EXHIBIT 10.3.2
SECOND AMENDMENT TO CREDIT AND SECURITY AGREEMEENT
This Amendment, dated as of November 12, 1997, 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 and amended by First Amendment to Credit
and Security Agreement dated as of July 10, 1997 (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 the Lender waive certain Defaults and
reset the financial covenants to the Credit Agreement, which the Lender is
willing to do 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. FINANCIAL COVENANTS. Sections 6.12, 6.13, 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 at the end of each month listed below, at an
amount not less than the amount set forth opposite such period:
MONTH MINIMUM BOOK NET WORTH
October 31, 1997 < $480,000 >
November 30, 1997 $725,000
December 31, 1997 $885,000
"Section 6.13 [Section intentionally left blank.]
"Section 6.14 MINIMUM NET INCOME. The Borrower will achieve as of each
date listed below, Net Income, of not less than the amount set forth
opposite such date:
DATE MINIMUM NET INCOME
October 31, 1997 < $5,165,000 >
November 30, 1997 < $5,460,000 >
December 31, 1997 < $5,300,000 >
"Section 6.15 MINIMUM DEBT SERVICE COVERAGE RATIO. For each fiscal year
after December 31, 1997, the Borrower will achieve a Debt Service Coverage
Ratio of 1.00 to 1.00 as of each fiscal year end for the fiscal year then
ending."
2. LIENS. Section 7.1(d) of the Credit Agreement is hereby
amended in its entirety and replaced with the following new paragraph:
"(d) purchase money security interests relating to the acquisition of
machinery and equipment of the Borrower, not exceeding $50,000 for any one
purchase or $200,000 in the aggregate during any fiscal year and so long
as no Default Period is then in existence and none would exist immediately
after such acquisition."
3. CAPITAL EXPENDITURES. Section 7.10 of the Credit Agreement is
hereby amended in its entirety and replaced with the following new section:
"Section 7.10 CAPITAL EXPENDITURES. The Borrower will not incur or
contract to incur Capital Expenditures of more than $200,000 in the
aggregate during any fiscal year, or more than $50,000 in any one
transaction."
4. 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.
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5. WAIVER OF DEFAULTS. The Borrower is in default of the
following provisions of the Credit Agreement (collectively, the
"Defaults"):
SECTION/COVENANT PERIOD REQUIRED ACTUAL
6.12 Minimum Book Net Worth 8/97 not less than $885,000 $537,000
9/97 not less than $ 1,385,000 $308,000
6.13 Maximum Debt to Book
Net Worth 8/97 not more than 9.05 to 1.00 17.61 to 1.00
9/97 not more than 6.75 to 1.00 31.90 to 1.00
10/97 not more than 6.10 to 1.00 unknown
6.14 Minimum Net Income 8/97 not less than < $3,800,000> < $4,148,000 >
9/97 not less than < $3,300,000> < $4,378,000 >
Upon the terms and subject to the conditions set forth in this 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.
6. AMENDMENT FEE. The Borrower shall pay the Lender as of the
date hereof a fully earned, non-refundable fee in the amount of $10,000
in consideration of the Lender's execution of this Amendment.
7. CONDITIONS PRECEDENT. This Amendment, and the waiver set forth
in Paragraph 5 hereof, 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) evidence that the Borrower has received a cash equity
infusion of not less than $1,500,000, PROVIDED HOWEVER, that the Borrower
must receive such cash equity infusion by November 14, 1997;
(b) payment of the fee described in Paragraph 6; and
(c) such other matters as the Lender may require in its sole
discretion.
8. 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
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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.
9. 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.
10. NO OTHER WAIVER. Except as set forth in Paragraph 5 hereof, 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.
11. 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.
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12. 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.
13. 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 BUSINESS CREDIT, INC. MEDICAL GRAPHICS CORPORATION
By /s/Xxxxxx X. Xxxxxxx By /s/Xxxx X. Xxxxxxx
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Xxxxxx X. Xxxxxxx CFO
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Its Assistant Vice President
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