<PAGE>
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:
September 30, 1999 Commission File Number 0-4431
AUTO-GRAPHICS, INC.
(Exact name of registrant as specified in its charter)
California 95-2105641
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
3201 Temple Avenue, Pomona, California 91768
(Address of principal executive offices) (zip code)
Registrant's telephone number, including area code: (909) 595-7004
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 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
Total Shares Outstanding:
Common Stock: 1,344,078
</PAGE>
<PAGE>
-2-
AUTO-GRAPHICS, INC.
Form 10-Q
September 30, 1999
TABLE OF CONTENTS
Unaudited Condensed Consolidated Statement of
Operations and Comprehensive Income
For Nine Months Ended September 30 3
Unaudited Condensed Consolidated Statement of
Operations and Comprehensive Income
For Three Months Ended September 30 4
Unaudited Consolidated Balance Sheet
September 30, 1999 and December 31, 1998 5
Unaudited Condensed Consolidated Statement of
Cash Flows For Nine Months Ended September 30 6
Notes to the Unaudited Condensed
Consolidated Financial Statements 7
Management's Discussion and Analysis of
Financial Condition and Results of
Operations 11
Part II - Other Information 14
</PAGE>
<PAGE>
-3-
AUTO-GRAPHICS, INC.
Form 10-Q
PART I -- FINANCIAL INFORMATION
Item 1. Financial Statements.
Unaudited Condensed Consolidated Statement of Operations
and Comprehensive Income for Nine Months Ended September 30
1999 1998
Net sales (See Note 4) $5,928,238 $6,675,759
Costs and expenses:
Cost of sales 3,417,328 4,127,078
Selling, general & administrative 2,242,885 2,396,927
Total costs and expenses 5,660,213 6,524,005
Income from operations 268,025 151,754
Interest/other 211,467 282,084
Income/(loss) before taxes 56,558 (130,330)
Provision for taxes
based on income (See Note 5) -- (58,802)
Net income/(loss) 56,558 (71,528)
Foreign currency
translation adjustments (See Note 3) -- (6,149)
Total comprehensive income/(loss) $ 56,558 $ (77,677)
Net income/(loss) per share - Basic $ 0.05 $ (0.13)
Net income/(loss) per share - Diluted $ 0.05 $ (0.13)
Weighted average shares outstanding - Basic 1,143,811 1,064,478
Weighted average shares outstanding - Diluted 1,162,586 1,064,478
See Notes to Unaudited Condensed Consolidated Financial Statements
</PAGE>
<PAGE>
-4-
AUTO-GRAPHICS, INC.
Form 10-Q
Unaudited Condensed Consolidated Statement of Operations
and Comprehensive Income for Three Months Ended September 30
1999 1998
Net sales (See Note 4) $1,904,796 $1,993,399
Costs and expenses:
Cost of sales 1,084,667 1,311,147
Selling, general & administrative 710,701 828,869
Total costs and expenses 1,795,368 2,140,016
Income/(loss) from operations 109,428 (146,617)
Interest/other 84,494 105,741
Income/loss) before taxes 24,934 (252,358)
Provision for taxes
based on income (See Note 5) -- (113,560)
Net income/comprehensive
income/(loss) (See Note 3) $ 24,934 $ (138,798)
Net income/(loss) per share - Basic $ 0.02 $ (0.13)
Net income/(loss) per share - Diluted $ 0.02 $ (0.13)
Weighted average shares outstanding - Basic 1,344,078 1,064,478
Weighted average shares outstanding - Diluted 1,400,403 1,064,478
See Notes to Unaudited Condensed Consolidated Financial
Statements
</PAGE>
<PAGE>
-5-
AUTO-GRAPHICS, INC.
Form 10-Q
Unaudited Balance Sheets
September 30, 1999 and December 31, 1998
ASSETS 1999 1998
(Unaudited) (Audited)
Current assets:
Cash $ 1,307,964 $ 292,744
Accounts receivable, less allowance
for doubtful accounts ($38,000 in
1999 and 1998) 1,092,424 1,697,826
Unbilled production costs 119,592 86,573
Other current assets 151,201 360,170
Total current assets 2,671,181 2,437,313
Software, equipment and leasehold
improvements, net 5,040,989 5,016,627
Other assets 116,585 119,162
$ 7,828,755 $ 7,573,102
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 128,473 $ 632,809
Deferred income 953,225 813,113
Accrued payroll and related
Liabilities 571,982 578,569
Other accrued liabilities 108,404 84,282
Current portion of long-term debt 927,000 787,500
Total current liabilities 2,689,084 2,896,273
Long-term debt, less current portion 2,400,000 2,587,500
Deferred taxes based on income 486,000 486,000
Total liabilities 5,575,084 5,969,773
Stockholders' equity:
Common stock, $.10 par value,
4,000,000 shares authorized,
1,344,078 shares issued and
outstanding in 1999, and
1,064,478 shares issued and
outstanding in 1998 (See Note 2) 134,408 106,448
Capital in excess of par value 1,731,323 1,123,899
Retained earnings 390,347 375,389
Foreign Currency Translation (2,407) (2,407)
Total stockholders' equity 2,253,671 1,603,329
$ 7,828,755 $ 7,573,102
See Notes to Unaudited Condensed Consolidated Financial Statements
</PAGE>
<PAGE>
-6-
AUTO-GRAPHICS, INC.
Form 10-Q
Unaudited Statements of
Cash Flows
For the Nine Months Ended September 30
Increase (Decrease) in Cash
1999 1998
Cash flows from operating activities:
Net income $ 56,558 $ (71,528)
Adjustments to reconcile net
income/(loss) to net cash
provided by operating activities:
Depreciation and amortization 915,225 774,543
Deferred taxes -- 13,000
Changes in operating assets
and liabilities:
Accounts receivable 605,403 411,851
Unbilled production costs (33,019) (185,469)
Other current assets 208,969 (199,795)
Other assets -- 206,084
Accounts payable (504,336) (447,534)
Deferred income 140,112 (125,738)
Other accrued liabilities 24,124 (200,103)
Accrued payroll and
related liabilities (6,586) 99,358
Net cash provided by
operating activities 1,406,450 274,669
Cash flows from investing activities:
Capital expenditures (937,013) (743,950)
Cash flows from financing activities:
Borrowings under long-term debt -- 923
Principal payments under debt
Agreements (48,000) (430,000)
Net borrowings under
line-of-credit agreement -- 840,162
Sale/(Repurchase) of stock, net (See Note 2) 593,783 (101,750)
Net cash provided by
financing activities 545,783 309,335
Effect of exchange rate change on cash -- (6,149)
Net change in cash 1,015,220 (166,095)
Cash at beginning of period 292,744 244,620
Cash at end of period $1,307,964 $ 78,525
Supplemental disclosures of cash flow information:
Cash paid during the period for:
Interest $ 238,605 $ 260,468
Income taxes 14,512 --
See Notes to Unaudited Condensed Consolidated Financial Statements
</PAGE>
<PAGE>
-7-
AUTO-GRAPHICS, INC.
Form 10-Q
Notes to
Unaudited Condensed Consolidated Financial Statements
September 30, 1999
NOTE 1. The Unaudited Condensed Consolidated Financial Statements included
herein have been prepared by Registrant and include all normal and
recurring adjustments which are, in the opinion of management,
necessary for a fair presentation of the financial position at
September 30, 1999, the results of operations and the statement of
cash flows for the nine months ended September 30, 1999 and 1998
pursuant to the rules and regulations of the Securities and Exchange
Commission. The consolidated financial statements include the
accounts of Auto-Graphics, Inc. and all of its wholly-owned
subsidiaries. All material intercompany accounts and transactions
have been eliminated.
The results of operations for the subject interim periods in 1999
are not necessarily indicative of the results for the entire year.
This Quarterly Report on Form 10-Q is qualified in its entirety by
the information included in the Company's Annual Report to the SEC
on Form 10-K for the period ending December 31, 1998, and including,
without limitation, the financial statements and notes included
therein.
NOTE 2. In May of 1999, the Company initiated a private placement offering
of its Common Stock for $2.50 per share. Shares offered and sold in the
offering were classified as restricted stock meaning that such shares
could not be sold in the public trading market for the Company's
stock for a minimum period of one year. At September 30, 1999, a
total of 300,400 shares had been sold by the Company for gross
proceeds of $751,000 of which $641,000 (net of offering expenses) has
been reflected in stockholder's equity. Total shares of the
Company's Common Stock issued and outstanding at such date increased
to 1,344,078. The offering was concluded in October 1999 with a
total of 551,400 shares sold, increasing total shares outstanding to
1,595,078, for gross proceeds of $1,378,500.
In 1995, the Company entered into a stock repurchase agreement with a
former officer and director of the Company, whereby the Company
agreed to purchase and retire, over a seven-year period, 156,000 of
171,000 shares of Company stock owned by the individual. The total
transaction cost of $825,000 includes stock, non-competition and
consulting fees. In January of 1995, 1996 and 1997, the Company
purchased and retired three blocks of 15,600 shares each. In January
of 1998 and 1999, the Company purchased and retired 26,000 and 20,800
shares, respectively, in accordance with the above referenced
agreement.
</PAGE>
<PAGE>
-8-
AUTO-GRAPHICS, INC.
Form 10-Q
Notes to
Unaudited Condensed Consolidated Financial Statements
September 30, 1999
NOTE 3. Effective January 1, 1998, the Company adopted Statement of
Financial Accounting Standards No. 130, "Reporting Comprehensive Income".
The statement establishes standards for reporting and display of
comprehensive income and its components in interim and annual
financial statements. Comprehensive income is defined as the change
in the equity (net assets) of an entity during a period from
transactions, events and circumstances excluding all transactions
involving investments by or distributions to the owners. There were
no material comprehensive income items for the nine months ending
September 30, 1999 and 1998.
Note 4. In June 1997, the Financial Accounting Standards ("FAS") Board
issued Statement of Financial Accounting Standards No. 131, "Disclosures
about Segments of an Enterprise and Related Information." The FAS is
effective for fiscal years beginning after December 15, 1997 and the
Company has adopted the statement in fiscal year ending December 31,
1998. The statement establishes standards for reporting of
information about operating segments in interim and annual financial
statements.
The following table summarizes sales and total assets presented on
the basis of GAAP (generally accepted accounting principles)
accounting for the nine months ending September 30, 1999 and 1998.
1999 1998
Geographic areas
Net sales
United States $ 4,603,785 $ 4,899,557
Foreign - Canada 1,316,577 1,578,943
Foreign - Japan/Other 7,876 197,259
Long-lived assets, net
United States 4,874,642 5,402,059
Foreign - Canada 170,347 181,095
Note 5. Deferred tax assets and liabilities are recognized for the
expected future tax consequences of events that have been recognized in
the Company's financial statements or tax returns. At December 31, 1998,
the Company has available federal, state and Canadian net operating
loss carry-forwards of approximately $462,000, $443,000 and $569,000,
respectively, for income tax purposes. These net operating loss
carry-forwards expire in 2018 for federal taxes, 2005 for state and
for foreign taxes.
</PAGE>
<PAGE>
-9-
AUTO-GRAPHICS, INC.
Form 10-Q
Notes to Unaudited
Consolidated Financial Statements
September 30, 1999
Note 6. Pending Pronouncement
In June 1998, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards No. 133, "Accounting for
Derivative Instruments and Hedging Activities," which is effective
for fiscal quarters of all fiscal years beginning after June 15,
2000. The Company plans to adopt the statement in the fiscal year
ending December 31, 2001. The statement establishes standards for
accounting for derivatives and hedging instruments (of which the
Company currently has none) and, therefore, the Company does not
expect this FAS will have a material effect on the Company's
financial position or results of operations.
