EXHIBIT 10.42
REVOLVING REDUCING NOTE.
$3,000,000.00
Los Angeles, California
August 1, 2000
FOR VALUE RECEIVED, the undersigned AUTO-GRAPHICS, INC., a California
corporation ("Borrower"), promises to pay to the order of WELLS FARGO BANK,
NATIONAL ASSOCIATION ("Bank") at its office at 333 South Grand Avenue, Los
Angeles, California, 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) at a
rate per annum one half of one percent (0.50%) above the 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. 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 August 31, 2000.
(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 set forth above or such
lesser amount as shall at any time be available hereunder. 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 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 3, 2002.
(b) Reductions in Availability. Notwithstanding the principal amount set
forth above, the maximum principal amount available under this Note shall be
reduced automatically and without further notice on each October 1 and each
April 1, commencing October 1, 2000, by the amount of Two Hundred Fifty
Thousand Dollars ($250,000.00), resulting in maximum principal availability
hereunder of $2,750,000 on October 1, 2000; $2,500,000 on April 1, 2001;
$2,250,000 on October 1, 2001; and $2,000,000 on April 1, 2002, minus in each
case the aggregate amount of reductions to the Line of Credit pursuant to
paragraph (c) below. If the outstanding principal balance of this Note on
any such date is greater than the new maximum principal amount then available
hereunder, Borrower shall make a principal reduction on this Note on such
date in an amount sufficient to reduce the then outstanding principal balance
hereof to an amount not greater than said new maximum principal amount. If
on any October 1 or April 1 the maximum principal amount then available
hereunder equals or exceeds the outstanding principal balance of this Note,
then Borrower shall not be required to repay principal outstanding under this
Note solely by reason of the reduction in availability that occurs on such
date.
(c) Equity Proceeds. Borrower shall prepay the Line of Credit in an amount
equal to ten percent (10%) of Excess Equity Proceeds not more than two (2)
business days after any Excess Equity Proceeds are received, and the Line of
Credit shall be permanently reduced on such date by the amount of prepayment
required by this sentence. "Equity Proceeds" shall mean the gross amount of
new equity received by the Borrower and its Subsidiaries from and after April
1, 2000. "Excess Equity Proceeds" shall mean Equity Proceeds in excess of
$5,000,000.00.
(d) 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)
Robert S. Cope or Daniel E. Luebben or Corey M. Patick or Michael K. Skiles
or Diep (Gina) Nguyen, 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 deposit account of Borrower, which advances, when so
deposited, shall be conclusively presumed to have been made to or for the
benefit of 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 Borrower.
(e) 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 Amended and Restated Credit Agreement between Borrower and Bank
dated as of August 1, 2000, 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 Borrower, and the
obligation, if any, of the holder to extend any further credit hereunder
shall immediately cease and terminate. 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 Borrower or any other person or entity.
Governing Law. This Note shall be governed by and construed in accordance
with the laws of the State of California.
IN WITNESS WHEREOF, the undersigned has executed this Note as of the date
first written above.
AUTO-GRAPHICS, INC., a California corporation
By: ss/Michael K. Skiles
-------------------------
Name: Michael K. Skiles
Title: President
