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
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
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