Note 7. In February 1997, the Financial Accounting Standards Board
issued Statement of Financial Accounting Standards ("FAS") No. 128,
"Earnings per Share", which is effective for interim and annual
periods ending after December 15, 1997. The Company adopted the
standard as of December 31, 1997. The standard requires the Company
to present basic earnings per share and diluted earnings per share,
using the treasury method and requires restatement of prior earnings
per share data presented. Basic earnings per share computations are
based on the weighted average number of shares of Common Stock
outstanding during the year. Diluted earnings per share computations
are based on the weighted average number of shares of Common Stock
outstanding during the year plus the dilutive effect of warrants.
The following table reconciles the numerator and denominator of the
basic and diluted earnings per share computations shown on the
Consolidated Statement of Operations and Comprehensive Income for the
nine months ending September 30, 1999 and 1998:
1999 1998
----------- ------------
Net Income/(loss) $ 56,558 $ (71,528)
Weighted average
shares outstanding - Basic 1,143,811 1,064,478
Dilutive effect of warrants 18,775 --
Weighted average
shares outstanding - Diluted 1,162,586 1,064,478
Net income/(loss) per share - Basic $0.05 ($0.13)
Net income/(loss) per share - Diluted $0.05 ($0.13)
</PAGE>
<PAGE>
-10-
AUTO-GRAPHICS, INC.
Form 10-Q
Notes to Unaudited
Consolidated Financial Statements
September 30, 1999
Note 7. The following table reconciles the numerator and denominator of
the basic and diluted earnings per share computations shown on the
Consolidated Statement of Operations and Comprehensive Income for the
three months ending September 30, 1999 and 1998:
1999 1998
----------- ------------
Net Income/(loss) $ 24,934 $ (138,798)
Weighted average
shares outstanding - Basic 1,344,078 1,064,478
Dilutive effect of warrants 56,325 --
Weighted average
shares outstanding - Diluted 1,400,403 1,064,478
Net income/(loss) per share - Basic $0.02 ($0.13)
Net income/(loss) per share - Diluted $0.02 ($0.13)
</PAGE>
<PAGE>
-11-
AUTO-GRAPHICS, INC.
Form 10-Q
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations.
FINANCIAL CONDITION
December 31, 1998 to September 30, 1999
Liquidity and capital resources. Working capital increased
$441,000 as a result of a decline in accounts receivable of $615,000 due
to lower sales and improved collections, and receipt of income tax refunds.
The average collection period for accounts receivable decreased from 66 days
at December 31, 1998 to 54 days at September 30, 1999. Net cash provided by
operations increased approximately $1,131,000 to $1,406,000 year-to-date
through the third quarter of 1999 from $275,000 through the third quarter of
1998 due primarily to improved profitability, higher depreciation and
amortization, receipt of tax refunds, and improved collection of accounts
receivable on lower net sales compared to the same period in the prior year.
Capital expenditures year-to-date increased to $937,000 through the third
quarter of 1999 up from $744,000 through the third quarter of 1998. Long-
term debt declined by $48,000 as a result of principal payments on term debt.
In May of 1999, the Company initiated a private placement offering
of its Common Stock for $2.50 per share. Shares offered and sold in the
offering were classified as restricted stock meaning that these shares could
not be sold in the public trading market for the Company's stock for a
minimum period of one year. At September 30, 1999, a total of 300,400 shares
had been sold by the Company for gross proceeds of $751,000 of which $641,000
(net of offering expenses) has been reflected in stockholder's equity. The
offering was concluded in October 1999 with a total of 551,400 shares sold,
increasing total shares outstanding to 1,595,078, for gross proceeds of
$1,378,500. The Company intends to use the proceeds from the private
placement offering primarily to fund further development of the Company's
Internet infrastructure, market and product development of the Company's new
product Internet initiatives, and working capital and not for debt repayment.
In September 1999, the Company concluded the renewal of its credit
facilities through June 1, 2000 with its bank, Wells Fargo Bank (See Part II
- - Exhibits). The Company has a revolving credit facility with maximum
availability of $1,000,000 ($1,000,000 available at September 30, 1999),
secured by accounts receivable, and renewable annually. Management believes
that the current line of credit should be sufficient to handle the Company's
cyclical working capital needs. The Company also maintains a capital line of
credit facility with a maximum availability of $3,000,000 (fully utilized at
September 30, 1999), secured by substantially all of the Company's capital
assets, and renewable annually. Management believes that increased credit
availability will not be required to finance planned capital expenditures in
1999, which are estimated at $1,200,000, to be used to expand the Company's
Internet infrastructure to better accommodate the growing number of
libraries, and resulting increasing volume of transactions, using the
Company's Internet/Web products. The new hardware and software systems being
installed will further enable the Company to offer expanded web-hosting and
e-business services. In 1997, the Company obtained an additional term credit
facility of $750,000 used to fund the 1997 acquisition of the Company's
Canadian subsidiary. The balance outstanding at June 30, 1999 was $375,000
</PAGE>
<PAGE>
-12-
AUTO-GRAPHICS, INC.
Form 10-Q
with monthly principal amortization terms of $16,000 for ten months followed
by a balloon payment of $215,000 on June 1, 2000. These credit facilities
also carry an interest rate of prime plus one percent, plus a commitment fee
of approximately one percent and no compensatory balance requirements. The
Company and it's bank have adopted new financial ratio loan covenants
effective June 30, 1999 and the Company was in compliance with these revised
loan covenants in both the second quarter ending June 30, 1999 and the third
quarter ending September 30, 1999. The Company was timely in all principal,
interest and fee payments to the bank through September 30,1999 and
anticipates timely payments in the balance of 1999.
The Company's capital resources are available for use as working
capital, for capital investments and, although less likely for the immediate
future, possible acquisitions of businesses, products or technologies
complementary to the Company's business. Management believes that cash
reserves, cash flow from operations and the proceeds from the private
placement offering together with the revised and renewed credit facility will
be sufficient to fund operations in 1999 and provide financing for planned
1999 capital expenditures. The Company believes that it is important to
continue to invest in Internet/Web capability for the foreseeable future.
Accordingly in 2000, and thereafter, the Company may and likely will require
additional financing to continue to develop and refine its Internet/Web line
of products and to seek to expand the market for these products. There can
be no assurance, however, that any additional financing will be available or
will be available on terms favorable to the Company.
This Report includes forward-looking statements which reflect the
Company's current views with respect to future events and financial
performance. The Company undertakes no obligation to publicly update or
revise any forward-looking statements, whether as a result of new
information, future events or otherwise.
</PAGE>
<PAGE>
-13-
AUTO-GRAPHICS, INC.
Form 10-Q
RESULTS OF OPERATIONS
First Nine Months 1999 as Compared to First Nine Months 1998
Net sales decreased $748,000 or 11% to $5,928,000. The net sales
decline is due to shrinking publishing composition sales and lower demand for
library services in Canada and international markets (Japan).
Cost of sales decreased $710,000 or 17%. Cost of sales as a percent of
sales declined from 62% in 1998 to 58% in 1999. Significant factors in the
decreased cost of sales include a continuing shift toward the Company's new
lower cost Internet products.
Selling, general and administrative expenses decreased $154,000 or 6%.
As a percentage of sales, these expenses increased from 36% in 1998 to 38% in
1999 primarily due to the lower sales levels.
Income from operations increased $116,000 or 77% to $268,000 in 1999 due
primarily to lower costs and expenses.
Interest expense/other decreased $71,000 or 25% on lower bank borrowings
and foreign exchange gains.
Net income increased $128,000 to $57,000 in 1999, up from a loss of
$77,000 in 1998, due primarily to lower costs and expenses and a more
profitable sales mix.
Net income per share increased from ($0.13) per share in 1998 to $0.05
per share in 1999 due primarily to lower costs and expenses offset by lower
sales and an increase in the shares outstanding as a result of the sales of
additional shares in the recently completed private placement offering (See
Note 2).
Third Quarter 1999 as Compared to Third Quarter 1998
Net sales decreased $89,000 or 4% to $1,905,000. The net sales decline
was due to shrinking publishing composition sales and lower demand for
library services in Canada.
Cost of sales decreased $226,000 or 17%. Cost of sales as a percent of
sales declined from 66% in 1998 to 57% in 1999. Significant factors in the
decreased cost of sales include a continuing shift toward the Company's new
lower cost Internet products.
Selling, general and administrative expenses decreased $118,000 or 14%.
As a percent of sales, these expenses decreased from 42% in 1998 to 37% in
1999.
Income from operations increased $256,000 to $109,000 in 1999 due
primarily to lower costs and expenses.
Interest expense/other was $84,000 in 1999 down from $106,000 in 1998 on
lower bank borrowings and foreign exchange gains.
Net income increased $164,000 to $25,000 in 1999, up from a loss of
$139,000 in 1998, due primarily to lower costs and expenses and a more
profitable sales mix.
Net income per share increased from ($0.13) per share in 1998 to $0.02
per share in 1999 due primarily to lower costs and expenses and an increase
in the shares outstanding as a result of the sales of additional shares in
the recently completed private placement offering (See Note 2).
</PAGE>
<PAGE>
-14-
AUTO-GRAPHICS, INC.
Form 10-Q
PART II - OTHER INFORMATION
Item 1. Legal Proceedings. None
Item 2. Changes in Securities.
(a) Securities sold: From May 1999 through September 30, 1999, the
Company sold 300,400 shares of its Common Stock in a private
placement offering (See Note 2).
(b) Underwriters and other Purchasers: No underwriter was employed
in the offering. The shares were sold to private investors,
executives and senior managers of the Company.
(c) Consideration: Securities sold for cash had an aggregate
offering price of $751,000 with no underwriting discounts or
commissions.
(d) Exemption from registration claimed: Regulation D of the
Federal Securities Act of 1933, as amended, covering the offer
and sale to a limited number of private investors.
(e) Terms of conversion or exercise: Not applicable.
Item 3. Defaults upon Senior Securities. None
Item 4. Submission of Matters to a Vote of Security Holders. None
Item 5. Other Information - Shareholder Proxy Proposals.
Any shareholder of the Company desiring to have a proposal considered
for inclusion in the Company's 2000 proxy solicitation material must,
in addition to other applicable requirements, set forth such proposal
in writing and file it with the Secretary of the Company on or before
January 1, 2000. The Board of Directors of the Company will review
any such proposals from shareholders received by that date and will
determine whether any such proposals are to be included in the
Company's 2000 proxy solicitation materials.
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits:
10.32 Sixth Amendment to Credit Agreement between Auto-
Graphics, Inc. and Wells Fargo Bank dated June 30, 1999.
10.33 Continuing Guaranty between Auto-Graphics, Inc. and
Wells Fargo Bank dated June 30, 1999.
10.34 Amendment to Continuing Guaranty between Auto-
Graphics, Inc. and Wells Fargo Bank dated June 30, 1999.
10.35 Revolving Line of Credit Note (working capital)
$1,000,000 between Auto-Graphics, Inc. and Wells Fargo
Bank dated June 30, 1999.
10.36 Revolving Line of Credit Note (capital) $3,000,000
between Auto-Graphics, Inc. and Wells Fargo Bank dated
dated June 30, 1999.
