Agreement dated as of March 26, 1998 and Fourth Amendment to
Credit and Security Agreement dated as of August 14, 1998 (as so amended, the
"Credit Agreement"). Capitalized terms used in these recitals have the meanings
given to them in the Credit Agreement unless otherwise specified.
The Borrower has requested that certain amendments be made to
the Credit Agreement, which the Lender is willing to make pursuant to the terms
and conditions set forth herein.
NOW, THEREFORE, in consideration of the premises and of the
mutual covenants and agreements herein contained, it is agreed as follows:
1. DEFINED TERMS. Capitalized terms used in this Amendment
which are defined in the Credit Agreement shall have the same meanings as
defined therein, unless otherwise defined herein. In addition, Section 1.1 of
the Credit Agreement is amended by adding or amending, as the case may be, the
following definitions:
"`Borrowing Base' means, at any time, the lesser of:
(a) the Maximum Line less the Norwest Bank
Revolving Advances; or
(b) the Borrowing Power."
"`Borrowing Power' means the sum of:
(i) 80% of Eligible Accounts; plus
(ii) the lesser of (A) 40% of Eligible Inventory
or (B) $1,500,000; plus
(iii) the Overadvance Component."
"`Overadvance Component' means (a) from August 24, 1998 through
September 30, 1998, the lesser of 20% of Eligible Inventory or
$500,000; (b) from October 1, 1998 through October 31, 1998, the lesser
of 15% of Eligible Inventory or $375,000 (c) from November 1, 1998
through November 30, 1998, the lesser of 10% of Eligible Inventory or
$250,000; (d) from December 1, 1998 through December 31, 1998, the
lesser of 5% of Eligible Inventory or $125,000 and (e) thereafter, $0."
"`Overadvance Floating Rate' means an annual rate equal to the
sum of the Base Rate plus six percent (6%), which annual rate shall
change when and as the Base Rate changes."
2. OVERADVANCE INTEREST RATE. Section 2.2 of the Credit
Agreement is hereby amended by adding the following new subsection (f):
"(f) OVERADVANCE INTEREST RATE. Except as set forth in
subsections 2.2(c) and 2.2(e), the Overadvance Component shall bear
interest at the Overadvance Floating Rate."
3. NO OTHER CHANGES. Except as explicitly amended by this
Amendment, all of the terms and conditions of the Credit Agreement shall remain
in full force and effect and shall apply to any advance or letter of credit
thereunder.
4. OVERADVANCE FEE. The Borrower shall pay the Lender in four
equal monthly installments, the first installment due on September 15, 1998 and
each subsequent installment due on the 15th of each month thereafter, a fully
earned, non-refundable fee in the amount of $10,000 for the privilege of
including the Overadvance Component in the Borrowing Power.
5. CONDITIONS PRECEDENT. This Amendment shall be effective
when the Lender shall have received an executed original hereof, together with
such other matters as the Lender may require. If the Overadvance fee set forth
in Paragraph 4 hereof is not paid in full when due, the Borrower will not have
the privilege of including the Overadvance Component in the Borrowing Power and
the Borrower will be considered to be in default if at any time the outstanding
principal balance of the Revolving Advances exceeded the difference of the
Borrowing Power and the Overadvance Component.
6. REPRESENTATIONS AND WARRANTIES. The Borrower hereby
represents and warrants to the Lender as follows:
(a) The Borrower has all requisite power and authority to
execute this Amendment and to perform all of its obligations hereunder,
and this Amendment has been duly executed and delivered by the Borrower
and constitutes the legal, valid and binding obligation of the
Borrower, enforceable in accordance with its terms.
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(b) The execution, delivery and performance by the Borrower
of this Amendment have been duly authorized by all necessary corporate
action and do not (i) require any authorization, consent or approval
by any governmental department, commission, board, bureau, agency or
instrumentality, domestic or foreign, (ii) violate any provision of
any law, rule or regulation or of any order, writ, injunction or decree
presently in effect, having applicability to the Borrower, or the
articles of incorporation or by-laws of the Borrower, or (iii) result
in a breach of or constitute a default under any indenture or loan or
credit agreement or any other agreement, lease or instrument to which
the Borrower is a party or by which it or its properties may be bound
or affected.
(c) All of the representations and warranties contained in
Article V of the Credit Agreement are correct on and as of the date
hereof as though made on and as of such date, except to the extent that
such representations and warranties relate solely to an earlier date.
7. REFERENCES. All references in the Credit Agreement to
"this Agreement" shall be deemed to refer to the Credit Agreement as amended
hereby; and any and all references in the Security Documents to the Credit
Agreement shall be deemed to refer to the Credit Agreement as amended hereby.
8. NO OTHER WAIVER. The execution of this Amendment and
acceptance of any documents related hereto shall not be deemed to be a waiver of
any Default or Event of Default under the Credit Agreement or breach, default or
event of default under any Security Document or other document held by the
Lender, whether or not known to the Lender and whether or not existing on the
date of this Amendment.
9. RELEASE. The Borrower hereby absolutely and
unconditionally releases and forever discharges the Lender, and any and all
participants, parent corporations, subsidiary corporations, affiliated
corporations, insurers, indemnitors, successors and assigns thereof, together
with all of the present and former directors, officers, agents and employees of
any of the foregoing, from any and all claims, demands or causes of action of
any kind, nature or description, whether arising in law or equity or upon
contract or tort or under any state or federal law or otherwise, which the
Borrower has had, now has or has made claim to have against any such person for
or by reason of any act, omission, matter, cause or thing whatsoever arising
from the beginning of time to and including the date of this Amendment, whether
such claims, demands and causes of action are matured or unmatured or known or
unknown.
10. COSTS AND EXPENSES. The Borrower hereby reaffirms its
agreement under the Credit Agreement to pay or reimburse the Lender on demand
for all costs and expenses incurred by the Lender in connection with the Credit
Agreement, the Security
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Documents and all other documents contemplated thereby, including without
limitation all reasonable fees and disbursements of legal counsel. Without
limiting the generality of the foregoing, the Borrower specifically agrees
to pay all fees and disbursements of counsel to the Lender for the services
performed by such counsel in connection with the preparation of this Amendment
and the documents and instruments incidental hereto. The Borrower hereby agrees
that the Lender may, at any time or from time to time in its sole discretion
and without further authorization by the Borrower, make a loan to the Borrower
under the Credit Agreement, or apply the proceeds of any loan, for the purpose
of paying any such fees, disbursements, costs and expenses.
11. MISCELLANEOUS. This Amendment may be executed in any
number of counterparts, each of which when so executed and delivered shall be
deemed an original and all of which counterparts, taken together, shall
constitute one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have caused this
Amendment to be duly executed as of the date first written above.
NORWEST BUINESS CREDIT INC. MEDICAL GRAPHICS CORPORATION
/s/ Xxxxx X. Xxxxxx /s/ Xxxx X. Xxxxxxx
-------------------------------- --------------------------------
Xxxxx X. Xxxxxx Xxxx X. Xxxxxxx
Its Officer Its Chief Financial Officer
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