EXHIBIT 10.3
CREDIT AGREEMENT
THIS CREDIT AGREEMENT, dated as of December 31, 1997, is by and
between RIMAGE CORPORATION, a Minnesota corporation ("Rimage"), A/G SYSTEMS,
INC., d/b/a DUPLICATION TECHNOLOGY ("Duplication Technology") (Rimage and
Duplication Technology are sometimes individually, the "Borrower" and
collectively, the "Borrowers"), and FIRST BANK NATIONAL ASSOCIATION, a national
banking association (the "Lender").
WHEREAS, the Lender and Rimage previously entered into that certain
Second Amended and Restated Credit Agreement and Amendment to Term Note, dated
as of March 31, 1997, as amended (as so amended, the "Prior Credit Agreement");
and
WHEREAS, pursuant to a Security Agreement dated as of March 18, 1994
Duplication Technology has granted to the Lender a security interest in its
assets to secure the obligations of Rimage to the Lender; and
WHEREAS, Rimage and Duplication Technology have requested that the
Lender amend certain provisions of the Prior Credit Agreement and the Lender is
willing to do so, upon the terms and subject to the conditions of this Credit
Agreement;
NOW, THEREFORE, in consideration of these premises and for other
good and valuable consideration, the parties agree as follows:
ARTICLE I
DEFINITIONS AND ACCOUNTING TERMS
Section 1.1 Defined Terms. As used in this Agreement the following
terms shall have the following respective meanings:
"Advance": As defined in the Supplement.
"Borrowing Base": As defined in Section 2.5.
"Borrowing Base Certificate": As defined in Section 2.5.
"Business Day": Any day (other than a Saturday, Sunday or legal
holiday in the State of Minnesota) on which national banks are permitted to be
open for business in Minneapolis, Minnesota.
"Closing Date": December 31, 1997.
"Commitments": The Revolving Commitment and the Term Loan
Commitment.
"Default": Any event which, with the giving of notice (whether such
notice is required under Section 7.1, or under some other provision of this
Agreement, or otherwise) or lapse of time, or both, would constitute an Event of
Default.
"Event of Default": Any event described in Section 7.1.
"Fixed Charge Coverage Ratio": For any period of determination with
respect to the Borrowers on a consolidated basis, the ratio of
(a) Net earnings after taxes plus depreciation and interest less (i) any
dividends or other distributions, and (ii) actual expenditures for
fixed and capital assets,
to
(b) the sum of interest expense and all mandatory principal payments
with respect to long term indebtedness (including but not limited to
all payments with respect to capitalized lease obligations of the
Borrower),
in each case determined for said period in accordance with GAAP.
"GAAP": Generally accepted accounting principles set forth in the
opinions and pronouncements of the Accounting Principles Board of the American
Institute of Certified Public Accountants and statements and pronouncements of
the Financial Accounting Standards Board or in such other statements by such
other entity as may be approved by a significant segment of the accounting
profession, which are applicable to the circumstances as of any date of
determination.
"Leverage Ratio": As defined in Section 6.8.
"Loan Documents": This Agreement, the Notes, and any documents
described in Section 3.1(a)(vii).
"Lien": With respect to any Person, any security interest, mortgage,
pledge, lien, charge, encumbrance, title retention agreement or analogous
instrument or device (including the interest of each lessor under any
capitalized lease), in, of or on any assets or properties of such Person, now
owned or hereafter acquired, whether arising by agreement or operation of law.
"Notes": The Revolving Note and the Term Note.
"Person": Any natural person, corporation, partnership, limited
partnership, joint venture, firm, association, trust, unincorporated
organization, government or governmental agency or political subdivision or any
other entity, whether acting in an individual, fiduciary or other capacity.
"Regulatory Change": Any change after the date of this Agreement in
federal, state or foreign laws or regulations or the adoption or making after
such date of any interpretations, directives or requests applying to a class of
banks including the Lender under any federal, state or foreign laws or
regulations (whether or not having the force of law) by any court or
governmental or monetary authority charged with the interpretation or
administration thereof.
"Revolving Commitment": The obligation of the Lender to make
Advances to the Borrower on the Revolving Loan in an aggregate principal amount
outstanding at any time not to exceed the Revolving Commitment Amount upon the
terms and subject to the conditions and limitations of this Agreement.
"Revolving Commitment Amount": As defined in Section 2.1.
"Revolving Loan": As defined in Section 2.1.
"Revolving Maturity Date": As defined in Section 2.1.
"Revolving Note": As defined in Section 2.3.
"Services Group": Those divisions of the Borrowers reflected in the
Borrowers' accounting records as the Services Group division, which operates the
business formerly owned and operated by Dunhill Software Services, Inc. plus the
operation of duplication services of Duplication Technology.
"Supplement": The Supplement attached hereto and made a part hereof.
"Systems Group": Those divisions of the Borrowers reflected in the
Borrowers' accounting records as the Systems Group division, which designs,
manufactures and sells duplication equipment and CD-R printers.
"Tangible Net Worth": As defined in Section 6.6.
"Term Loan": As defined in Section 2.1.
"Term Loan Commitment": The obligation of the Lender to make a term
loan to the Borrower in the Term Loan Commitment Amount upon the terms and
subject to the conditions and limitations of this Agreement.
"Term Loan Commitment Amount": As defined in Section 2.1.
"Term Note": As defined in Section 2.3.
"Total Liabilities": At the time of any determination, the amount of
all items of indebtedness of the Borrowers that would constitute "liabilities"
for balance sheet purposes in accordance with GAAP.
Section 1.2 Accounting Terms and Calculations. Except as may be
expressly provided to the contrary herein, all accounting terms used herein
shall be interpreted and all accounting determinations hereunder shall be made
in accordance with GAAP.
Section 1.3 Other Definitional Terms,Terms of Construction. The
words "hereof", "herein" and "hereunder" and words of similar import when used
in this Agreement shall refer to this Agreement as a whole, including the
Supplement, and not to any particular provision of this Agreement. References to
Sections, Exhibits, Schedules and the like references are to Sections, Exhibits,
Schedules and the like of this Agreement unless otherwise expressly provided.
The words "include", "includes" and "including" shall be deemed to be followed
by the phrase "without limitation". Unless the context in which used herein
otherwise clearly requires, "or" has the inclusive meaning represented by the
phrase "and/or". All incorporations by reference of covenants, terms,
definitions or other provisions from other agreements are incorporated into this
Agreement as if such provisions were fully set forth herein, and include all
necessary definitions and related provisions from such other agreements. All
covenants, terms, definitions and other provisions from other agreements
incorporated into this Agreement by reference shall survive any termination of
such other agreements until the obligations of the Borrowers under this
Agreement and the Notes are irrevocably paid in full and the Revolving
Commitment is terminated.
ARTICLE II
TERMS OF LENDING
Section 2.1 The Commitments. On the terms and subject to the
conditions hereof, the Lender agrees to make the following lending facilities
available to the Borrowers:
2.1 (a) Revolving Credit. A revolving loan (the
"Revolving Loan") to the Borrowers, or either of them, available as
Advances as specified in the Supplement at any time and from time to
time from the Closing Date to June 30, 1998 (the "Revolving Maturity
Date"), during which period the Borrowers may borrow, repay and
reborrow in accordance with the provisions hereof, provided, that
the unpaid principal amount of revolving Advances shall not at any
time exceed $5,000,000 (the "Revolving Commitment Amount"); and
provided, further, that no revolving Advance will be made if, after
giving effect thereto, the unpaid principal amount of the Revolving
Note would exceed the Borrowing Base.
2.1 (b) Term Loan. A term loan (the "Term Loan") from
the Lender to the Borrowers on the Closing Date in the amount of
$1,650,000 (the "Term Loan Commitment Amount").
2.1(c) Joint and Several Obligations. The obligations of
each Borrower hereunder and under the Notes and any other documents
executed by it in connection with loans made under this Agreement
shall be joint and several; provided, that each Borrower hereunder
shall be unconditionally and irrevocably obligated hereunder to pay
when due (i) all unpaid advances, the proceeds of which shall have
been received directly or indirectly by such Borrower, and all
accrued and unpaid interest thereon, and fees and other amounts
related thereto, and (ii) all unpaid advances, the proceeds of which
shall not have been received directly or indirectly by such
Borrower, and all accrued and unpaid interest thereon and fees and
other amounts related thereto; provided, further, that in no event
shall the amount payable by any such Borrower under clause (ii)
above exceed an aggregate amount equal to the largest amount that
would not render such Borrower's obligations under such clause (ii)
subject to avoidance under Section 548 of the United States
Bankruptcy Code or any applicable provision of comparable state law.
Section 2.2 Procedure for Advances on the Revolving Loan. Any
request by a Borrower for an Advance on the Revolving Loan shall be in writing,
or by telephone. Each request for an Advance shall be irrevocable and shall be
deemed a representation by the Borrowers that on the requested Advance date and
after giving effect to such Advance the applicable conditions specified in
Article III have been and will continue be satisfied. The Supplement specifies
time limits for any request for an Advance and the information that must be
included in such request. Unless the Lender determines that any applicable
condition specified in Article III has not been satisfied, the Lender will make
available to a Borrower at the Lender's office in Edina, Minnesota in
immediately available funds not later than 3:00 p.m. (Minneapolis time) on the
requested Advance date the amount of the requested Advance.
Section 2.3 The Notes. The Advances on the Revolving Loan shall be
evidenced by a single promissory note (the "Revolving Note"), substantially in
the form of Exhibit 2.3 (a) hereto, in the amount of the Revolving Commitment
Amount originally in effect. The Term Loan shall be evidenced by a promissory
note (the "Term Note"), substantially in the form of Exhibit 2.3 (b) hereto, in
an amount equal to the Term Loan Commitment Amount. The Lender shall enter in
its ledgers and records the payments made on the Term Loan and Advances made and
the payments made thereon, and the Lender is authorized by the Borrowers to
enter on schedules attached to the Notes a record of such Advances and
repayments.
Section 2.4 Interest. The Supplement sets forth the terms of the
interest rates applicable to Advances on the Revolving Loan and the Term Loan
under this Agreement.
