REDUCING REVOLVING NOTE
$1,600,000.00 Los Angeles, California
June 4, 2002
FOR VALUE RECEIVED, the undersigned AUTO-GRAPHICS, INC., a California
corporation ("Borrower"), promises to pay to the order of ▇▇▇▇▇ FARGO BANK,
NATIONAL ASSOCIATION ("Bank") at its office at ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, or at such other place as the holder hereof may
designate, in lawful money of the United States of America and in
immediately available funds, the principal sum of One Million Six Hundred
Thousand Dollars ($1,600,000.00), or so much thereof as may be advanced and
be outstanding, with interest thereon, to be computed on each advance from
the date of its disbursement as set forth herein. Capitalized terms used
herein without definition shall have the meanings assigned to such terms in
that certain Amended and Restated Credit Agreement dated as of August 1,
2000 (as amended, modified, supplemented or restated from time to time, the
"Credit Agreement") between Borrower and Bank.
INTEREST:
(a) Interest. The outstanding principal balance of this Note shall bear
interest (computed on the basis of a 360-day year, actual days elapsed) at a
rate per annum equal to the Prime Rate in effect from time to time plus the
Applicable Margin as in effect from time to time. The "Prime Rate" is a
base rate that Bank from time to time establishes and which serves as the
basis upon which effective rates of interest are calculated for those loans
making reference thereto. Each change in the rate of interest hereunder
shall become effective on the date each Prime Rate change is announced
within Bank. The "Applicable Margin" shall mean the per annum rate set forth
below for the applicable period set forth opposite such rate.
Period Applicable Margin
June 4, 2002 through September 30, 2002 2.5%
October 1, 2002 through December 31, 2002 3.0%
January 1, 2003 through March 31, 2003 3.5%
April 1, 2003 through June 2, 2003 4.0%
(b) Payment of Interest. Interest accrued on this Note shall be payable
on the last day of each month, commencing June 30, 2002.
(c) Default Interest. From and after the maturity date of this Note, or
such earlier date as all principal owing hereunder becomes due and payable
by acceleration or otherwise, the outstanding principal balance of this Note
shall bear interest until paid in full at an increased rate per annum
(computed on the basis of a 360-day year, actual days elapsed) equal to four
percent (4%) above the rate of interest from time to time applicable to this
Note.
BORROWING AND REPAYMENT:
(a) Borrowing and Repayment. Borrower may from time to time during the
term of this Note borrow, partially or wholly repay its outstanding
borrowings, and reborrow, subject to all of the limitations, terms and
conditions of this Note and of any document executed in connection with or
governing this Note; provided, however, that the total outstanding
borrowings under this Note shall not at any time exceed the principal amount
set forth above or such lesser amount as shall at any time be available
hereunder. The unpaid principal balance of this obligation at any time
shall be the total amounts advanced hereunder by the holder hereof less the
amount of principal payments made hereon by or for Borrower, which balance
may be endorsed hereon from time to time by the holder. The outstanding
principal balance of this Note shall be due and payable in full on June 2,
2003.
(b) Reductions in Availability. Notwithstanding the principal amount
set forth above, the maximum principal amount available under this Note
shall be reduced automatically and without further notice on the last day of
each calendar quarter, commencing September 30, 2002, by the amount of One
Hundred Seventy-Five Thousand Dollars ($175,000.00). If the outstanding
principal balance of this Note on any such date is greater than the new
maximum principal amount then available hereunder, Borrower shall make a
principal reduction on this Note on such date in an amount sufficient to
reduce the then outstanding principal balance hereof to an amount not
greater than said new maximum principal amount.
(c) Equity Proceeds. Borrower shall prepay the Line of Credit in an
amount equal to ten percent (10%) of Excess Equity Proceeds not more than
two (2) business days after any Excess Equity Proceeds are received, and the
Line of Credit shall be permanently reduced on such date by the amount of
prepayment required by this sentence. "Equity Proceeds" shall mean the
gross amount of new equity received by the Borrower and its Subsidiaries
from and after April 1, 2000. "Excess Equity Proceeds" shall mean Equity
Proceeds in excess of $5,000,000.00.
(d) Advances. Advances hereunder, to the total amount of the principal
sum stated above, may be made by the holder at the oral or written request
of (i) ▇▇▇▇▇▇ ▇. ▇▇▇▇ or ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, any one acting alone, who are
authorized to request advances and direct the disposition of any advances
until written notice of the revocation of such authority is received by the
holder at the office designated above, or (ii) any person, with respect to
advances deposited to the credit of any deposit account of Borrower, which
advances, when so deposited, shall be conclusively presumed to have been
made to or for the benefit of Borrower regardless of the fact that persons
other than those authorized to request advances may have authority to draw
against such account. The holder shall have no obligation to determine
whether any person requesting an advance is or has been authorized by
Borrower.
(e) Application of Payments. Each payment made on this Note shall be
credited first, to any interest then due and second, to the outstanding
principal balance hereof.
EVENTS OF DEFAULT:
This Note is made pursuant to and is subject to the terms and conditions of
the Credit Agreement. Any default in the payment or performance of any
obligation under this Note, or any defined event of default under the Credit
Agreement, shall constitute an "Event of Default" under this Note.
MISCELLANEOUS:
(a) Remedies. Upon the occurrence of any Event of Default, the holder
of this Note, at the holder's option, may declare all sums of principal and
interest outstanding hereunder to be immediately due and payable without
presentment, demand, notice of nonperformance, notice of protest, protest or
notice of dishonor, all of which are expressly waived by ▇▇▇▇▇▇▇▇, and the
obligation, if any, of the holder to extend any further credit hereunder
shall immediately cease and terminate. Borrower shall pay to the holder
immediately upon demand the full amount of all payments, advances, charges,
costs and expenses, including reasonable attorneys' fees (to include outside
counsel fees and all allocated costs of the holder's in-house counsel),
expended or incurred by the holder in connection with the enforcement of the
holder's rights and/or the collection of any amounts which become due to the
holder under this Note, and the prosecution or defense of any action in any
way related to this Note, including without limitation, any action for
declaratory relief, whether incurred at the trial or appellate level, in an
arbitration proceeding or otherwise, and including any of the foregoing
incurred in connection with any bankruptcy proceeding (including without
limitation, any adversary proceeding, contested matter or motion brought by
Bank or any other person) relating to Borrower or any other person or
entity.
(b) Governing Law. This Note shall be governed by and construed in
accordance with the laws of the State of California.
(c) Superseded Note. This Note replaces and supersedes in its entirety
that certain Revolving Note executed by ▇▇▇▇▇▇▇▇ in favor of Bank dated
December __, 2001 in the original principal amount of $1,600,000.00.
IN WITNESS WHEREOF, the undersigned has executed this Note as of the date
first written above.
AUTO-GRAPHICS, INC., a California
corporation
By: ss/ ▇▇▇▇▇▇ ▇. ▇▇▇▇
-----------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇
Title: President
