Exhibit Number 10.3.6
SIXTH AMENDMENT TO CREDIT AND SECURITY AGREEMENT
This Amendment, dated as of March 29, 1999, 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, 0000, Xxxxxx Xxxxxxxxx to
Credit and Security Agreement dated as of August 14, 1998 and Fifth Amendment to
Credit and Security Agreement dated as of September 10, 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:
"Overadvance Component' means from March 1, 1999 through May
31, 1999, the lesser of 5% of Eligible Inventory or $125,000 and (e)
thereafter, $0."
2. ACCOMMODATION FEE. Section 2.6 of the Credit Agreement is
hereby amended by adding the following new subsection (e):
"(e) ACCOMMODATION FEE. If a default occurs under Sections
6.12, 6.14 or 6.15 before June 30, 1999, then beginning on July 31,
1999, the Borrower shall pay a monthly accommodation fee of $8,500, due
and payable on the last day of each month."
3. FINANCIAL COVENANTS. Sections 6.12, 6.14 and 6.15 of the
Credit Agreement are hereby amended in their entirety and replaced with the
following new sections:
"Section 6.12 MINIMUM BOOK NET WORTH. The Borrower will
maintain its Book Net Worth, determined as of each date below, at an
amount not less than the amount set forth opposite the applicable date:
DATE MINIMUM BOOK NET WORTH
---- ----------------------
March 31, 1999 $1,895,000
June 30, 1999 $1,970,000
September 30, 1999 $2,070,000
December 31, 1999 $2,670,000
"Section 6.14 MINIMUM NET INCOME. The Borrower will achieve as
of each fiscal quarter end listed below, year-to-date Net Income of not
less than the amount set forth opposite such date:
DATE MINIMUM YEAR-TO-DATE NET INCOME
---- -------------------------------
March 31, 1999 ($125,000)
June 30, 1999 ($50,000)
September 30, 1999 $50,000
December 31, 1999 $350,000
In addition, for each month listed below, the Borrower must
achieve Net Income of not less than the amount set forth opposite such
month, and for each two-month period listed below, the Borrower must
achieve a cumulative Net Income of not less than the amount set forth
opposite such period:
MONTHS MINIMUM NET INCOME
------ ------------------
April, 1999 & May, 1999 ($500,000)
July, 1999 & August, 1999 ($550,000)
October, 1999 & September, 1999 ($300,000)
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"Section 6.15 MINIMUM DEBT SERVICE COVERAGE RATIO. The
Borrower will achieve a Debt Service Coverage Ratio at or above 1.00 to
1.00 as of each fiscal year end."
4. NEW COVENANTS. Section 6.17 of the Credit Agreement is
hereby amended in its entirety and replaced with the following new section:
Section 6.17 NEW COVENANTS. On or before March 31 of each
year, the Borrower and the Lender shall agree on new covenant levels
for Sections 6.12, 6.14, 6.15 and 7.10 for periods after such date. The
new covenant levels will be based on the Borrower's projections for
such periods and shall be no less stringent than the present levels.
5. 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.
6. WAIVER OF DEFAULTS. The Borrower is in default of the
following provisions of the Credit Agreement (collectively, the "Defaults"):
SECTION/COVENANT PERIOD REQUIRED ACTUAL
---------------- ------ -------- ------
6.14 Minimum Net Income 10/31/98 not less than ($1,600,000) ($1,696,000)
11/30/98 not less than ($1,600,000) ($2,045,000)
12/31/98 not less than ($900,000) ($1,251,000)
6.15 Debt Service Coverage Ratio FYE 12/31/98 not less than 0.25 to 1.00 -0.43 to 1.00
Upon the terms and subject to the conditions set forth in this
Sixth Amendment, the Lender hereby waives the Defaults. This waiver shall be
effective only in this specific instance and for the specific purpose for which
it is given, and this waiver shall not entitle the Borrower to any other or
further waiver in any similar or other circumstances.
7. DEFAULT WAIVER FEE. The Borrower shall pay the Lender a
fully earned, non-refundable fee in the amount of $50,500 in consideration of
the Lender's execution of this Amendment and the waiver granted in Paragraph 6.
The first $25,000 of such fee is payable as of the date hereof and the remainder
is payable in three equal monthly installments, the first installment due on
April 30, 1999 and each subsequent installment due on the last day of each month
thereafter.
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8. CONDITIONS PRECEDENT. This Amendment shall be effective
when the Lender shall have received an executed original hereof, together with
each of the following, each in substance and form acceptable to the Lender in
its sole discretion:
(a) Payment of the first $25,000 of the default waiver fee set
forth in Paragraph 7. If the remainder of the default waiver fee set
forth in Paragraph 7 hereof is not paid in full when due, the waiver
set forth in Paragraph 6 shall be null and void.
(b) Such other matters as the Lender may require.
9. 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.
(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.
10. 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.
11. NO OTHER WAIVER. Except as set forth in Paragraph 6, 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,
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whether or not known to the Lender and whether or not existing on the date of
this Amendment.
12. 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.
13. 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 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.
14. 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.
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IN WITNESS WHEREOF, the parties hereto have caused this
Amendment to be duly executed as of the date first written above.
NORWEST BANK MINNESOTA 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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