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CREDIT AND SECURITY AGREEMENT
AGREEMENT made this 14 day of March, 1995, Technical Publishing
Solutions, Inc., a Minnesota corporation (herein called "Borrower"), for the
benefit of Diversified Business Credit, Inc., a Minnesota corporation (herein,
with its participants, successors and assigns, called "Lender").
RECITALS
Borrower has requested that Lender make loans to Borrower from time to
time at Lender's sole discretion and, in connection therewith, has executed and
delivered for Lender's benefit the following security documents (herein called
the "Security Documents"):
1. UCC Financing Statements
2. Various ancillary and supplemental agreements and documents executed
and delivered in connection with the foregoing.
This Agreement sets forth certain additional obligations undertaken by Borrower
to induce Lender to make such loans.
ACCORDINGLY, to induce Lender to make one or more loans to Borrower, and
for good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, Borrower hereby represents, warrants and agrees for the
benefit of Lender that:
1. THE LOANS. Lender shall not be obligated to make any loans to
Borrower. All loans which Lender may determine to make under this Agreement
shall be repayable on demand. Borrower will comply with the following
procedure in requesting loans from Lender:
(a) Borrower will request loans from Lender in such manner as Lender
may from time to time prescribe.
(b) Lender may make loans in any amount and in any manner requested
orally or in writing (i) by any officer of Borrower; or (ii) by any person
designated as Borrower's agent by any officer of Borrower in a writing
delivered to Lender; or (iii) by any person reasonably believed by Lender
to be an officer of Borrower or such a designated agent. Except as
otherwise instructed in writing by such officer, agent or person, Lender
may disburse loan proceeds by deposit with any bank to or for the account
of Borrower or to or for the account of any third party designated by such
officer, agent or person, or by an instrument payable to Borrower or to
any such third party, or in any other manner deemed appropriate by Lender.
All principal of and interest on loans made by Lender shall be repayable
at the offices of Lender in Minneapolis, Minnesota, unless Lender
designates a different place of payment by written notice to Borrower.
(c) Lender may make loans on the basis of Collateral available
hereunder and under the Security Documents or any other basis deemed
appropriate by Lender from time to time. Lender may change from time to
time, at its sole discretion and without notice to Borrower, the
standards, criteria and formulae used by Lender in determining the type
and amount of Collateral eligible for advance. In any event, subject to
change at Lender's discretion, Borrower shall not request loans on the
basis of the following Collateral:
(1) Accounts receivable which are (i) disputed or subject to
claims or setoffs; or (ii) progress xxxxxxxx; or (iii) owed by an
account debtor not located in the United States or Canada and not
secured by a bank letter of credit satisfactory to
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Lender in its sole discretion; or (iv) owed by an account debtor
which is the subject of any bankruptcy or insolvency proceeding or
is insolvent or has made an assignment for the benefit of creditors
or has failed or suspended or gone out of business.
(2) Collateral which is not as warranted herein or in the
Security Documents.
(3) Collateral which Lender, in its discretion, has declared
ineligible collateral by written notice to Borrower.
(4) Accounts receivable not paid within 90 days after invoice
or, if Lender in its discretion has determined that a particular
dated receivable is eligible for advance, within 30 days after the
due date stated.
(5) Accounts receivable owed to Borrower by any shareholder,
subsidiary or affiliate of Borrower or by any person or company
obligated to pay any receivable deemed ineligible under clauses (1)
through (4), if such ineligible receivable is 10% or more of the
total amount due from such person or company.
Notwithstanding any apportionment, exclusion or segregation of collateral
made by Lender for purposes of determining the amount or maximum amount of
loans made to Borrower, all rights and interests of Lender hereunder and
under the Security Documents, and all other collateral rights, interests
and properties available to Lender, shall secure and may be applied to pay
any or all indebtedness of Borrower secured thereby, in any manner or
order of application and without regard to any such apportionment,
exclusion or segregation.
(d) Borrower will pay interest on all outstanding loans under this
Agreement (except for the loans referred to in the Term Loan Supplement to
Credit Agreement dated March ___, 1995) at an annual rate (computed on the
basis of actual days elapsed in a 360-day year) which shall at all times
be equal to the greater of (i) eight percent (8.0%) per annum, or (ii) two
and one half percent (2.5%) above the rate of interest publicly announced
by National City Bank of Minneapolis from time to time as its base rate
(or any similar successor rate), each change in the interest rate to take
effect simultaneously with the corresponding change in the designated
bank's base rate or any similar successor rate; provided that in no event
shall the Borrower pay interest at a rate greater than the highest rate
permitted by law. Borrower will pay interest on the loans referred to in
the Term Loan Supplement to Credit Agreement dated March __, 1995 at an
annual rate (computed on the basis of actual days elapsed in a 360-day
year) which shall at all times be equal to the greater of (i) seven and
one half percent (7.5%) per annum, or (ii) two percent (2.0%) above the
rate of interest publicly announced by National City Bank of Minneapolis
from time to time as its base rate (or any similar successor rate), each
change in the interest rate to take effect simultaneously with the
corresponding change in the designated bank's base rate or any similar
successor rate; provided that in no event shall the Borrower pay interest
at a rate greater than the highest rate permitted by law. All interest
shall accrue on the principal balance outstanding from time to time and
shall be payable on the first day of the next month in which accrued and
in any event on demand. Borrower agrees that Lender may at any time or
from time to time, without further request by Borrower, make a loan to
Borrower, or apply the proceeds of any loans, for the purpose of paying
all such interest promptly when due. In the computation of interest,
Lender may allow three (3) banking days for the collection of uncollected
funds.
(e) In addition to any other amounts payable by Borrower to Lender,
Borrower agrees to pay to the Lender on the date of this Agreement and on
each anniversary date, so
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long as Lender, in its sole discretion, is willing to make loans to
Borrower for ordinary working capital purposes subject to the availability
of Collateral deemed eligible by Lender an annual fee equal to $5,000,
provided, however, payment of such fee does not obligate Lender to make
any loans to Borrower, and Lender, in its sole discretion, shall determine
if it will make loans and the amounts of any such loans pursuant to the
terms of Paragraphs 1(a) through 1(h). In addition to the annual fee and
other amounts set forth herein, on each anniversary date of this
Agreement, Borrower shall pay to Lender an additional annual fee equal to
the difference between (a) one percent (1.0%) of the highest loan balance
outstanding owed by Borrower and DocuPro Services, Inc. in the aggregate
at any time during the preceding twelve (12) months and (b) $5,000. Such
additional annual fee will be due notwithstanding termination of this
Agreement on or before such anniversary date; and such additional annual
fee will be based on outstanding loan balances during the period beginning
with last anniversary date and ending on the date of termination of this
Agreement and shall be due and payable on such date of termination. The
hereinabove described annual fee and additional annual fee are the
joint and several obligations of Borrower and DocuPro Services, Inc. To
the extent the annual fee or additional annual fee or a portion thereof is
paid by DocuPro Services, Inc., Borrower shall be obligated to pay only
the remaining amount of the unpaid annual and additional annual fees.
(f) Lender may maintain from time to time, at its discretion,
liability records as to any and all loans made or repaid and interest
accrued or paid under this Agreement. All entries made on any such record
shall be presumed correct until Borrower establishes the contrary. On
demand by Lender, Borrower will admit and certify in writing the exact
principal balance which Borrower then asserts to be outstanding to Lender
for loans under this Agreement. Any billing statement or accounting
rendered by Lender shall be conclusive and fully binding on Borrower
unless specific written notice of exception is given to Lender by Borrower
within 30 days after its receipt by Borrower.
(g) Borrower's obligations with respect to all loans shall be fully
binding and enforceable without any note or other evidence of
indebtedness. Nevertheless, if Lender so requests, Borrower will duly
execute and deliver to Lender a promissory note negotiable in form payable
on demand to the order of Lender in a principal amount equal to the
principal balance then outstanding to Lender for loans under this
Agreement, together with interest as set forth in Paragraph 1(d).
(h) In requesting any loans under this Agreement, Borrower shall be
deemed to represent and warrant to Lender that, as of the date of the
proposed loans, (i) all of the representations and warranties made in
Paragraphs 3 and 4 will be true and correct except for changes caused by
transactions permitted under this Agreement, and (ii) no breach or default
under, and no Event of Default defined or described in, this Agreement or
any of the Security Documents will exist.
2. AFFILIATE. For the purposes of this Agreement, "Affiliate" refers to
DocuPro Services, Inc., Technical Publishing Solutions of Colorado, Inc. and
any other corporation, partnership, individual or other entity which now or
hereafter controls, is controlled by, or is under common control with Borrower.