Section 2.5 Borrowing Base and Mandatory Prepayment. The Borrowing
Base shall be equal to the sum of (1) the lesser of (w) 30% of the lower of
wholesale cost or replacement cost of Eligible Systems Group Inventory or (x)
$800,000, plus (2) the lesser of (y) 50% of the lower of wholesale cost or
replacement cost of Eligible Services Group Inventory or (z) $600,000, plus (3)
70% of
the face value of Eligible Systems Group Receivables, plus (4) 75% of the face
value of Eligible Services Group Receivables. "Eligible Systems Group
Inventory", "Eligible Services Group Inventory", "Eligible Services Group
Receivables" and "Eligible Systems Group Receivables" are defined on Schedule 1
hereto. The Borrower shall deliver to the Lender borrowing base certificates in
a form satisfactory to the Lender (a "Borrowing Base Certificate") (i) dated as
of the last day of each month, within 30 days after the end of each month and
(ii) dated as of the date the Lender requests such a Certificate within 10 days
of the Lender's request for the certificate. Each such Certificate shall state
the amount of the Borrowing Base as of the end of the previous month or the date
of the Lender's request, as appropriate. Any limitations on Advances or required
prepayments relating to the Borrowing Base shall be based on the latest
Borrowing Base Certificate the Borrower shall have delivered to the Lender. If
the principal balance of the Revolving Note at any time exceeds the Borrowing
Base, the Borrower shall immediately prepay the Revolving Note by the amount of
that excess.
Section 2.6 Repayment and Prepayment.
2.6(a) Repayment of the Revolving Note. Principal of the
Revolving Note shall be payable in full on the Revolving Maturity
Date. Terms governing prepayment of the Revolving Note are set forth
in the Supplement.
2.6(b) Repayment of the Term Note. Principal of the Term
Note is payable as provided in the Term Note. Terms governing
prepayment of the Term Note are set forth in the Supplement.
Section 2.7 Optional Reduction of Revolving Commitment Amount or
Termination of Commitment. The Borrower may, at any time, upon not less than
five Business Days prior written notice to the Lender, reduce the Revolving
Commitment Amount, with any such reduction in a minimum amount of $100,000, or,
if more, in an integral multiple of $100,000; provided, however, the Borrower
may not at any time reduce the Revolving Commitment Amount below the then unpaid
principal balance of the Revolving Note. The Borrower may, at any time, upon not
less than five Business Days prior written notice to the Lender, terminate the
Revolving Commitment in its entirety.
Section 2.8 Intentionally Omitted.
Section 2.9 Computation. Interest on the Notes shall be computed on
the basis of actual days elapsed and a year of 360 days.
Section 2.10 Capital Adequacy. In the event that any Regulatory
Change reduces or shall have the effect of reducing the rate of return on the
Lender's capital or the capital of its parent corporation (by an amount the
Lender deems material) as a consequence of the Commitments and/or the Advances
to a level below that which the Lender or its parent corporation could have
achieved but for such Regulatory Change (taking into account the Lender's
policies and the policies of its parent corporation with respect to capital
adequacy), then the Borrowers shall, within five days after written notice and
demand from the Lender, pay to the Lender additional amounts sufficient to
compensate the Lender or its parent corporation for such reduction. Any
determination by the Lender under this Section and any certificate as to the
amount of such reduction given to the Borrowers by the Lender shall be final,
conclusive and binding for all purposes, absent error.
Section 2.11 Use of Proceeds. The proceeds of the initial Revolving
Advance shall be used first for refinancing any amount outstanding on the
revolving loan under the Prior Credit Agreement. Any remaining balance of the
initial Revolving Advance and the proceeds of any subsequent Revolving Advance
shall be used for the Borrower's general business purposes in a manner not in
conflict with any of the Borrower's covenants in this Agreement. The proceeds of
the Term Loan
shall be used for refinancing the outstanding principal balance of the Term Note
as defined in the Prior Credit Agreement.
ARTICLE III
CONDITIONS PRECEDENT
Section 3.1 Conditions of Initial Revolving Advance and Term Loan.
The obligation of the Lender to make the initial Advance on the Revolving Loan
and the Term Loan hereunder shall be subject to the prior or simultaneous
fulfillment of each of the following conditions:
3.1(a) Documents. The Lender shall have received the
following:
(i) The Notes executed by a duly authorized
officer (or officers) of the Borrowers and dated the
Closing Date.
(ii) A copy of the corporate resolutions of
the Borrowers authorizing the execution, delivery and
performance of this Agreement and the Notes and
containing an incumbency certificate showing the names
and titles, and bearing the signatures of, the officers
of the Borrowers authorized to execute this Agreement
and the Notes, certified as of the Closing Date by the
Secretary or an Assistant Secretary of each Borrower.
(iii) A copy of the Articles of
Incorporation of the Borrowers with all amendments
thereto, certified by the appropriate governmental
official of the jurisdiction of its incorporation as of
a date not more than 30 days prior to the Closing Date
(or a certificate of the Secretary of each Borrower
certifying that the Articles of Incorporation of each
Borrower have not changed since the same were last
certified to the Lender.
(iv) A certificate of good standing for each
Borrower in the jurisdiction of its incorporation,
certified by the appropriate governmental officials as
of a date not more than 30 days prior to the Closing
Date.
(v) A copy of the bylaws of each Borrower,
certified as of the Closing Date by the Secretary or an
Assistant Secretary of the Borrower or a certificate of
such Secretary certifying that the bylaws of each
Borrower have not changed since the same were last
certified to the Lender.
(vi) An initial Borrowing Base Certificate
in a form satisfactory to the Lender.
(vii) A Security Agreement (each a "Security
Agreement") in form and substance satisfactory to the
Lender and duly executed by each Borrower.
(vii) A Reaffirmation of Security Agreement
from Rimage Europe, GmbH. in form and substance
satisfactory to the Lender.
3.1(b) Other Matters. All organizational and legal
proceedings relating to the Borrowers and all instruments and
agreements in connection with the transactions contemplated by this
Agreement shall be satisfactory in scope, form and substance to the
Lender and its counsel, and the Lender shall have received all
information and copies of all documents, including records of
corporate proceedings, which it may reasonably have requested in
connection therewith, such documents where appropriate to be
certified by proper Borrower or governmental authorities.
3.1(c) Fees and Expenses. The Lender shall have received
all fees and other amounts due and payable by the Borrowers on or
prior to the Closing Date, including the reasonable fees and
expenses of counsel to the Lender payable pursuant to Section 8.2.
3.1(d) Perfection. The Security Agreements (or financing
statements with respect thereto) shall have been appropriately filed
to the satisfaction of the Lender and the priority and perfection of
the Lien created thereby shall have been established to the
satisfaction of the Lender.
Section 3.2 Conditions Precedent to all Advances. The Lender shall
not have any obligation to make the Term Loan or any Advance on the Revolving
Loan (including Advances after the initial Advance) hereunder unless all
representations and warranties of the Borrowers made in this Agreement remain
true and correct and no Default or Event of Default exists.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
Each Borrower represents and warrants to the Lender:
Section 4.1 Organization, Standing, Etc. The Borrower is a
corporation duly incorporated and validly existing and in good standing under
the laws of the jurisdiction of its incorporation and has all requisite
corporate power and authority to carry on its business as now conducted, to
enter into this Agreement and to issue the Notes and to perform its obligations
hereunder and thereunder. This Agreement and the Notes have been duly authorized
by all necessary corporate action and when executed and delivered will be the
legal and binding obligations of the Borrowers. The execution and delivery of
this Agreement and the Notes will not violate a Borrower's Articles of
Incorporation or bylaws or any law applicable to the Borrowers. No governmental
consent or exemption is required in connection with each Borrower's execution
and delivery of this Agreement and the Notes.
Section 4.2 Financial Statements and No Material Adverse Change.
Rimage's audited financial statements as at December 31, 1996 and the Borrowers'
unaudited financial statements as at September 30, 1997, as heretofore furnished
to the Lender, have been prepared in accordance with GAAP. The Borrowers have no
material obligation or liability not disclosed in such financial statements, and
there has been no material adverse change in the condition of the Borrowers
since the dates of such financial statements.
Section 4.3 Litigation. There are no actions, suits or proceedings
pending or, to the knowledge of the Borrowers, threatened against or affecting a
Borrower which, if determined adversely to a Borrower, would have, a material
adverse effect on the condition of a Borrower. The Borrowers are not in
violation of any law or regulation (including environmental laws and regulations
and laws relating to employee benefit plans) where such violation could
reasonably be expected to impose a material liability on a Borrower.
Section 4.4 Taxes. Each Borrower has filed all federal, state and
local tax returns required to be filed and has paid or made provision for the
payment of all taxes due and payable pursuant to such returns and pursuant to
any assessments made against it or any of its property (other than taxes, fees
or charges the amount or validity of which is currently being contested in good
faith by appropriate proceedings and with respect to which reserves in
accordance with GAAP have been provided on the books of the Borrowers).
Section 4.5 Subsidiaries. Rimage has no active subsidiaries except
Duplication Technology and Rimage Europe GmbH.
ARTICLE V
AFFIRMATIVE COVENANTS
Until the Revolving Commitment shall have expired or been terminated
and the Notes and all of the Borrowers' other obligations to the Lender under
this Agreement shall have been paid in full, unless the Lender shall otherwise
consent in writing:
Section 5.1 Financial Statements and Reports. The Borrowers will
furnish to the Lender:
5.1(a) As soon as available and in any event within 120
days after the end of each fiscal year of the Borrowers,
consolidated financial statements of the Borrowers consisting of at
least statements of income, cash flow and changes in stockholders'
equity, and a balance sheet as at the end of such year, setting
forth in each case in comparative form corresponding figures from
the previous annual audit, certified without qualification by
independent certified public accountants of recognized national
standing selected by the Borrowers and acceptable to the Lender with
computations showing whether the Borrowers are in compliance with
all financial covenants of this Agreement.