10.37 Term Note $750,000 between Auto-Graphics, Inc. and Wells
Fargo Bank dated June 30, 1999.
</PAGE>
<PAGE>
-15-
AUTO-GRAPHICS, INC.
Form 10-Q
PART II - OTHER INFORMATION
(b) The Company filed a Report on Form 8-K on April 30, 1999
transmitting certain exhibits to the Form 10-K Report for the
year ended December 31, 1998. These exhibits were separated
from the 10-K prior to the filing thereof and were subsequently
refiled during the period covered by this Report.
(c) The Company filed a Report on Form 8-K dated July 1999 and
filed on August 9, 1999 indicating a potential change of
control of the registrant as a result of an option granted
by the Company's principal officer/shareholder to a third
party. The exhibits filed with the Report were: Option
Agreement (Exhibit 10.30) and Employment Agreement (Exhibit
10.31).
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this Report to be signed on its behalf by
the undersigned thereunto duly authorized.
AUTO-GRAPHICS, INC.
Date 11/15/99 ss/ Robert S. Cope
Robert S. Cope, President
and Treasurer
Date 11/15/99 ss/ Daniel E. Luebben
Daniel E. Luebben, Chief Financial Officer
and Secretary
</PAGE>
<PAGE>
-14-
AUTO-GRAPHICS, INC.
Form 10-Q
PART II - OTHER INFORMATION
Item 1. Legal Proceedings. None
Item 2. Changes in Securities.
(a) Securities sold: From May 1999 through September 30, 1999, the
Company sold 300,400 shares of its Common Stock in a private
placement offering (See Note 2).
(b) Underwriters and other Purchasers: No underwriter was employed
in the offering. The shares were sold to private investors,
executives and senior managers of the Company.
(c) Consideration: Securities sold for cash had an aggregate
offering price of $751,000 with no underwriting discounts or
commissions.
(d) Exemption from registration claimed: Regulation D of the
Federal Securities Act of 1933, as amended, covering the offer
and sale to a limited number of private investors.
(e) Terms of conversion or exercise: Not applicable.
Item 3. Defaults upon Senior Securities. None
Item 4. Submission of Matters to a Vote of Security Holders. None
Item 5. Other Information - Shareholder Proxy Proposals.
Any shareholder of the Company desiring to have a proposal considered
for inclusion in the Company's 2000 proxy solicitation material must,
in addition to other applicable requirements, set forth such proposal
in writing and file it with the Secretary of the Company on or before
January 1, 2000. The Board of Directors of the Company will review
any such proposals from shareholders received by that date and will
determine whether any such proposals are to be included in the
Company's 2000 proxy solicitation materials.
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits:
10.32 Sixth Amendment to Credit Agreement between Auto-
Graphics, Inc. and Wells Fargo Bank dated June 30, 1999.
10.33 Continuing Guaranty between Auto-Graphics, Inc. and
Wells Fargo Bank dated June 30, 1999.
10.34 Amendment to Continuing Guaranty between Auto-
Graphics, Inc. and Wells Fargo Bank dated June 30, 1999.
10.35 Revolving Line of Credit Note (working capital)
$1,000,000 between Auto-Graphics, Inc. and Wells Fargo
Bank dated June 30, 1999.
10.36 Revolving Line of Credit Note (capital) $3,000,000
between Auto-Graphics, Inc. and Wells Fargo Bank dated
dated June 30, 1999.
10.37 Term Note $750,000 between Auto-Graphics, Inc. and Wells
Fargo Bank dated June 30, 1999.
</PAGE>
<PAGE>
-15-
AUTO-GRAPHICS, INC.
Form 10-Q
PART II - OTHER INFORMATION
(b) The Company filed a Report on Form 8-K on April 30, 1999
transmitting certain exhibits to the Form 10-K Report for the
year ended December 31, 1998. These exhibits were separated
from the 10-K prior to the filing thereof and were subsequently
refiled during the period covered by this Report.
(c) The Company filed a Report on Form 8-K dated July 1999 and
filed on August 9, 1999 indicating a potential change of
control of the registrant as a result of an option granted
by the Company's principal officer/shareholder to a third
party. The exhibits filed with the Report were: Option
Agreement (Exhibit 10.30) and Employment Agreement (Exhibit
10.31).
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this Report to be signed on its behalf by the
undersigned thereunto duly authorized.
AUTO-GRAPHICS, INC.
Date 11/15/99
Robert S. Cope, President
and Treasurer
Date 11/15/99
Daniel E. Luebben, Chief Financial Officer
and Secretary
</PAGE>
EXHIBIT 10.32
SIXTH AMENDMENT TO CREDIT AGREEMENT
THIS SIXTH AMENDMENT TO CREDIT AGREEMENT (this
Amendment) is entered into as of June 30, 1999 by and
between AUTO-GRAPHICS, INC., a California corporation
(Borrower), and WELLS FARGO BANK, NATIONAL ASSOCIATION
(Bank).
RECITALS
A. Borrower is currently indebted to Bank pursuant to
the terms and conditions of that certain Credit Agreement
between Borrower and Bank dated as of May 12, 1997 as
amended from time to time (Credit Agreement).
B. Pursuant to the Credit Agreement, Borrower remains
indebted to Bank under a Line of Credit in the maximum
principal amount of One Million Two-Hundred Fifty Thousand
Dollars ($1,250,000.00) (Line of Credit) which is
evidenced by that certain promissory note executed by
Borrower in favor of Bank in the amount of the Line of
Credit and dated as of May 12, 1997 (Prior Line of Credit
Note). The Line of Credit matured and became due and
payable in full on June 1, 1999 and as of the date hereof,
the outstanding principal balance under the Line of Credit
is $191,807.04, plus accrued but unpaid interest.
C. Pursuant to the Credit Agreement, Borrower remains
indebted to Bank under a term loan in the maximum principal
amount of Three Million Dollars ($3,000,000.00) (Equipment
Line of Credit) which is evidenced by that certain
promissory note executed by Borrower in favor of Bank in the
amount of the Equipment Line of Credit and dated as of May
12, 1997 (Prior Equipment Line of Credit Note). The
Equipment Line of Credit matured and become due and payable
in full on June 1, 1999 and as of the date hereof, the
outstanding principal balance under Equipment Line of Credit
is $3,000,000.00, plus accrued but unpaid interest.
D. Pursuant to the Credit Agreement, Borrower remains
indebted to Bank under a term loan in the original principal
amount of Three Hundred Seventy-five Thousand Dollars
($375,000.00) (Term Loan) which is evidenced by that
certain promissory note executed by Borrower in favor of
Bank in the amount of the Term Loan and dated as of June 1,
1998 (Prior Term Note). As of the date hereof, the
outstanding principal balance under the Term Note is
$374,999.99, plus accrued but unpaid interest.
E. Borrower has requested that Bank extend the
maturity dates of the Line of Credit and the Equipment Line
of Credit and replace the Prior Term Note, and Bank has
agreed to the foregoing subject to the terms and conditions
set forth herein.
NOW THEREFORE, for valuable consideration, the receipt
and sufficiency of which are hereby acknowledged, Bank and
Borrower hereby agree that the Credit Agreement shall be
amended as follows to reflect said changes; provided,
however, that nothing shall terminate any security interest
or guaranties in favor of Bank and all such security
interests and guaranties shall continue in full force and
effect.
1. Section 1.1 (a) of the Credit Agreement is hereby
deleted in its entirety and the following substituted
therefor:
(a) Line of Credit. Subject to
the terms and conditions of this
Agreement, Bank hereby agrees to make
advances to Borrower from time to time
up to and including June 1, 2000, not to
exceed at any time the aggregate
principal amount of One Million Dollars
($1,000,000.00), the proceeds of which
shall be used for working capital.
Borrower's obligation to repay advances
under the Line of Credit shall be
evidenced by a promissory note
substantially in the form of Exhibit A
attached hereto (Line of Credit Note),
all terms of which are incorporated
herein by this reference.
The foregoing change shall become effective upon the
execution and delivery to Bank of a promissory note
substantially in the form of Exhibit A attached hereto
(which promissory note shall replace and be deemed the Line
of Credit Note defined in and made pursuant to the Credit
Agreement) and all other contracts, instruments and
documents required by Bank to evidence such change;
provided, however, that outstanding advances under the Line
of Credit heretofore provided Borrower by Bank in connection
with the Prior Line of Credit Note shall be deemed
outstanding advances under the Line of Credit Note in effect
hereby.
2. Section 1.2 (a) of the Credit Agreement is hereby
amended by deleting June 1, 1999 as the last day on which
Bank will make advances under the Equipment Line of Credit,
and by substituting for said date June 1, 2000, with such
change to be effective upon the execution and delivery to
Bank of a promissory note substantially in the form of
Exhibit B attached hereto (which promissory note shall
replace and be deemed the Equipment Line of Credit Note
defined in and made pursuant to the Credit Agreement) and
all other contracts, instruments and documents required by
Bank to evidence such change; provided, however, that all
outstanding advances under the Equipment Line of Credit
heretofore provided Borrower by Bank in connection with the
Prior Equipment Line of Credit Note shall be deemed
outstanding advances under the Equipment Line of Credit Note
in effect hereby.
3. Borrower's obligation to repay the outstanding
principal balance under Term Loan shall be evidenced by a
new promissory note substantially in the form of Exhibit C
attached hereto (which promissory note shall replace the
Prior Term Note and be deemed the Term Note defined in and
made pursuant to Section 1.3 of the Credit Agreement) with
such change to be effective upon Borrower's execution and
delivery of the new promissory note and all other contracts,
instruments and documents and documents required by Bank to
evidence such change.
4. Section 1.7 of the Credit Agreement is hereby
deleted in its entirety, and the following substituted
therefor:
1.7. GUARANTEES. All indebtedness
of Borrower to Bank shall be guaranteed
by Robert S. Cope in the principal
amount of up to $4,375,000.00, as
evidenced by and subject to the terms of
a guaranty in form and substance
satisfactory to Bank.
All indebtedness of Borrower to
Bank shall continue to be guaranteed by
A-G Canada pursuant to the terms of that
certain Guaranty in favor of Bank
executed by A-G Canada and dated as of
October 31, 1997.
5. Section 4.8 (a) of the Credit Agreement is hereby
deleted in its entirety, and the following substituted
therefor:
(a) EBITDA not less than
$270,000.00 per fiscal quarter, measured
each fiscal quarter end and fiscal year
end, on a cumulative basis, with
EBITDA defined as net profit before
tax plus interest expense (net of
capitalized interest expense),
depreciation expense and amortization
expense.
6. Section 4.8 (b) of the Credit Agreement is hereby
deleted in its entirety, and the following substituted
therefor:
(b) Operating Income not less than $1.00
per fiscal quarter, measured each fiscal quarter
end and fiscal year end, on a cumulative basis,
with Operating Income defined as net sales, less
cost of sales, sales and administrative expenses
and excluding expenses paid or incurred in
connection with raising New Capital. As used
herein, New Capital shall mean cash and cash
equivalents received and deposited by Borrower on
or after June 30, 1999 in the form of a capital
contribution in immediately available funds (prior
to the deduction of any and all selling
commissions and other costs and expenses,
including legal fees attributable to the
offering).
7. A new Section 4.8 (c) is hereby added to the Credit
Agreement, as follows:
(c) Tangible Net Worth shall not be less
than $1,573,000.00 as of each fiscal quarter end
and as of fiscal year end, with Tangible Net
Worth defined as the aggregate of total
stockholders' equity plus subordinated debt less
any intangible assets. For purposes of this
Agreement, capitalized software development and
acquisition cost is considered a tangible asset.