Borrower agrees that any breach, default or event of default by or
attributable to any Affiliate under any agreement between such Affiliate and
Lender shall constitute a breach of this Agreement and an Event of Default
hereunder and under the Security Documents.
3. SECURITY INTEREST
(a) GRANT OF SECURITY INTEREST. Borrower hereby assigns to Lender
and grants Lender a security interest (collectively referred to as the
"Security Interests") in the property
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described below, as security for the payment and performance of each
and every debt, liability and obligation of every type and description
which Borrower may now or at any time hereafter owe to Lender (whether
such debt, liability or obligation now exists or is hereafter created or
incurred, whether it arises in a transaction involving Lender alone or in
a transaction involving other creditors of Borrower, and whether it is
direct or indirect, due or to become due, absolute or contingent, primary
or secondary, liquidated or unliquidated, or sole, joint, several or joint
and several, and including specifically, but not limited to all
indebtedness or Borrower arising under this or any other present or future
loan or credit agreement, promissory note, guaranty or other undertaking
of Borrower enforceable by Lender; all such debts, liabilities and
obligations are herein collectively referred to as the "Obligations").
The Security Interests shall attach to the following property of Borrower
(the "Collateral"), including all proceeds and products thereof:
INVENTORY: All inventory of every type and description, now owned
or hereafter acquired by Borrower, including inventory consisting of
whole goods, spare parts or components, supplies or materials and
inventory acquired, held or furnished for sale, for lease or under
service contracts or for manufacture or processing, or any other
purpose, and wherever located.
DOCUMENTS OF TITLE; All warehouse receipts, bills of lading and
other documents of title of every type and description now owned or
hereafter acquired by Borrower.
RECEIVABLES: Each and every right of Borrower to the payment of
money, whether such right to payment now exists or hereafter arises,
whether such right to payment arises out of a sale, lease or other
disposition of goods or other property, out of a rendering of
services, out of a loan, out of the overpayment of taxes or other
liabilities, or any other transaction or event, whether such right
to payment is created, generated or earned by Borrower or by some
other person whose interest is subsequently transferred to Borrower,
whether such right to payment is or is not already earned by
performance, and howsoever such right to payment may be evidenced,
together with all other rights and interests (including all liens,
security interests and guaranties) which Borrower may at any time
have by law or agreement against any account debtor or other person
obligated to make any such payment or against any property of such
account debtor or other person; all contract rights, chattel papers,
bonds, notes and other debt instruments, and all loans and
obligations receivable, tax refunds and other rights to payment in
the nature of general intangibles; all checking accounts, savings
accounts and other depository accounts and all savings certificates
and certificates of deposit maintained with or issued by Lender or
any other bank or other financial institution.
EQUIPMENT AND FIXTURES: All equipment and fixtures of every type
and description now owned or hereafter acquired by Borrower,
including (without limitation) all present and future machinery,
vehicles, furniture, fixtures, manufacturing equipment, shop
equipment, office and recordkeeping equipment, parts, tools,
supplies and all other goods (except inventory) used or bought for
use by Borrower for any business or enterprise; including (without
limitation) all goods that are or may be attached or affixed or
otherwise become fixtures upon any real property; and including
specifically (without limitation) the goods described in any
equipment schedule or list herewith or hereafter furnished to Lender
by Borrower, all accessions thereto, all substitutions and
replacements thereof, and all like or similar property now owned or
hereafter acquired by Borrower. (No such schedule or list need be
furnished in order for the security interest granted herein to be
valid as to all of Borrower's equipment.)
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EQUITY SECURITIES: All stocks and other instruments, now owned or
hereafter acquired by Borrower, evidencing an ownership interest in
any partnership, corporation, entity or enterprise.
GENERAL INTANGIBLES: All general intangibles of every type and
description now owned or hereafter acquired by Borrower, including
(without limitation) all present and future foreign and domestic
patents, patent applications, trademarks, trademark applications,
copyrights, trade names, trade secrets, shop drawings, engineering
drawings, blueprints, specifications, parts lists, manuals,
operating instructions, customer or supplier lists and contracts,
licenses, permits, franchises, the right to use Borrower's corporate
name, and the goodwill of Borrower's business.
(b) REPRESENTATIONS, WARRANTIES AND COVENANTS. Borrower
represents, warrants and covenants as follows:
(1) Borrower has (or will have at the time it acquires rights
in Collateral hereafter arising) and will maintain so long as the
Security Interests may remain outstanding, absolute title to each
item of Collateral and all proceeds thereof, free and clear of all
interests, liens, attachments, encumbrances and security interests
except the Security Interests and as provided herein and except as
Lender may otherwise agree in writing. Borrower will defend the
Collateral against all claims or demands of all persons (other than
Lender) claiming the Collateral or any interest therein. Borrower
will not sell or otherwise dispose of the Collateral or any interest
therein, except the sale of inventory in the ordinary course of
Borrower's business, without Lender's prior written consent.
Borrower's interest in the Collateral is freely transferable to any
person, without condition, limitation, jurisdiction or restriction
of governmental authority, or any other qualification whatsoever.
(2) Borrower does business solely under its own name and trade
names (if any) set forth below. The place(s) of business and chief
executive office of Borrower are located at the address(es) set
forth below, and all tangible Collateral is located at such
address(es). All of Borrower's records relating to its business or
the Collateral are kept at its chief executive office. Borrower
will not permit any tangible Collateral or any records pertaining to
Collateral to be located in any state or area in which, in the event
of such location, a financing statement covering such Collateral
would be required to be, but has not in fact been, filed in order to
perfect the Security interests. Borrower will not change its name,
identity or corporate structure or the location of its place of
business, without prior written notice to Lender.
(3) None of the Collateral is or will become a fixture on real
estate, unless a sufficient fixture filing is in effect with respect
thereto.
(4) Each account and other right to payment and each
instrument, document, chattel paper and other agreement constituting
or evidencing Collateral is (or, in the case of all future
Collateral, will be when arising or issued) the valid genuine and
legally enforceable obligation, subject to no defense, setoff or
counterclaim, of the account debtor or other obligor named therein
or in Borrower's records pertaining thereto as being obligated to
pay such obligation. Borrower will not modify, amend, subordinate,
cancel or terminate an obligation of more than $10,000 of any such
account debtor or other obligor, without Lender's prior written
consent.
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(5) Borrower will keep all tangible Collateral in good
repair, working order and condition, normal depreciation excepted,
and will, from time to time, replace any worn, broken or defective
parts.
(6) Borrower will promptly pay all taxes and other
governmental charges levied or assessed upon or against any
Collateral or upon or against the creation, perfection or
continuance of the Security Interests.
(7) Borrower will keep all Collateral free and clear of all
security interests, liens and encumbrances except the Security
Interests and as provided herein and except other security interests
approved in writing by Lender.
(8) Borrower will at all reasonable times permit Lender or
its representatives to examine or inspect any Collateral, or any
evidence of Collateral, wherever located.
(9) Borrower will promptly notify Lender of any loss of or
material damage to any Collateral or of any substantial adverse
change, known to Borrower, in any Collateral or the prospect of
payment thereof.
(10) Upon request by Lender, whether such request is made
before or after the occurrence of any Event of Default, Borrower
will promptly deliver to Lender in pledge all instruments, documents
and chattel papers constituting Collateral, duly endorsed or
assigned by Borrower.
(11) Borrower will at all times keep all tangible Collateral
insured against risks of fire (including so-called extended
coverage), theft, collision (for Collateral consisting of motor
vehicles) and such other risks and in such amounts as Lender may
reasonably request, with any loss payable to Lender to the extent of
its interest.
(12) Borrower will use and keep the Collateral, and will
require that others use and keep the Collateral, only for lawful
purposes, without violation of any federal, state or local law,
statute or ordinance.
(13) Borrower from time to time will execute and deliver or
endorse any and all instruments, documents, conveyances,
assignments, security agreements, financing statements and other
agreements and writings which Lender may reasonably request in order
to secure, protect, perfect or enforce the Security Interests or the
rights of Lender under this Agreement (but any failure to request or
assure that Borrower executes, delivers or endorses any such item
shall not affect or impair the validity, sufficiency or
enforceability of this Agreement and the Security Interests,
regardless of whether any such item was or was not executed,
delivered or endorsed in a similar context or on a prior occasion).