5.1(b) As soon as available and in any event within 45
days after the end of each month, unaudited consolidated and
consolidating financial statements for the Borrowers for such month
and for the period from the beginning of such fiscal year to the end
of such month, substantially similar to the annual audited
statements.
5.1(c) As soon as practicable and in any event within 60
days after the end of each fiscal quarter, a copy of the Borrowers'
10Q quarterly report as filed with the Securities Exchange
Commission.
5.1(d) Immediately upon any officer of the Borrower
becoming aware of any Default or Event of Default, a notice
describing the nature thereof and what action the Borrower proposes
to take with respect thereto.
5.1(e) As soon as practicable and in any event within 45
days after the end of each month, a covenant compliance certificate
in the form supplied by the Lender, with covenant calculation detail
certified by the Chief Financial Officer or other responsible of the
Borrowers.
5.1(f) As soon as practicable and in any event within 30
days after the end of each month, a Borrowing Base Certificate
together with an accounts receivable summary (detailing
ineligibles), in form and substance satisfactory to the Lender.
5.1(g) As soon as practicable and in any event within 30
days after the end of each calendar quarter an accounts receivable
detail in form and substance satisfactory to the Lender.
5.1(h) From time to time, such other information
regarding the business, operation and financial condition of the
Borrower as the Lender may reasonably request.
Section 5.2 Corporate Existence. Each Borrower will maintain its
corporate existence in good standing under the laws of its jurisdiction of
incorporation and its qualification to transact business in each jurisdiction
where failure so to qualify would permanently preclude such Borrower from
enforcing its rights with respect to any material asset or would expose such
Borrower to any material liability.
Section 5.3 Insurance. The Borrowers will maintain with financially
sound and reputable insurance companies such insurance as may be required by law
and such other insurance in such amounts and against such hazards as is
customary in the case of reputable corporations engaged in the same or similar
business and similarly situated.
Section 5.4 Payment of Taxes and Claims. Each Borrower will file all
tax returns and reports which are required by law to be filed by it and will pay
before they become delinquent, all taxes, assessments and governmental charges
and levies imposed upon it or its property and all claims or demands of any kind
(including those of suppliers, mechanics, carriers, warehousemen, landlords and
other like Persons) which, if unpaid, might result in the creation of a Lien
upon its property.
Section 5.5 Inspection. Each Borrower will permit any Person
designated by the Lender to visit and inspect any of the properties, books and
financial records of the Borrowers, to examine and to make copies of the books
of accounts and other financial records of the Borrowers, and to discuss the
affairs, finances and accounts of the Borrowers with its officers at such
reasonable times and intervals as the Lender may designate. The Borrowers shall
also allow the Lender and its agents to conduct periodic collateral audits of
each Borrower's accounts and inventory at such intervals as the Lender may
choose, and the Borrowers shall pay the Lender's costs of such audits.
Section 5.6 Maintenance of Properties. Each Borrower will maintain
its properties in good condition, repair and working order, and supplied with
all necessary equipment, and make all necessary repairs, renewals, replacements,
betterments and improvements thereto, all as may be necessary so that the
business carried on in connection therewith may be properly and advantageously
conducted at all times.
Section 5.7 Books and Records. Each Borrower will keep adequate and
proper records and books of account in which full and correct entries will be
made of its dealings, business and affairs.
Section 5.8 Compliance. Each Borrower will comply in all material
respects with all laws, rules and regulations to which it may be subject.
Section 5.9 Notice of Litigation. Each Borrower will give prompt
written notice to the Lender of the commencement of any action, suit or
proceeding affecting a Borrower in which the damages claimed exceed $25,000.
Section 5.10 Plans. Each Borrower will maintain any employee benefit
plans in compliance with all material requirements of applicable laws and
regulations.
Section 5.11 Systems Group and Services Group. The Borrowers will
maintain complete and accurate books and records relating to the Systems Group
and its business and properties, will continue to account for the business and
properties of the Systems Group on a separate basis in the same manner as used
as of the Closing Date, and will not transfer or reclassify or otherwise change
its accounting methods regarding items relevant to the Borrowing Base and will
permit the Lender to inspect the Borrowers' books and records and to audit or
inspect the properties of the Systems Group on the same basis as all other
books, records and properties of the Borrowers. The Borrowers will maintain
complete and accurate books and records relating to the Services Group and its
business and properties, will continue to account for the business and
properties of the Services Group on a separate basis in the same manner as used
as of the Closing Date, and will not transfer or reclassify or otherwise change
its accounting methods regarding items relevant to the Borrowing Base and will
permit the
Lender to inspect the Borrowers' books and records and to audit or inspect the
properties of the Services Group on the same basis as all other books, records
and properties of the Borrower.
ARTICLE VI
NEGATIVE COVENANTS
Until the Revolving Commitment shall have expired or been terminated
and the Notes and all of the Borrowers' other obligations to the Lender under
this Agreement shall have been paid in full, unless the Lender shall otherwise
consent in writing:
Section 6.1 Merger. Each Borrower will not merge or consolidate or
enter into any analogous reorganization or transaction with any Person or
liquidate, wind up or dissolve itself (or suffer any liquidation or
dissolution); provided that Duplication Technology may be merged into Rimage.
Section 6.2 Sale of Assets. Each Borrower will not sell, transfer,
lease or otherwise convey all or any substantial part of its assets except for
sales and leases of inventory in the ordinary course of business.
Section 6.3 Indebtedness. Each Borrower will not borrow any money or
issue any bonds, debentures or other debt securities or otherwise become
obligated on any interest-bearing indebtedness except for the Term Loan and
Advances under this Agreement and except as listed on Schedule 6.3.
Section 6.4 Liens. Each Borrower will not create, incur, assume or
suffer to exist any Lien, or enter into any arrangement for the acquisition of
any property through conditional sale, lease-purchase or other title retention
agreements except:
6.4(a) Liens granted to the Lender.
6.4(b) Liens existing on the date of this Agreement and
disclosed on Schedule 6.4(b) hereto.
6.4(c) Deposits or pledges to secure payment of workers'
compensation, unemployment insurance, old age pensions or other
social security obligations arising in the ordinary course of
business of the Borrower.
6.4(d) Liens for taxes, fees, assessments and
governmental charges not delinquent.
6.4(e) Liens of carriers, warehousemen, mechanics and
materialmen, and other like Liens arising in the ordinary course of
business, for sums not due.
6.4(f) Liens incurred or deposits or pledges made or
given in connection with, or to secure payment of, indemnity,
performance or other similar bonds.
6.4(g) Encumbrances in the nature of zoning
restrictions, easements and rights or restrictions of record on the
use of real property and landlord's Liens under leases on the
premises rented, which do not materially detract from the value of
such property or impair the use thereof in the business of the
Borrower.
Section 6.5 Contingent Obligations. Each Borrower will not guarantee
or otherwise become liable on the indebtedness of any other Person.
Section 6.6 Tangible Net Worth. The Borrowers will not permit their
Tangible Net Worth (the excess of their assets, excluding intangible assets,
over their liabilities, each on a consolidated basis) at any time to be less
than (a) $3,800,000 as of December 31, 1997, (b) $4,000,000 as of March 31,
1998, (c) $4,300,000 as of June 30, 1998, (d) $4,800,000 as of September 30,
1998, and (e) $5,800,000 on and after December 31, 1998.
Section 6.7 Current Ratio. The Borrowers will not permit the ratio
of their current assets to their current liabilities on a consolidated basis to
be less than 1.15 to 1 at the end of any fiscal quarter.
Section 6.8 Leverage Ratio. The Borrowers will not permit their
Leverage Ratio (the ratio of their Total Liabilities to their Tangible Net
Worth, each on a consolidated basis) to be more than 3.25 to 1 at any time
through December 30, 1998 and more than 2.25 to 1 on December 31, 1998 and at
any time thereafter.
Section 6.9 Fixed Charge Coverage Ratio. The Borrowers will not
permit their Fixed Charge Coverage Ratio, as of the last day of any fiscal
quarter for the four consecutive fiscal quarters ending on that date to be less
than 1.4 to 1.
ARTICLE VII
EVENTS OF DEFAULT AND REMEDIES
Section 7.1 Events of Default. The occurrence of any one or more of
the following events shall constitute an Event of Default:
7.1(a) The Borrowers shall fail to make when due,
whether by acceleration or otherwise, any payment of principal of or
interest on the Notes or any other obligations of any Borrower to
the Lender pursuant to this Agreement.
7.1(b) Any representation or warranty made by or on
behalf of a Borrower in this Agreement or by or on behalf of a
Borrower in any certificate, statement, report or document herewith
or hereafter furnished to the Lender pursuant to this Agreement
shall prove to have been false or misleading in any material respect
on the date as of which the facts set forth are stated or certified.
7.1(c) The Borrowers shall fail to comply with Sections
5.2 or 5.3 or any Section of Article VI.
7.1(d) The Borrowers shall fail to comply with any other
agreement, covenant, condition, provision or term contained in this
Agreement (other than those hereinabove set forth in this Section
7.1) and such failure to comply shall continue for 30 calendar days
after whichever of the following dates is the earliest: (i) the date
the Borrower gives notice of such failure to the Lender, (ii) the
date the Borrower should have given notice of such failure to the
Lender pursuant to Section 5.1, or (iii) the date the Lender gives
notice of such failure to the Borrower.
7.1(e) A Borrower shall become insolvent or shall
generally not pay its debts as they mature or shall apply for, shall
consent to, or shall acquiesce in the appointment of a custodian,
trustee or receiver of such Borrower or for a substantial part of
the property thereof or, in the absence of such application, consent
or acquiescence, a custodian, trustee or receiver shall be appointed
for a Borrower or for a substantial part of the property thereof and
shall not be discharged within 45 days, or a Borrower shall make an
assignment for the benefit of creditors.
7.1(f) Any bankruptcy, reorganization, debt arrangement
or other proceedings under any bankruptcy or insolvency law shall be
instituted by or against a Borrower and, if instituted against a
Borrower, shall have been consented to or acquiesced in by such
Borrower or shall remain undismissed for 60 days, or an order for
relief shall have been entered against a Borrower.