8. Sections 4.8 (d) and 4.8(e) of the Credit Agreement
are hereby deleted in their entirety.
9. The following is hereby added to the Credit Agreement
as Section 4.11:
SECTION 4.11. WAIVER. Borrower hereby
waives all of its rights under California Civil
Code Section 2822, which provides as follows:
(a) The acceptance, by a creditor, of
anything in partial satisfaction of an
obligation, reduces the obligation of a
surety thereof, in the same measure as
that of the principal, but does not
otherwise affect it. However, if the
surety is liable upon only a portion of
an obligation and the principal provides
partial satisfaction of the obligation,
the principal may designate the portion
of the obligation that is to be
satisfied.
(b) For purposes of this section and Section
2819, an agreement by a creditor to accept from
the principal debtor a sum less than the balance
owed on the original obligation, without the prior
consent of the surety and without any other change
to the underlying agreement between the creditor
and principal debtor, shall not exonerate the
surety for the lesser sum agreed upon by the
creditor and principal debtor.
10. Section 6.1(i) of the Credit Agreement is hereby deleted
in its entirety.
11. Borrower shall pay to Bank, in immediately available funds,
a non-refundable commitment fee in an amount equal to Forty Three-
Thousand Seven-Hundred Fifty Dollars ($43,750.00) which fee shall
be due in three installments as follows: (a) Fifteen Thousand
Dollars ($15,000.00) shall be due and payable upon Borrower's
execution and delivery to Bank of this Amendment; (b) Fifteen
Thousand Dollars ($15,000.00) shall be due and payable thirty (30)
days after Borrower's execution and delivery to Bank of this
Amendment; and (c) Thirteen Thousand Seven Hundred Fifty Dollars
($13,750.00) shall be due and payable sixty (60) days after
Borrower's execution and delivery to Bank of this Amendment.
Borrower further acknowledges and agrees that the commitment
fee shall be fully earned by Bank upon Borrower's execution and
delivery to Bank of this Amendment.
12. The obligation of Bank to amend the terms and conditions
of the Credit Agreement as set forth herein is subject to the
fulfillment to Bank's satisfaction of all of the following
conditions:
(a) Bank shall have received, in form and substance
satisfactory to Bank, each of the following:
(i) This Amendment, the Line of Credit Note,
Equipment Line of Credit and Term Note.
(ii) Certificate of Incumbency.
(iii) Corporate Resolution: Borrowing.
(iv) Continuing Guaranty from Robert S. Cope.
(v) Guarantors Consent, Reaffirmation and
General Release attached hereto (A-G Canada).
(vi) Guarantor's Consent and General Release
attached hereto (Robert S. Cope).
(vii) Such other documents as Bank may require
under any other section of this Amendment.
(b) Borrower shall have delivered to Bank all amounts due
under Paragraph 11 (a) above.
13. General Release. In consideration of the benefits
provided to Borrower under the terms and provisions hereof,
Borrower and each guarantor hereunder hereby agree as follows
(General Release):
(a) Borrower and each guarantor hereunder, for itself
and on behalf of its respective successors and assigns, do
hereby release, acquit and forever discharge Bank, all of
Bank's predecessors in interest, and all of Bank's past and
present officers, directors, attorneys, affiliates,
employees and agents, of and from any and all claims,
demands, obligations, liabilities, indebtedness, breaches of
contract, breaches of duty or of any relationship, acts,
omissions, misfeasance, malfeasance, causes of action,
defenses, offsets, debts, sums of money, accounts,
compensation, contracts, controversies, promises, damages,
costs, losses and expenses, of every type, kind, nature,
description or character, whether known or unknown,
suspected or unsuspected, liquidated or unliquidated, each
as though fully set forth herein at length (each, a
Released Claim and collectively, the Released Claims),
that Borrower or any guarantor hereunder now has or may
acquire as of the later of: (i) the date this Amendment
becomes effective through the satisfaction (or waiver by
Bank) of all conditions hereto; or (ii) the date that
Borrower and each guarantor hereunder have executed and
delivered this Amendment to Bank (hereafter, the Release
Date), including without limitation, those Released Claims
in any way arising out of, connected with or related to any
and all prior credit accommodations, if any, provided by
Bank, or any of Bank's predecessors in interest, to Borrower
or any guarantor hereunder, and any agreements, notes or
documents of any kind related thereto or the transactions
contemplated thereby or hereby, or any other agreement or
document referred to herein or therein.
(b) Borrower and each guarantor hereunder hereby
acknowledge, represent and warrant to Bank as follows:
(i) Borrower and such guarantor understand the
meaning and effect of Section 1542 of the California Civil
Code which provides:
Section 1542. GENERAL RELEASE; EXTENT. A
GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH
THE CREDITOR DOES NOT KNOW OR SUSPECT TO EXIST IN
HIS FAVOR AT THE TIME OF EXECUTING THE RELEASE,
WHICH IF KNOWN BY HIM MUST HAVE MATERIALLY
AFFECTED HIS SETTLEMENT WITH THE DEBTOR.
(ii) With regard to Section 1542 of the California
Civil Code, Borrower and each such guarantor agree to assume
the risk of any and all unknown, unanticipated or
misunderstood defenses and Released Claims which are
released by the provisions of this General Release in favor
of Bank, and Borrower and each such guarantor hereby waive
and release all rights and benefits which they might
otherwise have under Section 1542 of the California Civil
Code with regard to the release of such unknown,
unanticipated or misunderstood defenses and Released Claims.
(c) Each person signing below on behalf of Borrower or
any guarantor hereunder acknowledges that he or she has read
each of the provisions of this General Release. Each such
person fully understands that this General Release has
important legal consequences, and each such person realizes
that they are releasing any and all Released Claims that
Borrower or any such guarantor may have as of the Release
Date. Borrower and each guarantor hereunder hereby
acknowledge that each of them has had an opportunity to
obtain a lawyer's advice concerning the legal consequences
of each of the provisions of this General Release.
(d) Borrower and each guarantor hereunder hereby
specifically acknowledge and agree that: (i) none of the
provisions of this General Release shall be construed as or
constitute an admission of any liability on the part of
Bank; (ii) the provisions of this General Release shall
constitute an absolute bar to any Released Claim of any
kind, whether any such Released Claim is based on contract,
tort, warranty, mistake or any other theory, whether legal,
statutory or equitable; and (iii) any attempt to assert a
Released Claim barred by the provisions of this General
Release shall subject Borrower and each guarantor hereunder
to the provisions of applicable law setting forth the
remedies for the bringing of groundless, frivolous or
baseless claims or causes of action.
14. Except as specifically provided herein, all terms
and conditions of the Credit Agreement remain in full force
and effect, without waiver or modification. All terms
defined in the Credit Agreement shall have the same meaning
when used in this Amendment. This Amendment and the Credit
Agreement shall be read together, as one document.
15. Borrower hereby remakes all representations and
warranties contained in the Credit Agreement and reaffirms
all covenants set forth therein. Borrower further certifies
that as of the date of this Amendment there exists no Event
of Default as defined in the Credit Agreement, nor any
condition, act or event which with the giving of notice or
the passage of time or both would constitute any such Event
of Default.
IN WITNESS WHEREOF, the parties hereto have caused this
Amendment to be executed as of the day and year first
written above.
AUTO-GRAPHICS, INC. WELLS FARGO BANK,
NATIONAL ASSOCIATION
By: ss/Robert S. Cope By: ss/Darryl S. Hallie
Robert S. Cope Darryl S. Hallie
Title:_President/CEO Vice President
</PAGE>
<PAGE>
GUARANTOR'S CONSENT, REAFFIRMATION AND GENERAL RELEASE
The undersigned guarantor of all indebtedness of Auto-
Graphics, Inc. to Wells Fargo Bank, National Association
hereby: (i) consents to the foregoing Amendment; (ii)
reaffirms its obligations under its Guaranty dated as of
October 31, 1997; (iii) reaffirms its waivers of each and
every one of the defenses to such obligations as set forth
in its Guaranty; (iv) reaffirms that its obligations under
its Guaranty are separate and distinct from the obligations
of any other party under said Amendment and the other Loan
Documents described therein; and (v) agrees to join in and
be bound by all of the terms and provisions of the General
Release contained in Paragraph 13 thereof.
GUARANTOR:
A-G CANADA LTD.
By: ss/Robert S. Cope
Robert S. Cope
Title: Director
</PAGE>
<PAGE>
GUARANTOR'S CONSENT AND GENERAL RELEASE
The undersigned guarantor of all indebtedness of Auto-
Graphics, Inc. to Wells Fargo Bank, National Association
hereby, subject to the terms and conditions of the
Continuing Guaranty, including the Addendum thereto,
executed concurrently herewith: (i) consents to the
foregoing Amendment; and (ii) agrees to join in and be bound
by all of the terms and provisions of the General Release
contained in Paragraph 13 thereof.
GUARANTOR:
Robert S. Cope
</PAGE>
EXHIBIT 10.33
CONTINUING GUARANTY
TO: WELLS FARGO BANK. NATIONAL ASSOCIATION
1. GUARANTY; DEFINITIONS. In consideration of the credit or
other financial accommodation described herein and extended or
made to AUTO-GRAPHICS, INC. (Borrowers), or any of them, by WELLS
FARGO BANK, NATIONAL ASSOCIATION (Bank), and for other valuable
consideration, the undersigned ROBERT S. COPE (Guarantor),
jointly and severally unconditionally guarantees and promises to
pay to Bank or order, on demand in lawful money of the United
States of America and in immediately available funds, any and all
Indebtedness of any of the Borrowers to Bank. The term
Indebtedness is used herein in its most comprehensive sense and
includes any and all advances, debts, obligations and liabilities
of Borrowers, or any of them, heretofore. now or hereafter made,
incurred or created. whether voluntary or involuntary and however
arising, whether due or not due, absolute or contingent,
liquidated or unliquidated, determined or undetermined, and
whether Borrowers may be liable individually or jointly with
others, or whether recovery upon such Indebtedness may be or
hereafter becomes unenforceable.
2. MAXIMUM LIABILITY; SUCCESSIVE TRANSACTIONS; REVOCATION;
OBLIGATION UNDER OTHER GUARANTIES. The liability of Guarantor
shall not exceed at any one time the sum of $4,375,000.00 for
principal, plus all interest thereon and costs and expenses
pertaining to the enforcement of this Guaranty and/or the
collection of the indebtedness of any of the Borrowers to Bank.
Notwithstanding the foregoing, Bank may permit the Indebtedness
of Borrowers to exceed Guarantor's liability. This is a
continuing guaranty and all rights, powers and remedies hereunder
shall apply to all past, present and future Indebtedness of each
of the Borrowers to Bank, including that arising under successive
transactions which shall either continue the Indebtedness,
increase or decrease it, or from time to time create new
indebtedness after all or any prior Indebtedness has been
satisfied and notwithstanding the death, incapacity, dissolution,
liquidation or bankruptcy of any Borrowers or Guarantor or any
other event or proceeding affecting any of the Borrowers or
Guarantor. This Guaranty shall not apply to any new Indebtedness
created after actual receipt by Bank of written notice of its
revocation as to such new Indebtedness; provided however, that
loans or advances made by the Bank to any of the Borrowers after
revocation under the commitments existing prior to receipt by
Bank of such revocation, and extensions, renewals or
modifications, of any kind, of indebtedness incurred by any of
the Borrowers or committed by Bank prior to receipt by Bank of
such revocation, shall not be considered new Indebtedness. Any
such notice must be sent to Bank by registered US mail, postage
prepaid, addressed to its office at 333 South Grand Ave. 9th
Floor, Los Angeles, CA 90071, or at such other address as Bank
shall from time to time designate. Any payment by Guarantor with
respect to the Indebtedness shall not reduce Guarantor's maximum
obligation hereunder unless written notice to that effect is
actually received by the Bank at or prior to the time of such
payment. The obligations of Guarantor hereunder shall be in
addition to any obligations of Guarantor under any other
guaranties of any liabilities or obligations of any of the
Borrowers or any other persons heretofore or hereafter given to
Bank unless said other guaranties are expressly modified or
revoked in writing; and this Guaranty shall not, unless expressly
herein provided, affect or invalidate any such other guaranties.