(14) The proper places to file financing statements to perfect
the Security Interests are the Secretary of State, Minnesota and
County Recorder, Hennepin County, Minnesota. When the financing
statements heretofore signed by Borrower are filed there, Lender
will have valid and perfected security interests in the Collateral,
subject to no prior security interest, assignment, lien or
encumbrance (except interests, if any, specifically approved by
Lender in writing).
If Borrower at any time fails to perform or observe any of the foregoing
agreements, and if such failure shall continue for a period of ten
calendar days after Lender gives Borrower
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written notice thereof (or in the case of the agreements contained in
subsections (7) and (11) above, immediately upon the occurrence of such
failure, without notice or lapse of time), Lender may, but need not,
perform or observe such agreement on behalf and in the name, place and
stead of Borrower (or, at Lender's option, in the name of Lender) and may,
but need not, take any and all other actions which Lender may reasonably
deem necessary to cure or correct such failure (including, without
limitation, the payment of taxes, the satisfaction of security interests,
liens or encumbrances, the performance of obligations owed to account
debtors or other obligors, the procurement and maintenance of insurance,
the execution of assignments, security agreements and financing
statements, and the endorsement of instruments); and Borrower shall
thereupon pay to Lender on demand the amount of all monies expended and
all costs and expenses (including reasonable attorneys' fees and legal
expenses) incurred by Lender in connection with or as a result of the
performance or observance of such agreements or the taking of such action
by Lender, together with interest thereon from the date expended or
incurred at the highest lawful rate then applicable to any of the
Obligations. To facilitate the performance or observance by Lender of
such agreements of Borrower, Borrower hereby irrevocably appoints Lender,
or the delegate of Lender, acting alone, as the attorney in fact of
Borrower with the right (but not the duty) from time to time to create,
prepare, complete, execute, deliver, endorse or file in the name and on
behalf of Borrower any and all instruments, documents, assignments,
security agreements, financing statements, applications for insurance and
other agreements and writings required to be obtained, executed, delivered
or endorsed by Borrower under this subparagraph (b).
(c) Proceeds; Collateral Account. Borrower agrees to deliver to
Lender, or, at Lender's option, to deposit in one or more special
collateral accounts maintained for Lender by any bank reasonably
satisfactory to Lender, all proceeds of cash sales of inventory, all
collections on accounts, contract rights, chattel paper and other rights
to payment constituting Collateral, and all other cash proceeds of
Collateral, immediately upon receipt thereof, in the form received, except
for Borrower's endorsement when deemed necessary. Amounts deposited in a
collateral account shall not bear interest and shall not be subject to
withdrawal by Borrower, except after full payment and discharge of all
Obligations. All such collections shall constitute proceeds of Collateral
and shall not constitute payment of any Obligation. Until delivered to
Lender or deposited in a collateral account, all proceeds or collections
of Collateral shall be held in trust by Borrower for and as the property
of Lender and shall not be commingled with any funds or property of
Borrower. Lender may deposit any and all collections received by it from
Borrower or out of any collateral account in Lender's general account and
may commingle such collections with other property of Lender or any other
person. All items shall be delivered to Lender or deposited in any
collateral account subject to final payment. If any such item is returned
uncollected, Borrower will immediately pay Lender, or, for items deposited
in a collateral account, the bank maintaining such account, the amount of
that item, or such bank in its discretion may charge any uncollected item
to Borrower's commercial account or other account. Borrower shall be
liable as an endorser on all items deposited in any collateral account,
whether or not in fact endorsed by Borrower. Lender from time to time at
its discretion may apply funds on deposit in a collateral account to the
payment of any or all Obligations, in any order or manner of application
satisfactory to Lender.
(d) Collection Rights of Lender. In addition to the rights of
Lender under subparagraph (c), with respect to any and all rights to
payment constituting Collateral Lender may at any time after the
occurrence of an Event of Default under Paragraph 7 notify any account
debtor or other person obligated to pay the amount due that such right to
payment has been assigned or transferred to Lender for security and shall
be paid directly to Lender. Borrower will join in giving such notice, if
Lender so requests. At any time after Borrower or Lender gives such
notice to an account debtor or other obligor, Lender may, but need not, in
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Lender's name or in Borrower's name (i) demand, xxx for, collect or
receive any money or property at any time payable or receivable on account
of, or securing, any such right to payment, or grant any extension to,
make any compromise or settlement with or otherwise agree to waive,
modify, amend or change the obligations (including collateral obligations)
of any such account debtor or other obligor; and (ii) as agent and
attorney in fact of Borrower, notify the United States Postal Service to
change the address for delivery of Borrower's mail to any address
designated by Lender and otherwise intercept, receive, open and dispose of
Borrower's mail, applying all Collateral as permitted under this Agreement
and holding all other mail for Borrower's account or forwarding such mail
to Borrower's last known address.
(e) Assignment of Insurance. As additional security for the
payment and performance of the Obligations, Borrower hereby assigns to
Lender any and all monies (including, without limitation, proceeds of
insurance and refunds of unearned premiums) due or to become due under,
and all other rights of Borrower with respect to, any and all policies of
insurance now or at any time hereafter covering the Collateral or any
evidence thereof or any business records or valuable papers pertaining
thereto, and Borrower hereby directs the issuer of any such policy to pay
all such monies directly to Lender. At any time, whether before or after
the occurrence of any Event of Default, Lender may (but need not), in
Lender's name or in Borrower's name, execute and deliver proofs of claim,
receive all such monies, endorse checks and other instruments representing
payment of such monies, and adjust, litigate, compromise or release any
claim against the issuer of any such policy.
(f) Reproductions. A carbon, photographic or other reproduction of
this Agreement or of any financing statement signed by Borrower shall be
sufficient as a financing statement.
(g) Verification. At any time or from time to time, under its own
name or under a trade name, Lender may (but shall not be obligated to)
send to and discuss with Borrower's account debtors requests for
verification of amounts owed to Borrower. If Lender so requests at any
time, Borrower will send requests for verification to its account debtors
or join in any requests for verification sent by Lender.
(h) Surplus and Deficiency; Care of Collateral. This Agreement
does not contemplate a sale of accounts, contract rights or chattel
paper, and, as provided by law, Borrower is entitled to any surplus and
shall remain liable for any deficiency. Lender's duty of care with
respect to Collateral in its possession (as imposed by law) shall be
deemed fulfilled if it exercises reasonable care in physically keeping
such Collateral or, in the case of Collateral in the custody or possession
of a bailee or other third person, exercises reasonable care in the
selection of the bailee or other third person, and Lender need not
otherwise preserve, protect, insure or care for any Collateral. Lender
shall not be obligated to preserve any rights Borrower may have against
prior parties, to realize on the Collateral at all or in any particular
manner or order or to apply any cash proceeds of the Collateral in any
particular order of application.
4. REPRESENTATIONS AND WARRANTIES. Borrower represents and warrants to
Lender that:
(a) Borrower is a corporation duly organized and existing in good
standing under the laws of the State of Minnesota. It has the corporate
power to own its property and to carry on its business as now conducted
and is duly qualified to do business in all states in which such
qualification is required. During its corporate existence, Borrower has
done business solely under the name Technical Publishing Solutions, Inc.
Borrower does not own any capital stock of any corporation, except DocuPro
Services, Inc.
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(b) Borrower is duly authorized and empowered to execute, deliver
and perform this Agreement and the Security Documents and to borrow money
from Lender.
(c) The execution and delivery of this Agreement and the Security
Documents, and the performance by Borrower of its obligations thereunder,
do not and will not violate or conflict with any provision of law or the
Articles of Incorporation or By-Laws of Borrower and do not and will not
violate or conflict with, or cause any default or event of default to
occur under, any agreement binding upon Borrower.
(d) The execution and delivery of this Agreement and the Security
Documents have been duly approved by all necessary action of the directors
and shareholders of Borrower; and this Agreement and the Security
Documents have in fact been duly executed and delivered by Borrower and
constitute its lawful and binding obligations, legally enforceable against
it in accordance with their respective terms (subject to laws generally
affecting the enforcement of creditors' rights).
(e) No litigation, tax claims or governmental proceedings are
pending or are threatened against Borrower or any Affiliate and no
judgment or order of any court or administrative agency is outstanding
against Borrower or any Affiliate.
(f) The transaction evidenced by this Agreement does not violate
any law pertaining to usury or the payment of interest on loans.
(g) The authorization, execution, delivery and performance of this
Agreement and the Security Documents are not and will not be subject to
the jurisdiction, approval or consent of, or to any requirement of
registration with or notification to, any federal, state or local
regulatory body or administrative agency.