7.1(g) Any dissolution or liquidation proceeding shall
be instituted by or against a Borrower and, if instituted against a
Borrower, shall be consented to or acquiesced in by such Borrower or
shall remain for 45 days undismissed.
7.1(h) A judgment or judgments for the payment of money
in excess of the sum of $50,000 in the aggregate shall be rendered
against a Borrower and either (i) the judgment creditor executes on
such judgment or (ii) such judgment remains unpaid or undischarged
for more than 90 days from the date of entry thereof or such longer
period during which execution of such judgment shall be stayed
during an appeal from such judgment.
7.1(i) The maturity of any material indebtedness of a
Borrower (other than indebtedness under this Agreement) shall be
accelerated, or a Borrower shall fail to pay any such material
indebtedness when due (after the lapse of any applicable grace
period) or any event shall occur or condition shall exist and shall
continue for more than the period of grace, if any, applicable
thereto and shall have the effect of causing, or permitting the
holder of any such indebtedness to cause, such material indebtedness
to become due prior to its stated maturity or to realize upon any
collateral given as security therefor. For purposes of this Section,
indebtedness of a Borrower shall be deemed "material" if it exceeds
$50,000 as to any item of indebtedness or in the aggregate for all
items of indebtedness with respect to which any of the events
described in this Section has occurred.
7.1(j) Any execution or attachment shall be issued
whereby any substantial part of the property of a Borrower shall be
taken or attempted to be taken and the same shall not have been
vacated or stayed within 30 days after the issuance thereof.
7.1(k) Any default shall occur under any other Loan
Document.
Section 7.2 Remedies. If (a) any Event of Default described in
Sections 7.1 (e), (f) or (g) shall occur with respect to the Borrower, the
Revolving Commitment shall automatically terminate and the Notes and all other
obligations of the Borrowers to the Lender under this Agreement shall
automatically become immediately due and payable, or (b) any other Event of
Default shall occur and be continuing, then the Lender may (i) declare the
Revolving Commitment terminated, whereupon the Commitment shall terminate, and
(ii) declare the Notes and all other obligations of the Borrowers to the Lender
under this Agreement to be forthwith due and payable, whereupon the same shall
immediately become due and payable, in each case without presentment, demand,
protest or other notice of any kind, all of which are hereby expressly waived,
anything in this Agreement or in the Notes to the contrary notwithstanding. Upon
the occurrence of any of the events described in clauses (a) or (b) of the
preceding sentence the Lender may exercise all rights and remedies under this
Agreement, the Notes and any related agreements and under any applicable law.
Section 7.3 Offset. In addition to the remedies set forth in Section
7.2, upon the occurrence of any Event of Default and thereafter while the same
be continuing, each Borrower hereby irrevocably authorizes the Lender to set off
all sums owing by the Borrowers to the Lender against all deposits and credits
of a Borrower with, and any and all claims of a Borrower against, the Lender.
ARTICLE VIII
MISCELLANEOUS
Section 8.1 Modifications. Notwithstanding any provisions to the
contrary herein, any term of this Agreement may be amended with the written
consent of the Borrowers; provided that no amendment, modification or waiver of
any provision of this Agreement or consent to any departure by the Borrowers
therefrom shall in any event be effective unless the same shall be in writing
and signed by the Lender, and then such amendment, modifications, waiver or
consent shall be effective only in the specific instance and for the purpose for
which given.
Section 8.2 Costs and Expenses. Whether or not the transactions
contemplated hereby are consummated, the Borrowers agree to reimburse the Lender
upon demand for all reasonable out-of-pocket expenses paid or incurred by the
Lender (including filing and recording costs and fees and expenses of Dorsey &
Whitney LLP, counsel to the Lender) in connection with the negotiation,
preparation, approval, review, execution, delivery, amendment, modification,
interpretation, collection and enforcement of this Agreement and the Notes. The
obligations of the Borrowers under this Section shall survive any termination of
this Agreement.
Section 8.3 Waivers, etc. No failure on the part of the Lender or
the holder of either Note to exercise and no delay in exercising any power or
right hereunder shall operate as a waiver thereof; nor shall any single or
partial exercise of any power or right preclude any other or further exercise
thereof or the exercise of any other power or right. The rights and remedies of
the Lender hereunder are cumulative and not exclusive of any right or remedy the
Lender otherwise has.
Section 8.4 Notices. Except when telephonic notice is expressly
authorized by this Agreement, any notice or other communication to any party in
connection with this Agreement shall be in writing and shall be sent by manual
delivery, telegram, telex, facsimile transmission, overnight courier or United
States mail (postage prepaid) addressed to such party at the address specified
on the signature page hereof, or at such other address as such party shall have
specified to the other party hereto in writing. All periods of notice shall be
measured from the date of delivery thereof if manually delivered, from the date
of sending thereof if sent by telegram, telex or facsimile transmission, from
the first Business Day after the date of sending if sent by overnight courier,
or from four days after the date of mailing if mailed; provided, however, that
any notice to the Lender under Article II hereof or the Supplement shall be
deemed to have been given only when received by the Lender.
Section 8.5 Successors and Assigns; Disposition of Loans. This
Agreement shall be binding upon and inure to the benefit of the parties hereto
and their respective successors and assigns, except that the Borrowers may not
assign their rights or delegate its obligations hereunder without the prior
written consent of the Lender. The Lender may at any time sell, assign,
transfer, grant participations in, or otherwise dispose of any portion of the
Revolving Commitment and the Term Loan and/or Advances to banks or other
financial institutions. The Lender may disclose any information regarding the
Borrowers in the Lender's possession to any prospective buyer or participant.
Section 8.6 Waiver of Certain Defenses. The obligations of each
Borrower hereunder are absolute, unconditional, complete and continuing and
shall not be released, in whole or in part, by any action or thing which might,
but for this provision, be deemed a legal or equitable discharge of a surety or
guarantor, other than irrevocable payment and performance in full of the
Obligations hereunder. No notice of the Obligations or of any renewal or
extension thereof need be given to a Borrower and none of the foregoing acts
shall release any Borrower from liability hereunder. Each Borrower hereby
expressly waives (a) demand of payment, presentment, protest, notice of
dishonor, nonpayment or nonperformance on any and all forms of the Obligations;
(b) notice of acceptance of the Notes and notice of any liability to which it
may apply; (c) all other notices and demands of any kind and description
relating to the Obligations now or hereafter provided for by any agreement,
statute, law, rule or regulation; and (d) any and all defenses of any other
Borrower pertaining to the
Obligations except for the defense of discharge by payment. No Borrower shall be
exonerated with respect to its liabilities under the Notes or this Agreement by
any act or thing except irrevocable payment and performance of the Obligations.
The Lender is expressly authorized to amend, modify, extend or
supplement the Notes, any note or other instrument evidencing the Obligations or
any part thereof and any other agreement with respect to the Obligations, waive
compliance by a Borrower or any other Person with the respective terms thereof
and settle or compromise any of the Obligations without notice to any other
Borrower and without in any manner affecting the absolute liabilities of any
other Borrower hereunder. The liabilities of each Borrower hereunder shall not
be affected or impaired by any failure, delay, neglect or omission on the part
of the Lender to realize upon any of the Obligations of any Borrower to the
Lender. No act or omission of the Lender, whether or not such action or failure
to act varies or increases the risk of, or affects the rights or remedies of a
Borrower, shall affect or impair the obligations of the any other Borrower
hereunder.
Each Borrower hereby waives any and all right to cause a marshalling
of the assets of any Borrower or any other action by any court or other
governmental body with respect thereto and further waives any and all
requirements that the Lender institute any action or proceeding at law or in
equity, or obtain any judgment, against any other Borrower or any other Person
for the Obligations, as a condition precedent to making demand on or bringing an
action or obtaining and/or enforcing a judgment against, any Borrower hereunder.
Any remedy or right hereby granted which shall be found to be unenforceable as
to any Person or under any circumstance, for any reason, shall in no way limit
or prevent the enforcement of such remedy or right as to any other Person or
circumstance, nor shall such unenforceability limit or prevent enforcement of
any other remedy or right hereby granted.
Notwithstanding any payment or payments made by a Borrower hereunder
or any setoff or application of funds of a Borrower by the Lender, no Borrower
shall be entitled to be subrogated to any of the rights of the Lender against
another Borrower or right of offset held by the Lender for the payment of the
Obligations, nor shall any Borrower seek or be entitled to seek any contribution
or reimbursement from another Borrower in respect of payments made by a Borrower
hereunder until the Obligations have been irrevocably paid in full. References
in this Agreement to amounts "irrevocably paid" or to "irrevocable payment"
refer to payments that cannot be set aside, recovered, rescinded or required to
be returned for any reason.
Each Borrower expressly agrees that its liabilities and obligations
under this Agreement shall not in any way be impaired or otherwise affected by
the institution by or against another Borrower or any other Person of any
bankruptcy, reorganization, arrangement, insolvency or liquidation proceedings,
or any other similar proceedings for relief under any bankruptcy law or similar
law for the relief of debtors and that any discharge of any of the Obligations
pursuant to any such bankruptcy or similar law or other law shall not diminish,
discharge or otherwise affect in any way the obligations of such Borrower under
this Agreement, and that upon the institution of any of the above actions, such
obligations shall be enforceable against the remaining Borrower.
SECTION 8.7 GOVERNING LAW AND CONSTRUCTION. THE VALIDITY,
CONSTRUCTION AND ENFORCEABILITY OF THIS AGREEMENT AND THE NOTES SHALL BE
GOVERNED BY THE INTERNAL LAWS OF THE STATE OF MINNESOTA, WITHOUT GIVING EFFECT
TO CONFLICT OF LAWS PRINCIPLES THEREOF, BUT GIVING EFFECT TO FEDERAL LAWS OF THE
UNITED STATES APPLICABLE TO NATIONAL BANKS.
