<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
-----------------------
FORM 10-K
(Mark One)
[x] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934 [FEE REQUIRED]
For the fiscal year ended January 31, 1994
OR
[_] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
For the transition period from to
Commission file number 0-12204
GRAPHIC INDUSTRIES, INC.
(Exact name of Registrant as specified in its charter)
GEORGIA 58-1101633
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
2155 MONROE DRIVE, N.E.,
ATLANTA, GEORGIA 30324
(Address of principal executive (Zip Code)
offices)
Registrant's telephone number, including area code 404/874-3327
Securities registered pursuant to Section 12(b) of the Act:
NONE
Securities registered pursuant to Section 12(g) of the Act:
COMMON STOCK, $.10 PAR VALUE
(Title of class)
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes [x] No [_]
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [x]
THE AGGREGATE MARKET VALUE OF THE VOTING STOCK HELD BY NONAFFILIATES OF THE
REGISTRANT WAS $39,541,641 AS OF APRIL 20, 1994 BASED UPON THE CLOSING SALE
----------
PRICE AS REPORTED ON THE NASDAQ NATIONAL MARKET SYSTEM THAT DAY.
SHARES OF COMMON STOCK, $.10 PAR VALUE, OUTSTANDING AT APRIL, 20, 1995 -
6,234,449; SHARES OF CLASS B COMMON STOCK, $.10 PAR VALUE, OUTSTANDING AT APRIL
20, 1995 - 4,519,117.
Documents incorporated by reference:
PORTIONS OF THE GRAPHIC INDUSTRIES, INC. ANNUAL SHAREHOLDERS REPORT FOR THE
YEAR ENDED JANUARY 31, 1995 ARE INCORPORATED BY REFERENCE INTO PART I AND PART
II.
PORTIONS OF THE GRAPHIC INDUSTRIES, INC. DEFINITIVE PROXY STATEMENT FOR
ANNUAL MEETING OF SHAREHOLDERS TO BE HELD MAY 23, 1995 ARE INCORPORATED BY
REFERENCE INTO PART III.
Exhibit Index begins on page 30. Total number of pages: 341.
<PAGE>
PART I
ITEM 1. BUSINESS
--------
General
- -------
Graphic Industries, Inc. (the "Company" or "Graphic") engages in all
aspects of financial and corporate printing, reprographic services, commercial
printing, direct mail printing and other graphic communications. The Company
ranks approximately 17th by sales among commercial printing firms in North
America. Graphic has expanded its printing and graphic arts services and its
markets through a continuing program of acquisitions of established companies in
its industry and through internal growth and development. The Company's
competitive position has been strengthened in recent years by its substantial
capital investments in advanced equipment, including computerized multicolor
presses, prepress equipment and laser scanners for color separations.
The Company's growth strategy is to pursue profitable expansion in its
industry on a regional and national basis through acquisitions and internal
growth together with emphasis on the use of state-of-the-art technology.
The Company was incorporated in Georgia in 1970 and serves as the parent of
its operating subsidiaries and divisions. As used herein, the terms "Graphic"
and "Company" include Graphic Industries, Inc. and its subsidiaries and
divisions unless the context indicates otherwise.
Acquisition History
- -------------------
Since its incorporation in 1970, Graphic has expanded from a regionally
based business with only six operating companies into a network of 16 commercial
printing companies and a reprographics division with operations in the major
U.S. market regions of the Southeast, Northeast, Midwest and Southwest.
Acquisitions have been made by the payment of either cash, a combination of
cash and notes issued to the sellers or by the use of stock. The Company has
generally maintained the acquired company as a subsidiary that continues to
operate under its own name and in most cases with the previous management.
In considering acquisition candidates, the Company seeks those companies
which offer opportunities for increased geographic coverage, improved
productivity and profitability, complementary products and services, added
technology, capacity and equipment, strong management in place, and a reasonable
purchase price.
The following table lists the Company's principal operating subsidiaries
and divisions, the dates of their founding or acquisition by the Company or its
predecessors, and shows their principal products and services.
-2-
<PAGE>
<TABLE>
<CAPTION>
Fiscal Year
in which
Organized
Name and Founded or Acquired Principal Services
Location in by Company or Products
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
A.C. Scanning, Inc. 1982 1985 Color separations
(1)
Bedford, MA
A & E Reprographic 1979 1981 Reprographic services
& Supply Co. (2)
Jacksonville, FL
Arco Blueprinter 1961 1986 Reprographic services
Asheville, NC (2)
Atlanta Blue Print 1919 1963 Reprographic services;
Co. architectural,
Atlanta, GA engineering and office
products and supplies
Atlantic Reprographics 1983 1989 Reprographic services;
(2) architectural,
Myrtle Beach, SC engineering and office
supplies
Baum Printing House, 1923 1989 Financial and
Inc. corporate printing;
Philadelphia, PA graphic communications
Carolina Reprographics 1938 1989 Reprographic services;
(2)(3) architectural,
Columbia, SC engineering and office
supplies
Cobb Reprographics & 1971 1971 Reprographic services
Office Supply(2)
Marietta, GA
Craftsman Printing 1957 1985 Financial and
Company corporate printing;
Charlotte, NC graphic communications
Executive Courier, 1983 1991 Courier services
Inc.(4)
Atlanta, GA
</TABLE>
-3-
<PAGE>
<TABLE>
<CAPTION>
Fiscal Year
in which
Organized
Name and Founded or Acquired Principal Services
Location in by Company or Products
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
Graphic Direct, Inc.- 1906 1987 Direct mail and
Illinois(5) business forms
Elmhurst, IL printing
Graphic Direct, Inc.- 1939 1987 Direct mail and
Michigan(6)(7) business forms
Madison Heights, MI printing
Heritage Press, 1923 1986 Financial and
Inc. corporate printing;
Dallas, TX graphic communications
Hoechstetter Printing 1963 1989 Financial and
Company, Inc. corporate printing;
Pittsburgh, PA graphic communications
Imaging Technologies 1992 1993 Reprographic services
Services(2)
Augusta, GA
Imaging Technologies 1954 1986 Reprographic services;
Services(2)(8) architectural,
Greenville, SC engineering and office
supplies
Imaging Technologies 1962 1986 Reprographic services
Services(2)(10)
Spartanburg, SC
IPD Printing & 1978 1986 Financial and
Distributing, Inc. corporate printing;
Atlanta, GA graphic
communications;
direct mail printing
Macon Blue Print 1918 1984 Reprographic services;
Company(2) architectural
Macon, GA engineering and office
supplies
Mercury Printing 1961 1989 Financial and
Company, Inc. corporate printing;
Memphis, TN graphic communications
</TABLE>
-4-
<PAGE>
<TABLE>
<CAPTION>
Fiscal Year
in which
Organized
Name and Founded or Acquired Principal Services
Location in by Company or Products
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
Monroe Litho, Inc. 1960 1990 Financial and
Rochester, NY corporate printing;
graphic communications
Prizma Photographics 1973 1981 Photographic services
(2)(9)
Atlanta, GA
Southern Signatures, 1991 1995 Graphic communications
Inc.
Atlanta, GA
State Printing 1891 1988 Financial and
Company, Inc. corporate printing;
Columbia, SC graphic communications
The Central Press 1965 1985 Graphic communications
of Miami, Inc.(1)
Pompano Beach, FL
The Stein Printing 1924 1978 Financial and
Company, Inc. corporate printing;
Atlanta, GA graphic communi-
cations; point-of-
purchase materials;
educational services;
W.E. Andrews Co., 1953 1985 Financial and
Inc. corporate printing;
Bedford, MA graphic communication;
educational services
</TABLE>
-5-
<PAGE>
<TABLE>
<CAPTION>
Fiscal Year
in which
Organized
Name and Founded or Acquired Principal Services
Location in by Company or Products
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
W.E. Andrews Co., 1959 1985 Financial and
Inc. of Connecticut corporate printing;
(1) graphic communications
Hartford, CT
Wetmore & Company 1947 1986 Financial and
Houston, TX corporate printing;
graphic communications
Williams Printing 1922 1922 Financial and
Company(11) corporate printing;
Atlanta, GA graphic
communications; point-
of-purchase materials
</TABLE>
______________________
(1) Subsidiary of W. E. Andrews Co., Inc.
(2) Division of Atlanta Blue Print Co.
(3) Former name - Capital Blueprint Company.
(4) Subsidiary of Atlanta Blue Print Co.
(5) Former name - A.J. Kennedy & Co., Inc.
(6) Former name - Printing Service Incorporated.
(7) Merged with Graphic Direct, Inc. - Illinois.
(8) Former name - Piedmont Printmakers.
(9) Former name - General Color.
(10) Former name - Spartan Blueprinters.
(11) Predecessor to the Company.
-6-
<PAGE>
Services and Products
- ---------------------
The following table indicates the approximate percentages of total gross
revenues of the Company attributable to each class of service provided by the
Company for the indicated periods:
<TABLE>
<CAPTION>
Fiscal Years
-------------------------------------
Class of Service 1995 1994 1993
- ---------------------------------- ----- ----- -----
<S> <C> <C> <C>
Financial and Corporate Printing 34% 34% 34%
Graphic Communications 43 41 42
Reprographic Services 7 7 6
Point-of-Purchase Materials 6 6 6
Direct Mail 7 9 9
Educational Services 3 3 3
----- ----- ----
Total 100% 100% 100%
----- ----- ----
</TABLE>
Due to the broad range of printing and graphic arts services provided by
the Company, the Company's business as a whole is not considered to be seasonal.
Financial and Corporate Printing. This category of printing consists
---------------------------------
primarily of the printing of annual reports to shareholders, quarterly reports,
registration statements, offering circulars, 10-Ks and related documents,
corporate magazines and product announcements.
In this market segment, the demand for multicolor printing requires the
latest technology for successful competition. Graphic has the capability of
providing full service in-house with its numerous high-speed, computerized
multicolor presses at greater cost efficiency than companies lacking such
capabilities. Graphic's modern equipment is complemented by strategically
located production facilities in many of the major U.S. markets for financial
and corporate printing.
Graphic Communications. The Company provides a broad line of graphic
-----------------------
communications services including multicolor product brochures, magazines, gift
catalogs, fine art reproductions, promotional calendars, labels, point of
purchase materials, check registers and sports programs. Like other Graphic
products, these are marketed to local, regional and large national corporations.
-7-
<PAGE>
To service this market, the Company relies on new technology in both
prepress and printing production. State-of-the-art equipment includes the
computerized production of previously labor intensive composition and pagination
for producing plates for printing. Quality color reproductions are achieved
with laser scanners for color separations and other sophisticated prepress
processes such as digital typesetting and capabilities for receiving texts from
clients via telecommunications.
Reprographic Services. Graphic's 13 reprographic facilities in Georgia,
----------------------
Florida, North Carolina and South Carolina comprise the largest reprographic
operation in the Southeast, serving more than 8,000 customers, principally
architects, engineers and photographers. Among the services provided by the
reprographic division are: diazo printing (blue on a white background), drafting
and office supplies, custom color and black-and-white photographic services,
color laser copying, desktop publishing, xerography, specifications printing,
and laser plotting and scanning.
The broad line of Graphic services, modern equipment and number of
personnel provide the Company with the capability of handling high volume, fast
turnaround reprographic projects seven days a week. The Company operates on-
premise reprographic service centers for a number of architectural and
engineering firms and also provides highly specialized production of photomural
displays with backlighting for marketing products and services of clients such
as airlines, supermarkets, fast food chains and ad agencies.
Direct Mail. Personalized direct mail requires sophisticated technology to
------------
produce the high quality services and products demanded by this market segment,
which includes many leading U.S. corporations. Among the specialized services
provided by Graphic are ink jet and laser imprinting, die cutting, foil
stamping, blow-on labeling, scratch-off inking and remoistenable glue,
continuous forms and the handling of complete mail packages for clients.
Educational Services. The Company serves a large number of leading
---------------------
colleges and universities as well as regional and local institutions. The
Company provides a wide range of services from design and copy writing to
production and fulfillment for educational clients.
Ancillary Services
- ------------------
The Company offers a full line of ancillary services to achieve greater
integration of its printing and graphic communications operations. These
services include creative staff, either in-house or by contract for research,
concept development, copywriting, editing, graphic design, photography and
production art. By providing such services, the Company enhances its marketing
effort and builds customer loyalty. Revenues attributable to these ancillary
services are included in the table of revenues above under the class of service
or product for which such services were performed.
-8-
<PAGE>
Warehousing, packaging, shipping and delivery services are also critical
elements in the printing industry and the Company is equipped to provide these
services by storing printed materials for its customers, handling bulk shipments
and mailing to meet customer needs. The Company operates a number of radio-
dispatched and other delivery trucks in certain market areas or utilizes courier
services to provide customers with pickup and delivery services.
Capital Expenditures
- --------------------
The Company has increased its capabilities for printing products and
services significantly through purchases of new equipment in recent years. The
following table indicates the expenditures for capital improvements (excluding
assets of acquired businesses) during each of the last five years:
<TABLE>
<CAPTION>
Fiscal Year Aggregate Capital Expenditures
----------- ------------------------------
<S> <C>
1991 $11,363,684
1992 13,243,479
1993 6,631,110
1994 21,126,441
1995 21,927,430
-----------
TOTAL $74,292,144
===========
</TABLE>
Except for the purchase of land, buildings and building improvements of
$1,418,201, $2,424,782, $1,401,369, $4,709,006 and $5,246,153 during fiscal
1991, 1992, 1993, 1994 and 1995 respectively (see Item 7, Management's
Discussion and Analysis of Financial Condition and Results of Operations, and
Item 13, Certain Relationships and Related Transactions, of this Report), the
expenditures in the table above represent additional equipment acquisitions.
These equipment additions increase the Company's production capacity while
permitting production operations to be more labor-efficient and cost-efficient
and capable of higher quality output.
The following is a description of certain equipment used by the Company in
its operations:
Computerized Phototypesetting and Telecommunications. Equipment includes
-----------------------------------------------------
various electronic typesetting systems utilizing computer hardware and software
to maximize speed, versatility and quality, as well as capabilities for
telecommunications linked directly to customers' word processors or computers to
perform typesetting.
Computerized Ink Control Panels. Seventy-five of the Company's four-,
--------------------------------
five-, six-, seven- and eight-color presses are equipped with computerized
control panels which automatically control the application of ink and produce
high quality reproduction at high press speeds.
-9-
<PAGE>
Specialized Equipment. The Company's specialized equipment, in addition to
----------------------
the above, includes twenty-four Misomex computerized stripping and platemaking
machines for automatically stripping page film into eight-page flats and making
the plate. The Company owns twenty-two Laser Scanners and thirteen color
manipulation systems which produce color separations by computerized scanning,
replacing labor-intensive handwork and camera work, improving the quality of the
product and turnaround time, and reducing the unit cost of a separation (used in
color printing).
The Company also owns 43 saddle stitcher/collator/trimmers and perfect
binding machines. This equipment includes a 27-pocket automatic perfect binder
which collates, binds and trims up to 864 pages in one operation and is used for
producing telephone directories and bulky catalogs.
Printing Presses. During fiscal 1995, the Company operated an aggregate of
-----------------
110 sheetfed offset presses, web offset presses and letterpresses, including 80
which print four to eight colors simultaneously.
Sales and Marketing
- -------------------
The Company seeks to maximize the benefits of its diversification by
decentralized marketing efforts of the various subsidiaries, each of which has
expertise in certain printing specialties. Collectively, the subsidiaries have
enabled the Company to improve its overall market position in the printing
industry.
At January 31, 1995, the Company's services were marketed by 250 full-time
salaried and commissioned sales persons employed by the Company's subsidiaries.
Although each sales person has primary responsibility to represent his own
company, he has access to the full range of services performed by the Company,
thus maximizing his potential sales volume and the sales potential of Graphic.
This strategy is based on orientation of accounts by the Company's organization
to serve the total printing and graphic arts needs of its customers.
Company sales persons participate in a comprehensive training program
operated by the particular subsidiary employing those persons, who also may
receive additional training at other subsidiaries. The Company has experienced
a low rate of turnover among its sales force.
Customers are billed upon completion or termination of an entire job. The
dollar amount of backlog orders, therefore, is not meaningful in the Company's
business as jobs are generally completed shortly after an order is received.
At January 31, 1995, the Company had more than 10,000 customer accounts.
No customer accounted for as much as 10% of the Company's revenues during fiscal
1995.
-10-
<PAGE>
Employees
- ---------
The Company employed 2,961 associates at January 31, 1995. Approximately
10 percent of the Company's associates are represented by one of five unions
covering mostly pressroom and bindery personnel. Collective bargaining
contracts are negotiated on an individual plant basis. The Company has not
experienced any significant work stoppages in more than 10 years.
Competition
- -----------
The printing and graphic arts industry is one of the largest and most
geographically dispersed manufacturing industries in the United States. The
U.S. Department of Commerce estimates there are approximately 37,000 commercial
printing plants in the nation with shipments of commercial printing reaching
$52.6 billion in 1993. Most of the Company's operations are included in the
commercial printing category.
Competition in the printing industry is principally based on quality,
service and price. The Company believes it competes effectively on all of these
bases. The Company competes directly with a number of printers throughout the
nation, some of which are subsidiaries or divisions of companies having much
greater financial resources than the Company.
Material
- --------
Although the Company purchases a number of different materials for its
operations, such as paper, ink, film and plates, only the purchase of paper is
significant. The Company purchases paper from various mills and local
suppliers, with many alternate sources of paper available. The Company has
experienced no difficulty in obtaining adequate suppliers of paper or other
materials nor is any difficulty anticipated in the future.
-11-
<PAGE>
ITEM 2. PROPERTIES
----------
The following table contains information regarding the Company's facilities
as of April 20, 1995, all of which are leased except as otherwise noted:
<TABLE>
<CAPTION>
Facility Square Feet Use (1)
- -------------------------------- ----------- --------------------------
<S> <C> <C>
Graphic Industries, Inc.(2)(3) 9,080 Corporate
Atlanta, GA headquarters
A & E Reprographic & 9,150 Production, sales and office
Supply Co.
Jacksonville, FL
Arco Blueprinter 5,000 Production, sales and office
Asheville, NC
Atlanta Blue Print Co. 43,500 Production, sales and office
Atlanta, GA
Atlantic Reprographics 5,000 Production, sales and office
Myrtle Beach, SC
Baum Printing House, Inc. 61,848 Production, sales and office
Philadelphia, PA
Carolina Reprographics(3) 17,700 Production, sales and office
Columbia, SC
Cobb Reprographics & 3,600 Production, sales and office
Office Supply
Marietta, GA
Craftsman Printing Company(2) 94,956 Production, sales, office and
Charlotte, NC warehouse
Executive Courier, Inc.(2) 4,000 Sales and office
Atlanta, GA
Graphic Direct, Inc.- 72,888 Production, sales and office
Illinois(4)
Elmhurst, IL
Graphic Direct, Inc.- 84,400 Production, sales and office
Michigan(2)
Madison Heights, MI
</TABLE>
-12-
<PAGE>
<TABLE>
<CAPTION>
Facility Square Feet Use (1)
- ------------------------------ ----------- --------------------------
<S> <C> <C>
Heritage Press, Inc.(2)(3) 106,000 Production, sales, office and
Dallas, TX warehouse
Hoechstetter Printing 138,000 Production, sales and office
Company, Inc.(2)
Pittsburgh, PA
Imaging Technologies 1,200 Production, sales and office
Services
Augusta, GA
Imaging Technologies 15,000 Production, sales and office
Services
Greenville, SC
Imaging Technologies 2,500 Production, sales and office
Services
Spartanburg, SC
IPD Printing & Distributing, 208,440 Production, sales, office and
Inc. (2) warehouse
Atlanta, GA
Macon Blue Print Company 10,000 Production, sales and office
Macon, GA
Mercury Printing Company, 54,134 Production, sales and office
Inc.
Memphis, TN
Monroe Litho, Inc. 53,000 Production, sales and office
Rochester, NY
Prizma Reprographics 1,500 Production, sales and office
Atlanta, GA
Southern Signatures, Inc. 25,000 Production, sales and office
Atlanta, GA
State Printing Company(2) 60,000 Production, sales and office
Columbia, SC
The Central Press of 41,000 Production, sales and office
Miami, Inc.(2)
Pompano Beach, FL
</TABLE>
-13-
<PAGE>
<TABLE>
<CAPTION>
Facility Square Feet Use (1)
- -------------------------------- ----------- --------------------------
<S> <C> <C>
The Stein Printing Company, 131,624 Administrative offices,
Inc.(2) conference rooms, production
Atlanta, GA and warehouse
W.E. Andrews Co., Inc.(5) 98,709 Production, sales and office
Bedford, MA
W.E. Andrews Co., Inc. of 44,000 Production, sales and office
Connecticut
Hartford, CT
Wetmore & Company(2) 112,043 Production, sales, office and
Houston, TX warehouse
Williams Printing Company(2)(3) 139,160 Production, sales, office and
Atlanta, GA warehouse
</TABLE>
____________________________
(1) Building space used for "production" as shown in the table above includes
functions such as layout, design, typesetting, printing, binding,
photographic processes and finishing. The Company believes that its
facilities are in good condition and adequate for the purposes for which
they are used. The aggregate annual rental cost for the total of
approximately 365,870 square feet of leased space described above is
approximately $1,491,600. See Note 6 of Notes to Consolidated Financial
Statements in Item 8 of this Report.
(2) These facilities are owned by the company.
(3) Includes two facilities.
(4) Includes two facilities, one of which is owned by the Company (30,838
square feet).
(5) Includes two facilities, one of which is owned by the Company (67,015
square feet).
-14-
<PAGE>
ITEM 3. LEGAL PROCEEDINGS
-----------------
At the end of fiscal year 1995, there were no material pending legal
proceedings to which the Company was a party or to which any of its property was
the subject.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
---------------------------------------------------
None.
ITEM 4(A). EXECUTIVE OFFICERS OF THE REGISTRANT
------------------------------------
Officers are elected annually and serve at the discretion of the Board of
Directors. The executive officers of the Company are as follows:
<TABLE>
<CAPTION>
Position with Company,
Principal Occupation,
Business Experience,
Name Other Directorships Age
- ---------------------------- ------------------------------- -------
<S> <C> <C>
Mark C. Pope III Chairman of the Board of 70
Graphic Industries since
1970 and President of
Graphic Industries 1970-
1989
Mark C. Pope IV (1) President of Graphic 44
Industries since 1989,
Vice President of Graphic
Industries 1984-1989,
Assistant Secretary of
Graphic Industries 1979-
1989; President of
Williams Printing
Company 1982-1987 (2)
Alvan A. Herring, Jr. Vice President of Graphic 51
Industries since 1990;
President, Foote & Davies,
Inc. 1989-90; Senior Vice
President Foote & Davies, Inc.
1982-1989
William A. Wood Vice President of Graphic 75
Industries since 1986;
President of The Stein
Printing Company, Inc.
1978-1986 (2)
</TABLE>
-15-
<PAGE>
<TABLE>
<CAPTION>
Position with Company,
Principal Occupation,
Business Experience,
Name Other Directorships Age
- ---------------------------- ------------------------------- -------
<S> <C> <C>
Joseph A. Fasolo Vice President of Graphic 53
Industries since 1994;
President of Baum Printing,
Inc. since 1988 (2)
Jim R. Tidwell Vice President of Graphic 55
Industries since 1993;
President of Craftsman
Printing Company since
1993; President of Heritage
Press, Inc. 1991-93;
President of Wetmore &
Company 1988-91(2)
David S. Fraser Chief Financial Officer and 56
Treasurer of Graphic Industries,
Inc. since 1994; President of
L.S. Brown Co. and Marine
Distributors, Inc. 1986-1994
Donald P. Hunnicutt Secretary of Graphic 51
Industries since 1987;
Controller of Graphic
Industries 1983-1987
</TABLE>
______________________
(1) Mark C. Pope IV is the son of Mark C. Pope III.
(2) Baum Printing, Inc., Craftsman Printing Company, Heritage Press, Inc., The
Stein Printing Company, Inc., Wetmore & Company and Williams Printing
Company are wholly-owned subsidiaries of the Company.
-16-
<PAGE>
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
---------------------------------------------------------------------
This information is incorporated by reference to "Market For Common Stock"
and "Dividend Information" on the inside back cover of the Registrant's annual
shareholders report for the year ended January 31, 1995.
ITEM 6. SELECTED FINANCIAL DATA
-----------------------
This information is incorporated by reference to "10-Year Comparative
Summary of Operations" and "10-Year Comparative Consolidated Balance Sheets" on
pages 4-7 of the Registrant's annual shareholders report for the year ended
January 31, 1995.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
-------------------------------------------------
CONDITION AND RESULTS OF OPERATIONS
-----------------------------------
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" on pages 18-19 of the Registrant's annual shareholders report for
the year ended January 31, 1995 are incorporated by reference.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
-------------------------------------------
The report of independent auditors and consolidated financial statements
included on page 20-29 of the Registrant's annual shareholders report for the
year ended January 31, 1995 are incorporated by reference.
"Quarterly Results of Operations" on page 30 of the Registrant's annual
shareholders report for the year ended January 31, 1995 are incorporated herein
by reference.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
---------------------------------------------------------------
FINANCIAL DISCLOSURE
--------------------
Not applicable.
-17-
<PAGE>
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
--------------------------------------------------
Information concerning directors is incorporated by reference to "Proposal
1 - Election of Directors" in the Registrant's definitive Proxy Statement for
the 1995 Annual Meeting of Shareholders, to be filed with the Securities and
Exchange Commission within 120 days of the end of the Registrant's 1995 fiscal
year.
Reference is also made to Item 4(A) of Part I of this Report, "Executive
Officers of the Registrant," which information is incorporated herein by
reference.
ITEM 11. EXECUTIVE COMPENSATION
----------------------
This information is incorporated by reference to "Executive Compensation -
Executive Compensation Tables", in the Registrant's definitive Proxy Statement
for the 1995 Annual Meeting of Shareholders, to be filed with the Securities and
Exchange Commission within 120 days of the end of the Registrant's 1995 fiscal
year.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
---------------------------------------------------
MANAGEMENT
----------
This information is incorporated by reference to "Proposal 1 - Election of
Directors" in the Registrant's definitive Proxy Statement for the 1995 Annual
Meeting of Shareholders, to be filed with the Securities and Exchange Commission
within 120 days of the end of the Registrant's 1995 fiscal year.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
----------------------------------------------
This information is incorporated by reference to "Proposal 1 - Election of
Directors - Certain Transactions" in the Registrant's definitive Proxy Statement
for the 1995 Annual Meeting of Shareholders, to be filed with the Securities and
Exchange Commission within 120 days of the end of the Registrant's 1995 fiscal
year.
-18-
<PAGE>
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON
-------------------------------------------------------
FORM 8-K
--------
(a) The following documents are filed as part of this Report:
1. Financial Statements.
The following consolidated financial statements of the Registrant,
included in the annual shareholders report for fiscal year ended
January 31, 1995, are incorporated by reference in Item 8:
* Consolidated Balance Sheets - January 31, 1995 and January 31,
1994.
* Consolidated Statements of Income - fiscal years ended January
31, 1995, 1994 and 1993.
* Consolidated Statements of Shareholders' Equity - fiscal years
ended January 31, 1995, 1994 and 1993.
* Consolidated Statements of Cash Flows - fiscal years ended
January 31, 1995, 1994 and 1993.
* Notes to Consolidated Financial Statements - January 31, 1995.
2. Financial Statement Schedule
Schedule The following consolidated statement schedule of the
--------
Number Registrant is included in Item 14(d):
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II Valuation and Qualifying Accounts.
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All other schedules for which provision is made in the
applicable accounting regulations of the Securities and
Exchange Commission are not required under the related
instructions or are inapplicable and therefore have been
omitted.
3. Exhibits incorporated by reference or filed with this report:
<TABLE>
<CAPTION>
Exhibit
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Number Description
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<S> <C>
3(a) Amended and Restated Articles of Incorporation of Registrant.
(1)
3(b) By-laws of Registrant. (2)
4(a) Instruments defining the rights of security holders. See
Articles V and VI of the Amended and Restated Articles of
Incorporation contained in Exhibit 3(a) and Articles Two and
Seven of the By-laws contained in Exhibit 3(b). (2)
4(b) Form of Indenture, including Form of Debenture, between
Registrant and the First National Bank of Atlanta. (3)
10(a)* Incentive Stock Option Plan and Form of Option Agreement of
Registrant. (4)
10(b)* Profit Sharing Plan and Trust of Registrant, together with
Call, Put and Right of First Refusal Agreement. (5)
10(c)* Payroll-Based Employee Stock Ownership Plan and Trust of
Registrant. (6)
10(d) Officers' and Directors' Liability Insurance Policy issued by
National Union Fire Insurance Co. (5)
10(l) Stock Purchase Agreement dated July 12, 1990 between the
Registrant and Dyment Limited with respect to the sale of
Finish It, Inc. (1)
10(m) Asset Purchase Agreement dated October 1, 1990 between the
Registrant and Vista Business Forms, Inc. with respect to the
sale of KAL Forms, Inc. (1)
10(n) Term Loan Agreement dated July 17, 1990 between Monroe Litho,
Inc. and Trust Company Bank with form of Term Note and
Guaranty of the Registrant. (1)
</TABLE>
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<TABLE>
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10(o) Receivable Financing Agreement dated September 28, 1990
between W.E. Andrews Co., Inc. of Connecticut and Bank of New
England together with Security Agreement, Installment
Promissory Note and Guaranty of W.E. Andrews Co. (1)
10(p) Receivable Financing Agreement dated December 17, 1990
between Edwards & Broughton Company and First Citizens Bank
together with Installment Promissory Note, Security Agreement
and Guaranty of the Registrant. (1)
10(q) Receivable Financing Agreement dated December 26, 1990
between Baum Printing House, Inc. and Philadelphia National
Bank together with Installment Promissory Note, Security
Agreement and Guaranty of the Registrant. (1)
10(u) Stock Purchase Agreement dated as of January 26, 1984 among
the Registrant, W.E.A., Inc. and W.E. Andrews Co. Inc., with
exhibits. (7)
10(aa) Stock Purchase Agreement dated September 11, 1985 among the
Registrant, IPD Acquisition Corp., IPD Printing &
Distributing, Inc., and Equifax, Inc., with exhibits and
Articles of Merger. (8)
10(ff) Promissory Note from the Registrant and Craftsman Printing
Company to Life Insurance Company of Georgia; Security
Agreement between Craftsman Printing Company and Life
Insurance Company of eorgia; Deed of Trust among Craftsman
Printing Company, Lewis H. Parham, Jr., and Life Insurance
Company of Georgia; and Guaranty from Registrant to Life
Insurance Company of Georgia. (9)
10(gg) Promissory Note from the Registrant and Wetmore & Company to
Life Insurance Company of Georgia; Deed of Trust among
Wetmore & Company, John B. Stewart and Life Insurance Company
of Georgia; and Guaranty Agreement from Registrant to Life
Insurance Company of Georgia. (9)
10(hh) Real Estate Note from Registrant and IPD Printing &
Distributing, Inc. to Life Insurance Company of Georgia; Deed
to Secure Debt from IPD Printing & Distributing, Inc. to Life
Insurance Company of Georgia; Security Agreement between IPD
Printing & Distributing, Inc. and Life Insurance Company
ofGeorgia; and Guaranty from Registrant to Life Insurance
Company of Georgia. (9)
10(ii) 1988 Incentive Stock Option Plan. (10)
10(jj) Lease Agreement dated December 1, 1981, as amended, and
Agreement and Release of Guaranty dated October 30, 1987.
(10)
</TABLE>
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<TABLE>
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10(kk) Stock Purchase Agreement dated September 14, 1988 among the
Registrant, Mercury Acquisition Company and the Shareholders
of Mercury Printing Company, Inc. with exhibits. (11)
10(ll) Stock Purchase Agreement dated June 8, 1988 among the
Registrant, Harvey A. Hoechstetter, HPC Acquisition Corp.,
and Hoechstetter Printing Company, Inc. with exhibits and
Articles of Merger. (11)
10(mm) Stock Purchase Agreement dated August 12, 1988 among the
Registrant, Baum Acquisition Co., Baum Printing House, Inc.,
Seymour Z. Baum, Joseph A. Fasolo and Seymour Z. Baum, as
trustee, with exhibits and Articles of Merger. (11)
10(qq) First Mortgage Real Estate Note and Deed to Secure Debt and
Security Agreement between the Registrant and Jefferson-Pilot
Life Insurance Company. (11)
10(rr) Real Estate Note and Mortgage between Printing Service, Inc.
and Jefferson-Pilot Life Insurance Company dated June 29,
1988. (11)
10(ss) First Mortgage Real Estate Note and Deed to Secure Debt and
Security Agreement between State Printing Company and
Jefferson-Pilot Life Insurance Company dated May 24, 1988.
(11)
10(tt) Stock Purchase Agreement dated July 31, 1989 among the
Registrant, Monroe Litho, Inc., Monroe Acquisition, Inc., and
the Shareholders of Monroe Litho, Inc. with exhibits. (12)
10(ww)* 1991 Incentive Stock Option and Non-Qualified Stock Options
Plan and Form of Option Agreement of Registrant. (2)
10(xx)* 1992 Restricted Stock Award Plan of Registrant. (2)
10(yy) Receivable Financing Agreement and Term Loan Agreement dated
March 3, 1992 between NationsBank, Atlanta Blue Print
Company, Inc., Craftsman Printing Company, Heritage Press,
Inc., IPD Printing & Distributing, Inc., The Stein Printing
Company, Inc., Wetmore & Company, Williams Printing Company
and the Registrant. (2)
</TABLE>
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<TABLE>
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10(zz) Form of Sale and Leaseback Agreement between Fleet Credit
Corporation, W.E. Andrews Co., Inc., W.E. Andrews Co., Inc.
of Connecticut, Baum Printing, Inc., The Central Press of
Miami, Inc., Graphic Direct, Inc.-Illinois, Heritage Press,
Inc., IPD Printing & Distributing, Inc., The Stein Printing
Company, Inc., Wetmore & Company, Williams Printing Company
and the Registrant. (2)
10(aaa) Sale and Leaseback Agreement between Fleet Credit
Corporation, W.E. Andrews Co., Inc. and the Registrant. (5)
10(bbb) First Mortgage Real Estate Note and Deed to Secure Debt and
Security Agreement between Heritage Press, Inc. Protective
Life Insurance Company and the Registrant dated February 4,
1992. (5)
10(ccc) First Mortgage Real Estate Note and Deed to Secure Debt
between Baum Printing, Inc., MetLife Corporation and the
Registrant dated August 27, 1992. (5)
10(ddd) First Mortgage Real Estate Note and Deed to Secure Debt
between MetLife Corporation and the Registrant dated August
27, 1992. (5)
10(eee) Receivable Financing Agreement dated October 20, 1992 between
Executive Courier, Inc. and the Merchant Bank of Atlanta
together with Installment Promissory Notes and Guaranty of
the Registrant. (5)
10(fff) Term Note Agreement, Promissory Note and Security Agreement
between State Printing Company, Inc., First Union National
Bank of Georgia and the Registrant along with Guaranty of the
Registrant. (5)
10(ggg) Letter Loan Agreement, Installment Term Notes and Master
Demand Note between Graphic Direct, Inc.-Illinois, Graphic
Direct, Inc.-Michigan, NBD Bank, NA and the Registrant along
with Guaranty of the Registrant. (5)
10(hhh) Loan and Security Agreement and Form of Promissory Note among
the Registrant, Atlanta Blue Print Co., Baum Printing, Inc.,
The Central Press of Miami, Inc., Craftsman Printing Company,
Edwards & Broughton Co., Graphic Direct, Inc.-Illinois,
Graphic Direct, Inc.-Michigan, Heritage Press, Inc.,
Hoechstetter Printing Company, Inc., IPD Printing &
Distributing, Inc., Mercury Printing Company, Inc., State
Printing Company, Inc., The Stein Printing Company, Inc.,
W.E. Andrews Co.,Inc., W.E. Andrews Co., Inc. of Connecticut,
Wetmore & Company, Williams Printing Company, A.C. Scanning,
Inc., and the CIT Group/Equipment Financing, Inc. dated July
29, 1993. (13)
</TABLE>
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<TABLE>
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10(iii) Amended and restated Financing Agreement, along with the
First and Second Amendment thereto, among the Registrant,
Atlanta Blue Print Co., Baum Printing, Inc., The Central
Press of Miami, Inc., Craftsman Printing Company, Edwards &
Broughton Co., Graphic Direct, Inc.-Illinois, Graphic Direct,
Inc.-Michigan, Heritage Press, Inc., IPD Printing &
Distributing, Inc., Mercury Printing Company, Inc., State
Printing Company, Inc., The Stein Printing Company, Inc.,
Wetmore & Company, Williams Printing Company and NationsBank
of Georgia, N.A. dated August 6, 1993. (13)
10(jjj) First Mortgage Real Estate Note and Deed to Secure Debt
between the Registrant and MetLife Corporation dated January
26, 1994. (13)
10(kkk) Offer to Purchase and Supplement to Offer to Purchase between
the Registrant and Kenneth A. Walt, as Trustee for the Estate
of Graphic Dynamics, Inc. dated January 31, 1994. (13)
10(lll) Agreement and Plan of Reorganization between the Registrant,
SS Acquisition Co., Southern Signatures, Inc., Brian R.
Smith, MI Holdings, Inc. and Steven C. Carson, M.D., Pension
Fund dated April 19, 1994.
10(mmm) Promissory Note and Master Security Agreement between Mercury
Printing Company, Fleet Credit Corporation and the Registrant
dated May 5, 1994.
10(nnn) First Mortgage Real Estate Note and Security Agreement
between the Registrant and MetLife Capital Financial
Corporation dated July 21, 1994.
10(ooo) Promissory Note, Credit Agreement and Security Agreement
between Wetmore & Company, Texas Commerce Bank and the
Registrant dated September 14, 1994 along with Guaranty of
the Registrant.
10(ppp) Term Loan, Security and Guaranty Agreement between IPD
Printing & Distributing, Inc., Trust Company Bank and the
Registrant dated November 30, 1994.
10(qqq) First Mortgage Real Estate Note, deed to secure debt and
Security Agreement between the Registrant and MetLife Capital
Financial Corporation dated December 27, 1994.
11 Computation of Earnings Per Share.
13 The Registrant's 1995 Annual Shareholders Report. With the
exception of information expressly incorporated herein by
reference, the 1995 Annual Shareholders Report is not deemed
to be filed with the commission.
</TABLE>
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<TABLE>
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22 Subsidiaries of the Registrant.
23 Consent of Independent Auditors.
* Compensatory Plan, arrangement or management contract.
</TABLE>
______________________
(1) Incorporated herein by reference to Exhibit of the same number of the
Registrant's Annual Report on Form 10-K for the fiscal year ended January
31, 1991. (File No. 0-12204).
(2) Incorporated herein by reference to Exhibit of the same number of the
Registrants Annual Report on Form 10-K for the fiscal year ended January 31,
1992. (File No. 0-12204)
(3) Incorporated herein by reference to Exhibit of the same number to the
Registrant's Registration Statement on Form S-1 as filed on April 30, 1986
(Reg. No. 33-5277).
(4) Incorporated herein by reference to Exhibit of the same number to
Amendment No. 2 to the Registrant's Registration Statement on Form S-1 filed
on December 13, 1983 (Reg. No. 2-86411) .
(5) Incorporated herein by reference to Exhibit of the same number of the
Registrants Annual Report on Form 10-K for the fiscal year ended January 31,
1993. (File No. 0-12204)
(6) Incorporated herein by reference to Exhibit of the same number to the
Registrant's Registration Statement on Form S-1 as filed on October 2, 1985
(Reg. No. 33-600).
(7) Incorporated herein by reference to Exhibit 2 to the Registrant's
Current Report on Form 8-K as filed on February 16, 1984 (File No. 0-12204).
(8) Incorporated herein by reference to the Registrant's Current Report on
Form 8-K as filed on September 26, 1985 (File No. 0-12204) .
(9) Incorporated herein by reference to Exhibit of the same number to the
Registrant's Annual Report on Form 10-K for the fiscal year ended January 31,
1987 (File No. 0-12204).
(10) Incorporated herein by reference to Exhibit of the same number to the
Registrant's Annual Report on Form 10-K for the fiscal year ended January
31, 1988 (File No. 0-12204).
(11) Incorporated herein by reference to Exhibit of the same number to the
Registrant's Annual Report on Form 10-K for the fiscal year ended January
31, 1989. (File No. O-12204)
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(12) Incorporated herein by reference to Exhibit of the same number of the
Registrant's Annual Report on Form 10-K for the fiscal year ended January
31, 1990. (File No. O-12204).
(13) Incorporated herein by reference to Exhibit of same number of the
Registrants Annual Report on Form 10-K for the fiscal year ended January 31,
1994. (File No. 0-12204).
(b) Reports on Form 8-K.
No reports on Form 8-K were filed during the quarter ended January 31,
1995.
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SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the
Securities Exchange Act of 1934, The Registrant has duly caused
this report to be signed on its behalf by the undersigned,
thereunto duly authorized.
GRAPHIC INDUSTRIES, INC.
Date: April 27, 1995 By: /s/ Mark C. Pope, III
--------------------------
Mark C. Pope, III
Chairman of the Board
Pursuant to the requirements of the Securities Exchange Act
of 1934, this report has been signed below by the following
persons on behalf of the Registrant and in the capacities and on
the dates indicated.
Date: April 27, 1995 /s/ Mark C. Pope, III
-------------------------------
Mark C. Pope, III
Chairman of the Board
(Principal Executive Officer)
Date: April 27, 1995 /s/ David S. Fraser
-------------------------------
David S. Fraser
Chief Financial Officer and
Treasurer
(Principal Financial and
Accounting Officer)
Date: April 27, 1995 /s/ Mark C. Pope, IV
-------------------------------
Mark C. Pope, IV
Director
Date: April 27, 1995 /s/ William A. Wood
-------------------------------
William A. Wood
Director
Date: April 27, 1995 /s/ John R. Pope
-------------------------------
John R. Pope
Director
Date: April 27, 1995 /s/ Alvan A. Herring, Jr.
-------------------------------
Alvan A. Herring, Jr.
Director
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Date: April 27, 1995 /s/ Clifford M. Kirtland, Jr.
-------------------------------
Clifford M. Kirtland, Jr.
Director
Date: April 27, 1995 /s/ Ralph N. Strayhorn
-------------------------------
Ralph N. Strayhorn
Director
Date: April 27, 1995 /s/ Warren E. Andrews
-------------------------------
Warren E. Andrews
Director
Date: April 27, 1995 /s/ Carter D. Pope
-------------------------------
Carter D. Pope
Director
Date: April 27, 1995 /s/ James A. Hatcher
-------------------------------
James A. Hatcher
Director
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Graphic Industries, Inc. and Subsidiaries
Schedule VII -- Valuation and Qualifying Accounts
<TABLE>
<CAPTION>
COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E
- -----------------------------------------------------------------------------------------------------------------------------
BALANCE AT CHARGED TO
BEGINNING OF COSTS AND CHARGED TO BALANCE AT END
CLASSIFICATION PERIOD EXPENSES OTHER ACCOUNTS DEDUCTIONS(1) OF PERIOD
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Year ended January 31, 1995:
Accounts receivable allowance $1,157,794 $1,345,038 $ -- $1,427,832 $1,075,000
Year ended January 31, 1994:
Accounts receivable allowance 1,079,056 1,778,552 -- 1,699,814 1,157,794
Year ended January 31, 1993:
Accounts receivable allowance 1,292,957 3,035,212 -- 3,249,113 1,079,056
</TABLE>
(1) Uncollectible accounts written off, net of recoveries.
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit
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Number Description Page
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3(a) Amended and Restated Articles of Incorporation of
Registrant. (1)
3(b) By-laws of Registrant. (2)
4(a) Instruments defining the rights of security
holders. See Articles V and VI of the Amended and
Restated Articles of Incorporation contained in
Exhibit 3(a) and Articles Two and Seven of the
By-laws contained in Exhibit 3(b). (2)
4(b) Form of Indenture, including Form of Debenture,
between Registrant and the First National Bank of
Atlanta. (3)
10(a)* Incentive Stock Option Plan and Form of Option
Agreement of Registrant. (4)
10(b)* Profit Sharing Plan and Trust of Registrant,
together with Call, Put and Right of First
Refusal Agreement. (5)
10(c)* Payroll-Based Employee Stock Ownership Plan and
Trust of Registrant. (6)
10(d) Officers' and Directors' Liability Insurance
Policy issued by National Union Fire Insurance
Co. (5)
10(l) Stock Purchase Agreement dated July 12, 1990
between the Registrant and Dyment Limited with
respect to the sale of Finish It, Inc. (1)
10(m) Asset Purchase Agreement dated October 1, 1990
between the Registrant and Vista Business Forms,
Inc. with respect to the sale of KAL Forms, Inc.
(1)
10(n) Term Loan Agreement dated July 17, 1990 between
Monroe Litho, Inc. and Trust Company Bank with
form of Term Note and Guaranty of the Registrant.
(1)
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Exhibit
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Number Description Page
- ------ ----------- ----
<S> <C> <C>
10(o) Receivable Financing Agreement dated September 28,
1990 between W.E. Andrews Co., Inc. of Connecticut
and Bank of New England together with Security
Agreement, Installment Promissory Note and Guaranty
of W.E. Andrews Co. (1)
10(p) Receivable Financing Agreement dated December 17,
1990 between Edwards & Broughton Company and First
Citizens Bank together with Installment Promissory
Note, Security Agreement and Guaranty of the
Registrant. (1)
10(q) Receivable Financing Agreement dated December 26,
1990 between Baum Printing House, Inc. and Phila-
delphia National Bank together with Installment
Promissory Note, Security Agreement and Guaranty
of the Registrant. (1)
10(u) Stock Purchase Agreement dated as of January 26,
1984 among the Registrant, W.E.A., Inc. and W.E.
Andrews Co. Inc., with exhibits. (7)
10(aa) Stock Purchase Agreement dated September 11, 1985
among the Registrant, IPD Acquisition Corp., IPD
Printing & Distributing, Inc., and Equifax, Inc.,
with exhibits and Articles of Merger. (8)
10(ff) Promissory Note from the Registrant and Craftsman
Printing Company to Life Insurance Company of
Georgia; Security Agreement between Craftsman
Printing Company and Life Insurance Company of
Georgia; Deed of Trust among Craftsman Printing
Company, Lewis H. Parham, Jr., and Life Insurance
Company of Georgia; and Guaranty from Registrant
to Life Insurance Company of Georgia. (9)
10(gg) Promissory Note from the Registrant and Wetmore &
Company to Life Insurance Company of Georgia; Deed
of Trust among Wetmore & Company, John B. Stewart
and Life Insurance Company of Georgia; and
Guaranty Agreement from Registrant to Life
Insurance Company of Georgia. (9)
10(hh) Real Estate Note from Registrant and IPD Printing
& Distributing, Inc. to Life Insurance Company of
Georgia; Deed to Secure Debt from IPD Printing &
Distributing, Inc. to Life Insurance Company of
Georgia; Security Agreement between IPD Printing &
Distributing, Inc. and Life Insurance Company of
Georgia; and Guaranty from Registrant to Life
Insurance Company of Georgia. (9)
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Exhibit
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Number Description Page
- ------ ----------- ----
<S> <C> <C>
10(ii) 1988 Incentive Stock Option Plan. (10)
10(jj) Lease Agreement dated December 1, 1981, as amended,
and Agreement and Release of Guaranty dated October
30, 1987. (10)
10(kk) Stock Purchase Agreement dated September 14, 1988
among the Registrant, Mercury Acquisition Company
and the Shareholders of Mercury Acquisition Company,
Inc. with exhibits. (11)
10(ll) Stock Purchase Agreement dated June 8, 1988 among
the Registrant, Harvey A. Hoechstetter, HPC
Acquisition Corp., and Hoechstetter Printing
Company, Inc. with exhibits and Articles of
Merger. (11)
10(mm) Stock Purchase Agreement dated August 12, 1988
among the Registrant, Baum Acquisition Co., Baum
Printing House, Inc., Seymour Z. Baum, Joseph A.
Fasolo and Seymour Z. Baum, as trustee, with
exhibits and Articles of Merger. (11)
10(qq) First Mortgage Real Estate Note and Deed to Secure
Debt and Security Agreement between the Registrant
and Jefferson-Pilot Life Insurance Company. (11)
10(rr) Real Estate Note and Mortgage between Printing
Service, Inc. and Jefferson-Pilot Life Insurance
Company dated June 29, 1988. (11)
10(ss) First Mortgage Real Estate Note and Deed to Secure
Debt and Security Agreement between State Printing
Company and Jefferson-Pilot Life Insurance Company
dated May 24, 1988. (11)
10(tt) Stock Purchase Agreement dated July 31, 1989 among
the Registrant, Monroe Litho, Inc., Monroe
Acquisition, Inc., and the Shareholders of Monroe
Litho, Inc. with exhibits. (12)
10(ww)* 1991 Incentive Stock Option and Non-Qualified Stock
Options Plan and Form of Option Agreement of
Registrant. (2)
10(xx)* 1992 Restricted Stock Award Plan of Registrant. (2)
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Exhibit
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Number Description Page
- ------ ----------- ----
<S> <C> <C>
10(yy) Receivable Financing Agreement and Term Loan
Agreement dated March 3, 1992 between
NationsBank, Atlanta Blue Print Company, Inc.,
Craftsman Printing Company, Heritage Press,
Inc., IPD Printing & Distributing, Inc., The
Stein Printing Company, Inc., Wetmore &
Company, Williams Printing Company and the
Registrant. (2)
10(zz) Form of Sale and Leaseback Agreement between Fleet
Credit Corporation, W.E. Andrews Co., Inc., W.E.
Andrews Co., Inc. of Connecticut, Baum Printing,
Inc., The Central Press of Miami, Inc., Graphic
Direct, Inc.-Illinois, Heritage Press, Inc., IPD
Printing & Distributing, Inc., The Stein Printing
Company, Inc., Wetmore & Company, Williams Printing
Company and the Registrant. (2)
10(aaa) Sale and Leaseback Agreement between Fleet Credit
Corporation, W.E. Andrews Co., Inc. and the
Registrant. (5)
10(bbb) First Mortgage Real Estate Note and Deed to Secure
Debt and Security Agreement between Heritage Press,
Inc., Protective Life Insurance Company and the
Registrant dated February 4, 1992. (5)
10(ccc) First Mortgage Real Estate Note and Deed to Secure
Debt between Baum Printing, Inc., MetLife Corporation
and the Registrant dated August 27, 1992. (5)
10(ddd) First Mortgage Real Estate Note and Deed to Secure
Debt between MetLife Corporation and the Registrant
dated August 27, 1992. (5)
10(eee) Receivable Financing Agreement dated October 20, 1992
between Executive Courier, Inc. and the Merchant Bank
of Atlanta together with Installment Promissory Notes
and Guaranty of the Registrant. (5)
10(fff) Term Note Agreement, Promissory Note and Security
Agreement between State Printing Company, Inc., First
Union National Bank of Georgia and the Registrant
along with Guaranty of the Registrant. (5)
10(ggg) Letter Loan Agreement, Installment Term Notes and
Master Demand Note between Graphic Direct, Inc.-
Illinois, Graphic Direct, Inc.-Michigan, NBD Bank,
NA and the Registrant along with Guaranty of the
Registrant. (5)
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Exhibit
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Number Description Page
- ------ ----------- ----
<S> <C> <C>
10(hhh) Loan and Security Agreement and Form of Promissory
Note among the Registrant, Atlanta Blue Print Co.,
Baum Printing, Inc., The Central Press of Miami,
Inc., Craftsman Printing Company, Edwards &
Broughton Co., Graphic Direct, Inc.-Illinois,
Graphic Direct, Inc.-Michigan, Heritage Press,
Inc., Hoechstetter Printing, Company, Inc., IPD
Printing & Distributing, Inc., Mercury Printing
Company, Inc., State Printing Company, Inc., The
Stein Printing Company, Inc., W.E. Andrews Co.,
Inc., W.E. Andrews Co., Inc. of Connecticut,
Wetmore & Company, Williams Printing Company, A.C.
Scanning, Inc., and the CIT Group/Equipment
Financing, Inc. dated July 29, 1993. (13)
10(iii) Amended and restated Financing Agreement, along with
the First and Second Amendment thereto, among the
Registrant, Atlanta Blue Print Co., Baum Printing,
Inc., The Central Press of Miami, Inc., Craftsman
Printing Company, Edwards & Broughton Co., Graphic
Direct, Inc.-Illinois, Graphic Direct, Inc.-Michigan,
Heritage Press, Inc., IPD Printing & Distributing,
Inc., Mercury Printing Company, Inc., State Printing
Company, Inc., The Stein Printing Company, Inc.,
Wetmore & Company, Williams Printing Company and
NationsBank of Georgia, N.A. dated August 6, 1993.
(13)
10(jjj) First Mortgage Real Estate Note and Deed to Secure Debt
between the Registrant and MetLife Corporation dated
January 26, 1994. (13)
10(kkk) Offer to Purchase and Supplement to Offer to Purchase
between the Registrant and Kenneth A. Walt, as Trustee
for the Estate of Graphic Dynamics, Inc. dated January
31, 1994. (13)
10(lll) Agreement and Plan of Reorganization between the
Registrant, SS Acquisition Co., Southern Signatures,
Inc., Brian R. Smith, MI Holdings, Inc. and Steven C.
Carson, M.D., Pension Fund dated April 19, 1994.
10(mmm) Promissory Note and Master Security Agreement between
Mercury Printing Company, Fleet Credit Corporation and
the Registrant dated May 5, 1994.
10(nnn) First Mortgage Real Estate Note and Security Agreement
between the Registrant and MetLife Capital Financial
Corporation dated July 21, 1994.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Exhibit
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Number Description Page
- ------ ----------- ----
<S> <C> <C>
10(ooo) Promissory Note, Credit Agreement and Security
Agreement between Wetmore & Company, Texas Commerce
Bank and the Registrant dated September 14, 1994
along with Guaranty of the Registrant.
10(ppp) Term Loan, Security and Guaranty Agreement between
IPD Printing & Distributing, Inc., Trust Company
Bank and the Registrant dated November 30, 1994.
10(qqq) First Mortgage Real Estate Note, deed to secure
debt and Security Agreement between the Registrant
and MetLife Capital Financial Corporation dated
December 27, 1994.
11 Computation of Earnings Per Share.
13 The Registrant's 1995 Annual Shareholders Report.
With the exception of information expressly
incorporated herein by reference, the 1995 Annual
Shareholders Report is not deemed to be filed with
the commission.
22 Subsidiaries of the Registrant.
23 Consent of Independent Auditors.
27 Financial Data Schedule.
* Compensatory Plan, arrangement or management contract.
</TABLE>
- ----------------------
(1) Incorporated herein by reference to Exhibit of the
same number of the Registrant's Annual Report on Form
10-K for the fiscal year ended January 31, 1991. (File
No. 0-12204).
(2) Incorporated herein by reference to Exhibit of the
same number of the Registrants Annual Report on Form
10-K for the fiscal year ended January 31, 1992. (File
No. 0-12204)
(3) Incorporated herein by reference to Exhibit of the
same number to the Registrant's Registration Statement on
Form S-1 as filed on April 30, 1986 (Reg. No. 33-5277).
(4) Incorporated herein by reference to Exhibit of the
same number to Amendment No. 2 to the Registrant's
Registration Statement on Form S-1 filed on December 13,
1983 (Reg. No. 2-86411).
<PAGE>
(5) Incorporated herein by reference to Exhibit of the
same number of the Registrants Annual Report on Form
10-K for the fiscal year ended January 31, 1993.
(File No. 0-12204)
(6) Incorporated herein by reference to Exhibit of the
same number to the Registrant's Registration Statement on
Form S-1 as filed on October 2, 1985 (Reg. No. 33-600).
(7) Incorporated herein by reference to Exhibit 2 to
the Registrant's Current Report on Form 8-K as filed on
February 16, 1984 (File No. 0-12204).
(8) Incorporated herein by reference to the Registrant's
Current Report on Form 8-K as filed on September 26, 1985
(File No. 0-12204).
(9) Incorporated herein by reference to Exhibit of the
same number to the Registrant's Annual Report on Form
10-K for the fiscal year ended January 31, 1987 (File No.
0-12204).
(10) Incorporated herein by reference to Exhibit of the
same number to the Registrant's Annual Report on Form
10-K for the fiscal year ended January 31, 1988 (File No.
0-12204).
(11) Incorporated herein by reference to Exhibit of the
same number to the Registrant's Annual Report on Form
10-K for the fiscal year ended January 31, 1989. (File
No. O-12204)
(12) Incorporated herein by reference to Exhibit of the
same number of the Registrant's Annual Report on Form
10-K for the fiscal year ended January 31, 1990. (File
No. O-12204).
(13) Incorporated herein by reference to Exhibit of
same number of the Registrants Annual Report on Form
10-K for the fiscal year ended January 31, 1994.
(File No. 0-12204).
(b) Reports on Form 8-K.
No reports on Form 8-K were filed during the
quarter ended January 31, 1995.
<PAGE>
EXHIBIT 10 (lll)
AGREEMENT AND PLAN OF REORGANIZATION
BY AND AMONG
GRAPHIC INDUSTRIES, INC.,
SS ACQUISITION CO.,
SOUTHERN SIGNATURES, INC.,
BRIAN R. SMITH,
MI HOLDINGS, INC.
AND
STEVEN C. CARSON, M.D. PENSION FUND
APRIL 29, 1994
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
ITEM NO. PAGE NO.
- -------- --------
<S> <C>
ARTICLE 1....................................................... 2
DEFINITIONS
ARTICLE 2....................................................... 8
MERGER AND EXCHANGE OF STOCK
ARTICLE 3....................................................... 15
REPRESENTATIONS AND WARRANTIES OF SOUTHERN
AND SOUTHERN SHAREHOLDERS
ARTICLE 4....................................................... 36
REPRESENTATIONS AND WARRANTIES OF GRAPHIC
AND SS ACQUISITION
ARTICLE 5....................................................... 39
COVENANTS OF SOUTHERN SHAREHOLDERS AND SOUTHERN
ARTICLE 6....................................................... 39
COVENANTS OF GRAPHIC AND SS ACQUISITION
ARTICLE 7....................................................... 40
INDEMNIFICATION
ARTICLE 8....................................................... 52
ERISA
ARTICLE 9....................................................... 55
MISCELLANEOUS
</TABLE>
i
<PAGE>
INDEX OF SCHEDULES
------------------
<TABLE>
<CAPTION>
<S> <C>
1.28
Southern Financial Statements............................. 7
2.4
Exchange Ratio............................................ 9
3.2
Capital Structure of Southern............................. 16
3.5
Liens..................................................... 17
3.6
Leases and Agreements of Southern......................... 18
3.7
Notices of Audit of Southern.............................. 19
3.8
Litigation and Judgments of Southern...................... 19
3.13
Contracts and Agreements of Southern...................... 22
3.14
Transactions with Affiliates.............................. 24
3.17
Corporate Names of Southern............................... 27
3.18
Material Changes in Southern.............................. 27
3.19
Insurance................................................. 29
3.20
Consents of Southern...................................... 30
3.24
Powers of Attorney of Southern............................ 32
3.25
Residency................................................. 33
3.26
Employee Benefit Plans of Southern........................ 35
</TABLE>
ii
<PAGE>
LIST OF EXHIBITS
----------------
<TABLE>
<S> <C>
Exhibit A.............................................. Employment Agreement
Exhibit B.................................................. Escrow Agreement
Exhibit C.................................................... Plan of Merger
Exhibit D............................................ Registration Agreement
</TABLE>
iii
<PAGE>
AGREEMENT AND PLAN OF REORGANIZATION
THIS AGREEMENT AND PLAN OF REORGANIZATION (the "AGREEMENT") is made as of
this 29th day of April, 1994, by and among Graphic Industries, Inc., a Georgia
corporation ("GRAPHIC"), SS Acquisition Co., a Georgia corporation ("SS
ACQUISITION"), Southern Signatures, Inc., a Georgia corporation ("SOUTHERN"),
and Brian R. Smith, an individual resident of the State of Georgia ("SMITH"), MI
Holdings, Inc., a Georgia corporation ("MIH"), and Steven C. Carson, M.D.
Pension Fund, a qualified retirement plan ("CARSON").
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, SS Acquisition is a wholly-owned subsidiary of Graphic and was
organized for the purpose of consummating the transactions contemplated herein;
and
WHEREAS, all of the issued and outstanding stock of Southern is owned of
record and beneficially by Smith, MIH and Carson; and
WHEREAS, Graphic, SS Acquisition and Southern and their respective Boards
of Directors mutually desire that Graphic acquire all of the issued and
outstanding stock of Southern in a transaction that qualifies as a
reorganization under Section 368 of the IRC, as defined in Article 11, with SS
Acquisition being merged into and with Southern, upon the terms and conditions
set forth herein, and pursuant to which: (a) each Southern Shareholder will
exchange his Southern Stock, as hereinafter defined, for certain shares of
Graphic Stock, as hereinafter defined; and (b) Southern will become a wholly-
owned subsidiary of Graphic.
<PAGE>
NOW, THEREFORE, in consideration of the premises and the mutual agreements,
representations, warranties and covenants herein contained, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto hereby agree as
follows:
ARTICLE 1
---------
DEFINITIONS
-----------
1.1 "ACQUISITION SHARES" shall mean the aggregate number of shares of
Graphic Stock to be issued to the Southern Shareholders in connection with the
Merger, which shall be equal to the quotient obtained by dividing the sum of
$1,005,000 (subject to adjustment upwards or downwards pursuant to Section 2.8
hereof) by the Market Value Per Share for Graphic Stock; provided, however,
notwithstanding anything herein to the contrary, the Acquisition Shares shall
not be less than 100,000 shares of Graphic Stock or more than 166,666 shares of
Graphic Stock.
1.2 "AFFILIATE(S)" shall mean any Person that directly, or indirectly
through one or more other Persons, controls, is controlled by or is under common
control with any other Person.
1.3 "AGREEMENT" shall mean this Agreement and Plan of Reorganization as
now existing or as hereafter amended.
1.4 "CLOSING" or "CLOSING DATE" shall mean the date of the closing under
this Agreement as specified in Section 2.7 herein.
1.5 "CLOSING AUDIT" shall mean the audit referred to in Section 2.8
hereof.
1.6 "DAILY MARKET VALUE PER SHARE" shall mean the average of the low and
high prices for Graphic Stock as reported on the
2
<PAGE>
NASDAQ national market system as published in The Wall Street Journal for any
-----------------------
trading day.
1.7 "EFFECTIVE DATE" shall mean the date hereof, which shall also be the
date the Merger is effective under the laws of the State of Georgia, which shall
be no later than April 29, 1994.
1.8 "EMPLOYMENT AGREEMENT" shall mean the Employment Agreement
substantially in the form of Exhibit "A" attached hereto and incorporated herein
by reference between Smith and Southern. The Employment Agreement shall provide
that Southern shall pay Smith a monthly salary of $10,000 during the term of the
Employment Agreement. In addition, the Employment Agreement shall be terminable
by Smith or Southern ninety (90) days after notice thereof by either party, but
the Agreement shall have a minimum term of six (6) months. The Employment
Agreement shall also contain noncompetition covenants whereby Smith shall agree
not to compete with Southern nor solicit the customers of Southern for Smith's
direct or indirect benefit during his employment with Southern and for a period
of three years thereafter.
1.9 "ENVIRONMENTAL LAWS" shall mean all federal, state, local and
foreign laws relating to pollution or protection of the environment, including
laws relating to emissions, discharges, spills, releases or threatened releases
of any pollutant, contaminant or Hazardous Substance into the environment
(including, without limitation, indoor air, ambient air, surface water, ground
water or land), or otherwise relating to the generation, manufacture,
processing, distribution, use, treatment, storage,
3
<PAGE>
disposal, transport, or handling of pollutants, contaminants or Hazardous
Substances including, but not limited to, the Comprehensive Environmental
Response Compensation and Liability Act, as amended (42 U.S.C. (S)(S)9601 et
seq.), the Resource Conservation and Recovery Act, as amended (42 U.S.C.
(S)(S)6901 et seq.), the Clean Water Act, as amended (33 U.S.C. (S)(S)1251 et
seq.), the Clean Air Act, as amended (42 U.S.C. (S)(S)7401 et seq.), the Toxic
Substance Control Act, as amended (15 U.S.C. (S)(S)2601 et seq.), and any and
all rules, regulations, codes, standards, plans, orders, decrees, judgments,
injunctions, notices or demand letters issued, entered, promulgated or approved
thereunder that apply to Southern on the date of the Merger.
1.10 "ESCROW AGENT" shall mean NationsBank of Georgia, N.A., including
its successors and assigns.
1.11 "ESCROW AGREEMENT" shall mean the Escrow Agreement substantially in
the form of Exhibit "B" attached hereto and incorporated herein by reference
among each Southern Shareholder, Graphic, SS Acquisition and the Escrow Agent.
1.12 "ESCROW PERIOD" shall mean the period beginning on the Effective
Date and continuing for six (6) months thereafter, unless sooner terminated or
extended, as provided in the Escrow Agreement.
1.13 "ESCROW SHARES" shall mean twenty percent (20%) of the Acquisition
Shares, rounded to the nearest whole number (which shall be registered in the
name of Escrow Agent), or any proceeds or substitutions therefor, in accordance
with this Agreement and the Escrow Agreement.
4
<PAGE>
1.14 "GRAPHIC FINANCIAL STATEMENTS" shall mean the consolidated financial
statements of Graphic as of January 31, 1994, which have been delivered to each
Southern Shareholder.
1.15 "GRAPHIC STOCK" shall mean the common stock, $.10 par value, of
Graphic.
1.16 "HAZARDOUS SUBSTANCE" shall mean any hazardous, toxic or dangerous
waste, substance or material, regulated or controlled pursuant to any
Environmental Law, now in effect, including, without limiting the generality of
the foregoing, asbestos, PCBs, petroleum products (including crude oil, natural
gas, natural gas liquids, liquified natural gas or synthetic gas) or any other
substance defined as a "hazardous substance," "extremely hazardous waste,"
"restricted hazardous waste," "hazardous material," "hazardous chemical,"
"hazardous waste," "hazardous air pollutant," "regulated substance, "toxic
chemical," "toxic substance" or other similar term in any Environmental Law.
1.17 "INITIAL SHARES" shall mean the Acquisition Shares minus the Escrow
Shares.
1.18 "LATEST FINANCIAL STATEMENTS" shall mean the balance sheet of
Southern as of January 31, 1994, and the related statements of income and
changes in financial position for the period then ended.
1.19 "MARKET VALUE PER SHARE" shall mean the average of the Daily Market
Values Per Share for each of the trading days during the period beginning on
December 6, 1993, and ending three (3) trading days prior to the Effective Date.
5
<PAGE>
1.20 "MERGER" shall refer to the merger of Southern with SS Acquisition
as provided in Section 2.2 hereof.
1.21 "NET BOOK VALUE" shall mean the total assets of Southern minus the
total liabilities (contingent or otherwise) of Southern, as determined in
accordance with generally accepted accounting principles consistently applied.
1.22 "1933 ACT" shall mean the Securities Act of 1933, as amended.
1.23 "PERSON" or "PERSONS" shall mean any individual, joint venture,
partnership, firm, corporation, trust, unincorporated organization or other
organization or entity, or a governmental body or any department or agency
thereof, and shall include both the singular or the plural.
1.24 "PLAN OF MERGER" shall mean the Plan of Merger required by the
provisions of Section 14-2-1101 of the Georgia Business Corporation Code
substantially in the form of Exhibit "C" attached hereto and incorporated herein
by reference.
1.25 "PURCHASE ADJUSTMENTS" shall mean those adjustments, if any, to the
aggregate consideration for the Merger as set forth in Section 2.8 herein.
1.26 "REGISTRATION AGREEMENT" shall mean that certain Registration
Agreement of even date between each Southern Shareholder and Graphic and all
amendments thereto, a copy of which is attached hereto as Exhibit "D".
1.27 "REGISTRATION STATEMENT" shall mean the Registration Statement on
Form S-3, including any prospectuses, supplements,
6
<PAGE>
amendments or post-effective amendments and exhibits to be filed by Graphic with
the Securities and Exchange Commission in accordance with the Registration
Agreement and relating to the resale of the Acquisition Shares by each Southern
Shareholder.
1.28 "SOUTHERN FINANCIAL STATEMENTS" shall mean the Latest Financial
Statements and the balance sheets of Southern as of January 31, 1994, and the
related statements of income and changes in financial position for the periods
then ended, and are included in Schedule 1.28 attached hereto.
1.29 "SOUTHERN SHAREHOLDERS" shall mean Smith, MIH and Carson as the
record and beneficial holders of all of the outstanding shares of Southern
Stock.
1.30 "SOUTHERN STOCK" shall mean the common stock, no par value, of
Southern; the Class A Preferred Stock, no par value, of Southern; and the Class
B Preferred Stock, no par value, of Southern.
1.31 "UNDISCLOSED LIABILITIES" shall mean any other liability or
obligation of Southern of any nature, whether accrued, absolute, contingent,
due, to become due or otherwise, whether or not incurred in respect of or
measured by the income of Southern and whether or not normally shown in a
financial statement prepared in accordance with generally accepted accounting
principles, not disclosed or reflected, or specifically reserved against, in any
financial statement delivered by Southern in accordance with this Agreement or
in any schedule or exhibit to this Agreement.
7
<PAGE>
ARTICLE 2
---------
MERGER AND EXCHANGE OF STOCK
----------------------------
2.1 Agreement to Merge. Graphic, SS Acquisition and Southern agree to
------------------
effect the Merger as provided for herein and in the Plan of Merger, subject to
the terms and conditions set forth herein and in the Plan of Merger.
2.2 Agreement to Issue Graphic Stock.
--------------------------------
(a) Subject to the terms and conditions herein and in exchange for the
Southern Stock outstanding on the Effective Date as provided for herein and in
the Plan of Merger, on the Effective Date Graphic shall issue and deliver: (a)
the Initial Shares to the Southern Shareholders and (b) the Escrow Shares to the
Escrow Agent, pursuant to the Escrow Agreement, in the name of the Escrow Agent
to provide for adjustments to the number of Escrow Shares as set forth in
Section 2.6 herein. Escrow Shares or dividends paid thereon remaining in escrow
as of the end of the Escrow Period, shall be released from escrow as set forth
in Section 2.6 hereof and in the Escrow Agreement.
(b) During the Escrow Period and subject to the terms and conditions of
the Escrow Agreement, the Southern Shareholders shall be entitled to vote the
Escrow Shares in all respects and on all matters as to which shareholders of
Graphic are entitled to vote and any and all dividends declared and paid with
respect to the Escrow Shares shall be deposited into escrow and shall be
distributed pursuant to Section 2.6 hereof and the Escrow Agreement.