(h) Payment of the Obligations to Lender has been guaranteed by
Xxxxxx X. Xxxxx and Xxxx X. Xxxxxxx, pursuant to one or more instruments
of guaranty duly executed and delivered and legally enforceable by Lender,
without further act and without condition, in accordance with the stated
terms (subject to laws generally affecting the enforcement of creditors'
rights).
(i) The conduct of its business by Borrower is not subject to
registration with, notification to, or regulation, licensing, franchising,
consent or approval by any state or federal governmental authority or
administrative agency, except general laws and regulations which are not
related or applicable particularly or uniquely to the type of business
conducted by Borrower, which do not materially restrict or limit the
business of Borrower, and with which Borrower is in full compliance. All
registrations and notifications required to be made, and all licenses,
franchises, permits, operating certificates, approvals and consents
required to be issued, to enter into or conduct such business have been
duly and lawfully made or obtained and issued, and all terms and
conditions set forth therein or imposed thereby have been duly met and
complied with.
(j) To the best knowledge of Borrower based upon reasonable
inquiry, no director, shareholder, officer, employee or agent of, or
consultant to, Borrower is prohibited by law, by regulation, by contract,
or by the terms of any license, franchise, permit, certificate, approval
or consent from participating in the business of Borrower as director,
shareholder, officer, employee or agent of, or as consultant to, Borrower,
or is the subject of any pending or, to Borrower's best knowledge,
threatened proceeding which, if determined adversely, would or could
result in such a prohibition.
- 9 -
10
(k) All assets of Borrower and any Affiliates are free and clear of
liens, security interests and encumbrances, except those permitted under
Paragraph 6(b).
(l) Borrower and all Affiliates have filed all federal and state
tax returns which are required to be filed, and all taxes shown as due
thereon have been paid. Borrower and all Affiliates have paid or caused
to be paid to the proper authorities when due all federal, state and local
taxes required to be withheld by them.
(m) Borrower has furnished to Lender the financial statements
described below for the periods described below:
12 months ended 3/31/93
-----------------------------
12 months ended 3/31/94
-----------------------------
8 months ended 11/30/94
-----------------------------
These statements were prepared in accordance with generally accepted
accounting principles consistently maintained, present fairly the
financial condition of Borrower as at the dates thereof, and disclose
fully all liabilities of Borrower, whether or not contingent, with respect
to any pension plan. Since the date of the most recent financial
statement, there has been no material adverse change in the financial
condition of Borrower.
(n) Each qualified retirement plan of Borrower presently conforms to
and is administered in a manner consistent with the Employee Retirement
Income Security Act of 1974.
(o) Borrower will not request or maintain any credit for the purpose
of purchasing or carrying any security, within the meaning of Regulations
G or U of the Board of Governors of the Federal Reserve System.
5. AFFIRMATIVE COVENANTS. Borrower covenants and agrees that it will:
(a) Use the proceeds of any and all loans made by Lender solely for
lawful and proper corporate purposes of the Borrower.
(b) Pay all taxes, assessments and governmental charges prior to the
time when any penalties or interest accrue, unless contested in good faith
with an adequate reserve for payment; and pay to the proper authorities
when due all federal, state and local taxes required to be withheld by it.
(c) Continue the conduct of its business; maintain its corporate
existence; maintain all rights, licenses and franchises; and comply with
all applicable laws and regulations.
(d) Maintain its property in good working order and condition and
make all needful and proper repairs, replacements, additions and
improvements thereto.
(e) Deliver to Lender:
(1) Within 120 days after the end of each fiscal year, a
statement of Borrower's financial condition as at the end of such
fiscal year and a statement of
- 10 -
11
earnings and retained earnings of Borrower for such fiscal year,
with comparative figures for the preceding fiscal year, prepared, if
Lender so requests, on a consolidating and consolidated basis to
include any Affiliated Corporation, reviewed without qualification
by independent certified public accountants acceptable to Lender.
(2) Within 25 days after the end of each fiscal month, a
statement of Borrower's financial condition and an operating
statement and statement of earnings and retained earnings of
Borrower for such month, in each case with comparative figures for
the same month in the preceding fiscal year, prepared on the same
basis as the most recent annual statement provided pursuant to
clause (1) above, certified by an officer of Borrower.
(3) Within 15 days after the end of each month, an aging of
Borrower's accounts receivable as at the end of such month.
(4) Within 15 days after the end of each month, an inventory
certification report as at the end of such month.
(5) Within 15 days after the end of each month, an aging of
Borrower's accounts payable as at the end of such month.
(6) From time to time, any and all receivables, schedules,
collection reports, equipment schedules, copies of invoices to
account debtors and shipment documents and delivery receipts for
goods sold, and other material, reports, records or information
required by Lender.
(f) Permit any officer, employee, attorney or accountant for Lender
to audit, review, make extracts from, or copy any and all corporate and
financial books, records and properties of Borrower at all times during
ordinary business hours, to send and discuss with account debtors and
other obligors' requests for verification of amounts owed to Borrower, and
to discuss the affairs of Borrower with any of its directors, officers,
employees, agents.
(g) Maintain property, liability, business interruption, xxxxxxx'x
compensation and other forms of insurance in reasonable amounts designated
at any time or from time to time by Lender.
(h) On a consolidated basis with DocuPro Services, Inc., at all
times maintain the book net worth of Borrower at amounts in excess of
$350,000 and maintain Borrower's tangible net worth (excluding all
intangible assets designated by Lender) at amounts in excess of $285,000.
(i) Notify Lender promptly of (i) any disputes or claims by
customers of Borrower; (ii) any goods returned to or recovered by
Borrower; (iii) any change in the persons constituting the officers and
directors of Borrower; and (iv) the occurrence of any breach, default or
event of default by or attributable to Borrower under this Agreement or
any of the Security Documents.
(j) Maintain insurance on the lives of Xxxxxx X. Xxxxx and Xxxx X.
Xxxxxxx in the amount of $500,000 each with companies and terms reasonable
acceptable to Lender and assign such life insurance policies to Lender on
forms of assignment acceptable to Lender.
- 11 -
12
6. NEGATIVE COVENANTS. Borrower covenants and agrees that it will not,
except with the prior written approval of Lender:
(a) Become or remain liable in any manner in respect of any
indebtedness or contractual liability (including, without limitation,
notes, bonds, debentures, loans, guaranties, obligations of partnerships,
and pension liabilities, in each case whether or not contingent and
whether or not subordinated), except:
(1) Indebtedness arising under this Agreement;
(2) Unsecured indebtedness, other than for money borrowed or
for the purchase of a capital asset, incurred in the ordinary course
of its business, which becomes due and must be fully satisfied
within twelve months after the date on which it is incurred;
(3) On a consolidated basis with DocuPro Services, Inc.,
unsecured indebtedness, in an amount not exceeding $55,000 at any
one time outstanding, which is fully subordinated in right of
payment to all indebtedness owed to Lender pursuant to a
subordination agreement accepted or approved in writing by the
Lender.
(4) Indebtedness arising out of the lease or purchase of goods
constituting equipment and either unsecured or secured only by a
purchase money security interest securing purchase money
indebtedness, but in any event only if such equipment is acquired in
compliance with Paragraph 6(c).
(5) Presently outstanding unsecured borrowings, if any,
disclosed in the financial statements referred to in Paragraph 4(m),
but not including any extensions or renewals thereof.
(b) Create, incur or cause to exist any mortgage, security interest,
encumbrance, lien or other charge of any kind upon any of its property or
assets, whether now owned or hereafter acquired, except:
(1) The interests created by this Agreement and the Security
Documents;
(2) Liens for taxes or assessments not yet due or contested in
good faith by appropriate proceedings;
(3) A purchase money security interest or lessor's interest
securing indebtedness permitted to be outstanding or incurred under
Paragraph 6(a)(4);
(4) Security interests approved by Lender in writing; and
(5) Other liens, charges and encumbrances incidental to the
conduct of its business or the ownership of its property which were
not incurred in connection with the borrowing of money or the
purchase of property on credit and which do not in the aggregate
materially detract from the value of its property or materially
impair the use thereof in its business.
(c) On a consolidated basis with DocuPro Services, Inc., expend or
contract to expend, in any one calendar year, more than $250,000
- 12 -
13
in the aggregate or more than $250,000 in any one transaction for the
lease, purchase or other acquisition of any capital asset, or for the
lease of any other asset, whether payable currently or in the future.
(d) Sell, lease, or otherwise dispose of all or any substantial part
of its property, except as expressly permitted hereunder or under the
Security Documents.