3. OBLIGATIONS JOINT AND SEVERAL; SEPARATE ACTIONS; WAIVER
OF STATUTE OF LIMITATIONS; REINSTATEMENT OF LIABILITY. The
obligations hereunder are joint and several and independent of
the obligations of Borrowers, and a separate action or actions
may be brought and prosecuted against Guarantor whether action is
brought against any of the Borrowers or any other person, or
whether any of the Borrowers or any other person is joined in any
such action or actions. Guarantor acknowledges that this
Guaranty is absolute and unconditional, there are no conditions
precedent to the effectiveness of this Guaranty, and this
Guaranty is in full force and effect and is binding on Guarantor
as of the date written below, regardless of whether Bank obtains
collateral or any guaranties from others or takes any other
action contemplated by Guarantor. Guarantor waives the benefit
of any statute of limitations affecting Guarantor's liability
hereunder or the enforcement thereof, and Guarantor agrees that
any payment of any Note Indebtedness or other act which shall
toll any statute of limitations applicable thereto shall
similarly operate to toll such statute of limitations applicable
to Guarantor's liability hereunder. The liability of Guarantor
hereunder shall be reinstated and revived and the rights of Bank
shall continue if and to the extent that for any reason any
amount at any time paid on account of any Note Indebtedness
guaranteed hereby is rescinded or must otherwise be restored by
Bank, whether as a result of any proceedings in bankruptcy or
reorganization or otherwise, all as though such amount had not
been paid. The determination as to whether any amount so paid
must be rescinded or restored shall be made by Bank in its sole
discretion; provided however, that if Bank chooses to contest any
such matter at the request of Guarantor, Guarantor agrees to
indemnify and hold Bank harmless from and against all costs and
expenses, including reasonable attorneys' fees, expended or
incurred by Bank in connection therewith, including without
limitation, in any litigation with respect thereto.
4. AUTHORIZATIONS TO BANK. Guarantor authorizes Bank,
without notice to or demand an Guarantor. and without affecting
Guarantor's liability hereunder, from time to time to: (a) alter,
compromise, renew, extend, accelerate or otherwise change the
time for payment of, or otherwise change the terms of, the Note
Indebtedness or any portion thereof, including increase or
decrease of the rate of interest thereon; (b) take and hold
security for the payment of this Guaranty or the Note
Indebtedness or any portion thereof, and exchange, enforce,
waive, subordinate or release any such security; (c) apply such
security and direct the order or manner of sale thereof,
including without limitation, a non-judicial sale permitted by
the terms of the controlling security agreement or deed of trust,
as Bank in its discretion may determine; (d) release or
substitute any one or more of the endorsers or any other
guarantors of the Note Indebtedness, or any portion thereof, or
any other party thereto; and (e) apply payments received by Bank
from any of the Borrowers to any Indebtedness of any of the
Borrowers to Bank, in such order as Bank shall determine in its
sole discretion, whether or not such Indebtedness is covered by
this Guaranty, and Guarantor hereby waives any provision of law
regarding application of payments which specifies otherwise.
Bank may without notice assign this Guaranty in whole or in part.
Upon Bank's request, Guarantor agrees to provide to Bank copies
of Guarantor's financial statements.
5. REPRESENTATIONS AND WARRANTIES. Guarantor represents and
warrants to Bank that: (a) this Guaranty is executed at
Borrowers' request; (b) Guarantor shall not, without Bank's prior
written consent, sell, lease assign, encumber, hypothecate,
transfer or otherwise dispose of all or a substantial or material
part of Guarantors assets other than in the ordinary course of
Guarantor's business; (c) Bank has made no representation to
Guarantor as to the creditworthiness of any of the Borrowers; and
(d) Guarantor has established adequate means of obtaining from
each of the Borrowers on a continuing basis financial and other
information pertaining to Borrowers' financial condition.
Guarantor agrees to keep adequately informed from such means of
any facts, events or circumstances which might in any way affect
Guarantor's risks hereunder, and Guarantor further agrees that
Bank shall have no obligation to disclose to Guarantor any
information or material about any of the Borrowers which is
acquired by Bank in any manner.
6. GUARANTOR'S WAIVERS.
(a) Guarantor waives any right to require Bank to: (i) proceed
against any of the Borrowers or any other person; (ii) marshal
assets or proceed against or exhaust any security held from any
of the Borrowers or any other person; (iii) give notice of the
terms, time and place of any public or private sale of personal
property security held from any of the Borrowers or any other
person, or otherwise comply with the provisions of Section 9504
of the California Uniform Commercial Code; (iv) take any action
or pursue any other remedy in Bank's power, or (v) make any
presentment or demand for performance, or give any notice of
nonperformance, protest, notice of protest or notice of dishonor
hereunder or in connection with any obligations or evidences of
indebtedness held by Bank as security for or which constitute in
whole or in part the Note Indebtedness guaranteed hereunder, or
in connection with the creation of new or additional
Indebtedness.
(b) Guarantor waives any defense to its obligations hereunder
based upon or arising by reason of: (i) any disability or other
defense of any of the Borrowers or any other person; (ii) the
cessation or limitation from any cause whatsoever, other than
payment in full, of the Note Indebtedness; (iii) any lack of
authority of any officer, director, partner, agent or other
person acting or purporting to act on behalf of any of the
Borrowers which is a corporation, partnership or other type of
entity. or any defect in the formation of any such Borrower, (iv)
the application by any of the Borrowers of the proceeds of the
Note Indebtedness for purposes other than the purposes
represented by Borrowers to, or intended or understood by, Bank
or Guarantor, (v) any act or omission by Bank which directly or
indirectly results in or aids the discharge of any of the
Borrowers or any portion of the Note Indebtedness by operation of
law or otherwise, or which in any way impairs or suspends any
rights or remedies of Bank against any of the Borrowers; (vi) any
impairment of the value of any interest in any security for the
Note Indebtedness or any portion thereof, including without
limitation, the failure to obtain or maintain perfection or
recordation of any interest in any such security, the release of
any such security without substitution, and/or the failure to
preserve the value of, or to comply with applicable law in
disposing of, any such security; or (vii) any modification of the
Note Indebtedness, in any form whatsoever, including without
limitation the renewal. extension, acceleration or other change
in time for payment of, or other change in the terms of, the Note
Indebtedness or any portion thereof, including increase or
decrease of the rate of interest thereon. Until all Note
Indebtedness shall have been paid in full, Guarantor shall have
no right of subrogation, and Guarantor waives any right to
enforce any remedy which Bank now has or may hereafter have
against any of the Borrowers or any other person, and waives any
benefit of, or any right to participate in, any security now or
hereafter held by Bank. Guarantor further waives all rights and
defenses Guarantor may have arising out of (A) any election of
remedies by Bank, even though that election of remedies. such as
a non-judicial foreclosure with respect to any security for any
portion of the Note Indebtedness, destroys Guarantor's rights of
subrogation or Guarantor's rights to proceed against any of the
Borrowers for reimbursement, or (B) any loss of rights Guarantor
may suffer by reason of any rights, powers or remedies of any of
the Borrowers in connection with any anti-deficiency laws or any
other laws limiting, qualifying or discharging Borrowers'
Indebtedness, whether by operation of Sections 726, 580a or 580d
of the Code of Civil Procedure as from time to time amended, or
otherwise, including any rights Guarantor may have to a Section
580a fair market value hearing to determine the size of a
deficiency following any trustee's foreclosure sale or other
disposition of any real property security for any portion of the
Indebtedness.
7. BANK'S RIGHTS WITH RESPECT TO GUARANTOR'S PROPERTY IN
BANK'S POSSESSION. In addition to all liens upon and rights of
setoff against the monies, securities or other property of
Guarantor given to Bank by law, Bank shall have a lien upon and a
right of setoff against all monies, securities and other property
of Guarantor now or hereafter in the possession of or on deposit
with Bank, whether held in a general or special account or
deposit or for safekeeping or otherwise, and every such lien and
right of setoff may be exercised without demand upon or notice to
Guarantor. No lien or right of setoff shall be deemed to have
been waived by any act or conduct on the part of Bank, or by any
neglect to exercise such right of setoff or to enforce such lien,
or by any delay in so doing, and every right of setoff and lien
shall continue in full force and effect until such right of
setoff or lien is specifically waived or released by Bank in
writing.
8. SUBORDINATION. Any Indebtedness of any of the Borrowers
now or hereafter held by Guarantor is hereby subordinated to the
obligations of Borrowers to Bank under the Note Indebtedness.
Such Indebtedness of Borrowers to Guarantor is assigned to Bank
as security for this Guaranty and the Note Indebtedness and, if
Bank requests, shall be collected and received by Guarantor as
trustee for Bank and paid over to Bank on account of the Note
Indebtedness but without reducing or affecting in any manner the
liability of Guarantor under the other provisions of this
Guaranty. Any notes or other instruments now or hereafter
evidencing such Indebtedness of any of the Borrowers to Guarantor
shall be marked with a legend that the same are subject to this
Guaranty and, if Bank so requests, shall be delivered to Bank.
Guarantor will, and Bank is hereby authorized in the name of
Guarantor from time to time to, execute and file financing
statements and continuation statements and execute such other
documents and take such other action as Bank deems necessary or
appropriate to perfect preserve and enforce its rights hereunder.
9. REMEDIES; NO WAIVER. All rights, powers and remedies of
Bank hereunder are cumulative. No delay, failure or
discontinuance of Bank in exercising any right, power or remedy
hereunder shall affect or operate as a waiver of such right,
power or remedy; nor shall any single or partial exercise of any
such right, power or remedy preclude, waive or otherwise affect
any other or further exercise thereof or the exercise of any
other right, power or remedy. Any waiver, permit, consent or
approval of any kind by bank of any breach of this Guaranty. or
any such waiver of any provisions or conditions hereof, must be
in writing and shall be effective only to the extent set forth in
writing.
10. COSTS, EXPENSES AND ATTORNEYS' FEES. Guarantor shall pay
to Bank immediately upon demand the full amount of all payments,
advances, charges, costs and expenses, including reasonable
attorneys' fees (to include outside counsel fees and all
allocated costs of Bank's in-house counsel ), expended or
incurred by Bank in connection with the enforcement of any of
Bank's rights, powers or remedies and/or the collection of any
amounts which become due to Bank under this Guaranty, and the
prosecution or defense of any action in any way related to this
Guaranty, whether incurred at the trial or appellate level, in an
arbitration proceeding or otherwise, and including any of the
foregoing incurred in connection with any bankruptcy proceeding
(including without limitation, any adversary proceeding,
contested matter or motion brought by Bank or any other (person)
relating to Guarantor or any other person or entity. All of the
foregoing shall be paid by Guarantor with interest from the date
of demand until paid in full at a rate per annum equal to the
greater of ten percent (10%) or Bank's Prime Rate in effect from
time to time. The Prime Rate is a base rate that Bank from time
to time establishes and which serves as the basis upon which
effective rates of interest are calculated for those loans making
reference thereto.