SECTION 8.8 CONSENT TO JURISDICTION. AT THE OPTION OF THE LENDER,
THIS AGREEMENT AND THE NOTE MAY BE ENFORCED IN ANY FEDERAL COURT OR MINNESOTA
STATE COURT SITTING IN HENNEPIN COUNTY; AND THE BORROWERS CONSENT TO THE
JURISDICTION AND VENUE OF ANY SUCH COURT AND WAIVES ANY ARGUMENT THAT
VENUE IN SUCH FORUMS IS NOT CONVENIENT. IN THE EVENT A BORROWER COMMENCES ANY
ACTION IN ANOTHER JURISDICTION OR VENUE UNDER ANY TORT OR CONTRACT THEORY
ARISING DIRECTLY OR INDIRECTLY FROM THE RELATIONSHIP CREATED BY THIS AGREEMENT,
THE LENDER AT ITS OPTION SHALL BE ENTITLED TO HAVE THE CASE TRANSFERRED TO ONE
OF THE JURISDICTIONS AND VENUES ABOVE-DESCRIBED, OR IF SUCH TRANSFER CANNOT BE
ACCOMPLISHED UNDER APPLICABLE LAW, TO HAVE SUCH CASE DISMISSED WITHOUT
PREJUDICE.
SECTION 8.9 WAIVER OF JURY TRIAL. EACH OF THE BORROWERS AND THE
LENDER IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL
PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT, THE NOTE AND ANY OTHER
LOAN DOCUMENTS OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY.
Section 8.10 Captions. The captions or headings herein and any table
of contents hereto are for convenience only and in no way define, limit or
describe the scope or intent of any provision of this Agreement.
Section 8.11 Entire Agreement. This Agreement and the other Loan
Documents embody the entire agreement and understanding between the Borrowers
and the Lender with respect to the subject matter hereof and thereof. This
Agreement supersedes all prior agreements and understandings relating to the
subject matter hereof, including, without limitation the Prior Credit Agreement,
which is hereby terminated. Notwithstanding the taking of the Security
Agreements under this Agreement, all prior security agreements from each
Borrower to the Lender, and the security interests thereunder, remain in full
force and effect and secure the indebtedness of the Borrowers hereunder. Each
reference in any such security agreement to a credit agreement shall, as of the
date hereof, be deemed a reference to this Agreement.
Section 8.12 Counterparts. This Agreement may be executed in any
number of counterparts, all of which taken together shall constitute one and the
same instrument, and either of the parties hereto may execute this Agreement by
signing any such counterpart.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed as of the date first above written.
RIMAGE CORPORATION
By /s/ BERNARD P. ALDRICH
--------------------------------------
Bernard P. Aldrich, President & CEO
Borrower's Address:
7725 Washington Ave. S.
Edina, MN 55439
A/G SYSTEMS, INC., d/b/a Duplication
Technology
By /s/ BERNARD P. ALDRICH
--------------------------------------
Bernard P. Aldrich, President & CEO
Borrower's Address:
7725 Washington Ave. S.
Edina, MN 55439
FIRST BANK NATIONAL ASSOCIATION
By RICHARD D. HARTMAN
--------------------------------------
Richard D. Hartman, Vice President
Lender's Address:
First Bank National Association
7001 France Ave. S.
Edina, MN 55435
Fax (612) 927-1268
EXHIBIT 2.3 (a) TO
CREDIT AGREEMENT
REVOLVING NOTE
$5,000,000
December 31, 1997
Minneapolis, Minnesota
FOR VALUE RECEIVED, RIMAGE CORPORATION, a Minnesota corporation, and
A/G SYSTEMS, INC. d/b/a Duplication Technology hereby jointly and severally
promises to pay to the order of FIRST BANK NATIONAL ASSOCIATION (the "Lender")
at its main office in Minneapolis, Minnesota, in lawful money of the United
States of America in immediately available funds on the Maturity Date (as such
term and each other capitalized term used herein are defined in the Credit
Agreement hereinafter referred to) the principal amount of FIVE MILLION AND
NO/100 DOLLARS ($5,000,000) or, if less, the aggregate unpaid principal amount
of all Revolving Advances made by the Lender under the Credit Agreement, and to
pay interest (computed on the basis of actual days elapsed and a year of 360
days) in like funds on the unpaid principal amount hereof from time to time
outstanding at the rates and times set forth in the Credit Agreement including
the Supplement thereto. The Maturity Date is June 30, 1998.
This note is the Revolving Note referred to in the Credit Agreement
dated as of December 31, 1997 (as the same may be hereafter from time to time
amended, restated or modified, the "Credit Agreement") between the undersigned
and the Lender. This note is secured, it is subject to certain permissive and
mandatory prepayments and its maturity is subject to acceleration, in each case
upon the terms provided in said Credit Agreement.
In the event of default hereunder, the undersigned agrees to pay all
costs and expenses of collection, including reasonable attorneys' fees. The
undersigned waives demand, presentment, notice of nonpayment, protest, notice of
protest and notice of dishonor.
THE VALIDITY, CONSTRUCTION AND ENFORCEABILITY OF THIS NOTE SHALL BE
GOVERNED BY THE INTERNAL LAWS OF THE STATE OF MINNESOTA WITHOUT GIVING EFFECT TO
THE CONFLICT OF LAWS PRINCIPLES THEREOF, BUT GIVING EFFECT TO FEDERAL LAWS OF
THE UNITED STATES APPLICABLE TO NATIONAL BANKS.
RIMAGE CORPORATION
By _______________________________
Bernard P. Aldrich, President & CEO
A/G SYSTEMS, INC. d/b/a Duplication
Technology
By _______________________________
Bernard P. Aldrich, President & CEO
EXHIBIT 2.3 (b) TO
CREDIT AGREEMENT
TERM NOTE
$1,650,000
December 31, 1997
Minneapolis, Minnesota
FOR VALUE RECEIVED, RIMAGE CORPORATION, a Minnesota corporation, and
A/G SYSTEMS, INC. d/b/a Duplication Technology hereby jointly and severally
promise to pay to the order of FIRST BANK NATIONAL ASSOCIATION (the "Lender") at
its main office in Minneapolis, Minnesota, in lawful money of the United States
of America in immediately available funds (as such term and each other
capitalized term used herein are defined in the Credit Agreement hereinafter
referred to), the principal amount of ONE MILLION SIX HUNDRED FIFTY THOUSAND AND
NO/100 DOLLARS ($1,650,000), and to pay interest (computed on the basis of
actual days elapsed and a year of 360 days) in like funds on the unpaid
principal amount hereof from time to time at the rates and times set forth in
the Credit Agreement, including the Supplement thereto.
The principal hereof is payable as follows: in equal consecutive
monthly installments of $75,000 each commencing on the last day of January, 1998
and continuing on the last day of each month thereafter through September 30,
1999 and with one final payment in the amount of the entire remaining unpaid
principal balance plus accrued and unpaid interest on October 31, 1999.
This note may be prepaid in accordance with the provisions of the
Credit Agreement, including the Supplement thereto.
This note is the Term Note referred to in the Credit Agreement dated
as of December 31, 1997 (as the same may hereafter be from time to time amended,
restated or otherwise modified, the "Credit Agreement") between the undersigned
and the Lender. This note is secured and its maturity is subject to
acceleration, in each case upon the terms provided in said Credit Agreement.
In the event of default hereunder, the undersigned agrees to pay all
costs and expenses of collection, including reasonable attorneys' fees. The
undersigned waives demand, presentment, notice of nonpayment, protest, notice of
protest and notice of dishonor.
THE VALIDITY, CONSTRUCTION AND ENFORCEABILITY OF THIS NOTE SHALL BE
GOVERNED BY THE INTERNAL LAWS OF THE STATE OF MINNESOTA WITHOUT GIVING EFFECT TO
THE CONFLICT OF LAWS PRINCIPLES THEREOF, BUT GIVING EFFECT TO FEDERAL LAWS OF
THE UNITED STATES APPLICABLE TO NATIONAL BANKS.
RIMAGE CORPORATION
By ______________________________
Bernard P. Aldrich, President & CEO
A/G SYSTEMS, INC., d/b/a Duplication
Technology
By ________________________
Bernard P. Aldrich, President & CEO
SCHEDULE 1 TO
CREDIT AGREEMENT
BORROWING BASE DEFINITIONS
"Affiliate": When used with reference to any Person, (a) each Person
that, directly or indirectly, controls, is controlled by or is under common
control with, the Person referred to, (b) each Person which beneficially owns or
holds, directly or indirectly, five percent or more of any class of voting stock
of the Person referred to (or if the Person referred to is not a corporation,
five percent or more of the equity interest), (c) each Person, five percent of
more of the voting stock (or if such Person is not a corporation, five percent
or more of the equity interest) of which is beneficially owned or held, directly
or indirectly, by the Person referred to, and (d) each of such Person's
officers, directors, joint venturers and partners. The term control (including
the terms "controlled by" and "under common control with") means the possession,
directly, of the power to direct or cause the direction of the management and
policies of the Person in question.
"Eligible Systems Group Inventory" means Inventory of the Borrowers
(excluding Inventory of the Services Group) which meets the following
requirements: (a) it is owned by a Borrower, is subject to a first priority
perfected security interest in favor of the Lender, and is not subject to any
assignment, claim or Lien other than (i) a Lien in favor of the Lender and (ii)
Liens consented to by the Lender in writing; (b) consists of raw materials or
finished products (not including work in process and supplies); (c) if held for
sale or lease or furnishing under contracts of service, it is (except as the
Lender may otherwise consent in writing) new and unused; (d) except as the
Lender may otherwise consent, it is not stored with a bailee, warehouseman or
similar party; if so stored with the Lender's consent, such bailee, warehouseman
or similar party has issued and delivered to the Lender, in form and substance
acceptable to the Lender, such documents and agreements as the Lender may
require, including, without limitation, warehouse receipts therefor in the
Lender's name; (e) the Lender has determined, in its sole and absolute
discretion, that it is not unacceptable due to age, type, category,
obsolescence,quality and/or quantity; (f) it is not held by a Borrower for
demonstration; and (g) the warranties, representations and covenants contained
in any security agreement or other agreement of a Borrower with or given to the
Lender relating directly or indirectly to a Borrower's Inventory are applicable
to it without exception.