(e) Consolidate or merge with any other corporation; or acquire any
business; or acquire stock of any corporation; or enter into any
partnership or joint venture.
(f) Substantially alter the nature of the business in which it is
engaged.
(g) Declare or pay any dividends (except dividends payable solely in
its capital stock), or purchase or redeem any of its capital stock, or
otherwise distribute any property on account of its capital stock; or
enter into any agreement therefor; provided, however, Borrower may declare
and pay dividends in an amount equal to income tax assessed against the
shareholders of Borrower as a result of the income of Borrower being
directly charged to such shareholders upon Lender's receipt of evidence of
such assessment satisfactory to Lender.
(h) Purchase stock or securities of, extend credit to or make
investments in, become liable as surety for, or guarantee or endorse any
obligation of, any person, firm or corporation, except investments in
direct obligations of the United States and commercial bank deposits and
extensions of credit reflected by trade accounts receivable arising for
goods sold by Borrower in the ordinary course of its business.
(i) After notice from Lender, grant any discount, credit or
allowance to any customer of Borrower or accept any return of goods sold.
(j) In any manner transfer any property without prior or present
receipt of full and adequate consideration.
(k) On a consolidated basis with DocuPro Services, Inc., permit more
than $10,000 in the aggregate to be owing to Borrower by the officers,
directors or shareholders of Borrower or any Affiliated Corporation, or
members of their families, on account of any loan, travel advance, credit
sale or other transaction or event.
(l) On a consolidated basis with DocuPro Services, Inc., pay
excessive or unreasonable salaries, bonuses, commissions, consultant fees,
or other compensation; or increase the salary, bonus, commissions,
consultant fees or other compensation of any director, officer, or
consultant, or any member of their families, by more than 10% in any one
year, either individually or for all such persons in the aggregate, or pay
any such increase from any source other than profits earned in the year of
payment.
(m) Permit any breach, default or event of default to occur under
any note, loan agreement, indenture, lease, mortgage, contract for deed,
security agreement or other contractual obligation binding upon Borrower.
(n) Permit more than $400,000 in the aggregate to be owing to
Borrower by, or invested by Borrower in, DocuPro Services, Inc.
7. EVENT OF DEFAULT. Any breach of any representation, warranty or
agreement of Borrower set forth herein or in the Security Documents or in any
other instrument or agreement
- 13 -
14
securing any of the Obligations shall constitute an Event of Default
hereunder and under the Security Documents.
8. REMEDIES UPON DEFAULT. Upon the occurrence of any Event of Default,
and at any time thereafter unless and until such Event of Default is waived in
writing by Lender, Lender may exercise one or several or all of the following
rights and remedies:
(a) Lender may terminate this Agreement with immediate effectiveness
and without notice or lapse of time. Notwithstanding such termination,
all claims, rights and security interests of Lender and all debts,
liabilities, obligations and duties of Borrower shall remain in full force
and effect.
(b) Lender may exercise and enforce any and all rights and remedies
available upon default to a secured party under the Uniform Commercial
Code, including, without limitation, the right to take possession of
Collateral, or any evidence thereof, proceeding without judicial process
(without a prior hearing or notice thereof, which Borrower hereby
expressly waives) and the right to sell, lease or otherwise dispose of any
or all of the Collateral, and in connection therewith Borrower will on
demand assemble the Collateral and make it available to Lender at a place
to be designated by Lender which is reasonably convenient to all parties.
If notice to Borrower of any intended disposition of Collateral or any
other intended action is required by law in a particular instance, such
notice shall be deemed commercially reasonable if given (in the manner
specified in Paragraph 13(a) at least ten calendar days prior to the date
of intended disposition or other action. For the purpose of enabling
Lender to exercise such rights and remedies:
(1) Borrower hereby grants Lender (in addition to Lender's
security interest in general intangibles) a non-exclusive license to
use, sell or otherwise exploit in any manner any and all trade
names, trademarks, patents, copyrights, licenses and other
intangible properties necessary, appropriate or useful in the
enforcement of the Security Interests; and
(2) Borrower hereby grants Lender the right to possess and
hold all premises owned, leased or held by Borrower upon which any
Collateral is or may be located (the "Premises"), subject to the
following terms and conditions:
A. Lender may take possession of the Premises only upon
the occurrence of an Event of Default.
B. Lender may use the Premises only to hold, process,
manufacture and sell or otherwise dispose of goods which are
inventory, or to provide services under contracts for
receivables, or to use, operate, store, liquidate or realize
upon goods which are equipment or any other Collateral granted
under this Agreement and for other purposes which Lender may
in good xxxxx xxxx to be related or incidental purposes.
C. The right of Lender to hold the Premises shall cease
and terminate upon the earlier of (i) payment in full and
discharge of all Obligations; (ii) final sale or disposition
of all goods constituting Collateral (including both inventory
and equipment) and delivery of all such goods to purchasers.
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15
D. Lender shall not be obligated to pay or account for
any rent or other compensation for this grant or for the
possession, occupancy or use of any of the Premises.
E. Borrower acknowledges and agrees that the breach of
this grant is not fully compensable by money damages, and
that, accordingly, this grant may be enforced by an action for
specific performance.
(c) Lender may exercise or enforce any and all other rights or
remedies available by law or agreement against the Collateral, against
Borrower, or against any other person or property.
9. Acceleration Upon Bankruptcy. All of the Obligations shall be
immediately and automatically due and payable, without further act or
condition, if any case under the United States Bankruptcy Code is commenced
voluntarily by Borrower or involuntarily against Borrower.
10. Setoff. Borrower agrees that Lender may at any time or from time to
time, at its sole discretion and without demand and without notice to anyone,
set off any deposit or other liability owed to Borrower by Lender, whether or
not due, against any indebtedness owed to Lender by Borrower (for loans under
this Agreement or for any other transaction or event), whether or not due. In
addition, each person holding a participating interest in any loans made to
Borrower by Lender shall have the right to appropriate or set off any deposit
or other liability then owed by such person to Borrower, whether or not due,
and apply the same to the payment of said participating interest, as fully as
if such person had lent directly to Borrower the amount of such participating
interest.
11. Termination by Borrower. So long as Lender, in its sole discretion,
is willing to make loans to Borrower for ordinary working capital purposes
subject to the availability of Collateral deemed eligible by Lender, Borrower
may terminate this Agreement and (subject to payment and performance of all
outstanding secured obligations) may obtain any release or termination of the
Security Documents to which Borrower is otherwise entitled by law, provided
that (i) Lender receives at least 60 days' prior written notice of Borrower's
intent to terminate this Agreement and (ii) Borrower shall have paid to Lender
prior to such termination a termination fee in the amount of (A) $10,000 if
this Agreement is terminated before the second anniversary date of the
Agreement, or (B) $5,000 if this Agreement is terminated on or after the second
anniversary date of this Agreement but before the third anniversary date of
this Agreement. The hereinabove described fee is the joint and several
obligation of Borrower and DocuPro Services, Inc. To the extent the
termination fee or a portion thereof is paid by DocuPro Services, Inc.,
Borrower shall be obligated to pay only the remaining amount of the unpaid
termination fee. Upon any such termination, all obligations of Borrower under
this Agreement and the Security Documents shall remain in full force and effect
until all indebtedness arising under this Agreement and all other debts,
liabilities and obligations of Borrower secured hereby, or by the Security
Documents or any other collateral security have been fully paid and satisfied.
12. Reservation of Right to Make Demand and to Refuse to Lend.
Notwithstanding any other provisions contained herein, Borrower acknowledges
that Lender reserves the right to demand immediate payment of any or all loans
and the interest thereon and of all other obligations of Borrower payable on
demand, and the right to refuse to make any loans hereunder, whether or not (a)
an Event of Default has occurred hereunder, (b) Borrower has failed to comply
with the terms of this Agreement or the Security Documents, (c) Borrower's
financial or other condition has changed, (d) Lender has at that time or in
connection with any previous demand or refusal to lend given notice of its
intention to make demand or to refuse to lend or (e) such demand or refusal to
lend shall not cause any loss or damage to the Borrower.
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16
13. Miscellaneous. Borrower agrees that:
(a) This Agreement can be waived, amended, terminated or discharged,
and the Security Interests can be released, only explicitly in a writing
signed by Lender. A waiver so signed shall be effective only in the
specific instance and for the specific purpose given. Mere delay or
failure to act shall not preclude the exercise or enforcement of any
rights and remedies available to Lender. All rights and remedies of
Lender shall be cumulative and may be exercised singularly in any order or
sequence, or concurrently, at Lender's option, and the exercise or
enforcement of any such right or remedy shall neither be a condition to
nor bar the exercise of enforcement of any other. All notices to be given
to Borrower shall be deemed sufficiently given if actually received by any
officer of Borrower or if delivered or mailed by registered, certified or
ordinary mail, postage prepaid, to Borrower at its address set forth below
or at its most recent address shown on Lender's records.