11. SUCCESSORS; ASSIGNMENT. This Guaranty shall be binding
upon and inure to the benefit of the heirs, executors,
administrators, legal representatives, successors and assigns of
the parties, provided however, that Guarantor may not assign or
transfer any of its interests or rights hereunder without Bank's
prior written consent Guarantor acknowledges that Bank has the
right to sell, assign, transfer, negotiate or grant participation
in all or any part of, or any interest in, the Note Indebtedness
and any obligations with respect thereto, including this
Guaranty. In connection therewith. Bank may disclose all
documents and information which Bank now has or hereafter
acquires relating to Guarantor and/or this Guaranty, whether
furnished by Borrowers, Guarantor or otherwise. Guarantor
further agrees that Bank may disclose such documents and
information to Borrowers.
12. AMENDMENT. This Guaranty may be amended or modified only
in writing signed by Bank Guarantor.
13. OBLIGATIONS OF MARRIED PERSONS. Any married person who
signs this Guaranty as a Guaranty hereby expressly agrees that
recourse may be had against his or her separate property for all
his or her obligate under this Guaranty.
14. APPLICATION OF SINGULAR AND PLURAL. In all cases where
there is but a single Borrower, then all words used herein in the
plural shall be deemed to have been used in the singular where
the context and construction so require; and when there is more
than one Borrower named herein, or when this Guaranty is executed
by more than one Guarantor, the word Borrowers and the word
Guarantor respectively shall mean all or any one more of them as
the context requires.
15. UNDERSTANDING WITH RESPECT TO, WAIVERS; SEVERABILITY OF
PROVISIONS. Guarantor warrants and agrees that each of the
waivers set forth herein is made with Guarantor's full knowledge
of significance and consequences, and that under the
circumstances, the waivers are reasonable and not contrary public
policy or law. If any waiver or other provision of this
Agreement shall be held to be prohibited by or invalid under
applicable public policy or law, such waiver or other provision
shall be ineffective only to the extent of such prohibition or
invalidity, without invalidating the remainder of such waiver or
other provision or any remaining provisions of this Agreement.
16. GOVERNING LAW. This Guaranty shall be governed by and
construed in accordance with the laws of the state of California.
17. ARBITRATION.
(a) Arbitration. Upon the demand of any party, any Dispute
shall be resolved by binding arbitration (except as set forth in
(e) below) in accordance with the terms of this Guaranty. A
Dispute shall mean any action, dispute claim or controversy of
any kind, whether in contract or tort, statutory or common law,
legal or equitable, now existing or hereafter arising under or in
connection with, or in any way pertaining to, this Guaranty and
each other, document, contract and instrument required hereby or
now or hereafter delivered to Bank in connection herewith
(collectively, the Documents), or any past present or future
extensions of credit and other activities, transactions or
obligations of any kind related directly or indirectly to any of
the Documents, including without limitation, any of the foregoing
arising in connection with the exercise of any self-help,
ancillary or other remedies pursuant to any of the Documents.
Any party may by summary proceedings bring an action in court to
compel arbitration of a dispute. Any party who fails or refuses
to submit to arbitration following a lawful demand by any other
party shall bear all costs and expenses incurred by such other
party in compelling arbitration of any Dispute.
(b) Governing Rules. Arbitration proceedings shall be
administered by the American Arbitration Association (AAA) or
such other administrator as the parties shall mutually agree upon
in accordance with the AAA Commercial Arbitration Rules. All
Disputes submitted to arbitration shall be resolved in accordance
with the Federal Arbitration Act (Title 9 of the United States
Code) notwithstanding any conflicting choice of law provision in
any of the Documents. The arbitration shall be conducted at a
location in California selected by the AAA or other
administrator. If there is any inconsistency between the terms
hereof and any such rules, the terms and procedures set forth
herein shall control. All statutes of limitation applicable to
any Dispute shall apply to any arbitration proceeding. All
discovery activities shall be expressly limited to matters
directly relevant to the Dispute being arbitrated. Judgment upon
any award rendered in an arbitration may be entered in any court
having jurisdiction provided however, that nothing contained
herein shall be deemed to be a waiver by any party that is a bank
of the protections afforded to it under 12 U.S.C. 91 or any
similar applicable state law.
(c) No Waiver Provisional Remedies, Self-Help and Foreclosure.
No provision hereof shall limit the right any party to exercise
self-help remedies such as setoff, foreclosure against or sale of
any real or personal property collateral or security, or to
obtain provisional or ancillary remedies, including without
limitation injunctive relief. sequestration, attachment,
garnishment or the appointment of a receiver, from a court of
competent jurisdiction before, after or during the pendency of
any arbitration or other proceeding. The exercise of any such
remedy shall not waive the right of any party to compel
arbitration or reference hereunder.
(d) Arbitrator Qualifications and Powers: Awards. Arbitrators
must be active members of the California State Bar or retired
judges of the state or federal judiciary of California, with
expertise in the substantive law applicable to the subject matter
of the Dispute. Arbitrators are empowered to resolve Disputes by
summary rulings in response to motions filed prior to the final
arbitration hearing. Arbitrators (i) shall resolve all Disputes
in accordance with the substantive law of the state of
California, (ii) may grant any remedy or relief that a court of
the state of California could order or grant within the scope
hereof and such ancillary relief as is necessary to make
effective any award, and (iii) shall have the power to award
recovery of all costs and fees, to impose sanctions and to take
such other actions as they deem necessary to the same extent a
judge could pursuant to the Federal Rules of Civil Procedure, the
California Rules of Civil Procedure or other applicable law. Any
Dispute in which the amount in controversy is $5,000,000 or less
shall be decided by a single arbitrator who shall not render an
award of greater than $5,000,000 (including damages, costs, fees
and expenses). By submission to a single arbitrator, each party
expressly waives any right or claim to recover more than
$5,000,000. Any Dispute in which the amount in controversy
exceeds $5,000,000 shall be decided by majority vote of a panel
of three arbitrators provided however, that all three arbitrators
must actively participate in all hearings and deliberations.
(e) Judicial Review. Notwithstanding anything herein to the
contrary, in any arbitration in which the amount in controversy
exceeds $25,000,000, the arbitrators shall be required to make
specific, written findings of fact and conclusions of law. In
such arbitration's (i) the arbitrators shall not have the power
to make any award which is not supported by substantial evidence
or which is based on legal error, (ii) an award shall not be
binding upon the parties unless the findings of fact are
supported by substantial evidence and the conclusions of law are
not erroneous under the substantive law of the state of
California, and (iii) the parties shall have in addition to the
grounds referred to in the Federal Arbitration Act for vacating,
modifying or correcting an award the right to judicial review of
(A) whether the findings of fact rendered by the arbitrators are
supported by substantial evidence, and (B) whether the
conclusions of law are erroneous under the substantive law of the
state of California. Judgment confirming an award in such a
proceeding may be entered only if a court determines the award is
supported by substantial evidence and not based on legal error
under the substantive law of the state of California.
(f) Real Property Collateral: Judicial Reference.
Notwithstanding anything herein to the contrary, no Dispute shall
be submitted to arbitration if the Dispute concerns indebtedness
secured directly or indirectly, in whole or in part, by any real
property unless (i) the holder of the mortgage, lien or security
interest specifically elects in writing to proceed with the
arbitration, or (ii) all parties to the arbitration waive any
rights or benefits that might accrue to them by virtue of the
single action rule statute of California, thereby agreeing that
all indebtedness and obligations of the parties, and all
mortgages, liens and security interests securing such
indebtedness and obligations, shall remain fully valid and
enforceable. If any such Dispute is not submitted to
arbitration, the Dispute shall be referred to a referee in
accordance with California Code of Civil Procedure Section 638 et
seq., and this general reference agreement is intended to be
specifically enforceable in accordance with said Section 638. A
referee with the qualifications required herein for arbitrators
shall be selected pursuant to the AAA's selection procedures.
Judgment upon the decision rendered by a referee shall be entered
in the court in which such proceeding was commenced in accordance
with California Code of Civil Procedure Sections 644 and 645.
(g) Miscellaneous. To the maximum extent practicable, the AAA,
the arbitrators and the parties shall take all action required to
conclude any arbitration proceeding within 180 days of the filing
of the Dispute with the AAA. No arbitrator or other party to an
arbitration proceeding may disclose the existence, content or
results thereof, except for disclosures of information by a party
required in the ordinary course of its business, by applicable
law or regulation, or to the extent necessary to exercise any
judicial review rights set forth herein if more than one
agreement for arbitration by or between the parties potentially
applies to a Dispute, the arbitration provision most directly
related to the Documents or the subject matter of the Dispute
shall control. This arbitration provision shall survive
termination, amendment or expiration of any of the Documents or
any relationship between the parties.
IN WITNESS WHEREOF, the undersigned Guarantor has executed this
Guaranty as of June 30, 1999.
By: ss/ Robert S. Cope
ROBERT S. COPE
EXHIBIT 10.34
ADDENDUM TO CONTINUING GUARANTY
THIS ADDENDUM is attached to and made a part of that certain
Continuing Guaranty executed by Robert S. Cope (Guarantor) in
favor of WELLS FARGO BANK, NATIONAL ASSOCIATION (Bank) for all
indebtedness of Auto-Graphics, Inc. (Borrower) to Bank and
dated as of June 30, 1999 (the Guaranty).
The following provisions are hereby incorporated into the
Guaranty as if fully set forth therein:
18. REDUCTION OF LIABILITY. Notwithstanding anything in
the Guaranty or the Credit Agreement to the contrary, the
maximium liability of the Guarantor set forth in the first
sentence of Paragraph 2 of the Guaranty shall not exceed at any
one time the sum of $2,187,500.00 for principal, plus interest
thereon and costs and expenses pertaining to the enforcement of
the Guaranty and/or the collection of the Indebtedness of any of
the Borrowers to Bank if the following conditions are met on or
before September 30, 1999: (a) Borrower delivers evidence
satisfactory to Bank in its sole discretion that Borrower has
received New Capital (defined below) in the aggregate amount of
$750,000.00; and (b) at the time of that all evidence necessary
to the satisfaction of subparagraph (a) above has been delivered
to Bank, no default or Event of Default shall have occurred under
any of the documents or instruments evidencing or relating to the
Indebtedness of Borrower to Bank. As used herein, New Capital
shall mean cash and cash equivalents received and deposited by
Borrower on or after June 30, 1999 in the form of a capital
contribution in immediately available funds (prior to the
deduction of any and all selling commissions and other costs and
expenses, including legal fees attributable to the offering).
19. RELEASE FROM LIABILITY. Notwithstanding anything in
the Guaranty or the Credit Agreement to the contrary, Guarantor
shall be fully, finally and forever released from all liability
to Bank under the Guaranty or otherwise, if the following
conditions are met on or before the date that all Indebtedness of
Borrower to Bank has been paid in full: (a) Borrower delivers
evidence satisfactory to Bank in its sole discretion that
Borrower has received New Capital in the aggregate amount of
$1,250,000.00 (inclusive of the $750,000.00 referenced in
Paragraph 18 above); and (b) at the time of that all evidence
necessary to the satisfaction of subparagraph (a) above has been
delivered to Bank, no default or Event of Default shall have
occurred under any of the documents or instruments evidencing or
relating to the Indebtedness of Borrower to Bank.