"Eligible Services Group Inventory" means Inventory accounted for by
the Borrowers as Inventory of the Services Group which meets the following
requirements: (a) it is owned by a Borrower, is subject to a first priority
perfected security interest in favor of the Lender, and is not subject to any
assignment, claim or Lien other than (i) a Lien in favor of the Lender and (ii)
Liens consented to by the Lender in writing; (b) is located in the United
States; (c) consists of raw materials (and excludes work in process and finished
goods); (d) the Lender has determined in its sole and absolute discretion that
it is not unacceptable due to age, type, category, obsolescence, quality and/or
quantity; and (e) the warranties, representations and covenants contained in any
security agreement or other agreement of a Borrower with or given to the Lender
relating directly or indirectly to a Borrower's Inventory are applicable to it
without exception.
"Eligible Services Group Receivables" means all Receivables that
meet all requirements of Eligible Systems Group Receivables except that they are
owed to or are accounted for by the Borrowers as Receivables of the Services
Group.
"Eligible Systems Group Receivables" means the Receivables owned by
the Borrowers, excluding Receivables owed to or that are accounted for by the
Borrowers as Receivables of the Services Group, which are subject to a first
priority perfected security interest in favor of the Lender and not subject to
any assignment, claim or Lien other than the Lien in favor of the Lender and
other Liens consented to by the Lender in writing, but excluding (a) Receivables
which are not earned; (b) Receivables which are unpaid more than ninety (90)
days after the original invoice date;
(c) Receivables owed by debtors 10% or more of whose Receivables owed are
otherwise ineligible; (d) Receivables representing progress billings, or
retainages, or for work covered by any payment or performance bond; (e)
Receivables owed by Rimage Europe GmbH. and any of a Borrower's Affiliates; (f)
Receivables owed by debtors not located in the United States; (g) Receivables as
to which any warranty or representation contained in any security agreement or
other agreement of a Borrower with or given to the Lender with respect to any
such Receivable is untrue in any material respect; (h) Receivables as to which
the account debtor has disputed liability, or made any claim with respect to any
other Receivable due from such account debtor to a Borrower; (i) Receivables
subject to setoff; (j) Receivables as to which the account debtor has filed a
petition for bankruptcy or any other petition for relief under the Bankruptcy
Code, assigned any assets for the benefit of creditors, or if any petition or
other application for relief under the Bankruptcy Code has been filed against
the account debtor, or if the account debtor has failed, suspended business,
become insolvent, or has had or suffered a receiver or a trustee to be appointed
for all or a significant portion of its assets or affairs; (k) Receivables owed
by any government or government agency; (l) Receivables evidenced by a
promissory note or other instrument; and (m) Receivables as to which the Lender
believes that collection of any such Receivable is insecure or that any such
Receivable may not be paid by reason of the account debtor's financial inability
to pay.
"Inventory" means any and all of the Borrowers goods, including,
without limitation, goods in transit, wherever located which are or may at any
time be leased by a Borrower to a lessee, held for sale or lease, furnished
under any contract of service or held as raw materials, work in process, or
supplies or materials used or consumed in a Borrower's business, or which are
held for use in connection with the manufacture, packing, shipping, advertising,
selling or finishing of such goods, and all goods, the sale or other disposition
of which has given rise to a Receivable, which are returned to and/or
repossessed and/or stopped in transit by a Borrower, or the Lender, or at any
time hereafter in the possession or under the control of a Borrower, or the
Lender, or any agent or bailee of either thereof, and all documents of title or
other documents representing the same.
"Receivables" means each and every right to payment of Borrowers,
whether such right to payment arises out of a sale or lease of goods by a
Borrower or or other disposition of goods or other property of a Borrower, out
of a rendering of services by a Borrower, out of a loan by a Borrower, out of
damage to or loss of goods in the possession of a railroad or other carrier or
any other bailee, out of overpayment of taxes or other liabilities of a
Borrower, or which otherwise arises under any contract or agreement, or from any
other cause, whether such right to payment now exists or hereafter arises and
whether such right to payment is or is not yet earned by performance and
howsoever such right to payment may be evidenced, together with all other rights
and interest (including all liens and security interests) which a Borrower may
at any time have by law or agreement against any account debtor (as defined in
the Minnesota Uniform Commercial Code) or other obligor obligated to make any
such payment or against any of the property of such account debtor or other
obligor; specifically (but without limitation), the term includes all present
and future instruments, documents, chattel papers, accounts and contract rights
of a Borrower.
SCHEDULE 6.3 TO CREDIT AGREEMENT
List of Indebtedness
Creditor Type Amount as of 11/30/97
7725 Washington Ave. Corp. Cap. Bldg Lease $1,045,307
Venture III Cap. Bldg Lease $501,545
Phoenixcorp. Equipment Lease $1,496,514
SUPPLEMENT
TO
CREDIT AGREEMENT
(Reference and Eurodollar Rates)
THIS SUPPLEMENT, dated as of December 31, 1997, is entered into by
and between RIMAGE CORPORATION and A/G SYSTEMS, INC., d/b/a Duplication
Technology (collectively, the "Borrower") and FIRST BANK NATIONAL ASSOCIATION
(the "Lender") and provides additional terms which are applicable to the Credit
Agreement between the Borrower and the Lender of even date.
Section S1. Defined Terms. Terms which are defined in the Credit
Agreement are used herein with the respective meanings attributed thereto in the
Credit. As used herein, the following terms shall have the following respective
meanings:
"Adjusted Eurodollar Rate": With respect to each Interest Period
applicable to a Eurodollar Rate Advance, the rate (rounded upward, if necessary,
to the next one hundredth of one percent) determined by dividing the Eurodollar
Rate for such Interest Period by 1.00 minus the Eurodollar Reserve Percentage.
"Advance": Any portion of the outstanding Revolving Loan or Term
Loan as to which one of the available interest rate options and, if pertinent,
an Interest Period, is applicable. An Advance may be a Eurodollar Rate Advance
or a Reference Rate Advance.
"Applicable Margin": With respect to:
(a) Reference Rate Advances: That percentage that will make
the interest rate on the Reference Rate Advances on the first day such Advances
are available equal to the interest rate on Advances that were Eurodollar Rate
Advances on the last day Eurodollar Rate Advances were available. The Applicable
Margin for Reference Rate Advances will be maintained throughout the period
Reference Rate Advances are available. (Reference Rate Advances are available
only if Eurodollar Rate Advances are no longer available as set forth in
Sections S6 and S8 hereof).
(b) Eurodollar Rate Advances: 2.25%.
"Applicable Term Margin": With respect to:
(a) Reference Rate Advances: That percentage that will make
the interest rate on the Reference Rate Advances on the first day such Advances
are available equal to the interest rate on Advances that were Eurodollar Rate
Advances on the last day Eurodollar Rate Advances were available. The Applicable
Margin for Reference Rate Advances will be maintained throughout the period
Reference Rate Advances are available. (Reference Rate Advances are available
only if Eurodollar Rate Advances are no longer available as set forth in
Sections S6 and S8 hereof).
(b) Eurodollar Rate Advances: 2.50%.
"Board": The Board of Governors of the Federal Reserve System or any
successor thereto.
"Eurodollar Business Day": A Business Day which is also a day for
trading by and between banks in United States dollar deposits in the interbank
Eurodollar market and a day on which banks are open for business in New York
City.
"Eurodollar Rate": With respect to each Interest Period applicable
to a Eurodollar Rate Advance, the average offered rate for deposits in United
States dollars (rounded upward, if necessary, to the nearest 1/16 of 1%) for
delivery of such deposits on the first day of such Interest Period, for the
number of days in such Interest Period, which appears on the Reuters Screen LIBO
page as of 11:00 a.m., London time (or such other time as of which such rate
appears) two Eurodollar Business Days prior to the first day of such Interest
Period, or the rate for such deposits determined by the Lender at such time
based on such other published service of general application as shall be
selected by the Lender for such purpose; provided, that in lieu of determining
the rate in the foregoing manner, the Lender may determine the rate based on
rates at which United States dollar deposits are offered to the Lender in the
interbank Eurodollar market at such time for delivery in Immediately Available
Funds on the first day of such Interest Period in an amount approximately equal
to the Advance by the Lender to which such Interest Period is to apply (rounded
upward, if necessary, to the nearest 1/16 of 1%). "Reuters Screen LIBO page"
means the display designated as page "LIBO" on the Reuters Monitor Money Rate
Screen (or such other page as may replace the LIBO page on such service for the
purpose of displaying London interbank offered rates of major banks for United
States dollar deposits).
"Eurodollar Rate Advance": An Advance with respect to which the
interest rate is determined by reference to the Adjusted Eurodollar Rate.
"Eurodollar Reserve Percentage": As of any day, that percentage
(expressed as a decimal) which is in effect on such day, as prescribed by the
Board for determining the maximum reserve requirement (including any basic,
supplemental or emergency reserves) for a member Lender of the Federal Reserve
System, with deposits comparable in amount to those held by the Lender, in
respect of "Eurocurrency Liabilities" as such term is defined in Regulation D of
the Board. The rate of interest applicable to any outstanding Eurodollar Rate
Advances shall be adjusted automatically on and as of the effective date of any
change in the Eurodollar Reserve Percentage.
"Interest Period": With respect to each Eurodollar Rate Advance, the
period commencing on the date of such Advance or on the last day of the
immediately preceding Interest Period, if any, applicable to an outstanding
Advance and ending one, two, three, four or six months thereafter, as the
Borrower may elect in the applicable notice of borrowing, continuation or
conversion; provided that:
(1) Any Interest Period that would otherwise end on a
day which is not a Eurodollar Business Day shall be extended to the
next succeeding Eurodollar Business Day unless such Eurodollar
Business Day falls in another calendar month, in which case such
Interest Period shall end on the next preceding Eurodollar Business
Day;
(2) Any Interest Period that begins on the last
Eurodollar Business Day of a calendar month (or a day for which
there is no numerically corresponding day in the calendar month at
the end of such Interest Period) shall end on the last Eurodollar
Business Day of a calendar month; and
(3) Any Interest Period that would otherwise end after
the Revolving Maturity Date shall end on the Revolving Maturity Date
and any Interest Period that would otherwise end after the maturity
of the Term Note shall end on the maturity date of the Term Note.