(b) Borrower will furnish to Lender, prior to the first advance
hereunder, (i) a certified copy of resolutions of the directors and, if
required, the shareholders of Borrower, authorizing the execution,
delivery and performance of this Agreement and the Security Documents;
(ii) a certificate of an officer of Borrower confirming, in his personal
capacity, the representations and warranties set forth in Paragraphs 3 and
4; (iii) a written opinion of Borrower's independent legal counsel,
addressed to Lender, confirming to the satisfaction of Lender the
representations and warranties set forth in clause (b)(14) of Paragraph 3
and clauses (a) through (h) of Paragraph 4; and (iv) currently certified
copies of the Articles of Incorporation and Bylaws of Borrower and a
Certificate of Good Standing issued as to Borrower by the Secretary of
State of the state of its incorporation; and (v) all certificates of
insurance and insurance endorsements required hereunder and under the
Security Documents; and (vi) all collateral schedules, security interest
subordination agreements, searches, abstracts, releases and termination
statements which Lender may request adequately to assure and confirm the
creation, perfection and priority of the security interests created
hereunder or under the Security Documents.
(c) On demand, Borrower will pay or reimburse Lender for all
expenses, including all reasonable fees and disbursements of legal
counsel, incurred by Lender in connection with the preparation,
negotiation, execution, performance or enforcement of this Agreement or
the Security Documents, or any document contemplated thereby, or the
perfection, protection, enforcement or foreclosure of the security
interests created hereby or by the Security Documents, or in connection
with the protection or enforcement of the interests and collateral
security of Lender in any litigation or bankruptcy or insolvency
proceeding or the prosecution or defense or any action or proceeding
relating in any way to the transactions contemplated by this Agreement.
(d) Lender and its participants, if any, are not partners or joint
venturers, and Lender shall have no liability or responsibility for any
obligation, act or omission of its participants under or as to this
Agreement.
(e) This Agreement shall be binding upon Borrower and its successors
and assigns and shall inure to the benefit of Lender and its participants,
successors and assigns. This Agreement shall be effective when executed
by Borrower and delivered to Lender, whether or not this Agreement is
executed by Lender. All rights and powers specifically conferred upon
Lender may be transferred or delegated by Lender to any of its
participants, successors or assigns. Except to the extent otherwise
required by law, this Agreement and the transactions evidenced hereby
shall be governed by the substantive laws of the State in which this
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17
Agreement is accepted by Lender. If any provision or application of this
Agreement is held unlawful or unenforceable in any respect, such
illegality or unenforceability shall not affect other provisions or
applications which can be given effect, and this Agreement
shall be construed as if the unlawful or unenforceable provision or
application had never been contained herein or prescribed hereby. All
representations and warranties contained in this Agreement or in any other
agreement between Borrower and Lender shall survive the execution,
delivery and performance of this Agreement and the creation and payment of
any indebtedness to Lender. Borrower waives notice of the acceptance of
this Agreement by Lender.
14. Nothing herein contained nor any transaction related hereto shall be
construed or shall operate so as to require the Borrower or any person liable
for repayment of loans made hereunder to pay interest in an amount or at a rate
greater than the maximum allowed, from time to time, by applicable laws, if
any. Should any interest or other charges, including any property, tangible or
intangible, or other items of value received by the Lender, imposed against or
paid by the Borrower or any party liable for the payment of such loans, result
in a computation of earning of interest in excess of the maximum legal rate of
interest permitted under applicable law in effect while such interest is being
earned, then any and all of that excess shall be an is waived by the Lender,
and all of that excess shall be automatically credited against and in reduction
of the principal balance of such loans, without premium, with the same force
and effect as though the Borrower had specifically designated such extra sums
to be so applied to principal and the Lender to accept such extra payment(s) as
a premium-free prepayment, and any portion of the excess that exceeds the
principal balance of loans made hereunder shall be paid by the Lender to the
Borrower or to any party liable for the payment of such loans, applicable, it
being the intent of the parties hereto that under no circumstances shall the
Borrower or any party liable for the payment of the indebtedness evidenced
hereby be required to pay interest in excess of the maximum rate allowed by any
applicable laws. The provisions of this Agreement are hereby modified to the
extent necessary to conform with the limitations and provisions of this
paragraph, and this paragraph shall govern over all other provisions in any
document or agreement now or hereafter existing. This paragraph shall never be
superseded or waived unless there is a written document executed by the Lender
and the Borrower, expressly declaring the usury limitation of this Agreement to
be null and void, and no other method or language shall be effective to
supersede or waive this paragraph.
15. Environmental Laws. Borrower is and will continue to be throughout
the term of this Agreement in full and complete compliance with all federal,
state and local laws, rules and regulations governing hazardous and toxic
substances, waste or materials, any pollutants or contaminants or any other
similar substances, or pertaining to environmental regulations, contamination
or cleanup, including, without limitation, the Comprehensive Environmental
Response Compensation and Liability Act, as amended, the Minnesota Petroleum
Tank Release Cleanup Act, as amended, or any other state lien or state super
lien or environmental cleanup statute (all such laws, rules and regulations
being referred to collectively as "Environmental Laws").
Borrower indemnifies, defends and holds Lender and its officers,
directors, employees and agents, harmless from and against any liability, laws,
claims, damages or expense (including attorneys' fees and disbursements)
arising out of or based upon any violation or claim of violation of
Environmental Laws by any Borrower or with respect to any assets owned or used
by any Borrower or any properties leased or occupied by any properties of any
Borrower by Lender. This indemnity shall be continuing and remain in full
force and effect and shall survive this Agreement and the Security Documents or
any exercise of any remedy by Lender even if all indebtedness and other
obligations to Lender have been satisfied in full."
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18
16. WAIVER OF JURY TRIAL. BORROWER AND LENDER EACH HEREBY WAIVE ANY RIGHT
TO TRIAL BY JURY IN ANY ACTION OR PROCEEDING ARISING OUT OF THIS AGREEMENT, THE
SECURITY DOCUMENTS OR ANY OTHER AGREEMENTS OR TRANSACTIONS BETWEEN THE BORROWER
AND LENDER.
IN WITNESS WHEREOF, this Agreement has been duly executed and delivered by
the proper officers thereunto duly authorized on the day and year first above
written.
Technical Publishing Solutions, Inc.
By /s/ Xxxxxx X. Xxxxx
------------------------------
Chief Executive Officer
By /s/ Xxxx X. Xxxxxxx
------------------------------
Secretary
TRADE NAMES OF BORROWER: ADDRESS OF CHIEF EXECUTIVE OFFICES:
DocuPro Services, Inc. 0000 Xxxxxxx Xxxxx, Xxxxx 000
Technical Publishing Solutions of Colorado, Inc. Xxxxxxxxxxx, Xxxxxxxxx 00000
COLLATERAL LOCATIONS: OTHER LOCATIONS:
0000 Xxxxxxx Xxxxx, Xxxxx 000 Xxxxxxxxxx Xxxxxxxx
Xxxxxxxxxxx, Xxxxxxxxx 00000 X000/X000
Xxxxxxxxx Xxxx
Xxxxxxxx, Xxxxxxxxx 00000
0000 Xxxx Xxxxx Xxxxxx, Xxxxx 0-000
Xxxxxx, Xxxxxxxx 00000
0000 Xxxxxxx Xxxx, Xxxxx 00
Xxx Xxxxxx, Xxxx 00000
Accepted at Minneapolis, Minnesota
on March 14, 1995
DIVERSIFIED BUSINESS CREDIT, INC.
By /s/ Illegible Signature
-----------------------
Vice President
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19
SUPPLEMENT TO CREDIT AGREEMENT
(MULTIPLE BORROWERS)
This Supplement is made this 14 day of March, 1995, by Technical
Publishing Solutions, Inc., a Minnesota corporation and by DocuPro Services,
Inc., a Minnesota corporation, (each herein called a "Borrower" and together
referred to as the "Borrowers"), for the benefit of Diversified Business
Credit, Inc., a Minnesota corporation herein, with its participants, successors
and assigns, called "Lender").