This Guaranty supercedes and replaces in its entirety that
certain Guaranty executed by Robert S. Cope in favor of the Bank
as of May 12, 1997, which is hereby terminated, cancelled and is
of no further force or effect as of the date hereof.
IN WITNESS WHEREOF, this Addendum has been executed as of
the same date as the Guaranty.
WELLS FARGO BANK, GUARANTOR
NATIONAL ASSOCIATION
By:_ ss/Darryl Hallie ss/Robert S. Cope_
Darryl Hallie Robert S. Cope
Vice President
EXHIBIT 10.35
REVOLVING LINE OF CREDIT NOTE
$1,000,000.00 Angeles, California
June 30, 1999
FOR VALUE RECEIVED, the undersigned AUTO-GRAPHICS, INC.
(Borrower) promises to pay to the order of WELLS FARGO BANK,
NATIONAL ASSOCIATION (Bank) at its office at 333 South Grand
Avenue, 9th Floor, Los Angeles, CA 90071, or at such other place
as the holder hereof may designate, in lawful money of the United
States of America and in immediately available funds, the
principal sum of One Million Dollars ($1,000,000.00), or so much
thereof as may be advanced and be outstanding, with interest
thereon, to be computed on each advance from the date of its
disbursement as set forth herein.
INTEREST:
(a) Interest. The outstanding principal balance of this
Note shall bear interest (computed on the basis of a 360-day
year, actual days elapsed) for the designated periods at a rate
per annum equal to the corresponding percentages above the Prime
Rate in effect from time to time, as follows:
Period % Above Prime Rate
- ------------------------------- ----------------------
June 30, 1999 to and including
September 29, 1999 One Percent (1.00%)
September 30, 1999 to and One and One-Quarter Percent
including December 30, 1999 (1.25%)
December 31, 1999 to and One and One-Half Percent
including March 30, 2000 (1.50%)
On and after March 31, 2000 One and Three-Quarters
Percent (1.75%)
Notwithstanding the foregoing, should Borrower deliver evidence
satisfactory to Bank in its sole discretion that Borrower has
received New Capital (defined below) at the times and in the
cumulative amounts shown below, the outstanding principal balance
of this Note shall bear interest (computed on the basis of a
360-day year, actual days elapsed) for the designated periods at
a rate per annum equal to the corresponding percentages above the
Prime Rate in effect from time to time, as follows:
Deadline for Cumulative Period % Above Prime
Receipt of New Amount of New Rate
Capital Capital
- -------------- ------------- ------------- --------------
September 30, $250,000.00 September 30, One Percent
1999 (the First 1999 to and (1%)
Milestone) including
December 30,
1999
December 31, $350,000.00 December 31, One Percent
1999 (the Second 1999 to and (1%) if
Milestone) including Borrower met
March 30, 2000 the First
Milestone
One and One-
Quarter
Percent
(1.25%)if
Borrower did
not meet the
First
Milestone
March 31, 2000 $1,000,000.00 On and after One Percent
March 31, 2000 (1%) if
Borrower met
both
the First
Milestone and
the Second
Milestone
One and One-
Quarter
Percent
(1.25%)if
Borrower met
either the
First
Milestone or
the Second
Milestone, but
not both
One and One-
Half Percent
(1.50%) if
Borrower
received
neither the
First
Milestone nor
the Second
Milestone
As used herein, New Capital shall mean cash and cash
equivalents received and deposited by Borrower on or after June
30, 1999 in the form of a capital contribution in immediately
available funds (prior to the deduction of any and all selling
commissions and other costs and expenses, including legal fees
attributable to the offering). The Prime Rate is a base rate
that Bank from time to time establishes and which serves as the
basis upon which effective rates of interest are calculated for
those loans making reference thereto. Each change in the rate of
interest hereunder shall become effective on the date each Prime
Rate change is announced within Bank.
(b) Payment of Interest. Interest accrued on this Note
shall be payable on the last day of each month, commencing July
31, 1999.
(c) Default Interest. From and after the maturity date
of this Note, or such earlier date as all principal owing
hereunder becomes due and payable by acceleration or otherwise,
the outstanding principal balance of this Note shall bear interest
until paid in full at an increased rate per annum (computed on
the basis of a 360-day year, actual days elapsed) equal to four
percent (4%) above the rate of interest from time to time
applicable to this Note.
BORROWING AND REPAYMENT:
(a) Borrowing and Repayment. Borrower may from time to
time during the term of this Note borrow, partially or wholly
repay its outstanding borrowings, and reborrow, subject to all
of the limitations, terms and conditions of this Note and of any
document executed in connection with or governing this Note;
provided however, that the total outstanding borrowings under
this Note shall not at any time exceed the principal amount
stated above. The unpaid principal balance of this obligation
at any time shall be the total amounts advanced hereunder by the
holder hereof less the amount of principal payments made hereon
by or for any Borrower, which balance may be endorsed hereon from
time to time by the holder. The outstanding principal balance of
this Note shall be due and payable in full on June 1, 2000.
(b) Advances. Advances hereunder, to the total amount of
the principal sum stated above, may be made by the holder at the
oral or written request of (i) DANIEL E. LUEBBEN or ROBERT S.
COPE, any one acting alone, who are authorized to request
advances and direct the disposition of any advances until written
notice of the revocation of such authority is received by the
holder at the office designated above, or (ii) any person, with
respect to advances deposited to the credit of any account of any
Borrower with the holder, which advances, when so deposited,
shall be conclusively presumed to have been made to or for the
benefit of each Borrower regardless of the fact that persons
other than those authorized to request advances may have
authority to draw against such account. The holder shall have no
obligation to determine whether any person requesting an advance
is or has been authorized by any Borrower.
(c) Application of Payments. Each payment made on this
Note shall be credited first, to any interest then due and
second, to the outstanding principal balance hereof.
EVENTS OF DEFAULT:
This Note is made pursuant to and is subject to the terms
and conditions of that certain Credit Agreement between Borrower
and Bank dated as of May 12, 1997, as amended from time to time
(the Credit Agreement). Any default in the payment or
performance of any obligation under this Note, or any defined
event of default under the Credit Agreement, shall constitute
an Event of Default under this Note.
MISCELLANEOUS:
(a) Remedies. Upon the occurrence of any Event of Default,
the holder of this Note, at the holder's option, may declare all
sums of principal and interest outstanding hereunder to be
immediately due and payable without presentment, demand, notice
of nonperformance, notice of protest, protest or notice of
dishonor, all of which are expressly waived by each Borrower, and
the obligation, if any, of the holder to extend any further
credit hereunder shall immediately cease and terminate. Each
Borrower shall pay to the holder immediately upon demand the full
amount of all payments, advances, charges, costs and expenses,
including reasonable attorneys' fees (to include outside counsel
fees and all allocated costs of the holder's in-house counsel),
expended or incurred by the holder in connection with the
enforcement of the holder's rights and/or the collection of any
amounts which become due to the holder under this Note, and the
prosecution or defense of any action in any way related to this
Note, including without limitation, any action for declaratory
relief, whether incurred at the trial or appellate level, in an
arbitration proceeding or otherwise, and including any of the
foregoing incurred in connection with any bankruptcy proceeding
(including without limitation, any adversary proceeding,
contested matter or motion brought by Bank or any other person)
relating to any Borrower or any other person or entity.
(b) Obligations Joint and Several. Should more than one
person or entity sign this Note as a Borrower, the obligations of
each such Borrower shall be joint and several.
(c) Governing Law. This Note shall be governed by and
construed in accordance with the laws of the State of California.
This Note replaces and supersedes in its entirety that
certain promissory note executed by Borrower in favor of Bank in
the original principal amount of $1,250,000.00 and dated as of
May 12, 1997, which is hereby cancelled.
IN WITNESS WHEREOF, the undersigned has executed this Note
as of the date first written above.
AUTO-GRAPHICS, INC.
By: ss/Robert S. Cope
Robert S. Cope
Title: President/CEO
EXHIBIT 10.36
REVOLVING LINE OF CREDIT NOTE
$3,000,000.00 Los Angeles, California
June 30, 1999
FOR VALUE RECEIVED, the undersigned AUTO-GRAPHICS, INC.
(Borrower) promises to pay to the order of WELLS FARGO BANK,
NATIONAL ASSOCIATION (Bank) at its office at 333 South Grand
Avenue, 9th Floor, Los Angeles, CA 90071, or at such other place
as the holder hereof may designate, in lawful money of the United
States of America and in immediately available funds, the
principal sum of Three Million Dollars ($3,000,000.00), or so
much thereof as may be advanced and be outstanding, with interest
thereon, to be computed on each advance from the date of its
disbursement as set forth herein.
INTEREST:
(a) Interest. The outstanding principal balance of this
Note shall bear interest (computed on the basis of a 360-day
year, actual days elapsed) for the designated periods at a rate
per annum equal to the corresponding percentages above the Prime
Rate in effect from time to time, as follows:
Period % Above Prime Rate
- ------------------------------- --------------------------
June 30, 1999 to and including
September 29, 1999 One Percent (1.00%)
September 30, 1999 to and One and One-Quarter Percent
including December 30, 1999 (1.25%)
December 31, 1999 to and One and One-Half Percent
including March 30, 2000 (1.50%)
On and after March 31, 2000 One and Three-Quarters
Percent (1.75%)
Notwithstanding the foregoing, should Borrower deliver evidence
satisfactory to Bank in its sole discretion that Borrower has
received New Capital (defined below) at the times and in the
cumulative amounts shown below, the outstanding principal balance
of this Note shall bear interest (computed on the basis of a
360-day year, actual days elapsed) for the designated periods at
a rate per annum equal to the corresponding percentages above the
Prime Rate in effect from time to time, as follows:
Deadline for Cumulative Period % Above Prime
Receipt of New Amount of New Rate
Capital Capital
- -------------- ------------- ------------- --------------
September 30, $250,000.00 September 30, One Percent
1999 (the First 1999 to and (1%)
Milestone) including
December 30,
1999
December 31, $350,000.00 December 31, One Percent
1999 (the Second 1999 to and (1%) if
Milestone) including Borrower met
March 30, 2000 the First
Milestone
One and One-
Quarter
Percent
(1.25%)if
Borrower did
not meet the
First
Milestone
March 31, 2000 $1,000,000.00 On and after One Percent
March 31, 2000 (1%) if
Borrower met
both
the First
Milestone and
the Second
Milestone
One and One-
Quarter
Percent
(1.25%)if
Borrower met
either the
First
Milestone or
the Second
Milestone, but
not both
One and One-
Half Percent
(1.50%) if
Borrower
received
neither the
First
Milestone nor
the Second
Milestone
As used herein, New Capital shall mean cash and cash
equivalents received and deposited by Borrower on or after June
30, 1999 in the form of a capital contribution in immediately
available funds (prior to the deduction of any and all selling
commissions and other costs and expenses, including legal fees
attributable to the offering). The Prime Rate is a base rate
that Bank from time to time establishes and which serves as the
basis upon which effective rates of interest are calculated for
those loans making reference thereto. Each change in the rate of
interest hereunder shall become effective on the date each Prime
Rate change is announced within Bank.
(b) Payment of Interest. Interest accrued on this Note
shall be payable on the last day of each month, commencing July
31, 1999.