8
<PAGE>
2.3 Merger of SS Acquisition Into Southern. On the Effective Date, SS
--------------------------------------
Acquisition shall be merged into and with Southern in accordance with the
provisions of the Georgia Business Corporation Code. Southern shall be the
surviving corporation in the Merger, and the business of SS Acquisition and
Southern shall be conducted under the name "Southern Signatures, Inc."
2.4 Manner of Converting Shares.
---------------------------
(a) Each share of stock of SS Acquisition issued and outstanding on the
Effective Date, by virtue of the Merger and without any action on the part of
the holders thereof, shall automatically be converted into one fully paid and
nonassessable share of Southern Stock.
(b) The manner and basis of converting the outstanding shares of
Southern Stock upon consummation of the Merger shall be as follows:
(1) Except as provided in Section 2.4(b)(2) below, each share of
Southern Stock issued and outstanding on the Effective Date (other than treasury
shares) shall, as of the Effective Date, and without any action on the part of
the holder thereof, be converted into and exchanged for a number of shares of
Graphic Stock set forth on Schedule 2.4 hereof. Any and all shares of Southern
Stock held as treasury shares by Southern shall automatically be canceled and
retired on the Effective Date, and no consideration shall be issued in exchange
therefor.
(2) No fractional shares of Graphic Stock will be issued as a result of
the Merger. In lieu of the issuance of fractional
9
<PAGE>
shares, on the Effective Date, Graphic shall deliver to the Southern
Shareholders the cash value of such fractional share based upon the Market Value
Per Share.
2.5 Exchange of Stock Certificates. On or after the Effective Date,
------------------------------
each holder of any outstanding certificate or certificates theretofore
representing Southern Stock shall surrender the same to Graphic, and such holder
shall be entitled upon such surrender to receive a certificate or certificates
representing the number of full Initial Shares of Graphic Stock that he or she
is entitled to receive pursuant to this Agreement and the Plan of Merger and an
acknowledgement of deposit into escrow pursuant to the Escrow Agreement of a
certificate for the maximum number of Escrow Shares to which such shareholder is
entitled pursuant to the terms of this Agreement and the Plan of Merger.
Until so surrendered, each outstanding certificate formerly representing
Southern Stock will be deemed for all corporate purposes of Graphic to evidence
ownership of the number of full shares of Graphic Stock to which the Southern
Shareholders are entitled pursuant to the Merger. Unless and until such
outstanding certificates representing Southern Stock owned prior to the Merger
are so surrendered: (i) no dividend payable to holders of record of Graphic
Stock as of any date subsequent to the Effective Date shall be paid to the
holder of such outstanding certificate of Southern Stock; (ii) the holder of
such outstanding certificate of Southern Stock shall not have any voting rights
in Graphic; and (iii) no
10
<PAGE>
Escrow Shares or the proceeds from the sale thereof to which such Southern
Shareholder may be entitled to receive will be released from escrow to such
holder. Upon the surrender of such outstanding certificates of Southern Stock,
however, Graphic shall pay to the record holder of the certificates of Graphic
Stock issued and exchanged therefor, the amount of dividends, if any, which were
paid subsequent to the Effective Date with respect to such shares of Graphic
Stock; provided, however, that dividends paid with respect to Escrow Shares
shall be paid as set forth in the Escrow Agreement. No interest shall be
payable with respect to the payment of such dividends paid prior to the
surrender of such certificates.
2.6 Escrow Shares.
-------------
(a) As set forth in Section 2.2 hereof, on the Effective Date, Graphic
shall issue and deliver to the Escrow Agent the Escrow Shares to be held in
escrow for the Escrow Period. The Escrow Shares and the dividends thereon shall
be used for the purposes set forth in the Escrow Agreement, including, but not
limited to: (i) repurchase certain uncollectible accounts receivable as
determined under Section 3.16(c) hereof; (ii) adjust the consideration as set
forth in Section 2.8 hereof; and (iii) compensate, in whole or in part, Graphic
and SS Acquisition for a breach of any representation, warranty or covenant by
Southern or any Southern Shareholder.
(b) During the Escrow Period no party to the Escrow Agreement shall be
entitled to sell the Escrow Shares; provided,
11
<PAGE>
however, that the Southern Shareholders, as a group, may substitute cash for
Escrow Shares at the Market Value Per Share, and in such case Graphic may
choose, in its sole discretion, to apply any claims to the cash or Escrow
Shares, or a combination thereof, in accordance with this Agreement and the
Escrow Agreement. All dividends granted relating to the Escrow Shares shall
also be held in escrow pursuant to the Escrow Agreement.
2.7 Closing. The Closing of the transaction contemplated herein shall
-------
take place on or before April 29, 1994, at the offices of Gray, Gilliland &
Gold, P.C., Suite 1050, North Terraces, 400 Perimeter Center Terrace, Atlanta,
Georgia 30346, or at such other time or place as the parties to this Agreement
shall agree in writing.
2.8 Review; Adjustments.
-------------------
(a) In their sole discretion, prior to the date of this Agreement,
Graphic and SS Acquisition shall conduct an analysis of Southern, its business
and property, as Graphic and SS Acquisition, in their sole discretion, deem
necessary or appropriate. Southern shall afford Graphic and SS Acquisition and
their representatives full, complete and unrestricted access prior to the
Effective Date to the facilities of Southern and to all of the books, records,
work papers, documents, accounts of Southern and such other business records
relating to the business or condition, financial or otherwise, of Southern as
Graphic and SS Acquisition may reasonably request, and whether located at the
premises of Southern or its counsel, accountants or other agents or
representatives.
12
<PAGE>
(b) Graphic shall, at its expense, cause its certified public
accountants, Kanes & Benator, to conduct an audit of the financial records of
Southern and to prepare an audited balance sheet of Southern dated as close as
possible to the Effective Date (the "Closing Audit"). Such closing balance sheet
shall be referred to herein as the "Closing Balance Sheet". The Closing Audit
shall be completed within sixty (60) days after the Effective Date. The balance
sheet resulting from the Closing Audit shall be prepared in accordance with
generally accepted accounting principles and shall be prepared in accordance
with past accounting practices of Southern applied on a consistent basis
provided such practices are in accordance with generally accepted accounting
principles.
(c) Subject to Section 7.1(b) hereof, the consideration to be paid
to each Southern Shareholder for the Merger shall be adjusted, upward or
downward, dollar for dollar, as follows: (i) by the amount by which the Net Book
Value of Southern as shown on the Closing Balance Sheet, is more or less than
(whichever is the case) $643,924.99 (which is the Net Book Value of Southern as
of January 31, 1994; (ii) by the face value of any accounts receivable (net of
allowances for doubtful accounts) of Southern that remain uncollected one
hundred and twenty (120) days after the date of the Closing Balance Sheet, as
shown on the Closing Balance Sheet; (iii) by an amount equal to any loss,
damage, cost or expense (including, but not limited to, reasonable attorney's
fees and court costs) incurred by Graphic or SS Acquisition as a result of the
breach of
13
<PAGE>
any representation, warranty or covenant of Southern or any Southern Shareholder
herein, in the schedules attached hereto, in the Registration Agreement, in the
Secretary's Certificate, in the Employment Agreement (in the case of Smith), in
the Non-Competition Agreement between Smith and SS Acquisition of even date
herewith (in the case of Smith) or in the Escrow Agreement.
(d) Nothing in this Section 2.8 shall in any way limit or decrease the
liability of the Southern Shareholders and Southern to Graphic and SS
Acquisition for any default or breach of this Agreement or the related
documents, except as set forth below in this Section.
(e) In the event there is a reduction in the consideration to be paid
the Southern Shareholders as set forth in this Agreement, the amount of such
reduction shall be first paid to Graphic and SS Acquisition from the Escrow
Shares in accordance with the Escrow Agreement, and if the Escrow Shares are not
sufficient to pay such deficiency, the Southern Shareholders shall remain liable
therefor. Such payment from the Escrow Shares, however, shall not be the
exclusive remedy of Graphic or SS Acquisition for the payment of such reduction.
Any increase in the consideration paid to the Southern Shareholders pursuant
hereto shall be made with Graphic Stock in amount equal to the quotient obtained
by dividing the amount of such increase by the Market Value Per Share.
14
<PAGE>
ARTICLE 3
---------
REPRESENTATIONS AND WARRANTIES OF SOUTHERN
------------------------------------------
AND SOUTHERN SHAREHOLDERS
-------------------------
Southern and each Southern Shareholder, jointly and severally, hereby
represent, warrant and covenant to and for the benefit of Graphic and SS
Acquisition as follows:
3.1 Organization. Southern is a corporation duly organized, validly
------------
existing and in good standing under the laws of the State of Georgia, and
Southern has, since its inception, been organized under the laws of the State of
Georgia. Southern has no subsidiaries, and Southern is not a party to a
partnership, joint venture or other business enterprise and has no ownership
interest in any other person or entity. Southern has all requisite corporate
power and authority to carry on its business and to own, to lease and to operate
its properties in the places where such businesses are now conducted and where
such properties are now owned, leased or operated. Southern is not qualified to
do business as a foreign corporation in any other state, and Southern is not
required to be so qualified in any state other than Georgia. Southern has all
requisite corporate power and authority to execute and deliver this Agreement
and any documents contemplated by this Agreement and to perform its obligations
under this Agreement.
3.2 Capital Structure. The authorized capital stock of Southern
-----------------
consists of 1,000 shares of no par value common voting stock, of which 500
shares are issued and outstanding on the date of this Agreement, 250 shares, no
par value, of the Class A Preferred Stock, of which 250 shares are issued and
outstanding and
15
<PAGE>
250 shares, no par value, of the Class B Preferred Stock, of which 250 shares
are issued and outstanding. Southern does not hold any shares of its authorized
capital stock in its treasury. All of the shares of Southern Stock issued and
outstanding as of the Effective Date are duly authorized, validly issued and
fully paid and non-assessable under the Georgia Business Corporation Code and
all predecessor statutes. There are no warrants, rights, options, subscriptions
or agreements to issue shares of any class of capital stock, securities
convertible into capital stock (other than the Preferred Stock referenced in
this Section) or property of Southern or other securities of Southern. As of
the Effective Date, there is not any liability for dividends declared or
accumulated but unpaid with respect to Southern Stock. Between the date of
Southern's incorporation and the Effective Date, Southern has not directly or
indirectly redeemed, purchased or otherwise acquired any shares of its capital
stock except as listed in Schedule 3.2. All shares of Southern Stock have been
issued in compliance with applicable and available exemptions from the
registration requirements of the 1933 Act and all applicable state securities
laws.
3.3 Ownership of Southern Stock. The Southern Shareholders are the sole
---------------------------
record and beneficial owners of all of the shares of Southern Stock as set forth
on Schedule 2.4 hereof. Each Southern Shareholder has good, valid and
marketable title to the Southern Stock, free and clear of any and all liens,
options, contracts, calls, commitments, demands, encumbrances, equities, pledges
or
16
<PAGE>
claims, whatsoever. Upon consummation of the Merger, Graphic will obtain good
and valid title to the Southern Stock, free and clear of any and all liens,
encumbrances, equities and claims whatsoever.
3.4 Licenses and Permits. Southern has in its possession, all material
--------------------
licenses, permits and certificates or has the authority necessary to continue to
conduct its business in the manner in which such business is now conducted, and
all such licenses, permits and certificates are in full force and effect. No
proceedings against Southern looking toward the suspension, modification,
revocation, alteration or amendment of any such licenses, permits or
certificates have been instituted, threatened or are contemplated, to the best
knowledge of Southern.
3.5 Properties. Southern owns no real property. Southern has good and
----------
valid title to all of its personal property. To the best of each Southern
Shareholder's and Southern's knowledge, all of the properties of Southern are in
good operating condition and state of repair, normal wear and tear excepted.
Southern owns its properties and assets free and clear of all liens, pledges,
security interests, claims, mortgages, leases, charges or encumbrances of every
kind or nature or conditional sale or other title retention agreement, except as
listed on Schedule 3.5 attached hereto. All improvements on any real property
owned or leased by Southern conform to any and all applicable governmental laws,
regulations and ordinances, including, without limitation, zoning, building,
health, safety, environmental and traffic laws, regulations and ordinances, and
Southern has not received any
17
<PAGE>
notice of any violations of any such laws, regulations or ordinances.
3.6 Leases. A list and a brief description of all of the leases and
------
agreements under which Southern is a lessee of or holds or operates any property
real or personal, is set forth on Schedule 3.6 attached hereto. All such leases
and agreements are valid and binding by and against Southern and in full force
and effect, and Southern is not in default under any of said leases and
agreements. The execution, delivery and performance of this Agreement and the
Plan of Merger and the consummation of the transactions contemplated herein and
therein shall not constitute a default under or allow the termination of any of
such leases or agreements.
3.7 Taxes.
-----
(a) As of the date hereof, Southern has no liability that is not
reflected on the Latest Financial Statements for unpaid federal, foreign, state
or local taxes that were required to be paid by Southern, in its own right or as
transferee or successor to or from any other corporation, person, association,
partnership, joint venture or other entity. In addition, Southern has filed all
federal, foreign, state, county and local income, franchise, sales, property and
other tax returns or reports required to be filed and all of such returns or
reports are true and correct in all material respects.
(b) The reserve for accrued but unpaid taxes on the Latest Financial
Statements and on the Closing Balance Sheet is and will be sufficient for the
payment of all federal, state and local taxes
18
<PAGE>
not required to be paid prior to such date with respect to the conduct of the
business of Southern for such period through date of the Latest Financial
Statement and the Closing Balance Sheet.
(c) All monies required to be withheld by Southern from its employees
for income taxes, social security and unemployment insurance taxes or other
similar charges or assessments have been collected or withheld and either paid
to the respective governmental agencies or set aside in accounts for such
purpose. Southern has paid any and all amounts due to any governmental agency,
bureau, board or department for worker's compensation insurance or claims and
there are no pending or, to the best of each Southern Shareholder's and
Southern's knowledge, threatened investigations, proceedings, audits,
deficiencies or assessments, with respect to worker's compensation matters.
(d) No income or other tax returns or reports of Southern have been
audited by the Internal Revenue Service or any state or federal agencies for any
fiscal years or periods which remain open for examination under applicable
statutes of limitation. Except as set forth on Schedule 3.7, Southern has not
received any notice of contemplated investigation or audit by the Internal
Revenue Service or any state or federal agencies for any fiscal years or periods
which remain open for examination under applicable statutes of limitation.
3.8 Litigation; Judgments. Except as set forth on Schedule 3.8 attached
---------------------
hereto, there are not now any pending or, to the best of each Southern
Shareholder's or Southern's knowledge, threatened
19
<PAGE>
suits, actions or litigation, or administrative, arbitration or other
proceedings, governmental investigations or inquiries or, to the best of each
Southern Shareholder's or Southern's knowledge, any change in the environmental,
zoning, consumer, building or other laws, regulations or ordinances, affecting
Southern or any Southern Shareholder, their assets or the business of Southern,
at law or in equity, or both, or by any federal, state, municipal or other
governmental department, commission, board, bureau, agency or instrumentality,
domestic or foreign, which might, individually or in the aggregate, adversely
affect Southern or the business or assets of Southern. There are no judgments
unsatisfied against Southern or any Southern Shareholder or consent decrees or
injunctions to which Southern or any Southern Shareholder is subject. Neither
Southern nor any Southern Shareholder is aware of any action or proceeding
questioning the validity of this Agreement or seeking to restrain the
consummation of the Merger.
3.9 Conduct of Business. Southern has conducted its business in
-------------------
substantially the same manner since the date of acquisition of its business, and
has used its best efforts to preserve, intact, its goodwill, reputation and
business organization and to preserve its relationship with its officers,
employees, suppliers, customers and others having business relations with
Southern. There are no material disputes with employees and, to the best of
Southern's and each Southern Shareholder's knowledge, Southern has good
relations with its employees.
20
<PAGE>
3.10 Authority. The execution and delivery of this Agreement and the
---------
Plan of Merger and the consummation of the transactions contemplated herein and
therein have been duly and validly authorized by each of the Southern
Shareholders and the Board of Directors of Southern and constitute valid and
legally binding obligations of Southern and each Southern Shareholder,
enforceable in accordance with their respective terms. The execution and
delivery of this Agreement, the Registration Agreement and the Escrow Agreement
and the consummation of the transactions contemplated herein have been duly and
validly authorized by the Board of Directors of MIH and the trustee or plan
administrator of Carson. Neither the execution and delivery of this Agreement
and the Plan of Merger nor the consummation of the transactions contemplated
herein and therein, nor compliance by Southern or the Southern Shareholders with
any of the provisions herein or therein will violate any provisions of or
conflict with the Articles of Incorporation or By-Laws of Southern or MIH,
respectively, or the plan documents for Carson, or any applicable statute, law,
rule or regulation, federal, state or local, conflict with or result in a
breach of any of the terms, conditions or provisions of, constitute a default
under or result in the creation of any lien, charge or encumbrance upon any of
the properties or assets or outstanding stock of Southern pursuant to any
indenture, mortgage, lease, contract, agreement, permit, license, grant or other
instrument to which Southern is a party or by which it is bound or result in the
acceleration of the maturity
21
<PAGE>
date of any indebtedness of Southern or increase or materially and adversely
affect the obligations of Southern thereunder.
3.11 Corporate Records.
-----------------
(a) On or before the date hereof, Southern shall deliver or have
delivered to SS Acquisition true, complete and correct copies of the following
corporate records of Southern: (i) Certificate of Incorporation together with
any and all amendments thereto, certified by an appropriate state agency as
being true and correct for Southern and MIH; (ii) By-Laws for Southern and MIH,
as originally adopted, together with any and all amendments thereto, certified
by the Secretary of Southern and MIH, respectively; (iii) all minutes, consent
actions or other records of all corporate action taken by the directors and
shareholders of Southern; and (iv) the plan documents for Carson.
(b) All of the foregoing corporate records reflect all corporate action
taken by or on behalf of Southern since its date of incorporation and do not
omit to state or reflect any corporate action required to be taken by Southern
in connection with its organization, operations and business.
3.12 Securities Owned by Southern. Southern owns no securities in any
----------------------------
other person, firm, association, partnership, joint venture, corporation or
other entity.
3.13 Contracts and Agreements.
------------------------
(a) All written or oral contracts or commitments to which Southern is a
party are set forth on Schedule 3.13 attached hereto. Except as set forth in
Schedule 3.13, Southern is not party to, or
22
<PAGE>
bound by any contract, commitment or understanding (whether in writing or oral)
with respect to: (i) any bonus, incentive, compensation, profit sharing,
retirement, pension, group or individual insurance (health, dental, disability
or otherwise), death benefit or other fringe benefit plan, deferred compensation
and post termination obligations (including, without limitation, medical plans
regarding retired employees), employment agreements, trust agreements or the
like, formal or informal; (ii) collective bargaining agreements with any labor
union or other representative or employees; (iii) agreements limiting the
freedom to compete in any lines of business or with any persons; (iv) any
interest, direct or indirect, of any officer, shareholder or director of
Southern; (v) any continuing contract or commitment for the purchase of
materials, supplies, equipment or services; (vi) any agreement for the
employment or compensation of any person, firm or corporation not cancelable at
will by Southern; (vii) any contracts, leases, agreements, commitments, quotas,
restrictions or trade concessions; or (viii) any contract or agreement to borrow
money or guaranty the debt or other obligation of any other person, firm or
entity.
(b) Southern is not in default in connection with any indebtedness or
under any contract, lease, agreement or other commitment to which it is a party,
and neither Southern nor any Southern Shareholder has received any notice
claiming a default thereto. Each contract or commitment to which Southern is a
party or by which Southern is bound is in full force and effect in
23
<PAGE>
accordance with its terms. There is no outstanding notice of cancellation or
termination in connection therewith, and all rights of Southern under any
contracts or commitments extending beyond the Effective Date that are material
to the operation of the business of Southern shall remain in effect on the
Effective Date after giving effect to the transactions contemplated herein,
without payment of any additional amount or the assumption of any additional
obligation on the part of Southern.
3.14 Transactions with Affiliates. Except as set forth in Schedule 3.14,
----------------------------
Southern is not indebted to or party to a contract or agreement with a person
who is or was a shareholder, Affiliate, officer or director of Southern, or to a
spouse, child or Affiliate of such person, except for reimbursement of employees
for normal business expenses incurred on behalf of Southern.
3.15 Customer Relations. To the best of each Southern Shareholder's and
------------------
Southern's knowledge, relations with the customers or suppliers of Southern are
continuing in good order, and there are no known outstanding disputes with
customers or suppliers.
3.16 Financial Statements and Liabilities.
------------------------------------
(a) Schedule 1.28 contains the Southern Financial Statements. The
Southern Financial Statements: (i) have been prepared in accordance with the
books and records of Southern (including, but not limited to, the general
ledger) and said books and records reflect all of the assets and liabilities of
Southern; (ii) present fairly and accurately the financial condition of
24
<PAGE>
Southern as of the respective dates indicated and the results of operations for
the respective periods indicated; (iii) have been prepared in accordance with
generally accepted accounting principles applied on a consistent basis; (iv)
reflect adequate reserves for all liabilities and reasonably anticipated losses,
including, but not limited to, taxes of any nature or kind, product or service
claims, and accident or other liability claims, whether or not covered by
insurance; and (v) contain no untrue statements of any material fact, or omit to
state any material fact required to be stated therein or necessary in order to
make the statements therein, in light of the circumstances under which they were
made, not misleading.
(b) All inventories shown on the Latest Financial Statements or acquired
thereafter consist of or will consist of materials and supplies of a quality and
quantity usable or saleable in the ordinary course of Southern's business, and
all such inventories are not valued in excess of the lower of cost or net
realizable market value.
(c) All accounts receivable shown on the Latest Financial Statements,
and all accounts receivable arising thereafter up to and including the Effective
Date, have arisen or will arise in the ordinary course of Southern's business
and are not subject to any rights of set off or other offset. An account
receivable shall be deemed uncollectible if it is not paid within one hundred
and twenty (120) days after the date of the Closing Balance Sheet. Once an
account receivable is uncollectible, upon request by
25
<PAGE>
Graphic, the Southern Shareholders shall repurchase such account receivable from
Southern for a purchase price equal to the face value of the account receivable.
This subsection shall not apply to an account receivable deducted from Net Book
Value as set forth in Section 2.8 hereof and shall be net of the application of
any reserve for doubtful accounts. Graphic and SS Acquisition shall be entitled
to set off such amount from the Escrow Shares or the proceeds thereof or any
other amounts owed the Southern Shareholders. However, this Section does not
provide the exclusive remedy available to SS Acquisition and Graphic for the
liabilities of and amounts owed by any Southern Shareholder hereunder.
(d) Except to the extent reflected or reserved against in the Latest
Financial Statements or as otherwise disclosed in this Agreement and except for
ordinary and customary obligations accruing in the ordinary course of business
since the date of the Latest Financial Statements, Southern has no Undisclosed
Liabilities. As of the date hereof, there is no basis for assertion against
Southern of any liability or obligation of any nature or any amount, whether
accrued, absolute, contingent, due, to become due or otherwise not fully
reflected or reserved against in the Latest Financial Statements, or disclosed
in this Agreement, except for ordinary and customary obligations arising in the
ordinary course of business.
(e) The representations and warranties set forth above and herein with
respect to Financial Statements and the Latest Financial Statements shall also
apply with equal force to the
26
<PAGE>
Closing Balance Sheet and shall be deemed given upon completion of the Closing
Balance Sheet.
3.17 Corporate Names. Southern has not, during the preceding five (5)
---------------
years, been known as or used, directly or through any predecessor, affiliate or
any acquired entity, any other corporate or fictitious name, except as disclosed
on Schedule 3.17 hereof.
3.18 Material Changes. Except as listed on Schedule 3.18
----------------
hereof or as disclosed in this Agreement and the schedules incorporated herein,
since January 31, 1994, Southern has not:
(a) issued or purchased any of its own stock, bonds, notes or other
corporate securities of Southern, except for debt obligations issued in the
ordinary course of Southern's business;
(b) incurred any presently existing obligation or liability, whether
absolute or contingent, except current liabilities incurred, and obligations
under contracts entered into, in the ordinary course of business not material,
individually or in the aggregate;
(c) discharged or satisfied any lien or encumbrance or paid any
obligation or liability, whether absolute or contingent, other than current
liabilities which have matured and are shown on the Latest Financial Statements;
(d) declared or made any loan, payment (other than salaries paid in the
ordinary course of business) or distribution to any director, officer,
shareholder or employee of Southern or purchased or redeemed any shares of its
capital stock;
27
<PAGE>
(e) acquired, sold, transferred, pledged, hypothecated or granted a
security interest, or subjected to any lien, charge or other encumbrance, any of
its assets or property, including, without limitation, that certain 5 color
Heidelberg press or intangible assets, other than in the ordinary course of
business;
(f) suffered any extraordinary losses or waived any rights in excess of
$5,000 in value whether or not in the ordinary course of business;
(g) entered into any transactions whatsoever other than in the ordinary
course of business;
(h) lost any significant customer or account, any key employee, or any
significant supplier of inventory or equipment;
(i) incurred any adverse changes in the financial condition, assets,
properties, liabilities or business, other than changes in the ordinary course
of business, none of which changes, in the aggregate, has been materially
adverse;
(j) suffered any damage, destruction or loss, whether or not covered by
insurance, materially and adversely affecting any of Southern's properties,
assets or business;
(k) had any declaration, setting aside or paying of any dividend or
other distribution with respect to the capital stock, assets or properties of
Southern, or any direct or indirect redemption, purchase or other acquisition of
any stock;
(l) increased the compensation or rate of compensation payable by
Southern to any of its respective employees, including officers, directors or
agents, or increased the formula for
28
<PAGE>
determining any bonus payment or arrangement made to or with any such employees
or agents;
(m) materially amended or terminated any material contract, agreement or
license to which Southern is a party; sold or granted to any party or parties
any license, franchise, option or other right of any nature whatsoever to sell,
distribute or otherwise deal in or with the products or services of Southern;
(n) been involved in any labor dispute or commitment (through
negotiations or otherwise) or any liability incurred to any labor organization;
(o) granted any options, warrants or other rights calling for the
issuance of stock or other corporate securities of Southern; or
(p) canceled any of the debts or claims by Southern, except in the
ordinary course of business.
3.19 Insurance. All of the insurance policies of Southern in effect on
---------
the date of this Agreement are listed on Schedule 3.19 attached hereto. The
properties and business of Southern of an insurable nature are adequately
insured, consistent with industry standards, under such policies to the extent
usually insured against by such corporations. Southern has not failed to give
any notice or present any material claim thereunder in a due and timely fashion.
Schedule 3.19 also contains a true, accurate and complete list of any and all
claims, accidents, losses, or damages, whether to persons, property, or both,
pending or, to the
29
<PAGE>
best of each Southern Shareholder's or Southern's knowledge, threatened, on and
as of the date hereof against Southern.
3.20 Consents. Except as listed on Schedule 3.20 hereto, no consent,
--------
approval or authorization of any governmental authority or other persons or
entities is required in connection with the execution, delivery or performance
of this Agreement, the Escrow Agreement, the Registration Agreement or the
Employment Agreement on the part of Southern or any Southern Shareholder or the
consummation of the transactions contemplated herein and therein, other than
corporate authority on behalf of Southern.
3.21 Broker's or Finder's Fees. Neither any Southern Shareholder nor
-------------------------
Southern nor any of Southern's officers, directors or employees has employed any
broker, agent or finder or incurred any liability for any brokerage fees,
agent's commissions or finder's fees in connection with the transactions
contemplated hereby.
3.22 Compliance with Laws. Southern is in compliance in all material
--------------------
respects with all laws, regulations, requirements, ordinances, decrees and
orders (whether Federal, state or local) applicable to it or its business and
the present use of its properties. Neither Southern nor any Southern
Shareholder has received any notice or warning from any governmental authority
with respect to any failure or alleged failure to comply with any law,
regulations, ordinance, order or decree. None of the officers, shareholders or
directors of Southern knows of any union organizational activity among any of
its employees.
30
<PAGE>
3.23 Environmental Laws.
------------------
(a) After due inquiry to the appropriate governmental agencies, Southern
has obtained all permits, licenses and other authorizations, if any, which are
required in connection with its ownership or use of any real property occupied
by it under Environmental Laws and it is in compliance with all material terms
and conditions of the required permits, licenses and authorizations, and is also
in compliance with all other material limitations, restrictions, conditions,
standards, prohibitions, requirements, obligations, schedules and timetables
contained in the Environmental Laws and it has filed all notifications required
under Environmental Laws relating to air emissions, effluent discharges, and the
generation, storage, treatment and disposal of Hazardous Substances.
(b) Neither Southern nor any Southern Shareholder is aware of, or has
received notice of the disposal, spill or release of Hazardous Substances on the
properties that it now owns or occupies or formerly owned or occupied, (whether
such disposal, spill or release originates or originated from its premises or
from another property) or of any past, present or future events, conditions,
circumstances, activities, practices, incidents, actions or plans that may
interfere with or prevent compliance or continued compliance with Environmental
Laws, or may give rise to any common law or legal liability, or otherwise form
the basis of any claim, action, demand, suit, lien, proceeding, hearing, study
or investigation, based on or related to Environmental Laws or
31
<PAGE>
otherwise related to the generation, manufacture, processing, distribution, use,
treatment, storage, disposal, transport, or handling, or the emission,
discharge, release or threatened release into the environment, of any pollutant,
contaminant or Hazardous Substance;
(c) No personal property or real property owned, leased or operated by
Southern is contaminated by Hazardous Substances and the generation, use and
disposal of any pollutant, contaminant or Hazardous Substances by or on its
behalf is, in all respects, in compliance with all applicable and material
Environmental Laws.
(d) Southern has duly investigated the real property owned or used by
Southern, and no underground tank is under such premises.
(e) No Hazardous Substances, now or in the past, generated by Southern
are being sent or have been sent, directly or indirectly to any site listed or
formally proposed for listing on the national priority list, promulgated
pursuant to the Comprehensive Environmental Response, Compensation and Liability
Act, or to any site listed on any state list of sites contaminated by Hazardous
Substances, that require investigation or clean-up.
3.24 Powers of Attorney. Except as disclosed on Schedule 3.24 attached
------------------
hereto, Southern has not given any power of attorney, whether limited or
general, to any person, firm, corporation or otherwise that is continuing in
effect.
32
<PAGE>
3.25 Securities Representations.
--------------------------
(a) Each Southern Shareholder either alone or with his or its purchaser
representative has such knowledge and experience in financial and business
matters that he or it is capable of evaluating the merits and risks of obtaining
the Graphic Stock and making an investment in Graphic. No assurances have been
made as to the future income or success of Graphic. Each Southern Shareholder
has had an opportunity to ask questions and receive satisfactory answers from
the officers and directors of Graphic concerning Graphic and the terms and
conditions of his or its investment in capital stock of Graphic.
(b) No Southern Shareholder has received any representations or
warranties, other than those set forth in this Agreement, from the officers,
directors, affiliates, agents or representatives of Graphic in making his or its
decision to exchange his or its Southern Stock for the Acquisition Shares, and
each Southern Shareholder is relying solely on the information contained in this
Agreement, in any prospectus delivered to him or it, and personal investigation.
(c) Each Southern Shareholder is presently a bona fide resident of the
state listed on Schedule 3.25 attached hereto and has no present intention of
becoming a resident of any other state or jurisdiction.
(d) Each Southern Shareholder has made other investments of this type
and, by reason of his or its business and financial experience and of the
business and financial experience of those
33
<PAGE>
persons he or it has retained to advise him or it with respect to his or its
acquisition of the Acquisition Shares he or it has obtained the capacity to
protect his or its own interest in investments of this nature. In reaching the
conclusion that he or it desires to acquire the Acquisition Shares, each
Southern Shareholder has carefully evaluated his financial resources and
investment position and the risks associated with his or its investment in
Graphic and acknowledges that he or it is familiar with and able to bear any
economic risk of such investment.
(e) Each Southern Shareholder understands and agrees that the
Acquisition Shares are to be issued to him or it without registration under any
state or federal law relating to the registration of securities and will be
issued to him or it in reliance on exemptions from registration under
appropriate state and federal laws and that reliance by Graphic on such
exemptions is predicated in part on the representations set forth in this
Section 3.25. Each Southern Shareholder is acquiring the Acquisition Shares for
his or its own account, to hold for investment, and with no present intention of
dividing his or its participation with others or reselling or otherwise
participating, directly or indirectly, in the distribution of the Acquisition
Shares and shall not make any transfer, sale, or other disposition of the
Acquisition Shares (other than as contemplated by the Registration Agreement):
(i) other than pursuant to an effective registration under applicable state
securities laws or in a transaction which is otherwise in compliance with those
laws; (ii) other than pursuant
34
<PAGE>
to an effective registration under the 1933 Act or a transaction otherwise in
compliance with the 1933 Act; and (iii) in a manner so that the disposition of
such Acquisition Shares does not cause the transactions contemplated by this
Agreement to fail to qualify as a reorganization under Section 368 of the IRC.
(f) No Southern Shareholder has received any public solicitation or
advertisement concerning an offer to sell Graphic stock. Each Southern
Shareholder has received and reviewed copies of Graphic's Annual Report on Form
10-K (including the Annual Report to Shareholders for the year ended January 31,
1994), all Quarterly Reports on Form 10-Q for fiscal year ended January 31,
1994, current Reports on Form 8-K filed subsequent to April 18, 1994, and
Graphic's Proxy Statement for the 1994 Annual Meeting of Shareholders.
3.26 Employee Benefit Plans. Southern does not maintain any employee
----------------------
benefit plans for any of its employees, officers, shareholders or directors
except as described on Schedule 3.26 attached hereto. As used herein "employee
benefit plans" shall mean and include any retirement plan, whether profit
sharing or a defined benefit pension plan, bonus, thrift, savings, stock
purchase, deferred compensation, or similar type of plan whether or not
qualified or required to be qualified under the Employee Retirement Income
Security Act of 1974 ("ERISA"). Except as disclosed on Schedule 3.26, no
unfunded liabilities, including unfunded past service liabilities, exist under
any such plans and, to the extent that any plans maintained by Southern are
subject to
35
<PAGE>
the provisions of ERISA, or other federal and state statutes and regulations
relating to employee benefit plans, Southern is in full compliance with all
applicable and material provisions thereof. This representation is in addition
to and is in no way limited by Article 11 hereof.
3.27 Representations and Warranties. No investigation or analysis or
------------------------------
inspection conducted by Graphic or SS Acquisition pursuant to this Agreement
shall in any way limit, modify, impair or affect any of the foregoing
representations and warranties. No representation or warranty of the Southern
Shareholders or Southern contained herein or in any schedule furnished to
Graphic or SS Acquisition pursuant hereto contains any untrue statement of a
material fact or omits to state any material fact necessary, in light of the
circumstances under which such statement was made, in order to make the
statements contained herein or therein not misleading.
ARTICLE 4
---------
REPRESENTATIONS AND WARRANTIES OF
---------------------------------
GRAPHIC AND SS ACQUISITION
--------------------------
Graphic and SS Acquisition, jointly and severally, hereby represent,
covenant and warrant to and for the benefit of the Southern Shareholders and
Southern as follows:
4.1 Organization of Graphic. Graphic is a corporation duly organized,
-----------------------
validly existing and in good standing under the laws of the State of Georgia,
with all requisite corporate power to own, operate and lease its properties and
assets and to enter into and perform its obligations hereunder. Graphic has
taken, or prior to
36
<PAGE>
the Effective Date shall have taken, all necessary corporate action to authorize
and approve the execution and delivery of this Agreement and the performance of
its obligations hereunder. All of the Graphic Stock to be issued pursuant to
this Agreement will be fully paid, validly existing and nonassessable under the
Georgia Business Corporation Code and all predecessor statutes.
4.2 Organization of SS Acquisition. SS Acquisition is a corporation
-------------------------------
duly organized, validly existing and in good standing under the laws of the
State of Georgia, with all requisite corporate power to own, operate and lease
its properties and assets and to enter into and perform its obligations
hereunder. SS Acquisition has taken, or prior to the Effective Date shall have
taken, all necessary corporate action to authorize and approve the execution and
delivery of this Agreement and the performance of its obligations hereunder. SS
Acquisition is a wholly owned subsidiary of Graphic.
4.3 Authorization of Agreement. The execution and delivery of this
--------------------------
Agreement has been duly authorized and approved by the Executive Committee of
the Board of Directors of Graphic, and the execution and delivery of this
Agreement and the Plan of Merger have been duly authorized and approved by the
shareholder and Board of Directors of SS Acquisition. This Agreement is a valid
and binding obligation of Graphic and SS Acquisition, enforceable against
Graphic and SS Acquisition, as the case may be, in accordance with its terms.
All persons who have executed this Agreement and the Plan of Merger on behalf of
Graphic and SS
37
<PAGE>
Acquisition have been duly authorized to do so by all necessary corporate action
of Graphic and SS Acquisition. The execution and delivery of this Agreement and
the consummation of the Merger will not violate any provision of the Articles of
Incorporation or By-laws of Graphic or the Articles of Incorporation or By-laws
of SS Acquisition or any order, arbitration award, judgment or decree to which
either Graphic or SS Acquisition is a party or is bound.
4.4 Material Adverse Changes. Since January 31, 1994, there have been
------------------------
no material adverse changes (excluding any changes in the market price of
Graphic Stock) in the business or consolidated financial condition of Graphic
and its subsidiaries, considered as one entity, from that reflected in the most
recent consolidated financial statements of Graphic contained in the Graphic
Financial Statements.
4.5 Broker's or Finder's Fees. Neither Graphic nor SS Acquisition nor
-------------------------
any of Graphic's or SS Acquisition's officers, directors or employees has
employed any broker, agent or finder or incurred any liability for any brokerage
fees, agent's commissions or finder's fees in connection with the transactions
contemplated hereby.
4.6 Representations and Warranties. No investigation or analysis or
------------------------------
inspection conducted by Southern pursuant to this Agreement shall in any way
limit, modify, impair or affect any of the foregoing representations and
warranties. No representation or warranty made by Graphic or SS Acquisition
contained herein or in any schedule furnished to any Southern Shareholder or
Southern
38
<PAGE>
pursuant hereto contains any untrue statement of material fact or omits to state
any material fact necessary, in light of the circumstances under which such
statement was made, in order to make the statements contained herein or therein
not misleading.
ARTICLE 5
---------
COVENANTS OF SOUTHERN SHAREHOLDERS AND SOUTHERN
-----------------------------------------------
Southern and each Southern Shareholder shall use their best efforts to
cause the transactions contemplated in this Agreement to be consummated and,
without limiting the generality of the foregoing, to obtain all consents and
authorizations of third parties, and to make all filings with and give all
notices to third parties which may be necessary or reasonably required in order
to effect the transactions contemplated herein.
ARTICLE 6
---------
COVENANTS OF GRAPHIC AND SS ACQUISITION
---------------------------------------
Graphic and SS Acquisition shall use their best efforts to cause the
transactions contemplated in this Agreement to be consummated, and, without
limiting the generality of the foregoing, to obtain all consents and
authorizations of third parties and to make all filings with and give all
notices to third parties which may be necessary or reasonably required in order
to effect the transactions contemplated herein.
39
<PAGE>
ARTICLE 7
---------
INDEMNIFICATION
---------------
7.1 Indemnification of Graphic and SS Acquisition.
---------------------------------------------
(a) Each Southern Shareholder, jointly and severally, hereby indemnifies
and agrees to hold Graphic and SS Acquisition harmless from and against any
loss, damage, claim, liability, cost or expense (including reasonable attorneys'
fees and court costs), which Graphic or SS Acquisition may incur or sustain
resulting from or arising out of any misrepresentation, breach of warranty or
non-fulfillment of any agreement or covenant by or on the part of Southern or
any Southern Shareholder made or given in this Agreement or any
misrepresentation in or omission from any schedule to this Agreement or the
Registration Agreement, the Secretary's Certificate of even date herewith, the
Employment Agreement (as to Smith), the Non-Competition Agreement between Smith
and Southern (as to Smith), or the Escrow Agreement furnished to Graphic or SS
Acquisition in connection with the transactions contemplated by this Agreement.
(b) The Southern Shareholders shall have no liability to indemnify
Graphic or SS Acquisition pursuant to this Article until and unless the
aggregate claims of Graphic and SS Acquisition hereunder exceed $25,000. Once
such $25,000 threshold has been attained, the Southern Shareholders shall be
liable hereunder for the full amount of any claims made by Graphic or SS
Acquisition including those claims, the amounts of which were used in attaining
the $25,000 threshold. Notwithstanding anything herein to the
40
<PAGE>
contrary (except for Smith's breach of his obligations pursuant to his
Employment Agreement or his Non-Competition Agreement), the parties hereto do
hereby agree that the total, aggregate liabilities of the Southern Shareholders
shall be limited to $1,005,000.
(c) Section (b) of this Article only limits the liability of the
Southern Shareholders as to adjustments to the consideration pursuant to Section
2.8, misrepresentations, breaches of warranty and nonfulfillment of any
agreement or covenant made by the Southern Shareholders or Southern made or
given with respect to this Agreement or any agreements related hereto, or any
misrepresentation in or omission from any certificate, schedule or other
instrument furnished to Graphic or SS Acquisition in connection with the
transactions contemplated by this Agreement. Nothing in this Article shall in
any way limit or decrease the liability of the Southern Shareholders to Graphic
or SS Acquisition for uncollectible receivables as set forth in Section 3.16(c)
of this Agreement, and any adjustments pursuant to Section 3.16(c) shall not be
subject to the $25,000 threshold set forth herein. Notwithstanding any other
provision of this Agreement, the Southern Shareholders shall not be responsible
for any liabilities that arise on or after the Effective Date.
7.2 Indemnification of Southern Shareholders.
----------------------------------------
(a) Graphic and SS Acquisition, jointly and severally, hereby indemnify
and agree to hold harmless the Southern Shareholders and Southern from and
against any loss, damage, claim,
41
<PAGE>
liability, cost or expense (including reasonable attorneys' fees and court
costs), which the Southern Shareholders or Southern may incur or sustain
resulting from or arising out of any misrepresentation, breach of warranty or
nonfulfillment or any agreement or covenant by or on the part of Graphic or SS
Acquisition made or given with respect to this Agreement or any agreements
related hereto or any misrepresentation in or omission from any certificate,
schedule or other instrument furnished to the Southern Shareholders or Southern
in connection with the transactions contemplated by this Agreement.
(b) Graphic and SS Acquisition shall have no liability to indemnify any
Southern Shareholder pursuant to this Article until and unless the aggregate
claims of the claims hereunder exceed $25,000. Once such $25,000 threshold has
been attained, Graphic and SS Acquisition shall be liable hereunder for the full
amount of any claims made by the Southern Shareholders including those claims,
the amounts of which were used in attaining the $25,000 threshold.
7.3 Procedure for Indemnification. Any party making a claim for
-----------------------------
indemnification pursuant to Sections 7.1 or 7.2 shall be referred to as the
"Indemnitee" and the party from whom indemnification is sought shall be referred
to as the "Indemnitor." Any claims for indemnification pursuant to this Article
must be made within three (3) years from the Effective Date (other than under
Section 3.25(e)(iii) hereof for which there will be no time limitation other
than the applicable statute of limitations). If
42
<PAGE>
an Indemnitee has a claim for indemnification pursuant to this Article, it shall
notify the Indemnitor in writing of the nature of such claim. Subject to the
$25,000 threshold set forth above, such claim shall be paid in accordance with
the Escrow Agreement (if it is still in effect) or the Indemnitor shall pay such
claim directly to the Indemnitee. If Indemnitor notifies Indemnitee that it
objects to such claim within fifteen (15) days after it receives notice of the
claim, the parties shall negotiate in good faith for a period of fifteen (15)
days after such written notice from the Indemnitor, before the Indemnitee may
take action on such claim; provided, however, if the claim involves an
emergency, Indemnitee may act immediately, after sending notice to Indemnitor of
its intent to do so. This negotiating period shall not be in addition to any
notice or negotiating period in the Escrow Agreement. If the claim is below the
$25,000 threshold set forth herein, the Indemnitor may object to the claim at
the time of the claim or wait until it receives notice of a claim exceeding said
$25,000 threshold, in which case such objection shall be provided within fifteen
(15) days of receipt of the notice relating to the claim which exceeds the
$25,000 threshold. If the Indemnitor does not object to the claim within the
required time period, the claim shall be deemed valid and payment by Indemnitor
shall be due and payable on such date that said objection period lapsed. If a
claim for indemnification hereunder is based upon an action or claim filed or
made against the Indemnitee or its affiliate, the Indemnitor shall have the
right to negotiate a settlement or
43
<PAGE>
compromise of such action or claim, or defend any such action or claim at its
sole cost and expense, with counsel reasonably satisfactory to the Indemnitee;
provided, however, that the Indemnitor must first obtain the Indemnitee's
written approval of any such settlement or compromise. If the Indemnitor elects
to defend any such action or claim with counsel of its choice at its sole cost
and expense, then the Indemnitee shall be entitled to participate in such
defense with counsel of its choice and at its sole cost and expense.
7.4 Contribution. The Southern Shareholders do hereby acknowledge and
------------
agree that upon the consummation of the Merger, they shall not be entitled to
bring an action or lawsuit for contribution or for the breach of a
representation, warranty or covenant herein, against Southern.
7.5 Tax Indemnity to Southern Shareholders. The parties hereto have
--------------------------------------
endeavored to structure the Merger so as to qualify it as a "reorganization"
within the meaning of IRC Section 368(a)(1)(A) and 368(a)(2)(E). Therefore, as
to each Southern Shareholder who receives Initial Shares or Escrow Shares in
exchange for such Southern Shareholder's Southern Stock as a result of
participating in the Merger (a "Merger Exchange"), Graphic shall provide (A) an
Indemnity (as defined in Section 7.5(a)) to each of the Southern Shareholders
and (B) may (but is not required) to provide, a Tax Defense (as defined and
described in Section 7.5(d) hereof) to any Southern Shareholder who properly
requests such Tax Defense in the event that such Southern Shareholder's Merger
44
<PAGE>
Exchange results in a Proposed Taxable Event (as defined and described in
Section 7.5(b)) to such Southern Shareholders, all on the following terms and
conditions:
(a) Provision of Tax Indemnity. For purposes of this Section 7.5, if as
--------------------------
a result of any action taken by Graphic or its Affiliates, either prior to or
after consummation of the Merger and following a Proposed Taxable Event, one or
more of the Southern Shareholders is required, for federal income tax purposes,
pursuant to a Final Determination (as defined below in this Section 7.5(f)) to
include in his gross income any income based on the fact that such Southern
Shareholder's Merger Exchange is a taxable exchange of his Southern Stock under
IRC Section 1001 (the event described in this clause being hereinafter referred
to as a "Inclusion"), then Graphic shall indemnify each such Southern
Shareholder with respect to such Inclusion in the manner and amount set forth in
this Section 7.5.
(b) Requisite Proposed Taxable Event. For purposes of this Section 7.5,
a "Proposed Taxable Event" shall only have occurred with respect to any Southern
Shareholder if, as a result of an Internal Revenue Service ("IRS") audit of such
Southern Shareholder's federal income tax return, the IRS in a Revenue Agent
Report (or other written statement signed by an IRS Agent), proposes an
assessment of federal income taxes in excess of the dollar amount of federal
------------
income taxes reflected on such Southern Shareholder's tax return, and where such
proposed assessment is based solely on the assertion by the IRS that such
Southern
45
<PAGE>
Shareholder's Merger Exchange is a taxable exchange of such Southern Stock under
IRC Section 1001.
(c) Notice of Audit. Upon receipt of notice from the IRS of an audit of
---------------
his federal income tax return in which one of the issues raised by the IRS is
the tax-free versus taxable nature of the Merger Exchange, each Southern
Shareholder shall promptly notify Graphic in writing of the details of such
audit. Following such notice to Graphic, each Southern Shareholder shall allow
Graphic or its authorized representatives to consult with or participate in the
audit process with respect to the issue of the Merger Exchange, provided that
Graphic involvement shall not be permitted to the extent that it prejudices such
Southern Shareholder's overall tax position in such audit taking into
consideration all the facts and circumstances. Further, in such audit
proceeding, each Southern Shareholder shall use its reasonable best efforts to
assert that such Merger Exchange was not a taxable exchange of his Southern
Stock under IRC Section 1001, except that he shall not be required to pursue
that effort to the extent that it prejudices such Southern Shareholder's overall
tax position in such audit taking into consideration all the facts and
circumstances.
(d) Right to Contest. If after a Proposed Taxable Event asserting a
----------------
claim which, if successful, would result in an Inclusion under Section 7.5(a)
hereof under circumstances that would require Graphic to indemnify a Southern
Shareholder for such Inclusion, each Southern Shareholder hereby agrees to: (i)
promptly
46
<PAGE>
notify Graphic in writing of such claim concerning the Inclusion where such
notice shall include the necessary documentation of the claim by the IRS and the
details of such Southern Shareholder's treatment of such claim during the audit
including documentation forwarded to the IRS; (ii) not make payment of the tax
claimed with respect to the Inclusion for at least twenty (20) days after the
giving of such notice (or shorter period within which such Southern Shareholder
is required by law to pay or commence administrative or judicial action); and
(iii) request Graphic to defend the claim concerning the Inclusion on its behalf
(a "Tax Defense"). The failure of such Southern Shareholder to notify Graphic
of the claim or to allow Graphic to participate or to consult with respect to
defending the claim will relieve Graphic of its obligation to indemnify such
Southern Shareholder pursuant to this Section 7.5. Graphic shall have the right
to assume the Tax Defense against such claim at its own expense and through tax
counsel of its own choosing. If Graphic elects to assume the Tax Defense of the
claim, such Southern Shareholder may participate in such Tax Defense but should
Graphic and such Southern Shareholder disagree concerning any action to be taken
in connection with defense of such claim, the decision of Graphic in conducting
such Tax Defense shall be controlling; provided, further, if such Southern
-------- -------
Shareholder elects to participate in such defense, then the expenses of such
Southern Shareholder incurred by virtue of such participation shall be paid by
such Southern Shareholder. If Graphic elects to assume the Tax Defense and to
defend the claim
47
<PAGE>
concerning the Inclusion, such Southern Shareholder shall: (x) provide to
Graphic all the necessary records and other documentation relating to such claim
and a power of attorney to Graphic if necessary; (y) cooperate in furnishing
evidence and testimony and in any other manner which Graphic may reasonably
request; and (z) in all other respects, have an obligation of good faith dealing
with Graphic in good faith in order to assist Graphic in defending such claim
effectively so as to not unreasonably expose Graphic to an undue risk of loss.
Such Southern Shareholder shall be entitled to reimbursement from Graphic for
out-of-pocket expenses reasonably incurred by him in connection with such
cooperation (excluding attorneys' fees with respect to voluntary participation).
If Graphic elects to assume the Tax Defense and to defend the claim concerning
the Inclusion, Graphic shall: (A) hold such Southern Shareholder harmless on an
after-tax basis from any and all fees, expenses, interest, penalties or
additions to tax arising out of the Final Determination with respect to the
claim concerning the Inclusion including, without limitation, that Graphic's
payment of any or all such indemnity amounts to such Southern Shareholder may
cause such Southern Shareholder to be required to recognize taxable income for
federal income tax purposes equal to such amounts in the year of receipt; and
(B) shall pay each such Southern Shareholder an amount of money equal to the
loss of tax deferral to such Southern Shareholder (for as long as such
shareholder holds the Acquisition Shares but not past his death or the
termination of an entity that is a Southern
48
<PAGE>
Shareholder) that was the intended result of the Merger Exchange calculated at
an interest rate equal to the "Prime Rate" as announced by NationsBank, Atlanta,
Georgia from time to time compounded semi-annually where such interest rate is
multiplied times a "principal amount". Such "principal amount" on which the
interest amount (the "Interest Amount") is to be computed shall be equal to the
federal and any state income tax liability before interest, penalties or other
additions to such federal or state tax liability and also less any federal and
state tax liability from the Inclusion which is related to Acquisition Shares
which are no longer held by such Southern Shareholder; provided, however,
-------- -------
notwithstanding anything to the contrary herein, Graphic shall not be required
to indemnify the Southern Shareholders for the actual federal and state tax
liability amount (exclusive of penalties, interest or additions to such tax) as
a result of the Inclusion, but rather only the amounts set forth in (A) and (B).
(e) Southern Shareholder Defense. If Graphic does not notify such
----------------------------
Southern Shareholder within twenty (20) days after the receipt of Southern
Shareholder notice concerning the claim that Graphic elects to assume the
conduct and cost of the Tax Defense of the claim, then the Tax Defense of the
claim concerning an Inclusion shall be controlled solely by such Southern
Shareholder, and Graphic shall indemnify such Southern Shareholder with respect
to such claim based upon a Final Determination with respect to the Inclusion.
Where such Southern Shareholder defends such claim, the advisability of any
settlement of such claim shall be a matter for
49
<PAGE>
the good faith determination of such Southern Shareholder, who shall be under no
duty to litigate or otherwise contest the claim except as dictated by his own
personal business judgment. The indemnity payable by Graphic where such
Southern Shareholder assumes the defense of the claim concerning the Inclusion
shall be a payment to such Southern Shareholder by Graphic after demand by such
Southern Shareholder composed of the sum of (i) an amount (supported by a
computation in reasonable detail) which includes the following: (a) the
reasonable costs and expenses incurred by such Southern Shareholder (including
reasonable attorneys' and accountants' fees and disbursements) in defending the
claim concerning the Inclusion; (b) the Interest Amount as a result of the
Inclusion based on the Final Determination computed as set forth in Clause (B)
Section 7.5(d) above; and (c) aggregate amount of any interest, penalties or
additions to tax payable by such Southern Shareholder with respect to actual
federal and state income tax deficiencies for such year as a result of such
Inclusion and (ii) that amount on an after-tax basis necessary to indemnify such
Southern Shareholder for any required inclusion of any or all of the amounts
referred to in preceding clause (i) in his taxable income for federal income tax
purposes in the year of receipt; provided, however, notwithstanding anything
-------- -------
herein to the contrary, Graphic shall not be required to indemnify the Southern
Shareholders for the actual federal and state tax liability amount (exclusive of
penalties, interest or additions to such tax) as a
50
<PAGE>
result of the Inclusion, but rather only the amounts set forth in (i) and (ii)
above.
(f) Final Determination. For purposes of this Section 7.5, a "Final
-------------------
Determination" shall be deemed to occur with respect to an Inclusion when: (i)
there is a decision, judgment, decree or other order by any court of competent
jurisdiction, which decision, judgment, decree or other order has become final,
i.e., all allowable appeals requested by the party defending against an
- ----
Inclusion, pursuant to this Section 7.5 have been exhausted by either party to
the action; (ii) there is a closing agreement made under IRC Section 7121 or any
other settlement agreement is entered into in connection with an administrative
or judicial proceeding; or (iii) the time for instituting a claim for refund has
expired, or if a claim was filed, the time for instituting suit with respect
thereto has expired.
(g) Indemnity Payments. The payments, if any, of the Interest Amount to
------------------
be made by Graphic to the Southern Shareholders pursuant to clause (B) of
Section 7.5(d) and pursuant to clause (b) of Section 7.5(e) hereof shall be made
annually on the anniversary date of the consummation of this Merger with the
first payment to be made on the first anniversary date following the applicable
Final Determination. All other indemnity payments required under this Section
7.5 shall be made promptly after the applicable Final Determination.
(h) Communications. Any and all notices, elections, demands, requests
--------------
and responses thereto permitted or required to be
51
<PAGE>
given under this Section 7.5 shall be given in the manner set forth in Section
9.6 hereof.
(i) Survival. Notwithstanding anything to the contrary in this
--------
Agreement, the contractual provisions of this Section 7.5 shall survive the
execution and delivery of this Agreement, and none of such contractual
provisions shall be deemed merged into or superseded by the execution and
delivery of any documents, instruments or agreements in connection with the
consummation of the transactions contemplated by this Agreement. The $25,000
threshold in Section 7.2 of this Agreement shall not be applicable to the
indemnity provided in this Section 7.5.
ARTICLE 8
---------
ERISA
-----
8.1 Definitions. As used in this Article, the following terms shall
-----------
have the following definitions:
IRC - means the Internal Revenue Code of 1986, as amended, and all
---
references to sections thereof shall include such sections and any predecessor
provisions thereto.
ERISA - means the Employee Retirement Income Security Act of 1974, as
-----
amended, and all references to sections thereof shall include such sections and
any predecessor provisions thereto.
ERISA Affiliate - means each trade or business (whether or not
---------------
incorporated) which together with Southern would be treated as a single employer
under Section 414(b) or (c) of the IRC.
Multi-Employer Plan - means a plan described in ERISA which covers
-------------------
employees of Southern or any ERISA Affiliate.
52
<PAGE>
PBGC - means the Pension Benefit Guaranty Corporation.
----
Plan - means any Plan (other than a Multi-Employer Plan) described in
----
Section 3(2) of ERISA maintained for employees of Southern or any ERISA
Affiliate, and any such Plan no longer maintained by Southern, or any ERISA
Affiliate to which Southern or any ERISA Affiliate has paid or was required to
make any contributions within any of the preceding five years.
Prohibited Transaction - means any transaction described in ERISA which is
----------------------
not exempt by reason of Section 408 of ERISA or the transitional rules set forth
in Section 414(c) of ERISA, and any transaction described in Section 4975(c) of
the IRC which is not exempt by reason of Section 4975(c)(2) of the IRC or any
other rules or regulations related thereto.
Reportable Event - means a reportable event described in Section 4043 of
----------------
ERISA or the regulations thereunder (other than a reportable event for which the
thirty (30) day notice requirement of Section 4043(a) of ERISA has been waived
under regulations of the U.S. Department of Labor), a withdrawal from a Plan in
Section 4063 of ERISA or a cessation of operation described in Section 4062(e)
of ERISA.
8.2 Representations and Warranties. The Southern Shareholders and
------------------------------
Southern, jointly and severally, warrant, represent, covenant and agree that:
(a) Neither Southern nor any ERISA Affiliate nor Plan is in violation of
any of the material provisions of ERISA. Each Plan which is intended to
qualified under Section 401(a) of
53
<PAGE>
IRC has received a favorable determination letter from the Internal Revenue
Service stating that the Plan is qualified under Section 401(a) of the Code, and
no event has occurred since the date of such letter that has adversely affected
such qualification except that such Plan has not been amended to comply with the
Tax Reform Act of 1986 and any subsequent legislation or rulings;
(b) No Prohibited Transaction or Reportable Event has occurred with
respect to any Plan nor has any Plan been the subject of the waiver of the
minimum funding standard under Section 412 of the IRC;
(c) No notice of intent to terminate a Plan has been filed under Section
4041 of the ERISA, nor has any Plan been terminated under Section 4041(e) of
ERISA;
(d) Southern has not received notice that the PBGC has instituted
proceedings to terminate or appoint a trustee to administer a Plan and no event
has occurred or condition exists which might constitute grounds under Section
4042 of ERISA for the termination of, or the appointment of a trustee to
administer any Plan;
(e) Neither Southern nor any ERISA Affiliate will be liable for any
amount pursuant to Section 4062, 4063 or 4064 of ERISA for any Plans terminated
as of the most recent valuation dates of such Plans;
(f) Neither Southern nor any ERISA Affiliate has incurred or expects to
incur any withdrawal liability to any Multi-Employer Plan; and
54
<PAGE>
(g) No tax liability, penalty or interest relating to any Plan of
Southern will be due from Southern, any Plan of Southern, or any Southern
Shareholder resulting from the consummation of the transactions contemplated
herein.
8.3 Disclosures.
-----------
(a) Southern and the Southern Shareholders hereby agree to provide true
and correct copies of the following to Graphic: (i) all Plans, as amended; (ii)
all Schedule 5500's with respect to the Plans for at least the past three (3)
years and longer if reasonably available; (iii) all Applications for Letters of
Determination; (iv) Determination Letters from the Internal Revenue Service
("IRS") for each Plan, to the extent applicable; (v) all actuarial reports for
any Plan which is a defined benefit plan for the last five (5) years; (vi) all
audits of the Plans; (vii) a list of all employees covered by the Plans; and
(viii) all other documents relating to the Plans filed with the IRS.
(b) Graphic shall have the right to audit the Plans, at its own expense.
(c) All amounts due to any of Southern's Plans through the Effective
Date shall be accrued on the Closing Balance Sheet.
ARTICLE 9
---------
MISCELLANEOUS
-------------
9.1 Representations and Warranties. All representations, warranties and
------------------------------
agreements of Southern, the Southern Shareholders, Graphic and SS Acquisition
herein shall survive the execution and delivery of this Agreement for a period
of three (3) years from the
55
<PAGE>
date hereof, and none of such representations, warranties or agreement shall be
deemed merged into or superseded by the execution and delivery of any documents,
instruments or agreements in connection with the consummation of the
transactions contemplated herein.
9.2 Other Documents. The parties hereto will, at any time before, at or
---------------
after the Effective Date, sign, execute and deliver, or to the extent within
their control, cause others so to do, all such bills of sale, deeds,
certificates of title, assignments, documents and other instruments and to do or
cause to be done all such other acts and things, which may be necessary or
proper to carry out the transactions contemplated by this Agreement.
9.3 Governing Law; Successors. This Agreement shall be governed by and
-------------------------
construed and enforced in accordance with the laws of the State of Georgia. All
of the terms of this Agreement shall be binding upon and inure to the benefit of
and be enforceable by and against the successors and permitted assigns of
Southern, the Southern Shareholders, Graphic and SS Acquisition, as the case may
be. Nothing in this Agreement, express or implied, is intended to confer upon
any person, other than the parties hereto and their successors and assigns, any
rights, remedies, obligations or liabilities by reason of this Agreement.
9.4 Entire Agreement. This Agreement and any other agreements,
----------------
certificates or other instruments executed pursuant hereto embody the entire
agreement of the parties hereto relating to the subject matter hereof and
supersede any prior
56
<PAGE>
understandings, commitments or agreements, whether oral or in writing.
9.5 Severability. If any one or more of the provisions contained in
------------
this Agreement shall for any reason be held to be excessively broad, as to
duration, geographic scope, activity or subject matter, such provision(s) shall
be construed by severing, limiting or reducing it or them so as to be
enforceable to the extent compatible with the applicable law as it shall then
exist. The provisions of this Agreement shall be severable and the illegality
or unenforceability of any one provision shall not affect the validity or
enforceability of the others.
9.6 Notices. All notices to be given hereunder shall be in writing and
-------
shall be conclusively deemed to be delivered on the date of delivery in the case
of hand delivery or three (3) business days after being mailed by certified
mail, return receipt requested, to the following addresses or such other
addresses as the parties may from time to time designate in writing:
If to Southern:
Southern Signatures, Inc.
201 Armour Drive
Atlanta, Georgia 30324
If to the Southern Shareholders:
Brian R. Smith
260 Tamerlane
Atlanta, Georgia 30327
MI Holdings, Inc.
3109 Maple Drive, Suite 407
Atlanta, Georgia 30305
Attention: Stephen C. Herndon
57
<PAGE>
Steven C. Carson, M.D. Clayton L. Scroggins
Pension Fund and Associates, Inc.
7781 Coldstream Woods Dr. 200 North Boulevard
Cincinnati, Ohio 45255 Cincinnati, OH 45246-
3670
With a copy to:
Long, Aldridge & Norman
One Peachtree Center
Suite 5300
303 Peachtree Street, N.E.
Atlanta, Georgia 30308
Attention: Wayne N. Bradley, Esq.
If to Graphic or SS Acquisition:
Graphic Industries, Inc.
2155 Monroe Drive
Atlanta, Georgia 30324
Attention: Mark C. Pope, IV, President
With a copy to:
Gray, Gilliland & Gold, P.C.
Suite 1050
400 Perimeter Center Terrace
Atlanta, Georgia 30346
Attention: Lawrence M. Gold, Esq.
9.7 Amendments; Counterparts. No amendment or modification of this
------------------------
Agreement shall be valid or binding upon the parties hereto unless made in
writing and signed by the parties hereto. Any pronoun used herein shall be
deemed to cover the plural and singular and all genders and the neuter. The
headings in this Agreement are for identification only and shall not be deemed
to limit, define or otherwise affect the terms or provisions of this Agreement.
This Agreement may be executed in multiple counterparts, each of which shall be
deemed an original and all of such counterparts shall constitute one and the
same agreement.
58
<PAGE>
9.8 Confidential Information. Prior to the consummation of the Merger,
------------------------
the parties to this Agreement will provide one another with information
regarding their respective businesses, operations and prospects. Each party
agrees to hold confidential all such information, to the extent that such
information is not publicly available, and to protect all information provided
to it by another party to this Agreement with the same degree of care that it
employs to protect its own confidential and proprietary information. Neither
party shall issue a press release or make a public announcement of this
transaction, without the prior written consent of the other parties. If this
Agreement is terminated prior to consummation of the Merger, each party agrees
to return all documents and other material, whether or not confidential,
provided to it pursuant to this Agreement, and all copies thereof, by or on
behalf of the other party to this Agreement.
9.9 Remedies Not Exclusive. No remedy conferred by any of the specific
----------------------
provisions of this Agreement is intended to be exclusive of any other remedy,
and each and every remedy shall be cumulative and shall be in addition to every
other remedy given hereunder or now or hereafter existing at law or in equity or
by any statute or otherwise. The election of any one or more remedies by
Graphic, SS Acquisition, the Southern Shareholders or Southern shall not
constitute a waiver of the right of exercise of other available remedies.
9.10 No Waiver. No failure on the part of any party hereto to exercise,
---------
and no delay in exercising any right, power or remedy
59
<PAGE>
hereunder, shall operate as a waiver thereof, nor shall any single or partial
exercise of any right, power or remedy by any party hereto preclude any other or
further exercise thereof or the exercise of any other right, power or remedy.
No express waiver or assent by any party of any breach of or any default in any
term, covenant, or condition which this Agreement requires to be performed or
observed by any other party shall constitute a waiver of or assent to any
succeeding breach of or default in the same or any other term, covenant or
condition hereof.
9.11 Expenses. All expenses incurred in connection with this Agreement
--------
and the transactions contemplated herein, including, but not limited to,
accounting or legal fees, consulting fees, personal time charges, travel
expenses and filing fees shall be borne by each respective party who authorizes
and incurs such expense. Southern's legal or accounting fees shall be paid by
the Southern Shareholders and shall not be accrued on Southern's Financial
Statements.
9.12 Taxes. The Southern Shareholders shall pay all documentary,
-----
transfer and other state or local taxes relating to or arising from the Merger
and related transactions as contemplated herein.
60
<PAGE>
IN WITNESS WHEREOF, the parties hereto have duly caused this Agreement to
be executed, under seal, as of the day and year first above written.
GRAPHIC INDUSTRIES, INC.
ATTEST: By:/s/ MARK C. POPE IV
------------------------------
Title: President
--------------------------
By:/s/ DONALD P. HUNNICUTT
------------------------------
CORPORATE SECRETARY
[Corporate Seal]
SS ACQUISITION CO.
ATTEST: By:/s/ MARK C. POPE IV
------------------------------
Title: President
---------------------------
By:/s/ DONALD P. HUNNICUTT
-----------------------------
CORPORATE SECRETARY
[Corporate Seal]
SOUTHERN SIGNATURES, INC.
ATTEST: By:/s/ BRIAN R. SMITH
------------------------------
Title: President
---------------------------
/s/ MARK HUFFMAN
- -------------------------------
CORPORATE SECRETARY
[Corporate Seal]
[SIGNATURES CONTINUED ON FOLLOWING PAGE]
61
<PAGE>
[SIGNATURES CONTINUED FROM PREVIOUS PAGE]
/s/ BRIAN R. SMITH
------------------------------(SEAL)
BRIAN R. SMITH
MI HOLDINGS, INC.
ATTEST: By:/s/ STEPHEN C. HENNDON
---------------------------------
Title: Vice President
------------------------------
_______________________________
CORPORATE SECRETARY
[Corporate Seal]
STEVEN C. CARSON, M.D.
PENSION FUND, A QUALIFIED
RETIREMENT PLAN
By:_________________________________
Title:______________________________
________________________________(SEAL)
BRIAN R. SMITH
MI HOLDINGS, INC.
ATTEST: By:
_________________________________
Title:
______________________________
_______________________________
CORPORATE SECRETARY
[Corporate Seal]
STEVEN C. CARSON, M.D.
PENSION FUND, A QUALIFIED
RETIREMENT PLAN
By:/s/ RICHARD J. STILZ, MD
----------------------------------
Title: TRUSTEE
-------------------------------
62
<PAGE>
EXHIBIT 10 (mmm)
[LOGO OF FLEET CREDIT CORPORATION]
Secured Promissory Note No. 23459-105
Secured Party: Fleet Credit Debtor: MERCURY PRINTING COMPANY, INC.
Corporation ---------------------------------
111 Westminster Street Address: 2929 Convair Road
Providence, Rhode --------------------------------
Island 02903 Memphis, TN 38132
----------------------------------------
Telephone:( ) _________________________
1. Secured Party and Debtor have entered into a Master Security Agreement
dated as of May 5, 1994, (the "Security Agreement"). To secure payment of the
indebtedness set forth below, including the Principal Amount set forth below,
and the performance of all obligations contained herein, Debtor hereby grants
to Secured Party, its successors and assigns, a security interest in the
property set forth in Schedule A hereto, together with all attachments,
accessories, additions and accessions thereto, whether now existing or
hereafter acquired, all replacements and substitutions therefor, and all
proceeds thereof (all hereinafter referred to collectively as the "Equipment").
2. Principal Amount. The original Principal Amount of this Note is:
$2,050,000.00.
- -------------
3. a. Term. The Term of this Note is 84 months commencing on the Term
--
Commencement Date as set forth in the Acceptance Certificate of this Note plus
any partial period between the Acceptance Date of the Equipment as set forth in
the Acceptance Certificate and the Term Commencement Date.
b. Payments. Debtor hereby promises to pay the Principal Amount to Secured
Party and Interest thereon as follows:
(1) Interest only on the Term Commencement Date in an amount equal to
$427.08 multiplied by the number of days between the Acceptance Date up to and
- -------
including the Term Commencement Date.
(2) Thereafter each Installment Payment shall be paid in 84
--
month/consecutive installments and shall be equal to the "Base Payment" (as
hereinafter defined) as adjusted by the "Payment Adjustment" (as hereinafter
defined). The Base Payment for each month shall be $31,443.47. The Payment
----------
Adjustment for any given month shall be an amount equal to the product obtained
from the following calculation:
Difference between the
Unpaid Principal X "Base Prime Rate" and
Balance "Prime Rate"
---------------------------
12
The Base Prime Rate is 6.75% per annum and for the purpose of the foregoing
-------
calculation and the "Prime Rate" shall mean the rate of interest designated by
Fleet National Bank from time to time as being its prime rate of interest in
effect on the 15th day of the month preceding the month to which such Payment
Adjustment applies. If the Prime Rate is lower than Base Prime Rate, then the
Payment Adjustment shall be a deduction from the Base Payment. If the Prime
Rate is higher than Base Prime Rate, the Payment Adjustment shall be added to
the Base Payment.