RECITALS
Each Borrower has requested that Lender make loans to it from time to
time at the sole discretion of Lender, pursuant to a credit and security
agreement dated March 14, 1995 between such Borrower and Lender (each herein
called a "Credit Agreement" and together referred to as the "Credit
Agreements") and has granted Lender collateral security in various properties
of such Borrower pursuant to the Credit Agreement and the following security
documents executed by such Borrower (the "Security Documents"):
1. Credit and Security Agreements to be dated March 14, 1995,
entered into by these corporations for the benefit of the
Lender.
2. UCC Financing Statements
3. Various ancillary and supplemental agreements and documents
executed and delivered in connection with the Credit and
Security Agreements.
By this Supplement to the Credit Agreements, each Borrower acknowledges its
joint and several liability for, and guarantees payment of, all indebtedness of
any or all of the Borrowers to Lender.
ACCORDINGLY, to induce Lender from time to time to make one or more
loans or extend other financial accommodations at the discretion of Lender to
any of the Borrowers, and for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, each of the Borrowers hereby
acknowledges its joint and several liability for, and each of the Borrowers
hereby absolutely and unconditionally guarantees to Lender the full and prompt
payment when due (whether on demand or at a stated maturity or earlier by
reason of acceleration or otherwise) of, all indebtedness owed to Lender by a
Borrower or by several or all of the Borrowers under the Credit Agreements or
by reason of transactions contemplated thereby and all other present and future
debts, liabilities and obligations owed to Lender by a Borrower or by several
or all of the Borrowers; and the Borrowers acknowledge and agree with Lender
that:
1. The debts, liabilities and obligations guaranteed hereby
(collectively referred to herein as the "Indebtedness") shall include, but
shall not be limited to, debts, liabilities and obligations arising out of
loans, credit transactions, financial accommodations, discounts, purchases of
property or other transactions with or for account of one or more of the
Borrowers or out of any other transaction or event, owed to Lender or owed to
others by reason of participations granted to or interests acquired or
20
created for or sold to them by Lender, in each case whether now existing or
hereafter arising, whether arising directly in a transaction or event involving
Lender or acquired by Lender from another by purchase or assignment or as
collateral security, whether owed by such Borrower or Borrower as drawer,
maker, endorser, accommodation party, guarantor, principal, surety or as a
member of any partnership, syndicate, association party, guarantor, principal,
surety or as a member of any partnership, syndicate, association or group or
in any other capacity, whether absolute or contingent, direct or indirect,
primary or secondary, sole, joint, several or joint and several, secured or
unsecured, due or not due, contractual, tortious, or statutory, liquidated or
unliguidated, arising by agreement or imposed by law or otherwise.
2. Each Borrower represents and warrants to Lender that (i) such
Borrower is a corporation duly organized and existing in good standing under
the laws of the respective state set forth above, and has full power and
authority to execute, deliver and perform this Supplement; (ii) the execution,
delivery and performance of this Supplement have been duly authorized by all
necessary action of its directors and shareholders and do not and will not
violate the provisions of, or constitute a default under, any law or its
articles of incorporation or by-laws or any agreement binding on it; (iii)
this Supplement has been duly executed and delivered by the authorized officers
of such Borrower and constitutes its lawful, valid and binding obligation,
legally enforceable against it in accordance with its terms (subject to laws
generally affecting the enforcement of creditors' rights): and (iv) the
authorization, execution, delivery and performance of this Supplement do not
require notification to, registration with, or consent or approval by any
federal, state or local regulatory body or administrative agency.
3. No act or thing need occur to establish the liability of any
Borrower hereunder, and no act or thing, except full payment and discharge of
all Indebtedness, shall in any way exonerate any Borrower or modify, reduce,
limit or release the liability of any Borrower hereunder. This is an absolute,
unconditional and continuing acknowledgment of liability for, and guaranty of
payment of, the Indebtedness and shall continue to be in force and be binding
upon each Borrower, whether or not all Indebtedness is paid in full, until this
Supplement is revoked prospectively as to future transactions, by written notice
actually received by Lender, and such revocation shall not be effective as to
Indebtedness existing or committed for at the time of actual receipt of such
notice by Lender or as to any renewals, extensions and refinancings thereof,
and such revocation shall be effective only as to the Borrower so revoking.
The dissolution, adjudication of bankruptcy or disability or incapacity of a
Borrower shall not revoke this Supplement, except upon actual receipt of
written notice thereof by Lender and then only as to such Borrower and only
prospectively, as to future transactions, as herein set forth.
4. Each Borrower represents and warrants to Lender that such Borrower
has a direct and substantial economic interest in each other Borrower and has
received and expects to continue receiving substantial benefits therefrom and
from any loans, credit transactions, financial accommodations, discounts,
purchases of property and other transactions and events resulting in the
creation of Indebtedness, and that this Supplement is made and delivered for a
corporate purpose. Each Borrower agrees promptly to notify Lender and revoke
this Supplement prospectively (as to future indebtedness not outstanding or
committed for) in accordance with paragraph 3, if at any time, in the opinion
of the directors or officers of such Borrower, the corporate benefits then
being received by such Borrower in connection with this Supplement are not
sufficient to warrant the continuance of this Supplement as to future
Indebtedness of Borrowers. Accordingly, so long as this Supplement is not
revoked prospectively in accordance with paragraph 3, Lender may rely
conclusively on a continuing warranty, hereby made, that each Borrower
continues to be benefited by this Supplement and Lender shall have no duty to
inquire into or confirm the receipt of any such benefits, and this Supplement
shall be effective and enforceable by Lender without regard to the receipt,
nature or value of any such benefits.
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5. If any Borrower shall be dissolved, shall be or become insolvent, or
shall initiate or have initiated against such Borrower any act, process or
proceeding under the United States Bankruptcy Code or any other bankruptcy,
insolvency or reorganization law or otherwise for the modification or adjustment
of the rights of creditors, then such Borrower will forthwith pay to Lender the
full amount of all Indebtedness then outstanding, whether or not any
Indebtedness is then due and payable.
6. Notwithstanding the aggregate amount of Indebtedness which may from
time to time be outstanding, the Borrowers shall be liable for all Indebtedness,
without limitation as to amount, plus accrued interest thereon and all
attorney's fees, collection costs and enforcement expenses referable thereto.
Indebtedness may be created and continued in any amount in accordance with the
terms of the Credit Agreements or otherwise, whether or not in excess of such
principal amount, and the Borrower incurring such Indebtedness shall be liable
therefor without any limitation as to amount, as fully as if this Supplement had
not been executed. If Indebtedness is created in an amount in excess of any
principal amount set forth in this paragraph, the liability of the Borrowers
hereunder shall not be affected or impaired, and Lender may pay (or allow for
the payment of) the excess out of any sums received by or available to Lender on
account of the Indebtedness from the Borrower incurring such excess Indebtedness
or any other person, from their properties, out of any collateral security or
from any other source, and such payment (or allowance) shall not reduce, affect
or impair the liability of any other Borrower hereunder. If the liability of the
Borrower's is limited to a stated amount pursuant to this paragraph, any payment
made by a Borrower under this Supplement applied to Indebtedness not incurred by
that Borrower shall be effective to rescue or discharge such liability only if
accompanied by a written transmittal document, received by Lender, advising
Lender that such payment is made under this Supplement for such purpose. In no
event shall Lender be obligated to return, account for or incur any liability as
a result of any monies collected or other assets of Borrower received by Lender
under this Supplement.
7. No Borrower will exercise or enforce any right of contribution,
reimbursement, recourse or subrogation available to it as to any Indebtedness,
or against any person liable therefor, or as to any collateral security
therefor, unless and until all Indebtedness shall have been fully paid and
discharged.
8. The Borrowers will pay or reimburse Lender for all costs and expenses
(including reasonable attorneys' fees and legal expenses) incurred by Lender in
connection with the collection of any Indebtedness or the enforcement of this
Supplement.