"Reference Rate": The rate of interest from time to time publicly
announced by the Lender as its "reference rate." The Lender may lend to its
customers at rates that are at, above or below the Reference Rate. For purposes
of determining any interest rate hereunder or under the Revolving Note which is
based on the Reference Rate, such interest rate shall change as and when the
Reference Rate shall change.
"Reference Rate Advance": An Advance with respect to which the
interest rate is determined by reference to the Reference Rate. Reference Rate
Advances are available only if Eurodollar Rate Advances are no longer allowed as
per sections S6 and S8 of this Supplement.
Section S2. Procedure for Advances. Any request for an Advance must
be given so as to be received by the Lender not later than 2:00 p.m.
(Minneapolis time) two Eurodollar Business Days prior to the date of the
requested Advance if the Advance is requested as a Eurodollar Rate Advance and
not later than 2:00 p.m. on the date of the requested Advance if the Advance is
requested as a Reference Rate Advance. Each request for an Advance shall specify
(i) the date of the Advance, (ii) the amount of the Advance to be made on such
date which shall be in a minimum amount of $10,000 or, if more, an integral
multiple thereof, (iii) whether such Advance is to be funded as a Reference Rate
Advance or a Eurodollar Rate Advance (Reference Rate Advances are available only
if Eurodollar Rate Advances are no longer available), and (iv) in the case of a
Eurodollar Rate Advance, the duration of the initial Interest Period applicable
thereto.
Section S3. Interest Rates, Interest Payments and Default Interest.
Interest shall accrue and be payable on the Advances as follows:
S3 (a) Each Eurodollar Rate Advance on the Revolving Loan
shall bear interest on the unpaid principal amount thereof during the Interest
Period applicable thereto at a rate per annum equal to the sum of (i) the
Adjusted Eurodollar Rate for such Interest Period, plus (ii) the Applicable
Margin.
S3 (b) Each Reference Rate Advance on the Revolving Loan
shall bear interest on the unpaid principal amount thereof at a varying rate per
annum equal to the sum of (i) the Reference Rate, plus (ii) the Applicable
Margin.
S3 (c) Upon the happening of any Event of Default, each
Advance on the Revolving Loan shall, at the option of the Lender, bear interest
until paid in full (i) during the balance of any Interest Period applicable to
such Advance, at a rate per annum equal to the sum of the rate applicable to
such Advance during such Interest Period plus 2.0%, and (ii) otherwise, at a
rate per annum equal to the sum of (A) the Reference Rate, plus (B) the
Applicable Margin for Reference Rate Advances, plus (C) 2.0%.
S3 (d) Interest on the Revolving Loan shall be payable (i)
with respect to each Eurodollar Rate Advance having an Interest Period of three
months or less, on the last day of the Interest Period applicable thereto; (ii)
with respect to any Eurodollar Rate Advance having an Interest Period greater
than three months, on the last day of the Interest Period applicable thereto and
on each day that would have been the last day of the Interest Period for such
Advance had successive Interest Periods of three months duration been applicable
to such Advance; (iii) with respect to any Reference Rate Advance, on the last
day of each month; (iv) with respect to all Advances, upon any permitted
prepayment (on the amount prepaid); and (v) with respect to all Advances on the
Revolving Maturity Date; provided that interest under Section S3 (c) shall be
payable on demand.
Section S4. Interest Rates, Interest Payments and Default Interest
on Term Loan. Interest shall accrue and be payable on the Advances on the Term
Loan as follows:
S4 (a) Each Eurodollar Rate Advance shall bear interest on
the unpaid principal amount thereof during the Interest Period applicable
thereto at a rate per annum equal to the sum of (i) the Adjusted Eurodollar Rate
for such Interest Period, plus (ii) the Applicable Term Margin.
S4 (b) Each Reference Rate Advance shall bear interest on the
unpaid principal amount thereof at a varying rate per annum equal to the sum of
(i) the Reference Rate, plus (ii) the Applicable Term Margin.
S4 (c) Upon the happening of any Event of Default, each
Advance shall, at the option of the Lender, bear interest until paid in full (i)
during the balance of any Interest Period applicable to such Advance, at a rate
per annum equal to the sum of the rate applicable to such Advance during such
Interest Period plus 2.0%, and (ii) otherwise, at a rate per annum equal to the
sum of (A) the Reference Rate, plus (B) the Applicable Term Margin, plus (C)
2.0%.
S4 (d) Interest on the Term Loan shall be payable (i) with
respect to each Eurodollar Rate Advance having an Interest Period of three
months or less, on the last day of the Interest Period applicable thereto; (ii)
with respect to any Eurodollar Rate Advance having an Interest Period greater
than three months, on the last day of the Interest Period applicable thereto and
on each day that would have been the last day of the Interest Period for such
Advance had successive Interest Periods of three months duration been applicable
to such Advance; (iii) with respect to any Reference Rate Advance, on the last
day of each month; (iv) with respect to all Advances, upon any permitted
prepayment (on the amount prepaid); and (v) with respect to all Advances on the
maturity date of the Term Loan; provided that interest under Section S4 (c)
shall be payable on demand.
Section S5. Optional Prepayments. The Borrower may prepay Reference
Rate Advances, in whole or in part, at any time, without premium or penalty. Any
such prepayment must be accompanied by accrued and unpaid interest on the amount
prepaid. Each partial prepayment shall be in a minimum amount of $10,000 or, if
more, an integral multiple thereof. Except upon an acceleration following an
Event of Default or upon termination of the Revolving Commitment in whole (and
then only with respect to the Revolving Loan), the Borrower may pay Eurodollar
Rate Advances only on the last day of the Interest Period applicable thereto.
Amounts paid (unless following an acceleration or upon termination of the
Commitment in whole) or prepaid on Advances on the Revolving Loan under this
Section S5 may be reborrowed upon the terms and subject to the conditions and
limitations of the Credit Agreement. Amounts prepaid on the Term Loan may not be
reborrowed.
Section S6. Interest Rate Not Ascertainable, Etc. If, on or prior to
the date for determining the Adjusted Eurodollar Rate in respect of the Interest
Period for any Eurodollar Rate Advance, the Lender determines (which
determination shall be conclusive and binding, absent error) that:
(a) deposits in dollars (in the applicable amount) are
not being made available to the Lender in the relevant market for
such Interest Period, or
(b) the Adjusted Eurodollar Rate will not adequately and
fairly reflect the cost to the Lender of funding or maintaining
Eurodollar Rate Advances for such Interest Period, the Lender shall
forthwith give notice to the Borrower of such determination,
whereupon the obligation of the Lender to make or continue, or to
convert any Advances to, Eurodollar Rate Advances, as the case may
be, shall be suspended until the Lender notifies the Borrower that
the circumstances giving rise to such suspension no longer exist.
While any such suspension continues, all further Advances by the
Lender shall be made as Reference Rate Advances. No such suspension
shall affect the interest rate then in effect during the applicable
Interest Period for any Eurodollar Rate Advance outstanding at the
time such suspension is imposed.
Section S7. Increased Cost. If any Regulatory Change:
(a) shall subject the Lender to any tax, duty or other
charge with respect to its Eurodollar Rate Advances, the Notes, its
obligation to make Eurodollar Rate Advances or shall change the
basis of taxation of payment to the Lender of the principal of or
interest on Eurodollar Rate Advances or any other amounts due under
this Agreement in respect of Eurodollar Rate Advances or its
obligation to make Eurodollar Rate Advances (except for changes in
the rate of tax on the overall net income of the Lender imposed by
the jurisdiction in which the Lender's principal office is located);
or
(b) shall impose, modify or deem applicable any reserve,
special deposit, capital requirement or similar requirement
(including, without limitation, any such requirement imposed by the
Board, but excluding with respect to any Eurodollar Rate Advance any
such requirement to the extent included in calculating the
applicable Adjusted Eurodollar Rate) against assets of, deposits
with or for the account of, or credit extended by, the Lender or
shall impose on the Lender or on the interbank Eurodollar market any
other condition affecting its Eurodollar Rate Advances, the Notes or
its obligation to make Eurodollar Rate Advances;
and the result of any of the foregoing is to increase the cost to the Lender of
making or maintaining any Eurodollar Rate Advance, or to reduce the amount of
any sum received or receivable by the Lender under this Agreement or under the
Revolving Note or the Term Note, then, within 30 days after demand by the
Lender, the Borrower shall pay to the Lender such additional amount or amounts
as will compensate the Lender for such increased cost or reduction. The Lender
will promptly notify the Borrower of any event of which it has knowledge,
occurring after the date hereof, which will entitle the Lender to compensation
pursuant to this Section. A certificate of the Lender claiming compensation
under this Section, setting forth the additional amount or amounts to be paid to
it hereunder and stating in reasonable detail the basis for the charge and the
method of computation, shall be conclusive in the absence of error. In
determining such amount, the Lender may use any reasonable averaging and
attribution methods. Failure on the part of the Lender to demand compensation
for any increased costs or reduction in amounts received or receivable with
respect to any Interest Period shall not constitute a waiver of the Lender's
rights to demand compensation for any increased costs or reduction in amounts
received or receivable in any subsequent Interest Period.
Section S8. Illegality. If any Regulatory Change shall make it
unlawful or impossible for the Lender to make, maintain or fund any Eurodollar
Rate Advances, the Lender shall notify the Borrower, whereupon the obligation of
the Lender to make or continue, or to convert any Advances to, Eurodollar Rate
Advances shall be suspended until the Lender notifies the Borrower that the
circumstances giving rise to such suspension no longer exist. If the Lender
determines that it may not lawfully continue to maintain any Eurodollar Rate
Advances to the end of the applicable Interest Periods, all of the affected
Advances shall be automatically converted to Reference Rate Advances as of the
date of the Lender's notice, and upon such conversion the Borrower shall
indemnify the Lender in accordance with Section S9.