The first Installment Payment shall be payable on the 5th day of June, 1994,
----- ------------
with each of the remaining Installment Payments due on the same day of each
month/quarter thereafter until fully paid, provided that the final installment
shall be in the amount of the unpaid balance hereof, together with any accrued
interest and late charges.
In the event that the Payments set forth in any Acceptance Certificate
hereto differ from those set forth in this Section 3(b), the Payments shall be
as set forth in the Acceptance Certificate.
c. Debtor agrees to pay Secured Party, in advance, the first only
----
Installment Payments.
d. Secured Party acknowledges receipt from Debtor of a payment in the
amount of $ n/a to be held by Secured Party as a deposit to secure Debtor's
---
performance hereunder .
4. The Equipment will be located at the locations specified in Schedule A
hereto.
5. The Installment Payments may change for Equipment accepted after May 16,
-------
1994.
- ----
6. This Note is secured by the Equipment, as set forth in Schedule A hereto
and as further defined in the Security Agreement, the terms and conditions of
which are incorporated herein by reference. This Note is one of the "Notes"
referred to in the Security Agreement.
Dated as of May 5, 1994 1994
------------------, --- By execution hereof, the signer
certifies that he has read,
accepted and duly executed this
Note to the Master Security
Agreement on behalf of Debtor.
SECURED PARTY: FLEET CREDIT CORPORATION DEBTOR: MERCURY PRINTING COMPANY, INC.
-------------------------------
By: /s/Louis M. Serruolo By: /s/MARK C. POPE
---------------------------------- -----------------------------------
Title: DM Title: VICE PRESIDENT
------------------------------- --------------------------------
Floating Rate Note
<PAGE>
[LOGO OF FLEET CREDIT CORPORATION]
Master Security Agreement
No. 23459
-----------------
<TABLE>
<S> <C>
SECURED PARTY: FLEET CREDIT CORPORATION DEBTOR: MERCURY PRINTING COMPANY, INC.
a Rhode Island Corporation ------------------------------------------
Address: 111 Westminster Street a Tennessee CorporatioSn ("Debtor")
Providence, Rhode --------------------------
02903 Island Address: 2929 Conair Road
Telephone (401) 278-6911 ----------------------------------------
Memphis, TN 38132
----------------------------------------
</TABLE>
1. GRANT OF SECURITY INTEREST
For valuable consideration, the receipt and sufficiency of which are hereby
acknowledged by Debtor, Debtor hereby grants to Secured Party a continuing
general lien and security interest in the items of equipment set forth from
time to time in each Secured Promissory Note issued pursuant to this Master
Security Agreement (individually a "Note" and collectively the "Notes")
including, without limitation, all accessories, additions, accessions,
alterations, attachments, parts, and repairs now or hereafter affixed thereto
or used in connection therewith and substitutions and replacements thereof or
of any part thereof (collectively, the "Equipment") and all proceeds of the
foregoing including, without limitation, the proceeds of any insurance payable
to Debtor or Secured Party with respect to the foregoing; and any cash or cash
equivalent deposits made by Debtor to Secured Party from time to time to secure
Debtor's obligations under any Note or other agreement with Secured Party (a
"Security Deposit"). Notwithstanding anything to the contrary, expressed or
implied, in this Agreement, the terms and conditions of this Agreement shall be
construed and interpreted as to each Note hereunder as if a separate, but
identical, security agreement had been executed with regard to the Equipment
set forth in such Note, and, unless otherwise agreed in writing, the Equipment
set forth in such Note shall serve as collateral security for Debtor's
obligations under that Note only.
The security interest granted herein shall attach to each item of Equipment
at the earlier of (i) Debtor's execution and delivery of the Note and
Acceptance Certificate with respect to such item which shall occur upon
Debtor's acceptance of such item pursuant to the terms of any purchase order or
agreement with the vendor of such item; or (ii) the time that Secured Party
advances any funds to or on behalf of Debtor in complete or partial payment for
such Equipment.
2. TERM AND PAYMENTS
The term of each Note with respect to each item of Equipment shall commence
on the date of the Note Acceptance Certificate with respect to such item and
shall continue for the number of months, and proration thereof, specified in
the applicable Note. Installment payments shall be in the amounts and shall be
due and payable as set forth in the applicable Note. If any amount payable
hereunder shall not be paid when due, Debtor shall pay as an administrative and
late charge and amount equal to 5% of the amount of any such overdue payment.
In addition, Debtor shall pay interest on such delinquent payment from 30 days
after the due date until paid at the rate of 1 1/2% per month or the maximum
amount permitted by law whichever is lower. All payments to be made to Secured
Party shall be made to Secured Party at the address shown above, or at such
other place as Secured Party shall specify in writing.
3. INSPECTION; PERSONAL PROPERTY
Secured Party may enter the premises where the Equipment is located during
business hours for the purpose of inspecting the Equipment. The Equipment shall
always remain personal property even though the Equipment may hereafter become
attached or affixed to real property. Debtor agrees to give and record such
notices and to take such other action at its own expense as may be necessary to
prevent any third party (other than an assignee of Secured Party) from
acquiring or having the right under any circumstances to acquire any interest
in the Equipment. In the event such third party does acquire or have the right
to acquire any interest in the Equipment, Debtor shall remove such third
party's interest within 30 days of its being asserted.
4. DISCLAIMER OF WARRANTIES
SECURED PARTY IS NOT THE MANUFACTURER OR SUPPLIER OF THE EQUIPMENT, NOR THE
AGENT THEREOF, AND MAKES NO EXPRESS OR IMPLIED WARRANTIES AS TO ANY MATTER
WHATSOEVER, INCLUDING, WITHOUT LIMITATION, THE MERCHANTABILITY OF THE EQUIPMENT,
ITS FITNESS FOR A PARTICULAR PURPOSE, ITS DESIGN OR CONDITION, ITS CAPACITY OR
DURABILITY, THE QUALITY OF THE MATERIAL OR WORKMANSHIP OR CONFORMITY OF THE
EQUIPMENT TO THE PROVISIONS AND SPECIFICATIONS OF ANY PURCHASE ORDER RELATING
THERETO, OR PATENT INFRINGEMENTS, AND HEREBY DISCLAIMS ANY SUCH WARRANTY.
SECURED PARTY IS NOT RESPONSIBLE FOR ANY REPAIRS OR SERVICE TO THE EQUIPMENT,
DEFECTS THEREIN OR FAILURES IN THE OPERATION THEREOF. Debtor has made the
selection of each TO THE EQUIPMENT, DEFECTS THEREIN OR FAILURES IN THE OPERATION
THEREOF. Debtor has made the selection of each item of Equipment and the
manufacturer and/or supplier thereof based on its own judgment and expressly
disclaims any reliance upon any statements or representations made by Secured
Party.
- --------------------------------------------------------------------------------
This Master Security Agreement consists of nineteen sections, including the
terms and provisions contained on the reverse side hereof, and the terms and
provisions of any Note, Note Acceptance Certificate, rider, exhibit, amendment
or other document now or hereafter attached hereto and made a part hereof. THIS
AGREEMENT REPRESENTS THE FINAL AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE
CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL
AGREEMENTS BETWEEN THE PARTIES. DEBTOR ACKNOWLEDGES AND CERTIFIES THAT NO SUCH
ORAL AGREEMENTS EXIST. This Agreement may not be amended, nor may any rights
hereunder be waived, except by an instrument in writing signed by the party
charged with such amendment or waiver. The term "Debtor" as used herein shall
mean and include any and all Debtors who sign hereunder, each of whom shall be
jointly and severally bound hereby. This Agreement will not be binding on
Secured Party until executed by Secured Party.
By execution hereof, the signer
DATED AS OF: May 5, 1994 certifies that he or she has read,
--------------------, -- and duly executed this Master
Security Agreement on behalf of
Debtor.
SECURED PARTY: FLEET CREDIT CORPORATION DEBTOR: MERCURY PRINTING COMPANY, INC.
By: /s/Louis M. Serruolo By: /s/Mark C. Pope
----------------------------------- -----------------------------------
Title: DM Title: Vice President
-------------------------------- --------------------------------
Master Security Agreement
<PAGE>
5. REPRESENTATIONS AND WARRANTIES
Debtor represents and warrants to Secured Party as of the date hereof and
as of the date of each Note hereunder that:
(a) Debtor is a business organization as set forth in the first paragraph
hereof duly organized and in good standing under the laws of its state of
organization, is duly qualified and in good standing wherever necessary to carry
on its business as now being conducted and to own its properties, including the
Equipment, and has full power to carry on its business as now being conducted;
(b) Debtor has full power and authority to execute, deliver and perform this
Agreement and each Note, and this Agreement has been and each Note will be duly
authorized by all necessary and proper action on the part of the Debtor. No
consent or approval of stockholders or of any public authority is required in
connection with the execution, delivery or performance by Debtor of this
Agreement or any Note. The execution, delivery or performance by Debtor of this
Agreement and each Note will not violate any provision of law, or any judgment
or decree applicable to Debtor and will not conflict with or result in a breach
of or create a default under any corporate charter or by-laws or partnership
agreement or certificate or any agreement, bond, note or indenture to which it
is a party or by which it is bound; (c) This Agreement has been and each Note
will be duly executed and delivered, and constitute the valid and legally
binding obligations of Debtor, enforceable in accordance with their respective
terms; (d) Debtor has good title to, and is the lawful owner of the Equipment,
and the Equipment is and shall continue to be free from all adverse claims,
liens, encumbrances, charges or security interests whatsoever, except for the
lien and security interest granted by this Agreement; (e) The provisions of this
Agreement will create a valid and perfected security interest in the Equipment
as set forth in each Note, enforceable in accordance with the terms hereof,
subject to no prior or equal lien, charge, encumbrance or security interest,
upon the filing of appropriate Uniform Commercial Code financing statements or
equivalent security or lien instruments with respect to their Equipment which
shall be timely delivered to Secured Party for filing at the appropriate
offices; (f) The Equipment will be used solely in the conduct of Debtor's
business and will remain in the location shown on the applicable Note unless
Secured Party and Debtor otherwise agree in writing and Debtor has completed all
notifications, filings, recordings, and other actions in such new location as
Secured Party may reasonably request to protect Secured Party's interest in the
Equipment; (g) There are no material adverse changes in the financial condition
or operation of Debtor since the date of its financial statements provided to
Secured Party nor any pending or threatened actions or proceedings before any
court or administrative agency which materially adversely affect Debtor's
financial condition or operations and all information so provided is, and all
information hereafter furnished will be, true and correct in all material
respects; (h) Debtor has not and is not now engaged in, and shall not, during
any time that any of Debtor's obligations hereunder are outstanding, engage in
any conduct or activity, including but not necessarily limited to, a pattern of
racketeering activity, that would subject any of Debtor's assets to forfeiture.
6. INDEMNITY
Debtor assumes the risk of liability for, and hereby agrees to indemnify
and hold safe and harmless, and convenants to defend, Secured Party, its
employees, servants and agents from and against; (a) any and all liabilities,
losses, damages, claims and expenses (including legal expenses of every kind and
nature) arising out of the manufacturing, purchase, shipment and delivery to
Debtor, acceptance or rejection, ownership, titling, registration, leasing,
possession, operations, use, return or other disposition of the Equipment,
including, without limitation, any of such as may arise from patent or latent
defects in the Equipment (whether or not discoverable by Debtor), any claims
based on absolute tort liability or warranty and any claims based on patent,
trademark or copyright infringement; (b) any and all loss or damage to the
Equipment, normal wear and tear excepted; and (c) any obligation or liability of
the manufacturer and any supplier of the Equipment arising under the purchase
orders of Debtor.
The covenants and indemnities contained in this Section and Section 7 shall
survive the termination of this Agreement or any Note hereunder.
7. TAXES AND OTHER CHANGES
Debtor agrees to comply with all laws, regulations and governmental orders
related to this Agreement and to the Equipment and its use or possession and to
pay when due, and to defend and indemnify Secured Party against liability for
all license fees, assessments and sales, use, property, excise, privilege and
other taxes (including any related or interest or penalties) or other charges or
fees now or hereafter imposed by any governmental body or agency upon any
Equipment, or with respect to the manufacturing, ordering, shipment, purchase,
ownership, delivery, installation, leasing, operation, possession, use, return,
or other disposition thereof or the installment payments hereunder. Any fees,
taxes or other lawful charges paid by Secured Party upon failure of Debtor to
make such payments shall at Secured Party's option become immediately due from
Debtor to Secured Party.
8. EVENTS OF DEFAULT
The occurrence of any of the following events (each an "Event of Default")
shall constitute a default hereunder and under each Note: (a) Debtor shall fail
to pay any principal of or interest on any Note, or to pay any other sum secured
hereby, when the same becomes due and payable, whether at maturity or by
declaration or otherwise; or (b) Debtor shall fail to observe or perform any
other covenant or agreement contained herein or in any Note and such failure
shall remain unremedied for a period of 10 days after written notice thereof
shall have been given to Debtor by Secured Party or the holder or assignee of
such Note; or Debtor shall default in the payment of any indebtedness to Secured
Party or any parent, affiliate or subsidiary of Secured Party under any note,
security agreement, equipment lease, title retention or conditional sales
agreement or any other instrument or agreement evidencing such indebtedness with
Secured Party or any parent, affiliate or subsidiary of Secured Party, or Debtor
shall default in the performance of, or compliance with, any term contained in
any agreement or instrument evidencing or relating to such indebtedness, if the
effect of such default is to cause or permit such indebtedness to become due
prior to its stated maturity, or if any such indebtedness is not paid at
maturity; or (c) any statement, representation, or warranty made herein by
Debtor or in any certificate, agreement, statement or document heretofore or
hereafter furnished by or on behalf of Debtor shall be false or incorrect in any
material respect; or (d) death or judicial declaration of incompetence of
Debtor, if an individual; the commencement of any bankruptcy, insolvency,
arrangement, reorganization, receivership, liquidation or other similar
proceeding by or against Debtor or any of its properties or business, or the
appointment of a trustee, receiver, liquidator or custodian for Debtor or any of
its properties or business, or if Debtor suffers the entry of an order for
relief under Title 11 of the United States Code, or the making by Debtor of a
general assignment or deed of trust for the benefit or creditors; or (e) the
Equipment shall be abused, substantially damaged or destroyed or Secured Party
shall reasonably deem the Equipment unsafe or at risk; or (f) Debtor shall
default in meeting any of its trade, tax or other obligations as they mature,
except to the extent Debtor contests such obligations in good faith and has
established adequate reserves therefor; or (g) the Debtor shall terminate its
existence by merger, consolidation, sale of substantially all of its assets or
otherwise; or (h) Secured Party shall determine, in its sole discretion and in
good faith, that Debtor's ability to make any payment hereunder or under any
Note promptly when due or otherwise comply with the terms of this Agreement or
any Note or any other agreement between Secured Party and Debtor is impaired; or
(i) any event or condition set forth in subsections (b), (c), (d), (e), (f), (g)
or (h) of this Section 8 shall occur with respect to any guarantor or other
person responsible, in whole or in part, for payment or performance of this
Agreement or any Note.
Debtor shall promptly notify Secured Party or any holder(s) or assignee(s)
of all Notes of the occurrence of any Event of Default or the occurrence or
existence of any event or condition which, upon the giving of notice, lapse of
time, or both may become an Event of Default.
<PAGE>
9. REMEDIES
Upon the occurrence of any Event of Default, Secured Party may, at its sole
option and discretion, to the extent permitted by applicable law, exercise one
or more of the following remedies with respect to any or all of the Equipment
subject to any Note in default: (a) cause Debtor to, upon written demand of
Secured Party and at Debtor's expense, promptly return such Equipment to such
location as Secured Party may designate in accordance with the terms of Section
18, or Secured Party, at its option, may enter upon premises where the Equipment
is located and take immediate possession of and remove the same by summary
proceedings or otherwise all without liability to Secured Party for or by reason
of damage to property or such entry or taking possession; (b) sell any or all
the Equipment at public or private sale otherwise dispose of, hold, use,
operate, lease to others or keep idle the Equipment, all as Secured Party in its
sole discretion may determine and all free and clear of any rights of Debtor;
(c) remedy such default, including making repairs or modifications to the
Equipment, for the account of and the expense of Debtor and Debtor agrees to
reimburse Secured Party for all of Secured Party's costs and expenses; (d)
declare by written notice any or all Notes and other obligations of Debtor
immediately due and payable and recover from Debtor the outstanding principal
balance of such Note or Notes, plus any accrued interest and late charges, and
the applicable prepayment premium calculated as of the date of default as set
forth in Section 12 hereof; (e) apply any Security Deposit or other cash
collateral or sale or remarketing proceeds of the Equipment at any time as it
sees fit to reduce any amounts due to Secured Party and; (f) exercise any other
right or remedy which may be available to it under applicable law and the
Uniform Commercial Code or proceed by appropriate court action to enforce the
terms hereof or to recover damages for the breach hereof, including reasonable
attorneys' fees and court costs. In addition to the foregoing, Debtor shall
continue to be liable for all indemnities under this Agreement and each Note and
for all legal fees and other costs and expenses resulting from any Event of
Default or the exercise of Secured Party's remedies.
No remedy referred to in this Section 9 is intended to be exclusive, but
each shall be cumulative and in addition to any other remedy referred to above
or otherwise available to Secured Party at law or in equity. The exercise or
beginning of exercise by Secured Party of any one or more of such remedies shall
not preclude the simultaneous or later exercise by Secured Party of any or all
such other remedies and all remedies hereunder shall survive termination of this
Agreement and any Note.
At the sale of the Equipment pursuant to this Section 9, Secured Party may
bid for and purchase the Equipment. Notice required, if any, of any sale or
other disposition hereunder by Secured Party shall be satisfied by the mailing
of such notice to Debtor at least seven (7) days prior to the sale or other
disposition. In the event Secured Party takes possession of the Equipment,
Secured Party shall give Debtor credit for any sums actually received by Secured
Party from the disposition of the Equipment after deductions of expenses of
disposition. A termination shall occur only upon written notice by Secured Party
and only with respect to such Equipment as Secured Party shall specify in such
notice. Termination under this Section 9 shall not affect Debtor's duty to
perform Debtor's obligations hereunder to Secured Party on demand for any and
all costs and expenses incurred by Secured Party in enforcing its rights
hereunder following the occurrence of an Event of Default, including, without
limitation, reasonable attorneys' fees, and the costs of foreclosing,
repossession, storage, insuring, leasing, selling and disposing of any and all
Equipment.
10. ADDITIONAL SECURITY
In order more fully to secure its payments and all other obligations to
Secured Party hereunder with respect to each Note, Debtor hereby grants to
Secured Party a security interest in any Security Deposit of Debtor to Secured
Party under Section 3(d) of any Note hereto. Such Security Deposit shall not
bear interest, may be commingled with other funds of Secured Party and shall be
immediately restored by Debtor if applied under Section 9(e). Upon expiration of
the term of the Note to which any Security Deposit relates and satisfaction of
all of Debtor's obligations under such Note, the Security Deposit shall be
returned to Debtor.
11. NOTICES
Any notices and demands required or permitted to be given under this
Agreement shall be given in writing and by regular mail and shall become
effective when deposited in the United States mail with postage prepaid to
Secured Party, to the attention of Customer Accounts, and to Debtor at the
addresses herein above set forth, or to such other address as the party to
receive notice hereafter designates by such written notice.
12. TERMINATION AND PREPAYMENT
No Note may be prepaid voluntarily or involuntarily, except in its
entirety. An involuntary termination shall occur if any item of Equipment shall
become lost, stolen, destroyed, damaged beyond repair or rendered permanently
unfit for use for any reason, or in the event of any condemnation, confiscation,
theft or seizure or requisition of title or use of such item, in which event
Debtor shall promptly pay to Secured Party an amount equal to the outstanding
principal balance of the Note with respect to such Equipment plus any accrued
interest and late charges.
Any prepayment resulting from voluntary prepayment, prepayment upon
default, or any other cause other than involuntary termination, shall be in an
amount equal to the outstanding principal on the date of such prepayment,
together with a premium, calculated as of the date of voluntary prepayment on
the date of default, as applicable, equal to 5% during the first year of such
term, 4% during the second year, 3% during the third year, 2% during the fourth
year, 1% during the fifth year and 0% thereafter, and any then existing late
charges and accrued interest. The principal balance at any time outstanding on a
fixed rate note shall be calculated in accordance with the "Rule of 78's".
13. INSURANCE
Debtor shall obtain and maintain at its own expense for the entire term of
this Agreement Comprehensive General Liability and Property Damage Insurance
including products, completed operations and contractual liability and All Risk
Physical Damage Insurance including earthquake and flood, in such amounts and
form and with such insurers as shall be satisfactory to Secured Party,
provided, however, that the amount of insurance on any item of Equipment shall
not be less than the greater of (I) the full replacement value of such item of
Equipment or (ii) the aggregate unpaid principal amount of the Note with
respect to such item of Equipment.
Each insurance policy or certificate shall name Debtor as the insured and
Secured Party as loss payee and as an additional named insured as its interest
may appear, and shall provide that Secured Party shall receive 30 days prior
written notice of any termination, cancellation, or material change of the
terms of such insurance and shall provide that the coverage afforded to Secured
Party shall not be rescinded, impaired or invalidated by any act or neglect of
Debtor. Debtor shall furnish to Secured Party a certificate of insurance or
other evidence that such insurance coverage is in effect, provided however that
Secured Party shall be under no duty either to ascertain the existence of or to
examine such insurance policy or certificate or to advise Debtor in the event
such insurance coverage shall not comply with the requirements hereof. Secured
Party may, at its option, apply any insurance monies received under such
policies to the cost of repairs to the Equipment and/or payment of any of the
indebtedness of Debtor secured hereby, in any order Secured Party may determine
whether or not due, and shall remit any surplus to Debtor.
In addition to the foregoing minimum insurance coverage, Debtor shall
procure and maintain such other insurance coverages as Secured Party may
require from time to time during the term of this Agreement. In case of failure
of Debtor to procure or maintain insurance, Secured Party
<PAGE>
may at its option obtain such insurance, the cost of which will be paid by the
Debtor as additional indebtedness. Debtor hereby irrevocably appoints Secured
Party as Debtor's attorney-in-fact to file, settle or adjust, and receive
payment of claims under any such insurance policy and to endorse Debtor's name
on any checks, drafts or other instruments in payment of such claim.
14. LIMITATION OF LIABILITY
Secured Party shall have no liability in connection with or arising out of
the possession, furnishing, performance, ownership or use of the Equipment or
any special, indirect, incidental or consequential damages of any character,
including, without limitation, loss of use of production facilities or
equipment, loss of profits, property damage or lost production, whether suffered
by Debtor or any third party.
15. FURTHER ASSURANCES
Debtor shall promptly execute and deliver to Secured Party such further
documents and take such further action as Secured Party may require in order to
more effectively carry out the intent and purpose of this Agreement and each
Note. Debtor shall provide to Secured Party within 120 days after the close of
each of Debtor's fiscal years, and, upon Secured Party's request, within 45
days of the end of each quarter of Debtor's fiscal year, a copy of its
financial statements prepared in accordance with generally accepted accounting
principles. Debtor shall execute and deliver to Secured Party upon Secured
Party's request such instruments and assurances as Secured Party deems
necessary for the confirmation, preservation or perfection of this Agreement
and each Note and Secured Party's security interest and rights thereunder,
including, without limitation, such corporate resolutions and opinions of
counsel as Secured Party may request from time to time, and all schedules,
forms and other reports as may be required to satisfy obligations imposed by
taxing authorities. In furtherance thereof, Secured Party may file or record
this Agreement or a memorandum or a photocopy hereof or a Note (which for the
purposes hereof shall be effective as a financing statement) so as to give
notice to third parties, and Debtor hereby appoints Secured Party as its
attorney-in-fact to execute, sign, file and record UCC financing statements and
other third parties, and Debtor hereby appoints Secured Party as its
attorney-in-fact to execute, sign, file and record UCC financing statements and
other lien recordation documents with respect to the Equipment where Debtor
falls or refuses to do so after Secured Party's written request, and Debtor
agrees to pay all stamp fees or taxes arising from any such filings.
16. ASSIGNMENT
This Agreement and any Note and all rights of Secured Party hereunder shall
be assignable by Secured Party absolutely or as security, without notice to
Debtor, subject to the rights of Debtor hereunder. Any such assignment shall not
relieve Secured Party of its obligations hereunder unless specifically assumed
rights of set-off or counterclaim against any assignee to which Secured Party
shall have assigned its rights and interests hereunder, and not to hold or
attempt to hold such assignee liable for any of Secured Party's obligations
hereunder.
DEBTOR SHALL NOT LIEN, ENCUMBER, ASSIGN OR DISPOSE OF ANY OF ITS RIGHTS OR
INTEREST IN THE EQUIPMENT OR ITS RIGHTS OR OBLIGATIONS UNDER THIS AGREEMENT OR
ANY NOTE OR ENTER INTO ANY LEASE WITH RESPECT TO ANY OF THE EQUIPMENT WITHOUT
THE EXPRESS PRIOR WRITTEN CONSENT OF SECURED PARTY.
17. DEBTOR'S OBLIGATIONS UNCONDITIONAL
Debtor hereby agrees that it shall not be entitled to any abatement of
installment payment or of any other amounts payable hereunder or under any Note
by Debtor and that its obligation to pay all amounts owing hereunder or under
any Note shall be absolute and unconditional under all circumstances, including,
without limitation, the following circumstances: (i) set-off, counterclaim,
recoupment, defense or other right which Debtor may have against Secured Party,
any seller or manufacturer of any Equipment or anyone else for any reason
whatsoever; (ii) the existence of any liens, encumbrances or rights of others
whatsoever with respect to any Equipment; or (iii) any other event or
circumstance whatsoever. Each payment made by Debtor hereunder and under each
Note shall be final and Debtor will not seek to recover all or any part of such
payment from Secured Party for any reason whatsoever.
18. DELIVERY OF EQUIPMENT
Upon demand of Secured Party as provided in Section 9, Debtor, at its own
expense, shall immediately deliver the Equipment described in any Note in the
same condition as when delivered to Debtor, ordinary wear and tear excepted, to
such location as Secured Party shall designate. The Equipment shall be delivered
to Secured party free and clear of all liens, encumbrances and rights of others.
The risk of loss of the Equipment shall remain with Debtor until the Equipment
is accepted by Secured Party or such other entity to whom the Equipment is
delivered, and Debtor shall maintain insurance on the Equipment in accor dance
with Section 13 until such acceptance occurs.
19. ENFORCEABILITY AND GOVERNING LAW
Any provision of this Agreement or any Note which is unenforceable in any
jurisdiction, shall be ineffective to the extent of such unenforceability
without invalidating the remaining provisions hereof, and any such
unenforceability in any jurisdiction shall not render unenforceable such
provisions in any other jurisdiction. To the extent permitted by applicable law
Debtor hereby waives any provisions of law which render any provision hereof
unenforceable in any respect. Any waiver of the terms hereof shall be effective
only in the specific instance and for the specific purpose given. Time is of the
essence. The captions in this Agreement are for convenience only and shall not
define or limit any of the terms hereof.
THIS AGREEMENT AND EACH NOTE SHALL IN ALL RESPECTS BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF RHODE ISLAND. DEBTOR
HEREBY CONSENTS AND SUBMITS TO THE JURISDICTION OF THE COURTS OF THE STATE OF
RHODE ISLAND AND THE FEDERAL DISTRICT COURT FOR THE DISTRICT OF RHODE ISLAND FOR
THE PURPOSES OF ANY SUIT, ACTION OR OTHER PROCEEDING ARISING OUT OF ITS
OBLIGATIONS HEREUNDER OR UNDER THE NOTES, AND EXPRESSLY WAIVES ANY OBJECTIONS
THAT IT MAY HAVE TO THE VENUE OF SUCH COURTS. DEBTOR HEREBY EXPRESSLY WAIVES
TRAIL BY JURY IN ANY ACTION BROUGHT ON OR WITH RESPECT TO THIS AGREEMENT OR ANY
NOTE. Any action by Debtor against Secured Party for any cause of action under
this Agreement or any Note shall be brought within one year after any such cause
of action first occurs.
<PAGE>
EXHIBIT 10 (nnn)
Prepared by and to:
MetLife Capital Financial Corporation
Real Estate Department
10900 N.E. 4th Street, Suite 500
Bellevue, Washington 98004
Loan Number: 5904594-001
MORTGAGE, SECURITY AGREEMENT,
ASSIGNMENT OF LEASES AND RENTS,
AND FIXTURE FILING
(2901 Gateway Drive, Pompano Beach, Florida)
THIS MORTGAGE (herein "Instrument") is made as of July 21, 1994, among
the Mortgagor, Graphic Industries, Inc. ("Borrower"), a Georgia corporation
whose address is 2155 Monroe Drive, N.E., Atlanta, Georgia 30324, in favor of
the Mortgagee, MetLife Capital Financial Corporation, a Delaware corporation,
whose address is Real Estate Department, 10900 N.E. 4th Street, Suite 500,
Bellevue, Washington 98004 (herein "METLIFE").
Borrower, in consideration of the indebtedness herein recited
irrevocably mortgages to METLIFE all of Borrower's right, title and interest,
now owned or hereafter acquired, including any reversion or remainder interest,
in the real property located in the City of Pompano Beach, County of Broward,
State of Florida, described on Exhibit A attached hereto and incorporated herein
---------
including all heretofore or hereafter vacated alleys and streets abutting the
property, and all easements, rights, appurtenances, tenements, hereditaments,
rents, royalties, mineral, oil and gas rights and profits, water, water rights,
and water stock appurtenant to the property (collectively "Premises");
TOGETHER with all of Borrower's estate, right, title and interest, now
owned or hereafter acquired, in:
(a) all buildings, structures, improvements, parking areas,
landscaping, fixtures and articles of property now or hereafter erected on,
attached to, and used or adapted for use in the operation of the Premises;
including but without being limited to, all heating, air conditioning and
incinerating apparatus and equipment; all boilers, engines, motors, dynamos,
generating equipment, piping and plumbing fixtures, water heaters, ranges,
cooking apparatus and mechanical kitchen equipment, refrigerators, freezers,
cooling, ventilating, sprinkling and vacuum cleaning systems, fire extinguishing
apparatus, gas and electric fixtures, carpeting, floor coverings, underpadding,
elevators, escalators, partitions, mantels, built-in mirrors, window shades,
blinds, draperies, screens, storm sash, awnings, furnishings of public spaces,
halls and lobbies, and shrubbery and plants, and including also all interest of
any owner of the Premises in any of such items hereafter at any time acquired
under conditional sale contract, chattel mortgage or other title retaining or
security instrument, all of which property mentioned in this clause (a) shall be
deemed part of the realty covered by this Instrument and not severable wholly
<PAGE>
or in part without material injury to the freehold of the Premises (all of the
foregoing together with replacements and additions thereto are referred to
herein as "Improvements"); and
(b) all compensation, awards, damages, rights of action and proceeds,
including interest thereon and/or the proceeds of any policies of insurance
therefor, arising out of or relating to a (i) taking or damaging of the Premises
or Improvements thereon by reason of any public or private improvement,
condemnation proceeding (including change of grade), sale or transfer in lieu of
condemnation, or fire, earthquake or other casualty, or (ii) any injury to or
decrease in the value of the Premises or the Improvements for any reason
whatsoever;
(c) return premiums or other payments upon any insurance any time
provided for the benefit of or naming METLIFE, and refunds or rebates of taxes
or assessments on the Premises;
(d) all the right, title and interest of Borrower in, to and under
all written and oral leases and rental agreements (including extensions,
renewals and subleases; all of the foregoing shall be referred to collectively
herein as the "Leases") now or hereafter affecting the Premises including,
without limitation, all rents, issues, profits and other revenues and income
therefrom and from the renting, leasing or bailment of Improvements and
equipment, all guaranties of tenants' performance under the Leases, and all
rights and claims of any kind that Borrower may have against any tenant under
the Leases or in connection with the termination or rejection of the Leases in a
bankruptcy or insolvency proceeding; and the leasehold estate in the event this
Instrument is on a leasehold;
(e) plans, specifications, contracts and agreements relating to the
design or construction of the Improvements; Borrower's rights under any payment,
performance, or other bond in connection with the design or construction of the
Improvements; all landscaping and construction materials, supplies, and
equipment used or to be used or consumed in connection with construction of the
Improvements, whether stored on the Premises or at some other location; and
contracts, agreements, and purchase orders with contractors, subcontractors,
suppliers, and materialmen incidental to the design or construction of the
Improvements;
(f) all contracts (excluding contracts relating to the printing
operations of Central Press of Miami, Inc. ("Central Press")), rights, claims or
causes of action pertaining to or affecting the Premises or the Improvements,
including, without limitation, all options or contracts to acquire other
property for use in connection with operation or development of the Premises or
Improvements, management contracts, service or supply contracts, permits,
licenses, franchises and certificates, and all commitments or agreements, now or
hereafter in existence, intended by the obligor thereof to provide Borrower with
proceeds to satisfy the loan evidenced hereby or improve the Premises or
Improvements, and the right to receive all proceeds due under such commitments
or agreements including refundable deposits and fees;
(g) all books, records, surveys, reports and other documents related
to the Premises, the Improvements, the Leases, or other items of collateral
described herein; and
(h) all additions, accessions, replacements, substitutions, proceeds
and products of the real and personal property, tangible and intangible,
described herein.
2
<PAGE>
All of the foregoing described collateral is exclusive of any
furniture, equipment, furnishings or trade fixtures owned and supplied by
Central Press or any tenant of the Premises. The Premises, the Improvements, the
Leases and all of the rest of the foregoing property are herein referred to as
the "Property."
TO SECURE TO METLIFE (a) the repayment of the indebtedness evidenced
by Borrower's note dated of even date herewith, a true and correct copy of which
is attached hereto as Exhibit B, in the principal sum of One Million Eighty-
---------
Seven Thousand Five Hundred Dollars ($1,087,500), with interest thereon at a
floating or variable rate equal to two hundred fifty-five basis points (2.55%)
in excess of the average weekly yield for thirty (30)-day commerical paper as
published in Federal Reserve Statistical Release H.15 [519], as set forth in the
----------------------------------------------
note, and all renewals, extensions and modifications thereof (herein "Note");
(b) the repayment of any future advances, with interest thereon, made by METLIFE
to Borrower pursuant to Section 28 hereof (herein "Future Advances"); (c) the
----------
payment of all other sums, with interest thereon, advanced in accordance
herewith to protect the security of this Instrument or to fulfill any of
Borrower's obligations hereunder or under the other Loan Documents (as defined
below); (d) the performance of the covenants and agreements of Borrower
contained herein or in the other Loan Documents; and (e) the repayment of all
sums now or hereafter owing to METLIFE by Borrower pursuant to any instrument
which recites that it is secured hereby. The indebtedness and obligations
described in clauses (a)-(e) above are collectively referred to herein as the
"Indebtedness." The Note, this Instrument, and all other documents evidencing,
securing or guaranteeing the Indebtedness (except any Certificate and Indemnity
Agreement Regarding Hazardous Substances), as the same may be modified or
amended from time to time, are referred to herein as the "Loan Documents." The
terms of the Note secured hereby may provide that the interest rate or payment
terms or balance due may be indexed, adjusted, renewed, or renegotiated from
time to time, and this Instrument shall continue to secure the Note
notwithstanding any such indexing, adjustment, renewal or renegotiation.
Borrower represents and warrants that it has good, marketable and
insurable title to, and has the right to mortgage an indefeasible fee simple
estate in, the Premises, Improvements, rents, and leases (or, if this Instrument
is on a leasehold, good, marketable and insurable title to, and the right to
convey the leasehold estate and that the ground lease is in full force and
effect without modification except as noted above and without default on the
part of either lessor or lessee thereunder), and the right to convey the other
Property, that the Property is unencumbered except as disclosed in writing to
and approved by METLIFE prior to the date hereof, and that Borrower will warrant
and forever defend the title to the Property against all claims and demands,
subject only to the permitted exceptions set forth in Schedule 1 attached
----------
hereto.
Borrower represents, warrants, covenants and agrees for the benefit of
METLIFE as follows:
1. PAYMENT OF PRINCIPAL AND INTEREST. Borrower shall promptly pay
---------------------------------
when due the principal of and interest on the Indebtedness, any prepayment and
other charges provided in the Loan Documents and all other sums secured by this
Instrument.
3
<PAGE>
2. FUNDS FOR TAXES, INSURANCE AND OTHER CHARGES. Upon the
--------------------------------------------
occurrence of an Event of Default (hereinafter defined), and at METLIFE's sole
option at any time thereafter, Borrower shall pay in addition to each monthly
payment on the Note, one-twelfth of the annual real estate taxes, insurance
premiums, assessments, water and sewer rates, ground rents and other charges
(herein "Impositions") payable with respect to the Property (as estimated by
METLIFE in its sole discretion), to be held by METLIFE without interest to
Borrower, for the payment of such obligations.
If the amount of such additional payments held by METLIFE ("Funds") at
the time of the annual accounting thereof shall exceed the amount deemed
necessary by METLIFE to provide for the payment of Impositions as they fall due,
such excess shall be at Borrower's option, either repaid to Borrower or credited
to Borrower on the next monthly installment or installments of Funds due. If at
any time the amount of the Funds held by METLIFE shall be less than the amount
deemed necessary by METLIFE to pay Impositions as they fall due, Borrower shall
pay to METLIFE any amount necessary to make up the deficiency within thirty (30)
days after notice from METLIFE to Borrower requesting payment thereof.
Upon Borrower's breach of any covenant or agreement of Borrower in
this Instrument, METLIFE may apply, in any amount and in any order as METLIFE
shall determine in METLIFE's sole discretion, any Funds held by METLIFE at the
time of application (i) to pay Impositions which are now or will hereafter
become due, or (ii) as a credit against sums secured by this Instrument. Upon
payment in full of all sums secured by this Instrument, METLIFE shall refund to
Borrower any Funds held by METLIFE.
3. APPLICATION OF PAYMENTS. Unless applicable law provides
-----------------------
otherwise, each complete installment payment received by METLIFE from Borrower
under the Note or this Instrument shall be applied by METLIFE first in payment
of amounts payable to METLIFE by Borrower under Section 2 hereof, then to
---------
interest payable on the Note, then to principal of the Note, and then to
interest and principal on any Future Advances in such order as METLIFE, at
METLIFE's sole discretion, shall determine. Upon Borrower's breach of any
covenant or agreement of Borrower in this Instrument, METLIFE may apply, in any
amount and in any order as METLIFE shall determine in METLIFE's sole discretion,
any payments received by METLIFE under the Note or this Instrument. Any partial
payment received by METLIFE shall, at METLIFE's option, be held in a non-
interest bearing account until METLIFE receives funds sufficient to equal a
complete installment payment.
4. CHARGES, LIENS. Borrower shall pay all Impositions attributable
--------------
to the Property in the manner provided under Section 2 hereof or, if not paid in
---------
such manner, by Borrower making payment, when due, directly to the payee
thereof, or in such other manner as METLIFE may designate in writing. If
requested by METLIFE, Borrower shall promptly furnish to METLIFE all notices of
Impositions which become due, and in the event Borrower shall make payment
directly, Borrower shall promptly furnish to METLIFE receipts evidencing such
payments. Borrower shall promptly discharge any lien which has, or may have,
priority over or equality with, the lien of this Instrument, and Borrower shall
pay, when due, the claims of all persons supplying labor or materials to or in
connection with the Property. Without METLIFE's prior written permission,
Borrower shall not allow any lien inferior to this Instrument to be perfected
against the Property. If any lien inferior to this Instrument is filed against
the Property
4
<PAGE>
without METLIFE's prior written permission and without the consent of Borrower,
Borrower shall, within thirty (30) days after receiving notice of the filing of
such lien, cause such lien to be released of record and deliver evidence of such
release to METLIFE.
5. INSURANCE. Borrower shall obtain and maintain the following
---------
types of insurance upon and relating to the Property:
(a) "All Risk" property and fire insurance (with extended coverage
endorsement including malicious mischief and vandalism) in an
amount not less than the lesser of the full replacement value of
the Property or the amount of the Indebtedness (with a deductible
not to exceed $25,000 and with co-insurance limited to a maximum
of 10% of the amount of the policy), naming METLIFE under a
lender's loss payee endorsement (form 438BFU or equivalent) and
including agreed amount, inflation guard, replacement cost and
waiver of subrogation endorsements;
(b) Comprehensive general liability insurance in an amount not less
than $1,000,000 per occurrence and $2,000,000 in the aggregate
insuring against personal injury, death and property damage and
naming METLIFE as additional insured;
(c) Business interruption insurance covering loss of rental or other
income (including all expenses payable by tenants) for up to six
(6) months; and
(d) Such other types of insurance or endorsements to existing
insurance as may be required from time to time by METLIFE.
Upon the request of METLIFE, Borrower shall increase the coverages
under any of the insurance policies required to be maintained hereunder or
otherwise modify such policies in accordance with METLIFE's request. All of the
insurance policies required hereunder shall be issued by corporate insurers
licensed to do business in the state in which the Property is located and rated
A:X or better by A.M. Best Company, and shall be in form acceptable to METLIFE.
If and to the extent that the Property is located within an area that has been
or is hereafter designated or identified as an area having special flood hazards
by the Department of Housing and Urban Development or such other official as
shall from time to time be authorized by federal or state law to make such
designation pursuant to any national or state program of flood insurance,
Borrower shall carry flood insurance with respect to the Property in amounts not
less than the maximum limit of coverage then available with respect to the
Property or the amount of the Indebtedness, whichever is less. Certificates of
all insurance required to be maintained hereunder shall be delivered to METLIFE,
along with evidence of payment in full of all premiums required thereunder,
contemporaneously with Borrower's execution of this Instrument. All such
certificates shall be in form acceptable to METLIFE and shall require the
insurance company to give to METLIFE at least thirty (30) days' prior written
notice before canceling the policy for any reason or materially amending it.
Certificates evidencing all renewal and substitute policies of insurance shall
be delivered to METLIFE, along with evidence of the payment in full of all
premiums required thereunder, at least fifteen (15) days before termination of
the policies being renewed or substituted. If any loss shall occur at any time
when Borrower shall be in default
5
<PAGE>
hereunder, METLIFE shall be entitled to the benefit of all insurance policies
held or maintained by Borrower, to the same extent as if same had been made
payable to METLIFE, and upon foreclosure hereunder, METLIFE shall become the
owner thereof. METLIFE shall have the right, but not the obligation, to make
premium payments, at Borrower's expense, to prevent any cancellation,
endorsement, alteration or reissuance of any policy of insurance maintained by
Borrower, and such payments shall be accepted by the insurer to prevent same.
If any act or occurrence of any kind or nature (including any casualty
for which insurance was not obtained or obtainable) shall result in damage to or
destruction of the Property (such event being called a "Loss"), Borrower will
give prompt written notice thereof to METLIFE. All insurance proceeds paid or
payable in connection with any Loss shall be paid to METLIFE. If (i) no Event
of Default has occurred and is continuing hereunder, (ii) Borrower provides
evidence satisfactory to METLIFE of its ability to pay all amounts becoming due
under the Note during the pendency of any restoration or repairs to or
replacement of the Property, (iii) the available insurance proceeds are, in
METLIFE's judgment, sufficient to fully and completely restore, repair or
replace the Property, and (iv) Borrower provides evidence satisfactory to
METLIFE that none of the tenants of the Property will terminate their lease
agreements as a result of either the Loss or the repairs to or replacement of
the Property, Borrower shall have the right to apply all insurance proceeds
received in connection with such Loss either (a) to restore, repair, replace and
rebuild the Property as nearly as possible to its value, condition and character
immediately prior to such Loss, or (b) to the payment of the Indebtedness in
such order as METLIFE may elect. If an Event of Default has occurred and is
continuing hereunder at the time of such Loss, if METLIFE determines that
Borrower will be unable to pay all amounts becoming due under the Note during
the pendency of any restoration or repairs to or replacement of the Property, if
the available insurance proceeds are insufficient, in METLIFE's judgment, to
fully and completely restore, repair or replace the Property or if METLIFE
believes that one or more tenants of the Property will terminate their lease
agreements as a result of either the Loss or the repairs to or replacement of
the Property, then all of the insurance proceeds payable with respect to such
Loss will be applied to the payment of the Indebtedness, or if so instructed by
METLIFE, Borrower will promptly, at Borrower's sole cost and expense and
regardless of whether sufficient insurance proceeds shall be available, commence
to restore, repair, replace and rebuild the Property as nearly as possible to
its value, condition, character immediately prior to such Loss. Borrower shall
diligently prosecute any restoration, repairs or replacement of the Property
undertaken by or on behalf of Borrower pursuant to this Section 5. All such
---------
work shall be conducted pursuant to written contracts approved by METLIFE in
writing. Notwithstanding anything contained herein to the contrary, in the
event the insurance proceeds received by METLIFE following any Loss are
insufficient in METLIFE's judgment to fully and completely restore, repair or
replace the Property, and if Borrower has complied with all of the other
conditions described in this Section 5, Borrower may elect to restore, repair or
---------
replace the Property if it first deposits with METLIFE such additional sums as
METLIFE determines are necessary in order to fully and completely restore,
repair or replace the Property. In the event any insurance proceeds remain
following the restoration, repair or replacement of the Property, such proceeds
shall be applied to the Indebtedness in such order as METLIFE may elect.
6
<PAGE>
6. PRESERVATION AND MAINTENANCE OF PROPERTY; LEASEHOLDS. Borrower
----------------------------------------------------
(a) shall not commit waste or permit impairment or deterioration of the
Property, (b) shall not abandon the Property, (c) shall restore or repair
promptly and in a good and workmanlike manner all or any part of the Property to
the equivalent of its original condition, or such other condition as METLIFE may
approve in writing, in the event of any damage, injury or loss thereto, whether
or not insurance proceeds are available to cover in whole or in part the costs
of such restoration or repair, (d) shall keep the Property, including all
improvements, fixtures, equipment, machinery and appliances thereon, in good
repair and shall replace fixtures, equipment, machinery and appliances on the
Property when necessary to keep such items in good repair, (e) shall comply with
all laws, ordinances, regulations and requirements of any governmental body
applicable to the Property, (f) if all or part of the Property is for rent or
lease, then METLIFE, at its option after the occurrence of an Event of Default,
may require Borrower to provide for professional management of the Property by a
property manager satisfactory to METLIFE pursuant to a contract approved by
METLIFE in writing, unless such requirement shall be waived by METLIFE in
writing, (g) shall generally operate and maintain the Property in a manner to
ensure maximum rentals, (recognizing, however, that the Property will be
occupied by Central Press) and (h) shall give notice in writing to METLIFE of
and, unless otherwise directed in writing by METLIFE, appear in and defend any
action or proceeding purporting to affect the Property, the security of this
Instrument or the rights or powers of METLIFE hereunder. Neither Borrower nor
Central Press, nor any tenant or other person, without the written approval of
METLIFE, shall remove, demolish or alter the Property except when incident to
the replacement of fixtures, equipment, machinery and appliances with items of
like kind.
Borrower represents, warrants and covenants that the Property is and
shall be in compliance with the Americans with Disabilities Act of 1990 and all
of the regulations promulgated thereunder, as the same may be amended from time
to time.
If this Instrument is on a leasehold, Borrower (i) shall comply with
the provisions of the ground lease, (ii) shall give immediate written notice to
METLIFE of any default by lessor under the ground lease or of any notice
received by Borrower from such lessor of any default under the ground lease by
Borrower, (iii) shall exercise any option to renew or extend the ground lease
and give written confirmation thereof to METLIFE within thirty (30) days after
such option becomes exercisable, (iv) shall give immediate written notice to
METLIFE of the commencement of any remedial proceedings under the ground lease
by any party thereto and, if required by METLIFE, shall permit METLIFE as
Borrower's attorney-in-fact to control and act for Borrower in any such remedial
proceedings and (v) shall within thirty (30) days after request by METLIFE
obtain from the lessor under the ground lease and deliver to METLIFE a lessor's
estoppel certificate in form and substance acceptable to METLIFE. Borrower
hereby expressly transfers and assigns to METLIFE the benefit of all covenants
contained in the ground lease, whether or not such covenants run with the land,
but METLIFE shall have no liability with respect to such covenants or any other
covenants contained in the ground lease.
Borrower shall neither surrender the leasehold estate and interests
herein conveyed nor terminate or cancel the ground lease creating said estate
and interests, and Borrower shall not, without the express written consent of
METLIFE, alter or amend said ground lease. There shall not be a merger of the
ground lease, or of the leasehold estate created thereby, with the fee estate
covered by the ground lease by reason of said leasehold estate or
7
<PAGE>
said fee estate, or any part of either, coming into common ownership, unless
METLIFE shall consent in writing to such merger; if Borrower shall acquire such
fee estate, then this Instrument shall simultaneously and without further action
be spread so as to become a lien on such fee estate.
7. USE OF PROPERTY. Unless required by applicable law or unless
---------------
METLIFE has otherwise agreed in writing, Borrower shall not allow changes in the
use for which all or any part of the Property was intended at the time this
Instrument was executed. Borrower shall not, without METLIFE's prior written
consent, (i) initiate or acquiesce in a change in the zoning classification
(including any variance under any existing zoning ordinance applicable to the
Property), (ii) permit the use of the Property to become a non-conforming use
under applicable zoning ordinances, (iii) file any subdivision or parcel map
affecting the Property, or (iv) amend, modify or consent to any easement or
covenants, conditions and restrictions pertaining to the Property.
8. PROTECTION OF METLIFE'S SECURITY. If Borrower fails to perform
--------------------------------
any of the covenants and agreements contained in this Instrument, or if any
action or proceeding is commenced which affects the Property or title thereto or
the interest of METLIFE therein, including, but not limited to, eminent domain,
insolvency, code enforcement, or arrangements or proceedings involving a
bankrupt or decedent, then METLIFE at METLIFE's option may make such
appearances, disburse such sums and take such action as METLIFE deems necessary,
in its sole discretion, to protect METLIFE's interest, including, but not
limited to, (i) disbursement of attorneys' fees, (ii) entry upon the Property to
make repairs, (iii) procurement of satisfactory insurance as provided in Section
-------
5 hereof, and (iv) if this Instrument is on a leasehold, exercise of any option
- -
to renew or extend the ground lease on behalf of Borrower and the curing of any
default of Borrower in the terms and conditions of the ground lease.
Any amounts disbursed by METLIFE pursuant to this Section 8, with
---------
interest thereon, shall become additional Indebtedness of Borrower secured by
this Instrument. Unless Borrower and METLIFE agree to other terms of payment,
such amounts shall be immediately due and payable and shall bear interest from
the date of disbursement at the highest rate which may be collected from
Borrower under applicable law or, at METLIFE's option, the rate stated in the
Note. Borrower hereby covenants and agrees that METLIFE shall be subrogated to
the lien of any mortgage or other lien discharged, in whole or in part, by the
Indebtedness. Nothing contained in this Section 8 shall require METLIFE to
---------
incur any expense or take any action hereunder.
9. INSPECTION. METLIFE may make or cause to be made reasonable
----------
entries upon the Property to inspect the interior and exterior thereof.
10. FINANCIAL DATA. Borrower will furnish to METLIFE within one
--------------
hundred twenty (120) days after the close of its fiscal year (i) current
financial statements of Borrower, including a balance sheet, profit and loss
statement and Borrower's most recent form 10-K prepared in accordance with
generally accepted accounting principles and practices consistently applied and,
if METLIFE so requires, accompanied by the annual audit report of an independent
certified public accountant reasonably acceptable to METLIFE, (ii) if requested
by METLIFE an annual operating statement for the immediately preceding fiscal
year, together with other
8
<PAGE>
supporting data reflecting all material information with respect to the
operation of the Property and Improvements during the period covered thereby,
and (iii) all other financial information and reports concerning Borrower or
Central Press that METLIFE may from time to time reasonably request.
11. CONDEMNATION. If the Property, or any part thereof, shall be
------------
condemned for any reason, including without limitation fire or earthquake
damage, or otherwise taken for public or quasi-public use under the power of
eminent domain, or be transferred in lieu thereof, all damages or other amounts
awarded for the taking of, or injury to, the Property shall be paid to METLIFE
who shall have the right, in its sole and absolute discretion, to apply the
amounts so received against (a) the costs and expenses of METLIFE, including
reasonable attorneys' fees incurred in connection with collection of such
amounts, and (b) the balance against the Indebtedness; provided, however, that
if (i) no Event of Default shall have occurred and be continuing hereunder, (ii)
Borrower provides evidence satisfactory to METLIFE of its ability to pay all
amounts becoming due under the Note during the pendency of any restoration or
repairs to or replacement of the Property, (iii) METLIFE determines, in its sole
discretion, that the proceeds of such award are sufficient to restore, repair,
replace and rebuild the Property as nearly as possible to its value, condition
and character immediately prior to such taking (or, if the proceeds of such
award are insufficient for such purpose, if Borrower provides additional sums to
METLIFE's satisfaction so that the aggregate of such sums and the proceeds of
such award will be sufficient for such purpose), and (iv) Borrower provides
evidence satisfactory to METLIFE that none of the tenants of the Property will
terminate their lease agreements as a result of either the condemnation or
taking or the repairs to or replacement of the Property, the proceeds of such
award, together with additional sums provided by Borrower, shall be placed in a
separate account for the benefit of METLIFE and Borrower to be used to restore,
repair, replace and rebuild the Property as nearly as possible to its value,
condition and character immediately prior to such taking. All work to be
performed in connection therewith shall be pursuant to a written contract
therefor, which contract shall be subject to the prior approval of METLIFE. To
the extent that any funds remain after the Property has been so restored and
repaired, the same shall be applied against the Indebtedness in such order as
METLIFE may elect. To enforce its rights hereunder, METLIFE shall be entitled to
participate in and control any condemnation proceedings and to be represented
therein by counsel of its own choice, and Borrower will deliver, or cause to be
delivered to METLIFE such instruments as may be requested by it from time to
time to permit such participation. In the event METLIFE, as a result of any such
judgment, decree or award, believes that the payment or performance of any of
the Indebtedness is impaired, METLIFE may declare all of the Indebtedness
immediately due and payable.
12. BORROWER AND LIEN NOT RELEASED. From time to time, METLIFE may,
------------------------------
at METLIFE's option, without giving notice to or obtaining the consent of
Borrower, Borrower's successors or assigns or of any junior lienholder or
guarantors, without liability on METLIFE's part and notwithstanding Borrower's
breach of any covenant or agreement of Borrower in this Instrument, extend the
time for payment of the Indebtedness or any part thereof, reduce the payments
thereon, release anyone liable on any of the Indebtedness, accept an extension
or modification or renewal note or notes therefor, modify the terms and time of
payment of the Indebtedness, release from the lien of this Instrument any part
of the Property, take or release other or additional security, reconvey any part
of the Property, consent to any map or plan of the Property, consent to the
granting of any easement, join in any extension or
9
<PAGE>
subordination agreement, and agree in writing with Borrower to modify the rate
of interest or period of amortization of the Note or change the amount of the
monthly installments payable thereunder. Any actions taken by METLIFE pursuant
to the terms of this Section 12 shall not affect the obligation of Borrower or
----------
Borrower's successors or assigns to pay the sums secured by this Instrument and
to observe the covenants of Borrower contained herein, shall not affect the
guaranty of any person, corporation, partnership or other entity for payment of
the Indebtedness, and shall not affect the lien or priority of the lien hereof
on the Property. Borrower shall pay METLIFE a service charge, together with such
title insurance premiums and attorneys' fees as may be incurred at METLIFE's
option, for any such action if taken at Borrower's request.
13. FORBEARANCE BY METLIFE NOT A WAIVER. Any forbearance by METLIFE
-----------------------------------
in exercising any right or remedy hereunder, or otherwise afforded by applicable
law, shall not be a waiver of or preclude the exercise of any other right or
remedy. The acceptance by METLIFE of payment of any sum secured by this
Instrument after the due date of such payment shall not be a waiver of METLIFE's
right to either require prompt payment when due of all other sums so secured or
to declare a default for failure to make prompt payment. The procurement of
insurance or the payment of taxes or other liens or charges by METLIFE shall not
be a waiver of METLIFE's right to accelerate the maturity of the Indebtedness
secured by this Instrument, nor shall METLIFE's receipt of any awards, proceeds
or damages under Sections 5 and 11 hereof operate to cure or waive Borrower's
-----------------
default in payment of sums secured by this Instrument.
14. UNIFORM COMMERCIAL CODE SECURITY AGREEMENT. This Instrument is
------------------------------------------
intended to be a security agreement pursuant to the Uniform Commercial Code for
any of the items specified above as part of the Property which, under applicable
law, may be subject to a security interest pursuant to the Uniform Commercial
Code, and Borrower hereby grants and conveys to METLIFE a first and prior
security interest in all of the Property that constitutes personalty, whether
now owned or hereafter acquired. Borrower agrees that METLIFE may file this
Instrument, or a reproduction thereof, in the real estate records or other
appropriate index, as a financing statement for any of the items specified above
as part of the Property. Any reproduction of this Instrument or of any other
security agreement or financing statement shall be sufficient as a financing
statement. In addition, Borrower agrees to execute and deliver to METLIFE, upon
METLIFE's request, any financing statements, as well as extensions, renewals and
amendments thereof, and reproductions of this Instrument in such form as METLIFE
may require to perfect a security interest with respect to the foregoing items.
Borrower shall pay all costs of filing such financing statements and any
extensions, renewals, amendments and releases thereof, and shall pay all costs
and expenses of any record searches for financing statements METLIFE may
require. Without the prior written consent of METLIFE, Borrower shall not
create or suffer to be created pursuant to the Uniform Commercial Code any other
security interest in the Property (except for Permitted Exceptions) including
replacements and additions thereto. Upon Borrower's breach of any covenant or
agreement of Borrower contained in this Instrument, including the covenants to
pay when due all sums secured by this Instrument, METLIFE shall have the
remedies of a secured party under the Uniform Commercial Code, and METLIFE may
also invoke the remedies provided in Section 26 of this Instrument as to such
----------
items. In exercising any of said remedies METLIFE may proceed against the items
of real property and any items of personal property specified above separately
or together and in any order whatsoever, without in any way affecting the
availability of METLIFE's remedies under the
10
<PAGE>
Uniform Commercial Code or of the remedies provided in Section 26 of this
----------
Instrument. Within ten (10) days following any request therefor by METLIFE,
Borrower shall prepare and deliver to METLIFE a written inventory specifically
listing all of the personal property covered by the security interest herein
granted, which inventory shall be certified by Borrower as being true, correct,
and complete.
15. LEASES OF THE PROPERTY. As used in this Section 15, the word
---------------------- ----------
"Lease" shall include subleases if this Instrument is on a leasehold. Borrower
shall comply with and observe Borrower's obligations as landlord under all
Leases of the Property or any part thereof. All Leases now or hereafter entered
into will be in form and substance subject to the approval of METLIFE. All
Leases of the Property shall specifically provide that such Leases are
subordinate to this Instrument; that the tenant attorns to METLIFE, such
attornment to be effective upon METLIFE's acquisition of title to the Property;
that the tenant agrees to execute such further evidences of attornment as
METLIFE may from time to time request; that the attornment of the tenant shall
not be terminated by foreclosure; and that METLIFE may, at METLIFE's option,
accept or reject such attornments. Borrower shall not, without METLIFE's written
consent, request or consent to the subordination of any Lease of all or any part
of the Property to any lien subordinate to this Instrument. If Borrower becomes
aware that any tenant proposes to do, or is doing, any act or thing which may
give rise to any right of set-off against rent, Borrower shall (i) take such
steps as shall be reasonably calculated to prevent the accrual of any right to a
set-off against rent, (ii) immediately notify METLIFE thereof in writing and of
the amount of said set-offs, and (iii) within ten (10) days after such accrual,
reimburse the tenant who shall have acquired such right to set-off or take such
other steps as shall effectively discharge such setoff and as shall assure that
rents thereafter due shall continue to be payable without set-off or deduction.
Upon METLIFE's receipt of notice of the occurrence of any default or violation
by Borrower of any of its obligations under the Leases, METLIFE shall have the
immediate right, but not the duty or obligation, without prior written notice to
Borrower or to any third party, to enter upon the Property and to take such
actions as METLIFE may deem necessary to cure the default or violation by
Borrower under the Leases. The costs incurred by METLIFE in taking any such
actions pursuant to this paragraph shall become part of the Indebtedness, shall
bear interest at the rate provided in the Note, and shall be payable by Borrower
to METLIFE on demand. METLIFE shall have no liability to Borrower or to any
third party for any actions taken by METLIFE or not taken pursuant to this
paragraph.
16. REMEDIES CUMULATIVE. Each remedy provided in this Instrument is
-------------------
distinct and cumulative to all other rights or remedies under this Instrument or
afforded by law or equity, and may be exercised concurrently, independently, or
successively, in any order whatsoever.
17. TRANSFERS OF THE PROPERTY OR BENEFICIAL INTERESTS IN BORROWER;
--------------------------------------------------------------
ASSUMPTION. METLIFE may, at its option, declare all sums secured by this
- ----------
Instrument to be immediately due and payable, and METLIFE may invoke any
remedies permitted by Section 26 of this Instrument, if title to the Property is
----------
changed without the prior written consent of METLIFE, which consent shall be at
METLIFE's sole discretion. Any transfer of any interest in the Property or in
the income therefrom, by sale, lease (except for leases to tenants in the
ordinary course of managing income property which are approved by METLIFE
pursuant to Section 15 of this Instrument), contract, mortgage, further
----------
encumbrance or otherwise
11
<PAGE>
(including any such transfers as security for additional financing of the
Property), and any change in the ownership interests in Borrower (including any
change in the ownership interests of any legal entities which comprise or
control Borrower), except transfers and changes in ownership by devise or
descent, shall be considered a change of title. METLIFE shall have the right to
condition its consent to any proposed sale or transfer described in this Section
-------
17 upon, among other things, METLIFE's approval of the transferee's
- --
creditworthiness and management ability and the transferee's execution, prior to
the sale or transfer, of a written assumption agreement containing such terms as
METLIFE may require, including, if required by METLIFE, the imposition of an
assumption fee of one percent (1%) of the then outstanding balance of the
Indebtedness, except in the case of a transfer to one of Borrower's direct or
indirect subsidiaries, in which case Borrower will be liable only for payment of
all third-party costs, such as METLIFE's attorneys' fees and recording costs.
Consent by METLIFE to one transfer of the Property shall not constitute consent
to subsequent transfers or waiver of the provisions of this Section 17. No
----------
transfer by Borrower shall relieve Borrower of liability for payment of the
Indebtedness. METLIFE acknowledges that Graphic is a publicly-held company and
that purchases and sales of its common stock from time to time on the NASDAQ
market and in the ordinary course of business shall not constitute a transfer of
the Property or a change in the ownership interests in Graphic pursuant to this
Section 17. Further, offerings and sales of additional securities of Graphic,
- ----------
payment of stock dividends, redemptions of stock, issuance of securities
pursuant to stock option, bonus or incentive plans or other common uses of
publicly traded securities shall not be considered to be changes in the
ownership interests in Borrower under this Section 17. METLIFE acknowledges
----------
that Central Press will occupy the Property.
18. NOTICE. Except for any notice required under applicable law to
------
be given in another manner, any and all notices, elections, demands, or requests
permitted or required to be made under this Instrument or under the Note shall
be in writing, signed by the party giving such notice, election, demand or
request, and shall be delivered personally, by telegram, or sent by registered,
certified, or Express United States mail, postage prepaid, or by Federal Express
or similar service requiring a receipt, to the other party at the address stated
above, or to such other party and at such other address within the United States
of America as any party may designate in writing as provided herein. The date of
receipt of such notice, election, demand or request shall be the earliest of (i)
the date of actual receipt, (ii) three (3) days after the date of mailing by
registered or certified mail, (iii) one (1) day after the date of mailing by
Express Mail or the delivery (for redelivery) to Federal Express or another
similar service requiring a receipt, or (iv) the date of personal delivery (or
refusal upon presentation for delivery).
19. SUCCESSORS AND ASSIGNS BOUND; JOINT AND SEVERAL LIABILITY;
----------------------------------------------------------
AGENTS; CAPTIONS. The covenants and agreements herein contained shall bind, and
- ----------------
the rights hereunder shall inure to, the respective heirs, successors and
assigns of METLIFE and Borrower, subject to the provisions of Section 17 hereof.
----------
If Borrower is comprised of more than one person or entity, whether as
individuals, partners, partnerships or corporations, each such person or entity
shall be jointly and severally liable for Borrower's obligations hereunder. In
exercising any rights hereunder or taking any actions provided for herein,
METLIFE may act through its employees, agents or independent contractors as
authorized by METLIFE. The captions and headings of the sections of this
Instrument are for convenience only and are not to be used to interpret or
define the provisions hereof.
12
<PAGE>
20. WAIVER OF STATUTE OF LIMITATIONS. Borrower hereby waives the
--------------------------------
right to assert any statute of limitations as a bar to the enforcement of the
lien of this Instrument or to any action brought to enforce the Note or any
other obligation secured by this Instrument.
21. WAIVER OF MARSHALLING. Notwithstanding the existence of any
---------------------
other security interests in the Property held by METLIFE or by any other party,
METLIFE shall have the right to determine the order in which any or all of the
Property shall be subjected to the remedies provided herein. METLIFE shall have
the right to determine the order in which any or all portions of the
Indebtedness secured hereby are satisfied from the proceeds realized upon the
exercise of the remedies provided herein. Borrower, any party who consents to
this Instrument and any party who now or hereafter acquires a security interest
in the Property and who has actual or constructive notice hereof hereby waives
any and all right to require the marshalling of assets in connection with the
exercise of any of the remedies permitted by applicable law or provided herein.
22. HAZARDOUS WASTE. Borrower has furnished to METLIFE a Phase I
---------------
Environmental Assessment dated November 16, 1993, and a Phase II Environmental
Assessment dated January 6, 1994, both prepared by Environmental Consulting &
Technology, Inc., and an Environmental Questionnaire dated June 27, 1994
(collectively, the "Report"). Except as disclosed to METLIFE in the Report,
Borrower has received no notification of any kind suggesting that the Property
or any adjacent property is or may be contaminated with any hazardous waste or
materials or is or may be required to be cleaned up in accordance with any
applicable law or regulation; and Borrower further represents and warrants that,
except as previously disclosed to METLIFE in writing, to the best of its
knowledge as of the date hereof there are no hazardous waste or materials
located in, on or under the Property or any adjacent property, or incorporated
in any Improvements, nor has the Property or any adjacent property ever been
used as a landfill or a waste disposal site, or a manufacturing, handling,
storage, distribution or disposal facility for hazardous waste or materials. As
used herein, the term "hazardous waste or materials" includes any substance or
material defined in or designated as hazardous or toxic wastes, hazardous or
toxic material, a hazardous, toxic or radioactive substance, or other similar
term, by any federal, state or local statute, regulation or ordinance now or
hereafter in effect. Borrower shall promptly comply with all statutes,
regulations and ordinances, and with all orders, decrees or judgments of
governmental authorities or courts having jurisdiction, relating to the use,
collection, treatment, disposal, storage, control, removal or cleanup of
hazardous waste or materials in, on or under the Property or any adjacent
property, or incorporated in any Improvements, at Borrower's expense. In the
event that METLIFE at any time believes that the Property is not free of all
hazardous waste or materials or that Borrower has violated any applicable
environmental law with respect to the Property, then immediately upon request by
METLIFE, Borrower shall obtain and furnish to METLIFE, at Borrower's sole cost
and expense, an environmental audit and inspection of the Property from an
expert satisfactory to METLIFE. In the event that Borrower fails to immediately
obtain such audit or inspection, METLIFE or its agents may perform or obtain
such audit or inspection at Borrower's sole cost and expense. METLIFE may, but
is not obligated to, enter upon the Property and take such actions and incur
such costs and expenses to effect such compliance as it deems advisable to
protect its interest in the Property; and whether or not Borrower has actual
knowledge of the existence of hazardous waste or materials on the Property or
any adjacent property as of the date hereof, Borrower shall reimburse METLIFE as
provided in Section 23 below for the full amount of all costs and
----------
13
<PAGE>
expenses incurred by METLIFE prior to METLIFE acquiring title to the Property
through foreclosure or acceptance of a deed in lieu of foreclosure, in
connection with such compliance activities. Neither this provision nor any of
the other Loan Documents shall operate to put METLIFE in the position of an
owner of the Property prior to any acquisition of the Property by METLIFE. The
rights granted to METLIFE herein and in the other Loan Documents are granted
solely for the protection of METLIFE's lien and security interest covering the
Property, and do not grant to METLIFE the right to control Borrower's actions,
decisions or policies regarding hazardous waste or materials.
23. ADVANCES, COSTS AND EXPENSES. Borrower shall pay within ten (10)
----------------------------
days after written demand from METLIFE all sums advanced by METLIFE and all
costs and expenses incurred by METLIFE in taking any actions pursuant to the
Loan Documents including attorneys' fees and disbursements, accountants' fees,
appraisal and inspection fees and the costs for title reports and guaranties,
together with interest thereon at the rate applicable under the Note after an
Event of Default from the date such costs were advanced or incurred. All such
costs and expenses incurred by METLIFE, and advances made, shall constitute
advances under this Instrument to protect the Property and shall be secured by
and have the same priority as the lien of this Instrument. If Borrower fails to
pay any such advances, costs and expenses and interest thereon, METLIFE may
apply any undisbursed loan proceeds to pay the same, and, without foreclosing
the lien of this Instrument, may at its option commence an independent action
against Borrower for the recovery of the costs, expenses and/or advances, with
interest, together with costs of suit, costs of title reports and guaranty of
title, disbursements of counsel and reasonable attorneys' fees incurred therein
or in any appeal therefrom.
24. ASSIGNMENT OF LEASES AND RENTS. Borrower, for good and valuable
------------------------------
consideration, the receipt of which is hereby acknowledged, to secure the
Indebtedness, does hereby absolutely and unconditionally grant, bargain, sell,
transfer, assign, convey, set over and deliver unto METLIFE all right, title and
interest of Borrower in, to and under the Leases of the Property, whether now in
existence or hereafter entered into, and all guaranties, amendments, extensions
and renewals of said Leases and any of them, and all rents, income and profits
which may now or hereafter be or become due or owing under the Leases, and any
of them, or on account of the use of the Property.
Borrower represents, warrants, covenants and agrees with METLIFE as
follows:
(a) The sole ownership of the entire lessor's interest in the
Leases is vested in Borrower, and Borrower has not, and
shall not, perform any acts or execute any other instruments
which might prevent METLIFE from fully exercising its rights
with respect to the Leases under any of the terms, covenants
and conditions of this Instrument.