9. Lender shall not be obligated by reason of its acceptance of this
Supplement to engage in any transactions with or for any Borrower. Whether or
not any existing relationship between or among the Borrowers has been changed or
ended and whether or not this Supplement has been revoked in accordance with
paragraph 3, Lender may enter into transactions resulting in the creation or
continuance of Indebtedness and may otherwise agree, consent to, or suffer the
creation or continuance of any Indebtedness, without any consent or approval by
any Borrower and without any prior or subsequent notice to any Borrower. The
liability of the Borrowers shall not be affected or impaired by any of the
following acts or things (which Lender is expressly authorized to do, omit or
suffer from time to time, both before and after revocation of this Supplement,
without consent or approval by or notice to any Borrower): (i) any acceptance of
collateral security, guarantors, accommodation parties or sureties for any or
all Indebtedness; (ii) one or more extensions or renewals of Indebtedness
(whether or not for longer than the original period) or any modification of the
interest rates, maturities or other contractual terms applicable to any
Indebtedness; (iii) any waiver or indulgence granted to a Borrower, any delay or
lack of diligence in the enforcement of Indebtedness, or any failure to
institute proceedings, file a
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claim, give any required notices or otherwise protect any Indebtedness; (iv)
any full or partial release of, compromise or settlement with, or agreement not
to xxx a Borrower or any guarantor or other person liable in respect of any
Indebtedness; (v) any release, surrender, cancellation or other discharge of
any evidence of Indebtedness or the acceptance of any instrument in renewal or
substitution therefor; (vi) any failure to obtain collateral security
(including rights of setoff) for Indebtedness, or to see to the proper or
sufficient creation and perfection thereof, or to establish the priority
thereof, or to preserve, protect, insure, care for, exercise or enforce any
collateral security; or any modification, alteration, substitution, exchange,
surrender, cancellation, termination, release or other change, impairment,
limitation, loss or discharge of any collateral security; (vii) any collection,
sale, lease or other disposition of, or any other foreclosure or enforcement of
or realization on, any collateral security; (viii) any assignment, pledge or
other transfer of any Indebtedness or any evidence thereof; (ix) any manner,
order or method of application of any payments or credits upon Indebtedness.
Each Borrower waives any and all defenses and discharges available to a surety,
guarantor, or accommodation co-obligor, dependent on its character as such.
10. Each Borrower waives any and all defenses, claims, setoffs, and discharges
available against Lender to any other Borrower, or any other obligor,
pertaining to Indebtedness, except the defense of discharge by payment in full.
Without limiting the generality of the foregoing, no Borrower will assert
against Lender any defense of waiver, release, discharge in bankruptcy, statute
of limitations, res judicata, statue of frauds, antideficiency statute, fraud,
incapacity, minority, usury, illegality or unenforceability which may be
available to any other Borrower or any other person liable in respect of any
Indebtedness, or any setoff available against Lender to any other Borrower or
any such other person, whether or not on account of a related transaction, and
each Borrower expressly agrees that it shall be and remain liable for any
deficiency remaining after foreclosure of any mortgage or security interest
securing Indebtedness whether or not the liability of any other Borrower or any
other obligor for such deficiency is discharged pursuant to statute or
judicial decision. The liability of a Borrower shall not be affected or
impaired by any voluntary or involuntary liquidation, dissolution, sale or
other disposition of all or substantially all the assets, marshaling of assets
and liabilities, receivership, insolvency, bankruptcy, assignment for the
benefit of creditors, reorganization, arrangement, composition or readjustment
of, or other similar event or proceeding affecting, any other Borrower or any
of its assets. No Borrower will assert against Lender any claim, defense or
setoff available to such Borrower against any other Borrower.
11. Each Borrower waives presentment, demand for payment, notice of
dishonor or nonpayment, and protest of any instrument evidencing Indebtedness.
Lender shall not be required first to resort for payment of the Indebtedness to
a particular Borrower or other persons, or their properties, or first to
enforce, realize upon or exhaust any collateral security for Indebtedness,
before enforcing this Supplement.
12. If any payment applied by Lender to Indebtedness is thereafter set
aside, recovered, rescinded or required to be returned for any reason
(including, without limitation, the bankruptcy, insolvency or reorganization of
a Borrower or any other obligor), the Indebtedness to which such payment was
applied shall for the purposes of this Supplement be deemed to have continued
in existence, notwithstanding such application and this Supplement shall be
enforceable as to such Indebtedness as fully as if such application had never
been made.
13. The liability of the Borrowers under this Supplement is in
addition to and shall be cumulative with all other liabilities of each Borrower
to Lender under the Credit Agreement signed by such borrower or in respect of
any indebtedness or obligation of any
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other Borrower, without any limitation as to amount, unless the instrument or
agreement evidencing or creating such other liability specifically provides
to the contrary.
14. All obligations of a Borrower under this Supplement are and shall
be secured pursuant to the Security Documents and, except as otherwise agreed
in writing by Lender, by any and all other liens and security interests
heretofore or hereafter granted or available to Lender with respect to any
property of any or all of the Borrowers.
15. This Supplement shall be enforceable against each Borrower, and all
agreements and promises herein shall be construed to be, and are hereby
declared to be, joint and several in each and every particular and shall be
fully binding upon and enforceable against each and all of the Borrowers. This
Supplement shall be effective upon delivery to Lender, without further act,
condition or acceptance by Lender, shall be binding upon the Borrowers and the
successors and assigns of the Borrowers and shall inure to the benefit of
Lender and its participants, successors and assigns. Any invalidity or
unenforceability of any provision or application of this Supplement shall not
affect other lawful provisions and applications hereof, and to this end the
provisions of this Supplement are declared to be severable. This Supplement
may not be waived, modified, amended, terminated, released or otherwise changed
except by a writing signed by Borrowers and Lender. This Supplement shall be
governed by the substantive laws of the State of Minnesota. The Borrowers
waive notice of the acceptance of this Supplement by Lender.
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24
IN WITNESS WHEREOF, this Supplement has been duly executed and
delivered by the proper officers thereunto duly authorized on the day and year
first above written.
Technical Publishing Solutions, Inc.
By /s/ Xxxxxx X. Xxxxx
----------------------------------
Chief Executive Officer
By /s/ Xxxx X. Xxxxxxx
----------------------------------
Secretary
DocuPro Services, Inc.
By /s/ Xxxxxx X. Xxxxx
----------------------------------
Chief Executive Officer
By /s/ Xxxx X. Xxxxxxx
----------------------------------
Secretary
Accepted at Minneapolis, Minnesota
on March 14, 1995.
Diversified Business Credit, Inc.
By /s/ Illegible Signature
---------------------------------
Vice President
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AMENDMENT TO CREDIT AND SECURITY AGREEMENT
THIS AMENDMENT made and entered into as of this 17 day of September,
1995, by Technical Publishing Solutions, Inc., a Minnesota corporation (herein
called "Borrower") for the benefit of Diversified Business Credit, Inc., a
Minnesota corporation (herein called "Lender").
W I T N E S S E T H
WHEREAS, Borrower and Lender executed a Credit and Security Agreement
dated as of March 14, 1995 (the "Credit Agreement");
WHEREAS, Borrower and Lender desire to alter, amend and modify the
Credit Agreement as hereinafter set forth.
NOW THEREFORE, in consideration of the foregoing, and other good and
valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties hereby agree as follows:
1. Paragraph 5(h) of the Credit Agreement is hereby deleted
therefrom in its entirety and the following is hereby inserted in lieu thereof:
5(h) On a consolidated basis with DocuPro Services, Inc., at all
times maintain the book net worth of Borrower at amounts in excess
$150,000 for the year ending 3/31/96 and $250,000 for the year ending
3/31/97.
2. Paragraph 5(j) of the Credit Agreement is hereby deleted
therefrom in its entirety and the following is hereby inserted in lieu thereof:
5(j) Maintain insurance on the life of Xxxxxx X. Xxxxx in the amount
of $1,000,000 with companies and terms reasonably acceptable to Lender
and assign such life insurance policies to Lender on forms of
assignment acceptable to Lender.
3. Paragraph 6(a)(3) of the Credit Agreement is hereby deleted
therefrom in its entirety and the following is hereby inserted in lieu thereof:
9(a)(3) On a consolidated basis with DocuPro Services, Inc., unsecured
indebtedness, in an amount not exceeding $27,500.00 at any one time
outstanding, which is full subordinated in right of payment to all
indebtedness owed to Lender pursuant to a subordination agreement
accepted or approved in writing by Lender.
26
4. Except as herein specifically set forth, the terms and
provisions of the Credit Agreement shall remain in full force and effect without
modification, amendment or alteration.
IN WITNESS WHEREOF, this Amendment to the Credit Agreement has been duly
executed and delivered by the proper officers thereunto duly authorized on the
day and year first above written.
Technical Publishing Solutions, Inc.
By /s/ Xxxxxx X. Xxxxx
------------------------------
Its President
-------------------------
ADDRESS:
0000 Xxxxxxx Xxxxx, Xxxxx 000
Xxxxxxxxxxx, Xxxxxxxxx 00000
Accepted at Minneapolis, MN
on September 18, 1995
DIVERSIFIED BUSINESS CREDIT, INC.
By /s/ Illegible Signature
--------------------------
Its Vice President
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