EXHIBIT 10.2
THIRD AMENDMENT TO CREDIT AND SECURITY AGREEMENT
This Third Amendment, dated as of June 17, 1998, is made by and
between MEDAMICUS, INC., a Minnesota corporation (the "Borrower"), and NORWEST
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 5, 1996, as amended by First Amendment to Credit and
Security Agreement dated as of June 27, 1997 and by Second Amendment to Credit
and Security Agreement dated as of May __, 1998 (as 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 and subject to change from time
to time in the Lender's sole discretion, the lesser of:
(a) the Maximum Line; or
(b) the sum of
(i) 85% of Eligible Accounts, and
(ii) the lesser of (i) the Fixed Asset Percentage of Eligible
Fixed Assets or (ii) $233,000."
"'Eligible Fixed Assets' means the forced liquidation value of the
Borrower's Equipment, except that Equipment not subject to a duly
perfected security interest in favor of the Lender or which is subject to
any lien, security interest or claim in favor
of any Person other than the Lender, shall not in any event be deemed
Eligible Fixed Assets."
"'Fixed Asset Percentage' means (i) 75% from the date of the Third
Amendment to January 30, 1999; and (ii) beginning on January 31, 1999 and
on the last day of each month thereafter the percentage will decrease by
1% each month.
"'Floating Rate' means an annual rate equal to the sum of the Base
Rate plus one percent (1.0%) which annual rate shall change when and as
the Base Rate changes."
"'Maturity Date' means June 30, 1999."
"'Maximum Line' means $1,500,000."
"'Note' means the Borrower's Revolving Note dated as of the date of
the Third Amendment, in the form attached as Exhibit A to the Third
Amendment."
"'Third Amendment' means that certain Third Amendment to Credit and
Security Agreement, dated as of June 17, 1998, by and between the Borrower
and the Lender."
2. Liquid Asset Requirement. Section 6.10 of the Credit Agreement is
hereby amended in its entirety and replaced with the following:
"Section 6.10 Liquid Asset Requirement.
(a) The Borrower shall at all times own and maintain in an
account or accounts with Norwest Investment Services, Inc. ("NISI"),
unencumbered Liquid Assets, free and clear of any right of set off
and of any related margin account debt. The fair market value of
such Liquid Assets must be at least $250,000.
(b) To facilitate the monitoring of the status of the Liquid
Asset requirement, the Borrower shall deliver to the Lender the
monthly statements for such NISI accounts for the prior month
stating the respective fair market values of the securities in the
accounts upon receipt thereof, and shall deliver such other
information on the Borrower's accounts at NISI as the Lender may
request. The Borrower hereby authorizes the Lender to directly
contact NISI in order to obtain information on the Borrower's
accounts at NISI."
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. 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) The replacement note substantially in the form of Exhibit A
hereto, duly executed on behalf of the Borrower (the "Replacement Note").
(b) A Certificate of the Secretary of the Borrower certifying as to
(1) the resolutions of the board of directors of the Borrower approving
the execution and delivery of this Third Amendment and the Replacement
Note, (2) the fact that the Articles of Incorporation and Bylaws of the
Borrower, which were certified and delivered to the Lender pursuant to the
Certificate of the Borrower's Secretary dated as of March 26, 1996,
continue in full force and effect and have not been amended or otherwise
modified except as set forth in Certificates previously delivered or the
Certificate to be delivered, and (3) certifying that the officers and
agents of the Borrower who have been certified to the Lender, pursuant to
the Certificate of Authority of the Borrower's Secretary dated as of March
26, 1996, as being authorized to sign and to act on behalf of the Borrower
continue to be so authorized or setting forth the sample signatures of
each of the officers and agents of the Borrower authorized to execute and
deliver this Third Amendment and all other documents, agreements and
certificates on behalf of the Borrower.
(c) Such other matters as the Lender may require.
5. 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 the Replacement Note and to perform all of its
obligations hereunder, and this Amendment and the Replacement Note have
been duly executed and delivered by the Borrower and constitute 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 and the Replacement Note 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.
6. 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. Upon the
satisfaction of each of the conditions set forth in paragraph 4 hereof, the
definition of "Note" and all references thereto in the Credit Agreement shall be
deemed amended to describe the Replacement Note, which Note shall be issued by
the Borrower to the Lender in replacement, renewal and amendment, but not in
repayment, of the Note.
7. No Waiver. The execution of this Amendment and acceptance of the
Replacement Note and 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.
8. 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.
9. 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.
10. 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 Third
Amendment to be duly executed as of the date first written above.
NORWEST CREDIT, INC. MEDAMICUS, INC.
By By
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Xxxxx X. Xxxxxxxx Xxxxx X. Xxxxxxx
Its Vice President Its President