(b) The Leases are and shall be valid and enforceable in
accordance with their terms and have not been and shall not
be altered, modified, amended, terminated, canceled, renewed
or surrendered except as approved in writing by METLIFE.
The terms and
14
<PAGE>
conditions of the Leases have not been and shall not be
waived in any manner whatsoever except as approved in
writing by METLIFE.
(c) Borrower shall not materially alter the term or the amount
of rent payable under any Lease without prior written notice
to METLIFE and METLIFE's consent, which shall not be
unreasonably withheld.
(d) To the best of Borrower's knowledge, there are no defaults
now existing under any of the Leases and there exists no
state of facts which, with the giving of notice or lapse of
time or both, would constitute a default under any of the
Leases.
(e) Borrower shall give prompt written notice to METLIFE of any
notice received by Borrower claiming that a default has
occurred under any of the Leases on the part of Borrower,
together with a complete copy of any such notice.
(f) Each of the Leases shall remain in full force and effect
irrespective of any merger of the interest of lessor and any
lessee under any of the leases.
(g) Borrower will not permit any Lease to become subordinate to
any lien other than the lien of this Instrument.
This assignment is absolute, is effective immediately, and is
irrevocable by Borrower so long as the Indebtedness remains outstanding.
Notwithstanding the foregoing, until a Notice is sent to Borrower in writing
that an Event of Default has occurred (which notice is hereafter called a
"Notice"), Borrower may receive, collect and enjoy the rents, income and profits
accruing from the Property.
Upon the occurrence of an Event of Default hereunder, METLIFE may, at
its option, after service of a Notice, receive and collect all such rents,
income and profits from the Property as they become due. METLIFE shall
thereafter continue to receive and collect all such rents, income and profits,
as long as such default or defaults shall exist, and during the pendency of any
foreclosure proceedings.
Borrower hereby irrevocably appoints METLIFE its true and lawful
attorney with power of substitution and with full power for METLIFE in its own
name and capacity or in the name and capacity of Borrower, from and after
service of a Notice, to demand, collect, receive and give complete acquittances
for any and all rents, income and profits accruing from the Property, either in
its own name or in the name of Borrower or otherwise, which METLIFE may deem
necessary or desirable in order to collect and enforce the payment of the rents,
income and profits of and from the Property. Lessees of the Property are hereby
expressly authorized and directed, following receipt of a Notice from METLIFE,
to pay any and all amounts due Borrower pursuant to the Leases to METLIFE or
such nominee as METLIFE may designate in a writing delivered to and received by
such lessees, and the lessees of the Property are
15
<PAGE>
expressly relieved of any and all duty, liability or obligation to Borrower in
respect of all payments so made.
Upon the occurrence of any Event of Default, from and after service of
a Notice, METLIFE is hereby vested with full power to use all measures, legal
and equitable, deemed by it to be necessary or proper to enforce this Section 24
----------
and to collect the rents, income and profits assigned hereunder, including the
right of METLIFE or its designee, to enter upon the Property, or any part
thereof, and take possession of all or any part of the Property together with
all personal property, fixtures, documents, books, records, papers and accounts
of Borrower relating thereto, and METLIFE may exclude Borrower, its agents and
servants, wholly therefrom. Borrower hereby grants full power and authority to
METLIFE to exercise all rights, privileges and powers herein granted at any and
all times after service of a Notice, with full power to use and apply all of the
rents and other income herein assigned to the payment of the costs of managing
and operating the Property and of any indebtedness or liability of Borrower to
METLIFE, including but not limited to the payment of taxes, special assessments,
insurance premiums, damage claims, the costs of maintaining, repairing,
rebuilding and restoring the improvements on the Property or of making the same
rentable, reasonable attorneys' fees incurred in connection with the enforcement
of this Instrument, and of principal and interest payments due from Borrower to
METLIFE on the Note and this Instrument, all in such order as METLIFE may
determine. METLIFE shall be under no obligation to exercise or prosecute any of
the rights or claims assigned to it hereunder or to perform or carry out any of
the obligations of the lessor under any of the Leases and does not assume any of
the liabilities in connection with or arising or growing out of the covenants
and agreements of Borrower in the Leases. It is further understood that the
assignment set forth in this Section 24 shall not operate to place
----------
responsibility for the control, care, management or repair of the Property, or
parts thereof, upon METLIFE, nor shall it operate to make METLIFE liable for the
performance of any of the terms and conditions of any of the Leases, or for any
waste of the Property by any lessee under any of the Leases, or any other
person, or for any dangerous or defective condition of the Property or for any
negligence in the management, upkeep, repair or control of the Property
resulting in loss or injury or death to any lessee, licensee, employee or
stranger.
25. DEFAULT. The following shall each constitute an event of default
-------
("Event of Default"):
(a) Failure of or refusal by Borrower to pay any portion of the
sums secured by this Instrument when due, and such failure or refusal shall
continue for a period of ten (10) days after written notice is given to Borrower
by METLIFE specifying such failure; or
(b) Failure of Borrower within the time required by this
Instrument to make any payment for taxes, insurance or for reserves for such
payments, or any other payment necessary to prevent filing of or discharge of
any lien, and such failure shall continue for a period of ten (10) days after
written notice is given to Borrower by METLIFE specifying such failure; or
(c) Failure by Borrower to observe or perform any obligations of
Borrower to METLIFE on or with respect to any transactions, debts, undertakings
or agreements other than the transaction evidenced by the Note following the
giving of any required notice and the expiration of any applicable period of
grace; or
16
<PAGE>
(d) Failure of Borrower to make any payment or perform any
obligation under any superior liens or encumbrances on the Property, within the
time required thereunder, or commencement of any suit or other action to
foreclose any superior liens or encumbrances; or
(e) Failure by Borrower to observe or perform any of its
obligations under any of the Leases; or
(f) The Property is transferred or any agreement to transfer any
part or interest in the Property in any manner whatsoever is made or entered
into without the prior written consent of METLIFE, except as specifically
allowed under this Instrument, including without limitation creating or allowing
any liens on the Property or leasing any portion of the Property; or
(g) Filing by Borrower or Central Press of a voluntary petition
in bankruptcy or filing by Borrower of any petition or answer seeking or
acquiescing in any reorganization, arrangement, composition, readjustment,
liquidation, or similar relief for itself under any present or future federal,
state or other statute, law or regulation relating to bankruptcy, insolvency or
other relief for debtors, or the seeking, consenting to, or acquiescing by
Borrower or Central Press in the appointment of any trustee, receiver,
custodian, conservator or liquidator for Borrower, any part of the Property, or
any of the income or rents of the Property, or the making by Borrower or Central
Press of any general assignment for the benefit of creditors, or the inability
of or failure by Borrower or Central Press to pay its debts generally as they
become due, or the insolvency on a balance sheet basis or business failure of
Borrower or Central Press, or the making or suffering of a preference within the
meaning of federal bankruptcy law or the making of a fraudulent transfer under
applicable federal or state law, or concealment by Borrower or Central Press of
any of its property in fraud of creditors, or the imposition of a lien upon any
of the property of Borrower or Central Press which is not discharged in the
manner permitted by Section 4 of this Instrument, or the giving of notice by
---------
Borrower or Central Press to any governmental body of insolvency or suspension
of operations; or
(h) Filing of a petition against Borrower or Central Press
seeking any reorganization, arrangement, composition, readjustment, liquidation,
or similar relief under any present or future federal, state or other law or
regulation relating to bankruptcy, insolvency or other relief for debts, or the
appointment of any trustee, receiver, custodian, conservator or liquidator of
Borrower, or Central Press of any part of the Property or of any of the income
or rents of the Property, unless such petition shall be dismissed within sixty
(60) days after such filing, but in any event prior to the entry of an order,
judgment or decree approving such petition; or
(i) The institution of any proceeding for the dissolution or
termination of Borrower voluntarily, involuntarily, or by operation of law; or
(j) A material adverse change occurs in the assets, liabilities
or net worth of Borrower or any of the guarantors of the indebtedness evidenced
by the Note from the
17
<PAGE>
assets, liabilities or net worth of Borrower or any of the guarantors of the
indebtedness evidenced by the Note previously disclosed to METLIFE; or
(k) Any warranty, representation or statement furnished to
METLIFE by or on behalf of Borrower under the Note, this Instrument, any of the
other Loan Documents or the Certificate and Indemnity Agreement Regarding
Hazardous Substances, shall prove to have been false or misleading in any
material respect; or
(l) Failure of Borrower to observe or perform any other covenant
or condition contained in the Note and such default shall continue for thirty
(30) days after notice is given to Borrower specifying the nature of the
failure. No notice of default and no opportunity to cure shall be required if
during the prior twelve (12) months METLIFE has already sent a notice to
Borrower concerning default in performance of the same obligation; or
(m) Failure of Borrower to observe or perform any other
obligation under this Instrument, any other Loan Document or the Certificate and
Indemnity Regarding Hazardous Substances when such observance or performance is
due, and such failure shall continue beyond the applicable cure period set forth
in such Loan Document, or if the default cannot be cured within such applicable
cure period, Borrower fails within such time to commence and pursue curative
action with reasonable diligence or fails at any time after expiration of such
applicable cure period to continue with reasonable diligence all necessary
curative actions. No notice of default and no opportunity to cure shall be
required if during the prior twelve (12) months METLIFE has already sent a
notice to Borrower concerning default in performance of the same obligation; or
(n) Borrower's abandonment of the Property; or
(o) Any of the foregoing events occur with respect to any tenant
of the Property, with respect to any guarantor of any of Borrower's obligations
in connection with the Indebtedness or with respect to any guarantor of any
tenant's obligations relating to the Property, or such guarantor dies or becomes
incompetent; or
(p) The occurrence of any default under any of the documents
evidencing or securing (i) METLIFE Loan No. 5905292, (ii) METLIFE Loan No.
5905392, (iii) METLIFE Loan No. 5905393, (iv) METLIFE Loan No.
5017294001 , or (v) any other indebtedness of Borrower or any of the
- -----------
guarantors of the Indebtedness which is now or hereafter owed to METLIFE.
26. RIGHTS AND REMEDIES ON DEFAULT.
------------------------------
26.1 Remedies. Upon the occurrence of any Event of Default and at
--------
any time thereafter, METLIFE may exercise any one or more of the following
rights and remedies:
(a) METLIFE may declare all sums secured by this Instrument
immediately due and payable, including any prepayment premium which Borrower
would be required to pay.
18
<PAGE>
(b) METLIFE shall have the right to foreclose this Instrument
in accordance with applicable law.
(c) In the event of any foreclosure, to the extent permitted by
applicable law, METLIFE will be entitled to a judgment which will provide that
if the foreclosure sale proceeds are insufficient to satisfy the judgment,
execution may issue for any amount by which the unpaid balance of the
obligations secured by this Instrument exceeds the net sale proceeds payable to
METLIFE.
(d) With respect to all or any part of the Property that
constitutes personalty, METLIFE shall have all rights and remedies of secured
party under the Uniform Commercial Code.
(e) METLIFE shall have the right to have a receiver appointed
to take possession of any or all of the Property, with the power to protect and
preserve the Property, to operate the Property preceding foreclosure or sale, to
collect all the rents and revenues from the Property and apply the proceeds,
over and above cost of the receivership, against the sums due under this
Instrument, and to exercise all of the rights with respect to the
Property described in Section 24 above. The receiver may serve without bond if
----------
permitted by law. METLIFE's right to the appointment of a receiver shall exist
whether or not apparent value of the Property exceeds the sums due under this
Instrument by a substantial amount. Employment by METLIFE shall not disqualify a
person from serving as a receiver.
(f) In the event Borrower remains in possession of the Property
after the Property is sold as provided above or METLIFE otherwise becomes
entitled to possession of the Property upon default of Borrower, Borrower shall
become a tenant at will of METLIFE or the purchaser of the Property and shall
pay a reasonable rental for use of the Property while in Borrower's possession.
(g) METLIFE shall have any other right or remedy provided in
this Instrument, the Note, or any other Loan Document or instrument delivered by
Borrower in connection therewith, or available at law, in equity or otherwise.
(h) METLIFE shall have all the rights and remedies set forth in
Sections 23 and 24.
- ------------------
26.2 Sale of the Property. In exercising its rights and remedies,
--------------------
METLIFE may, at METLIFE's sole discretion, cause all or any part of the Property
to be sold as a whole or in parcels, and certain portions of the Property may be
sold without selling other portions. METLIFE may bid at any public sale on all
or any portion of the Property.
26.3 Notice of Sale. METLIFE shall give Borrower reasonable notice
--------------
of the time and place of any public sale of any personal property or of the time
after which any private sale or other intended disposition of the personal
property is to be made. Reasonable notice shall mean notice given in accordance
with applicable law, including notices given in the manner and at the times
required for notices in a nonjudicial foreclosure.
19
<PAGE>
26.4 Waiver; Election of Remedies. A waiver by either party of a
----------------------------
breach of a provision of this Instrument shall not constitute a waiver of or
prejudice the party's right otherwise to demand strict compliance with that
provision or any other provision. Election by METLIFE to pursue any remedy
shall not exclude pursuit of any other remedy, and all remedies of METLIFE under
this Instrument are cumulative and not exclusive. An election to make
expenditures or take action to perform an obligation of Borrower shall not
affect METLIFE's right to declare a default and exercise its remedies under this
Instrument.
27. SATISFACTION OF MORTGAGE. Upon payment of all sums secured by
------------------------
this Instrument, METLIFE shall execute a satisfaction of this Instrument and
shall surrender this Instrument and all notes evidencing Indebtedness secured by
this Instrument to the person or persons legally entitled thereto. Such person
or persons shall pay METLIFE's costs incurred in connection with satisfaction of
this Instrument.
28. FUTURE ADVANCES. Upon request of Borrower, METLIFE, at METLIFE's
---------------
option so long as this Instrument secures Indebtedness held by METLIFE, may make
Future Advances to Borrower. Such Future Advances, with interest thereon, shall
be secured by this Instrument when evidenced by promissory notes stating that
said notes are secured hereby.
29. IMPOSITION OF TAX BY STATE.
--------------------------
29.1 State Taxes Covered. The following constitute state taxes to
-------------------
which this Section applies:
(a) A specific tax upon mortgages or upon all or any part of
the indebtedness secured by a mortgage.
(b) A specific tax on a mortgagor which the taxpayer is
authorized or required to deduct from payments on the indebtedness secured by a
mortgage.
(c) A tax on a mortgage chargeable against the mortgagee or the
holder of the note secured.
(d) A specific tax on all or any portion of the indebtedness or
on payments of principal and interest made by a mortgagor.
29.2 Remedies. If any state tax to which this Section applies is
--------
enacted subsequent to the date of this Instrument, this shall have the same
effect as an Event of Default, and METLIFE may exercise any or all of the
remedies available to it unless the following conditions are met:
(a) Borrower may lawfully pay the tax or charge imposed by
state tax, and
(b) Borrower pays the tax or charge within thirty (30) days
after notice from METLIFE that the tax law has been enacted.
20
<PAGE>
30. ATTORNEYS' FEES. In the event suit or action is instituted to
---------------
enforce or interpret any of the terms of this Instrument (including without
limitation efforts to modify or vacate any automatic stay or injunction), the
prevailing party shall be entitled to recover all expenses reasonably incurred
at, before and after trial and on appeal whether or not taxable as costs, or in
any bankruptcy proceeding including, without limitation, attorneys' fees,
witness fees (expert and otherwise), deposition costs, copying charges and other
expenses. Whether or not any court action is involved, all reasonable expenses,
including but not limited to the costs of searching records, obtaining title
reports, surveyor reports, and title insurance, incurred by METLIFE that are
necessary at any time in METLIFE's opinion for the protection of its interest or
enforcement of its rights shall become a part of the Indebtedness payable on
demand and shall bear interest from the date of expenditure until repaid at the
interest rate as provided in the Note. The term "attorneys' fees" as used in the
Loan Documents shall be deemed to mean such fees as are reasonable and are
actually incurred.
31. GOVERNING LAW; SEVERABILITY. This Instrument shall be governed
---------------------------
by the law of the State of Florida applicable to contracts made and to be
performed therein (excluding choice-of-law principles). In the event that any
provision or clause of this Instrument or the Note conflicts with applicable
law, such conflict shall not affect other provisions of this Instrument or the
Note which can be given effect without the conflicting provision, and to this
end the provisions of this Instrument and the Note are declared to be severable.
32. TIME OF ESSENCE. Time is of the essence of this Instrument.
---------------
33. CHANGES IN WRITING. This Instrument and any of its terms may
------------------
only be changed, waived, discharged or terminated by an instrument in writing
signed by the party against which enforcement of the change, waiver, discharge
or termination is sought. Any agreement subsequently made by Borrower or
METLIFE relating to this Instrument shall be superior to the rights of the
holder of any intervening lien or encumbrance.
34. NO OFFSET. Borrower's obligation to make payments and perform
---------
all obligations, covenants and warranties under this Instrument and under the
Note shall be absolute and unconditional and shall not be affected by any
circumstance, including without limitation any setoff, counterclaim, abatement,
suspension, recoupment, deduction, defense or other right that Borrower or any
guarantor may have or claim against METLIFE or any entity participating in
making the loan secured hereby. The foregoing provisions of this section,
however, do not constitute a waiver of any claim or demand which Borrower or any
guarantor may have in damages or otherwise against METLIFE or any other person,
or preclude Borrower from maintaining a separate action thereon; provided,
however, that Borrower waives any right it may have at law or in equity to
consolidate such separate action with any action or proceeding brought by
METLIFE.
35. AUTHORIZATION TO INSERT. [INTENTIONALLY DELETED.]
-----------------------
36. MAXIMUM INTEREST CHARGES.
------------------------
Notwithstanding anything contained herein or in any of the Loan
Documents to the contrary, in no event shall METLIFE be entitled to receive
interest on the loan secured by this
21
<PAGE>
Instrument (the "Loan") in amounts which, when added to all of the other
interest charged, paid to or received by METLIFE on the Loan, causes the rate of
interest on the Loan to exceed the highest lawful rate. Borrower and METLIFE
intend to comply with the applicable law governing the highest lawful rate and
the maximum amount of interest payable on or in connection with the Loan. If the
applicable law is ever judicially interpreted so as to render usurious any
amount called for under the Loan Documents, or contracted for, charged, taken,
reserved or received with respect to the Loan, or if acceleration of the final
maturity date of the Loan or if any prepayment by Borrower results in Borrower
having paid or demand having been made on Borrower to pay, any interest in
excess of the amount permitted by applicable law, then all excess amounts
theretofore collected by METLIFE shall be credited on the principal balance of
the Note (or, if the Note has been or would thereby be paid in full, such excess
amounts shall be refunded to Borrower), and the provisions of the Note, this
Instrument and any demand on Borrower shall immediately be deemed reformed and
the amounts thereafter collectible thereunder and hereunder shall be reduced,
without the necessity of the execution of any new document, so as to comply with
the applicable law, but so as to permit the recovery of the fullest amount
otherwise called for thereunder and hereunder. The right to accelerate the final
maturity date of the Loan does not include the right to accelerate any interest
which has not otherwise accrued on the date of such acceleration, and METLIFE
does not intend to collect any unearned interest in the event of acceleration.
All sums paid or agreed to be paid to METLIFE for the use, forbearance or
detention of the Loan shall, to the extent permitted by applicable law, be
amortized, prorated, allocated and spread through the full term of the Loan
until payment in full so that the rate or amount of interest on account of the
Loan does not exceed the applicable usury ceiling. By execution of this
Instrument, Borrower acknowledges that it believes the Loan to be nonusurious
and agrees that if, at any time, Borrower should have reason to believe that the
Loan is in fact usurious, it will give METLIFE written notice of its belief and
the reasons why Borrower believes the Loan to be usurious, and Borrower agrees
that METLIFE shall have ninety (90) days following its receipt of such written
notice in which to make appropriate refund or other adjustment in order to
correct such condition if it in fact exists.
IMPORTANT: READ BEFORE SIGNING. THE TERMS OF THIS
AGREEMENT SHOULD BE READ CAREFULLY BECAUSE ONLY THOSE
TERMS IN WRITING ARE ENFORCEABLE. NO OTHER TERMS OR
ORAL PROMISES NOT CONTAINED IN THIS WRITTEN CONTRACT
MAY BE LEGALLY ENFORCED. YOU MAY CHANGE THE TERMS OF
THIS AGREEMENT ONLY BY ANOTHER WRITTEN AGREEMENT.
22
<PAGE>
IN WITNESS WHEREOF, Borrower has executed this Instrument or has
caused the same to be executed by its representatives thereunto duly authorized.
BORROWER:
Signed, sealed, and delivered GRAPHIC INDUSTRIES, INC.,
in the presence of: a Georgia corporation
Martin c. Kendall By: Mark C. Pope, III
- --------------------------------- ---------------------------------------
Signature of First Witness Mark C. Pope, III, Chairman & CEO
Martin c. Kendall
- ---------------------------------
Typed Name of First Witness Attest: Donald P. Hunnicutt
-----------------------------------
Title: Coporate Secretary
Dorothy J. Atkins -----------------------------------
- ---------------------------------
Signature of Second Witness
Dorothy J. Atkins
- ---------------------------------
Typed Name of Second Witness
Exhibits:
- --------
Exhibit A - Description of Property
Exhibit B - Promissory Note
Schedule 1 - Permitted Exceptions
23
<PAGE>
STATE OF Georgia )
---------
) ss.
COUNTY OF Fulton )
--------
ACKNOWLEDGEMENT
---------------
PERSONALLY before me, the undersigned, a Notary Public in and for
said State, appeared Mark C. Pope, III, to be well-known and known by me [or
proven upon the basis of credible evidence] to be the Chairman and Chief
Executive Officer, respectively, of Graphic Industries, Inc., a Georgia
corporation, the corporation that executed the within instrument, and known to
me to be the person whose signature appears on the within instrument on behalf
of such corporation therein named, and acknowledged to me that he executed such
instrument as his own free act and deed and that such corporation executed the
within instrument as its own free act and deed, pursuant to its by-laws or a
resolution of its board of directors for the uses and purposes set forth
therein.
WITNESS my hand and official seal this 21 st day of July 1994.
-- ----
/s/ Barbara W. Luctts
------------------------
Notary Public
Notary Public, DeKalb County Georgia
My commission expires: My commission Expires
----------------------
April 7, 1998
----------------------
[SEAL]
24
<PAGE>
Loan No: 5904594-001
EXHIBIT A
(2901 Gateway Drive, Pompano Beach, Florida)
Legal Description:
- -----------------
PARCEL "A", GATEWAY INDUSTRIAL CENTER NO. 22, according to the Plat thereof, as
recorded in Plat Book 103, at Page 2, of the Public Records of Broward County,
Florida; together with a portion of PARCEL "B" of said GATEWAY INDUSTRIAL CENTER
NO. 22, more fully described as follows:
Beginning at the Southwest corner of said PARCEL "B"; thence North 0 degrees 07
minutes 20 seconds East, along the West line of said PARCEL "B", a distance of
81 feet; thence South 89 degrees 46 minutes 38 seconds East, a distance of 205
feet; thence South 47 degrees 35 minutes 06 seconds East a distance of 70.96
feet to a point on a curve; thence Southeasterly along a curve to the left,
whose tangent bears South 18 degrees 02 minutes 07 seconds East, having a radius
of 50 feet and a central angle of 60 degrees 18 minutes 20 seconds, an arc
distance of 52.63 feet to the Southeast corner of said PARCEL "B"; thence North
89 degrees 46 minutes 38 seconds West, along the South line of said PARCEL "B",
a distance of 295 feet to the Point of Beginning.
25
<PAGE>
EXHIBIT B
PROMISSORY NOTE
(2901 Gateway Drive, Pompano Beach, Florida)
$1,087,500 July 21, 1994
FOR VALUE RECEIVED, Graphic Industries, Inc., a Georgia corporation
("BORROWER"), promise to pay to the order of MetLife Capital Financial
Corporation ("METLIFE") at METLIFE's office at 10900 N.E. 4th St., Suite 500,
Bellevue, Washington 98004, attention: Real Estate Department, or at such other
address as the holder hereof may from time to time designate in writing, the
principal sum of One Million Eighty-Seven Thousand Five Hundred Dollars
($1,087,500) together with interest from the date the proceeds of the loan (the
"Loan") evidenced by this Promissory Note (this "Note") are initially disbursed
until maturity on the principal balance from time to time remaining unpaid
hereon at the Variable Rate, as follows:
From and after the date hereof (until maturity or the occurrence of an
Event of Default, as hereinafter provided), interest shall accrue on the
principal balance outstanding hereunder at a floating or variable rate equal to
two hundred fifty-five (255) basis points in excess of the average weekly yield
for thirty (30)-day commercial paper (the "Variable Rate") as published in
Federal Reserve Statistical Release H.15 [519] (the "Index"), adjusted monthly.
- ----------------------------------------------
As of the date hereof, the Variable Rate is
SEVEN AND ONE-TENTH
- --------------------------------------------------------------------------------
percent ( 7.1% ) per annum (the "Initial Rate"). Interest shall be computed on
-------
the basis of a 360-day year composed of twelve (12) months of thirty (30) days.
A single payment of interest only, representing interest through July 31, 1994,
at the Initial Rate shall be due on the date that funds are advanced hereunder.
Thereafter, principal and interest shall be payable monthly, in arrears, in one
hundred seventy-nine (179) consecutive equal monthly installments of principal
in the amount of Six Thousand Forty-One and sixty-seven hundredths Dollars
($6,041.67), plus accrued interest at the Variable Rate, beginning on September
1, 1994, and continuing on the first day of each calendar month thereafter until
August 1, 2009, at which time all unpaid principal, together with accrued but
unpaid interest, shall be due and payable. Payments shall be applied first to
accrued interest and other charges due hereunder and the remainder to principal.
If any payment shall not be paid when due and shall remain unpaid for
ten (10) days, BORROWER shall pay an additional charge equal to five percent
(5.00%) of the delinquent payment or the highest additional charge permitted by
law, whichever is less.
Upon not less than thirty (30) days advance written notice to METLIFE
at any time after the fifth (5th) anniversary of the due date of the first
monthly principal and interest payment due under this Note, BORROWER shall have
the right to prepay all, but not less than all, of the outstanding balance of
this Note on any regularly scheduled principal and interest payment date.
Prepayment prior to the fifth (5th) anniversary of the due date of the first
monthly principal and interest payment due under this Note will not be
permitted.
26
<PAGE>
BORROWER shall be liable on this Note and on all the representations,
warranties, indemnities and covenants in the Mortgage, Security Agreement,
Assignment of Leases and Rents and Fixture Filing ("Mortgage") covering the
property (the "Property") securing this Note and all other documents executed or
delivered in connection herewith (the "Loan Documents").
Each of the following shall constitute an Event of Default ("Event of
Default") hereunder and under the Mortgage executed contemporaneously herewith:
(a) Failure of or refusal by BORROWER to make any payment of
principal, interest, or Prepayment Premium upon this Note when due, and such
failure or refusal shall continue for a period of ten (10) days after written
notice is given to BORROWER by METLIFE specifying such failure; or
(b) Failure of BORROWER within the time required by the Mortgage to
make any payment for taxes, insurance or for reserves for such payments, or any
other payment necessary to prevent filing of or discharge of any lien, and such
failure shall continue for a period of ten (10) days after written notice is
given to BORROWER by METLIFE specifying such failure; or
(c) Failure by BORROWER to observe or perform any obligations of
BORROWER to METLIFE on or with respect to any transactions, debts, undertakings
or agreements other than the transaction evidenced by this Note following the
giving of any required notice and the expiration of any applicable period of
grace; or
(d) Failure of BORROWER to make any payment or perform any obligation
under any superior liens or encumbrances on the Property, within the time
required thereunder, or commencement of any suit or other action to foreclose
any superior liens or encumbrances; or
(e) Failure by BORROWER to observe or perform any of its obligations
under any of the lease agreements covering the Property; or
(f) The Property is transferred or any agreement to transfer any part
or interest in the Property in any manner whatsoever is made or entered into
without the prior written consent of METLIFE, except as specifically allowed
under the Mortgage, including without limitation creating or allowing any liens
on the Property or leasing any portion of the Property; or
(g) Filing by BORROWER or Central Press of Miami, Inc. ("Central
Press") of a voluntary petition in bankruptcy or filing by BORROWER or Central
Press of any petition or answer seeking or acquiescing in any reorganization,
arrangement, composition, readjustment, liquidation, or similar relief for
itself under any present or future federal, state or other statute, law or
regulation relating to bankruptcy, insolvency or other relief for debtors, or
the seeking, consenting to, or acquiescing by BORROWER or Central Press in the
appointment of any trustee, receiver, custodian, conservator or liquidator for
BORROWER or Central Press, any part of the Property, or any of the income or
rents of the Property, or the making by BORROWER or Central Press of any general
assignment for the benefit of creditors, or the inability of or failure
27
<PAGE>
by BORROWER or Central Press to pay its debts generally as they become due, or
the insolvency on a balance sheet basis or business failure of BORROWER or
Central Press, or the making or suffering of a preference within the meaning of
federal bankruptcy law or the making of a fraudulent transfer under applicable
federal or state law, or concealment by BORROWER or Central Press of any of its
property in fraud of creditors, or the imposition of a lien upon any of the
property of BORROWER which is not discharged in the manner permitted by the
Mortgage, or the giving of notice by BORROWER or Central Press to any
governmental body of insolvency or suspension of operations; or
(h) Filing of a petition against BORROWER or Central Press seeking
any reorganization, arrangement, composition, readjustment, liquidation, or
similar relief under any present or future federal, state or other law or
regulation relating to bankruptcy, insolvency or other relief for debts, or the
appointment of any trustee, receiver, custodian, conservator or liquidator of
BORROWER or Central Press, of any part of the Property or of any of the income
or rents of the Property, unless such petition shall be dismissed within sixty
(60) days after such filing, but in any event prior to the entry of an order,
judgment or decree approving such petition; or
(i) The institution of any proceeding for the dissolution or
termination of BORROWER voluntarily, involuntarily, or by operation of law; or
(j) A material adverse change occurs in the assets, liabilities or
net worth of BORROWER or any of the guarantors of the indebtedness evidenced by
this Note from the assets, liabilities or net worth of BORROWER or any of the
guarantors of the indebtedness evidenced by this Note previously disclosed to
METLIFE; or
(k) Any warranty, representation or statement furnished to METLIFE by
or on behalf of BORROWER under this Note, the Mortgage, or any of the Loan
Documents shall prove to have been false or misleading in any material respect;
or
(l) Failure of BORROWER to observe or perform any other covenant or
condition contained in this Note and such default shall continue for thirty (30)
days after notice is given to BORROWER specifying the nature of the failure. No
notice of default and no opportunity to cure shall be required if during the
prior twelve (12) months METLIFE has already sent a notice to BORROWER
concerning default in performance of the same obligation; or
(m) Failure of BORROWER to observe or perform any other obligation
under the Mortgage or any other Loan Document when such observance or
performance is due, and such failure shall continue beyond the applicable cure
period set forth in such Loan Document, or if the default cannot be cured within
such applicable cure period, BORROWER fails within such time to commence and
pursue curative action with reasonable diligence or fails at any time after
expiration of such applicable cure period to continue with reasonable diligence
all necessary curative actions. No notice of default and no opportunity to cure
shall be required if during the prior twelve (12) months METLIFE has already
sent a notice to BORROWER concerning default in performance of the same
obligation; or
(n) BORROWER's abandonment of the Property; or
28
<PAGE>
(o) Any of the foregoing events occur with respect to any tenant of
the Property, with respect to any guarantor of any of BORROWER's obligations in
connection with the indebtedness evidenced by this Note or with respect to any
guarantor of any tenant's obligations relating to the Property, or such
guarantor dies or becomes incompetent; or
(p) The occurrence of any default under any of the documents
evidencing or securing (i) METLIFE Loan No. 5905292, (ii) METLIFE Loan No.
5905392, (iii) METLIFE Loan No. 5905393, (iv) METLIFE Loan No.
_________________, or (v) any other indebtedness of BORROWER or any of the
guarantors of the Indebtedness which is now or hereafter owed to METLIFE.
Upon the occurrence of any of the foregoing events of default, METLIFE
shall have the option to declare the entire amount of principal and interest due
under this Note immediately due and payable without notice or demand, and
METLIFE may exercise any of its rights under this Note and any document executed
or delivered herewith. After acceleration or maturity, BORROWER shall pay
interest on the outstanding principal balance of this Note at the rate of five
percent (5.00%) per annum above Chase Manhattan Bank's prime interest rate in
effect from time to time, or fifteen percent (15.00%) per annum, whichever is
higher, provided that such interest rate shall not exceed the maximum interest
rate permitted by law.
All payments of the principal and interest on this Note shall be made
in coin or currency of the United States of America which at the time shall be
the legal tender for the payment of public and private debts.
If this Note is placed in the hands of an attorney for collection,
BORROWER agrees to pay reasonable attorneys' fees and costs incurred by METLIFE
in connection therewith, and in the event suit or action is instituted to
enforce or interpret this Note (including without limitation efforts to modify
or vacate any automatic stay or injunction), the prevailing party shall be
entitled to recover all expenses reasonably incurred at, before or after trial
and on appeal, whether or not taxable as costs, or in any bankruptcy proceeding,
or in connection with post-judgment collection efforts, including, without
limitation, attorneys' fees, witness fees (expert and otherwise), deposition
costs, copying charges and other expenses.
This Note shall be governed and construed in accordance with the laws
of the State of Florida applicable to contracts made and to be performed therein
(excluding choice-of-law principles). BORROWER hereby irrevocably submits to
the jurisdiction of any state or federal court sitting in Florida in any action
or proceeding brought to enforce or otherwise arising out of or relating to this
Note, and hereby waives any objection to venue in any such court and any claim
that such forum is an inconvenient forum.
This Note is given in a commercial transaction for business purposes.
This Note may be declared due prior to its expressed maturity date,
all in the events, on the terms, and in the manner provided for in the Mortgage.
BORROWER and all sureties, endorsers, guarantors and other parties now
or hereafter liable for the payment of this Note, in whole or in part, hereby
severally (i) waive
29
<PAGE>
demand, notice of demand, presentment for payment, notice of nonpayment, notice
of default, protest, notice of protest, notice of intent to accelerate, notice
of acceleration and all other notices, and further waive diligence in collecting
this Note or in enforcing any of the security for this Note; (ii) agree to any
substitution, subordination, exchange or release of any security for this Note
or the release of any party primarily or secondarily liable for the payment of
this Note; (iii) agree that METLIFE shall not be required to first institute
suit or exhaust its remedies hereon against BORROWER or others liable or to
become liable for the payment of this Note or to enforce its rights against any
security for the payment of this Note; and (iv) consent to any extension of time
for the payment of this Note, or any installment hereof, made by agreement by
METLIFE with any person now or hereafter liable for the payment of this Note,
even if BORROWER is not a party to such agreement.
BORROWER authorizes METLIFE or its agent to insert in the spaces
provided herein the appropriate interest rate and the payment amounts as of the
date of the initial advance hereunder.
All agreements between BORROWER and METLIFE, whether now existing or
hereafter arising and whether written or oral, are hereby limited so that in no
contingency, whether by reason of demand or acceleration of the final maturity
of this Note or otherwise, shall the interest contracted for, charged, received,
paid or agreed to be paid to METLIFE exceed the maximum amount permissible under
the applicable law. If, from any circumstance whatsoever, interest would
otherwise be payable to METLIFE in excess of the maximum amount permissible
under applicable law, the interest payable to METLIFE shall be reduced to the
maximum amount permissible under applicable law; and if from any circumstance
METLIFE shall ever receive anything of value deemed interest by applicable law
in excess of the maximum amount permissible under applicable law, an amount
equal to the excessive interest or if such excessive amount of interest exceeds
the unpaid balance of principal hereof, such excess shall be refunded to
BORROWER. All interest paid or agreed to be paid to METLIFE shall, to the extent
permitted by applicable law, be amortized, prorated, allocated, and spread
throughout the full period (including any renewal or extension) until payment in
full of the principal so that the interest hereon for such full period shall not
exceed the maximum amount permissible under applicable law. METLIFE expressly
disavows any intent to contract for, charge or receive interest in an amount
which exceeds the maximum amount permissible under applicable law. This
paragraph shall control all agreements between BORROWER and METLIFE.
IMPORTANT: READ BEFORE SIGNING. THE TERMS OF THIS
AGREEMENT SHOULD BE READ CAREFULLY BECAUSE ONLY THOSE
TERMS IN WRITING ARE ENFORCEABLE. NO OTHER TERMS OR
ORAL PROMISES NOT CONTAINED IN THIS WRITTEN CONTRACT
MAY BE LEGALLY ENFORCED. YOU MAY CHANGE THE TERMS OF
THIS AGREEMENT ONLY BY ANOTHER WRITTEN AGREEMENT.
THE DOCUMENTARY STAMPS REQUIRED TO BE PAID PURSUANT TO
FLORIDA STATUTES HAVE BEEN AFFIXED TO THE MORTGAGE,
SECURITY AGREEMENT, ASSIGNMENT OF LEASES AND RENTS, AND
FIXTURE FILING OF EVEN DATE HEREWITH
30
<PAGE>
SECURING THE INDEBTEDNESS EVIDENCED BY THIS NOTE.
IN WITNESS WHEREOF, Borrower has caused this Note to be executed by
its duly authorized officers as of the year and day first written above.
BORROWER:
GRAPHIC INDUSTRIES, INC.,
a Georgia corporation
By:____________________________________
Mark C. Pope, III, Chairman & CEO
Attest:________________________________
Title:_________________________________
31
<PAGE>
Loan No: 5904591-001
SCHEDULE 1
(2901 Gateway Drive, Pompano Beach, Florida)
Permitted Exceptions:
- --------------------
1. Deed restrictions as contained in Warranty Deeds filed August 24, 1979
in Official Records Book 8405, Page 252 (re-recorded January 11, 1980,
in Official Records Book 8667, Page 145), and filed January 11, 1980,
in Official Records Book 8665, Page 929. Water/Sewer; Setback;
Approval of Landscaping.
2. Easement granted to Florida Power & Light Company, dated January 10,
1980, and filed on February 6, 1980 in Official Records Book 8715,
Page 595.
3. Encroachment of paved parking area onto six (6') foot utility easement
on western side of subject property; onto ten (10') foot utility
easement on southern side of subject property; and onto ten (10') foot
utility easement on eastern side of subject property, as disclosed on
survey dated January 21, 1994, under Order No. 1-94-86, by Continental
Land Surveyors, Inc.
4. Encroachment of asphalt, concrete, and ramp on easement referenced in
Item 3 above as disclosed on survey dated January 21, 1994, under
Order No. 1-94-86, by Continental Land Surveyors, Inc.
5. Easements shown on the Plat of Gateway Industrial Center No. 22,
recorded in Plat Book 103, Page 2.
6. Developer's Agreement between Broward County and Plantmasters Nursery,
Inc. dated November 20, 1979, and recorded on December 3, 1979, in
Official Records Book 8590, Page 415, and also recorded November 13,
1986, in Official Records Book 13897, Pages 311 through 326.
RECORDED IN THE
OFFICIAL RECORDS
BOOK OF BROWARD
COUNTY, FLORIDA
COUNTY ADMINISTRATOR
32
<PAGE>
Loan No. 5904594-001
SECURITY AGREEMENT
(2901 Gateway Drive, Pompano Beach, Florida)
Debtor:
Name: Graphic Industries, Inc., a Georgia corporation
Address: 2155 Monroe Drive, N.E.
Atlanta, Georgia 30324
Secured Party:
Name: MetLife Capital Financial Corporation, a Delaware
Address: corporation
Real Estate Department
10900 N.E. 4th Street, Suite 500
Bellevue, Washington 98004
Debtor, for valuable consideration, hereby grants to Secured Party a
security interest in the property listed on Exhibit B hereto, and any and all
---------
additions and substitutions thereto (the "Collateral") (i) to secure payment of
the indebtedness evidenced by that certain promissory note of even date
herewith, payable to the order of Secured Party, in the principal amount of One
Million Eighty-Seven Thousand Five Hundred Dollars ($1,087,500) (the "Note") and
(ii) to secure all other obligations of Debtor arising under all documents
securing or executed in connection with the Note, except any Certificate and
Indemnity Agreement Regarding Hazardous Substances or Environmental Indemnity
Agreement (the "Loan Documents").
Debtor expressly warrants and covenants:
1. Except for the security interest granted hereby, Debtor is, or to
the extent that this Security Agreement states that the
Collateral is to be acquired after the date hereof, will be, the
owner of the Collateral free from any lien, security interest or
encumbrance. Debtor shall defend the Collateral against all
claims and demands of all persons at any time claiming the same
or any interest therein.
2. The Collateral is used or bought primarily for use in the
business of Debtor.
3. Debtor's business address is as stated above. The Collateral is
located at or on or is used or owned for or in connection with
the real estate situated in Pompano Beach, Florida, and described
on the attached Exhibit A herein incorporated by this reference
---------
(the "Property").
4. Debtor shall notify Secured Party of any change in the location
of the Collateral or any change in Debtor's principal place of
business.
<PAGE>
5. Debtor shall pay all taxes and assessments of every nature which
may be levied or assessed against the Collateral.
6. Debtor shall not permit or allow any lien, security interest or
encumbrance whatsoever upon the Collateral and shall not permit
the Collateral to be attached or replevied.
7. The Collateral is in good condition and Debtor shall keep the
Collateral in good condition and from time to time, forthwith,
replace and repair all such parts of the Collateral as may be
broken, worn out, or damaged without allowing any lien to be
created upon the Collateral on account of such replacement or
repairs. Secured Party may examine and inspect the Collateral at
any time, wherever located.
8. Debtor will not use the Collateral in violation of any applicable
statutes, regulations or ordinances.
9. Notwithstanding anything else contained herein to the contrary,
Secured Party has been advised that certain personal property
will be leased to Debtor, and Secured Party's interest therein
shall be subordinate to lessor's interest therein.
Until default Debtor may have possession of the Collateral and use it
in any lawful manner, and upon default Secured Party shall have the immediate
right to the possession of the Collateral.
Debtor shall be in default under this Security Agreement upon the
happening of any of the following events (an "Event of Default"):
(a) default in the payment or performance of any obligation,
covenant or liability contained or referred to in this
Security Agreement and such default shall continue for a
period of thirty (30) days after written notice is given to
Debtor by Secured Party specifying such default; or
(b) the occurrence of an Event of Default as defined under the
Note, any instrument securing the Note, including the
Mortgage, Security Agreement, Assignment of Leases and Rents
and Fixture Filing securing the Note (the "Mortgage"), any
other Loan Document, or the Certificate and Indemnity
Agreement Regarding Hazardous Substances or the
Environmental Indemnity Agreement; or
(c) loss, theft, damage or destruction to or of any of the
Collateral which shall materially and substantially diminish
the aggregate value of the Collateral, the sale or
encumbrance of any of the Collateral, or the making of any
levy, seizure or attachment on or
2
<PAGE>
to the Collateral (subject in each instance to the
applicable provisions of the Mortgage).
Upon an Event of Default and at any time thereafter, Secured Party may
declare the Note immediately due and payable and shall have the remedies of a
secured party under the Articles of the Florida Uniform Commercial Code.
Secured Party may require Debtor to assemble the Collateral and deliver or make
it available to Secured Party at a place to be designated by Secured Party which
is reasonably convenient to both parties.
Secured Party may require that the Collateral be sold at a public sale
at the same time and place as the sale of the Property, or Secured Party may
sell the Collateral at one or more other public or private sales in accordance
with the Florida Uniform Commercial Code. The Collateral shall not be required
to be exhibited, presented or displayed at any sale. In the event that the
Collateral is sold under the Mortgage, Secured Party hereby assigns its security
interest in the Collateral to the trustee or Sheriff selling the Property under
the Mortgage. Debtor agrees that a sale of the Collateral under the Mortgage
and the notices required under the laws of Florida for the sale of real property
are commercially reasonable and adequate under the Florida Uniform Commercial
Code.
Debtor agrees to pay to Secured Party in addition to the indebtedness
secured hereby, all expenses of retaking, holding, preparing for sale and
selling incurred by Secured Party in connection with realization on the
Collateral including reasonable attorneys' fees and costs. In addition, in the
event suit or action is instituted to enforce or interpret this Agreement
(including without limitation efforts to modify or vacate any automatic stay or
injunction), the prevailing party shall be entitled to recover all expenses
reasonably incurred at, before or after trial and on appeal whether or not
taxable as costs, or in any bankruptcy proceeding, including, without
limitation, attorneys' fees, witness fees (expert and otherwise), deposition
costs, copying charges and other expenses.
No waiver by Secured Party of an Event of Default shall operate as a
waiver of any other default or of the same default on a future occasion. The
taking of this Security Agreement shall not waive or impair any other security
said Secured Party may have or hereafter acquire for the payment of the Note nor
shall the taking of any such additional security waive or impair this Security
Agreement. Secured Party may resort to any security it may have in the order it
may deem proper.
All rights of Secured Party hereunder shall inure to the benefit of
its successors and assigns. All promises and duties of Debtor shall bind its
successors and assigns.
Any and all notices, elections, demands, or requests permitted or
required to be made under this Security Agreement shall be in writing, signed by
the party giving such notice, election, demand or request, and shall be
delivered personally, by telegram, or sent by registered, certified, or Express
United States mail, postage prepaid, or by Federal Express or similar service
requiring a receipt, to the other party at the address set forth above or to
such other party and at such other address within the United States of America
as any party may designate as provided herein. The date of receipt of such
notice, election, demand or request shall be the earliest of (i) the date of
actual receipt, (ii) three (3) days after the date of mailing by
3
<PAGE>
registered or certified mail, (iii) one (1) day after the date of mailing by
Express Mail, or the delivery (for redelivery) to Federal Express or another
similar service requiring a receipt, or (iv) the date of personal delivery (or
refusal upon presentation for delivery).
This Security Agreement shall be governed and construed in accordance
with the laws of the State of Florida.
IN WITNESS WHEREOF, Debtor has executed this Security Agreement as of
July 21, 1994.
DEBTOR:
GRAPHIC INDUSTRIES, INC.,
a Georgia corporation
/s/ Mark C. Pope III
By:----------------------------------------------
Mark C. Pope, III, Chairman & CEO
/s/ Donald P. Hunnicutt
Attest:------------------------------------------
Secretary
Title:-------------------------------------------
Exhibits:
- --------
Exhibit A - Legal Description
Exhibit B - Personal Property
Loan No: 5904594-001
4
<PAGE>
EXHIBIT A
(2901 Gateway Drive, Pompano Beach, Florida)
Legal Description:
- -----------------
PARCEL "A", GATEWAY INDUSTRIAL CENTER NO. 22, according to the Plat thereof, as
recorded in Plat Book 103, at Page 2, of the Public Records of Broward County,
Florida; together with a portion of PARCEL "B" of said GATEWAY INDUSTRIAL CENTER
NO. 22, more fully described as follows:
Beginning at the Southwest corner of said PARCEL "B"; thence North 0 degrees 07
minutes 20 seconds East, along the West line of said PARCEL "B", a distance of
81 feet; thence South 89 degrees 46 minutes 38 seconds East, a distance of 205
feet; thence South 47 degrees 35 minutes 06 seconds East a distance of 70.96
feet to a point on a curve; thence Southeasterly along a curve to the left,
whose tangent bears South 18 degrees 02 minutes 07 seconds East, having a radius
of 50 feet and a central angle of 60 degrees 18 minutes 20 seconds, an arc
distance of 52.63 feet to the Southeast corner of said PARCEL "B"; thence North
89 degrees 46 minutes 38 seconds West, along the South line of said PARCEL "B",
a distance of 295 feet to the Point of Beginning.
5
<PAGE>
EXHIBIT B
(2901 Gateway Drive, Pompano Beach, Florida)
Secured Party: MetLife Capital Financial Corporation
- -------------
Debtor: Graphic Industries, Inc.
- ------
Loan No.: 5904594-001
- --------
All right, title, and interest of Debtor in
1. All buildings, structures, improvements, parking areas,
landscaping, fixtures and articles of property now or hereafter attached to, and
used or adapted for use in the operation of the real estate (herein the
"Premises") described in Exhibit "A" attached to the financing statement or
security agreement with respect to which this Exhibit "B" is attached, including
but without being limited to, all heating, air conditioning, and incinerating
apparatus and equipment; all boilers, engines, motors, dynamos, generating
equipment, piping and plumbing fixtures, water heaters, ranges, cooking
apparatus and mechanical kitchen equipment, refrigerators, freezers, cooling,
ventilating, sprinkling and vacuum cleaning systems, fire extinguishing
apparatus, gas and electric fixtures, carpeting, floor coverings, underpadding,
elevators, escalators, partitions, mantels, built-in mirrors, window shades,
blinds, draperies, screens, storm sash, awnings, furnishings of public spaces,
halls and lobbies, and shrubbery and plants, and including also all interest of
any owner of the Premises in any of such items hereafter at any time acquired
under conditional sale contract, chattel mortgage or other title retaining or
security instrument, all of which property mentioned in this paragraph 1 shall
be referred to as the "Improvements" and shall be deemed part of the realty and
not severable wholly or in part without material injury to the freehold of the
Premises.
2. All compensation, awards, damages, rights of action and proceeds,
including interest thereon and/or the proceeds of any policies of insurance
therefor, arising out of or relating to a (a) taking or damaging of the Premises
or Improvements thereon by reason of any public or private improvement,
condemnation proceeding (including change of grade), sale or transfer in lieu of
condemnation, or fire, earthquake or other casualty, or (b) any injury to or
decrease in the value of the Premises or the Improvements for any reason
whatsoever.
3. Return premiums or other payments upon any insurance any time
provided for the benefit of or naming Secured Party, and refunds or rebates of
taxes or assessments on the Premises.
4. All written and oral leases and rental agreements (including
extensions, renewals and subleases; all of the foregoing shall be referred to
collectively herein as the "Leases") now or hereafter affecting the Premises
including, without limitation, all rents, issues, profits and other revenues and
income therefrom and from the renting, leasing or bailment of
6
<PAGE>
Improvements and equipment, all guaranties of tenants' performance under the
Leases, and all rights and claims of any kind that Debtors may have against any
tenant under the Leases or in connection with the termination or rejection of
the Leases in a bankruptcy or insolvency proceeding.
5. Plans, specifications, contracts and agreements relating to the
design or construction of the Improvements; Debtor's rights under any payment,
performance, or other bond in connection with the design or construction of the
Improvements; all landscaping and construction materials, supplies, and
equipment used or to be used or consumed in connection with construction of the
Improvements, whether stored on the Premises or at some other location; and
contracts, agreements, and purchase orders with contractors, subcontractors,
suppliers, and materialmen incidental to the design or construction of the
Improvements.
6. All contracts (excluding contracts relating to the printing
operations of The Central Press of Miami, Inc.), rights, claims or causes of
action pertaining to or affecting the Premises or the Improvements, including,
without limitation, all options or contracts to acquire other property for use
in connection with operation or development of the Premises or Improvements,
management contracts, service or supply contracts, deposits, permits, licenses,
franchises and certificates, and all commitments or agreements, now or hereafter
in existence, intended by the obligor thereof to provide Debtor with proceeds to
satisfy the loan evidenced hereby or improve the Premises or Improvements, and
the right to receive all proceeds due under such commitments or agreements
including refundable deposits and fees.
7. All books, records, surveys, reports and other documents related
to the Premises, the Improvements, the Leases, or other items of collateral
described herein.
8. All additions, accessions, replacements, substitutions, proceeds
and products of the real and personal property, tangible and intangible,
described herein.
All of the foregoing described collateral is exclusive of any
furniture, equipment, furnishings or trade fixtures owned and supplied by The
Central Press of Miami, Inc., or any tenant of the Premises.
7
<PAGE>
EXHIBIT 10 (ooo)
ADVANCING PROMISSORY NOTE
CONVERTING TO A TERM NOTE
(this "Note")
<TABLE>
<CAPTION>
=======================================================================================
U.S. $2,250,000.00 September 14, 1994 (the "DATE")
- ---------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
ACCOUNT NUMBER: NOTE NUMBER: RENEWAL CODE: ANALYST: OFFICER:
------- --------- ------------ NEW LH JJL
=======================================================================================
</TABLE>
ON OR BEFORE October 1, 2000 ("Stated Maturity Date"), FOR VALUE RECEIVED,
WETMORE & COMPANY (the "Maker", jointly and severally if more than one),
promises to pay to the order of TEXAS COMMERCE BANK NATIONAL ASSOCIATION
("Payee") at its banking house at 712 Main Street, P.O. Box 2558 Houston,
Harris County, TX 77252 or at such other location as Payee may designate, in
lawful money of the United States of America, the sum of TWO MILLION TWO
HUNDRED FIFTY THOUSAND AND NO/100THS UNITED STATES DOLLARS (U.S. $2,250,000.00)
(the "Maximum Amount of Note") or the aggregate unpaid amount of all advances
or loans ("Loans") hereunder, whichever is the lesser amount, together with
interest on the said principal or so much thereof as may from time to time be
advanced and outstanding hereunder computed from the date of each Loan until
the maturity hereof (howsoever brought about). Each Loan shall be due and
payable on the Maturity Date agreed to by the Payee and the Maker with respect
to such Loan (the "Maturity Date"). Subject to the limitations set forth
herein, Maker may borrow and repay hereunder and there is no limitation on the
number of Loans made hereunder prior to the Advance Termination Date (as
-------------------------------------
hereinafter defined) so long as the total unpaid principal amount at anytime
outstanding does not exceed the Maximum Amount of Note.
The Loans may be either, Alternate Base Rate Loans (as hereinafter
defined) or Eurodollar Loans (as hereinafter defined).
The Maker shall pay interest on each Alternate Base Rate Loan for the
Interest Period (as hereinafter defined) with respect thereto at a rate per
annum equal to the lesser of: (i) the Alternate Base Rate (as hereinafter
defined) in effect from time to time plus one half percent (1/2%) (the
"Effective Alternate Base Rate"); or (ii) the Highest Lawful Rate (as
hereinafter defined), which interest shall be due and payable on the first day
of each month.
The Maker shall pay interest on each Eurodollar Loan for the Interest
Period with respect thereto on the unpaid principal amount thereof at a rate per
annum equal to the lesser of: (i) the Eurodollar Rate (as hereinafter defined)
plus three percent (3%) (the "Effective Eurodollar Rate"); or (ii) the Highest
Lawful Rate, which interest shall be due and payable on the first day of each
month.
Any amount not paid when due with respect to principal (whether at
Maturity Date, by acceleration or otherwise), costs, expenses, and to the extent
permitted by applicable law, interest, shall bear interest at a rate per annum
equal to the lesser of: (i) the Alternate Base Rate in effect from time to time
plus five percent (5%); or (ii) the Highest Lawful Rate, which interest shall be
due and payable on demand. The principal of any Loan shall be deemed past due if
not paid on or before the Maturity Date or any earlier maturity date resulting
from acceleration in accordance with the terms of this Note or as provided by
law or otherwise. Interest accrued and unpaid with respect to any Loan shall be
deemed past due if not paid on or before the applicable interest payment due
date as provided for herein.
Notwithstanding the foregoing, if at any time the effective rate of
interest which would otherwise be payable on any Loan evidenced by this Note
exceeds the Highest Lawful Rate, the rate of interest to accrue on the unpaid
principal balance of such Loan during all such times shall be limited to the
Highest Lawful Rate, but any subsequent reductions in such interest rate shall
not become effective to reduce such interest rate below the Highest Lawful Rate
until the total amount of interest accrued on the unpaid principal balance of
such Loan equals the total amount of interest which would have accrued if the
Effective Alternate Base Rate, or Effective Eurodollar Rate, whichever is
applicable, had at all times been in effect.
Each Loan shall be in an amount not less than $100,000.00 and an
integral multiple of $100,000.00. Interest with respect to Alternate Base Rate
Loans shall be calculated on the basis of a 365 day year or 366 day year, as the
case may be, for the actual number of days elapsed. Interest with respect to
Eurodollar Loans shall be calculated on the basis of a 360 day year for the
actual days elapsed, unless such calculation would result in a usurious interest
rate, in which case such interest shall be calculated on the basis of a 365 day
or 366 day year, as the case may be.
The following terms shall have the respective meanings indicated:
"Alternate Base Rate" shall mean for any day, a rate per annum (rounded
upwards, if necessary, to the next higher 1/16 of 1%) equal to the greatest
of: (a) the Prime Rate in effect on such day; (b) the Base CD Rate in
effect on such day plus 1%; and (c) the Federal Funds Effective Rate in
effect on such day plus 1/2 of 1%. For purposes hereof, "Prime Rate" shall
mean the rate of interest per annum determined from time to time by the
Payee as its prime rate in effect at its principal office in Houston, Texas
and thereafter entered in the minutes of its Loan and Discount Committee;
each change in the Prime Rate shall be effective on the date such change is
determined; without special notice to the Maker or any other person or
entity. THE PRIME RATE IS A REFERENCE RATE AND DOES NOT NECESSARILY
REPRESENT THE LOWEST OR BEST RATE ACTUALLY CHARGED TO ANY CUSTOMER AND ANY
STATEMENT, REPRESENTATION OR WARRANTY IN THAT REGARD OR TO THAT EFFECT IS
EXPRESSLY DISCLAIMED BY PAYEE. PAYEE MAY MAKE LOANS AT RATES OF INTEREST
AT, ABOVE OR BELOW THE PRIME RATE. "Base CD Rate" shall mean an interest
rate per annum determined by the Payee to be the sum of: (a) the rate per
annum obtained by dividing: (i) the Three-Month Secondary CD Rate by (ii)
--------
Statutory Reserves; plus (b) the Assessment Rate. "Three-Month Secondary CD
Rate" shall mean, for any day, the secondary market rate for three-month
certificates of deposit reported as being in effect on such day (or, if
such day shall not be a Business Day, the next preceding Business Day) by
the Board through the public information telephone line of the Federal
Reserve Payee of New York (which rate will, under the current practices of
the Board, be published in Federal Reserve Statistical Release H.15(519)
during the week following such day), or, if such rate shall not be so
reported on such day or such next preceding Business Day, the average of
the secondary market quotations for three-month certificates of deposit of
major money center banks in New York City received at approximately 10:00
a.m., New York City time, on such day (or, if such day shall not be a
Business Day, on the next preceding Business Day) by the Payee from three
New York City negotiable certificate of deposit dealers of recognized
standing selected by Payee. "Federal Funds Effective Rate" shall mean, for
any day, the weighted average of the rates on overnight Federal funds
transactions with members of the Federal Reserve System arranged by Federal
funds brokers, as published on the next succeeding Business Day by the
Federal Reserve Bank of New York, or, if such rate is not so published for
any day which is a Business Day, the average of the quotations for the day
of such transactions received by the Payee from three Federal funds brokers
of recognized standing selected by Payee. If for any reason the Payee shall
have determined (which determination shall be conclusive absent manifest
error) that it is unable to ascertain the Base CD Rate or the Federal Funds
Effective Rate, or both, for any reason, including the inability or failure
of the Payee to obtain sufficient quotations in accordance with the terms
thereof, the Alternate Base Rate shall be determined without regard to
clause (b) or (c), or both, of the first sentence of this definition, as
appropriate, until the circumstances giving rise to such inability no
longer exist. Any change in the Alternate Base Rate due to a change in the
Prime Rate, the Three-Month Secondary CD Rate or the Federal Funds
Effective Rate shall be effective on the effective date of such change in
the Prime Rate, the Three-Month Secondary CD Rate or the Federal Funds
Effective Rate, respectively.
"Alternate Base determined by reference to the Alternate Base Rate.
<PAGE>
Advancing Promissory Note
Converting to a Term Note
Wetmore & Company
September 14, 1994
"Assessment Rate" means, for any date, the annual rate (rounded upwards,
if not already a whole multiple of 1/16 of 1%, to the next higher 1/16 of
1%) most recently estimated by the Payee as the then current net annual
assessment rate that will be employed in determining amounts payable by the
Payee to the Federal Deposit Insurance Corporation for insurance by the
Corporation of time deposits made in dollars at its domestic offices.
"Board" shall mean the Board of Governors of the Federal Reserve System
of the United States.
"Borrowing Date" means any Business Day on which the Payee shall make a
Loan hereunder.
"Business Day" means a day: (i) on which the Payee and commercial banks
in New York City are generally open for business; and (ii) with respect to
Eurodollar Loans, on which dealings in United States Dollar deposits are
carried out in the Eurodollar interbank markets.
"Eurodollar Lending Office" means the office of the Payee located at 712
Main Street, Houston, Texas, or such other office of the Payee as the Payee
may from time to time specify to the Maker.
"Eurodollar Loan" means a Loan which bears interest at a rate determined
by reference to the Eurodollar Rate.
"Eurodollar Rate" means, for each Eurodollar Loan, an interest rate per
annum determined by the Payee by dividing: (i) the rate per annum
--------
determined by the Payee at or before 10:00 a.m. (Houston time) (or as soon
thereafter as practicable) two Business Days before the first day of such
Interest Period to be the rate per annum at which deposits of dollars are
offered to the Payee by prime banks in whatever Eurodollar interbank market
may be selected by the Payee in its sole discretion, acting in good faith,
at the time of determination and in accordance with the usual practice in
such market for delivery on the first day of such Interest Period in
immediately available funds and for a period equal to such Interest Period
and in an amount substantially equal to the amount of the Payee's
Eurodollar Loan during such Interest Period; by (ii) Statutory Reserves.
"Highest Lawful Rate" as used herein shall mean the maximum nonusurious
interest rate permitted from time to time to be contracted for, taken,
reserved, charged or received on any Loan under applicable federal or Texas
laws, whichever permits the higher lawful rate; provided, however, that in
the event: (i) such maximum nonusurious rate in effect on the date of such
Loan; and (ii) applicable law permits contracting for, taking, reserving,
charging, and receiving on such Loan throughout the duration thereof the
maximum nonusurious rate in effect on the date such Loan was made, then and
at all such times the Highest Lawful Rate shall be the maximum nonusurious
rate permitted to be contracted for, taken, reserved, charged or received
on such Loan under applicable law in effect on the date of such Loan. At
all such times, if any, as Texas law shall establish the Highest Lawful
Rate, the Highest Lawful Rate shall be the "indicated rate ceiling" (as
defined in Tex. Rev. Civ. Stat. art. 5069-1.04) from time to time in
effect.
"Interest Period" means, with respect to any Loan, the period commencing
on the Borrowing Date and ending on the Maturity Date, consistent with the
following provisions. The duration of each Interest Period shall be: (a) in
the case of an Alternate Base Rate Loan, a period of up to the Stated
Maturity Date; and (b) in the case of a Eurodollar Loan, 1, 2, 3 or 6
months; in each case as selected by the Maker and agreed to by the Payee at
Payee's sole discretion. The Maker's choice of Interest Period is also
subject to the following limitations: (i) No Interest Period shall end on a
date after the Stated Maturity Date; and (ii) If the last day of an
Interest Period would be a day other than a Business Day, the Interest
Period shall end on the next succeeding Business Day (unless the Interest
Period relates to a Eurodollar Loan and the next succeeding Business Day is
in a different calendar month than the day on which the Interest Period
would otherwise end, in which case the Interest Period shall end on the
next preceding Business Day).
"Statutory Reserves" shall mean the difference (expressed as a decimal)
----------
of the number one minus the aggregate of the maximum reserve percentages
(including, without limitation, any marginal, special, emergency, or
supplemental reserves) expressed as a decimal established by the Board and
any other banking authority to which the Payee is subject: (a) with respect
to the CD Rate, for new negotiable time deposits in dollars of over
$100,000 with maturities approximately equal to the applicable Interest
Period; and (b) with respect to the Eurodollar Rate, for Eurocurrency
Liabilities (as defined in Regulation D of the Board). Such reserve
percentages shall include, without limitation, those imposed under such
Regulation D. Eurodollar Loans shall be deemed to constitute Eurocurrency
Liabilities and as such shall be deemed to be subject to such reserve
requirements without benefit of or credit for proration, exceptions or
offsets which may be available from time to time to any Payee under such
Regulation D. Statutory Reserves shall be adjusted automatically on and as
of the effective date of any change in any reserve percentage.
Any Loan which the Payee agrees to make hereunder shall be made on the
Maker's irrevocable notice, given not later than 10:00 A.M. (Houston time) on,
in the case of Eurodollar Loans, the third Business Day prior to the proposed
Borrowing Date or, in the case of Alternate Base Rate Loans, the first Business
Day prior to the proposed Borrowing Date, from the Maker to the Payee. Each such
notice of a requested borrowing (a "Notice of Requested Borrowing") under this
paragraph may be oral or written, and shall specify: (i) the requested amount of
such Loan; (ii) the proposed Borrowing Date; (iii) whether the requested Loan is
to be an Alternate Base Rate Loan, or Eurodollar Loan; and (iv) the Interest
Period for such Loan. If any Notice of Requested Borrowing shall be oral, the
Maker shall deliver to the Payee prior to the Borrowing Date a confirmatory
written Notice of Requested Borrowing.
If at any time the Payee determines in good faith (which determination
shall be conclusive) that any change in any applicable law, rule or regulation
or in the interpretation, application or administration thereof makes it
unlawful, or any central bank or other governmental authority asserts that it is
unlawful, for the Payee or its foreign branch or branches to maintain or fund
any Loan by means of dollar deposits obtained in any Eurodollar interbank market
(any of the above being described as a "Eurodollar Event"), then, at the option
of the Payee, the aggregate principal amount of the Payee's Eurodollar Loans
then outstanding, which Loans are directly affected by such Eurodollar Event,
shall be prepaid by the Maker. Upon the occurrence of any Eurodollar Event, and
at any time thereafter so long as such Eurodollar Event shall continue, the
Payee may exercise its aforesaid option by giving written notice thereof to the
Maker.
Any prepayment of any Eurodollar Loan which is required under the
preceding paragraph shall be made, together with accrued and unpaid interest and
all other amounts payable to the Payee under this Note with respect to such
prepaid Eurodollar Loan on the date stated in the notice to the Maker referred
to above, which date ("required prepayment date") shall be not less than 15 days
from the date of such notice. If any Eurodollar Loan is required to be prepaid
under the preceding paragraph, the Payee shall make on the required prepayment
date an Alternate Base Rate Loan in the same principal amount and with an
Interest Period ending on the same day as the Eurodollar Loan so prepaid.
<PAGE>
Advancing Promissory Note
Converting to a Term Note
Wetmore & Company
September 14, 1994
If any domestic or foreign law, treaty, rule or regulation (whether now
in effect or hereinafter enacted or promulgated, including Regulation D of the
Board of Governors of the Federal Reserve System) or any interpretation or
administration thereof by any governmental authority charged with the
interpretation or administration thereof (whether or not having the force of
law): (a) changes, imposes, modifies, applies or deems applicable any reserve,
special deposit or similar requirements in respect of any such Loan (excluding
those for which the Payee if fully compensated pursuant to adjustments made in
the definition of the CD Rate) or against assets of, deposits with or for the
account of, or credit extended or committed by, the Payee; or (b) imposes on the
Payee or the interbank eurocurrency deposit and transfer market or the market
for domestic bank certificates or deposit any other condition affecting any such
Loan; and the result of any of the foregoing is to impose a cost to the Payee of
agreeing to make, funding or maintaining any such Loan or to reduce the amount
of any sum receivable by the Payee in respect of any such Loan, then the Payee
may notify the Maker in writing of the happening of such event and Maker shall
upon demand pay to the Payee such additional amounts as will compensate the
Payee for such costs. Without prejudice to the survival of any other agreement
of the Maker under this Note, the obligations of the Maker under this paragraph
shall survive the termination of this Note.
The Maker may on any Business Day prepay the outstanding principal
amount of any Alternate Base Rate Loan, in whole or in part, together with
accrued interest to the date of such prepayment on the principal amount prepaid.
Partial prepayments shall be in an aggregate principal amount of $100,000.00 or
a greater integral multiple of $100,000.00. Except as specified in this
paragraph, the Maker shall have no right to prepay any Loan.
The Maker will indemnify the Payee against, and reimburse the Payee on
demand for, any loss, cost or expense incurred or sustained by the Payee
(including without limitation any loss, cost or expense incurred by reason of
the liquidation or reemployment of deposits or other funds acquired by the Payee
to fund or maintain Loans bearning interest at the Eurodollar Rate) as a result
of: (a) any payment or prepayment (whether permitted by the Payee or required
hereunder or otherwise) of all or a portion of any Eurodollar Loan on a day
other than Maturity Date of such Loan; (b) any payment or prepayment, whether
required hereunder or otherwise, of any Eurodollar Loan made after the delivery
of a Notice of Requested Borrowing but before the applicable Borrowing Date if
such payment or prepayment prevents the proposed Loan from becoming fully
effective; or (c) the failure of any Eurodollar Loan to be made by the Payee due
to any action or inaction of the Maker. For purposes of this paragraph, funding
losses arising by reason of liquidation or reemployment of deposits or other
funds acquired by the Payee to fund or maintain Loans bearing interest at the
Eurodollar Rate shall be calculated as the remainder obtained by subtracting:
(i) the yield (reflecting both stated interest rate and discount, if any) to
maturity of obligations of the United States Treasury in an amount equal or
comparable to such Loan for the period of time commencing on the date of the
payment, prepayment or change of rate as provided above and ending on the last
day of the subject Interest Period; from (ii) the interest payable at the
Eurodollar Rate for the period commencing on the date of such payment,
prepayment or change of rate and ending on the last day of such Interest Period.
Such funding losses and other costs and expenses shall be calculated and billed
by the Payee and such bill shall, as to the costs incurred, be conclusive absent
manifest error.
If after the date of this Note, adoption of any applicable law, rule or
regulation regarding capital adequacy, or any change therein, or any change in
the interpretation or administration thereof by any governmental authority,
central bank or comparable agency charged with the interpretation or
administration thereof, or compliance by the Payee with any request or directive
regarding capital adequacy, (whether or not having the force of law) of any such
authority, central bank or comparable agency, has or would have the effect of
reducing the rate of return on the Payee's capital as a consequence of making
any Loans hereunder to a level below that which the Payee could have achieved
but for such adoption, change or compliance (taking into consideration the
Payee's policies with respect to capital adequacy) by an amount deemed by the
Payee in good faith to be material, then from time to time, the Maker shall pay
to the Payee such additional amount or amounts as will compensate the Payee for
such reduction.
A certificate of the Payee setting forth such amount or amounts as shall
be necessary to compensate the Payee as specified in the immediately preceding
paragraphs above shall be delivered as soon as practicable to the Maker and
shall be conclusive and binding, absent manifest error. The Maker shall pay the
Payee the amount shown as due on any such certificate within 15 days after Payee
delivers such certificate. In Preparing such certificate, the Payee may employ
such assumptions and allocations of cost and expenses as it shall in good faith
deem reasonable and may use any reasonable averaging and attribution method.