(c) Default Interest. From and after the maturity date of
this Note, or such earlier date as all principal owing hereunder
becomes due and payable by acceleration or otherwise, the
outstanding principal balance of this Note shall bear interest
until paid in full at an increased rate per annum (computed on
the basis of a 360-day year, actual days elapsed) equal to four
percent (4%) above the rate of interest from time to time
applicable to this Note.
BORROWING AND REPAYMENT:
(a) Borrowing and Repayment. Borrower may from time to
time during the term of this Note borrow, partially or wholly
repay its outstanding borrowings, and reborrow, subject to all of
the limitations, terms and conditions of this Note and of any
document executed in connection with or governing this Note;
provided however, that the total outstanding borrowings under
this Note shall not at any time exceed the principal amount
stated above. The unpaid principal balance of this obligation at
any time shall be the total amounts advanced hereunder by the
holder hereof less the amount of principal payments made hereon
by or for any Borrower, which balance may be endorsed hereon from
time to time by the holder. The outstanding principal balance of
this Note shall be due and payable in full on June 1, 2000.
(b) Advances. Advances hereunder, to the total amount of
the principal sum stated above, may be made by the holder at the
oral or written request of (i) DANIEL E. LUEBBEN or ROBERT S.
COPE, any one acting alone, who are authorized to request
advances and direct the disposition of any advances until written
notice of the revocation of such authority is received by the
holder at the office designated above, or (ii) any person, with
respect to advances deposited to the credit of any account of any
Borrower with the holder, which advances, when so deposited,
shall be conclusively presumed to have been made to or for the
benefit of each Borrower regardless of the fact that persons
other than those authorized to request advances may have
authority to draw against such account. The holder shall have no
obligation to determine whether any person requesting an advance
is or has been authorized by any Borrower.
(c) Application of Payments. Each payment made on this
Note shall be credited first, to any interest then due and
second, to the outstanding principal balance hereof.
EVENTS OF DEFAULT:
This Note is made pursuant to and is subject to the terms
and conditions of that certain Credit Agreement between Borrower
and Bank dated as of May 12, 1997, as amended from time to time
(the Credit Agreement). Any default in the payment or
performance of any obligation under this Note, or any defined
event of default under the Credit Agreement, shall constitute an
Event of Default under this Note.
MISCELLANEOUS:
(a) Remedies. Upon the occurrence of any Event of Default,
the holder of this Note, at the holder's option, may declare all
sums of principal and interest outstanding hereunder to be
immediately due and payable without presentment, demand, notice
of nonperformance, notice of protest, protest or notice of
dishonor, all of which are expressly waived by each Borrower, and
the obligation, if any, of the holder to extend any further
credit hereunder shall immediately cease and terminate. Each
Borrower shall pay to the holder immediately upon demand the full
amount of all payments, advances, charges, costs and expenses,
including reasonable attorneys' fees (to include outside counsel
fees and all allocated costs of the holder's in-house counsel),
expended or incurred by the holder in connection with the
enforcement of the holder's rights and/or the collection of any
amounts which become due to the holder under this Note, and the
prosecution or defense of any action in any way related to this
Note, including without limitation, any action for declaratory
relief, whether incurred at the trial or appellate level, in an
arbitration proceeding or otherwise, and including any of the
foregoing incurred in connection with any bankruptcy proceeding
(including without limitation, any adversary proceeding,
contested matter or motion brought by Bank or any other person)
relating to any Borrower or any other person or entity.
(b) Obligations Joint and Several. Should more than one
person or entity sign this Note as a Borrower, the obligations of
each such Borrower shall be joint and several.
(c) Governing Law. This Note shall be governed by and
construed in accordance with the laws of the State of California.
This Note replaces and supersedes in its entirety that
certain promissory note executed by Borrower in favor of Bank in
the original principal amount of $3,000,000.00 and dated as of
May 12, 1997, which is hereby cancelled.
IN WITNESS WHEREOF, the undersigned has executed this Note
as of the date first written above.
AUTO-GRAPHICS, INC.
By: ss/Robert S. Cope
Robert S. Cope
Title: President/CEO
EXHIBIT 10.37
TERM NOTE
$374,999.99 Los Angeles, California
June 30, 1999
FOR VALUE RECEIVED, the undersigned AUTO-GRAPHICS, INC.
(Borrower) promises to pay to the order of WELLS FARGO BANK,
NATIONAL ASSOCIATION (Bank) at its office at 333 South Grand
Avenue, 9th Floor, Los Angeles, CA 90071, or at such other place
as the holder hereof may designate, in lawful money of the United
States of America and in immediately available funds, the
principal sum of Three Hundred Seventy-Four Thousand Nine Hundred
Ninety Nine and 99/100 Dollars ($374,999.99), with interest
thereon as set forth herein.
INTEREST:
(a) Interest. The outstanding principal balance of this
Note shall bear interest (computed on the basis of a 360-day
year, actual days elapsed) for the designated periods at a rate
per annum equal to the corresponding percentages above the Prime
Rate in effect from time to time, as follows:
Period % Above Prime Rate
- ------------------------------- --------------------------
June 30, 1999 to and including
September 29, 1999 One Percent (1.00%)
September 30, 1999 to and One and One-Quarter Percent
including December 30, 1999 (1.25%)
December 31, 1999 to and One and One-Half Percent
including March 30, 2000 (1.50%)
On and after March 31, 2000 One and Three-Quarters
Percent (1.75%)
Notwithstanding the foregoing, should Borrower deliver evidence
satisfactory to Bank in its sole discretion that Borrower has
received New Capital (defined below) at the times and in the
cumulative amounts shown below, the outstanding principal balance
of this Note shall bear interest (computed on the basis of a
360-day year, actual days elapsed) for the designated periods at
a rate per annum equal to the corresponding percentages above the
Prime Rate in effect from time to time, as follows:
Deadline for Cumulative Period % Above Prime
Receipt of New Amount of New Rate
Capital Capital
- -------------- ------------- ------------- --------------
September 30, $250,000.00 September 30, One Percent
1999 (the First 1999 to and (1%)
Milestone) including
December 30,
1999
December 31, $350,000.00 December 31, One Percent
1999 (the Second 1999 to and (1%) if
Milestone) including Borrower met
March 30, 2000 the First
Milestone
One and One-
Quarter
Percent
(1.25%)if
Borrower did
not meet the
First
Milestone
March 31, 2000 $1,000,000.00 On and after One Percent
March 31, 2000 (1%) if
Borrower met
both
the First
Milestone and
the Second
Milestone
One and One-
Quarter
Percent
(1.25%)if
Borrower met
either the
First
Milestone or
the Second
Milestone, but
not both
One and One-
Half Percent
(1.50%) if
Borrower
received
neither the
First
Milestone nor
the Second
Milestone
As used herein, New Capital shall mean cash and cash
equivalents received and deposited by Borrower on or after June
30, 1999 in the form of a capital contribution in immediately
available funds (prior to the deduction of any and all selling
commissions and other costs and expenses, including legal fees
attributable to the offering). The Prime Rate is a base rate
that Bank from time to time establishes and which serves as the
basis upon which effective rates of interest are calculated for
those loans making reference thereto. Each change in the rate
of interest hereunder shall become effective on the date each
Prime Rate change is announced within Bank.
(b) Payment of Interest. Interest accrued on this Note
shall be payable on the last day of each month, commencing July
31, 1999.
(c) Default Interest. From and after the maturity date of
this Note, or such earlier date as all principal owing hereunder
becomes due and payable by acceleration or otherwise, the
outstanding principal balance of this Note shall bear interest
until paid in full at an increased rate per annum (computed on
the basis of a 360-day year, actual days elapsed) equal to four
percent (4%) above the rate of interest from time to time
applicable to this Note.
REPAYMENT AND PREPAYMENT:
(a) Repayment. Principal shall be payable on the last day
of each month in installments of Sixteen Thousand Dollars
($16,000.00) each, commencing July 31, 1999, and continuing up to
and including May 31, 2000, with a final installment consisting
of all remaining unpaid principal due and payable in full on June
1, 2000.
(b) Application of Payments. Each payment made on this
Note shall be credited first, to any interest then due and
second, to the outstanding principal balance hereof.
(c) Prepayment. Borrower may prepay principal on this Note
at any time, in any amount and without penalty. All prepayments
of principal shall be applied on the most remote principal
installment or installments then unpaid.
EVENTS OF DEFAULT:
This Note is made pursuant to and is subject to the terms
and conditions of that certain Credit Agreement between Borrower
and Bank dated as of May 12, 1997, as amended from time to time
(the Credit Agreement). Any default in the payment or
performance of any obligation under this Note, or any defined
event of default under the Credit Agreement, shall constitute
an Event of Default under this Note.
MISCELLANEOUS:
(a) Remedies. Upon the occurrence of any Event of Default,
the holder of this Note, at the holder's option, may declare all
sums of principal and interest outstanding hereunder to be
immediately due and payable without presentment, demand, notice
of nonperformance, notice of protest, protest or notice of
dishonor, all of which are expressly waived by each Borrower.
Each Borrower shall pay to the holder immediately upon demand
the full amount of all payments, advances, charges, costs and
expenses, including reasonable attorneys' fees (to include
outside counsel fees and all allocated costs of the holder's
in-house counsel), expended or incurred by the holder in
connection with the enforcement of the holder's rights and/or the
collection of any amounts which become due to the holder under
this Note, and the prosecution or defense of any action in any
way related to this Note, including without limitation, any
action for declaratory relief, whether incurred at the trial or
appellate level, in an arbitration proceeding or otherwise, and
including any of the foregoing incurred in connection with any
bankruptcy proceeding (including without limitation, any
adversary proceeding, contested matter or motion brought by Bank
or any other person) relating to any Borrower or any other person
or entity.
(b) Obligations Joint and Several. Should more than one
person or entity sign this Note as a Borrower, the obligations of
each such Borrower shall be joint and several.
(c) Governing Law. This Note shall be governed by and
construed in accordance with the laws of the State of California.
This Note replaces and supersedes in its entirety that
certain promissory note executed by Borrower in favor of Bank in
the original principal amount of $375,000.00 and dated as of June
1, 1998, which is hereby cancelled.
IN WITNESS WHEREOF, the undersigned has executed this Note
as of the date first written above.
AUTO-GRAPHICS, INC.
By: ss/Robert S. Cope
Robert S. Cope
Title: President/CEO
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted
from the Balance Sheet and related Statement of Operations of
Auto-Graphics, Inc. as of September 30, 1999 and is qualified in
its entirety by reference to such financial statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-END> SEP-30-1999
<CASH> 1307964
<SECURITIES> 0
<RECEIVABLES> 1130424
<ALLOWANCES> 38000
<INVENTORY> 119592
<CURRENT-ASSETS> 2671181
<PP&E> 12336194
<DEPRECIATION> 7295205
<TOTAL-ASSETS> 7828755
<CURRENT-LIABILITIES> 2689084
<BONDS> 0
0
0
<COMMON> 134409
<OTHER-SE> 2119262
<TOTAL-LIABILITY-AND-EQUITY> 7828755
<SALES> 5928238
<TOTAL-REVENUES> 5928238
<CGS> 3417328
<TOTAL-COSTS> 3417328
<OTHER-EXPENSES> 2242885
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 234029
<INCOME-PRETAX> 56558
<INCOME-TAX> 0
<INCOME-CONTINUING> 56558
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 56558
<EPS-BASIC> .05
<EPS-DILUTED> .05
</TABLE>