Section S9. Funding Losses; Eurodollar Rate Advances. The Borrower
shall compensate the Lender, upon its written request, for all losses, expenses
and liabilities (including any interest paid by the Lender to lenders of funds
borrowed by it to make or carry Eurodollar Rate Advances to the extent not
recovered by the Lender in connection with the re-employment of such funds and
including loss of anticipated profits) which the Lender may sustain: (i) if for
any reason, other than a default by the Lender, a funding of a Eurodollar Rate
Advance does not occur on the date specified therefor in the Borrower's request
or notice as to such Advance under Section S2 or S3, or (ii) if, for whatever
reason (including, but not limited to, acceleration of the maturity of Advances
following an Event of Default), any repayment of a Eurodollar Rate Advance, or a
conversion pursuant to Section S8, occurs on any day other than the last day of
the Interest Period applicable thereto. The Lender's request for compensation
shall set forth the basis for the amount requested and shall be final,
conclusive and binding, absent error.
Section S10. Discretion of Lender as to Manner of Funding. The
Lender shall be entitled to fund and maintain its funding of Eurodollar Rate
Advances in any manner it may elect, it being understood, however, that for the
purposes of this Agreement all determinations hereunder (including, but not
limited to, determinations under Section S9, but excluding determinations that
the Lender may elect to make from the Reuters screen) shall be made as if the
Lender had actually funded and maintained each Eurodollar Rate Advance during
the Interest Period for such Advance through the purchase of deposits having a
maturity corresponding to the last day of the Interest Period and bearing an
interest rate equal to the Eurodollar Rate for such Interest Period.
RIMAGE CORPORATION
By
------------------------------------
Bernard P. Aldrich, President & CEO
A/G SYSTEMS, INC., d/b/a Duplication
Technology
By
------------------------------------
Bernard P. Aldrich, President & CEO
FIRST BANK NATIONAL ASSOCIATION
By
------------------------------------
Richard D. Hartman, Vice President
CERTIFICATE OF ASSISTANT SECRETARY OF
RIMAGE CORPORATION
I, James L. Reissner, hereby certify to First Bank National Association that I
am the Assistant Secretary of Rimage Corporation, a Minnesota corporation (the
"Company") and that the following resolutions have been duly adopted by the
Board of Directors of the Company in a manner authorized by the laws of the
State of Minnesota:
"WHEREAS, the Company wishes to borrow money from First
Bank National Association (the "Lender"), and for that purpose
intends to enter into a Credit Agreement with the Lender.
RESOLVED, the Company shall enter into a Credit
Agreement with the Lender under which the Company and A/G Systems,
Inc., d/b/a Duplication Technology may obtain revolving loans up to
$5,000,000 in aggregate amount and a Term Loan of $1,650,000; and
the President and CEO or the Assistant Secretary of the Company is
hereby authorized at any time and from time to time to execute and
deliver to the Lender such Credit Agreement and any promissory
notes, security agreements, mortgages, subordination agreements,
pledge agreements, assignments of life insurance, reimbursement
agreements, or amendments to any of the foregoing as may be
contemplated or required pursuant to such Credit Agreement or
otherwise, all in such form as such officer may determine and
approve (such determination and approval to be established
conclusively by such officer's execution and delivery of such Credit
Agreement and any such related documents and instruments).
FURTHER RESOLVED, that the President and CEO or the
Assistant Secretary of the Company is hereby authorized at any time
and from time to time to sell, assign, transfer, mortgage, create
security interests in and pledge to the Lender the real property,
goods, instruments, documents, securities, chattel paper, accounts,
contract rights and other intangibles and any other property now
owned or hereafter acquired by the Company, either absolutely for
such consideration as such officer may determine to be appropriate
or as security for the payment or performance of any or all debts,
liabilities and obligations of every type and description now or at
any time hereafter owed to the Lender by the Company, on such terms
as such officer may approve, and to do such other acts or things in
connection therewith or pursuant thereto as such officer may
determine to be appropriate (such determination and approval to be
established conclusively by the instrument executed or action taken
by such officer).
FURTHER RESOLVED, it is hereby acknowledged that each
and every note, guaranty, security agreement and other instrument
made pursuant to the foregoing resolutions is and will be made and
given for the corporate purposes of this Company.
FURTHER RESOLVED, the Secretary or Assistant Secretary
shall certify to the Lender the names and signatures of the persons
who presently are duly elected, qualified and acting as the officers
authorized to act under the foregoing resolutions, and the Secretary
or Assistant Secretary shall from time to time hereafter, upon a
change in the facts so certified, immediately certify to the Lender
the names and signatures of the persons then authorized to sign or
to act; the Lender shall be fully protected in relying on such
certificates and on the obligation of the Secretary or an Assistant
Secretary immediately to certify to the Lender any change in any
fact certified, and the Lender shall be indemnified and saved
harmless by the Company from any and all claims, demands, expenses,
costs and damages resulting from or growing out of honoring or
relying on the signature or other authority (whether or not properly
used) of any officer whose name and signature was so certified, or
refusing to honor any signature or authority not so certified."
I further certify that the foregoing resolutions have not been amended or
revoked and are in full force and effect on the date hereof.
I further certify that the Board of Directors of the Company has, and at the
time of adoption of the foregoing resolutions had, full power and lawful
authority to adopt the foregoing resolutions and to confer the powers therein
granted upon the officers designated, and that such officers have full power and
authority to exercise the same.
I further certify that the officers whose names appear below have been duly
elected to and now hold the offices in the Company set forth opposite their
respective names and that the signature appearing opposite the name of each of
such officer is authentic and official:
Name Title Specimen Signature
Bernard P. Aldrich President & CEO ____________________
James L. Reissner Assistant Secretary ____________________
I further certify that shareholder approval of the foregoing resolutions is not
required and said resolutions are effective and binding on the Company without
approval by its shareholders.
I further certify that the Articles of Incorporation and bylaws of the Company
have not been amended or modified since the same were last certified to the
Lender.
Dated December 31, 1997
------------------------
Assistant Secretary
- ------------------------------
Attest by President & CEO
CERTIFICATE OF ASSISTANT SECRETARY OF
A/G SYSTEMS, INC.
I, James L. Reissner , hereby certify to First Bank National Association that I
am the Assistant Secretary of A/G Systems, Inc. (the "Company") and that the
following resolutions have been duly adopted by the Board of Directors of the
Company in a manner authorized by the laws of the State of the Company's
incorporation:
"WHEREAS, the Company wishes to borrow money from First
Bank National Association (the "Lender"), and for that purpose
intends to enter into a Credit Agreement with the Lender.
RESOLVED, the Company shall enter into a Credit
Agreement with the Lender under which the Company and its affiliate
Rimage Corporation may obtain revolving loans up to $5,000,000 in
aggregate amount and a Term Loan of $1,650,000; and the President
and CEO or the Assistant Treasurer of the Company is hereby
authorized at any time and from time to time to execute and deliver
to the Lender such Credit Agreement and any promissory notes,
security agreements, mortgages, subordination agreements, pledge
agreements, assignments of life insurance, reimbursement agreements,
or amendments to any of the foregoing as may be contemplated or
required pursuant to such Credit Agreement or otherwise, all in such
form as such officer may determine and approve (such determination
and approval to be established conclusively by such officer's
execution and delivery of such Credit Agreement and any such related
documents and instruments).
FURTHER RESOLVED, that the President and CEO or the
Assistant Secretary of the Company is hereby authorized at any time
and from time to time to sell, assign, transfer, mortgage, create
security interests in and pledge to the Lender the real property,
goods, instruments, documents, securities, chattel paper, accounts,
contract rights and other intangibles and any other property now
owned or hereafter acquired by the Company, either absolutely for
such consideration as such officer may determine to be appropriate
or as security for the payment or performance of any or all debts,
liabilities and obligations of every type and description now or at
any time hereafter owed to the Lender by the Company, on such terms
as such officer may approve, and to do such other acts or things in
connection therewith or pursuant thereto as such officer may
determine to be appropriate (such determination and approval to be
established conclusively by the instrument executed or action taken
by such officer).
FURTHER RESOLVED, it is hereby acknowledged that each
and every note, guaranty, security agreement and other instrument
made pursuant to the foregoing resolutions is and will be made and
given for the corporate purposes of this Company.
FURTHER RESOLVED, the Secretary or Assistant Secretary
shall certify to the Lender the names and signatures of the persons
who presently are duly elected, qualified and acting as the officers
authorized to act under the foregoing resolutions, and the Secretary
or Assistant Secretary shall from time to time hereafter, upon a
change in the facts so certified, immediately certify to the Lender
the names and signatures of the persons then authorized to sign or
to act; the Lender shall be fully protected in relying on such
certificates and on the obligation of the Secretary or an Assistant
Secretary immediately to certify to the Lender any change in any
fact certified, and the Lender shall be indemnified and saved
harmless by the Company from any and all claims, demands, expenses,
costs and damages resulting from or growing out of honoring or
relying on the signature or other authority (whether or not properly
used) of any officer whose name and signature was so certified, or
refusing to honor any signature or authority not so certified."
I further certify that the foregoing resolutions have not been amended or
revoked and are in full force and effect on the date hereof.
I further certify that the Board of Directors of the Company has, and at the
time of adoption of the foregoing resolutions had, full power and lawful
authority to adopt the foregoing resolutions and to confer the powers therein
granted upon the officers designated, and that such officers have full power and
authority to exercise the same.
I further certify that the officers whose names appear below have been duly
elected to and now hold the offices in the Company set forth opposite their
respective names and that the signature appearing opposite the name of each of
such officer is authentic and official:
Name Title Specimen Signature
Bernard P. Aldrich President & CEO ____________________
James L. Reissner Assistant Secretary ____________________
I further certify that shareholder approval of the foregoing resolutions is not
required and said resolutions are effective and binding on the Company without
approval by its shareholders.
I further certify that attached hereto as Exhibits A and B, respectively, are
true, correct and complete copies of the Articles of Incorporation and bylaws of
the Company, including all amendments thereto.
Dated December 31, 1997
------------------------
Assistant Secretary
- ------------------------------
Attest by President & CEO