It is the intention of Maker and Payee to comply with usury laws in
force in the State of Texas and in the United States of America as applicable.
Anything in this Note to the contrary notwithstanding, the Maker shall never be
required to pay unearned interest on this Note and shall never be required to
pay interest on this Note at a rate in excess of the Highest Lawful Rate, and if
the effective rate of interest which would otherwise be payable under this Note
would exceed the Highest Lawful Rate, or if the holder of the Note shall receive
any unearned interest or shall receive monies that are deemed to constitute
interest which would increase the effective rate of interest payable under this
Note to a rate in excess of the Highest Lawful Rate, then: (i) the amount of
interest which would otherwise be payable under this Note shall be reduced to
the amount allowed under applicable law; and (ii) any unearned interest paid by
the Maker or any interest paid by the Maker in excess of the Highest Lawful Rate
shall, at the option of the holder of this Note, be either refunded to the Maker
or credited on the principal of this Note. It is further agreed that, without
limitation of the foregoing, all calculations of the rate of interest contracted
for, charged or received by the Payee or any holder of this Note that are made
for the purpose of determining whether such rate exceeds the Highest Lawful Rate
shall be made, to the extent permitted by usury laws applicable to the Payee
(now or hereafter enacted), by amortizing, prorating and spreading in equal
parts during the period of the full stated terms of the Loans evidenced by this
Note all interest at any time contracted for, charged or received by the Payee
in connection therewith.
To the extent Texas law shall be controlling, to determine the Highest
Lawful Rate, the Payee has elected the "indicated" (weekly) ceiling as defined
in the Texas Credit Code (Texas Revised Civil Statues Article 5069-1.04) or as
same may be hereafter amended, and to the extent other law shall be controlling,
the Highest Lawful Rate shall be the maximum nonusurious rate of interest
allowed by such applicable law. It is expressly agreed that the Payee may from
time to time, as to current and future balances, elect and implement any other
ceiling under such Code and/or revise the index, formula or provisions of law
used to compute the rate on this open-end account by notice to the Maker, if and
to the extent permitted by, and in the manner provided in, such Code.
In addition to all principal and accrued interest on this Note, the Maker
agrees to pay: (a) all reasonable costs and expenses incurred by the Payee and
all owners and holders of this Note in collecting this Note through probate,
reorganization, bankruptcy or any other proceeding; and (b) reasonable
attorney's fees if and when this Note is placed in the hands of an attorney for
collection.
The unpaid principal balance of this Note at any time shall be the
aggregate amounts of Loans by the Payee or holder hereof, less the amount of all
payments or prepayments of principal made hereon by or for the Maker. Absent
manifest error, the records of the Payee or any subsequent holder shall be
conclusive as to amounts owed, both principal and accrued interest, hereunder.
Subject to the terms and conditions of this Note and the Credit Agreement (as
defined below), and provided that there is no default, Maker may use all or any
part of the credit provided for herein at any time before September 14, 1995
(the "Advance Termination Date") and may borrow and repay but not reborrow
hereunder prior to the Advance Termination Date and there is no limitation on
the number of Loans made hereunder so long as the aggregate amount of Loans
advanced prior to the Advance Termination Date does not exceed the Maximum
Amount of Note. After the Advance Termination Date, Loans may only be rolled
over into another Interest Period but may not be reborrowed and repayed. Maker
shall at all times have enough Alternate Base Rate Loans to make its due and
payable principal payment as hereinafter required and set forth.
<PAGE>
Advancing Promissory Note
Converting to a Term Note
Wetmore & Company
September 14, 1994
Advances against this Note by the Payee or other owner or holder hereof
shall be governed by the terms and conditions hereof, and that one certain
credit agreement by and between Payee and Maker dated September 14, 1994,
including any amendments, modifications, supplements thereto and restatements
thereof (the "Credit Agreement").
Accrued interest shall be due and payable monthly, beginning on October
14, 1994, and continuing on the 14th day of each month thereafter and at the
maturity when all unpaid principal and accrued and unpaid interest shall be
finally due and payable. After the Advance Termination Date the principal
advanced and outstanding shall be due in 60 substantially equal monthly
installments determined by dividing the amount of principal outstanding on the
Advance Termination Date by 60, each such payment to be due on the 14th day of
each month beginning on October 14, 1995 and continuing thereafter until the
Stated Maturity Date. In addition to principal installments due hereunder,
accrued and unpaid interest is due on the same dates as and when principal
payments are due. All remaining unpaid principal and accrued and unpaid interest
are finally due on the Stated Maturity Date.
If Payee exercises its right to accelerate the maturity of this Note
following default, any tender of payment of the amount necessary to satisfy the
entire debt evidenced hereby made thereafter by or on behalf of Maker shall
constitute an evasion of the prepayment charge provisions of this Note, shall be
deemed to be a voluntary prepayment and shall, to the extent not prohibited or
sanctioned by applicable law, be accompanied by payment of the amount required
to be paid under voluntary prepayments.
All payments and prepayments hereon may, at the Payee's sole option, be
applied to accrued interest, to principal, or to both. Maker and each and all
comakers, endorsers, guarantors and sureties severally waive notice, demand,
presentment for payment, notice of nonpayment, notice of intent to accelerate,
notice of acceleration, protest, notice of protest, and the filing of suit and
diligence in collecting this Note and all other demands and notices, and consent
and agree that their liabilities and obligations shall not be released or
discharged by any or all of the following, whether with or without notice to
them or any of them, and whether before or after the Stated Maturity Date: (i)
extensions of the time of payment hereof; (ii) renewals hereof; (iii)
acceptances of partial payments; (iv) releases or substitutions of the
collateral; and (v) the failure, if any, to perfect or maintain perfection of
any security interest in the collateral. The Maker and each comaker, endorser,
guarantor and surety hereof also agree that acceptance of any partial payment
shall not constitute a waiver and that waiver of any default shall not
constitute waiver of any prior or subsequent default. As used herein, where
appropriate, the neuter gender includes the feminine and the masculine and the
singular number includes the plural number.
The term "Loan Documents" shall refer to this Note, the Credit Agreement,
and any security agreements executed as security for this Note and all such
other written agreements, guaranties, documents, instruments and other writings
required by Payee and executed and delivered to Payee in connection with or in
any way related to this Note or any security for the Note.
If any of the following events ("Events of Default") shall occur, then the
Payee may do any or all of the following, subject to the Cure Period set forth
in the Credit Agreement: Remedies: (i) cease to make advances hereunder; (ii)
--------
declare this Note to be, and thereupon the principal balance of this Note shall
forthwith become, immediately due and payable, together with all accrued and
unpaid interest thereon and all other obligations and indebtedness of the Maker
under the Loan Documents, without notice of acceleration or of intention to
accelerate, presentment and demand or protest, all of which are hereby expressly
waived; (iii) set off, in any order, against the indebtedness of the Maker under
the Loan Documents any debt owning by the Payee to any Maker, including, but not
limited to, any deposit account, which right is hereby granted by Maker to the
Payee; and (iv) exercise any and all other rights pursuant to the Loan
Documents, at law, in equity or otherwise: Events of Default: (a) Maker shall
-----------------
fail to pay any principal of or interest on this Note or any other obligation
under any Loan Document as and when due; or (b) any representation or warranty
made in connection with any of the Loan Documents shall prove to have been
incorrect, false or misleading; or (c) default shall occur in the punctual and
complete performance of any covenant of Maker or any guarantor contained in any
Loan Document; or (d) the occurrence of an event of default under any Loan
Document; or (e) final judgment for the payment of money shall be rendered
against Maker and the same shall remain undischarged for a period of 30 days
during which execution shall not be effectively stayed; or (f) any order shall
be entered in any proceeding against Maker decreeing the dissolution,
liquidation or split-up thereof, and such order shall remain in effect for 30
days; or (g) Maker shall make a general assignment for the benefit of creditors
or shall petition or apply to any tribunal for the appointment of a trustee,
custodian, receiver or liquidator of all or any substantial part of its
business, estate or assets or shall commence any proceeding under any
bankruptcy, insolvency, dissolution or liquidation law of any jurisdiction,
whether now or hereafter in effect; or any such petition or application shall be
filed or any such proceeding shall be commenced against Maker and Maker, by any
act or omission, shall indicate approval thereof, consent thereto or
acquiescence therein, or an order shall be entered appointing a trustee,
custodian, receiver or liquidator of all or any substantial part of the assets
of Maker or granting relief to Maker or approving the petition in any such
proceeding, and such order shall remain in effect for more than 30 days; or
Maker shall fail generally to pay its debts as they become due or suffer any
writ of attachment or execution or any similar process to be issued or levied
against it or any substantial part of its property which is not released,
stayed, bonded or vacated within 30 days after its issue or levy; or (h) a
material adverse change shall occur in the assets, liabilities, financial
condition, business or affairs of Maker.
The Maker warrants and represents to the Payee, and to all other owners
and/or holders of any indebtedness evidenced hereby, that: (i) evidenced by this
Note are and shall be for business, commercial, investment or other similar
purpose and not primarily for personal, family, household or agricultural use as
such terms are used in Chapter One of the Texas Credit Code (ii) no amounts
advanced hereunder shall be used for the purchase or carrying of any margin
stock as that term is defined in Regulation "U" of the board of Governors of the
Federal Reserve System. Notwithstanding anything contained herein or in any
other Loan Document, if this is a consumer credit obligation (as defined or
described in 12 C.F.R. 227, Regulation AA, promulgated by the Federal Reserve
Board), the security for this credit obligation shall not extend to any non-
possessory security interest in household goods (as defined in Regulation AA)
other than a purchase money security interest, and no waiver of any notice
contained herein or therein shall be construed under any circumstances to extend
to any waiver of notice prohibited by Regulation AA.
The Maker and the Payee expressly agree, pursuant to Article 15.10 (b) of
Chapter 15 ("Chapter 15") of the Texas Credit Code, that Chapter 15 shall not
apply to this Note or to any advance evidenced by this Note.
THIS NOTE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF
THE STATE OF TEXAS AND THE APPLICABLE LAWS OF THE UNITED STATES OF AMERICA. THIS
NOTE HAS BEEN ENTERED INTO IN HARRIS COUNTY, TEXAS, SHALL BE PERFORMABLE FOR ALL
PURPOSES IN SUCH COUNTY AND THE MAKER AND THE PAYEE AGREE THAT SUCH COUNTY IS
PROPER VENUE FOR ANY ACTION OR PROCEEDING BROUGHT BY THE MAKER OR THE PAYEE,
WHETHER IN CONTRACT, TORT, OR OTHERWISE. ANY ACTION OR PROCEEDING AGAINST THE
MAKER MAY BE BROUGHT IN ANY STATE OR FEDERAL COURT IN SUCH COUNTY. THE MAKER
HEREBY IRREVOCABLY (A) SUBMITS TO THE NONEXCLUSIVE JURISDICTION OF SUCH COURTS,
AND (B) WAIVES ANY OBJECTION IT MAY NOW OR HEREAFTER HAVE AS TO THE VENUE OF ANY
SUCH ACTION OR PROCEEDING BROUGHT IN ANY SUCH COURT OR THAT ANY SUCH COURT IS AN
INCONVENIENT FORUM. THE MAKER AGREES THAT SERVICE OF PROCESS UPON IT MAY BE MADE
IN ACCORDANCE WITH APPLICABLE LAW. NOTHING HEREIN OR IN ANY OF THE OTHER LOAN
DOCUMENTS SHALL AFFECT THE RIGHT OF THE PAYEE TO SERVE PROCESS IN ANY OTHER
MANNER PERMITTED BY LAW OR SHALL LIMIT THE RIGHT OF THE PAYEE TO BRING ANY
ACTION OR PROCEEDING AGAINST THE MAKER OR WITH RESPECT TO ANY OF ITS PROPERTY IN
COURTS IN OTHER JURISDICTIONS OR VENUES.
<PAGE>
Advancing Promissory Note
Converting to a Term Note
Wetmore & Company
September 14, 1994
The Payee and any subsequent owner or holder hereof reserves the right, in
its sole discretion, without notice to the Maker, to sell participations or
assigns its interest or both, in all or any part of this Note or the advances
hereunder.
Each Maker and cosigner represents and warrants to Payee that if it is not
a natural person, it is duly organized and validly existing and in good standing
under the laws of the state of its incorporation or organization; has full power
to own its properties and to carry on its business as now conducted; and is duly
qualified to do business and is in good standing in each jurisdiction in which
the nature of the business conducted by it makes such qualification desirable;
and has not commenced any dissolution proceedings. Each Maker and cosigner
represent and warrants that if it conducts business under an assumed business or
professional name it has properly filed Assumed Name Certificate(s) in the
office(s) required by Chapter 36 of the Texas Business and Commerce Code. Each
of the persons signing below as Maker or cosigner represents and warrants that
he/she has full requisite power and authority to execute and deliver this Note
to Payee on behalf of the party for whom he/she signs and to bind such party to
the terms and conditions of this Note and that this Note is enforceable against
such party.
THIS NOTE AND THE OTHER WRITTEN LOAN DOCUMENTS CONSTITUTE A "LOAN
AGREEMENT" AS DEFINED IN SECTION 26.02(a) OF THE TEXAS BUSINESS AND COMMERCE
CODE AND REPRESENT THE FINAL AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE
CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL
AGREEMENTS OF THE PARTIES.
THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.
IN WITNESS WHEREOF, the Maker has executed this Note effective as of the Date.
ADDRESS OF MAKER; 1645 West Sam Houston Parkway
Houston, Texas 77043
THE MAKER: WETMORE & COMPANY
By: /s/ Mark C. Pope Date: 10/12/94
--------------------------------- ---------
Printed Name: Mark C. Pope IV
-----------------------
Title: Vice President
------------------------------
(The Payee's signature is provided as its acknowledgment of the above as the
final written agreement between the parties.)
THE PAYEE: TEXAS COMMERCE BANK NATIONAL ASSOCIATION
By: /s/ Joel J. Landis
------------------------
Typed Name: Joel J. Landis
------------------------
Title: Vice President
------------------------
<PAGE>
EXHIBIT A
Compliance Certificate
WETMORE & COMPANY
FOR THE PERIOD ENDING:______________________
The undersigned officer of WETMORE & COMPANY, does hereby certify that the
following covenants and financial tests, as defined in that certain Credit
Agreement (the "Agreement") dated September 14, 1994 executed by Wetmore &
Company, and delivered to Texas Commerce Bank National Association (the "Bank")
are as follows:
<TABLE>
<CAPTION>
In Compliance
(Please indicate)
<S> <C> <C>
1. Financial Statements and Reports of Borrower:
--------------------------------------------
(i) Annual FYE financial statements and Compliance Certificate
on or before 120 days after each FYE. Yes No
(ii) Quarterly unaudited financial statements and Compliance Certificate
within 45 days of each quarter end. Yes No
2. Fixed Charge Coverage Ratio of Borrower:
---------------------------------------
Minimum of 1.00 to 1.00 required at all times.
Actual for the period ending __________:= ______________ Yes No
3. Borrower certifies it is not in default with any other credit agreements
or credit facilities. Yes No
4. Borrower certifies it is not aware of guarantor's default with any other
credit agreements or credit facilities. Yes No
</TABLE>
THE ABOVE SUMMARY REPRESENTS ONLY A SMALL PORTION OF THE COVENANTS AND
AGREEMENTS CONTAINED IN THE AGREEMENT AND DOES NOT IN ANY WAY RESTRICT OR
MODIFY THE TERMS AND CONDITIONS OF THE AGREEMENT. IN CASE OF CONFLICT BETWEEN
THIS EXHIBIT AND THE AGREEMENT, THE AGREEMENT SHALL CONTROL.
The undersigned hereby certifies that the above information and computations
are true and correct and not misleading as of the date hereof, and that no
Default or Event of Default has occurred and is continuing.
Executed this _______________ day of _______________, 19_____.
COMPANY NAME: WETMORE & COMPANY
SIGNATURE:______________________________________________________________________
NAME:___________________________________________________________________________
TITLE:__________________________________________________________________________
ADDRESS:________________________________________________________________________
EXHIBIT A
<PAGE>
ANNEX I
LOAN DOCUMENTS
"Loan Documents" includes, but is not limited to, the following:
1. Agreement
2. Note
3. [_] Assignment covering:
[_] Life insurance
[_] Deposit account
[_] Other (specify)
4. [X] Security Agreements, in Proper Form, Covering
[_] Accounts and general intangibles
[X] Equipment
[_] Inventory
[_] Securities
[_] Secured note
[_] Certificate of deposit or deposit account
[_] Partnership interest
[_] Rights under contract
[_] Other (specify)
5. [_] Deed of Trust covering the real property described on Annex IV,
attached hereto.
6. [_] Title Insurance Policy
7. [X] Financing Statements
8. [X] Guaranty by: Graphic Industries, Inc. ("Guarantor")
9. [_] Other (specify):
10. [_] Opinion of Borrowers' Counsel
11. [X] Certified Copies of Organizational and Authority Documents
12. [_] Insurance policies and certificates
13. [_] Subordination Agreement covering: [_] Debt to:
[_] Lien of:
14. [X] Financial Statement of: Borrower and guarantor
15. [X] UCC search
16. [_] Regulation U statement
ANNEX I Page 1 of 1
<PAGE>
ANNEX II
Subsidiaries
<TABLE>
<CAPTION>
Subsidiary Name State Where
and Address Borrower Incorporated % Owned
- --------------- -------- ------------ -------
<S> <C> <C> <C>
</TABLE>
NONE
ANNEX II Page 1 of 1
<PAGE>
ANNEX III
FINANCIAL COVENANTS
Unless otherwise defined herein or within the Agreement, all accounting
terms shall have the meaning assigned to them by generally accepted accounting
principles.
1. Fixed Charge Coverage Ratio. Have a ratio of Tax Adjusted Net Income, plus
---------------------------
depreciation, plus amortization, plus interest to cash capital
expenditures, plus current maturities of long term debt, plus dividends,
plus interest for the 4 fiscal quarters ending on each fiscal quarter end
during a period indicated below of at least the corresponding ratio shown
below:
<TABLE>
<CAPTION>
Period Minimum Fixed Charge Ratio
------ --------------------------
<S> <C>
At all times 1.00 to 1.0
</TABLE>
The list of financial covenants above does not exhaust the financial
concepts which may be important or useful in any analysis of the financial
condition of the Borrower.
ANNEX III
<PAGE>
TEXAS COMMERCE BANK NATIONAL ASSOCIATION
SECURITY AGREEMENT - EQUIPMENT
hereinafter called "Debtor," and TEXAS COMMERCE BANK NATIONAL ASSOCIATION
2200 ROSS AVENUE P.O. Box 660197
DALLAS, DALLAS COUNTY, TEXAS 75266-0197
hereinafter called "Secured Party," agree as follows:
SECTION I. CREATION OF SECURITY INTEREST.
In order to secure the prompt and unconditional payment of the indebtedness
herein referred to and the performance of the obligations, covenants,
agreements and undertakings of Debtor herein described, Debtor hereby grants to
Secured Party a security interest in all goods, equipment, machinery,
furnishings, fixtures, furniture, appliances, accessories, leasehold
improvements, chattels and other articles of personal property of whatever
nature now owned by Debtor or hereafter acquired, all accessions and
appurtenances thereto, and all renewals or replacements of or substitutions for
any of the foregoing (hereinafter collectively called "the Collateral") and all
proceeds of the Collateral. If, and only if, this box [_] is checked, the
Collateral shall be solely that equipment described on the reverse hereof under
Collateral Description, together with accessions and appurtenances thereto and
proceeds thereof. The inclusion of proceeds does not authorize Debtor to sell,
dispose of or otherwise use the Collateral in any manner not authorized herein.
SECTION II. SECURED INDEBTEDNESS.
This Security Agreement-Equipment (hereinafter called this "Agreement") is
made to secure and enforce the payment and performance of all debts,
obligations and liabilities of every kind and character of Debtor now or
hereafter existing in favor of Secured Party whether such debts, obligations or
liabilities be direct or indirect, primary or secondary, joint or several,
fixed or contingent, and whether originally payable to Secured Party or to a
third party and subsequently acquired by Secured Party and whether such debts,
obligations or liabilities are evidenced by note, open account, overdraft,
endorsement, surety agreement, guaranty or otherwise, it being contemplated
that Debtor may hereafter become indebted to Secured Party in further sum or
sums, and all modifications, renewals or extensions of or substitutions for,
any of the foregoing. All such indebtedness is hereinafter sometimes called the
"secured indebtedness" or the "indebtedness secured hereby."
SECTION III. DEBTOR'S REPRESENTATIONS AND WARRANTIES.
Debtor represents, warrants and covenants that Debtor's location is the
address stated at the beginning of this Agreement; that Debtor is now in a
solvent condition; that no bankruptcy or insolvency proceedings are pending or
contemplated by or against Debtor; that all information, reports, statements
and other data furnished by Debtor to Secured Party prior to, contemporaneously
with or subsequent to the execution of this Agreement or in connection with the
indebtedness secured hereby are and shall be true, correct and complete and do
not and will not omit to state any fact or circumstance necessary to make the
statements contained therein not misleading; that Debtor is the lawful owner of
good and marketable title to the Collateral and has good right and authority to
grant a security interest in the Collateral; that the Collateral is free and
clear from all security interests and encumbrances except the security interest
evidenced hereby; that there is no financing statement covering the Collateral
or its proceeds on file in any public office; that the Collateral and the
intended use thereof by Debtor comply with all applicable laws, rules and
regulations; that the Collateral is free from damage caused by fire or other
casualty; that this Agreement constitutes the legal, valid and binding
obligation of Debtor enforceable against Debtor in accordance with its terms;
that the execution, delivery and performance of this Agreement does not and
will not contravene or violate any provision of any law, rule, regulation,
order, writ, judgment, injunction, decree, determination or award presently in
effect and applicable to Debtor or result in a breach of or constitute a
default (with or without the giving of notice or the lapse of time or both)
under any indenture or any loan, credit or other agreement to which Debtor is a
party or by which Debtor may be bound or affected; that the execution, delivery
and performance of this Agreement does not require the consent or approval of
any person, including, without limitation, any regulatory body or governmental
authority; and that Debtor will warrant and forever defend the title to the
Collateral and its proceeds against the claims and demands of all persons
whomsoever claiming or to claim the same or any part thereof.
SECTION IV. COVENANTS.
4.1. So long as the indebtedness secured hereby or any part thereof remains
unpaid, Debtor covenants and agrees with Secured Party as follows:
(a) Debtor shall make prompt payment, as the same becomes due, of all
indebtedness secured hereby in accordance with the terms and provisions
of the agreements evidencing such indebtedness.
(b) If Debtor is a corporation, Debtor will continuously maintain
Debtor's corporate existence.
(c) Debtor will cause the Collateral to be maintained and operated in
a good and workmanlike manner and in accordance with all applicable laws
and rules, regulations and orders promulgated by all duly constituted
authorities. Debtor will not use, or allow the use of, the Collateral in
any manner which constitutes a public or private nuisance or which makes
void, voidable or cancellable, or increases the premium of, any
insurance then in force with respect thereto. Debtor will not do or
suffer to be done any act whereby the value of any part of the
Collateral may be lessened. Debtor will allow Secured Party or its
authorized representative to inspect the Collateral and Debtor's books
and records pertaining thereto and Debtor will assist Secured Party or
said representative in whatever way necessary to make such inspection.
If Debtor receives notice from any federal, state or other governmental
entity that the Collateral is not in compliance with any applicable law,
rule, regulation or order, Debtor will promptly furnish a copy of such
notice to Secured Party.
(d) Debtor will cause all debts and liabilities of any character,
including without limitation all debts and liabilities for labor,
material and equipment, incurred in the installation, maintenance and
operation of the Collateral to be promptly paid.
(e) Debtor will cause to be paid prior to delinquency all taxes,
charges, liens and assessments heretofore or hereafter leveled or
assessed against the Collateral, or any part thereof, or against the
Secured Party for or on account of the indebtedness secured hereby or
the interest created by this Agreement, and will furnish Secured Party
with receipts or other satisfactory evidence showing payment of such
taxes and assessments at least ten (10) days prior to the applicable
default date therefor.
(f) Debtor will keep the Collateral in good order, repair and
operating condition, causing all necessary repairs, renewals,
replacements, additions and improvements to be promptly made, and will
not allow the Collateral to be misused, abused or wasted, or to
deteriorate, except for the ordinary wear and tear of its intended
primary use. Debtor will promptly replace all worn-out or obsolete
fixtures or personal property covered by this Agreement with fixtures or
personal property comparable to the replaced fixtures or personal
property when new.
(g) Debtor will keep the Collateral Insured in an amount equal to the
full insurable value thereof against loss or damage by fire, theft,
collision and other hazards as may be required by Secured Party by
policies of fire, extended coverage and other insurance in such company
or companies, in such amounts, upon such terms and provisions, and with
such endorsement, all as may be acceptable to Secured Party. Such
insurance policies shall also contain a standard mortgagee's endorsement
providing for payment of any loss to Secured Party. All policies of
insurance shall provide for ten (10) days written minimum cancellation
notice to Secured Party. All draft or instruments of any kind evidencing
payment under any such insurance policies which come into the possession
of Debtor shall be immediately delivered to Secured Party. No such
policies shall be payable to any party other than Secured Party and
Debtor. Debtor shall furnish Secured Party with certificates or other
evidence satisfactory to Secured Party of compliance with the foregoing
Insurance provisions. Duplicate originals of all policies,
verifications, binders and cover notes covering any of the Collateral
shall be delivered to Secured Party upon demand following an Event of
Default. Secured Party may act as attorney for Debtor in obtaining,
adjusting, settling and cancelling such insurance and endorsing any
drafts drawn by insurers of the Collateral. Secured Party may apply any
proceeds of such insurance which may be received by it in payment on
account of the obligations secured hereby, whether due or not.
(h) If the Collateral is or is to be wholly or partly affixed to real
estate or other goods, a description of the real estate or other goods
is listed in the portion below labelled "Collateral Description" and the
name of the record owner of such real estate or other goods is following
an Event of Default.
Said real estate is not subject to any construction mortgage. If the
Collateral is wholly or partly affixed to real estate or installed in or
affixed on other goods, Debtor will, on demand of Secured Party,
furnished the latter with a disclaimer or disclaimers, signed by all
persons having an interest in the real estate or other goods of any
interest in the collateral which is prior to Secured Party's interest.
Unless the blank spaces in this paragraph are filled in when this
Agreement is executed, the Collateral will not be affixed to any real
estate or other goods so as to become fixtures on such real estate or
accessions to other goods.
(i) If the validity or priority of this Agreement or of any rights,
titles, security interests or other interests created or evidenced
hereby shall be attacked, endangered or questioned, or if any legal
proceedings are instituted with respect thereto), Debtor will give
prompt written notice thereof to Secured Party and, at Debtor's own cost
and expense, will diligently endeavor to cure any defect which may be
developed or claimed and will take all necessary and proper steps for
the defense of such legal proceedings, and Secured Party (whether or not
named as a party to legal proceedings with respect thereto) is hereby
authorized and empowered to take such additional steps as in its
judgment and discretion may be necessary or proper for the defense of
any such legal proceedings or the protection of the validity or priority
of this Agreement and the rights, titles, security interests and other
interests created or evidenced hereby, and all expenses so incurred of
every kind and character shall be a demand obligation owing by Debtor
and the party incurring such expenses shall be subrogated to all rights
of the person receiving such payment.
(j) Debtor will, on request of Secured Party, (i) promptly correct any
defect, error or omission which may be discovered in the contents of
this Agreement or in any other instrument executed in connection
herewith or in the execution or acknowledgment thereof; (ii) execute,
acknowledge, deliver and record or file such further instruments
(including, without limitation, further security agreements, financing
statements and continuation statements) and do such further acts as may
be necessary, desirable or proper to carry out more effectively the
purposes of this Agreement and
<PAGE>
such other Instruments, and to subject to the security interests hereof
and thereof any property intended by the terms hereof and thereof to be
covered hereby and thereby including specifically, but without
limitation, any renewals, additions, substitutions, replacements or
appurtenances to the then Collateral; and (iii) execute, acknowledge,
deliver, procure and record or file any document or instrument
(including specifically any financing statement) deemed advisable by
Secured Party to protect the security interest hereunder against the
rights or interests of third persons, and Debtor will pay all costs
connected with any of the foregoing.
(k) Notwithstanding the security interest in proceeds granted herein,
Debtor will not sell, lease, exchange, lend, rent, assign, transfer or
otherwise dispose of all or any part of the Collateral or any interest
therein or permit the title to the Collateral, or any interest therein,
to be vested in any other party, in any manner whatsoever, by operation
of law or otherwise, without the prior written consent of Secured Party.
(l) To the extent not prohibited by law, Debtor will pay, or
reimburse Secured Party for, all costs and expenses, of every character,
incurred or expended from time to time (including, but not limited to,
the fees and expenses of counsel for Secured Party) in connection with
the negotiation, preparation, execution, filing, recording, refiling and
re-recording of this Agreement and all related financing statements and
the making, servicing and collection of the indebtedness secured hereby;
any and all stamp, mortgage and recording taxes; the costs of any title
insurance or lien insurance purchased by Secured Party in connection
herewith; all costs of negotiation, preparation, execution and delivery
of any and all amendments, modifications, supplements, consents, waivers
or other documents or writings relating to the transactions contemplated
by this Agreement; and all costs (including attorneys' fees) of
reviewing title opinions and security opinions relating to the
indebtedness secured hereby. Debtor will reimburse Secured Party for all
amounts expended by Secured Party to satisfy any obligation of Debtor
under this Agreement or to protect the Collateral. In addition, whether
or not a default shall have occurred, Debtor will pay, or reimburse
Secured Party for, all costs and expenses, of every character incurred
or expended from time to time in connection with the evaluation,
monitoring, administration and protection of the Collateral and the
exercise by Secured Party of any of its rights and remedies hereunder or
at law (including, but not limited to, all appraisal fees, consulting
fees, brokerage fees and commissions, insurance premiums, Uniform
Commercial Code search fees, fees incident to title searches and
reports, investigation costs, escrow fees, attorneys' fees, legal
expenses, fees of auditors and accountants, court costs, fees of
governmental authorities, auctioneer fees and expenses, and all fees and
expenses incurred in connection with the marshalling, guarding,
management, operation, removal, maintenance, cleanup, storage, auction
and liquidation of the Collateral). Any amount to be paid or reimbursed
by Debtor to Secured Party shall be a demand obligation owing by Debtor
to Secured Party and, to the extent not prohibited by law, shall bear
interest from the date of expenditure by Secured Party until paid at the
same rate provided for past-due principal and interest in the principal
obligation (the "Past Due Rate"). The principal obligation shall be (1)
the not secured hereby; (2) If more than one note is secured hereby, the
note with the largest face amount; and (3) if no note is served hereby,
the obligation with the largest face amount.
(m) Debtor shall account fully and faithfully for and, if Secured
Party so elects, shall promptly pay or turn over to Secured Party the
proceeds in whatever form received from disposition in any manner of any
of the Collateral, except as otherwise specifically authorized herein.
Debtor shall at all times keep the Collateral and its proceeds separate
and distinct from other property of Debtor and shall keep accurate and
complete records of the Collateral and its proceeds.
(n) The Collateral will be used in the business of Debtor and shall
remain in Debtor's possession or control at all times at Debtor's risk
of loss at Debtor's location as stated herein and at such other places
as Debtor may specify in writing to Secured Party.
(o) Debtor will not change its address, location, name, identity or
corporate structure without notifying Secured Party of such change in
writing at least thirty (30) days prior to the effective date of such
change.
(p) Debtor shall furnish Secured Party all such information as Secured
Party may request with respect to the Collateral.
(q) If Secured Party should at any time be of the opinion that the
Collateral is not sufficient or has declined or may decline in value, or
should Secured Party deem payment of Debtor's obligations to be
insecure, then Secured Party may call for additional Collateral
satisfactory to Secured Party, and Debtor promises to furnish such
additional security forthwith. The call for additional security may be
oral or by telegram or by United States Postal Service addressed to the
address of Debtor shown at the beginning of this Agreement.
4.2 Debtor agrees that if Debtor fails to perform any act or to take any
action which hereunder Debtor is required to perform or take, or to pay
any money which hereunder Debtor is required to pay, Secured Party, in
Debtor's name or in its own name, may but shall not be obligated to
perform or cause to be performed such act or take such action or pay
such money, and any expenses so incurred by Secured Party and any money
so paid by Secured Party, shall be a demand obligation owing by Debtor
to Secured Party, and Secured Party, upon making such payment, shall be
subrogated to all of the rights of the person, corporation or body
politic receiving such payment by which it is bound and which has not
been waived. Any amounts due and owing by Debtor to Secured Party
pursuant to this Agreement shall bear interest from the date of
expenditure until paid at the Past Due Rate and shall be secured by this
Agreement and by any other instrument securing the secured indebtedness.
SECTION V. EVENTS OF DEFAULT.
Debtor shall be in default under this Agreement upon the happening of any of
the following events or conditions, herein called an "Event of Default" by
which it is bound and which has not been waived.
(a) Debtor's failure to pay when due any of the secured indebtedness;
or
(b) default by Debtor in the punctual performance of any of the
obligations, covenants, terms or provisions contained or referred to in
this Agreement, in any other instrument securing the secured
indebtedness or in any note secured hereby; or
(c) any warranty, representation or statement contained in this
Agreement or made or furnished to Secured Party by or on behalf of
Debtor in connection with this Agreement or to induce Secured Party to
make a loan to Debtor, shall prove to have been false or misleading in
any respect when made or furnished; or
(d) loss, theft, substantial damage, destruction, sale or encumbrance
of or to any of the Collateral, or the making of any levy, seizure or
attachment thereof or thereon; or
(e) Debtor's death, dissolution, termination of existence, insolvency
or business failure; the failure of Debtor or of any guarantor or surety
for Debtor generally to pay its debts as they come due; the appointment
of a receiver, trustee, custodian or liquidator of all or any part of
the property of Debtor; an assignment for the benefit of creditors of
Debtor; the calling of a meeting of creditors of Debtor; or the
commencement of any proceeding under any bankruptcy, insolvency or
reorganization laws by or against Debtor or any guarantor or surety for
Debtor; or
(f) any statement of the financial condition of Debtor or of any
guarantor, comaker, surety or endorser of any liability of Debtor
submitted to Secured Party by Debtor or any such guarantor, comaker,
surety or endorser shall prove to be false or misleading in any respect;
or
(g) any guarantor, comaker, surety or endorser for Debtor defaults in
any obligation or liability by which it is bound and which has not been
waived, or
(h) any adverse material change shall occur in the assets,
liabilities, financial condition, business operations, affairs or
circumstances of Debtor.
SECTION VI. REMEDIES IN EVENT OF DEFAULT.
6.1 Upon the occurrence of an Event of Default, and subject to any
Applicable Cure Period as defined in the Credit Agreement dated 9/14/94
between Secured Party and Debtor or if Secured Party shall deem payment
of Debtor's obligations to be insecure, and at any time thereafter,
Secured Party shall have the option of declaring without notice to any
person, all indebtedness secured hereby, principal and accrued interest,
to be immediately due and payable.
6.2. Upon the occurrence of an Event of Default, and subject to any
Applicable Cure Period as defined in the Credit Agreement dated 9/14/94
between Secured Party and Debtor or if Secured Party shall deem payment
of Debtor's obligations to be insecure, and at any time thereafter,
Secured Party is authorized to take possession of the Collateral and of
all books, records and accounts relating thereto, and to exercise
without interference from Debtor any and all rights which Debtor has
with respect to the management, possession, operation, protection or
preservation of the Collateral, including the right to rent the same for
the account of Debtor and to deduct from such rents all costs, expenses
and liabilities of every character incurred by Secured Party in
collecting such rents and in managing, operating, maintaining,
protecting or preserving the Collateral, and to apply the remainder of
such rents on the indebtedness secured hereby in such manner as Secured
Party may elect. All such costs, expenses and liabilities incurred by
Secured Party in collecting such rents in managing, operating,
maintaining, protecting or preserving such properties, if not paid out
of such rents as herein above provided, shall constitute a demand
obligation owing by Debtor and shall bear interest from the date of
expenditure until paid at the Past Due Rate, all of which shall
constitute a portion of the secured indebtedness. If necessary to obtain
the possession provided for above, Secured Party may invoke any and all
legal remedies to dispossess Debtor, including specifically one or more
actions for forcible entry and detained. In connection with any action
taken by Secured Party pursuant to this paragraph 6.2., Secured Party
shall not be liable for any loss sustained by Debtor resulting from any
failure to let the Collateral, or any part thereof, or from other act or
omission of Secured Party in managing the Collateral unless such loss is
caused by the willful misconduct and bad faith of Secured Party, nor
shall Secured Party be obligated to perform or discharge any obligation,
duty or liability under any lease agreement covering the Collateral or
any part thereof, or under or by reason of this instrument or the
exercise of rights or remedies hereunder.
6.3. Upon the occurrence of an Event of Default, *or if Secured Party shall
deem payment of Debtor's obligations to be insecure, and at any time
thereafter, Secured Party shall have all the rights of a secured party
after default under the Uniform Commercial Code of Texas and in
conjunction with, in addition to or in substitution for those rights and
remedies provided for herein:
(a) Secured Party may enter upon Debtor's premises to take possession
of, assemble and collect the Collateral or to render it unusable; and
(b) Secured Party may require Debtor to assemble the Collateral and
make it available at a place Secured Party designates which is mutually
convenient to allow Secured Party to take possession or dispose of the
Collateral; and
(c) Written notice mailed to Debtor as provided herein ten (10) days
prior to the date of public sale of the Collateral or prior to the date
after which private sale of the Collateral will be made shall constitute
reasonable notice; and
(d) It shall not be necessary that the Collateral or any part thereof
be present at the location of such sale; and
(e) Prior to application of proceeds of disposition of the Collateral
to the secured indebtedness, such proceeds shall be applied to the
reasonable expenses of retaking, holding, preparing for sale or lease,
selling, leasing and the like and the attorneys' fees and legal expenses
incurred by Secured Party, Debtor to remain liable for any deficiency;
and
(f) The sale by Secured Party of less than the whole of the Collateral
shall not exhaust the rights of Secured Party hereunder, and Secured
Party is specifically empowered to make successive sale or sales
hereunder until the whole of the Collateral shall be sold; and, if the
proceeds of such sale of less than the whole of the Collateral shall be
less than the aggregate of the indebtedness secured hereby, this
Agreement and the security interest created hereby shall remain in full
force and effect as to the unsold portion of the Collateral just as
though no sale had been made; and subject to any Applicable Cure Period
as defined in the Credit Agreement dated 9/14/94 between Secured Party
and Debtor,
Page 2 of 4
<PAGE>
(g) In the event any sales hereunder is not completed or is defective
in the opinion of Secured Party, such sales shall not exhuast the rights
of Secured Party hereunder and Secured Party shall have the right to
cause a subsequent sale or sales to be made hereunder; and
(h) Any and all statements of fact or other recitals made in any bill
of sale or assignment or other instrument evidencing any foreclosure
sale hereunder as to nonpayment of the indebtedness, or as to the
occurrence of any default, or as to Secured Party having declared all of
such indebtedness to be due and payable, or as to notice of time, place
and terms of sale and the properties to be sold having been duly given,
or as to any other act or thing having been duly done by Secured Party,
shall be taken as prima facie evidence of the truth of the facts so
stated and recited; and
(i) Secured Party may appoint or delegate any one or more persons as
agent to perform any act or acts necessary or incident to any sale held
by Secured Party, including the sending of notices and the conduct of
sale, but in the name and on behalf of Secured Party.
6.4. All remedies herein expressly provided for are cumulative of any and all
other remedies existing at law or in equity and are cumulative of any
and benefiting Secured Party, and the resort to any remedy provided for
hereunder or under any such other Instrument or provided for by law
shall not prevent the concurrent or subsequent employment of any other
appropriate remedy or remedies.
6.5. Secured Party may resort to any security given by this Agreement or to
any other security now existing or hereafter given to secure the payment
of the secured indebtedness, in whole or in part, and in such portions
and in such order as may seem best to Secured Party in its sole and
uncontrolled discretion, and any such action shall not in anywise be
considered as a waiver of any of the rights, benefits or security
interests evidenced by this Agreement.
6.6. To the full extent Debtor may do so, Debtor agrees that Debtor will not
at any time insist upon, plead, claim or take the benefit or advantage
of any law now or hereafter in force providing for any appraisement,
valuation, stay, extension or redemption, and Debtor, for Debtor,
Debtor's heirs, devisees, representatives, receivers, trustees,
successors and assigns, and for any and all persons ever claiming any
interest in the Collateral, to the extent permitted by law, hereby
waives and releases all rights of redemption, valuation, appraisement,
stay of execution, notice of intention to mature or declare due the
whole of the secured indebtedness, notice of election to mature or
declare due the whole of the secured indebtedness and all rights to a
marshalling of the assets of Debtor, including the Collateral, or to a
sale in inverse order of alienation in the event of foreclosure of the
security interest hereby created.
SECTION VII. ADDITIONAL AGREEMENTS.
7.1. If all of the secured indebtedness be paid as the same becomes due and
payable, and if all of the covenants, warranties, undertakings and
agreements made in this Agreement are kept and performed, then and in
that event only, all rights under this Agreement shall terminate and the
Collateral shall become wholly clear of the security interest evidenced
hereby, and such security interest shall be released by Secured Party in
due form at Debtor's cost.
7.2. Secured Party may waive any default without waiving any other prior or
subsequent default. Secured Party may remedy any default without waiving
the default remedied. The failure by Secured Party to exercise any
right, power or remedy upon any default shall not be construed as a
waiver of such default or as a waiver of the right to exercise any such
right, power or remedy at a later date. No single or partial exercise by
Secured Party of any right, power or remedy hereunder shall exhaust the
same or shall preclude any other or further exercise thereof, and every
such right, power or remedy hereunder may be exercised at any time and
from time to time. No modification or waiver of any provision hereof nor
consent to any departure by Debtor therefrom shall in any event be
effective unless the same shall be in writing and signed by Secured
Party and then such waiver or consent shall be effective only in the
specific instances, for the purpose for which given and to the extent
therein specified. No notice to nor demand on Debtor in any case shall
of itself entitle Debtor to any other or further notice of demand in
similar or other circumstances. Acceptance by Secured Party of any
payment in an amount less than the amount then due on any secured
indebtedness shall be deemed an acceptance on account only and shall not
in any way affect the existence of a default hereunder.
7.3. Secured Party may at any time and from time to time in writing (a) waive
compliance by Debtor with any covenant herein made by Debtor to the
extent and in the manner specified in such writing; (b) consent to
Debtor doing any act which hereunder Debtor is prohibited from doing, or
consent to Debtor failing to do any act which hereunder Debtor is
required to do, to the extent and in the manner specified in such
writing; (c) release any part of the Collateral or any interest therein
from the security interest of this Agreement; or (d) release any party
liable, either directly or indirectly, for the secured indebtedness or
for any covenant herein or in any other instrument now or hereafter
securing the payment of the secured indebtedness, without impairing or
releasing the liability of any other party. No such act shall in any way
impair the rights of Secured Party hereunder except to the extent
specifically agreed to by Secured Party in such writing.
7.4. The security interest and other rights of Secured Party hereunder shall
not be imparied by an indulgence, moratorium or release granted by
Secured Party, including but not limited to (a) any renewal, extension
or modification which Secured Party may grant with respect to any
secured indebtedness; (b) any surrender, compromise, release, renewal,
extension, exchange or substitution which Secured Party may grant in
respect of any item of the Collateral, or any part thereof or any
interest therein; or (c) any release or indulgence granted to any
endorser, guarantor, comaker or surety of any secured indebtedness.
7.5. A carbon, photographic or other reproduction of this Agreement or of any
financing statement relating to this Agreement shall be sufficient as a
financing statement.
7.6. Debtor will cause all financing statements and continuation statements
relating hereto to be recorded, filed, re-recorded and refiled in such
manner and in such places as Secured Party shall reasonably request, and
will pay all such recording, filing, re-recording and refiling taxes,
fees and other charges.
7.7. In the event the ownership of the Collateral or any part thereof becomes
vested in a person other than Debtor, Secured Party may, without notice
to Debtor, deal with such successor or successors in interest with
reference to this Agreement and to the indebtedness secured hereby in
the same manner as with Debtor, without in any way vitiating or
discharging Debtor's liability hereunder or on the indebtedness secured
hereby. No sale of the Collateral, no forbearance on the part of Secured
Party and no extension of the time for the payment of the indebtedness
secured hereby given by Secured Party shall operate to release,
discharge, modify, change or affect, in whole or in part, the liability
of Debtor hereunder or for the payment of the indebtedness secured
hereby or the liability of any other person hereunder or for the payment
of the indebtedness secured hereby, except as agreed to in writing by
Secured Party.
7.8. To the extent that proceeds of the note or other evidence of the secured
indebtedness are used to pay indebtedness secured by any outstanding
lien, security interest, charge or prior encumbrance against the
Collateral, such proceeds have been advanced by Secured Party at
Debtor's request and Secured Party shall be subrogated to any and all
rights, security interest and liens owned by any owner or holder of such
outstanding liens, security interests, charges or encumbrances,
irrespective of whether said liens, security interests, charges or
encumbrances are released.
7.9. If any part of the secured indebtedness cannot be lawfully secured by
this Agreement, or if any part of the Collateral cannot be lawfully
subject to the security interest hereof to the full extent of such
indebtedness, then all payments made shall be applied on said
indebtedness first in discharge of that portion thereof which is not
secured by this Agreement.
7.10. Secured Party may assign this Agreement so that the assignee shall be
entitled to the rights and remedies of Secured Party hereunder and in
the event of such assignment, Debtor will assert no claims or defenses
it may have against the assignee except those granted in this Agreement.
7.11. Any notice, request, demand or other communication required or permitted
hereunder, or under any note, guaranty, loan or agreement or other
instrument securing the payment of the secured indebtedness (unless
otherwise expressly provided herein), shall be given in writing by
delivering same in person to the intended addressee, or by United States
Postal Service, postage prepaid, registered or certified mail, return
receipt requested, or by prepaid telegram (provided that such telegram
is confirmed by mail in the manner previously described), sent to the
intended addressee at the address shown herein, or to such different
address as the addressee shall have designated by written notice sent in
accordance herewith and actually received by the other party at least
ten (10) days in advance of the date upon which such change of address
shall be effective.
7.12. This Agreement shall be binding upon Debtor, and the heirs, devisees,
representatives, receivers, trustees, successors and assigns of Debtor,
including all successors in interest of Debtor in and to all or any part
of the Collateral, and shall inure to the benefit of Secured Party and
the successors and assigns of Secured Party. All references in this
Agreement to Debtor or Secured Party shall be deemed to include all such
successors and assigns.
7.13. Secured Party in its discretion may, after an event of default, in its
name or in the name of Debtor or otherwise, demand, sue for, collect or
receive any money or other property at any time payable or receivable on
account of or in exchange for, or make any compromise settlement deemed
desirable with respect to, any of the Collateral, but Secured Party
shall be under no obligation so to do.
7.14. Whenever possible, each provision of this Security Agreement shall be
interpreted in such manner as to be effective and valid under applicable
law. A determination that any provision of this Security Agreement is
unenforceable or invalid shall not affect the enforceability or validity
of any other provision, and any determination that the application of
any provision of this Security Agreement to any person or circumstance
is illegal or unenforceable shall not affect the enforceability or
validity of such provision as it may apply to any other persons or
circumstances.
7.15. Secured Party may, by any employee or employees it designates, execute,
sign, endorse, transfer or deliver in the name of Debtor, notes, checks,
drafts or other instruments for the payment of money and receipts or any
other documents necessary to evidence, perfect and realize upon the
security interests and obligations of this Agreement.
Page 3 of 4
<PAGE>
7.16. Notwithstanding anything to the contrary contained herein, if any
secured indebtedness shall be indebtedness resulting from an extension
of credit to a consumer (as such terms are defined or described in 12
C.F.R. 227, Regulation AA of the Federal Reserve Board) hereinafter
referred to as "consumer credit obligation" then the collateral securing
any such consumer credit obligation shall not extend to any
nonpossessory security interest in household goods which is not a
purchase money security interest (as defined in said Regulation AA), and
no waiver of any notice herein shall be construed under any
circumstances to extend to any waiver of notice which is prohibited by
Regulation AA.
7.17. The term "Debtor" as is used in this Agreement shall be construed as
singular or plural to correspond with the number of persons executing
this Agreement as Debtor. The pronouns used in this Agreement are in the
neuter gender but shall be construed as feminine or masculine as
occasion may require. "Secured Party" and "Debtor" as used in this
Agreement include the heirs, devisees, executors or administrators,
successors, representatives, receivers, trustees and assigns of those
parties. 7.18. If more than one person executes this Agreement as
Debtor, their obligations under this Agreement shall be joint and
several.
7.18. If more than one person executes this Agreement as Debtor, their
obligations under this Agreement shall be joint and several.
7.19. The section headings appearing in this Agreement have been inserted for
convenience only and shall be given no substantive meaning or
significance whatever in construing the terms and provisions of this
Agreement. Terms used in this Agreement which are defined in the Texas
Uniform Commercial Code are used with the meanings as therein defined.
7.20. This Agreement shall be governed by and construed in accordance with
the laws of the state of Texas and the United States of America.
COLLATERAL DESCRIPTION
The Collateral of this Security Agreement is of the following description:
SECURITY INTEREST IN (1) 1983 HARRIS PRESS AND ALL
ACCESSIONS AND APPURTENANCES THERETO, (1) IRIS
COLOR INK PRINTER, SMART JET 4012 SN:597
HARRIS M-300 6 UNIT PRESS
DESCRIBED MORE FULLY ON THE ATTACHED EXHIBIT "A"
THIS WRITTEN LOAN AGREEMENT REPRESENTS THE FINAL AGREEMENT BETWEEN THE PARTIES
AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT
ORAL AGREEMENT OF THE PARTIES.
THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.
SIGNATURES(S) OF DEBTOR:
/s/ Mark C. Pope Date 10/12/94
- ---------------------------------------------- ----------------------
WETMORE & COMPANY
/s/ Mark C. Pope IV Vice President Date______________________
- ----------------------------------------------
By: Title:
______________________________________________ Date______________________
______________________________________________ Date______________________
______________________________________________ Date______________________
______________________________________________ Date______________________
SECURED PARTY: TEXAS COMMERCE BANK NATIONAL ASSOCIATION
BY: /s/ Joel J. Lanbis
---------------------------------------------------------------------
TITLE: Vice President
------------------------------------------------------------------
Pape 4 of 4
<PAGE>
THIS CREDIT AGREEMENT (as amended, modified and supplemented from time to
time, this "Agreement") by and between WETMORE & COMPANY (singly, a "Borrower"
--------- --------
and collectively, the "Borrowers") and TEXAS COMMERCE BANK NATIONAL
---------
ASSOCIATION (the "Bank") is dated as of September 14, 1994.
1. THE LOANS.
---------
ADVANCE CREDIT NOTE 1.1. Subject to the terms and conditions hereof, the
Bank agrees to make loans ("Loan" or "Loans") to any Borrower from time to time
---- -----
before the Termination Date, not to exceed at any one time outstanding for all
Borrowers $2,250,000.00 (the "Commitment"), each Borrower having the right to
----------
borrow and repay only. The Bank and the Borrowers agree that Chapter 15 of the
Texas Credit Code shall not apply to this Agreement, the Note or any Loan. The
Loans shall be evidenced by, and shall bear interest and be payable as provided
in, the note of the Borrowers of even date herewith (together with any and all
renewals, extensions, modifications and replacements thereof and substitutions
therefor, the "Note"). The purpose of the Loans is to purchase equipment.
----
LOAN DOCUMENTS 1.2 The Loans and all other obligations and indebtedness of
the Borrowers to the Bank are entitled to the benefit of the Loan Documents.
PAST DUE AMOUNTS 1.3 Each amount due to the Bank in connection with the Loan
Documents shall bear interest from its due date until paid at the Past Due Rate
(as defined in the Note).
2. CONDITIONS PRECEDENT.
--------------------
ALL LOANS 2.1 The obligation of the Bank to make any Loan is subject to
satisfaction of the following conditions precedent: (a) the Bank shall have
received the following, all of which shall be duly executed and in Proper Form:
(1) a Notice of Requested Borrowing within the time period and containing such
information as specified in the Note; and (2) such other documents as the Bank
may reasonably require; (b) no Event of Default shall have occurred and be
continuing and no Cure Period shall be in effect; and (c) the making of the
Loan shall not be prohibited by, or subject the Bank to any penalty or onerous
condition under, any Legal Requirement. "Business Day" shall have the same
------------
meaning as in the Note.
FIRST LOAN 2.2 In addition to the matters described in the preceding
section, the obligation, if any, of the Bank to make the first Loan is subject
to the receipt by the Bank of all the Loan Documents specified on Annex I, all
-------
of which shall be in Proper Form.
3. REPRESENTATIONS AND WARRANTIES.
------------------------------
To induce the Bank to enter into this Agreement and to make the Loans, the
Borrowers jointly and severally represent and warrant:
ORGANIZATION AND STATUS 3.1 Each Borrower who is not an individual and each
Subsidiary of each Borrower is duly organized, validly existing and in good
standing under the laws of the jurisdiction of its organization; has all power
and authority to conduct its business as presently conducted, and is duly
qualified to do business and in good standing in each jurisdiction in which the
nature of the business conducted by it makes such qualification desirable. No
Borrower has any Subsidiary other than those listed on Annex II and each such
--------
Subsidiary is owned by the Borrower, and in the percentage, set forth on Annex
-----
II.
- --
FINANCIAL STATEMENTS 3.2 All financial statements delivered to the Bank are
complete and correct and fairly present, in accordance with generally accepted
accounting principles, consistently applied ("GAAP"), the financial condition
----
and the results of operations of each Borrower and each Subsidiary of each
Borrower as at the dates and for the periods indicated. No material adverse
change has occurred in the assets, liabilities, financial condition, business
or affairs of any Borrower or any Subsidiary of any Borrower since the dates of
such financial statements. No Borrower and no Subsidiary of any Borrower is
subject to any instrument or agreement materially and adversely affecting its
financial condition, business or affairs.
ENFORCEABILITY 3.3 The Loan Documents are legal, valid and binding
obligations of the Parties enforceable in accordance with their respective
terms, except as may be limited by bankruptcy, insolvency and other similar
laws affecting creditors' rights generally. The execution, delivery and
performance of the Loan Documents have all been duly authorized by all
necessary action; are within the power and authority of the Parties; do not and
will not contravene or violate any Legal Requirement or the Organizational
Documents of the Parties; and do not and will not result in the breach of, or
constitute a default under, any agreement or instrument by which the Parties or
any of their respective Property may be bound and affected.
COMPLIANCE 3.4 Borrower and each Subsidiary of each Borrower has filed and
paid all taxes shown thereon to be due, except those for which extensions have
been obtained and those which are being contested in good faith. Each Borrower
and each Subsidiary of each Borrower is in compliance with all applicable Legal
Requirements and manages and operates (and will continue to manage and operate)
its business in accordance with good industry practices. No Borrower and no
Subsidiary of any Borrower is in default in the payment of any other
indebtedness or under any agreement to which it is a party. All consents,
permissions and registrations of or with any Governmental Authority or other
Person required in connection with the execution, delivery and performance of
the Loan Documents have been obtained.
LITIGATION 3.5 Except as heretofore disclosed to the Bank in writing, there
is no litigation or administrative proceeding pending or, to the knowledge of
any Borrower, threatened against, nor any outstanding judgment, order or decree
affecting, any Borrower or any Subsidiary of any Borrower before or by any
Governmental Authority. No Borrower and no Subsidiary of any Borrower is in
default with respect to any judgment, order or decree of any Governmental
Authority.
TITLE AND RIGHTS 3.6 Borrower and each Subsidiary of each Borrower has good
and marketable title to the Collateral, free and clear of any Lien except for
Liens granted by the Loan Documents. Except as otherwise expressly stated in
the Loan Documents or permitted by this Agreement, the Liens of the Documents
will constitute valid and perfected first and prior Liens on the Property
described therein, subject to no other Liens whatsoever. Each Borrower and each
Subsidiary of each Borrower possesses all permits, licenses, patents,
trademarks and copyrights required to conduct its business. All easements,
rights-of-way and other rights necessary to the maintenance and operation of
the Property of the Borrowers have been obtained and are in full force and
effect.
REGULATION U 3.7 None of the proceeds of any Loans will be used for the
purpose of purchasing or carrying, directly or indirectly, any margin stock or
for any other purpose which would make this credit a "purpose credit" within
the meaning of Regulation U of the Board of Governors of the Federal Reserve
System.
ENVIRONMENT 3.8 No Borrower and no Subsidiary of any Borrower has generated,
handled, used, stored or disposed of any hazardous or toxic waste or substance,
on or off its premises (whether or not owned by it), other than in accordance
with applicable Legal Requirements. No Borrower and no Subsidiary of any
Borrower has any material contingent liability with respect to non-compliance
with environmental or hazardous waste laws or has received any notice that it
or any of its Property or operations is not in compliance with, or that any
Governmental Authority is investigating its compliance with, any environmental
or hazardous waste laws.
Page 1 of 5 Pages
<PAGE>
Credit Agreement (No Borrowing Base)
Wetmore & Company
September 14, 1994
STATEMENTS BY OTHERS 3.9 All statements made by or on behalf of any
Borrower, any Subsidiary of any Borrower or any other of the Parties in
connection with any Loan Document shall constitute the joint and several
representations and warranties of the Borrowers hereunder.
4. AFFIRMATIVE COVENANTS.
---------------------
The Borrowers jointly and severally covenant and agree with the Bank that
prior to the termination of this Agreement each Borrower will do, and if
necessary cause to be done, and cause its Subsidiaries to do, each and all of
the following:
CORPORATE FUNDAMENTALS 4.1 At all times: (a) pay when due all taxes and
governmental charges of every kind upon it or against its income, profits or
Property, unless and only to the extent that the same be contested in good
faith and adequate reserves have been established therefor; (b) renew and keep
in full force and effect all of its licenses, permits and franchises; (c) do
all things necessary to preserve its corporate existence and its qualifications
and rights in all jurisdictions where such qualification is necessary or
desirable; (d) comply with all applicable Legal Requirements in respect of the
conduct of its business and the ownership of its Property; and (e) cause its
Property to be protected, maintained and kept in good repair and make all
replacements and additions to its Property as may be reasonable necessary to
conduct its business properly and efficiently.
INSURANCE 4.2 Maintain insurance with such reputable insurers, on such of
its Property and personnel, in such amounts and against such risks as is
customary with similar Persons or as may be reasonably required by the Bank,
and furnish the Bank satisfactory evidence thereof promptly upon request. These
insurance provisions are cumulative of the insurance provisions of the other
Loan Documents. The Bank shall be named as a beneficiary of such insurance as
its interest may appear and the Borrowers shall provide the Bank with copies of
the policies of insurance and a certificate of the insurer that the insurance
required by this section may not be canceled, reduced or affected in any manner
without 30 days' prior written notice to the Bank.
FINANCIAL INFORMATION 4.3 Furnish to the Bank one copy of each of the
following in Proper Form: (i) for Borrower: (a) as soon as available and in any
event within 120 days after the end of each fiscal year of Borrower, Borrower's
annual financial statements, prepared in conformity with GAAP accompanied by a
Compliance Certificate in the form of Exhibit A; (b) as soon as available and
---------
in any event within 45 days after the end of each fiscal quarter, the financial
statements of each Borrower for such period, and for the year to date, prepared
in conformity with GAAP accompanied by computations and work papers to
establish compliance or non-compliance with the financial covenants set forth
in Annex III and accompanied by a Compliance Certificate in the form of Exhibit
A; (c) copies of special audits, studies, reports and analysis prepared for the
management of any Borrower by outside parties; and (d) promptly after such
request is submitted to the appropriate Governmental Authority, any request for
waiver of funding standards or extension of amortization periods with respect
to any employee benefit plan; (ii) for individual Borrowers or guarantors, no
later than 15 days after request therefor by the Bank, and no later than
January 31 of each year, the personal financial statement of such Borrower or
guarantor, in form and containing such information and detail as is
satisfactory to the Bank, and (iii) for all Borrowers or guarantors, such other
information relating to the financial condition and affairs of the Borrowers or
guarantors and their Subsidiaries as from time to time may be requested by the
Bank in its discretion.
MATTERS REQUIRING NOTICE 4.4 Notify the Bank immediately upon acquiring
knowledge of: (a) the institution or threatened institution of any lawsuit or
administrative proceeding which, if adversely determined, might adversely
affect any Borrower; (b) the occurrence of any material adverse change in the
assets, liabilities, financial condition, business or affairs of any Borrower,
(c) the occurrence of any Event of Default; of any Default; or (d) any
prohibited transaction in connection with any employee benefit plan.
INSPECTION 4.5 Permit the Bank and its affiliates to inspect and photograph
its Property, to examine its files, books and records and make and take away
copies thereof, and to discuss its affairs with its officers and accountants,
all at such times and intervals and to such extent as the Bank may reasonably
desire.
ASSURANCES 4.6 Promptly execute and deliver any and all further agreements,
documents, instruments and other writings which may be requested by the Bank to
cure any defect in the execution and delivery of any Loan Document or more
fully to describe particular aspects of the agreements set forth in the Loan
Documents or intended to be set forth.
CERTAIN CHANGES 4.7 Notify the Bank at least 30 days prior to the date that
any of the Parties changes its name or the location of its chief executive
office or principal place of business or the place where it keeps its books and
records or the location of any of the Collateral.
5. NEGATIVE COVENANTS.
------------------
The Borrowers jointly and severally covenant and agree with the Bank that
prior to the termination of this Agreement no Borrower and no Subsidiary of any
Borrower will:
FINANCIAL COVENANTS 5.1 Fail to comply with the requirements on Annex III
---------
hereto. Unless otherwise provided on Annex III, all such amounts and ratios
---------
shall be calculated: (a) on the basis of GAAP; and (b) on a consolidated basis,
and shall be applicable only to the parent corporation which is a Borrower if
there is a Borrower which is a Subsidiary of another Borrower. Compliance with
the requirements of Annex III shall be determined as of the dates of the
---------
financial statements to be provided to the Bank, and each Borrower shall
deliver schedules reflecting the calculation of such amounts and ratios
concurrently with each set of financial statements.
CORPORATE CHANGES 5.2 In any single transaction or series of transactions,
directly or indirectly: (a) liquidate or dissolve; (b) be a party to any merger
or consolidation; (c) sell or dispose of any interest in any of its
Subsidiaries, or permit any of its Subsidiaries to issue any additional equity
other than to a Borrower; or (d) sell, convey or lease all or any substantial
part of its assets, except for sale of assets in the ordinary course of
------
business.
NATURE OF BUSINESS; MANAGEMENT 5.3 Change the nature of its business or
enter into any business which is substantially different from the business in
which it is presently engaged, or permit any material change in its management.
AFFILIATE TRANSACTIONS 5.4 Enter into any transaction or agreement with any
officer, director of or holder of any outstanding capital stock of any Borrower
(or any member of the family of any such Person, or any Person controlling,
controlled by or under common control with any Borrower) unless the same is
upon terms substantially similar to those obtainable from wholly unrelated
sources.
SUBSIDIARIES 5.5 Form, create or acquire any Subsidiary.
6. EVENTS OF DEFAULT AND REMEDIES.
------------------------------
EVENTS OF DEFAULT 6.1 If any of the following events ("Events of Default")
-----------------
shall occur, then the Bank may do any or all of the following: (1) declare the
Note to be, and thereupon the Note shall forthwith become, immediately due and
payable, together with all accrued and unpaid interest thereon and all
commitment fees and all other obligations and indebtedness of the Borrowers
under the Loan Documents, without notice of acceleration or of intention to
accelerate, presentment and demand or protest, all of which are hereby
expressly waived; (2)
<PAGE>
Credit Agreement (No Borrowing Base)
Wetmore & Company
September 14, 1994
without notice to any Borrower, terminate the Commitment and accelerate the
Termination Date; (3) set off, in any order, against the indebtedness of the
Borrowers under the Loan Documents any debt owing by the Bank to any Borrower,
including, but not limited to, any deposit account, which right is hereby
granted by each Borrower to the Bank, and (4) exercise any and all other rights
pursuant to the Loan Documents, at law, in equity or otherwise:
(a) Any Borrower shall fail to pay a principal of or interest on the Note or
any other obligation under any Loan Document as and when due;
or
(b) Any Borrower or any Subsidiary of any Borrower or any Guarantor shall
fail to pay at maturity, or within any applicable period of grace, any
principal of or interest on any other borrowed money obligation or shall fail
to observe or perform any term, covenant or agreement contained in any
agreement or obligation by which it is bound and which has been waived; or
(c) Any representation or warranty made in connection with any Loan Document
shall prove to have been incorrect, false or misleading; or
(d) Default shall occur in the punctual and complete performance of any
covenant of any of the Parties contained in any Loan Document; or
(e) The occurrence of an Event of Default under any Loan Document; or
(f) Final judgment for the payment of money shall be rendered against any
Borrower or any Subsidiary of any Borrower and the same shall remain
undischarged for a period of 30 days during which execution shall not be
effectively stayed; or
(g) The sale, encumbrance or abandonment (except as otherwise expressly
permitted by this Agreement) of any of the Collateral or the making of any
levy, seizure or attachment thereof or thereon; or the loss, theft, substantial
damage, or destruction of any material portion of such Property; or
(h) Any order shall be entered in any proceeding against any Borrower or any
Subsidiary of any Borrower decreeing the dissolution, liquidation or split-up
thereof, and such order shall remain in effect for 30 days; or
(i) Any Borrower or any Subsidiary of any Borrower shall make a general
assignment for the benefit of creditors or shall petition or apply to any
tribunal for the appointment of a trustee, custodian, receiver or liquidator of
all or any substantial part of its business, estate or assets or shall commence
any proceeding under any bankruptcy, insolvency, dissolution or liquidation of
any jurisdiction, whether now or hereafter in effect; or any such petition or
application shall be filed or any such proceeding shall be commenced against
any Borrower or any Subsidiary of any Borrower and such Borrower or such
Subsidiary by any act or omission shall indicate approval thereof, consent
thereto or acquiescence therein, or an order shall be entered appointing a
trustee, custodian, receiver or liquidator of all or any substantial part of
the assets of any Borrower or any Subsidiary of any Borrower or granting relief
to any Borrower or any Subsidiary of any Borrower or approving the petition in
any such proceeding, and such order shall remain in effect for more than 30
days; or any Borrower or any Subsidiary of any Borrower shall fail generally to
pay its debts as they become due to suffer any writ of attachment or execution
or any similar process to be issued or levied against it or any substantial
part of its Property which is not released, stayed, bonded or vacated within 30
days after its issue or levy; or
(j) Any Borrower or any Subsidiary of any Borrower shall have concealed,
removed, or permitted to be concealed or removed, any part of its Property,
with intent to hinder, delay or defraud its creditors or any of them, or made
or suffered a transfer of any of its Property which may be fraudulent under any
bankruptcy, fraudulent conveyance or similar law; or shall have made any
transfer of its Property to or for the benefit of a creditor at a time when
other creditors similarly situated have not been paid; or
(k) A material adverse change shall occur in the assets, liabilities,
financial condition, business or affairs of any Borrower or any Subsidiary of
any Borrower, or
(l) Any change shall occur in the ownership of any Borrower;
provided that, Bank agrees not to exercise the remedies set forth in Section
6.1(1) and (2) above, prior to (the "Cure Period"): five days following an
Event of Default due to failure of Borrower to pay any principal of or interest
on the Note; and 20 days following either Borrower's failure to comply with the
financial covenants set forth on Annex III to this Agreement, or Guarantor's
failure to comply with the financial covenants set forth on Exhibit B to the
Guaranty.
REMEDIES CUMULATIVE 6.2 No remedy, right or power of the Bank is intended to
be exclusive of any other remedy, right or power now or hereafter existing by
contract, at law, in equity, or otherwise, and all such remedies, rights and
powers shall be cumulative. Nothing herein shall imply any obligation of any
Borrower to maintain any deposit with the Bank.
7. MISCELLANEOUS.
-------------
NO WAIVER 7.1 No waiver of any Default shall be deemed to be a waiver of any
other Default. No failure to exercise or delay in exercising any right or power
under any Loan Document shall operate as a waiver thereof, nor shall any single
or partial exercise of any such right or power preclude any further or other
exercise thereof or the exercise of any other right or power. No amendment,
modification or waiver of any Loan Document shall be effective unless the same
is in writing and signed by the Person against whom such amendment,
modification or waiver is sought to be enforced. No notice to or demand on any
Person shall entitle any Person to any other or further notice or demand in
similar or other circumstances.
NOTICES 7.2 All notices under the Loan Documents shall be in writing and
either delivered against receipt therefor, or mailed by registered or certified
mail, return receipt requested, in each case addressed to the address shown on
the signature page hereof or to such other address as a party may designate.
Except for the notices required by Section 2.1, which shall be given only upon
-----------
actual receipt by the Bank, notices shall be deemed to have been given (whether
actually received or not) when delivered (or, if mailed, on the next Business
Day).
GOVERNING LAW/ARBITRATION 7.3 (a) UNLESS OTHERWISE SPECIFIED THEREIN, EACH LOAN
DOCUMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE
STATE OF TEXAS AND, AS APPLICABLE, THE UNITED STATES OF AMERICA. To the maximum
extent not prohibited by law, any controversy or claim arising out of or
relating to the Loan or the Loan Documents or any transaction provided for
therein, including but not limited to any claim based on or arising from an
alleged tort or an alleged breach of any agreement contained in any of the Loan
Documents, shall, at the request of any party to the Loan or Loan Documents
(either before or after the commencement of judicial proceedings), be settled by
mandatory and binding arbitration pursuant to Title 9 of the United States Code
and in accordance with the Commercial Arbitration Rules of the American
Arbitration Association (the "AAA"). If Title 9 of the United States Code is
---
inapplicable to any such claim or controversy for any reason, such arbitration
shall be conducted pursuant to the Texas General Arbitration Act and in
accordance with the Commercial Arbitration Rules of the AAA. In any such
arbitration proceeding: (i) all statutes of limitations which would otherwise be
applicable shall apply; and (ii) the proceeding shall be conducted in the city
in which the principal office of the Bank is located in Texas, by a single
arbitrator, if the amount in controversy is $1 million or less or by a panel of
three arbitrators if the amount in controversy is over $1 million. All
arbitrators shall be selected by the process of appointment from a panel
pursuant to Section 13 of the AAA Commercial Arbitration Rules. Any award
rendered in any such arbitration proceeding shall be final and binding, and
judgment upon any such award may be entered in any court having jurisdiction.
(b) If any party to the Loan or Loan Documents files a proceeding in any court
to resolve any such controversy or claim, constitute a waiver of the right of
such party or a other party to seek arbitration under the provisions of this
Section of that or any other claim or controversy, and the court shall, upon
motion of any party to the proceeding, direct that such controversy or claim be
arbitrated in accordance with this Section.
(c) No provision of, or the exercise of any rights under, this Section shall
limit or impair the right of any party to the Loan Documents before, during or
after any arbitration proceeding to: (i) exercise self-help remedies such as
setoff or repossession; (ii) foreclosure (judicially or otherwise) any lien on
or security interest in any real or personal property Collateral; or (iii)
obtain emergency relief from a court of competent jurisdiction to prevent the
dissipation, damage, destruction, transfer, hypothecation, pledging or
concealment of assets or of Collateral securing any indebtedness, obligation or
guaranty referenced in the Loan Documents. Such emergency relief may be in the
nature of, but is not limited to: pre-judgment attachments, garnishments,
sequestrations, appointments of receivers, or other emergency injunctive relief
to preserve the status quo.
<PAGE>
Credit Agreement (No Borrowing Base)
Wetmore & Company
September 14, 1994
(d) To the extent arbitration is prohibited by law or in the event of
judicial proceedings for whatever reason, each Borrower hereby irrevocably
waives, to the fullest extent permitted by law, any objection which it may now
or hereafter have to the laying of venue of any suit, action or proceeding
arising out of or relating to the Loan or the Loan Documents brought in the
district courts of the county in Texas in which the principal office of the
Bank is located, or in the United States District Court for the District of
Texas in which the Bank's principal office is located (collectively, the
"Courts"), or any claim that any such suit, action or proceeding brought in any
------
such court has been brought in an inconvenient forum. Each Borrower hereby
irrevocably agrees that any judicial proceeding against the Bank arising out of
or in connection with the Loan Documents shall be brought in the Courts.
Nothing contained herein, however, shall be construed as a waiver of any
Borrower's or the Bank's right to compel arbitration of disputes pursuant to
subparagraphs (a) and (b), above.
SURVIVAL; PARTIES BOUND 7.4 All representations, warranties, covenants and
agreements made by or on behalf of any Borrower in connection with the Loan
Documents shall survive the execution and delivery of the Loan Documents; shall
not be affected by any investigation made by any Person, and shall bind each
Borrower and the heirs, devisees, executors, administrators, personal
representatives, successors, trustees, receivers and assigns of each Borrower
and inure to the benefit of the successors and assigns of the Bank; provided
--------
that the undertaking of the Bank hereunder to make the Loans to the Borrowers
shall not inure to the benefit of any successor or assign of any Borrower.
Except as otherwise provided herein, the term of this Agreement shall be until
the final maturity of the Note and the full and final payment of all amounts
due under the Loan Documents.
DOCUMENTARY MATTERS 7.5 This Agreement may be executed in several identical
counterparts, and by the parties hereto on separate counterparts, and each
counterpart, when so executed and delivered, shall constitute an original
instrument, and all such separate counterparts shall constitute but one and the
same instrument. The headings and captions appearing in the Loan Documents have
been included solely for convenience and shall not be considered in construing
the Loan Documents. The Loan Documents embody the entire agreement between the
Borrowers and the Bank and supersede all prior proposals, agreements and
understandings. If any provision of any Loan Document shall be invalid, illegal
or unenforceable in any respect under any applicable law, the validity,
legality and enforceability of the remaining provisions shall not be affected
or impaired thereby.
EXPENSES 7.6 Any provision to the contrary notwithstanding, and whether or
not the transactions contemplated by this Agreement shall be consummated, the
Borrowers jointly and severally agree to pay on demand all out-of-pocket
expenses (including, without limitation, the fees and expenses of counsel for
the Bank) in connection with the negotiation, preparation, execution, filing,
recording, modification, supplementing and waiver of the Loan Documents and the
making, servicing and collection of the Loans. The obligations of the Borrowers
under this and the following section shall survive the termination of this
Agreement.
INDEMNIFICATION 7.7 The Borrowers jointly and severally agree to indemnify,
defend and hold the Bank harmless from and against any and all loss, liability,
obligation, damage, penalty, judgment, claim, deficiency and expense (including
interest, penalties, attorneys' fees and amounts paid in settlement) to which
the Bank may become subject arising out of or based upon the Loan Documents or
any Loan, including that resulting from the Bank's own negligence, except and
------
to the extent caused by the gross negligence or willful misconduct of the Bank.
NATURE OF OBLIGATIONS 7.8 If more than one Borrower executes this Agreement,
all of the representations, warranties, covenants and agreements of the
Borrowers shall be joint and several obligations of the Borrowers.
CONSOLIDATION 7.9 If any Borrower has a Subsidiary, all financial statements
for such Borrower shall be prepared on both consolidated and consolidating
bases and all financial amounts and ratios with respect to such Borrower shall
be computed on a consolidated basis.
USURY NOT INTENDED 7.10 It is the intent of each Borrower and of Bank in the
execution and performance of this Agreement and any other Loan Document to
contract in strict compliance with the usury laws of the State of Texas, the
United States of America, and as applicable. Each Borrower and Bank agree that
none of the terms and provisions contained in this Agreement or any other Loan
Document shall ever be construed to create a contract to pay for the use,
forbearance or detention of money with interest at a rate in excess of the
maximum nonusurious rate of interest permitted to be charged by applicable
Federal or Texas law (whichever shall permit the higher lawful rate) from time
to time in effect ("Highest Lawful Rate"). At all times, if any, that Chapter
-------------------
One of the Texas Credit Code shall establish the Highest Lawful Rate, the
Highest Lawful Rate shall be the "indicated rate ceiling" as defined in that
Chapter. The provisions of this paragraph shall control over all other
provisions of this Agreement and all other Loan Documents which may be in
apparent conflict herewith. In the event Bank shall collect moneys which are
deemed to constitute interest in excess of the legal rate, such moneys shall be
immediately returned to the payor thereof (or, at the option of Bank, credited
against the unpaid principal of the Note) upon such determination.
8. DEFINITIONS.
-----------
Unless the context otherwise requires, capitalized terms used in Loans
Documents have these meanings:
Authority Documents shall mean certificates of authority to transact
- -------------------
business, Certificates of Good Standing, borrowing resolutions (with
secretary's certificate), Secretary's Certificates of Incumbency, and other
documents which empower and enable Borrowers or its representatives to enter
into agreements evidenced by Loan Documents or evidence such authority.
Cash Flow shall mean net income (after interest and tax expense) plus
- ---------
amortization of intangibles and depreciation.
Collateral shall mean all Property, tangible or intangible, real, personal
- ----------
or mixed, now or hereafter subject to the Security Documents, or intended so to
be.
Corporation shall mean corporations, partnerships, joint ventures, joint
- -----------
stock associations, business trusts and other business entities.
Current Assets shall mean all cash, customers' accounts and other
- --------------
receivables due within one year from statement date, inventory, deposits,
marketable securities, and prepaid expenses to be consumed within one year from
statement date.
Current Liabilities shall mean all amounts due or to become due for payment
- -------------------
within twelve (12) months of statement date.
Current Ratio shall mean the ratio of Current Assets to Current Liabilities.
- -------------
Dividends shall mean any distribution of capital to Graphic Industries, Inc.
- ---------
its subsidiaries and associates including but not limited to offsets of
intercompany loans.
Government Accounts shall mean receivables owed by the U.S. government or by
- -------------------
the government of any state, county, municipality, or other political
subdivision as to which Bank's security interest or ability to obtain direct
payment of the proceeds is governed by any federal or state statutory
requirements other than those of the Uniform Commercial Code, including,
without limitation, the Federal Assignment of Claims Act of 1940, as amended.
<PAGE>
Credit Agreement (No Borrowing Base)
Wetmore & Company
September 14, 1994
Governmental Authority shall mean any foreign governmental authority, the
- ----------------------
United States of America, any State of the United States and any political
subdivision of any of the foregoing, and any agency, department, commission,
board, bureau, court or other tribunal having jurisdiction over the Bank or any
Borrower, any Subsidiary of any Borrower or any guarantor of any indebtedness
hereunder or their respective Property.
Indebtedness shall mean and include (a) all items which in accordance with
- ------------
GAAP would be included on the liability side of a balance sheet on the date as
of which Indebtedness is to be determined (excluding capital stock, surplus
reserves and deferred credits); (b) all guaranties, endorsements and other
contingent obligations in respect of, or any obligations to purchase or
otherwise acquire, Indebtedness of others; and (c) all Indebtedness secured by
any Lien existing on any interest of the Person with respect to which
indebtedness is being determined in Property owned subject to such Lien whether
or not the Indebtedness secured thereby shall have been assumed.
Legal Requirement shall mean any law, ordinance, decree, requirement, order,
- -----------------
judgment, rule, regulation (or interpretation of any of the foregoing) of, and
the terms of any license or permit issued by, any Governmental Authority.
Lien shall mean any mortgage, pledge, charge, encumbrance, security
- ----
interest, collateral assignment or other lien or restriction of any kind,
whether based on common law, constitutional provision, statute or contract.
Loan Documents shall mean this Agreement, the agreements, documents,
- --------------
instruments and other writings contemplated by this Agreement or listed on
Annex I, all other assignments, deeds, guaranties, pledges, instruments,
- -------
certificates and agreements now or hereafter executed or delivered to the Bank
pursuant to any of the foregoing, and all amendments, modifications, renewals
extensions, increases and rearrangements of, and substitutions for, any of the
foregoing.
Organizational Documents shall mean, with respect to a corporation, the
- ------------------------
certificate of incorporation, articles of incorporation and bylaws of such
corporation; with respect to a partnership, joint venture, or trust, the
agreement or instrument establishing such entity; in each case including any
and all modifications thereof as of the date of the Loan Document referring to
such Organizational Document and any and all future modifications thereof which
are consented to by the Bank.
Parties shall mean all Persons other than the Bank executing any Loan
- -------
Document.
Person shall mean any individual, Corporation, trust, unincorporated
- ------
organization, Governmental Authority or any other form of entity.
Proper Form shall mean in form and substance satisfactory to the Bank.
- -----------
Property shall mean any interest in any kind of property or asset, whether
- --------
real, personal or mixed, tangible or intangible.
Subordinated Debt shall mean any Indebtedness subordinated to Indebtedness
- -----------------
due Bank on terms satisfactory to Bank.
Subsidiary shall mean, as to a particular parent Corporation, any
- ----------
Corporation of which 50% or more of the indicia of equity rights is at the time
directly or indirectly owned by such parent Corporation or by one or more
Persons controlled by, controlling or under common control with such parent
Corporation.
Tax Adjusted Net Income shall mean as of any date 60% of Borrowers net
- -----------------------
income as determined in accordance with GAAP.
Termination Date shall mean the earlier of: (a) October 1, 2000 or (b) the
- ----------------
date specified by the Bank pursuant to Section 6.1 hereof.
-----------
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
set forth above.
THIS WRITTEN LOAN AGREEMENT REPRESENTS THE FINAL AGREEMENT BETWEEN BANK AND
THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS,
OR SUBSEQUENT ORAL AGREEMENTS OF BANK AND THE PARTIES.
THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN BANK AND THE PARTIES.
BORROWER(S): WETMORE & COMPANY
By: /s/ MARK C. POPE
---------------------------------------------------------------------------
Name: MARK C. POPE IV
------------------------------------------------------------------------
Title: VICE PRESIDENT
-----------------------------------------------------------------------
Address:
----------------------------------------------------------------------
BANK TEXAS COMMERCE BANK NATIONAL ASSOCIATION
By: /s/ JOEL J. LAMDIS
---------------------------------------------------------------------------
Name: JOEL J. LAMDIS
-------------------------------------------------------------------------
Title: VICE PRESIDENT
------------------------------------------------------------------------
Address:
----------------------------------------------------------------------
EXHIBITS: ANNEXES:
A Compliance Certificate I Loan Documents
II Subsidiaries
III Financial Covenants
<PAGE>
EXHIBIT 10 (ppp)
EXECUTION COPY
LOAN, SECURITY AND GUARANTY AGREEMENT
Dated as of November 30, 1994
Between
IPD PRINTING & DISTRIBUTING, INC.,
as Borrower
GRAPHIC INDUSTRIES, INC.,
as Guarantor
AND
TRUST COMPANY BANK,
as Lender
<PAGE>
TABLE OF CONTENTS
-----------------
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
ARTICLE I DEFINITIONS ......................................................1
1.1 Definitions ................................................1
1.2 Accounting Terms ...........................................7
1.3 Use of Defined Terms .......................................7
1.4 Interpretation .............................................7
ARTICLE II AMOUNT AND TERMS OF BORROWINGS ...................................8
2.1 Advances and Multiple Disbursement Master Note .............8
2.2 Manner of Advances .........................................8
2.3 Term Loan ..................................................9
2.4 Accrual of Interest on Term Loan ...........................9
2.5 Prepayment of Advances and Term Loan ......................10
2.6 Mandatory Prepayment Upon Sale of Collateral ..............10
2.7 Capital Adequacy ..........................................10
2.8 Making of Payments ........................................10
2.9 Default Rate of Interest ..................................11
2.10 Calculation of Interest ...................................11
ARTICLE III CONDITIONS TO ADVANCES AND TERM LOAN ............................11
3.1 Conditions Precedent to Initial Advance ...................11
3.2 Conditions Precedent to Each Advance ......................12
3.3 Conditions Precedent to Term Loan .........................13
ARTICLE IV REPRESENTATIONS AND WARRANTIES ..................................13
4.1 Corporate Existence .......................................13
4.2 Corporate Power and Authority .............................13
4.3 Enforceability ............................................14
4.4 Consent ...................................................14
4.5 Financial Statements ......................................14
4.6 Taxes .....................................................14
4.7 Litigation ................................................15
4.8 Title to Collateral .......................................15
4.9 Federal Reserve Regulations ...............................15
4.10 ERISA .....................................................15
4.11 Outstanding Debt ..........................................16
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C>
4.12 Conflicting Agreements or Other Matters 16
4.13 Pollution and Environmental Control 16
4.14 Possession of Franchises, Licenses, etc. 17
4.15 Investment Company Act.....................................17
4.16 Public Utility Holding Company.............................17
4.17 Financing Statements.......................................17
4.18 Principal Place of Business................................17
ARTICLE V AFFIRMATIVE COVENANTS............................................18
5.1 Insurance..................................................18
5.2 Reporting Covenants........................................18
5.3 Funding of Plans...........................................20
5.4 Maintenance of Collateral..................................20
5.5 Current Ratio..............................................20
5.6 Leverage Ratio.............................................20
5.7 Fixed Charge Coverage Ratio................................20
5.8 Debt Service Coverage Ratio................................20
ARTICLE VI NEGATIVE COVENANTS...............................................20
6.1 Limitation on Liens........................................21
6.2 Consolidations, Mergers, etc...............................21
6.3 Sale of Collateral.........................................21
6.4 Continuous Perfection......................................21
ARTICLE VII EVENTS OF DEFAULT AND REMEDIES...................................21
7.1 Events of Default..........................................21
7.2 Remedies on Default........................................23
ARTICLE VIII GUARANTY.........................................................24
8.1 Guaranty...................................................24
8.2 Waivers....................................................25
8.3 Modification, etc..........................................25
8.4 Reinstatement..............................................26
8.5 Subrogation................................................26
8.6 Continuing Guaranty........................................27
ARTICLE IX SECURITY INTEREST................................................27
9.1 Security Interest..........................................27
9.2 Power-of-Attorney..........................................27
9.3 Borrower to Hold in Trust..................................27
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C>
9.4 Financing Statements.......................................28
ARTICLE X MISCELLANEOUS....................................................28
10.1 No Waiver..................................................28
10.2 Notices....................................................28
10.3 GOVERNING LAW..............................................29
10.4 Survival of Representations and Warranties.................29
10.5 Severability...............................................29
10.6 Counterparts...............................................30
10.7 Payment of Costs...........................................30
10.8 Successors and Assigns.....................................30
10.9 Set-Off....................................................30
10.10 Indemnity..................................................30
10.11 Jurisdiction and Venue.....................................31
10.12 Entire Agreement...........................................31
10.13 WAIVER OF JURY TRIAL.......................................31
10.14 Amendments, etc............................................32
</TABLE>
Exhibit A - Multiple Disbursement Master Note
Exhibit B - Term Note
Exhibit C - Description of Real Property
Exhibit D - Certificate as to Annual Financial Statements
Attachment Number 1 to Exhibit E Compliance Certificate
<PAGE>
THIS LOAN, SECURITY AND GUARANTY AGREEMENT (this "Agreement") dated as of
---------------
November 30, 1994 between IPD PRINTING & DISTRIBUTING, INC. ("Borrower"), a
--------
Georgia corporation, GRAPHIC INDUSTRIES, INC., a Georgia corporation
("Guarantor") and TRUST COMPANY BANK, a Georgia banking corporation ("Lender").
--------- ------
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, upon the terms specified herein, Borrower has requested from
Lender a multiple disbursement credit facility equal to $3,500,000 in aggregate
principal amount at any time outstanding (the "Commitment") to finance the
----------
purchase and installation of one (1) Heidelberg 3/4 Web Printing Press until the
earlier of November 30, 1995 or the date Borrower requests Lender to convert to
the Term Loan (the "Conversion Date");
---------------
WHEREAS, upon the terms specified herein, Borrower has requested from
Lender a term loan in an aggregate principal amount equal to the lesser of the
Commitment and the principal amount of advances outstanding under the Commitment
on the Conversion Date from the Conversion Date until five (5) years thereafter;
WHEREAS, Lender is willing to make advances under the Commitment and the
term loan, subject to the terms and conditions as hereinafter set forth,
including the unconditional guaranty of Guarantor provided for herein;
WHEREAS, Guarantor, the parent company of Borrower, is willing to
unconditionally guarantee the payment and performance of Borrower's obligations
hereunder;
NOW, THEREFORE, for and in consideration of the mutual premises, covenants
and conditions contained herein, and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto
agree as follows:
ARTICLE I
DEFINITIONS
-----------
Section 1.1 Definitions. In addition to the other terms defined herein,
-----------
the following terms used herein shall have the meanings herein specified (such
meanings to be equally applicable to both the singular and plural forms of the
terms defined) :
"Advance" shall mean a disbursement made by Lender to Borrower
-------
under the Commitment that bears interest as provided in Section 2.1 (c) hereof
----------- -
(individually, an "Advance" and collectively, the "Advances").
------- --------
<PAGE>
"Agreement Date" shall mean the date as of which this Agreement is
--------------
dated.
"Business Day" shall mean any day that is not a Saturday, a Sunday
------------
or a day on which commercial banks are required or authorized to close in
Atlanta, Georgia.
"Capital Lease" shall mean for any Person any lease which is
-------------
required to be capitalized on the balance sheet of such Person as lessee in
accordance with GAAP.
"Cash" shall mean all monetary items (including currency, coin and
----
bank demand deposits) that are treated as cash under GAAP.
"Cash Equivalents" shall mean all investments classified as
----------------
"marketable securities" in accordance with GAAP.
"Code" shall mean the Internal Revenue Code of 1986, as amended
----
from time to time, and the regulations promulgated and the rulings issued
thereunder.
"Collateral" shall mean one (1) Heidelberg 3/4 Web Printing Press,
----------
Harris Model 100L, Serial No. 052091-8, with Scheffer in-line finishing system,
wherever located, together with all attachments, components, parts, equipment
and accessories installed thereon or affixed thereto and to the extent not
otherwise included, all proceeds (as defined in the Uniform Commercial Code of
the applicable jurisdiction).
"Commitment" shall have the meaning set forth in the preamble
----------
hereof.
"Consolidated Current Assets" shall mean only those assets of
---------------------------
Guarantor and its Subsidiaries on a consolidated basis which may, in the
ordinary course of business, be converted into cash within a period of one (1)
year from the date as of which a computation is being made.
"Consolidated Current Liabilities" shall mean, without duplication,
--------------------------------
the sum of (a) trade accounts payable and (b) notes payable to banks and other
short-term Indebtedness owed to financial institutions and (c) current
maturities of Indebtedness which matures in over one year of Guarantor and its
Subsidiaries on a consolidated basis determined in accordance with GAAP.
"Consolidated Depreciation and Amortization" shall mean
------------------------------------------
depreciation expense, amortization expense and other non-cash charges of
Guarantor and its Subsidiaries determined on a consolidated basis in accordance
with GAAP.
"Consolidated Funded Debt" shall mean for any period all
------------------------
outstanding Indebtedness of Guarantor and its Subsidiaries on a consolidated
basis, less the sum of Cash and Cash Equivalents.
----
-2-
<PAGE>
"Consolidated Income Tax Expense" shall mean for any period for
-------------------------------
Guarantor the income tax expense taken into account in calculating Net Income of
Guarantor and its Subsidiaries on a consolidated basis in accordance with GAAP.
"Consolidated Interest Expense" shall mean for any period the
-----------------------------
aggregate amount of interest expense of Guarantor and its Subsidiaries on a
consolidated basis (including the portion of any obligation under Capital Leases
allocable to interest expense under GAAP) determined in accordance with GAAP.
"Consolidated Lease Expense" shall mean for any period the
--------------------------
aggregate operating lease payments of Guarantor and its Subsidiaries on a
consolidated basis determined in accordance with GAAP.
"Consolidated Net Worth" shall mean the shareholders' equity
----------------------
(deficiency) of Guarantor and its Subsidiaries on a consolidated basis
determined in accordance with GAAP.
"Consolidated Total Liabilities" shall mean the total liabilities
------------------------------
of Guarantor and its Subsidiaries on a consolidated basis determined in
accordance with GAAP.
"Conversion Date" shall have the meaning set forth in the preamble
---------------
hereof.
"Current Ratio" shall mean for any period the ratio of Consolidated
-------------
Current Assets to Consolidated Current Liabilities.
"Debt Service Coverage Ratio" shall mean for any period the ratio
---------------------------
of (i) Consolidated Funded Debt for such period to (ii) EBITDA for the
immediately preceding four (4) fiscal quarters ending with such period.
"Default" shall mean any event that, with notice or lapse of time
-------
or both, would constitute an Event of Default.
"Dollars" and the sign "$" shall mean lawful money of the United
-------
States of America.
"EBILT" shall mean for any period Consolidated Net Income, plus
----- ----
Consolidated Interest Expense, plus Consolidated Lease Expense, plus
---- ----
Consolidated Income Tax Expense.
"EBITDA" shall mean for any period Consolidated Net Income, plus
------ ----
Consolidated Interest Expense, plus Consolidated Income Tax Expense, plus
---- ----
Consolidated Depreciation and Amortization.
-3-
<PAGE>
"ERISA" shall mean the Employee Retirement Income Security Act of
-----
1974, as amended from time to time, and the regulations promulgated and rulings
issued thereunder.
"ERISA Affiliate" shall mean, as of any date, any trade or business
---------------
(whether or not incorporated) which, together with Guarantor, is treated as a
single employer under section 414(b), (c), (m) or (o) of the Code.
"Event of Default" shall have the meaning set forth in Article VII.
----------------
"Final Maturity Date" shall mean the date that is five (5) years
-------------------
from and after the Conversion Date.
"Fixed Charge Coverage Ratio" shall mean for any period the ratio
---------------------------
of (a) EBILT for the immediately preceding four (4) fiscal quarters then ended
to (b) the sum of (i) Consolidated Interest Expense for the immediately
preceding four (4) fiscal quarters then ended, plus (ii) Consolidated Lease
Expense for the immediately preceding four (4) fiscal quarters then ended.
"GAAP" shall mean generally accepted accounting principles as
----
defined by the Financial Accounting Standards Board as from time to time in
effect that are consistently applied and, when used with respect to Guarantor,
that are consistent with the accounting practices of Guarantor reflected in the
financial statements of Guarantor, with such changes as may be approved by an
independent public accountant satisfactory to Lender; provided, that in the
--------
event changes shall be mandated by the Financial Accounting Standards Board or
any similar accounting authority of comparable standing, or shall be recommended
by Guarantor's independent public accountants, such changes shall be included in
GAAP only from and after the date that the parties hereto execute a definitive
agreement necessary to reflect any such changes in the financial covenants set
forth herein.
"Indebtedness" of any Person shall mean without duplication (a) all
------------
obligations of such Person for borrowed money, (b) all obligations of such
Person evidenced by loans, debentures, notes or similar instruments, (c) all
obligations of such Person to pay the deferred purchase price of property or
services (other than accounts payable and prepaid expenses incurred in the
ordinary course of business and not overdue by more than ninety (90) days), (d)
all obligations of such Person as lessee under leases which shall have been or
should be, in accordance with GAAP, recorded as Capital Leases, (e) all
obligations of such Person to purchase securities or other property which arise
out of or in connection with the sale of the same or substantially similar
securities or property, (f) all obligations of such Person created or arising
under any conditional sale or other title retention agreement with respect to
property acquired by such Person (even though the rights and remedies of the
seller or lender under such agreement in the event of a default are limited to
repossession or sale of such property) and (g) all obligations under direct or
indirect guaranties in respect of, and
-4-
<PAGE>
obligations (contingent or otherwise) to purchase or otherwise acquire, or
otherwise to assure a creditor against loss in respect of, indebtedness or
obligations of others of the kinds referred to in clauses (a) through (f) above.
"Leverage Ratio" shall mean for any period the ratio of
--------------
Consolidated Total Liabilities to Consolidated Net Worth.
"Lien" shall mean any mortgage, pledge, security interest,
----
encumbrance, lien or charge of any kind (including any written agreement to give
any of the foregoing, any conditional sale or other title retention agreement,
any lease in the nature thereof, and the filing of or agreement to give any
financing statement under the Uniform Commercial Code of any jurisdiction).
"Loan Documents" shall mean and include, as the context requires,
--------------
this Agreement, the Multiple Disbursement Master Note, the Term Note and any and
all other instruments, agreements, documents and writings contemplated hereby or
executed in connection herewith.
"Material Adverse Effect" shall mean a material adverse effect on
-----------------------
the business, assets, operations, condition (financial or otherwise), or
prospects of Guarantor and its Subsidiaries taken as a whole.
"Multiemployer Plan" shall mean, as of any date, a "multiemployer
------------------
plan" as defined in section 4001 (a)(3) of ERISA.
"Multiple Disbursement Master Note" shall mean a promissory note of
---------------------------------
Borrower payable to the order of Lender, in substantially the form of Exhibit A
---------
hereto, evidencing the outstanding aggregate principal amount of Advances of
Lender to Borrower under the Commitment, either as such promissory note is
originally executed or as it from time to time may be supplemented, modified,
amended, renewed or extended.
"Net Income" shall mean for any period the net earnings from
----------
continuing operations before extraordinary items and after provision for income
taxes of Guarantor and its Subsidiaries on a consolidated basis determined in
accordance with GAAP.
"PBGC" shall mean the Pension Benefit Guaranty Corporation and any
----
successor thereto.
"Permitted Liens" shall mean the following Liens: (a) Lien granted
---------------
to Lender on the Collateral pursuant to this Agreement; (b) purchase money Liens
upon any property acquired or held by Borrower in the ordinary course of
business to secure the purchase price of such property or to
-5-
<PAGE>
secure Indebtedness incurred solely for the purpose of financing the acquisition
of such property, provided that such Liens do not extend to any other property;
(c) Liens existing on any property held by Borrower in the ordinary course of
business at the time of its acquisition (other than any such Lien created in
contemplation of such acquisition); (d) Liens for taxes, assessments or other
governmental charges or levies not yet due or which are being actively contested
in good faith by appropriate proceedings if adequate reserves with respect
thereto are maintained on the books of Borrower in accordance with GAAP; (e)
statutory Liens of landlords and Liens of carriers, warehousemen, mechanics,
materialmen and other Liens imposed by law created in the ordinary course of
business for amounts not yet due or which are being contested in good faith by
appropriate proceedings and with respect to which adequate reserves are being
maintained; (f) Liens (other than any Lien imposed by ERISA) incurred or
deposits made in the ordinary course of business in connection with workmen's
compensation, unemployment insurance or other types of social security; (g)
easements, rights-of-way, restrictions and other similar charges or encumbrances
not materially detracting from the value of Borrower's properties or interfering
with the ordinary conduct of the business of Borrower or any of its properties;
and (h) extensions, renewals or replacements of any Lien referred to in clauses
(a) and (b) hereof; provided, that the principal amount of the indebtedness or
--------
obligation secured thereby is not increased and that any such extension, renewal
or replacement is limited to the property originally encumbered by the Lien.
"Person" shall mean an individual, partnership, corporation
------
(including a business trust), joint stock company, limited liability company,
trust, unincorporated association, joint venture or other entity, or a
government or any political subdivision or agency thereof.
"Plan" shall mean any "employee benefit plan" as defined in Section
----
3(3) of ERISA maintained by or on behalf of Guarantor or any ERISA Affiliate,
including but not limited to any defined benefit pension plan, profit sharing
plan, money purchase pension plan, savings or thrift plan, stock bonus plan,
employee stock ownership plan, Multiemployer Plan, or any plan, fund, program,
arrangement or practice providing for medical (including post-retirement
medical), hospitalization, accident, sickness, disability or life insurance
benefits.
"Prime Rate" shall mean the annual rate of interest equal to the
----------
rate of interest designated by Lender to be its prime rate from time to time,
with any change in the rate of interest resulting from a change in the Prime
Rate to be effective as of the opening of business of Lender on the day of such
change. The Prime Rate is a reference rate and does not necessarily represent
the lowest or best rate charged to any customer. Lender may make commercial
loans or any other loan at rates of interest at, above or below the Prime Rate.
"Secured Obligations" shall mean the Indebtedness evidenced by the
-------------------
Multiple Disbursement Master Note and the Term Note and all other obligations
under this Agreement and
-6-
<PAGE>
the other Loan Documents, whether now existing or hereafter arising, however
evidenced, whether direct or indirect, absolute or contingent, individually or
jointly with any other Person, together with any extensions and renewals of any
of the foregoing.
"Subsidiary" shall mean any Person of which securities or other
----------
ownership interests having ordinary voting power to elect a majority of the
board of directors or other Persons performing similar functions are at the time
directly or indirectly owned by such Person. Any reference herein to
"Subsidiary" shall mean and refer to a Subsidiary of Guarantor unless otherwise
indicated.
"Term Loan" shall mean the loan made by Lender to Borrower on the
---------
Conversion Date in accordance with Section 2.4 hereof and evidenced by the Term
Note.
"Term Note" shall mean a promissory note of Borrower payable to the
---------
order of Lender, in substantially the form of Exhibit B hereto, evidencing the
Term Loan, either as such promissory note is originally executed or as it from
time to time may be supplemented, modified, amended, renewed or extended.
Section 1.2 Accounting Terms. All accounting terms not
----------------
specifically defined herein shall have the meanings normally given them in
accordance with GAAP consistently applied and applied on a basis consistent with
that applied to the financial statements previously furnished to Lender pursuant
to Section 4.5 hereof and the financial statements delivered to Lender pursuant
-----------
to Section 5.2 (a) hereof.
----------- -
Section 1.3 Use of Defined Terms. Unless otherwise defined or the
--------------------
context requires, all terms defined in this Agreement shall have the same
defined meanings when used in any other Loan Documents.
Section 1.4 Interpretation. All personal pronouns used in this
--------------
Agreement, whether used in the masculine, feminine or neuter gender, shall
include all genders; the singular shall include the plural and the plural shall
include the singular; "hereunder", "hereof", "hereto" and words of similar
import shall be deemed references to this Agreement as a whole and not to any
particular Article, Section or other provision hereof; "or" is not exclusive;
------- -------
and relative to any determination of any period of time, "from" means "from and
including", "to" means "to but not including" and "through" means "to and
including".
-7-
<PAGE>
ARTICLE II
AMOUNT AND TERMS OF BORROWINGS
------------------------------
Section 2.1 Advances and Multiple Disbursement Master Note.
----------------------------------------------
(a) During the period from the Agreement Date to the Conversion Date,
or until the Commitment shall be terminated in accordance with the terms of this
Agreement, Lender agrees to make available to Borrower, upon the terms and
conditions herein set forth, Advances which shall not exceed, in aggregate
principal amount, the Commitment.
(b) Advances by Lender under the Commitment shall be evidenced by the
Multiple Disbursement Master Note. The Multiple Disbursement Master Note shall
be dated the Agreement Date, shall be payable to the order of Lender in a
principal amount equal to the Commitment and shall bear interest as hereinafter
provided. Lender shall, and is hereby authorized by Borrower to, set forth on
the grid schedule attached to the Multiple Disbursement Master Note the amount
of each Advance made by it hereunder and the other information provided for
therein. Such grid schedule (or any account records maintained by Lender) shall
constitute, absent manifest error, prima facie evidence of the principal amounts
-----------
outstanding under the Multiple Disbursement Master Note and the payments made
hereunder at any time; provided, that no delay or failure of Lender to record
--------
the amount of any Advance on such grid schedule (or in such account) shall
affect the obligation of Borrower to repay such Advances and accrued interest
thereon in accordance with this Agreement. The Multiple Disbursement Master Note
shall mature on the Conversion Date or sooner in the event of the exercise by
Lender of its right to declare the principal and accrued interest on the
Multiple Disbursement Master Note immediately due and payable pursuant to
Section 7.2 (a) or (b) hereof.
- ----------- - -
(c) Interest shall accrue on the unpaid principal amount of each
Advance from time to time outstanding at a rate per annum equal to the Prime
Rate, plus one-half of one percent (0.50%) per annum. All accrued and unpaid
interest on the Multiple Disbursement Master Note shall be payable on the last
day of each calendar month during which such Advances are outstanding and on the
Conversion Date. The Multiple Disbursement Master Note shall provide for
Borrower to pay all costs of collection, including Lender's reasonable
attorneys' fees, if collected by or through an attorney at law.
Section 2.2 Manner of Advances. Borrower shall give Lender at least one
------------------
(1) Business Day's prior written, telecopied or irrevocable telephonic notice
(promptly confirmed in writing) of any requested Advance hereunder, which notice
shall specify (a) the amount of the Advance (which shall be in a minimum amount
of $50,000 and integral multiples of $5,000 in excess thereof) and (b) the date
the proposed Advance is to be made (which shall be a Business Day). The proceeds
of
-8-
<PAGE>
each Advance will be provided by deposit to Borrower's account with Lender or
by such other method agreed to or confirmed in writing by Borrower and Lender.
Section 2.3 Term Loan. (a) On the Conversion Date, the aggregate
---------
outstanding principal amount of Advances under the Multiple Disbursement Master
Note, and accrued and unpaid interest thereon, shall be due and payable in full.
Upon payment in full of all such accrued and unpaid interest, such principal
amount, or any portion thereof, may, at the option of Borrower and upon written
notice to Lender, so long as no Default or Event of Default shall have occurred
and be continuing and so long as the conditions in Section 3.3 hereof have been
-----------
satisfied, be paid by Borrower by converting such principal amount into the Term
Loan and by the simultaneous execution and delivery to Lender of the Term Note.
If Borrower elects to repay only a portion of such outstanding Advances in
accordance with the immediately preceding sentence, Borrower shall pay the
amount of such Advances that were not converted into the Term Loan on the
Conversion Date in accordance with Section 2.8 hereof.
-----------
(b) The Term Loan shall be evidenced by the Term Note. The Term Note
shall be dated the Conversion Date, shall be payable to the order of Lender in a
principal amount equal to the Term Loan as determined in accordance with Section
-------
2.3 (a) hereof, shall bear interest in accordance with the provisions of Section
- --- - -------
2.4 hereof, and shall mature on the Final Maturity Date or sooner in the event
- ---
of the exercise by Lender of its right to declare the principal and accrued
interest on the Term Loan to be immediately due and payable pursuant to Section
-------
7.2 (a) or (b) hereof.
- --- - -
(c) Principal on the Term Loan shall be payable in twenty (20)
consecutive equal quarterly installments, commencing on the last day of the
calendar quarter next succeeding the Conversion Date and continuing on the last
day of each calendar quarter thereafter and on the Final Maturity Date, with the
final such installment equalling the remaining unpaid principal balance on the
Term Loan.
Section 2.4 Accrual of Interest on Term Loan.
--------------------------------
(a) Interest shall accrue on the unpaid principal amount of the Term
Loan from time to time outstanding at a rate per annum equal to Prime Rate, plus
one-half of one percent (0.50%) per annum.
(b) All accrued and unpaid interest on the Term Note shall be payable
on the last day of each calendar quarter, on the date of any prepayment in
accordance with Section 2.5 hereof, and on the Final Maturity Date.
-----------
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<PAGE>
Section 2.5 Prepayment of Advances and Term Loan. At the option of
------------------------------------
Borrower, Borrower may prepay any Advance or the Term Loan, in whole or in part
from time to time, without premium or penalty, but with accrued interest to the
date of such prepayment on the principal amount prepaid; provided, that (a) each
--------
partial prepayment shall be in the minimum principal amount of $50,000 and
integral multiples of $5,000 in excess thereof, (b) any partial prepayment of
the Term Loan shall be applied to installments of principal in the inverse order
of their maturity and (c) Borrower shall have no right to reborrow any Advance
after any such prepayment.
Section 2.6 Mandatory Prepayment Upon Sale of Collateral. In the event
--------------------------------------------
that Borrower sells, leases, transfers or otherwise disposes of the Collateral
prior to the Final Maturity Date, all Advances (if such disposition occurs prior
to or on the Conversion Date) or the Term Loan (if such disposition occurs after
the Conversion Date) shall immediately become due and payable in full, and
Borrower shall apply the cash proceeds of such sale, lease, transfer or other
disposition to the prepayment of all Advances or the Term Loan in accordance
with Section 2.5 hereof, as the case may be.
-----------
Section 2.7 Capital Adequacy. If after the Agreement Date Lender shall
----------------
have determined that the adoption or implementation of any applicable law, rule
or regulation regarding capital adequacy, or any change therein, or any change
in the interpretation or administration thereof by any governmental authority,
central bank or comparable agency charged with the interpretation or
administration thereof, or compliance by Lender with any request or directive
regarding capital adequacy (whether or not having the force of law) of any such
authority, central bank or comparable agency, has or would have the effect of
reducing the rate of return on Lender's capital, whether under this Agreement or
otherwise, as a consequence of its obligations to Borrower hereunder, to a level
below that which Lender could have achieved but for such adoption, change or
compliance (taking into consideration Lender's policies with respect to capital
adequacy) by an amount deemed by Lender to be material, then, from time to time,
promptly upon demand by Lender, Borrower shall pay Lender such additional amount
or amounts as will compensate Lender for such reduction. A certificate for
compensation setting forth the additional amount or amounts to be paid to it
hereunder, if made by Lender in good faith, shall be conclusive absent manifest
error. In determining any such amount Lender may use any reasonable averaging
and attribution methods. The obligations of Borrower hereunder shall survive the
termination of this Agreement and the payment of the Secured Obligations for a
period of twelve (12) months after such termination and payment; provided, that
--------
Lender shall promptly release the Collateral upon such termination and payment
pursuant to Section 9.4 hereof.
-----------
Section 2.8 Making of Payments. All payments of principal of, and interest
------------------
on, the Multiple Disbursement Master Note and the Term Note and all other
amounts to be paid under this Agreement, the Multiple Disbursement Master Note
and the Term Note shall be made in
-10-
<PAGE>
immediately available funds in Dollars to Lender at its principal office in
Atlanta, Georgia. All such payments shall be made not later than 11:00 A.M.
(Atlanta, Georgia time). Funds received after that hour shall be deemed to have
been received by Lender on the next following Business Day for the purposes of
assessing interest, but not for the purpose of determining the occurrence of an
Event of Default.
Section 2.9 Default Rate of Interest. If an Event of Default shall have
------------------------
occurred and be continuing, at the option of Lender, interest shall accrue on
the unpaid principal amount of the Advances or the Term Loan, as the case may
be, at a rate of interest equal to the rate otherwise applicable to such
Advances or Term Loan, as the case may be, plus an additional two percent (2.0%)
per annum.
Section 2.10 Calculation of Interest. Interest payable on the Advances or
-----------------------
the Term Loan, as the case may be, shall be calculated on the basis of a year of
360 days and shall be payable for the actual number of days elapsed. If the date
for any payment of principal is extended (whether by operation of this
Agreement, any provision of law or otherwise), interest shall be payable for
such extended time at the rates provided herein. Whenever any payment hereunder
shall be stated to be due on a day other than a Business Day, such payment shall
be due on the next succeeding Business Day.
ARTICLE III
CONDITIONS TO ADVANCES AND TERM LOAN
------------------------------------
The obligation of Lender to make any Advance under the Commitment
and to make the Term Loan to Borrower hereunder is subject to the satisfaction
of the respective following conditions:
Section 3.1 Conditions Precedent to Initial Advance. At the time of the
---------------------------------------
making by Lender of its initial Advance under the Commitment, Lender shall have
received the following, in form and substance reasonably satisfactory to Lender:
(a) A duly executed Agreement.
(b) A duly executed Multiple Disbursement Master Note.
(c) The duly executed UCC financing statements referred to in
Section 4.17 hereof.
- ------------
-11-
<PAGE>
(d) A copy of the articles of incorporation of Borrower,
certified as true and correct by the Secretary of State of Georgia, and a
certificate of existence of Borrower from the Secretary of State of Georgia,
dated as of a recent date.
(e) A copy of the articles of incorporation of Guarantor,
certified as true and correct by the Secretary of State of Georgia, and a
certificate of existence of Guarantor dated as of a recent date from the
Secretary of State of Georgia.
(f) Certified copies of the by-laws of each of Guarantor and
Borrower, of resolutions of the Board of Directors of each of Guarantor and
Borrower approving the execution and delivery of the Loan Documents to which
each of them is a party and the performance of the transactions contemplated
hereunder and thereunder by each of them, and of all documents evidencing other
necessary corporate action and governmental approvals, if any, with respect to
Loan Documents to which it is a party, respectively.
(g) A certificate of the Secretary or Assistant Secretary of
each of Guarantor and Borrower certifying the names and true signatures of the
officers of Guarantor and Borrower, respectively, authorized to execute the Loan
Documents to which each of them is a party and any other documents to be
delivered hereunder by each of them.
(h) All corporate and other proceedings taken or to be taken in
connection with the transactions contemplated herein and in the other Loan
Documents and all other documents incident thereto or delivered in connection
therewith shall be reasonably satisfactory in form and content to Lender.
Section 3.2 Conditions Precedent to Each Advance. On the Agreement Date
------------------------------------
and thereafter, at the time of the making by Lender of each Advance hereunder,
(a) the following statements shall be true (and each of the giving by Borrower
of a notice of borrowing in accordance with Section 2.3 hereof and the
acceptance by Borrower of the proceeds of an Advance shall constitute a
representation and warranty by each of Borrower and Guarantor that on the date
of such Advance, before and after giving effect thereto and to the application
of the proceeds therefrom, such statements are true):
(i) The representations and warranties contained in Article
IV hereof are true and correct on and as of the Agreement Date and the date of
such Advance as though made on and as of such date, and
(ii) No Default or Event of Default exists or would result
from such Advance or from the application of the proceeds therefrom; and
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<PAGE>
(b) Lender shall have received such other approvals, opinions
and documents as it may reasonably request.
Section 3.3 Conditions Precedent to Term Loan. On the Conversion Date,
at the time of the making by Lender of the Term Loan, (a) the following
statements shall be true:
(i) The representations and warranties contained in Article
IV hereof are true and correct on and as of the Conversion Date as though made
on and as of such date, and
(ii) No Default or Event of Default exists or would result
from the making of the Term Loan or from the application of the proceeds
therefrom; and
(b) Lender shall have received such other approvals, opinions
and documents as it may reasonably request, including, without limitation, the
duly executed Term Note.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
Each of Borrower and Guarantor represents and warrants as
follows:
Section 4.1 Corporate Existence. Each of Borrower and Guarantor (a) is a
-------------------
corporation duly organized, validly existing and in good standing under the laws
of the State of Georgia, with all requisite corporate power and authority to own
its properties and to engage in the business and activities as now conducted,
and (b) is duly qualified and in good standing as a foreign corporation
authorized to do business in each jurisdiction (other than the jurisdiction of
its incorporation) in which the nature of its activities or the character of the
properties it owns or leases makes such qualification necessary (except where
the failure to qualify would not have a Material Adverse Effect).
Section 4.2 Corporate Power and Authority. The execution, delivery and
-----------------------------
performance by each of Borrower and Guarantor of this Agreement and the other
Loan Documents to which it is a party are within Borrower's and Guarantor's
respective corporate powers, have been duly authorized by all necessary
corporate action (including any necessary shareholder action), and do not and
will not (a) violate any provision of any law, rule or regulation, any judgment,
order or ruling of any court or governmental agency, the articles of
incorporation or by-laws of Borrower or Guarantor, or any material indenture,
agreement or other instrument to which Borrower or Guarantor is a party or by
which Borrower or Guarantor or any of its respective properties is bound or (b)
be
-13-
<PAGE>
in conflict with, result in a breach of, or constitute with notice or lapse of
time or both a default under, any such indenture, agreement or other instrument
or (c) except as set forth in or contemplated by the Loan Documents, result in
or require the creation of any material Lien upon or with respect to any of
Borrower's properties.
Section 4.3 Enforceability. (a) This Agreement, the Multiple
--------------
Disbursement Master Note and the other Loan Documents to which it is a party
constitute, and the Term Note, when executed and delivered pursuant to Section
-------
3.3 (b) hereof will constitute, the valid and binding obligations of Borrower,
- --- -
enforceable against Borrower in accordance with their respective terms. (b) This
Agreement constitutes the valid and binding obligations of Guarantor,
enforceable against Guarantor in accordance with its terms.
Section 4.4 Consent. No authorization, consent, approval, order,
-------
license, exemption or other action by, or notice to or filing with, any court or
administrative or governmental body or any other Person is required in
connection with the execution and delivery of this Agreement, the Multiple
Disbursement Master Note, the Term Note and the other Loan Documents or
fulfillment of or compliance with the terms and provisions hereof or thereof.
Section 4.5 Financial Statements. Borrower has furnished Lender the
--------------------
following consolidated financial statements identified by the chief financial
officer of Guarantor: (a) the audited balance sheet of Guarantor and its
Subsidiaries (including Borrower) as at January 31, 1994 and the consolidated
statements of income, stockholders' equity and cash flows of Guarantor and its
Subsidiaries (including Borrower) for such year, certified by Ernst & Young; and
(b) the unaudited consolidated balance sheet of Guarantor and its Subsidiaries
(including Borrower) as at July 31, 1994 and the related consolidated unaudited
statement of income, of Guarantor and its Subsidiaries (including Borrower) for
the six-month period ended on such date, prepared by Guarantor. All such
financial statements (including any related schedules and/or notes) are true and
correct in all material respects (subject, as to interim statements, to changes
resulting from audits and normal year-end adjustments), have been prepared in
accordance with GAAP consistently applied throughout the periods involved and
show all liabilities, direct and contingent, of Guarantor and its Subsidiaries
(including Borrower) required to be shown in accordance with GAAP. The balance
sheet fairly presents the condition of Guarantor and its Subsidiaries (including
Borrower) as at the date thereof, and the statements of income, stockholders'
equity and cash flows fairly present the results of the operations of Guarantor
and its Subsidiaries (including Borrower) for the periods indicated. There has
been no material adverse change in the business, assets, operations, condition
(financial or otherwise) or prospects of Guarantor or Borrower since January 31,
1994.
Section 4.6 Taxes. Each of Borrower and Guarantor has filed all Federal,
-----
state and other income tax returns which are required to be filed and has paid
all taxes as shown on such returns and
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<PAGE>
on all assessments received by it to the extent that such taxes have become due
or except such as are being contested in good faith by appropriate proceedings
and for which adequate reserves have been established in accordance with GAAP.
Section 4.7 Litigation. No action, suit, investigation or proceeding is
----------
pending or, to the best knowledge of Borrower and Guarantor, is threatened,
against Borrower or Guarantor, or any properties or rights of Borrower or
Guarantor, by or before any court, arbitrator or administrative or governmental
body, which would have a Material Adverse Effect or which in any manner draws
into question the validity of this Agreement or the other Loan Documents to
which it is a party.
Section 4.8 Title to Collateral. Borrower has good title to the
-------------------
Collateral, subject to no Lien except Permitted Liens.
Section 4.9 Federal Reserve Regulations. Borrower is not in the business
---------------------------
of extending credit for the purpose of purchasing or carrying any "margin stock"
as defined in Regulation U (12 C.F.R. Part 221) of the Board of Governors of the
Federal Reserve System (hereinafter called "margin stock"). Each Advance will be
used solely for the purposes specified in this Agreement and none of such
proceeds will be used, directly or indirectly, for the purpose of purchasing or
carrying any margin stock or for the purpose of reducing or retiring any
Indebtedness which was originally incurred to purchase or carry any margin stock
or for any other purpose which might constitute this transaction a "purpose
credit" within the meaning of Regulation U. Neither Borrower nor any agent of
Borrower acting on its behalf has taken or will take any action which might
cause this Agreement or the other Loan Documents to which it is a party to
violate Regulations G, T, U, or X or (to the best knowledge of Borrower) any
other regulation of the Board of Governors of the Federal Reserve System or to
violate the Securities Exchange Act of 1934, as amended, in each case as now in
effect or as the same may hereafter be in effect.
Section 4.10 ERISA. Except as disclosed on Schedule 4.10 attached
----- -------------
hereto:
(a) Compliance. All Plans maintained or contributed to by
----------
Guarantor or any ERISA Affiliate are in compliance with ERISA and all other
applicable law.
(b) Liabilities. Neither Guarantor nor any Subsidiary is
-----------
currently or will become subject to any liability (other than routine Plan
expenses or contributions, if timely paid), tax or penalty whatsoever to any
Person whomsoever, which liability, tax or penalty is directly or indirectly
related to any Plan including, but not limited to any penalty or liability
arising under Title I or Title IV of ERISA, any tax or penalty resulting from a
loss of deduction under Sections 404 or 419 of the Code, or any tax or penalty
under Chapter 43 of the Code, except such liabilities, taxes or penalties (when
taken as a whole) as will not have a material adverse effect on the Borrower and
its
-15-
<PAGE>
Subsidiaries taken as a whole, or upon their financial condition, assets,
business, operation liabilities or prospects; and
(c) Funding. Guarantor and each ERISA Affiliate has made full
-------
and timely payment of all amounts (i) required to be contributed under the terms
of each Plan and applicable law and (ii) required to be paid as expenses of each
Plan. No Plan would have an "amount of unfunded benefit liabilities" (as defined
in Section 4001 (a) (18) of ERISA) if such Plan were terminated as of the date
on which this representation and warranty is made.
Section 4.11 Outstanding Debt. There exists no default or any condition
----------------
or event which, with the lapse of time or the giving of notice or both, would
constitute a default (which has not been waived) under the provisions of any
instrument evidencing or securing Indebtedness of Borrower or Guarantor in an
outstanding principal amount of $100,000 or more, or of any agreement otherwise
relating thereto.
Section 4.12 Conflicting Agreements or Other Matters. Neither Borrower
---------------------------------------
nor Guarantor is a party to any contract or agreement or subject to any charter
or other corporate restriction which, in accordance with its terms, could have a
Material Adverse Effect. Neither the execution or delivery of this Agreement or
any other Loan Document to which it is a party, nor fulfillment of or compliance
with the terms and provisions hereof and thereof, will conflict with, or result
in a breach of the terms, conditions or provisions of, or constitute a default
under, or result in any violation of, or result in the creation of any Lien upon
any of the properties or assets of Guarantor or Borrower pursuant to, the
articles of incorporation or by-laws of Guarantor and Borrower, respectively,
any award of any arbitrator or any material agreement (including any agreement
with stockholders) or instrument (including without limitation any instrument
evidencing Indebtedness of Borrower or Guarantor or any agreement relating
thereto) or any order, judgment, decree, and, to the best of Guarantor's or
Borrower's knowledge, any statute, law, rule or regulation to which Guarantor or
Borrower is subject.
Section 4.13 Pollution and Environmental Control. Each of Guarantor and
-----------------------------------
Borrower has obtained all material permits, licenses and other authorizations
which are required under, and is in substantial compliance with, all Federal,
state, and local laws and regulations relating to pollution, reclamation, or
protection of the environment, including laws relating to emissions, discharges,
releases or threatened releases of pollutants, contaminants, or hazardous or
toxic materials or wastes into the air, water, or land, or otherwise relating to
the manufacture, processing, distribution, use, treatment, storage, disposal,
transport, or handling of pollutants, contaminants or hazardous or toxic
materials or wastes into the environment (including without limitation ambient
air, surface water, ground water or land), or otherwise relating to the
manufacturing, processing, distribution, use, treatment, storage, disposal,
transport, or handling of pollutants, contaminants, chemical or
-16-
<PAGE>
industrial, hazardous or toxic materials or wastes, and any and all regulations,
codes, plans, orders, decrees, judgments, injunctions, notices or demand letters
issued, entered, promulgated or approved thereunder.
Section 4.14 Possession of Franchises, Licenses, etc. Each of Guarantor
----------------------------------------
and Borrower possesses all franchises, certificates, licenses, permits and other
authorizations from governmental subdivisions or regulatory authorities, and all
patents, trademarks, service marks, trade names, copyrights, licenses and other
rights, free from burdensome restrictions, that are necessary for the ownership,
maintenance and operation of any of its properties and assets and the conduct of
its business, and neither Guarantor nor Borrower is in violation of any thereof,
except where the failure to so possess would not have a Material Adverse Effect.
Section 4.15 Investment Company Act. Borrower is not an "investment
----------------------
company" or a company "controlled" by an "investment company" within the meaning
of the Investment Company Act of 1940, as amended.
Section 4.16 Public Utility Holding Company. Borrower is not a "holding
------------------------------
company," or a "subsidiary company" of a "holding company" or an "affiliate" of
a "holding company," within the meaning of the Public Utility Holding Company
Act of 1935, as amended.
Section 4.17 Financing Statements. Appropriate UCC-1 financing
--------------------
statements having been filed in the UCC and real property records of the Office
of the Clerk of Superior Court of DeKalb County, Georgia, this Agreement, as a
security agreement, is effective to create a valid and continuing first priority
perfected Lien on the Collateral, both as personal property and as a fixture, in
favor of Lender, prior to all other Liens except Permitted Liens, and is
enforceable as such against creditors of and purchasers from Borrower and as
against any purchaser of real property where the Collateral is located and any
present or future creditor obtaining a Lien on such real property.
Section 4.18 Principal Place of Business. Borrower's principal place of
---------------------------
business and the location of the Collateral are 5800 Peachtree Road, Chamblee,
Georgia 30341. The legal description of the real property on which the
Collateral is located is set forth on Exhibit C attached hereto. Borrower will
not change such principal place of business or remove the Collateral unless it
has taken such action as is necessary to cause the Lien of Lender in the
Collateral to continue to be perfected and has given thirty (30) days' prior
written notice thereof to Lender.
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<PAGE>
ARTICLE V
AFFIRMATIVE COVENANTS
---------------------
So long as the Multiple Disbursement Master Note and the Term Note shall
remain unpaid or Lender shall have the Commitment hereunder, unless Lender shall
otherwise consent in writing:
Section 5.1 Insurance. Borrower will maintain with financially sound and
---------
reputable carriers reasonably acceptable to Lender, casualty insurance coverage
on its real property and physical assets, including the Collateral, and other
insurance against other risks, including public liability in such amounts and as
such types as are ordinarily carried by other similar corporations, but in no
event less than one hundred percent (100%) of the replacement costs of such real
property and physical assets, including the Collateral. Borrower shall furnish,
upon Lender's request, a certificate from Borrower's insurance carrier
specifying the details of such insurance in effect.
Section 5.2 Reporting Covenants. Guarantor or Borrower will deliver to
-------------------
Lender:
(a) as soon as available and in any event within one hundred
twenty (120) days after the end of each fiscal year of Guarantor consolidated
and consolidating balance sheets of Guarantor and its Subsidiaries (including
Borrower) as of the end of such fiscal year and the related consolidated and
consolidating statements of income, cash flows and stockholders' equity for such
fiscal year, setting forth in each case in comparative form the figures for the
previous fiscal year, all in reasonable detail and accompanied by a report
thereon of Ernst & Young (with respect to such consolidated financial
statements) or other independent public accountants acceptable to Lender, which
report will be unqualified as to scope of audit and shall state that such
financial statements present fairly the financial condition of Guarantor and its
Subsidiaries (including Borrower) as at the end of such fiscal year and the
results of operations of Guarantor and its Subsidiaries (including Borrower) for
such fiscal year in accordance with GAAP consistently applied and that the audit
by such accountants in connection with such financial statements was made in
accordance with generally accepted auditing standards;
(b) as soon as available and in any event within sixty (60) days
after the end of each fiscal quarter, the unaudited consolidated balance sheet
of Guarantor and its Subsidiaries (including Borrower) as of the end of such
fiscal quarter and the related consolidated unaudited statement of income for
such fiscal quarter and for the portion of the fiscal year ended at the end of
such fiscal quarter, setting forth in each case in comparative form the figures
for the corresponding fiscal quarter and the corresponding portion of the
previous fiscal year, all prepared by the Guarantor in accordance with GAAP and
accompanied by a certificate of the chief financial officer of
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<PAGE>
Guarantor at the end of each fiscal quarter, stating that all such financial
statements delivered during such fiscal quarter are complete and accurate
(subject to normal year-end adjustments).
(c) simultaneously with the delivery of the financial statements
referred to in clauses (a) and (b) above, a certificate of the chief financial
officer of Guarantor in the form of Exhibit D attached hereto, setting forth,
---------
among other things, (i) the calculations required to establish whether Guarantor
was in compliance with the requirements of Sections 5.5, 5.6, 5.7 and 5.8 hereof
-------- --- --- --- ---
on the date of such financial statements, substantially in the form of
Attachment Number 1 to Exhibit D attached hereto, and (ii) whether there exists
---------
on the date of such certificate any Default or Event of Default and, if any
Default or Event of Default then exists, setting forth the details thereof and
the action which Borrower is taking or proposes to take with respect thereto;
(d) forthwith upon the occurrence of any Default or Event of
Default, a certificate of the chief financial officer of Guarantor setting forth
the details thereof and the action which Borrower is taking or proposes to take
with respect thereto;
(e) promptly upon the mailing or filing thereof, copies of all
reports, including, without limitation, reports on Form 10-K, Form 10-Q and Form
8-K, and any registration statements which Guarantor is required to file with
the Securities and Exchange Commission or any national securities exchange at
any time that Guarantor becomes subject to such reporting requirements;
(f) promptly after (i) the occurrence thereof, notice of the
institution by any Person of any action, suit or proceeding or any governmental
investigation or any arbitration in an amount in excess of $250,000, before any
court or arbitrator or any governmental or administrative or administrative
body, agency, or official, against Guarantor or Borrower or any material
property of Guarantor or Borrower or (ii) the receipt of actual knowledge
thereof, notice of the threat of any such action, suit, proceeding,
investigation or arbitration, each such notice under this subsection to specify,
if known, the amount of damages being claimed or other relief being sought, the
nature of the claim, the Person instituting the action, suit, proceeding,
investigation or arbitration, and any other significant features of the claim;
(g) promptly after the occurrence thereof with respect to any
Plan, or any trust established thereunder, notice of (i) a "reportable event"
described in Section 4043 of ERISA and the regulations issued from time to time
thereunder (other than a "reportable event" not subject to the provisions for
30-day notice to the PBGC under such regulations), (ii) any other event which
could subject Guarantor or any ERISA Affiliate to any material tax, penalty or
liability under Title I or Title IV of ERISA or Chapter 43 of the Code or (iii)
at the same time and in the same manner as such notice or report must be
provided to the PBGC or to a Plan participant, beneficiary or alternative payee,
any notice required under Section 101(d), 302(f)(4), 303, 307, 4041(b)(1)(A) or
-19-
<PAGE>
4041(c)(1)(A) of ERISA or under Section 401(a)(29) or 412 of the Code with
respect to any Plan; and
(h) such other information respecting the operations or
condition, financial or otherwise, of Guarantor or Borrower as Lender may from
time to time reasonably request.
Section 5.3 Funding of Plans. Guarantor shall contribute to each Plan,
----------------
within the time required by law, such amounts, if any, as are required pursuant
to Section 412 of the Code and shall not request a waiver of any such funding
requirement as permitted under Section 412(d) of the Code; and Guarantor shall
not terminate a Plan subject to Title IV of ERISA if, as of the date of the
termination of such Plan, there is or would be any "amount of unfunded benefit
liabilities" (as defined in Section 4001(a)(18) of ERISA) with respect to such
Plan or any other Plan subject to Title IV of ERISA.
Section 5.4 Maintenance of Collateral. Borrower will at all times
-------------------------
maintain and preserve the Collateral in use or useful in the conduct of its
business and keep the same in good repair, working order and condition (taking
into account ordinary wear and tear).
Section 5.5 Current Ratio. Guarantor shall maintain at all times a
-------------
Current Ratio of greater than 1.0:1.0.
Section 5.6 Leverage Ratio. Guarantor shall maintain at all times a
--------------
Leverage Ratio of not more than 2.75 to 1.0.
Section 5.7 Fixed Charge Coverage Ratio. Guarantor shall maintain at all
---------------------------
times a Fixed Charge Coverage Ratio of greater than 1.4 to 1.0.
Section 5.8 Debt Service Coverage Ratio. Guarantor shall maintain at all
---------------------------
times a Debt Coverage Ratio of not more than 3.5 to 1.0.
ARTICLE VI
NEGATIVE COVENANTS
------------------
So long as the Multiple Disbursement Master Note and the Term
Note shall remain unpaid or Lender shall have the Commitment hereunder, without
the prior written consent of Lender:
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<PAGE>
Section 6.1 Limitation on Liens. Borrower will not create, assume, incur
-------------------
or permit to exist or to be created, assumed, incurred or permitted to exist,
directly or indirectly, any Lien on the Collateral, other than Permitted Liens.
Section 6.2 Consolidations, Mergers, etc. Neither Guarantor nor Borrower
-----------------------------
will consolidate or merge with or into any Person or sell, lease or otherwise
transfer all or substantially all of its assets to any other Person; provided,
--------
that (a) Borrower may merge at any time with the Guarantor or with another
Person if (1) Borrower is the corporation surviving the merger and (2)
immediately after giving effect to such merger, no Default or Event of Default
shall have occurred and be continuing and (b) Guarantor may merge at any time
with another Person if (1) Guarantor is the corporation surviving the merger and
(2) immediately after giving effect to such merger, no Default or Event of
Default shall have occurred and be continuing.
Section 6.3 Sale of Collateral. Borrower shall not sell, lease, transfer
------------------
or otherwise dispose of the Collateral except in compliance with Section 2.6
-----------
hereof.
Section 6.4 Continuous Perfection. Borrower will not change its name,
---------------------
identity or corporate structure in any manner which might make any financing or
continuation statement filed in connection herewith seriously misleading within
the meaning of Section 9-402(7) of the Uniform Commercial Code in effect in the
State of Georgia, unless Borrower shall have given Lender at least thirty (30)
days' prior written notice thereof and shall have taken all action necessary or
reasonably requested by Lender to amend such financing or continuation statement
so that it is not seriously misleading. Borrower will not take, or omit to take,
any action which would cause the Collateral to become a "fixture" as defined in
Section 9-313(1)(a) of the Uniform Commercial Code in effect in the State of
Georgia, and it is expressly agreed by Borrower that the intent of the parties
hereto is that the Collateral does not and would not constitute a "fixture".
ARTICLE VII
EVENTS OF DEFAULT AND REMEDIES
Section 7.1 Events of Default. If one or more of the following events
-----------------
("Events of Default") shall occur and be continuing, such event shall constitute
-----------------
an Event of Default, whatever the reason for such event and whether it shall
occur by operation of law or pursuant to any order, rule or regulation of any
court or governmental authority or otherwise:
(a) Borrower fails to pay on the due date (i) any principal on
the Multiple Disbursement Master Note or the Term Note, (ii) within three (3)
Business Days of the due date, any
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<PAGE>
accrued interest on the Multiple Disbursement Master Note or the Term Note or
any other amount payable hereunder; or
(b) Any representation or warranty contained herein or in any
other Loan Document or deemed to have been made hereunder or thereunder or made
by or furnished on behalf of Borrower in connection herewith or therewith shall
be false or misleading in any material respect as of the date made or deemed to
have been made; or
(c) Guarantor fails to perform or observe any covenant, term or
condition contained in Sections 5.5, 5.6, 5.7 and 5.8 hereof or Article VI; or
-------- --- --- --- --- ----------
(d) Guarantor fails to perform or observe any other covenant or
agreement of this Agreement not specifically referred to elsewhere in this
Section 7.1 or any covenant or agreement contained in any other Loan Document
- -----------
and such failure continues for more than thirty (30) days after Borrower
receives written notice from Lender of such failure; or
(e) An "event of default" (as defined in any Loan Document)
shall occur and be continuing under any other Loan Document; or
(f) Guarantor or Borrower (i) fails to make any payment when due
(whether by scheduled maturity, required prepayment, acceleration, demand or
otherwise) with respect to any other Indebtedness of Guarantor or Borrower,
respectively (other than the Indebtedness referred to in paragraph (g) hereof)
in excess of $250,000 in the aggregate or (ii) fails to perform or observe any
other agreement, term or condition contained in any agreement under which any
Indebtedness described in clause (i) is created (or if any other event shall
occur and be continuing thereunder) and the effect of such failure or other
event set forth in clause (i) or clause (ii) above is to permit or cause such
obligation to become due prior to any stated maturity (unless such failure of
payment or performance is waived); or
(g) An "Event of Default" shall occur under (i) the Term Note
dated July 26, 1990 in the original principal amount of $10,000,000 executed by
Monroe Litho, Inc., a wholly-owned Subsidiary of Guarantor, in favor of Lender,
and Guarantor shall fail to cure such Event of Default within the time period
prescribed in its Guaranty dated July 26, 1990 or (ii) the Term Note dated
January 29, 1993 executed by Guarantor as borrower in favor of Lender; or
(h) Guarantor, Borrower or any other Subsidiary of Guarantor
shall (i) commence a voluntary case or other proceeding seeking liquidation,
reorganization or other relief with respect to itself or its debts under the
Bankruptcy Code of the United States of America, as amended from time to time,
or any other bankruptcy, insolvency or other similar law now or hereafter in
effect or
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<PAGE>
seeking the appointment of a trustee, receiver, liquidator, custodian or other
similar official of it or any substantial part of its property, or shall consent
to any such relief or to the appointment of or taking possession by any such
official in an involuntary case or other proceeding commenced against it, or
shall make a general assignment for the benefit of creditors, or shall take any
corporate action to authorize any of the foregoing or (ii) fail generally to pay
its debts as they become due; or
(i) An involuntary case or other proceeding shall be commenced
against Guarantor or Borrower or any other Subsidiary of Guarantor seeking
liquidation, reorganization or other relief with respect to it or its debts
under the Bankruptcy Code of the United States of America, as amended from time
to time, or any other bankruptcy, insolvency or other similar law now or
hereafter in effect or seeking the appointment of a trustee, receiver,
liquidator, custodian or other similar official of it or any substantial part of
its property, and such involuntary case or other proceeding shall remain
undismissed and unstayed for a period of 60 days; or an order for relief shall
be entered against Guarantor or any Subsidiary of Guarantor, including Borrower,
under the Federal bankruptcy laws as now or hereafter in effect; or
(j) Any order or judgment for the payment of money which could
have a Material Adverse Effect shall be rendered against Guarantor or against
Borrower or any other Subsidiary of Guarantor, and such order or judgment shall
continue unsatisfied and unstayed for more than sixty (60) days.
Section 7.2 Remedies on Default.
-------------------
(a) Upon the occurrence and during the continuation of an Event
of Default (other than an Event of Default described in Section 7.1 (h) or (i)
----------- - -
hereof, Lender may (i) terminate all obligations of Lender to Borrower under
this Agreement, including, without limitation, the Commitment and the obligation
to make Advances thereunder, and all obligations to convert Advances into the
Term Loan, (ii) declare the Multiple Disbursement Master Note or the Term Note,
as the case may be, including, without limitation, principal, accrued and unpaid
interest and costs of collection (including, without limitation, reasonable
attorneys' fees if collected by or through an attorney at law or in bankruptcy,
receivership or other judicial proceedings) immediately due and payable, without
presentment, demand, protest or any other notice of any kind, all of which are
expressly waived.
(b) Upon the occurrence of an Event of Default under Section 7.1
-----------
(h) or (i) hereof, (i) all obligations of Lender to Borrower under this
- -
Agreement, including, without limitation, the Commitment and all obligations to
make Advances thereunder, and all obligations to convert Advances into the Term
Loan, shall terminate automatically and (ii) the Multiple Disbursement Master
Note or the Term Note, as the case may be, including, without limitation,
principal, accrued
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<PAGE>
and unpaid interest and costs of collection (including, without limitation,
reasonable attorneys' fees if collected by or through an attorney at law or in
bankruptcy, receivership or other judicial proceedings), shall be immediately
due and payable, without presentment, demand, protest, or any other notice of
any kind, all of which are expressly waived.
(c) Upon the occurrence of an Event of Default and acceleration
of either the Multiple Disbursement Master Note or the Term Note, as the case
may be, as provided in (a) or (b) above, Lender may pursue any remedy available
under this Agreement or under any other Loan Document or available at law or in
equity, all of which shall be cumulative.
ARTICLE VIII
GUARANTY
--------
Section 8.1 Guaranty. Guarantor hereby unconditionally guarantees the
--------
full and punctual payment (whether at stated maturity, upon acceleration or
otherwise) of (x) the principal and interest on all Advances under the Multiple
Disbursement Master Note, (y) the principal and interest on the Term Loan under
the Term Note and (z) all other amounts payable by Borrower under this
Agreement. Guarantor agrees that the guaranty contained herein is a guaranty of
payment and performance and not of collection, and that its obligations
hereunder shall be primary, absolute and unconditional, irrespective of and
unaffected by:
(a) the genuineness, validity, regularity, enforceability or any
future amendment of, or change in this guaranty or any other term of this
Agreement or in the Multiple Disbursement Master Note or the Term Note;
(b) the absence of any action to enforce this guaranty or this
Agreement or the waiver or consent of Lender with respect to any of the
provisions hereof;
(c) the existence, value or condition of, or failure to perfect
a lien against, any security for the indebtedness of Borrower hereunder and
under the Multiple Disbursement Master Note and the Term Note (including without
limitation the Collateral), or the absence of any action by Lender in respect
thereof (including the release of any security); or
(d) any other action or circumstance which might otherwise
constitute a legal or equitable discharge or defense of a surety or guarantor;
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<PAGE>
it being agreed by Guarantor that its obligations under this Article VIII shall
not be discharged until the payment and performance of all obligations of
Borrower hereunder, under the Multiple Disbursement Master Note and under the
Term Note. Guarantor shall be deemed to be the principal debtor with respect to
such obligations. Guarantor hereby waives all rights it may now or in the future
have under any statute, or at common law, or in law or in equity, or otherwise,
to compel Lender to proceed against Borrower or any security in respect of such
obligations (including without limitation the Collateral) before proceeding
against Guarantor. Guarantor expressly waives and agrees not to assert any
defense based upon the failure of Lender to commence an action in respect of
such obligations against Borrower or any other party or any security for the
payment and performance of such obligations, including without limitation the
provisions of O.C.G.A. /S/ 10-7-24. It is agreed between Guarantor and Lender
that the foregoing waivers are of the essence of the transactions contemplated
by this Agreement and that, but for the guaranty contained in this Article VIII,
Lender would not have entered into the Commitment to make Advances and to
convert such Advances into the Term Loan.
Section 8.2 Waivers. In addition to the waivers contained in Section 8.1
------- -----------
hereof, Guarantor waives any appraisal, valuation, stay, extension, marshalling
of assets or redemption laws, or exemption, whether now or at any time hereafter
in force, which may delay, prevent or otherwise affect the performance by
Guarantor of its obligations under, or the enforcement by Lender of, the
guaranty contained in this Article VIII. Guarantor further waives diligence,
presentment and demand with respect to any of the obligations of Borrower
hereunder, under the Multiple Disbursement Master Note, or under the Term Note
or all other demands whatsoever, and waives the benefit of all provisions of law
which are or might be in conflict with the terms of this Article VIII.
Section 8.3 Modification, etc. If Lender shall at any time, without the
------------------
consent of, or notice to, Guarantor:
(a) change or extend the manner, place or terms of payment of,
or renew or alter all or any portion of, the Commitment and any Advance
thereunder or the Term Loan;
(b) take any action hereunder in the exercise of any remedy,
power or privilege contained herein or available to it at law, equity or
otherwise, or waive or refrain from exercising any of the foregoing;
(c) amend or modify this Agreement, the Multiple Disbursement
Master Note or the Term Note;
(d) extend or waive the time for performance by Borrower or
Guarantor of, or compliance with, any term, covenant or agreement on its part to
be performed or observed hereunder,
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<PAGE>
or waive such performance or compliance or consent to a failure of, or departure
from, such performance or compliance;
(e) take and hold security or collateral for the payment of the
obligations of the Borrower guaranteed hereby or sell, exchange, release,
dispose of, or otherwise deal with, any property pledged, mortgaged or conveyed,
or in which Lender has been granted a lien or security interest, to secure any
indebtedness of Guarantor or Borrower hereunder (including, without limitation,
the Collateral);
(f) release anyone who may be liable in any manner for the
payment of any amounts owed by Guarantor or Borrower or any of them to Lender;
and/or
(g) apply any sums by whomever paid or however realized to any
amounts owing by Guarantor or Borrower to Lender in such manner as Lender shall
determine in its discretion;
then Lender shall not incur any liability to Guarantor pursuant hereto as a
result thereof, and no such action shall impair or release the obligations of
Guarantor under this guaranty.
Section 8.4 Reinstatement. The guaranty contained in this Article VIII
-------------
shall remain in full force and effect and continue to be effective in the event
any petition is filed by or against Borrower or Guarantor for liquidation or
reorganization, in the event Borrower or Guarantor becomes insolvent or makes an
assignment for the benefit of creditors or in the event a receiver or trustee is
appointed for all or any significant part of Borrower's or Guarantor's assets,
and shall continue to be effective or be reinstated, as the case may be, if at
any time payment and performance of the obligations of Borrower hereunder or
under either the Multiple Disbursement Master Note or the Term Note is, pursuant
to applicable law, rescinded or reduced in amount, or must otherwise be restored
or returned by Lender, whether as a "voidable preference", "fraudulent
conveyance", or otherwise, all as though such payment or performance had not
been made. In the event that any payment, or any part thereof, is rescinded,
reduced, restored or returned, such obligations shall be reinstated and deemed
reduced only by such amount paid and not so rescinded, reduced, restored or
returned.
Section 8.5 Subrogation. Guarantor hereby waives as against Borrower and
-----------
its assets any and all rights, whether at law, in equity, by agreement or
otherwise, to subrogation, indemnity, reimbursement, or any other similar claim,
cause of action or remedy that otherwise would arise out of Guarantor's
performance of its obligations to Lender under this Article VIII. The preceding
waiver is intended by both Guarantor and Borrower to be for the benefit of
Borrower, and the waiver shall be enforceable by Borrower or its successors or
assigns as an absolute defense to any action
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<PAGE>
by Guarantor against Borrower or its assets which arises out of Guarantor's
having made payment to Lender with respect to any such obligations.
Section 8.6 Continuing Guaranty. Guarantor agrees that the guaranty
-------------------
contained in this Article VIII is a continuing guaranty and shall remain in full
force and effect until the payment and performance in full of all obligations of
Borrower hereunder, under the Multiple Disbursement Master Note and under the
Term Note.
ARTICLE IX
SECURITY INTEREST
Section 9.1 Security Interest. As collateral security for the prompt and
-----------------
complete payment and performance by Borrower of the Secured Obligations when due
(whether at stated maturity, by acceleration or otherwise), Borrower hereby
pledges, assigns, transfers, sets over, conveys and delivers to Lender, and
grants to Lender a Lien on, all right, title and interest of Borrower in and to
the Collateral.
Section 9.2 Power-of-Attorney. Borrower does hereby irrevocably make,
-----------------
constitute and appoint Lender and any of its officers or designees its true and
lawful attorney-in-fact, with full power and authority to do any and all acts
necessary or proper to carry out the intent of this Article, including, without
limitation, the right, power and authority (a) to enforce all rights of Borrower
under and pursuant to any agreements with respect to the Collateral, all for the
sole benefit of Lender and (b) to execute such other and further liens, security
interests, pledges and assignments of the Collateral as Lender may reasonably
require for the purpose of perfecting, protecting or maintaining the Lien
granted to Lender herein. Borrower hereby ratifies and confirms all that Lender
as such attorney-in-fact or its substitute does by virtue of this power-of-
attorney, which power is coupled with an interest and is irrevocable, until
Borrower has paid in full the Secured Obligations and the Commitment and this
Agreement is terminated. Notwithstanding the foregoing, Lender agrees that,
except upon the occurrence and during the continuation of an Event of Default,
it will not exercise the foregoing power of attorney, except (A) to pay or
discharge taxes, Liens, or other encumbrances levied or placed on or threatened
against the Collateral, (B) to effect any repairs or any insurance called for by
the terms of this Agreement, (C) to pay all or any part of the premiums for such
insurance and the costs thereof and (D) to exercise its rights pursuant to
Section 9.4 hereof.
- -----------
Section 9.3 Borrower to Hold in Trust. Upon the occurrence and during
-------------------------
the continuation of any Event of Default and regardless of whether Lender makes
any demand to or request of Borrower, Borrower agrees to hold in trust for
Lender any and all cash, checks, drafts, items, chattel
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<PAGE>
paper and other instruments or writings for the payment of money that may be
received by Borrower in full or partial payment or otherwise as proceeds of the
Collateral, in precisely the form received. Borrower will immediately upon
request by Lender endorse, transfer and deliver any and all such payments to
Lender for application against the Secured Obligations.
Section 9.4 Financing Statements. Borrower hereby authorizes Lender to
--------------------
file continuations to the financing statements described in Section 4.19 hereof
------------
without the signature of Borrower, so long as the Secured Obligations remain
unpaid. Upon payment in full of the Secured Obligations and the termination of
this Agreement, Lender shall execute and deliver to Borrower such termination
statements as Borrower shall reasonably request. Notwithstanding the foregoing,
this Agreement shall continue to be effective or be reinstated as the case may
be, if at any time payment and performance of the Secured Obligations, or any
part thereof, is, pursuant to applicable law, rescinded or reduced in amount, or
must otherwise be restored or returned by any obligee of the Secured
Obligations, whether as a "voidable preference", "fraudulent conveyance", or
otherwise, all as though such payment or performance had not been made. In the
event that any payment, or any part thereof, is rescinded, reduced, restored or
returned, the Secured Obligations shall be reinstated and deemed reduced only by
such amount paid and not so rescinded, reduced, restored or returned.
ARTICLE X
MISCELLANEOUS
-------------
Section 10.1 No Waiver. No delay or failure on the part of Lender or any
---------
holder of the Multiple Disbursement Master Note or the Term Note, as the case
may be, in the exercise of any right, power or privilege granted under this
Agreement or any other Loan Document or available at law or in equity, shall
impair any such right, power or privilege or be construed as a waiver of any
Event of Default or any acquiescence therein. No single or partial exercise of
any such right, power or privilege shall preclude the further exercise of such
right, power or privilege. No waiver shall be valid against Lender unless made
in writing and signed by Lender, and then only to the extent expressly specified
therein.
Section 10.2 Notices. Unless otherwise provided herein, all notices,
-------
requests and other communications provided for hereunder shall be in writing
(including telecopier) and shall be given at the following addresses:
(1) If to Lender: Trust Company Bank
25 Park Place
23rd Floor, Center 127
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<PAGE>
Atlanta, Georgia 30303
Attention: Willem-Jan Hattink
First Vice President
Telephone: (404) 588-8055
Telecopy: (404) 588-8833
(2) If to Borrower
or Guarantor: Graphic Industries, Inc.
2155 Monroe Drive, N. E.
Atlanta, Georgia 30324
Attention: David S. Fraser
Chief Financial Officer and
Treasurer
Telephone: (404) 874-3327
Telecopy: (404) 874-7589
Any such notice, request or other communication shall be effective (i) if given
by mail, upon the earlier of receipt or the third Business Day after such
communication is deposited in the United States mail, registered or certified,
with first-class postage prepaid, addressed as aforesaid, (ii) if given by air
courier, when delivered at the address specified herein, or (iii) if given by
telecopier, when so telecopied. Borrower, Guarantor and Lender may change its
address or telecopier number for notice purposes by notice to the other party in
the manner provided herein.
SECTION 10.3 GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND
-------------
INTERPRETED IN ACCORDANCE WITH THE LAWS OF THE STATE OF GEORGIA (WITHOUT GIVING
EFFECT TO THE CONFLICT OF LAW PRINCIPLES THEREOF).
Section 10.4 Survival of Representations and Warranties. All
------------------------------------------
representations and warranties contained herein or made by or furnished on
behalf of Borrower or Guarantor in connection herewith shall survive the
execution and delivery of this Agreement and all other Loan Documents.
Section 10.5 Severability. If any part of any provision contained in
------------
this Agreement shall be invalid or unenforceable under applicable law, said part
shall be ineffective to the extent of such
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<PAGE>
invalidity only, without in any way affecting the remaining parts of said
provision or the remaining provisions.
Section 10.6 Counterparts. This Agreement may be executed in any number
------------
of counterparts, each of which shall be deemed to be an original and all of
which, taken together, shall constitute one and the same instrument.
Section 10.7 Payment of Costs. Borrower shall pay all costs, expenses,
----------------
taxes and fees (a) incurred by Lender in connection with the administration
(outside of the ordinary course of business) of the Advances, the Commitment,
the Term Loan and the Loan Documents in accordance with the provisions thereof
and the preparation, execution and delivery of any waiver, amendment or consent
by Lender relating to the Loan Documents, including, without limitation, the
reasonable costs and expenses of counsel for Lender (including in-house
counsel); and (b) incurred by Lender in enforcing the Loan Documents, including,
without limitation, reasonable costs and expenses of counsel for Lender
(including in-house counsel).
Section 10.8 Successors and Assigns. This Agreement shall bind and inure
----------------------
to the benefit of Guarantor, Borrower and Lender, and their respective
successors and assigns; provided, that neither Guarantor nor Borrower shall have
--------
any right to assign its rights or obligations hereunder to any Person.
Notwithstanding anything in this Agreement to the contrary, Lender may assign
its rights and delegate its obligations under this Agreement and the other Loan
Documents and further may assign all or any part of any Advance or its
Commitment or the Term Loan or any other interest herein or in any other Loan
Document. Such assignee shall have, to the extent of such assignment (unless
otherwise provided therein), the same rights, obligations and benefits as it
would have if it were Lender hereunder and under the other Loan Documents.
Lender may sell or otherwise grant participations in the Advances, the
Commitment and the Term Loan. The holder of any such participation, if the
participation agreement so provides, shall have the same rights and benefits of
Lender hereunder.
Section 10.9 Set-Off. Upon the occurrence and during the continuation of
-------
an Event of Default, Guarantor and Borrower authorize Lender, without notice or
demand, to apply any indebtedness due or to become due to either Guarantor or
Borrower from Lender in satisfaction of any of the indebtedness, liabilities or
obligations of Borrower or Guarantor under this Agreement or under any other
Loan Document, including, without limitation, the right to set-off against any
deposits or other cash collateral of Borrower and Guarantor held by Lender.
Section 10.10 Indemnity. Each of Borrower and Guarantor agrees to
---------
protect, indemnify and save harmless Lender, and all shareholders, affiliates,
directors, officers, employees and agents of Lender, from and against any and
all (a) claims, demands and causes of action of any nature
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<PAGE>
whatsoever brought by any Person not a party to any Loan Document and arising
from or related or incident to this Agreement, or any other Loan Document, (b)
costs and expenses incident to the defense of such claims, demands and causes of
action, including, without limitation, reasonable attorneys' fees and (c)
liabilities, judgments, settlements, penalties and assessments arising from such
claims, demands and causes of action; provided, that such claims, costs and
liabilities are not proximately caused by Lender's gross negligence or willful
misconduct. The indemnity contained in this section shall survive the
termination of this Agreement.
Section 10.11 Jurisdiction and Venue. Each of Borrower and Guarantor
----------------------
agrees, without power of revocation, that any civil suit or action brought
against it by Lender or its successors or assigns as a result of any of its
obligations under this Agreement or under any other Loan Document may be brought
against it either in the Superior Court of Fulton County, Georgia, or in the
United States District Court for the Northern District of Georgia, and each of
Borrower and Guarantor hereby irrevocably submits to the jurisdiction of such
courts and irrevocably waives, to the fullest extent permitted by law, any
objections that it may now or hereafter have to the laying of the venue of such
civil suit or action and any claim that such civil suit or action has been
brought in an inconvenient forum, and each of Borrower and Guarantor agrees that
final judgment in any such civil suit or action shall be conclusive and binding
upon it and shall be enforceable against it by suit upon such judgment in any
court of competent jurisdiction.
Section 10.12 Entire Agreement. This Agreement and the other Loan
----------------
Documents executed and delivered contemporaneously herewith, together with the
exhibits and schedules attached hereto and thereto, constitute the entire
understanding of the parties with respect to the subject matter hereof, and any
other prior or contemporaneous agreements, whether written or oral, with respect
thereto including, without limitation, any loan commitment from Lender to
Borrower, are expressly superseded hereby. The execution of this Agreement and
the other Loan Documents by Borrower and Guarantor was not based upon any facts
or materials provided by Lender, nor was Borrower or Guarantor induced to
execute this Agreement or any other Loan Document by any representation,
statement or analysis made by Lender.
SECTION 10.13 WAIVER OF JURY TRIAL. BORROWER, GUARANTOR AND LENDER
--------------------
HEREBY IRREVOCABLY WAIVE ANY AND ALL RIGHTS TO TRIAL BY JURY IN ANY LEGAL
PROCEEDING ARISING OUT OF OR RELATED TO THIS AGREEMENT OR ANY OTHER LOAN
DOCUMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY TO THE EXTENT
PERMITTED BY APPLICABLE LAW.
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<PAGE>
Section 10.14 Amendments, etc. Any provision of this Agreement or the
----------------
other Loan Documents may be amended or waived, if such amendment or waiver is in
writing and is agreed by the Borrower, Guarantor and Lender.
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<PAGE>
WITNESS the hand and seal of the parties hereto through their
duly authorized officers, as of the date first above written, this 30th day of
November, 1994.
"BORROWER"
IPD PRINTING & DISTRIBUTING, INC.
By /s/Mark C. Pope IV
-----------------------------------
Name: Mark C. Pope IV
TITLE: Vice President
Attest /s/Donald P. Hunnicutt
-------------------------------
Name: Donald P. Hunnicutt
TITLE: Secretary
[CORPORATE SEAL]
"GUARANTOR"
GRAPHIC INDUSTRIES, INC.
By /s/Mark C. Pope IV
-----------------------------------
Name: Mark C. Pope IV
Title: President
Attest /s/Donald P. Hunnicutt
-------------------------------
Name: Donald P. Hunnicutt
TITLE: Corporate Secretary
[CORPORATE SEAL]
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<PAGE>
"LENDER"
TRUST COMPANY BANK
By /s/Sheila A. Corcoran
-----------------------------------
Name: Sheila A. Corcoran
TITLE: Banking Officer
By /s/David H. Eidson
-----------------------------------
Name: David H. Eidson
TITLE: Group Vice President
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<PAGE>
EXHIBIT A
---------
MULTIPLE DISBURSEMENT MASTER NOTE
---------------------------------
November 30, 1994 $3,500,000.00
Atlanta, Georgia
FOR VALUE RECEIVED, the undersigned, IPD PRINTING & DISTRIBUTING,
INC., a Georgia corporation ("Borrower"), promises to pay to the order of TRUST
COMPANY BANK ("Lender") at the principal office of Lender at 25 Park Place,
Atlanta, Georgia 30303, or at such other place as the holder hereof may
designate, in immediately available funds in lawful money of the United States
of America, on the Conversion Date as set forth in that certain Loan, Security
and Guaranty Agreement of even date herewith (as the same may hereafter be
amended, extended or supplemented from time to time, the "Agreement") between
Borrower, Guarantor and Lender, the principal amount of THREE MILLION FIVE
HUNDRED THOUSAND AND NO/100 DOLLARS ($3,500,000.00) or so much thereof as may be
disbursed hereunder and be outstanding as shown on the grid schedule attached
hereto, together with interest thereon as hereinafter provided.
In addition to principal, Borrower agrees to pay interest on the
principal amounts outstanding hereunder from the date of each disbursement until
paid at such simple rates of interest per annum and upon such dates as provided
for in the Agreement from the date hereof to the Conversion Date.
On the Conversion Date, Borrower may, subject to the terms and
conditions of the Agreement, pay the aggregate outstanding principal amount of
the Advances, or any portion thereof, by delivering to Lender a duly executed
Term Note.
This Multiple Disbursement Master Note evidences the Advances
made pursuant to the terms and conditions of the Agreement, to which Agreement
reference is hereby made for a full and complete description of such terms and
conditions, including without limitation, provisions for the acceleration of the
maturity date hereof upon the existence or occurrence of certain conditions or
events. All capitalized terms used in this Multiple Disbursement Master Note
shall have the same meanings as set forth in the Agreement.
Borrower acknowledges that the actual crediting of any Advance
under the Agreement to an account of Borrower or recording of such amount on the
books and records (including the attached Grid Schedule) of Lender shall, in the
absence of manifest error, constitute prima facie evidence of such disbursement
and that such Advance was made and borrowed under
-35-
<PAGE>
the Agreement. Such account records or grid schedule shall constitute, in the
absence of manifest error, prima facie evidence of principal amounts outstanding
under this Multiple Disbursement Master Note and the payments made under the
Agreement at any time; provided, that no delay or failure of Lender to record on
the attached grid schedule or in such account the amount of any Advance shall
affect the obligation of Borrower to repay such amount together with interest
thereon in accordance with this Multiple Disbursement Master Note and the
Agreement.
Failure or forbearance of Lender to exercise any right hereunder,
or otherwise granted by the Agreement or by law, shall not affect or release the
liability of Borrower hereunder and shall not constitute a waiver of such right
unless so stated by Lender in writing.
TIME IS OF THE ESSENCE HEREUNDER. In addition to and not in
limitation of the foregoing and the provisions of the Agreement, Borrower
further agrees to pay all costs and expenses of collection, including reasonable
attorneys' fees, if this Multiple Disbursement Master Note shall be collected by
law or through an attorney at law, or in bankruptcy or other judicial
proceedings.
THIS MULTIPLE DISBURSEMENT MASTER NOTE SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF GEORGIA (WITHOUT GIVING
EFFECT TO THE CONFLICT OF LAWS PRINCIPLES THEREOF).
PRESENTMENT, PROTEST AND NOTICE OF DISHONOR ARE HEREBY WAIVED.
IN WITNESS WHEREOF the duly authorized officers of the
undersigned have set their hands and the seal of the undersigned as of the date
first above written.
IPD PRINTING & DISTRIBUTING, INC.
By_________________________________
Name:
Title:
Attest______________________________
Name:
Title:
(CORPORATE SEAL)
<PAGE>
Multiple Disbursement Master Note (cont'd)
ADVANCES AND PAYMENTS OF PRINCIPAL
<TABLE>
<CAPTION>
Amount Amount of
Notation of Principal Maturity
Date Advance Prepaid Date Made By
- -------- ------- --------- -------- -------
<S> <C> <C> <C> <C>
</TABLE>
<PAGE>
EXHIBIT B
---------
TERM NOTE
---------
[Conversion Date] $[ ]
Atlanta, Georgia
FOR VALUE RECEIVED, the undersigned, IPD PRINTING & DISTRIBUTING,
INC., a Georgia corporation ("Borrower"), promises to pay to the order of TRUST
COMPANY BANK ("Lender") at the principal office of Lender at 25 Park Place,
Atlanta, Georgia 30303, or at such other place as the holder hereof may
designate, in immediately available funds in lawful money of the United States
of America, the principal sum of [ ] ($ ), together with all
accrued and unpaid interest thereon as hereinafter provided.
The principal amount hereof shall be payable in twenty (20)
consecutive equal quarterly installments of [ ] each, commencing on the
last day of the calendar quarter next succeeding the Conversion Date and
continuing on the last day of each calendar quarter thereafter up to and
including the Final Maturity Date, at which time the remaining unpaid principal
balance hereunder shall be due and payable.
In addition to principal, Borrower promises to pay interest on
the principal balance hereunder from time to time at the simple rate of interest
per annum and upon such dates as provided for in the Agreement (as hereinafter
defined) from the date hereof to the Final Maturity Date.
This Term Note evidences the Term Loan in the aggregate principal
amount of [ ], made pursuant to the terms and conditions of a certain
Loan, Security and Guaranty Agreement, dated as of November 30, 1994 between
Borrower, Guarantor and Lender (as the same hereafter may be amended, extended
or supplemented from time to time, the "Agreement"), to which Agreement
reference is hereby made for a full and complete description of such terms and
conditions, including without limitation, provisions for the acceleration of the
maturity date hereof upon the existence or occurrence of certain conditions or
events. All capitalized terms used in this Term Note shall have the same
meanings as set forth in the Agreement.
Failure or forbearance of Lender to exercise any right hereunder,
or otherwise granted by the Agreement or by law, shall not affect or release the
liability of Borrower hereunder and shall not constitute a waiver of such right
unless so stated by Lender in writing.
TIME IS OF THE ESSENCE HEREUNDER. In addition to and not in
limitation of the foregoing and the provisions of the Agreement, Borrower
further agrees to pay all costs and
<PAGE>
expenses of collection, including reasonable attorneys' fees, if this Term Note
shall be collected by law or through an attorney at law, or in bankruptcy or
other judicial proceedings.
THIS TERM NOTE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE
WITH THE LAWS OF THE STATE OF GEORGIA (WITHOUT GIVING EFFECT TO THE CONFLICT OF
LAWS PRINCIPLES).
PRESENTMENT, PROTEST AND NOTICE OF DISHONOR ARE HEREBY WAIVED.
IN WITNESS WHEREOF the duly authorized officer of the undersigned
have set its hand and the seal of the undersigned as of the date first above
written.
IPD PRINTING & DISTRIBUTING, INC.
By________________________________
Name:
Title:
Attest____________________________
Name:
Title:
<PAGE>
EXHIBIT C
Description of Real Property
<PAGE>
EXHIBIT D
GRAPHIC INDUSTRIES, INC.
CERTIFICATE AS TO
ANNUAL FINANCIAL STATEMENTS
I, _____________________, Chief Financial Officer of GRAPHIC
INDUSTRIES, INC., a Georgia corporation ("Guarantor"), hereby certify in my
capacity as such officer, pursuant to Section 5.2(c) of the Loan, Security and
Guaranty Agreement dated as of November 30, 1994, between IPD Distributing &
Printing, Inc. ("Borrower"), Guarantor and Trust Company Bank (the "Agreement";
all capitalized terms herein not otherwise defined herein shall have the
meanings ascribed to them in the Agreement), that:
1. To the best of my knowledge:
(a) the accompanying consolidated financial statements of
Guarantor and its Subsidiaries for the annual accounting period ending January
31, 199__, are complete and correct and present fairly, in accordance with GAAP
(except for changes therein or therefrom described below that have been approved
in writing by [ERNST & YOUNG], Guarantor's current independent certified public
accountants), the financial position of Guarantor and its Subsidiaries as at the
end of such period, and the results of operations and cash flows for such
period, on the basis presented;
(b) except as disclosed or reflected in such financial
statements, as at [date of financial statements], Guarantor did not have any
liability, contingent or otherwise, nor any unrealized or anticipated loss, on a
consolidated basis that, singly or in the aggregate, has had or could have a
Material Adverse Effect.
2. The changes from GAAP are as follows: [DESCRIBE OR INSERT
"NONE"]
All such changes have been approved in writing by [ERNST & YOUNG], Guarantor's
current independent certified public accountants.
3. Attachment No. 1 attached hereto sets forth the calculations
required to establish whether or not Guarantor was in compliance with Sections
--------
5.5, 5.6, 5.7 and 5.8 of the Agreement.
- --- --- --- ---
4. Based on an examination sufficient to enable me to make an
informed statement, no Default or Event of Default exists, except the following:
-1-
<PAGE>
[If none such exist, insert "None"; if any do exist, specify the
same by Section, give the date the same occurred, whether it is
continuing, and the steps being taken by Borrower with respect thereto.]
GRAPHIC INDUSTRIES, INC.
By_________________________________
Name:
Title: Chief Financial Officer
Dated:
-2-
<PAGE>
Attachment Number 1 to Exhibit D
Compliance Certificate
A. CURRENT RATIO
(measured quarterly commencing 1/31/95)
<TABLE>
<S> <C> <C>
1. Consolidated Current Assets $___________
2. Consolidated Current Liabilities $___________
3. Current Ratio (1/2)
at end of such fiscal period $__________
MINIMUM RATIO PERMITTED UNDER /S/ 5.5 1.00 to 1.00
</TABLE>
B. LEVERAGE RATIO
(measured quarterly commencing 1/31/95)
<TABLE>
<S> <C> <C>
4. Consolidated Total Liabilities $___________
5. Consolidated Net Worth $___________
6. Leverage Ratio (4/5) at end
of such fiscal period ____________
MAXIMUM RATIO PERMITTED UNDER /S/ 5.6 2.75 to 1.00
</TABLE>
C. FIXED CHARGE COVERAGE RATIO
(measured quarterly commencing 1/31/95)
<TABLE>
<S> <C>
7. Consolidated Net Income
(immediately preceding 4 fiscal quarters) $__________
8. Consolidated Interest Expense
(immediately preceding 4 fiscal quarters) $__________
9. Consolidated Lease Expense
(immediately preceding 4 fiscal quarters) $__________
10. Consolidated Income Tax Expense
(immediately preceding 4 fiscal quarters) $__________
</TABLE>
-3-
<PAGE>
<TABLE>
<S> <C> <C>
11. EBILT (7+8+9+10) $__________
12. Fixed Charge Coverage Ratio for
immediately preceding 4 fiscal quarters
(11/(8+9)) ____________
MINIMUM RATIO PERMITTED UNDER /S/ 5.7 1.4 to 1.0
</TABLE>
D. DEBT SERVICE COVERAGE RATIO
(measured quarterly commencing 1/31/95)
<TABLE>
<S> <C> <C>
13. Consolidated Funded Debt $___________
14. Consolidated Depreciation and
Amortization (immediately
preceding 4 fiscal quarters) $__________
15. EBITDA (7+8+10+14) $___________
16. Debt Service Coverage Ratio
for immediately preceding
4 fiscal quarters (13/15) ____________
MAXIMUM RATIO PERMITTED UNDER /S/ 5.8 3.5 to 1.0
</TABLE>
-4-
<PAGE>
EXHIBIT 10 (qqq)
Loan No. 5909794-002
SECURITY AGREEMENT
(685 Lambert Drive, Atlanta, Georgia)
Debtor:
Name: Graphic Industries, Inc., a Georgia corporation
Address: 2155 Monroe Drive, N.E.
Atlanta, Georgia 30324
Secured Party:
Name: MetLife Capital Financial Corporation,
a Delaware corporation
Address: Real Estate Department
10900 N.E. 4th Street, Suite 500
Bellevue, Washington 98004
Debtor, for valuable consideration, hereby grants to Secured Party a
security interest in the property listed on Exhibit B hereto, and any and all
---------
additions and substitutions thereto (the "Collateral") (i) to secure payment of
the indebtedness evidenced by that certain promissory note of even date
herewith, payable to the order of Secured Party, in the principal amount of
Three Hundred Thousand Dollars ($300,000) (the "Note") and (ii) to secure all
other obligations of Debtor arising under all documents securing or executed in
connection with the Note, except any Certificate and Indemnity Agreement
Regarding Hazardous Substances or Environmental Indemnity Agreement (the "Loan
Documents").
Debtor expressly warrants and covenants:
1. Except for the security interest granted hereby, Debtor is, or to
the extent that this Security Agreement states that the Collateral
is to be acquired after the date hereof, will be, the owner of the
Collateral free from any lien, security interest or encumbrance.
Debtor shall defend the Collateral against all claims and demands of
all persons at any time claiming the same or any interest therein.
2. The Collateral is used or bought primarily for use in the business
of Debtor.
3. Debtor's business address is as stated above. The Collateral is
located at or on or is used or owned for or in connection with the
real estate situated in Atlanta, Georgia, commonly known as 685
Lambert Drive and more
<PAGE>
particularly described on the attached Exhibit A herein
incorporated by this reference (the "Property").
4. Debtor shall notify Secured Party of any change in the location of
the Collateral or any change in Debtor's principal place of
business.
5. Debtor shall pay all taxes and assessments of every nature which
may be levied or assessed against the Collateral.
6. Debtor shall not permit or allow any lien, security interest or
encumbrance whatsoever upon the Collateral and shall not permit the
Collateral to be attached or replevied.
7. The Collateral is in good condition and Debtor shall keep the
Collateral in good condition and from time to time, forthwith,
replace and repair all such parts of the Collateral as may be
broken, worn out, or damaged without allowing any lien to be
created upon the Collateral on account of such replacement or
repairs. Secured Party may examine and inspect the Collateral at
any time, wherever located.
8. Debtor will not use the Collateral in violation of any applicable
statutes, regulations or ordinances.
9. Notwithstanding anything else contained herein to the contrary,
Secured Party has been advised that certain personal property will
be leased to Debtor, and Secured Party's interest therein shall be
subordinate to lessor's interest therein.
Until default Debtor may have possession of the Collateral and use it in
any lawful manner, and upon default Secured Party shall have the immediate right
to the possession of the Collateral.
Debtor shall be in default under this Security Agreement upon the
happening of any of the following events (an "Event of Default"):
(a) default in the payment or performance of any obligation, covenant
or liability contained or referred to in this Security Agreement
and such default shall continue for a period of thirty (30) days
after written notice is given to Debtor by Secured Party specifying
such default; or
(b) the occurrence of an Event of Default as defined under the Note,
any instrument securing the Note, including the Deed to Secure
Debt, Security Agreement, Assignment of Leases and Rents and
Fixture Filing or securing the Note (the "Deed to Secure Debt"),
any other Loan Document, or the Certificate and Indemnity Agreement
Regarding Hazardous Substances or the Environmental Indemnity
Agreement; or
2.
<PAGE>
(c) loss, theft, damage or destruction to or of any of the Collateral
which shall materially and substantially diminish the aggregate
value of the Collateral, the sale or encumbrance of any of the
Collateral, or the making of any levy, seizure or attachment on or
to the Collateral.
Upon an Event of Default and at any time thereafter, Secured Party may
declare the Note immediately due and payable and shall have the remedies of a
secured party under the Articles of the Georgia Uniform Commercial Code.
Secured Party may require Debtor to assemble the Collateral and deliver or make
it available to Secured Party at a place to be designated by Secured Party which
is reasonably convenient to both parties.
Secured Party may require that the Collateral be sold at a public sale
at the same time and place as the sale of the Property, or Secured Party may
sell the Collateral at one or more other public or private sales in accordance
with the Georgia Uniform Commercial Code. The Collateral shall not be required
to be exhibited, presented or displayed at any sale. In the event that the
Collateral is sold under the Deed to Secure Debt, Secured Party hereby assigns
its security interest in the Collateral to the trustee or Sheriff selling the
Property under the Deed to Secure Debt. Debtor agrees that a sale of the
Collateral under the Deed to Secure Debt and the notices required under the laws
of Georgia for the sale of real property are commercially reasonable and
adequate under the Georgia Uniform Commercial Code.
Debtor agrees to pay to Secured Party in addition to the indebtedness
secured hereby, all expenses of retaking, holding, preparing for sale and
selling incurred by Secured Party in connection with realization on the
Collateral including reasonable attorneys' fees and costs. In addition, in the
event suit or action is instituted to enforce or interpret this Agreement
(including without limitation efforts to modify or vacate any automatic stay or
injunction), the prevailing party shall be entitled to recover all expenses
reasonably incurred at, before or after trial and on appeal whether or not
taxable as costs, or in any bankruptcy proceeding, including, without
limitation, attorneys' fees, witness fees (expert and otherwise), deposition
costs, copying charges and other expenses.
No waiver by Secured Party of an Event of Default shall operate as a
waiver of any other default or of the same default on a future occasion. The
taking of this Security Agreement shall not waive or impair any other security
said Secured Party may have or hereafter acquire for the payment of the Note nor
shall the taking of any such additional security waive or impair this Security
Agreement. Secured Party may resort to any security it may have in the order it
may deem proper.
All rights of Secured Party hereunder shall inure to the benefit of its
successors and assigns. All promises and duties of Debtor shall bind its
successors and assigns.
3.
<PAGE>
Any and all notices, elections, demands, or requests permitted or
required to be made under this Security Agreement shall be in writing, signed by
the party giving such notice, election, demand or request, and shall be
delivered personally, by telegram, or sent by registered, certified, or Express
United States mail, postage prepaid, or by Federal Express or similar service
requiring a receipt, to the other party at the address set forth above or to
such other party and at such other address within the United States of America
as any party may designate as provided herein. The date of receipt of such
notice, election, demand or request shall be the earliest of (i) the date of
actual receipt, (ii) three (3) days after the date of mailing by registered or
certified mail, (iii) one (1) day after the date of mailing by Express Mail, or
the delivery (for redelivery) to Federal Express or another similar service
requiring a receipt, or (iv) the date of personal delivery (or refusal upon
presentation for delivery).
This Security Agreement shall be governed and construed in accordance
with the laws of the State of Georgia.
IN WITNESS WHEREOF, Debtor has executed this Security Agreement as of
December 27, 1994.
DEBTOR:
GRAPHIC INDUSTRIES, INC.,
a Georgia corporation
By: /s/Mark C. Pope, III
------------------------------------
Mark C. Pope, III, Chairman & CEO
Attest: /s/ Donald P Hunnicutt
--------------------------------
Donald P. Hunnicutt, Secretary
Exhibits:
- --------
Exhibit A - Legal Description
Exhibit B - Personal Property
4.
<PAGE>
EXHIBIT "A"
685 Lambert Drive
ALL THAT TRACT OR PARCEL OF LAND LYING and being in Land Lot 50, 17th District
of Fulton County, Georgia and being more particularly described as follows:
BEGINNING AT A POINT located on the Southeastern margin of the right-of-way of
Lambert Drive (the aforesaid right-of-way having a variable width ) a distance
of 560.0 feet easterly as measured along the aforesaid Southern margin of the
right-of-way of Lambert Drive from the point formed by the intersection of the
aforesaid Southern margin of the right-of-way of Lambert Drive and the Eastern
margin of the right-of-way of Piedmont Road; thence from the point of beginning
in a Northeasterly direction along the Southeastern margin of the aforesaid
right of way of Lambert Drive and following the curvature thereof a distance of
203.69 feet to a point marked by a 1/2 inch rebar found (which arc is subtended
by a chord lying to the Northwest of the arc having a chord bearing of North 37
degrees 37 minutes 37 seconds East, a chord distance of 202.28 feet and a radius
of 497.65 feet); thence leaving the aforesaid right-of-way of Lambe rt Drive
South 62 degrees 22 minutes 56 seconds East a distance of 61.32 feet to a point
marked by a 1/2 inch rebar found; thence South 00 degrees 34 minutes 49 seconds
East a distance of 115.60 feet to point marked by a 1/2 inch rebar found; thence
South 00 degrees 34 minutes 49 seconds East a distance of 257.58 feet to a point
marked by a 1/2 inch rebar set on the Northeastern margin of Bismark Road;
thence leaving the aforesaid margin of the right of way of Bismark Road North 87
degrees 21 minutes 21 seconds West a distance of 87.02 feet to a point marked by
a nail found; thence North 22 degrees 42 minutes 57 seconds West a distance of
247.51 feet to a point on the Southeastern margin of the right-of-way of Lambert
Drive, which point is the POINT OF BEGINNING; the aforesaid property being known
as 685 Lambert Drive, according to the present system of numbering in the City
of Atlanta, Georgia and containing 1.0855 acres pursuant to that certain plat
prepared for Graphic Industries, Inc., MetLife Capital Financial Corporation and
Lawyers Title Insurance Corporation dated December 14, 1994, prepared by Pearson
& Associates, Inc., Mark A. Buckner, Registered Land Surveyor No. 2422, which
plat is incorporated herein by this reference.
Together with a perpetual nonexclusive easement for vehicular and pedestrian
traffic over and across the existing driveways, roads and entrances located or
hereafter located on the following described property:
ALL THAT TRACT OR PARCEL OF LAND LYING and being in Land Lot 50 of the 17th
District, Fulton County, Georgia, and being more particularly described as
follows:
BEGINNING AT A POINT located on the Southern margin of the right-of-way of
Lambert Drive (the aforesaid right-of-way having a variable width) a distance of
285.0 feet easterly as measured along
5.
<PAGE>
the aforesaid Southern margin of the right-of-margin of Lambert Drive from the
point formed by the intersection of the aforesaid Southern margin of the
right-of-way of Lambert Drive and the Eastern margin of the right-of-way of
Piedmont Road; thence from the point of beginning in a Northeasterly direction
along the Southern and Southeastern margin of the aforesaid right-of-way of
Lambert Drive and following the curvature thereof a distance of 83.83 feet to a
point (the arc being subtended by a chord to the Northwest of the arc having a
chord bearing of North 78 degrees 12 minutes 26 seconds East, a chord distance
of 83.81 feet and a radius of 334.03 feet; thence continuing in a generally
Northeasterly direction along the Southeastern margin on the aforesaid
right-of-way of Lambert Drive and following the curvature thereof a distance of
191.17 feet to a point (said arc being subtended by a chord to the Northwest of
the arc having a chord bearing of North 60 degrees 21 minutes 28 seconds East, a
chord distance of 190.00 feet and a radius of 497.65 feet); thence leaving the
aforesaid margin of the right-of-way of Lambert Drive South 22 degrees 42
minutes 57 seconds East a distance of 247.51 feet to a point marked by a nail
found; thence South 87 degrees 21 minutes 21 seconds East a distance of 87.02
feet to a point marked by 1/2 inch rebar set on the Northeastern margin of the
right-of-way of Bismark Road; thence along the Westerly margin of the terminus
of the right of way of Bismark Road, South 25 degrees 30 minutes 23 seconds West
a distance of 50.02 feet to a point marked by a 1/2 inch rebar set on the
Southern margin of the aforesaid right of way of Bismark road; thence leaving
the aforesaid right of way of Bismark Road North 64 degrees 37 minutes 32
seconds West a distance of 53.83 feet to a point marked by a 1/2 inch rebar
found; thence South 22 degrees 36 minutes 12 seconds West a distance of 284.34
feet to a point marked by a 1/2 inch rebar found; thence South 46 degrees 31
minutes 42 seconds West a distance of 51.95 feet to a point marked by a 1 inch
pipe found; thence North 39 degrees 33 minutes 13 seconds West a distance of
28.83 feet to a point marked by a 1/2 inch rebar found; thence North 34 degrees
46 minutes 04 seconds West a distance of 75.09 feet to a point marked by a nail
found; thence North 34 degrees 53 minutes 51 seconds West a distance of 89.90
feet to a point marked by a crimp top pipe found; thence North 28 degrees 25
minutes 29 seconds West a distance of 167.85 feet to a point marked by a 1/2
inch rebar found; thence North 07 degrees 24 minutes 25 seconds West a distance
of 146.60 feet to a point on the Southern margin of Lambert Drive, which point
is the POINT OF BEGINNING, being improved property known as 655 Lambert Drive,
according to the present system of numbering houses in Atlanta, Georgia and
containing 2.7217 acres as shown delineated on plat of survey for Graphic
Industries, Inc., MetLife Capitol Financial Corporation and Lawyers Title
Insurance Company dated December 14, 1994, prepared by Pearson & Associates,
Inc., Mark A. Buckner Registered Land Surveyor Number 2422, which survey is
incorporated herein by this reference.
6.
<PAGE>
EXHIBIT B
(685 Lambert Drive, Atlanta, Georgia)
Secured Party: MetLife Capital Financial Corporation
- -------------
Debtor: Graphic Industries, Inc.
- ------
Loan No.: 5909794-002
- ---- ---
All right, title, and interest of Debtor in:
1. All buildings, structures, improvements, parking areas, landscaping,
fixtures and articles of property now or hereafter attached to, or used or
adapted for use in the operation of the real estate (herein the "Premises")
described in Exhibit "A" attached to the financing statement or security
agreement with respect to which this Exhibit "B" is attached, including but
without being limited to, all heating, air conditioning, and incinerating
apparatus and equipment; all boilers, engines, motors, dynamos, generating
equipment, piping and plumbing fixtures, water heaters, ranges, cooking
apparatus and mechanical kitchen equipment, refrigerators, freezers, cooling,
ventilating, sprinkling and vacuum cleaning systems, fire extinguishing
apparatus, gas and electric fixtures, carpeting, floor coverings, underpadding,
elevators, escalators, partitions, mantels, built-in mirrors, window shades,
blinds, draperies, screens, storm sash, awnings, signs, furnishings of public
spaces, halls and lobbies, and shrubbery and plants, and including also all
interest of any owner of the Premises in any of such items hereafter at any time
acquired under conditional sale contract, chattel mortgage or other title
retaining or security instrument, all of which property mentioned in this
paragraph 1 shall be referred to as the "Improvements" and shall be deemed part
of the realty and not severable wholly or in part without material injury to the
freehold of the Premises.
2. All compensation, awards, damages, rights of action and proceeds,
including interest thereon and/or the proceeds of any policies of insurance
therefor, arising out of or relating to a (a) taking or damaging of the Premises
or Improvements thereon by reason of any public or private improvement,
condemnation proceeding (including change of grade), sale or transfer in lieu of
condemnation, or fire, earthquake or other casualty, or (b) any injury to or
decrease in the value of the Premises or the Improvements for any reason
whatsoever.
3. Return premiums or other payments upon any insurance any time
provided for the benefit of or naming Secured Party, and refunds or rebates of
taxes or assessments on the Premises.
4. All the right, title and interest of Debtor in and under all written
and oral leases and rental agreements (including extensions, renewals and
subleases; all of the foregoing shall be referred to
7.
<PAGE>
collectively herein as the "Leases") now or hereafter affecting the Premises
including, without limitation, all rents, issues, profits and other revenues and
income therefrom and from the renting, leasing or bailment of Improvements and
equipment, all guaranties of tenants' performance under the Leases, and all
rights and claims of any kind that Debtor may have against any tenant under the
Leases or in connection with the termination or rejection of the Leases in a
bankruptcy or insolvency proceeding.
5. Plans, specifications, contracts and agreements relating to the
design or construction of the Improvements; Debtor's rights under any payment,
performance, or other bond in connection with the design or construction of the
Improvements; all landscaping and construction materials, supplies, and
equipment used or to be used or consumed in connection with construction of the
Improvements, whether stored on the Premises or at some other location; and
contracts, agreements, and purchase orders with contractors, subcontractors,
suppliers, and materialmen incidental to the design or construction of the
Improvements.
6. All contracts (excluding contracts relating to the printing
operations of Atlanta Blue Print Company), rights, claims or causes of action
pertaining to or affecting the Premises or the Improvements, including, without
limitation, all options or contracts to acquire other property for use in
connection with operation or development of the Premises or Improvements,
management contracts, service or supply contracts, permits, licenses, franchises
and certificates, and all commitments or agreements, now or hereafter in
existence, intended by the obligor thereof to provide Debtor with proceeds to
satisfy the loan evidenced hereby or improve the Premises or Improvements, and
the right to receive all proceeds due under such commitments or agreements
including refundable deposits and fees.
7. All books, records, surveys, reports and other documents related to
the Premises, the Improvements, the Leases, or other items of collateral
described herein.
8. All additions, accessions, replacements, substitutions, proceeds and
products of the real and personal property, tangible and intangible, described
herein.
All of the foregoing described collateral is exclusive of any equipment,
furniture, furnishings or trade fixtures owned and supplied by Atlanta Blue
Print Company or by any tenant of the Premises.
8.
<PAGE>
Loan No. 5909794-001
SECURITY AGREEMENT
(655 Lambert Drive, Atlanta, Georgia)
Debtor:
Name: Graphic Industries, Inc., a Georgia corporation
Address: 2155 Monroe Drive, N.E.
Atlanta, Georgia 30324
Secured Party:
Name: MetLife Capital Financial Corporation,
a Delaware corporation
Address: Real Estate Department
10900 N.E. 4th Street, Suite 500
Bellevue, Washington 98004
Debtor, for valuable consideration, hereby grants to Secured Party a
security interest in the property listed on Exhibit B hereto, and any and all
---------
additions and substitutions thereto (the "Collateral") (i) to secure payment of
the indebtedness evidenced by that certain promissory note of even date
herewith, payable to the order of Secured Party, in the principal amount of One
Million One Hundred Twenty-Five Thousand Dollars ($1,125,000) (the "Note") and
(ii) to secure all other obligations of Debtor arising under all documents
securing or executed in connection with the Note, except any Certificate and
Indemnity Agreement Regarding Hazardous Substances or Environmental Indemnity
Agreement (the "Loan Documents").
Debtor expressly warrants and covenants:
1. Except for the security interest granted hereby, Debtor is, or to
the extent that this Security Agreement states that the Collateral
is to be acquired after the date hereof, will be, the owner of the
Collateral free from any lien, security interest or encumbrance.
Debtor shall defend the Collateral against all claims and demands
of all persons at any time claiming the same or any interest
therein.
2. The Collateral is used or bought primarily for use in the business
of Debtor.
3. Debtor's business address is as stated above. The Collateral is
located at or on or is used or owned for or in connection with the
real estate situated in Atlanta, Georgia, commonly known as 655
Lambert Drive and more
<PAGE>
particularly described on the attached Exhibit A herein
---------
incorporated by this reference (the "Property").
4. Debtor shall notify Secured Party of any change in the location of
the Collateral or any change in Debtor's principal place of
business.
5. Debtor shall pay all taxes and assessments of every nature which
may be levied or assessed against the Collateral.
6. Debtor shall not permit or allow any lien, security interest or
encumbrance whatsoever upon the Collateral and shall not permit the
Collateral to be attached or replevied.
7. The Collateral is in good condition and Debtor shall keep the
Collateral in good condition and from time to time, forthwith,
replace and repair all such parts of the Collateral as may be
broken, worn out, or damaged without allowing any lien to be
created upon the Collateral on account of such replacement or
repairs. Secured Party may examine and inspect the Collateral at
any time, wherever located.
8. Debtor will not use the Collateral in violation of any applicable
statutes, regulations or ordinances.
9. Notwithstanding anything else contained herein to the contrary,
Secured Party has been advised that certain personal property will
be leased to Debtor, and Secured Party's interest therein shall be
subordinate to lessor's interest therein.
Until default Debtor may have possession of the Collateral and use it in
any lawful manner, and upon default Secured Party shall have the immediate right
to the possession of the Collateral.
Debtor shall be in default under this Security Agreement upon the
happening of any of the following events (an "Event of Default"):
(a) default in the payment or performance of any obligation, covenant
or liability contained or referred to in this Security Agreement
and such default shall continue for a period of thirty (30) days
after written notice is given to Debtor by Secured Party specifying
such default; or
(b) the occurrence of an Event of Default as defined under the Note,
any instrument securing the Note, including the Deed to Secure
Debt, Security Agreement, Assignment of Leases and Rents and
Fixture Filing or securing the Note (the "Deed to Secure Debt"),
any other Loan Document, or the Certificate and Indemnity Agreement
Regarding Hazardous Substances or the Environmental Indemnity
Agreement; or
2.
<PAGE>
(c) loss, theft, damage or destruction to or of any of the Collateral
which shall materially and substantially diminish the aggregate
value of the Collateral, the sale or encumbrance of any of the
Collateral, or the making of any levy, seizure or attachment on or
to the Collateral.
Upon an Event of Default and at any time thereafter, Secured Party may
declare the Note immediately due and payable and shall have the remedies of a
secured party under the Articles of the Georgia Uniform Commercial Code.
Secured Party may require Debtor to assemble the Collateral and deliver or make
it available to Secured Party at a place to be designated by Secured Party which
is reasonably convenient to both parties.
Secured Party may require that the Collateral be sold at a public sale
at the same time and place as the sale of the Property, or Secured Party may
sell the Collateral at one or more other public or private sales in accordance
with the Georgia Uniform Commercial Code. The Collateral shall not be required
to be exhibited, presented or displayed at any sale. In the event that the
Collateral is sold under the Deed to Secure Debt, Secured Party hereby assigns
its security interest in the Collateral to the trustee or Sheriff selling the
Property under the Deed to Secure Debt. Debtor agrees that a sale of the
Collateral under the Deed to Secure Debt and the notices required under the laws
of Georgia for the sale of real property are commercially reasonable and
adequate under the Georgia Uniform Commercial Code.
Debtor agrees to pay to Secured Party in addition to the indebtedness
secured hereby, all expenses of retaking, holding, preparing for sale and
selling incurred by Secured Party in connection with realization on the
Collateral including reasonable attorneys' fees and costs. In addition, in the
event suit or action is instituted to enforce or interpret this Agreement
(including without limitation efforts to modify or vacate any automatic stay or
injunction), the prevailing party shall be entitled to recover all expenses
reasonably incurred at, before or after trial and on appeal whether or not
taxable as costs, or in any bankruptcy proceeding, including, without
limitation, attorneys' fees, witness fees (expert and otherwise), deposition
costs, copying charges and other expenses.
No waiver by Secured Party of an Event of Default shall operate as a
waiver of any other default or of the same default on a future occasion. The
taking of this Security Agreement shall not waive or impair any other security
said Secured Party may have or hereafter acquire for the payment of the Note nor
shall the taking of any such additional security waive or impair this Security
Agreement. Secured Party may resort to any security it may have in the order it
may deem proper.
All rights of Secured Party hereunder shall inure to the benefit of its
successors and assigns. All promises and duties of Debtor shall bind its
successors and assigns.
3.
<PAGE>
Any and all notices, elections, demands, or requests permitted or
required to be made under this Security Agreement shall be in writing, signed by
the party giving such notice, election, demand or request, and shall be
delivered personally, by telegram, or sent by registered, certified, or Express
United States mail, postage prepaid, or by Federal Express or similar service
requiring a receipt, to the other party at the address set forth above or to
such other party and at such other address within the United States of America
as any party may designate as provided herein. The date of receipt of such
notice, election, demand or request shall be the earliest of (i) the date of
actual receipt, (ii) three (3) days after the date of mailing by registered or
certified mail, (iii) one (1) day after the date of mailing by Express Mail, or
the delivery (for redelivery) to Federal Express or another similar service
requiring a receipt, or (iv) the date of personal delivery (or refusal upon
presentation for delivery).
This Security Agreement shall be governed and construed in accordance
with the laws of the State of Georgia.
IN WITNESS WHEREOF, Debtor has executed this Security Agreement as of
December 27, 1994.
DEBTOR:
GRAPHIC INDUSTRIES, INC.,
a Georgia corporation
By: /s/Mark C. Pope, III
-----------------------------------
Mark C. Pope, III, Chairman & CEO
Attest: /s/Donald P. Hunnicutt
-------------------------------
Donald P. Hunnicutt, Secretary
Exhibits:
- --------
Exhibit A - Legal Description
Exhibit B - Personal Property
4.
<PAGE>
EXHIBIT "A"
655 Lambert Drive
ALL THAT TRACT OR PARCEL OF LAND LYING and being in Land Lot 50 of the 17th
District, Fulton County, Georgia, and being more particularly described as
follows:
BEGINNING AT A POINT located on the Southern margin of the right-of-way of
Lambert Drive (the aforesaid right-of-way having a variable width) a distance of
285.0 feet easterly as measured along the aforesaid Southern margin of the
right-of-way of Lambert Drive from the point formed by the intersection of the
aforesaid Southern margin of the right-of-way of Lambert Drive and the Eastern
margin of the right-of-way of Piedmont Road; thence from the point of beginning
in a Northeasterly direction along the Southern and Southeastern margin of the
aforesaid right-of-way of Lambert Drive and following the curvature thereof a
distance of 83.83 feet to a point (the arc being subtended by a chord to the
Northwest of the arc having a chord bearing of North 78 degrees 12 minutes 26
seconds East, a chord distance of 83.81 feet and a radius of 334.03 feet; thence
continuing in a generally Northeasterly direction along the Southeastern margin
of the aforesaid right-of-way of Lambert Drive and following the curvature
thereof a distance of 191.17 feet to a point (said arc being subtended by a
chord to the Northwest of the arc having a chord bearing of North 60 degrees 21
minutes 28 seconds East, a chord distance of 190.00 feet and a radius of 497.65
feet); thence leaving the aforesaid margin of the right-of-way of Lambert Drive
South 22 degrees 42 minutes 57 seconds East a distance of 247.51 feet to a point
marked by a nail found; thence South 87 degrees 21 minutes 21 seconds East a
distance of 87.02 feet to a point marked by a 1/2 inch rebar set on the
Northeastern margin of the right-of-way of Bismark Road; thence along the
Westerly margin of the terminus of the right of way of Bismark Road, South 25
degrees 30 minutes 23 seconds West distance of 50.02 feet to a point marked by a
1/2 inch rebar set on the Southern margin of the aforesaid right of way of
Bismark Road; thence leaving the aforesaid right of way of Bismark Road North 64
degrees 37 minutes 32 seconds West a distance of 53.83 feet to a point marked by
a 1/2 inch rebar found; thence South 22 degrees 36 minutes 12 seconds West a
distance of 51.95 feet to a point marked by a 1 inch pipe found; thence North 39
degrees 33 minutes 13 seconds West a distance of 28.83 feet to a point marked by
a 1/2 inch rebar found; thence North 34 degrees 46 minutes 04 seconds West a
distance of 75.09 feet to a point marked by a nail found; thence North 34
degrees 53 minutes 51 seconds West a distance of 89.90 feet to a point marked by
a crimp top pipe found; thence North 28 degrees 25 minutes 29 seconds West a
distance of 167.85 feet to a point marked by a 1/2 inch rebar found; thence
North 07 degrees 24 minutes 25 seconds West a distance of 146.60 feet to a point
on the Southern margin of Lambert Drive which point is the POINT OF BEGINNING
being improved property known as 655 Lambert Drive, according to the present
system of numbering houses in Atlanta, Georgia and
5.
<PAGE>
containing 2.7217 acres as shown and delineated on plat of survey for Graphic
Industries, Inc., MetLife Capitol Financial Corporation and Lawyers Title
Insurance Company dated December 14, 1994, prepared by Pearson & Associates,
Inc., Mark A. Buckner Registered Land Surveyor Number 2422, which survey is
incorporated herein by this reference.
Together with a perpetual nonexclusive easement for vehicular and pedestrian
traffic over and across the existing driveways, roads and entrances located or
hereafter located on the following described property:
ALL THAT TRACT OR PARCEL OF LAND LYING and being in Land Lot 50, 17th District
of Fulton County, Georgia and being more particularly described as follows:
BEGINNING AT A POINT located on the Southeastern margin of the right-of-way of
Lambert Drive (the aforesaid right-of-way having a variable width) a distance of
560.0 feet easterly as measured along the aforesaid Southern margin of the
right-of-way of Lambert Drive from the point formed by the intersection of the
aforesaid Southern margin of the right-of-way of Lambert Drive and the Eastern
margin of the right-of-way of Piedmont Road; thence from the point of beginning
in a Northeasterly direction along the Southeastern margin of the aforesaid
right of way of Lambert Drive and following the curvature thereof a distance of
203.69 feet to a point marked by a 1/2 inch rebar found (which arc is subtended
by a chord lying to the Northwest of the arc having a chord bearing of North 37
degrees 37 minutes 37 seconds East, a chord distance of 202.28 feet and a radius
of 497.65 feet); thence leaving the aforesaid right-of-way of Lambert Drive
South 62 degrees 22 minutes 56 seconds East a distance of 61.32 feet to a point
marked by a 1/2 inch rebar found; thence South 00 degrees 34 minutes 49 seconds
East a distance of 257.58 feet to a point marked by a 1/2 inch rebar set on the
Northeastern margin of Bismark Road; thence leaving the aforesaid margin of the
right of way of Bismark Road North 87 degrees 21 minutes 21 seconds West a
distance of 87.02 feet to a point marked by a nail found; thence North 22
degrees 42 minutes 57 seconds West a distance of 247.51 feet to a point on the
Southeastern margin of the right-of-way of Lambert Drive, which point is the
POINT OF BEGINNING; the aforesaid property being known as 685 Lambert Drive,
according to the present system of numbering in the City of Atlanta, Georgia and
containing 1.0865 acres pursuant to that certain plat prepared for Graphic
Industries, Inc., MetLife Capital Financial Corporation and Lawyers Title
Insurance Corporation dated December 14, 1994, prepared by Pearson & Associates,
Inc., Mark A. Buckner, Registered Land Surveyor No. 2422, which plat is
incorporated herein by this reference.
6.
<PAGE>
EXHIBIT B
(655 Lambert Drive, Atlanta, Georgia)
Secured Party: MetLife Capital Financial Corporation
- -------------
Debtor: Graphic Industries, Inc.
- ------
Loan No.: 5909794-001
- ---- ---
All right, title, and interest of Debtor in:
1. All buildings, structures, improvements, parking areas, landscaping,
fixtures and articles of property now or hereafter attached to, or used or
adapted for use in the operation of the real estate (herein the "Premises")
described in Exhibit "A" attached to the financing statement or security
agreement with respect to which this Exhibit "B" is attached, including but
without being limited to, all heating, air conditioning, and incinerating
apparatus and equipment; all boilers, engines, motors, dynamos, generating
equipment, piping and plumbing fixtures, water heaters, ranges, cooking
apparatus and mechanical kitchen equipment, refrigerators, freezers, cooling,
ventilating, sprinkling and vacuum cleaning systems, fire extinguishing
apparatus, gas and electric fixtures, carpeting, floor coverings, underpadding,
elevators, escalators, partitions, mantels, built-in mirrors, window shades,
blinds, draperies, screens, storm sash, awnings, signs, furnishings of public
spaces, halls and lobbies, and shrubbery and plants, and including also all
interest of any owner of the Premises in any of such items hereafter at any time
acquired under conditional sale contract, chattel mortgage or other title
retaining or security instrument, all of which property mentioned in this
paragraph 1 shall be referred to as the "Improvements" and shall be deemed part
of the realty and not severable wholly or in part without material injury to the
freehold of the Premises.
2. All compensation, awards, damages, rights of action and proceeds,
including interest thereon and/or the proceeds of any policies of insurance
therefor, arising out of or relating to a (a) taking or damaging of the Premises
or Improvements thereon by reason of any public or private improvement,
condemnation proceeding (including change of grade), sale or transfer in lieu of
condemnation, or fire, earthquake or other casualty, or (b) any injury to or
decrease in the value of the Premises or the Improvements for any reason
whatsoever.
3. Return premiums or other payments upon any insurance any time
provided for the benefit of or naming Secured Party, and refunds or rebates of
taxes or assessments on the Premises.
4. All the right, title and interest of Debtor in and under all written
and oral leases and rental agreements (including extensions, renewals and
subleases; all of the foregoing shall be referred to
7.
<PAGE>
collectively herein as the "Leases") now or hereafter affecting the Premises
including, without limitation, all rents, issues, profits and other revenues and
income therefrom and from the renting, leasing or bailment of Improvements and
equipment, all guaranties of tenants' performance under the Leases, and all
rights and claims of any kind that Debtor may have against any tenant under the
Leases or in connection with the termination or rejection of the Leases in a
bankruptcy or insolvency proceeding.
5. Plans, specifications, contracts and agreements relating to the
design or construction of the Improvements; Debtor's rights under any payment,
performance, or other bond in connection with the design or construction of the
Improvements; all landscaping and construction materials, supplies, and
equipment used or to be used or consumed in connection with construction of the
Improvements, whether stored on the Premises or at some other location; and
contracts, agreements, and purchase orders with contractors, subcontractors,
suppliers, and materialmen incidental to the design or construction of the
Improvements.
6. All contracts (excluding contracts relating to the printing
operations of Atlanta Blue Print Company), rights, claims or causes of action
pertaining to or affecting the Premises or the Improvements, including, without
limitation, all options or contracts to acquire other property for use in
connection with operation or development of the Premises or Improvements,
management contracts, service or supply contracts, permits, licenses, franchises
and certificates, and all commitments or agreements, now or hereafter in
existence, intended by the obligor thereof to provide Debtor with proceeds to
satisfy the loan evidenced hereby or improve the Premises or Improvements, and
the right to receive all proceeds due under such commitments or agreements
including refundable deposits and fees.
7. All books, records, surveys, reports and other documents related to
the Premises, the Improvements, the Leases, or other items of collateral
described herein.
8. All additions, accessions, replacements, substitutions, proceeds and
products of the real and personal property, tangible and intangible, described
herein.
All of the foregoing described collateral is exclusive of any equipment,
furniture, furnishings or trade fixtures owned and supplied by Atlanta Blue
Print Company or by any tenant of the Premises.
8.
<PAGE>
Loan No. 5909794-002
PROMISSORY NOTE
(685 Lambert Drive, Atlanta, Georgia)
$300,000 December 27, 1994
FOR VALUE RECEIVED, GRAPHIC INDUSTRIES, INC., a Georgia corporation
("BORROWER"), promises to pay to the order of MetLife Capital Financial
Corporation ("METLIFE") at METLIFE's office at 10900 N.E. 4th St., Suite 500,
Bellevue, Washington 98004, attention: Real Estate Department, or at such other
address as the holder hereof may from time to time designate in writing, the
principal sum of THREE HUNDRED THOUSAND DOLLARS ($300,000) together with
interest from the date the proceeds of the loan (the "Loan") evidenced by this
Promissory Note (this "Note") are initially disbursed until maturity on the
principal balance from time to time remaining unpaid hereon at the rate of ten
percent (10%) per annum (computed on the basis of a 360-day year of twelve (12)
consecutive thirty (30)-day months) in installments as follows: (i) interest
only in advance at the rate of $83.33 per day shall be due and payable on the
date the proceeds of the Loan are initially disbursed to or for the benefit of
BORROWER (including, without limitation, disbursement into an escrow for the
benefit of BORROWER) for the period beginning on the date of such disbursement
and ending on the last day of the month during which such disbursement occurs;
and (ii) one hundred seventy-nine (179) installments of principal and interest
in the amount of Three Thousand Two Hundred Twenty-Three and eighty-two
hundredths Dollars ($3,223.82) each shall be payable commencing on the first
day of the second month following the month in which the proceeds of the loan
evidenced by this Note are initially disbursed and continuing on the first day
of each and every succeeding month until the first day of the one hundred
eightieth (180th) month following the date the proceeds of the Loan are
initially disbursed at which time all then unpaid principal and interest hereon
shall be due and payable.
If any payment shall not be paid when due and shall remain unpaid for
ten (10) days, BORROWER shall pay an additional charge equal to five percent
(5.00%) of the delinquent payment or the highest additional charge permitted by
law, whichever is less.
Upon not less than thirty (30) days' advance written notice to METLIFE
at any time after the fifth (5th) anniversary of the due date of the first
monthly principal and interest payment due under this Note, and upon payment of
the Prepayment Premium, BORROWER shall have the right to prepay all, but not
less than all, of the outstanding balance of this Note on any regularly
scheduled principal and interest payment date. The Prepayment Premium shall be
determined by (i) calculating the decrease (expressed in basis points) in the
current weekly average yield of ten (10)-year U.S. Treasury Notes (as published
in Federal Reserve Statistical Release H.15 [519]) (the "Index") from September
16, 1994, to the Friday immediately preceding the week in which the prepayment
is made, (ii) dividing the decrease by 100, (iii) multiplying the result by the
following described applicable premium factor (the "Premium Factor"), and (iv)
multiplying the product by the principal balance to be prepaid.
<PAGE>
If the Index is unchanged or has increased from September 16, 1994 to the Friday
immediately preceding the prepayment date, no Prepayment Premium shall be due.
The Premium Factor shall be the amount shown on the following chart for the
month in which prepayment occurs:
<TABLE>
<CAPTION>
No. Mos. Premium
Remaining (Years) Factor
--------- ------- ------
<S> <C> <C>
180 - 169 (15) .073
168 - 157 (14) .069
156 - 145 (13) .064
144 - 133 (12) .059
132 - 121 (11) .054
120 - 109 (10) .049
108 - 97 ( 9) .044
96 - 85 ( 8) .039
84 - 73 ( 7) .035
72 - 61 ( 6) .030
60 - 49 ( 5) .025
48 - 37 ( 4) .020
36 - 25 ( 3) .015
24 - 13 ( 2) .010
12 - 1 ( 1) .005
</TABLE>
If the Federal Reserve Board ceases to publish Statistical Release H.15 [519],
then the decrease in the weekly average yield of ten (10)-year U.S. Treasury
Notes will be determined from another source designated by METLIFE. Prepayment
prior to the fifth (5th) anniversary of the due date of the first monthly
principal and interest payment due under this Note will be permitted only in the
event of a sale of the Property (as hereinafter defined) to a bona-fide third
party and only upon payment of both the prepayment premium set forth above and
an additional premium calculated by multiplying the original principal amount of
this Note by the Premium Factor set forth below:
<TABLE>
<CAPTION>
No. Mos. Premium
Remaining (Years) Factor
--------- ------- ------
<S> <C> <C>
180 - 169 (15) .03
168 - 157 (14) .02
156 - 121 (13 -11) .01
</TABLE>
If METLIFE at any time accelerates this Note after an Event of Default
(defined below), then BORROWER shall be obligated to pay the Prepayment Premium
in accordance with the foregoing schedule. The Prepayment Premium shall not be
payable with respect to condemnation awards or insurance proceeds from fire or
other casualty which METLIFE applies to prepayment, nor with respect to
BORROWER's prepayment of the Note in full during the last twelve (12) months of
the term of this Note unless an Event of Default has occurred. BORROWER
expressly acknowledges that such Prepayment Premium is not a penalty but is
intended solely to compensate METLIFE for the loss of its bargain and the
reimbursement of internal expenses and administrative fees and expenses incurred
by METLIFE.
2.
<PAGE>
BORROWER shall be liable on this Note and on all the representations,
warranties, indemnities and covenants in the Deed to Secure Debt, Security
Agreement, Assignment of Leases and Rents and Fixture Filing ("Deed to Secure
Debt") covering the property (the "Property") securing this Note and all other
documents executed or delivered in connection herewith (the "Loan Documents").
Each of the following shall constitute an Event of Default ("Event of
Default") hereunder and under the Deed to Secure Debt executed contemporaneously
herewith:
(a) Failure of or refusal by BORROWER to make any payment of principal,
interest, or Prepayment Premium upon this Note when due, and such failure or
refusal shall continue for a period of ten (10) days after written notice is
given to BORROWER by METLIFE specifying such failure; or
(b) Failure of BORROWER within the time required by the Deed to Secure
Debt to make any payment for taxes, insurance or for reserves for such payments,
or any other payment necessary to prevent filing of or discharge of any lien,
and such failure shall continue for a period of ten (10) days after written
notice is given to BORROWER by METLIFE specifying such failure; or
(c) Failure by BORROWER to observe or perform any obligations of
BORROWER to METLIFE on or with respect to any transactions, debts, undertakings
or agreements other than the transaction evidenced by this Note following the
giving of any required notice and the expiration of any applicable period of
grace; or
(d) Failure of BORROWER to make any payment or perform any obligation
under any superior liens or encumbrances on the Property, within the time
required thereunder, or commencement of any suit or other action to foreclose
any superior liens or encumbrances; or
(e) Failure by BORROWER to observe or perform any of its obligations
under any of the lease agreements covering the Property; or
(f) The Property is transferred or any agreement to transfer any part or
interest in the Property in any manner whatsoever is made or entered into
without the prior written consent of METLIFE, except as specifically allowed
under the Deed to Secure Debt, including without limitation creating or allowing
any liens on the Property or leasing any portion of the Property; or
(g) Filing by BORROWER or Atlanta Blue Print Company of a voluntary
petition in bankruptcy or filing by BORROWER or Atlanta Blue Print Company of
any petition or answer seeking or acquiescing in any reorganization,
arrangement, composition, readjustment, liquidation, or similar relief for
itself under any present or future federal, state or other statute, law or
regulation relating to bankruptcy, insolvency or other relief for debtors, or
the seeking, consenting to, or acquiescing by BORROWER or Atlanta Blue Print
Company in the appointment of any trustee, receiver, custodian, conservator or
liquidator for BORROWER or Atlanta Blue Print Company, any part of the Property,
or any of the
3.
<PAGE>
income or rents of the Property, or the making by BORROWER or Atlanta Blue Print
Company of any general assignment for the benefit of creditors, or the inability
of or failure by BORROWER or Atlanta Blue Print Company to pay its debts
generally as they become due, or the insolvency on a balance sheet basis or
business failure of BORROWER or Atlanta Blue Print Company, or the making or
suffering of a preference within the meaning of federal bankruptcy law or the
making of a fraudulent transfer under applicable federal or state law, or
concealment by BORROWER or Atlanta Blue Print Company of any of its property in
fraud of creditors, or the imposition of a lien upon any of the property of
BORROWER or Atlanta Blue Print Company which is not discharged in the manner
permitted by the Deed to Secure Debt, or the giving of notice by BORROWER or
Atlanta Blue Print Company to any governmental body of insolvency or suspension
of operations; or
(h) Filing of a petition against BORROWER or Atlanta Blue Print Company
seeking any reorganization, arrangement, composition, readjustment, liquidation,
or similar relief under any present or future federal, state or other law or
regulation relating to bankruptcy, insolvency or other relief for debts, or the
appointment of any trustee, receiver, custodian, conservator or liquidator of
BORROWER or Atlanta Blue Print Company, of any part of the Property or of any of
the income or rents of the Property, unless such petition shall be dismissed
within sixty (60) days after such filing, but in any event prior to the entry of
an order, judgment or decree approving such petition; or
(i) The institution of any proceeding for the dissolution or termination
of BORROWER voluntarily, involuntarily, or by operation of law; or
(j) A material adverse change occurs in the assets, liabilities or net
worth of BORROWER or any of the guarantors of the indebtedness evidenced by this
Note from the assets, liabilities or net worth of BORROWER or any of the
guarantors of the indebtedness evidenced by this Note previously disclosed to
METLIFE; or
(k) Any warranty, representation or statement furnished to METLIFE by or
on behalf of BORROWER under this Note, the Deed to Secure Debt, or any of the
Loan Documents shall prove to have been false or misleading in any material
respect; or
(l) Failure of BORROWER to observe or perform any other covenant or
condition contained in this Note and such default shall continue for thirty (30)
days after notice is given to BORROWER specifying the nature of the failure. No
notice of default and no opportunity to cure shall be required if during the
prior twelve (12) months METLIFE has already sent a notice to BORROWER
concerning default in performance of the same obligation; or
(m) Failure of BORROWER to observe or perform any other obligation under
the Deed to Secure Debt or any other Loan Document when such observance or
performance is due, and such failure shall continue beyond the applicable cure
period set forth in such Loan Document, or if the default cannot be cured within
such applicable cure period, BORROWER fails within such time to commence and
pursue curative action with
4.
<PAGE>
reasonable diligence or fails at any time after expiration of such applicable
cure period to continue with reasonable diligence all necessary curative
actions. No notice of default and no opportunity to cure shall be required if
during the prior twelve (12) months METLIFE has already sent a notice to
BORROWER concerning default in performance of the same obligation; or
(n) BORROWER's abandonment of the Property; or
(o) Any of the foregoing events occur with respect to any tenant of the
Property, with respect to any guarantor of any of BORROWER's obligations in
connection with the indebtedness evidenced by this Note or with respect to any
guarantor of any tenant's obligations relating to the Property, or such
guarantor dies or becomes incompetent; or
(p) The occurrence of any default under any of the documents evidencing
or securing (i) METLIFE Loan No. 5905292, (ii) METLIFE Loan No. 5905393, (iii)
METLIFE Loan No. 5905393, (iv) METLIFE Loan No. 5904594 or (v) any other
indebtedness with Borrower or any of the guarantors of the Indebtedness which is
now or hereafter owed to METLIFE.
Upon the occurrence of any of the foregoing events of default, METLIFE
shall have the option to declare the entire amount of principal and interest due
under this Note immediately due and payable without notice or demand, and
METLIFE may exercise any of its rights under this Note and any document executed
or delivered herewith. After acceleration or maturity, BORROWER shall pay
interest on the outstanding principal balance of this Note at the rate of five
percent (5.00%) per annum above Chase Manhattan Bank's prime interest rate in
effect from time to time, or fifteen percent (15.00%) per annum, whichever is
higher, provided that such interest rate shall not exceed the maximum interest
rate permitted by law.
All payments of the principal and interest on this Note shall be made in
coin or currency of the United States of America which at the time shall be the
legal tender for the payment of public and private debts.
If this Note is placed in the hands of an attorney for collection,
BORROWER agrees to pay reasonable attorneys' fees and costs incurred by METLIFE
in connection therewith, and in the event suit or action is instituted to
enforce or interpret this Note (including without limitation efforts to modify
or vacate any automatic stay or injunction), the prevailing party shall be
entitled to recover all expenses reasonably incurred at, before or after trial
and on appeal, whether or not taxable as costs, or in any bankruptcy proceeding,
or in connection with post-judgment collection efforts, including, without
limitation, attorneys' fees, witness fees (expert and otherwise), deposition
costs, copying charges and other expenses.
This Note shall be governed and construed in accordance with the laws of
the State of Georgia applicable to contracts made and to be performed therein
(excluding choice-of-law principles). BORROWER hereby irrevocably submits to
the jurisdiction of any state or federal court
5.
<PAGE>
sitting in Georgia in any action or proceeding brought to enforce or otherwise
arising out of or relating to this Note, and hereby waives any objection to
venue in any such court and any claim that such forum is an inconvenient forum.
This Note is given in a commercial transaction for business purposes.
This Note may be declared due prior to its expressed maturity date, all
in the events, on the terms, and in the manner provided for in the Deed to
Secure Debt.
BORROWER and all sureties, endorsers, guarantors and other parties now
or hereafter liable for the payment of this Note, in whole or in part, hereby
severally (i) waive demand, notice of demand, presentment for payment, notice of
nonpayment, notice of default, protest, notice of protest, notice of intent to
accelerate, notice of acceleration and all other notices, and further waive
diligence in collecting this Note or in enforcing any of the security for this
Note; (ii) agree to any substitution, subordination, exchange or release of any
security for this Note or the release of any party primarily or secondarily
liable for the payment of this Note; (iii) agree that METLIFE shall not be
required to first institute suit or exhaust its remedies hereon against BORROWER
or others liable or to become liable for the payment of this Note or to enforce
its rights against any security for the payment of this Note; and (iv) consent
to any extension of time for the payment of this Note, or any installment
hereof, made by agreement by METLIFE with any person now or hereafter liable for
the payment of this Note, even if BORROWER is not a party to such agreement.
All agreements between BORROWER and METLIFE, whether now existing or
hereafter arising and whether written or oral, are hereby limited so that in no
contingency, whether by reason of demand or acceleration of the final maturity
of this Note or otherwise, shall the interest contracted for, charged, received,
paid or agreed to be paid to METLIFE exceed the maximum amount permissible under
the applicable law. If, from any circumstance whatsoever, interest would
otherwise be payable to METLIFE in excess of the maximum amount permissible
under applicable law, the interest payable to METLIFE shall be reduced to the
maximum amount permissible under applicable law; and if from any circumstance
METLIFE shall ever receive anything of value deemed interest by applicable law
in excess of the maximum amount permissible under applicable law, an amount
equal to the excessive interest or if such excessive amount of interest exceeds
the unpaid balance of principal hereof, such excess shall be refunded to
BORROWER. All interest paid or agreed to be paid to METLIFE shall, to the
extent permitted by applicable law, be amortized, prorated, allocated, and
spread throughout the full period (including any renewal or extension) until
payment in full of the principal so that the interest hereon for such full
period shall not exceed the maximum amount permissible under applicable law.
METLIFE expressly disavows any intent to contract for, charge or receive
interest in an amount which exceeds the maximum amount permissible under
applicable law. This paragraph shall control all agreements between BORROWER
and METLIFE.
6.
<PAGE>
IMPORTANT: READ BEFORE SIGNING. THE TERMS OF THIS AGREEMENT SHOULD BE
READ CAREFULLY BECAUSE ONLY THOSE TERMS IN WRITING ARE ENFORCEABLE. NO
OTHER TERMS OR ORAL PROMISES NOT CONTAINED IN THIS WRITTEN CONTRACT MAY
BE LEGALLY ENFORCED. YOU MAY CHANGE THE TERMS OF THIS AGREEMENT ONLY BY
ANOTHER WRITTEN AGREEMENT.
IN WITNESS WHEREOF, BORROWER has caused this Note to be executed by its
duly authorized officers as of the year and day first written above.
BORROWER:
GRAPHIC INDUSTRIES, INC.,
a Georgia corporation
By:/s/ Mark C. Pope III
-------------------------------------
Mark C. Pope, III, Chairman & CEO
Attest:/s/ Donald P. Hunnicutt
---------------------------------
Donald P. Hunnicutt, Secretary
7.
<PAGE>
Loan No. 5909794-001
PROMISSORY NOTE
(655 Lambert Drive, Atlanta, Georgia)
$1,125,000 December 27, 1994
FOR VALUE RECEIVED, GRAPHIC INDUSTRIES, INC., a Georgia corporation
("BORROWER"), promises to pay to the order of MetLife Capital Financial
Corporation ("METLIFE") at METLIFE's office at 10900 N.E. 4th St., Suite 500,
Bellevue, Washington 98004, attention: Real Estate Department, or at such other
address as the holder hereof may from time to time designate in writing, the
principal sum of ONE MILLION ONE HUNDRED TWENTY-FIVE THOUSAND DOLLARS
($1,125,000) together with interest from the date the proceeds of the loan (the
"Loan") evidenced by this Promissory Note (this "Note") are initially disbursed
until maturity on the principal balance from time to time remaining unpaid
hereon at the rate of ten percent (10%) per annum (computed on the basis of a
360-day year of twelve (12) consecutive thirty (30)-day months) in installments
as follows: (i) interest only in advance at the rate of $312.50 per day shall
be due and payable on the date the proceeds of the Loan are initially disbursed
to or for the benefit of BORROWER (including, without limitation, disbursement
into an escrow for the benefit of BORROWER) for the period beginning on the date
of such disbursement and ending on the last day of the month during which such
disbursement occurs; and (ii) one hundred seventy-nine (179) installments of
principal and interest in the amount of Twelve Thousand Eight-Nine and thirty-
one hundredths Dollars ($12,089.31) each shall be payable commencing on the
first day of the second month following the month in which the proceeds of the
loan evidenced by this Note are initially disbursed and continuing on the first
day of each and every succeeding month until the first day of the one hundred
eightieth (180th) month following the date the proceeds of the Loan are
initially disbursed at which time all then unpaid principal and interest hereon
shall be due and payable.
If any payment shall not be paid when due and shall remain unpaid for
ten (10) days, BORROWER shall pay an additional charge equal to five percent
(5.00%) of the delinquent payment or the highest additional charge permitted by
law, whichever is less.
Upon not less than thirty (30) days' advance written notice to METLIFE
at any time after the fifth (5th) anniversary of the due date of the first
monthly principal and interest payment due under this Note, and upon payment of
the Prepayment Premium, BORROWER shall have the right to prepay all, but not
less than all, of the outstanding balance of this Note on any regularly
scheduled principal and interest payment date. The Prepayment Premium shall be
determined by (i) calculating the decrease (expressed in basis points) in the
current weekly average yield of ten (10)-year U.S. Treasury Notes (as published
in Federal Reserve Statistical Release H.15 [519]) (the "Index") from September
16, 1994, to the Friday immediately preceding the week in which the prepayment
is made, (ii) dividing the decrease by 100, (iii) multiplying the result by the
following described applicable premium factor (the "Premium Factor"), and (iv)
multiplying the product by the principal balance to be prepaid.
<PAGE>
If the Index is unchanged or has increased from September 16, 1994 to the Friday
immediately preceding the prepayment date, no Prepayment Premium shall be due.
The Premium Factor shall be the amount shown on the following chart for the
month in which prepayment occurs:
<TABLE>
<CAPTION>
No. Mos. Premium
Remaining (Years) Factor
--------- ------- -------
<S> <C> <C>
180 - 169 (15) .073
168 - 157 (14) .069
156 - 145 (13) .064
144 - 133 (12) .059
132 - 121 (11) .054
120 - 109 (10) .049
108 - 97 ( 9) .044
96 - 85 ( 8) .039
84 - 73 ( 7) .035
72 - 61 ( 6) .030
60 - 49 ( 5) .025
48 - 37 ( 4) .020
36 - 25 ( 3) .015
24 - 13 ( 2) .010
12 - 1 ( 1) .005
</TABLE>
If the Federal Reserve Board ceases to publish Statistical Release H.15 [519],
then the decrease in the weekly average yield of ten (10)-year U.S. Treasury
Notes will be determined from another source designated by METLIFE. Prepayment
prior to the fifth (5th) anniversary of the due date of the first monthly
principal and interest payment due under this Note will be permitted only in the
event of a sale of the Property (as hereinafter defined) to a bona-fide third
party and only upon payment of both the prepayment premium set forth above and
an additional premium calculated by multiplying the outstanding principal amount
of this Note by the Premium Factor set forth below:
<TABLE>
<CAPTION>
No. Mos. Premium
Remaining (Years) Factor
--------- ------- -------
<S> <C> <C>
180 - 169 (15) .03
168 - 157 (14) .02
156 - 121 (13-11) .01
</TABLE>
If METLIFE at any time accelerates this Note after an Event of Default
(defined below), then BORROWER shall be obligated to pay the Prepayment Premium
in accordance with the foregoing schedule. The Prepayment Premium shall not be
payable with respect to condemnation awards or insurance proceeds from fire or
other casualty which METLIFE applies to prepayment, nor with respect to
BORROWER's prepayment of the Note in full during the last twelve (12) months of
the term of this Note unless an Event of Default has occurred. BORROWER
expressly acknowledges that such Prepayment Premium is not a penalty but is
intended solely to compensate METLIFE for the loss of its bargain and the
reimbursement of internal expenses and administrative fees and expenses incurred
by METLIFE.
2.
<PAGE>
BORROWER shall be liable on this Note and on all the representations,
warranties, indemnities and covenants in the Deed to Secure Debt, Security
Agreement, Assignment of Leases and Rents and Fixture Filing ("Deed to Secure
Debt") covering the property (the "Property") securing this Note and all other
documents executed or delivered in connection herewith (the "Loan Documents").
Each of the following shall constitute an Event of Default ("Event of
Default") hereunder and under the Deed to Secure Debt executed contemporaneously
herewith:
(a) Failure of or refusal by BORROWER to make any payment of principal,
interest, or Prepayment Premium upon this Note when due, and such failure or
refusal shall continue for a period of ten (10) days after written notice is
given to BORROWER by METLIFE specifying such failure; or
(b) Failure of BORROWER within the time required by the Deed to Secure
Debt to make any payment for taxes, insurance or for reserves for such payments,
or any other payment necessary to prevent filing of or discharge of any lien,
and such failure shall continue for a period of ten (10) days after written
notice is given to BORROWER by METLIFE specifying such failure; or
(c) Failure by BORROWER to observe or perform any obligations of
BORROWER to METLIFE on or with respect to any transactions, debts, undertakings
or agreements other than the transaction evidenced by this Note following the
giving of any required notice and the expiration of any applicable period of
grace; or
(d) Failure of BORROWER to make any payment or perform any obligation
under any superior liens or encumbrances on the Property, within the time
required thereunder, or commencement of any suit or other action to foreclose
any superior liens or encumbrances; or
(e) Failure by BORROWER to observe or perform any of its obligations
under any of the lease agreements covering the Property; or
(f) The Property is transferred or any agreement to transfer any part or
interest in the Property in any manner whatsoever is made or entered into
without the prior written consent of METLIFE, except as specifically allowed
under the Deed to Secure Debt, including without limitation creating or allowing
any liens on the Property or leasing any portion of the Property; or
(g) Filing by BORROWER or Atlanta Blue Print Company of a voluntary
petition in bankruptcy or filing by BORROWER or Atlanta Blue Print Company of
any petition or answer seeking or acquiescing in any reorganization,
arrangement, composition, readjustment, liquidation, or similar relief for
itself under any present or future federal, state or other statute, law or
regulation relating to bankruptcy, insolvency or other relief for debtors, or
the seeking, consenting to, or acquiescing by BORROWER or Atlanta Blue Print
Company in the appointment of any trustee, receiver, custodian, conservator or
liquidator for BORROWER or Atlanta Blue Print Company, any part of the Property,
or any of the
3.
<PAGE>
income or rents of the Property, or the making by BORROWER or Atlanta Blue Print
Company of any general assignment for the benefit of creditors, or the inability
of or failure by BORROWER or Atlanta Blue Print Company to pay its debts
generally as they become due, or the insolvency on a balance sheet basis or
business failure of BORROWER or Atlanta Blue Print Company, or the making or
suffering of a preference within the meaning of federal bankruptcy law or the
making of a fraudulent transfer under applicable federal or state law, or
concealment by BORROWER or Atlanta Blue Print Company of any of its property in
fraud of creditors, or the imposition of a lien upon any of the property of
BORROWER or Atlanta Blue Print Company which is not discharged in the manner
permitted by the Deed to Secure Debt, or the giving of notice by BORROWER or
Atlanta Blue Print Company to any governmental body of insolvency or suspension
of operations; or
(h) Filing of a petition against BORROWER or Atlanta Blue Print Company
seeking any reorganization, arrangement, composition, readjustment, liquidation,
or similar relief under any present or future federal, state or other law or
regulation relating to bankruptcy, insolvency or other relief for debts, or the
appointment of any trustee, receiver, custodian, conservator or liquidator of
BORROWER or Atlanta Blue Print Company, of any part of the Property or of any of
the income or rents of the Property, unless such petition shall be dismissed
within sixty (60) days after such filing, but in any event prior to the entry of
an order, judgment or decree approving such petition; or
(i) The institution of any proceeding for the dissolution or termination
of BORROWER voluntarily, involuntarily, or by operation of law; or
(j) A material adverse change occurs in the assets, liabilities or net
worth of BORROWER or any of the guarantors of the indebtedness evidenced by this
Note from the assets, liabilities or net worth of BORROWER or any of the
guarantors of the indebtedness evidenced by this Note previously disclosed to
METLIFE; or
(k) Any warranty, representation or statement furnished to METLIFE by or
on behalf of BORROWER under this Note, the Deed to Secure Debt, or any of the
Loan Documents shall prove to have been false or misleading in any material
respect; or
(l) Failure of BORROWER to observe or perform any other covenant or
condition contained in this Note and such default shall continue for thirty (30)
days after notice is given to BORROWER specifying the nature of the failure. No
notice of default and no opportunity to cure shall be required if during the
prior twelve (12) months METLIFE has already sent a notice to BORROWER
concerning default in performance of the same obligation; or
(m) Failure of BORROWER to observe or perform any other obligation under
the Deed to Secure Debt or any other Loan Document when such observance or
performance is due, and such failure shall continue beyond the applicable cure
period set forth in such Loan Document, or if the default cannot be cured within
such applicable cure period, BORROWER fails within such time to commence and
pursue curative action with
4.
<PAGE>
reasonable diligence or fails at any time after expiration of such applicable
cure period to continue with reasonable diligence all necessary curative
actions. No notice of default and no opportunity to cure shall be required if
during the prior twelve (12) months METLIFE has already sent a notice to
BORROWER concerning default in performance of the same obligation; or
(n) BORROWER's abandonment of the Property; or
(o) Any of the foregoing events occur with respect to any tenant of the
Property, with respect to any guarantor of any of BORROWER's obligations in
connection with the indebtedness evidenced by this Note or with respect to any
guarantor of any tenant's obligations relating to the Property, or such
guarantor dies or becomes incompetent; or
(p) The occurrence of any default under any of the documents evidencing
or securing (i) METLIFE Loan No. 5905292, (ii) METLIFE Loan No. 5905393, (iii)
METLIFE Loan No. 5905393, (iv) METLIFE Loan No. 5904594 or (v) any other
indebtedness with Borrower or any of the guarantors of the Indebtedness which is
now or hereafter owed to METLIFE.
Upon the occurrence of any of the foregoing events of default, METLIFE
shall have the option to declare the entire amount of principal and interest due
under this Note immediately due and payable without notice or demand, and
METLIFE may exercise any of its rights under this Note and any document executed
or delivered herewith. After acceleration or maturity, BORROWER shall pay
interest on the outstanding principal balance of this Note at the rate of five
percent (5.00%) per annum above Chase Manhattan Bank's prime interest rate in
effect from time to time, or fifteen percent (15.00%) per annum, whichever is
higher, provided that such interest rate shall not exceed the maximum interest
rate permitted by law.
All payments of the principal and interest on this Note shall be made in
coin or currency of the United States of America which at the time shall be the
legal tender for the payment of public and private debts.
If this Note is placed in the hands of an attorney for collection,
BORROWER agrees to pay reasonable attorneys' fees and costs incurred by METLIFE
in connection therewith, and in the event suit or action is instituted to
enforce or interpret this Note (including without limitation efforts to modify
or vacate any automatic stay or injunction), the prevailing party shall be
entitled to recover all expenses reasonably incurred at, before or after trial
and on appeal, whether or not taxable as costs, or in any bankruptcy proceeding,
or in connection with post-judgment collection efforts, including, without
limitation, attorneys' fees, witness fees (expert and otherwise), deposition
costs, copying charges and other expenses.
This Note shall be governed and construed in accordance with the laws of
the State of Georgia applicable to contracts made and to be performed therein
(excluding choice-of-law principles). BORROWER hereby irrevocably submits to
the jurisdiction of any state or federal court
5.
<PAGE>
sitting in Georgia in any action or proceeding brought to enforce or otherwise
arising out of or relating to this Note, and hereby waives any objection to
venue in any such court and any claim that such forum is an inconvenient forum.
This Note is given in a commercial transaction for business purposes.
This Note may be declared due prior to its expressed maturity date, all
in the events, on the terms, and in the manner provided for in the Deed to
Secure Debt.
BORROWER and all sureties, endorsers, guarantors and other parties now
or hereafter liable for the payment of this Note, in whole or in part, hereby
severally (i) waive demand, notice of demand, presentment for payment, notice of
nonpayment, notice of default, protest, notice of protest, notice of intent to
accelerate, notice of acceleration and all other notices, and further waive
diligence in collecting this Note or in enforcing any of the security for this
Note; (ii) agree to any substitution, subordination, exchange or release of any
security for this Note or the release of any party primarily or secondarily
liable for the payment of this Note; (iii) agree that METLIFE shall not be
required to first institute suit or exhaust its remedies hereon against BORROWER
or others liable or to become liable for the payment of this Note or to enforce
its rights against any security for the payment of this Note; and (iv) consent
to any extension of time for the payment of this Note, or any installment
hereof, made by agreement by METLIFE with any person now or hereafter liable for
the payment of this Note, even if BORROWER is not a party to such agreement.
All agreements between BORROWER and METLIFE, whether now existing or
hereafter arising and whether written or oral, are hereby limited so that in no
contingency, whether by reason of demand or acceleration of the final maturity
of this Note or otherwise, shall the interest contracted for, charged, received,
paid or agreed to be paid to METLIFE exceed the maximum amount permissible under
the applicable law. If, from any circumstance whatsoever, interest would
otherwise be payable to METLIFE in excess of the maximum amount permissible
under applicable law, the interest payable to METLIFE shall be reduced to the
maximum amount permissible under applicable law; and if from any circumstance
METLIFE shall ever receive anything of value deemed interest by applicable law
in excess of the maximum amount permissible under applicable law, an amount
equal to the excessive interest or if such excessive amount of interest exceeds
the unpaid balance of principal hereof, such excess shall be refunded to
BORROWER. All interest paid or agreed to be paid to METLIFE shall, to the
extent permitted by applicable law, be amortized, prorated, allocated, and
spread throughout the full period (including any renewal or extension) until
payment in full of the principal so that the interest hereon for such full
period shall not exceed the maximum amount permissible under applicable law.
METLIFE expressly disavows any intent to contract for, charge or receive
interest in an amount which exceeds the maximum amount permissible under
applicable law. This paragraph shall control all agreements between BORROWER
and METLIFE.
6.
<PAGE>
IMPORTANT: READ BEFORE SIGNING. THE TERMS OF THIS AGREEMENT
SHOULD BE READ CAREFULLY BECAUSE ONLY THOSE TERMS IN WRITING
ARE ENFORCEABLE. NO OTHER TERMS OR ORAL PROMISES NOT CONTAINED
IN THIS WRITTEN CONTRACT MAY BE LEGALLY ENFORCED. YOU MAY
CHANGE THE TERMS OF THIS AGREEMENT ONLY BY ANOTHER WRITTEN
AGREEMENT.
IN WITNESS WHEREOF, BORROWER has caused this Note to be executed by its
duly authorized officers as of the year and day first written above.
BORROWER:
GRAPHIC INDUSTRIES, INC.,
a Georgia corporation
By: /s/ Mark C. Pope III
-----------------------------------
Mark C. Pope, III, Chairman & CEO
Attest: /s/ Donald P. Hunnicutt
-------------------------------
Donald P. Hunnicutt, Secretary
April 27, 1995,
7.
<PAGE>
Prepared by and after
recording return to:
Dorothea Summerell
Hunter, Maclean, Exley & Dunn, P.C.
200 East Saint Julian Street
Post Office Box 9848
Savannah, Georgia 31412
Loan Number: 5909794-001
DEED TO SECURE DEBT, SECURITY AGREEMENT,
ASSIGNMENT OF LEASES AND RENTS,
AND FIXTURE FILING
(655 Lambert Drive, Atlanta, Georgia)
THIS INSTRUMENT IS ALSO TO BE INDEXED IN THE INDEX OF FINANCING STATEMENTS. THIS
DEED TO SECURE DEBT, SECRUITY AGREEMENT, ASSIGNMENT OF LEASES AND RENTS, AND
FIXTURE FILING DEED COVERS GOODS WHICH ARE OR ARE TO BECOME FIXTURES ON THE REAL
PROPERTY DESCRIBED HEREIN. THE BORROWER/DEBTOR HEREUNDER IS THE RECORD OWNER OF
THE REAL PROPERTY.
THE NAMES OF THE "DEBTOR" AND THE "SECURED PARTY", THE MAILING ADDRESS OF THE
"SECURED PARTY" FROM WHICH INFORMATION CONCERNING THE SECURITY INTEREST MAY BE
OBTAINED, THE MAILING ADDRESSES OF THE "DEBTOR" AND A STATEMENT INDICATING THE
TYPES, OR DESCRIBING THE ITEMS, OF COLLATERAL ARE AS DESCRIBED IN ARTICLE III
BELOW, IN COMPLIANCE WITH THE REQUIREMENTS OF ARTICLE 9, SECTION 402 OF THE
UNIFORM COMMERCIAL CODE, O.C.G.A. (S) 11-9-402.
________________________________________________________________________________
THIS DEED TO SECURE DEBT, SECURITY AGREEMENT, ASSIGNMENT OF LEASES AND
RENTS, AND FIXTURE FILING (herein "Deed") is made as of December 27, 1994, by
the Grantor, GRAPHIC INDUSTRIES, INC., a Georgia corporation, whose address is
2155 Monroe Drive, Northeast, Atlanta, Georgia 30324 (herein "Borrower"), in
favor of the Grantee, METLIFE CAPITAL FINANCIAL CORPORATION, a Delaware
corporation, whose address is Real Estate Department, 10900 N.E. 4th Street,
Suite 500, Bellevue, Washington 98004 (herein "METLIFE").
Borrower, in consideration of the indebtedness herein recited does
hereby bargain, sell, transfer, assign, grant, and convey to METLIFE and its
successors and assigns, WITH POWER OF SALE all of Borrower's right, title and
interest, now owned or hereafter acquired, including any reversion or remainder
interest, in the real property located in the City of Atlanta, County of Fulton,
State of Georgia, commonly known as 655 Lambert Road, and more particularly
described on Exhibit A attached hereto and incorporated herein including all
---------
heretofore or hereafter vacated alleys and streets abutting the property, and
all easements, rights, appurtenances, tenements, hereditaments, rents,
royalties, mineral, oil and gas rights and profits, water, water rights, and
water stock appurtenant to the property (collectively "Premises");
<PAGE>
TOGETHER with all of Borrower's estate, right, title and interest, now
owned or hereafter acquired, in:
(a) all buildings, structures, improvements, parking areas, landscaping,
fixtures and articles of property now or hereafter erected on, attached to,
or used or adapted for use in the operation of the Premises; including but
without being limited to, all heating, air conditioning and incinerating
apparatus and equipment; all boilers, engines, motors, dynamos, generating
equipment, piping and plumbing fixtures, water heaters, ranges, cooking
apparatus and mechanical kitchen equipment, refrigerators, freezers,
cooling, ventilating, sprinkling and vacuum cleaning systems, fire
extinguishing apparatus, gas and electric fixtures, carpeting, floor
coverings, underpadding, elevators, escalators, partitions, mantels, built-
in mirrors, window shades, blinds, draperies, screens, storm sash, awnings,
signs, furnishings of public spaces, halls and lobbies, and shrubbery and
plants, and including also all interest of any owner of the Premises in any
of such items hereafter at any time acquired under conditional sale
contract, chattel mortgage or other title retaining or security deed, all
of which property mentioned in this clause (a) shall be deemed part of the
realty covered by this Deed and not severable wholly or in part without
material injury to the freehold of the Premises (all of the foregoing
together with replacements and additions thereto are referred to herein as
"Improvements"); and
(b) all compensation, awards, damages, rights of action and proceeds,
including interest thereon and/or the proceeds of any policies of insurance
therefor, arising out of or relating to a (i) taking or damaging of the
Premises or Improvements thereon by reason of any public or private
improvement, condemnation proceeding (including change of grade), sale or
transfer in lieu of condemnation, or fire, earthquake or other casualty, or
(ii) any injury to or decrease in the value of the Premises or the
Improvements for any reason whatsoever;
(c) return premiums or other payments upon any insurance any time provided
for the benefit of or naming METLIFE, and refunds or rebates of taxes or
assessments on the Premises;
(d) all written and oral leases and rental agreements (including
extensions, renewals and subleases and all usufructuary interest; all of
the foregoing shall be referred to collectively herein as the "Leases") now
or hereafter affecting the Premises including, without limitation, all
rents, issues, profits and other revenues and income therefrom and from the
renting, leasing or bailment of Improvements and equipment, all guaranties
of tenants' performance under the Leases, and all rights and claims of any
kind that Borrower may have against any tenant under the Leases or in
connection with the termination or rejection of the Leases in a bankruptcy
or insolvency proceeding; and the leasehold estate in the event this Deed
is on a leasehold;
2.
<PAGE>
(e) plans, specifications, contracts and agreements relating to the design
or construction of the Improvements; Borrower's rights under any payment,
performance, or other bond in connection with the design or construction of
the Improvements; all landscaping and construction materials, supplies, and
equipment used or to be used or consumed in connection with construction of
the Improvements, whether stored on the Premises or at some other location;
and contracts, agreements, and purchase orders with contractors,
subcontractors, suppliers, and materialmen incidental to the design or
construction of the Improvements;
(f) all contracts (excluding contracts relating to the printing operations
of Atlanta Blue Print Company ("ABP Co."), rights, claims or causes of
action pertaining to or affecting the Premises or the Improvements,
including, without limitation, all options or contracts to acquire other
property for use in connection with operation or development of the
Premises or Improvements, management contracts, service or supply
contracts, permits, licenses, franchises and certificates, and all
commitments or agreements, now or hereafter in existence, intended by the
obligor thereof to provide Borrower with proceeds to satisfy the loan
evidenced hereby or improve the Premises or Improvements, and the right to
receive all proceeds due under such commitments or agreements including
refundable deposits and fees;
(g) all books, records, surveys, reports and other documents related to
the Premises, the Improvements, the Leases, or other items of collateral
described herein; and
(h) all additions, accessions, replacements, substitutions, proceeds and
products of the real and personal property, tangible and intangible,
described herein.
(All of the foregoing described collateral is exclusive of any equipment,
furniture, furnishings or trade fixtures owned and supplied by ABP Co. or
tenants of the Premises. The Premises, the Improvements, the Leases and all of
the rest of the foregoing property are herein referred to as the "Property.")
TO HAVE AND TO HOLD the Property and all parts, rights, members, and
apurtenances thereof to the use, benefit, and behoof of METLIFE and its
successors and assigns in fee simple forever. This instrument is a deed passing
title pursuant to the laws of the State of Georgia governing loan or security
deeds and is not a mortgage as "mortgage" is defined for purposes of real
property laws.
This conveyance is intended to constitute a security agreement as
required under the Uniform Commercial Code as enacted in the State of Georgia.
Debtor's and Secured Party's addresses and the location of the collateral are
set forth on Schedule 1 attached hereto.
----------
This Deed is made to secure METLIFE (a) the repayment of the
indebtedness evidenced by Borrower's promissory note (the "Note") dated of even
date herewith in the principal sum of ONE MILLION ONE HUNDRED
3.
<PAGE>
TWENTY-FIVE THOUSAND Dollars ($1,125,000), with interest thereon at the rate of
ten percent (10%) per annum, having a maturity date of January 1, 2010, and all
renewals,extensions and modifications thereof; (b) the repayment of any future
advances, with interest thereon, made by METLIFE to Borrower pursuant to Section
-------
28 hereof (herein "Future Advances"); (c) the payment of all other sums, with
- --
interest thereon, advanced in accordance herewith to protect the security of
this Deed or to fulfill any of Borrower's obligations hereunder or under the
other Loan Documents (as defined below); (d) the performance of the covenants
and agreements of Borrower contained herein or in the other Loan Documents; and
(e) the repayment of all sums now or hereafter owing to METLIFE by Borrower
pursuant to any instrument which recites that it is secured hereby. The
indebtedness and obligations described in clauses (a)-(e) above are collectively
referred to herein as the "Indebtedness." The Note, this Deed, and all other
documents evidencing, securing or guaranteeing the Indebtedness (except any
Certificate and Indemnity Agreement Regarding Hazardous Substances), as the same
may be modified or amended from time to time, are referred to herein as the
"Loan Documents." The terms of the Note secured hereby may provide that the
interest rate or payment terms or balance due may be indexed, adjusted, renewed,
or renegotiated from time to time, and this Deed shall continue to secure the
Note notwithstanding any such indexing, adjustment, renewal or renegotiation.
Should the indebtedness be paid according to the tenor and effect
thereof where the same shall become due and payable, and should Borrower perform
all covenants herein contained in a timely manner, then this Deed is satisfied,
and METLIFE shall execute a proper cancellation at the expense of Borrower.
Borrower represents and warrants that Borrower has good, marketable and
insurable title to, and has the right to mortgage an indefeasible fee simple
estate in, the Premises, Improvements, rents, and leases (or, if this Deed is on
a leasehold, good, marketable and insurable title to, and the right to convey
the leasehold estate and that the ground lease is in full force and effect
without modification except as noted above and without default on the part of
either lessor or lessee thereunder), and the right to convey the other Property,
that the Property is unencumbered except as disclosed in writing to and approved
by METLIFE prior to the date hereof, and that Borrower will warrant and forever
defend the title to the Property against all claims and demands, subject only to
the permitted exceptions set forth in Schedule 2 attached hereto.
----------
Borrower represents, warrants, covenants and agrees for the benefit of
METLIFE as follows:
1. PAYMENT OF PRINCIPAL AND INTEREST. Borrower shall promptly pay when due
---------------------------------
the principal of and interest on the Indebtedness, any prepayment and other
charges provided in the Loan Documents and all other sums secured by this Deed.
2. FUNDS FOR TAXES, INSURANCE AND OTHER CHARGES. Upon the occurrence of an
--------------------------------------------
Event of Default (hereinafter defined), and at METLIFE's sole option at any time
thereafter, Borrower shall pay in addition to
4.
<PAGE>
each monthly payment on the Note, one-twelfth of the annual real estate taxes,
insurance premiums, assessments, water and sewer rates, ground rents and other
charges (herein "Impositions") payable with respect to the Property (as
estimated by METLIFE in its sole discretion), to be held by METLIFE without
interest to Borrower, for the payment of such obligations.
If the amount of such additional payments held by METLIFE ("Funds") at
the time of the annual accounting thereof shall exceed the amount deemed
necessary by METLIFE to provide for the payment of Impositions as they fall due,
such excess shall be at Borrower's option, either repaid to Borrower or credited
to Borrower on the next monthly installment or installments of Funds due. If at
any time the amount of the Funds held by METLIFE shall be less than the amount
deemed necessary by METLIFE to pay Impositions as they fall due, Borrower shall
pay to METLIFE any amount necessary to make up the deficiency within thirty (30)
days after notice from METLIFE to Borrower requesting payment thereof.
Upon Borrower's breach of any covenant or agreement of Borrower in this
Deed, METLIFE may apply, in any amount and in any order as METLIFE shall
determine in METLIFE's sole discretion, any Funds held by METLIFE at the time of
application (i) to pay Impositions which are now or will hereafter become due,
or (ii) as a credit against sums secured by this Deed. Upon payment in full of
all sums secured by this Deed, METLIFE shall refund to Borrower any Funds held
by METLIFE.
3. APPLICATION OF PAYMENTS. Unless applicable law provides otherwise,
-----------------------
each complete installment payment received by METLIFE from Borrower under the
Note or this Deed shall be applied by METLIFE first in payment of amounts
payable to METLIFE by Borrower under Section 2 hereof, then to interest payable
---------
on the Note, then to principal of the Note, and then to interest and principal
on any Future Advances in such order as METLIFE, at METLIFE's sole discretion,
shall determine. Upon Borrower's breach of any covenant or agreement of
Borrower in this Deed, METLIFE may apply, in any amount and in any order as
METLIFE shall determine in METLIFE's sole discretion, any payments received by
METLIFE under the Note or this Deed. Any partial payment received by METLIFE
shall, at METLIFE's option, be held in a non-interest bearing account until
METLIFE receives funds sufficient to equal a complete installment payment.
4. CHARGES, LIENS. Borrower shall pay all Impositions attributable to
--------------
the Property in the manner provided under Section 2 hereof or, if not paid in
---------
such manner, by Borrower making payment, when due, directly to the payee
thereof, or in such other manner as METLIFE may designate in writing. If
requested by METLIFE, Borrower shall promptly furnish to METLIFE all notices of
Impositions which become due, and in the event Borrower shall make payment
directly, Borrower shall promptly furnish to METLIFE receipts evidencing such
payments. Borrower shall promptly discharge any lien which has, or may have,
priority over or equality with, the lien of this Deed, and Borrower shall pay,
when due, the claims of all persons supplying labor or materials to or in
connection with the Property. Without METLIFE's prior written permission,
Borrower shall not allow any lien inferior to this Deed to be
5.
<PAGE>
perfected against the Property. If any lien inferior to this Deed is filed
against the Property without METLIFE's prior written permission and without the
consent of Borrower, Borrower shall, within thirty (30) days after receiving
notice of the filing of such lien, cause such lien to be released of record and
deliver evidence of such release to METLIFE.
5. INSURANCE. Borrower shall obtain and maintain the following types
---------
of insurance upon and relating to the Property:
(a) "All Risk" property and fire insurance (with extended coverage
endorsement including malicious mischief and vandalism) in an amount not less
than the lesser of the outstanding principal balance of the Note or the full
replacement value of the Property (with a deductible not to exceed $25,000 and
with co-insurance limited to a maximum of 10% of the amount of the policy),
naming METLIFE under a lender's loss payee endorsement (form 438BFU or
equivalent) and including agreed amount, inflation guard, replacement cost and
waiver of subrogation endorsements;
(b) Comprehensive general liability insurance in an amount not less
than $1,000,000 per occurrence and $2,000,000 in the aggregate insuring against
personal injury, death and property damage and naming METLIFE as additional
insured;
(c) Business interruption insurance covering loss of rental or other
income (including all expenses payable by tenants) for up to six (6) months; and
(d) Such other types of insurance or endorsements to existing insurance
as may be required from time to time by METLIFE.
Upon the request of METLIFE, Borrower shall increase the coverages under
any of the insurance policies required to be maintained hereunder or otherwise
modify such policies in accordance with METLIFE's request. All of the insurance
policies required hereunder shall be issued by corporate insurers licensed to do
business in the state in which the Property is located and rated A:X or better
by A.M. Best Company, and shall be in form acceptable to METLIFE. If and to the
extent that the Property is located within an area that has been or is hereafter
designated or identified as an area having special flood hazards by the
Department of Housing and Urban Development or such other official as shall from
time to time be authorized by federal or state law to make such designation
pursuant to any national or state program of flood insurance, Borrower shall
carry flood insurance with respect to the Property in amounts not less than the
maximum limit of coverage then available with respect to the Property or the
amount of the Indebtedness, whichever is less. Certificates of all insurance
required to be maintained hereunder shall be delivered to METLIFE, along with
evidence of payment in full of all premiums required thereunder,
contemporaneously with Borrower's execution of this Deed. All such certificates
shall be in form acceptable to METLIFE and shall require the insurance company
to give to METLIFE at least thirty (30) days' prior written notice before
canceling the policy for any reason or materially amending it. Certificates
evidencing all renewal and substitute policies of insurance shall be delivered
to METLIFE, along with evidence of the payment in full
6.
<PAGE>
of all premiums required thereunder, at least fifteen (15) days before
termination of the policies being renewed or substituted. If any loss shall
occur at any time when Borrower shall be in default hereunder, METLIFE shall be
entitled to the benefit of all insurance policies held or maintained by
Borrower, to the same extent as if same had been made payable to METLIFE, and
upon foreclosure hereunder, METLIFE shall become the owner thereof. METLIFE
shall have the right, but not the obligation, to make premium payments, at
Borrower's expense, to prevent any cancellation, endorsement, alteration or
reissuance of any policy of insurance maintained by Borrower, and such payments
shall be accepted by the insurer to prevent same.
If any act or occurrence of any kind or nature (including any casualty
for which insurance was not obtained or obtainable) shall result in damage to or
destruction of the Property (such event being called a "Loss"), Borrower will
give prompt written notice thereof to METLIFE. All insurance proceeds paid or
payable in connection with any Loss shall be paid to METLIFE. If (i) no Event
of Default has occurred and is continuing hereunder, (ii) Borrower provides
evidence satisfactory to METLIFE of its ability to pay all amounts becoming due
under the Note during the pendency of any restoration or repairs to or
replacement of the Property, (iii) the available insurance proceeds are, in
METLIFE's judgment, sufficient to fully and completely restore, repair or
replace the Property, and (iv) Borrower provides evidence satisfactory to
METLIFE that none of the tenants of the Property will terminate their lease
agreements as a result of either the Loss or the repairs to or replacement of
the Property, Borrower shall have the right to apply all insurance proceeds
received in connection with such Loss either (a) to restore, repair, replace and
rebuild the Property as nearly as possible to its value, condition and character
immediately prior to such Loss, or (b) to the payment of the Indebtedness in
such order as METLIFE may elect. If an Event of Default has occurred and is
continuing hereunder at the time of such Loss, if METLIFE determines that
Borrower will be unable to pay all amounts becoming due under the Note during
the pendency of any restoration or repairs to or replacement of the Property, if
the available insurance proceeds are insufficient, in METLIFE's judgment, to
fully and completely restore, repair or replace the Property or if METLIFE
believes that one or more tenants of the Property will terminate their lease
agreements as a result of either the Loss or the repairs to or replacement of
the Property, then all of the insurance proceeds payable with respect to such
Loss will be applied to the payment of the Indebtedness, or if so instructed by
METLIFE, Borrower will promptly, at Borrower's sole cost and expense and
regardless of whether sufficient insurance proceeds shall be available, commence
to restore, repair, replace and rebuild the Property as nearly as possible to
its value, condition, character immediately prior to such Loss. Borrower shall
diligently prosecute any restoration, repairs or replacement of the Property
undertaken by or on behalf of Borrower pursuant to this Section 5. All such
---------
work shall be conducted pursuant to written contracts approved by METLIFE in
writing. Notwithstanding anything contained herein to the contrary, in the
event the insurance proceeds received by METLIFE following any Loss are
insufficient in METLIFE's judgment to fully and completely restore, repair or
replace the Property, and if Borrower has complied with all of the other
conditions described
7.
<PAGE>
in this Section 5, Borrower may elect to restore, repair or replace the
---------
Property if it first deposits with METLIFE such additional sums as METLIFE
determines are necessary in order to fully and completely restore, repair or
replace the Property. In the event any insurance proceeds remain following the
restoration, repair or replacement of the Property, such proceeds shall be
applied to the Indebtedness in such order as METLIFE may elect.
6. PRESERVATION AND MAINTENANCE OF PROPERTY; LEASEHOLDS. Borrower (a)
----------------------------------------------------
shall not commit waste or permit impairment or deterioration of the Property,
(b) shall not abandon the Property, (c) shall restore or repair promptly and in
a good and workmanlike manner all or any part of the Property to the equivalent
of its original condition, or such other condition as METLIFE may approve in
writing, in the event of any damage, injury or loss thereto, whether or not
insurance proceeds are available to cover in whole or in part the costs of such
restoration or repair, (d) shall keep the Property, including all improvements,
fixtures, equipment, machinery and appliances thereon, in good repair and shall
replace fixtures, equipment, machinery and appliances on the Property when
necessary to keep such items in good repair, (e) shall comply with all laws,
ordinances, regulations and requirements of any governmental body applicable to
the Property, (f) if all or part of the Property is for rent or lease, then
METLIFE, at its option after the occurrence of an Event of Default, may require
Borrower to provide for professional management of the Property by a property
manager satisfactory to METLIFE pursuant to a contract approved by METLIFE in
writing, unless such requirement shall be waived by METLIFE in writing, (g)
shall generally operate and maintain the Property in a manner to ensure maximum
rentals, and (h) shall give notice in writing to METLIFE of and, unless
otherwise directed in writing by METLIFE, appear in and defend any action or
proceeding purporting to affect the Property, the security of this Deed or the
rights or powers of METLIFE hereunder. Neither Borrower nor any tenant or other
person, without the written approval of METLIFE, shall remove, demolish or alter
any improvement now existing or hereafter erected on the Property or any
fixture, equipment, machinery or appliance in or on the Property except when
incident to the replacement of fixtures, equipment, machinery and appliances
with items of like kind.
Borrower represents, warrants and covenants that the Property is and
shall be in compliance with the Americans with Disabilities Act of 1990 and all
of the regulations promulgated thereunder, as the same may be amended from time
to time.
If this Deed is on a leasehold, Borrower (i) shall comply with the
provisions of the ground lease, (ii) shall give immediate written notice to
METLIFE of any default by lessor under the ground lease or of any notice
received by Borrower from such lessor of any default under the ground lease by
Borrower, (iii) shall exercise any option to renew or extend the ground lease
and give written confirmation thereof to METLIFE within thirty (30) days after
such option becomes exercisable, (iv) shall give immediate written notice to
METLIFE of the commencement of any remedial proceedings under the ground lease
by any party thereto and, if required by METLIFE, shall permit METLIFE as
Borrower's attorney-in-fact to control and act for Borrower in any such remedial
proceedings and
8.
<PAGE>
(v) shall within thirty (30) days after request by METLIFE obtain from the
lessor under the ground lease and deliver to METLIFE a lessor's estoppel
certificate in form and substance acceptable to METLIFE. Borrower hereby
expressly transfers and assigns to METLIFE the benefit of all covenants
contained in the ground lease, whether or not such covenants run with the land,
but METLIFE shall have no liability with respect to such covenants or any other
covenants contained in the ground lease.
Borrower shall neither surrender the leasehold estate and interests
herein conveyed nor terminate or cancel the ground lease creating said estate
and interests, and Borrower shall not, without the express written consent of
METLIFE, alter or amend said ground lease. There shall not be a merger of the
ground lease, or of the leasehold estate created thereby, with the fee estate
covered by the ground lease by reason of said leasehold estate or said fee
estate, or any part of either, coming into common ownership, unless METLIFE
shall consent in writing to such merger; if Borrower shall acquire such fee
estate, then this Deed shall simultaneously and without further action be spread
so as to become a lien on such fee estate.
7. USE OF PROPERTY. Unless required by applicable law or unless
---------------
METLIFE has otherwise agreed in writing, Borrower shall not allow changes in the
use for which all or any part of the Property was intended at the time this Deed
was executed. Borrower shall not, without METLIFE's prior written consent, (i)
initiate or acquiesce in a change in the zoning classification (including any
variance under any existing zoning ordinance applicable to the Property), (ii)
permit the use of the Property to become a non-conforming use under applicable
zoning ordinances, (iii) file any subdivision or parcel map affecting the
Property, or (iv) amend, modify or consent to any easement or covenants,
conditions and restrictions pertaining to the Property.
8. PROTECTION OF METLIFE'S SECURITY. If Borrower fails to perform
--------------------------------
any of the covenants and agreements contained in this Deed, or if any action or
proceeding is commenced which affects the Property or title thereto or the
interest of METLIFE therein, including, but not limited to, eminent domain,
insolvency, code enforcement, or arrangements or proceedings involving a
bankrupt or decedent, then METLIFE at METLIFE's option may make such
appearances, disburse such sums and take such action as METLIFE deems necessary,
in its sole discretion, to protect METLIFE's interest, including, but not
limited to, (i) disbursement of attorneys' fees, (ii) entry upon the Property to
make repairs, (iii) procurement of satisfactory insurance as provided in Section
-------
5 hereof, and (iv) if this Deed is on a leasehold, exercise of any option to
- -
renew or extend the ground lease on behalf of Borrower and the curing of any
default of Borrower in the terms and conditions of the ground lease.
Any amounts disbursed by METLIFE pursuant to this Section 8, with
---------
interest thereon, shall become additional Indebtedness of Borrower secured by
this Deed. Unless Borrower and METLIFE agree to other terms of payment, such
amounts shall be immediately due and payable and shall bear interest from the
date of disbursement at the highest rate which may be collected from Borrower
under applicable law or, at METLIFE's option,
9.
<PAGE>
the rate stated in the Note. Borrower hereby covenants and agrees that METLIFE
shall be subrogated to the lien of any mortgage or other lien discharged, in
whole or in part, by the Indebtedness. Nothing contained in this Section 8 shall
---------
require METLIFE to incur any expense or take any action hereunder.
9. INSPECTION. METLIFE may make or cause to be made reasonable entries
----------
upon the Property to inspect the interior and exterior thereof.
10. FINANCIAL DATA. Borrower will furnish to METLIFE within one hundred
--------------
twenty (120) days after the close of its fiscal year (i) current financial
statements of Borrower, including a balance sheet and profit and loss statements
prepared in accordance with generally accepted accounting principles and
practices consistently applied and, if METLIFE so requires, accompanied by the
annual audit report of an independent certified public accountant reasonably
acceptable to METLIFE, (ii) if requested by METLIFE, an annual operating
statement, together with other supporting data reflecting all material
information with respect to the operation of the Property and Improvements
during the period covered thereby, and (iii) all other financial information and
reports that METLIFE may from time to time reasonably request.
11. CONDEMNATION. If the Property, or any part thereof, shall be
------------
condemned for any reason, including without limitation fire or earthquake
damage, or otherwise taken for public or quasi-public use under the power of
eminent domain, or be transferred in lieu thereof, all damages or other amounts
awarded for the taking of, or injury to, the Property shall be paid to METLIFE
who shall have the right, in its sole and absolute discretion, to apply the
amounts so received against (a) the costs and expenses of METLIFE, including
reasonable attorneys' fees incurred in connection with collection of such
amounts, and (b) the balance against the Indebtedness; provided, however, that
if (i) no Event of Default shall have occurred and be continuing hereunder, (ii)
Borrower provides evidence satisfactory to METLIFE of its ability to pay all
amounts becoming due under the Note during the pendency of any restoration or
repairs to or replacement of the Property, (iii) METLIFE determines, in its sole
discretion, that the proceeds of such award are sufficient to restore, repair,
replace and rebuild the Property as nearly as possible to its value, condition
and character immediately prior to such taking (or, if the proceeds of such
award are insufficient for such purpose, if Borrower provides additional sums to
METLIFE's satisfaction so that the aggregate of such sums and the proceeds of
such award will be sufficient for such purpose), and (iv) Borrower provides
evidence satisfactory to METLIFE that none of the tenants of the Property will
terminate their lease agreements as a result of either the condemnation or
taking or the repairs to or replacement of the Property, the proceeds of such
award, together with additional sums provided by Borrower, shall be placed in a
separate account for the benefit of METLIFE and Borrower to be used to restore,
repair, replace and rebuild the Property as nearly as possible to its value,
condition and character immediately prior to such taking. All work to be
performed in connection therewith shall be pursuant to a written contract
therefor, which contract shall be subject to the prior approval of METLIFE. To
the extent that any funds remain
10.
<PAGE>
after the Property has been so restored and repaired, the same shall be applied
against the Indebtedness in such order as METLIFE may elect. To enforce its
rights hereunder, METLIFE shall be entitled to participate in and control any
condemnation proceedings and to be represented therein by counsel of its own
choice, and Borrower will deliver, or cause to be delivered to METLIFE such
instruments as may be requested by it from time to time to permit such
participation. In the event METLIFE, as a result of any such judgment, decree or
award, believes that the payment or performance of any of the Indebtedness is
impaired, METLIFE may declare all of the Indebtedness immediately due and
payable.
12. BORROWER AND LIEN NOT RELEASED. From time to time, METLIFE may, at
------------------------------
METLIFE's option, without giving notice to or obtaining the consent of Borrower,
Borrower's successors or assigns or of any junior lienholder or guarantors,
without liability on METLIFE's part and notwithstanding Borrower's breach of any
covenant or agreement of Borrower in this Deed, extend the time for payment of
the Indebtedness or any part thereof, reduce the payments thereon, release
anyone liable on any of the Indebtedness, accept an extension or modification or
renewal note or notes therefor, modify the terms and time of payment of the
Indebtedness, release from the lien of this Deed any part of the Property, take
or release other or additional security, reconvey any part of the Property,
consent to any map or plan of the Property, consent to the granting of any
easement, join in any extension or subordination agreement, and agree in writing
with Borrower to modify the rate of interest or period of amortization of the
Note or change the amount of the monthly installments payable thereunder. Any
actions taken by METLIFE pursuant to the terms of this Section 12 shall not
----------
affect the obligation of Borrower or Borrower's successors or assigns to pay the
sums secured by this Deed and to observe the covenants of Borrower contained
herein, shall not affect the guaranty of any person, corporation, partnership or
other entity for payment of the Indebtedness, and shall not affect the lien or
priority of the lien hereof on the Property. Borrower shall pay METLIFE a
service charge, together with such title insurance premiums and attorneys' fees
as may be incurred at METLIFE's option, for any such action if taken at
Borrower's request.
13. FORBEARANCE BY METLIFE NOT A WAIVER. Any forbearance by METLIFE in
-----------------------------------
exercising any right or remedy hereunder, or otherwise afforded by applicable
law, shall not be a waiver of or preclude the exercise of any other right or
remedy. The acceptance by METLIFE of payment of any sum secured by this Deed
after the due date of such payment shall not be a waiver of METLIFE's right to
either require prompt payment when due of all other sums so secured or to
declare a default for failure to make prompt payment. The procurement of
insurance or the payment of taxes or other liens or charges by METLIFE shall not
be a waiver of METLIFE's right to accelerate the maturity of the Indebtedness
secured by this Deed, nor shall METLIFE's receipt of any awards, proceeds or
damages under Sections 5 and 11 hereof operate to cure or waive Borrower's
-----------------
default in payment of sums secured by this Deed.
14. UNIFORM COMMERCIAL CODE SECURITY AGREEMENT. This Deed is intended
------------------------------------------
to be a security agreement pursuant to the Uniform Commercial Code for any of
the items specified above as part of the Property which,
11.
<PAGE>
under applicable law, may be subject to a security interest pursuant to the
Uniform Commercial Code, and Borrower hereby grants and conveys to METLIFE a
first and prior security interest in all of the Property that constitutes
personalty, whether now owned or hereafter acquired. Borrower agrees that
METLIFE may file this Deed, or a reproduction thereof, in the real estate
records or other appropriate index, as a financing statement for any of the
items specified above as part of the Property. Any reproduction of this Deed or
of any other security agreement or financing statement shall be sufficient as a
financing statement. In addition, Borrower agrees to execute and deliver to
METLIFE, upon METLIFE's request, any financing statements, as well as
extensions, renewals and amendments thereof, and reproductions of this Deed in
such form as METLIFE may require to perfect a security interest with respect to
the foregoing items. Borrower shall pay all costs of filing such financing
statements and any extensions, renewals, amendments and releases thereof, and
shall pay all costs and expenses of any record searches for financing statements
METLIFE may require. Without the prior written consent of METLIFE, Borrower
shall not create or suffer to be created pursuant to the Uniform Commercial Code
any other security interest in said items, including replacements and additions
thereto. Upon Borrower's breach of any covenant or agreement of Borrower
contained in this Deed, including the covenants to pay when due all sums secured
by this Deed, METLIFE shall have the remedies of a secured party under the
Uniform Commercial Code, and METLIFE may also invoke the remedies provided in
Section 26 of this Deed as to such items. In exercising any of said remedies
- ----------
METLIFE may proceed against the items of Property separately or together and in
any order whatsoever, without in any way affecting the availability of METLIFE's
remedies under the Uniform Commercial Code or of the remedies provided in
Section 26 of this Deed. Within ten (10) days following any request therefor
- ----------
by METLIFE, Borrower shall prepare and deliver to METLIFE a written inventory
specifically listing all of the personal property covered by the security
interest herein granted, which inventory shall be certified by Borrower as being
true, correct, and complete.
15. LEASES OF THE PROPERTY. As used in this Section 15, the word
---------------------- ----------
"Lease" shall include subleases if this Deed is on a leasehold. Borrower shall
comply with and observe Borrower's obligations as landlord under all Leases of
the Property or any part thereof. All Leases now or hereafter entered into will
be in form and substance subject to the approval of METLIFE. All Leases of the
Property shall specifically provide that such Leases are subordinate to this
Deed; that the tenant attorns to METLIFE, such attornment to be effective upon
METLIFE's acquisition of title to the Property; that the tenant agrees to
execute such further evidences of attornment as METLIFE may from time to time
request; that the attornment of the tenant shall not be terminated by
foreclosure; and that METLIFE may, at METLIFE's option, accept or reject such
attornments. Borrower shall not, without METLIFE's written consent, request or
consent to the subordination of any Lease of all or any part of the Property to
any lien subordinate to this Deed. If Borrower becomes aware that any tenant
proposes to do, or is doing, any act or thing which may give rise to any right
of set-off against rent, Borrower shall (i) take such steps as shall be
reasonably calculated to prevent the accrual of any right to a set-off against
rent, (ii) immediately
12.
<PAGE>
notify METLIFE thereof in writing and of the amount of said set-offs, and (iii)
within ten (10) days after such accrual, reimburse the tenant who shall have
acquired such right to set-off or take such other steps as shall effectively
discharge such setoff and as shall assure that rents thereafter due shall
continue to be payable without set-off or deduction. Upon METLIFE's receipt of
notice of the occurrence of any default or violation by Borrower of any of its
obligations under the Leases, METLIFE shall have the immediate right, but not
the duty or obligation, without prior written notice to Borrower or to any third
party, to enter upon the Property and to take such actions as METLIFE may deem
necessary to cure the default or violation by Borrower under the Leases. The
costs incurred by METLIFE in taking any such actions pursuant to this paragraph
shall become part of the Indebtedness, shall bear interest at the rate provided
in the Note, and shall be payable by Borrower to METLIFE on demand. METLIFE
shall have no liability to Borrower or to any third party for any actions taken
by METLIFE or not taken pursuant to this paragraph.
16. REMEDIES CUMULATIVE. Each remedy provided in this Deed is distinct
-------------------
and cumulative to all other rights or remedies under this Deed or afforded by
law or equity, and may be exercised concurrently, independently, or
successively, in any order whatsoever.
17. TRANSFERS OF THE PROPERTY OR BENEFICIAL INTERESTS IN BORROWER;
--------------------------------------------------------------
ASSUMPTION. METLIFE may, at its option, declare all sums secured by this Deed
- ----------
to be immediately due and payable, and METLIFE may invoke any remedies permitted
by Section 26 of this Deed, if title to the Property is changed without the
----------
prior written consent of METLIFE, which consent shall be at METLIFE's sole
discretion. Any transfer of any interest in the Property or in the income
therefrom, by sale, lease (except for leases to tenants in the ordinary course
of managing income property which are approved by METLIFE pursuant to Section 15
----------
of this Deed and/or the use and occupation of the Property by ABP Co.),
contract, deed to secure debt, security deed, mortgage, deed of trust, further
encumbrance or otherwise (including any such transfers as security for
additional financing of the Property), and any change in the ownership interests
in Borrower (including any change in the ownership interests of any legal
entities which comprise or control Borrower), except transfers and changes in
ownership by devise or descent, shall be considered a change of title. METLIFE
shall have the right to condition its consent to any proposed sale or transfer
described in this Section 17 upon, among other things, METLIFE's approval of the
-----------
transferee's creditworthiness and management ability and the transferee's
execution, prior to the sale or transfer, of a written assumption agreement
containing such terms as METLIFE may require, including, if required by METLIFE,
the imposition of an assumption fee of one percent (1%) of the then outstanding
balance of the Indebtedness, except in the case of a transfer to one of
Borrower's direct or indirect subsidiaries, in which case Borrower will be
liable only for payment of all third-party costs, such as METLIFE's attorneys'
fees and recording costs. In addition to the foregoing, Borrower shall have a
one-time right to transfer the Property to a third party approved by METLIFE
which approval will not be unreasonably withheld, subject to Borrower's payment
of all third-party costs, such as METLIFE's attorneys' fees and recording costs.
Consent by METLIFE to one transfer of the
13.
<PAGE>
Property shall not constitute consent to subsequent transfers or waiver of the
provisions of this Section 17. No transfer by Borrower shall relieve Borrower
----------
of liability for payment of the Indebtedness. METLIFE acknowledges that Graphic
is a publicly-held company and that purchases and sales of its common stock from
time to time on the NASDAQ market and in the ordinary course of business shall
not constitute a transfer of the Property or a change in the ownership interests
in Graphic pursuant to this Section 17. Further, offerings and sales of
----------
additional securities of Graphic, payment of stock dividends, redemptions of
stock, issuance of securities pursuant to stock options, bonus or incentive
plans or other common uses of publicly traded securities shall not be considered
to be changes in the ownership interests in Borrower under this Section 17.
----------
18. NOTICE. Except for any notice required under applicable law to be
------
given in another manner, any and all notices, elections, demands, or requests
permitted or required to be made under this Deed or under the Note shall be in
writing, signed by the party giving such notice, election, demand or request,
and shall be delivered personally, by telegram, or sent by registered,
certified, or Express United States mail, postage prepaid, or by Federal Express
or similar service requiring a receipt, to the other party at the address stated
above, or to such other party and at such other address within the United States
of America as any party may designate in writing as provided herein. The date
of receipt of such notice, election, demand or request shall be the earliest of
(i) the date of actual receipt, (ii) three (3) days after the date of mailing by
registered or certified mail, (iii) one (1) day after the date of mailing by
Express Mail or the delivery (for redelivery) to Federal Express or another
similar service requiring a receipt, or (iv) the date of personal delivery (or
refusal upon presentation for delivery).
19. SUCCESSORS AND ASSIGNS BOUND; JOINT AND SEVERAL LIABILITY; AGENTS;
------------------------------------------------------------------
CAPTIONS. The covenants and agreements herein contained shall bind, and the
- --------
rights hereunder shall inure to, the respective heirs, successors and assigns of
METLIFE and Borrower, subject to the provisions of Section 17 hereof. If
----------
Borrower is comprised of more than one person or entity, whether as individuals,
partners, partnerships or corporations, each such person or entity shall be
jointly and severally liable for Borrower's obligations hereunder. In
exercising any rights hereunder or taking any actions provided for herein,
METLIFE may act through its employees, agents or independent contractors as
authorized by METLIFE. The captions and headings of the sections of this Deed
are for convenience only and are not to be used to interpret or define the
provisions hereof.
20. WAIVER OF STATUTE OF LIMITATIONS. Borrower hereby waives the
--------------------------------
right to assert any statute of limitations as a bar to the enforcement of the
lien of this Deed or to any action brought to enforce the Note or any other
obligation secured by this Deed.
21. WAIVER OF MARSHALLING. Notwithstanding the existence of any other
---------------------
security interests in the Property held by METLIFE or by any other party,
METLIFE shall have the right to determine the order in which any
14.
<PAGE>
or all of the Property shall be subjected to the remedies provided herein.
METLIFE shall have the right to determine the order in which any or all portions
of the Indebtedness secured hereby are satisfied from the proceeds realized upon
the exercise of the remedies provided herein. Borrower, any party who consents
to this Deed and any party who now or hereafter acquires a security interest in
the Property and who has actual or constructive notice hereof hereby waives any
and all right to require the marshalling of assets in connection with the
exercise of any of the remedies permitted by applicable law or provided herein.
22. HAZARDOUS WASTE. Borrower has furnished to METLIFE a Phase I
---------------
Environmental Assessment dated August 19, 1994, Job No. 13556, Report No. 98615,
prepared by Atlanta Testing & Engineering (the "Engineer"), and related letters
from the Engineer to Borrower dated September 1, 1994, September 6, 1994, and
September 28, 1994, and an Environmental Questionnaire dated December 8, 1994
(collectively, the "Report"). Except as disclosed to METLIFE in the Report,
Borrower has received no notification of any kind suggesting that the Property
or any adjacent property is or may be contaminated with any hazardous waste or
materials or is or may be required to be cleaned up in accordance with any
applicable law or regulation; and Borrower further represents and warrants that,
except as previously disclosed to METLIFE in writing, to the best of its
knowledge as of the date hereof after due and diligent inquiry, there are no
hazardous waste or materials located in, on or under the Property or any
adjacent property, or incorporated in any Improvements, nor has the Property or
any adjacent property ever been used as a landfill or a waste disposal site, or
a manufacturing, handling, storage, distribution or disposal facility for
hazardous waste or materials. As used herein, the term "hazardous waste or
materials" includes any substance or material defined in or designated as
hazardous or toxic wastes, hazardous or toxic material, a hazardous, toxic or
radioactive substance, or other similar term, by any federal, state or local
statute, regulation or ordinance now or hereafter in effect. Borrower shall
promptly comply with all statutes, regulations and ordinances, and with all
orders, decrees or judgments of governmental authorities or courts having
jurisdiction, relating to the use, collection, treatment, disposal, storage,
control, removal or cleanup of hazardous waste or materials in, on or under the
Property or any adjacent property, or incorporated in any Improvements, at
Borrower's expense. In the event that METLIFE at any time believes that the
Property is not free of all hazardous waste or materials or that Borrower has
violated any applicable environmental law with respect to the Property, then
immediately upon request by METLIFE, Borrower shall obtain and furnish to
METLIFE, at Borrower's sole cost and expense, an environmental audit and
inspection of the Property from an expert satisfactory to METLIFE. In the event
that Borrower fails to immediately obtain such audit or inspection, METLIFE or
its agents may perform or obtain such audit or inspection at Borrower's sole
cost and expense. METLIFE may, but is not obligated to, enter upon the Property
and take such actions and incur such costs and expenses to effect such
compliance as it deems advisable to protect its interest in the Property; and
whether or not Borrower has actual knowledge of the existence of hazardous waste
or materials on the Property or any adjacent property as of the date hereof,
Borrower shall reimburse METLIFE as provided in Section 23 below for the full
----------
amount of all costs and expenses incurred by METLIFE prior to METLIFE acquiring
title to the Property through foreclosure or acceptance of a deed in lieu
15.
<PAGE>
of foreclosure, in connection with such compliance activities. Neither this
provision nor any of the other Loan Documents shall operate to put METLIFE in
the position of an owner of the Property prior to any acquisition of the
Property by METLIFE. The rights granted to METLIFE herein and in the other Loan
Documents are granted solely for the protection of METLIFE's lien and security
interest covering the Property, and do not grant to METLIFE the right to control
Borrower's actions, decisions or policies regarding hazardous waste or
materials.
23. ADVANCES, COSTS AND EXPENSES. Borrower shall pay within ten (10)
----------------------------
days after written demand from METLIFE all sums advanced by METLIFE and all
costs and expenses incurred by METLIFE in taking any actions pursuant to the
Loan Documents including attorneys' fees and disbursements, accountants' fees,
appraisal and inspection fees and the costs for title reports and guaranties,
together with interest thereon at the rate applicable under the Note after an
Event of Default from the date such costs were advanced or incurred. All such
costs and expenses incurred by METLIFE, and advances made, shall constitute
advances under this Deed to protect the Property and shall be secured by and
have the same priority as the lien of this Deed. If Borrower fails to pay any
such advances, costs and expenses and interest thereon, METLIFE may apply any
undisbursed loan proceeds to pay the same, and, without foreclosing the lien of
this Deed, may at its option commence an independent action against Borrower for
the recovery of the costs, expenses and/or advances, with interest, together
with costs of suit, costs of title reports and guaranty of title, disbursements
of counsel and reasonable attorneys' fees incurred therein or in any appeal
therefrom.
24. ASSIGNMENT OF LEASES AND RENTS. Borrower, for good and valuable
------------------------------
consideration, the receipt of which is hereby acknowledged, to secure the
Indebtedness, does hereby absolutely and unconditionally grant, bargain, sell,
transfer, assign, convey, set over and deliver unto METLIFE all right, title and
interest of Borrower in, to and under the Leases of the Property, whether now in
existence or hereafter entered into, and all guaranties, amendments, extensions
and renewals of said Leases and any of them, and all rents, income and profits
which may now or hereafter be or become due or owing under the Leases, and any
of them, or on account of the use of the Property.
Borrower represents, warrants, covenants and agrees with METLIFE as
follows:
(a) The sole ownership of the entire lessor's interest in the Leases is
vested in Borrower, and Borrower has not, and shall not, perform any acts or
execute any other instruments which might prevent METLIFE from fully exercising
its rights with respect to the Leases under any of the terms, covenants and
conditions of this Deed.
(b) The Leases are and shall be valid and enforceable in accordance
with their terms and have not been and shall not be altered, modified, amended,
terminated, canceled, renewed or surrendered except as approved in writing by
METLIFE. The terms and conditions of the Leases have not been and shall not be
waived in any manner whatsoever except as approved in writing by METLIFE.
16.
<PAGE>
(c) Borrower shall not materially alter the term or the amount of rent
payable under any Lease without prior written notice to METLIFE and METLIFE's
consent, which shall not be unreasonably withheld.
(d) To the best of Borrower's knowledge, there are no defaults now
existing under any of the Leases and there exists no state of facts which, with
the giving of notice or lapse of time or both, would constitute a default under
any of the Leases.
(e) Borrower shall give prompt written notice to METLIFE of any notice
received by Borrower claiming that a default has occurred under any of the
Leases on the part of Borrower, together with a complete copy of any such
notice.
(f) Each of the Leases shall remain in full force and effect
irrespective of any merger of the interest of lessor and any lessee under any of
the leases.
(g) Borrower will not permit any Lease to become subordinate to any
lien other than the lien of this Deed.
This assignment is absolute, is effective immediately, and is
irrevocable by Borrower so long as the Indebtedness remains outstanding.
Notwithstanding the foregoing, until a Notice is sent to Borrower in writing
that an Event of Default has occurred (which notice is hereafter called a
"Notice"), Borrower may receive, collect and enjoy the rents, income and profits
accruing from the Property.
Upon the occurrence of an Event of Default hereunder, METLIFE may, at
its option, after service of a Notice, receive and collect all such rents,
income and profits from the Property as they become due. METLIFE shall
thereafter continue to receive and collect all such rents, income and profits,
as long as such default or defaults shall exist, and during the pendency of any
foreclosure proceedings.
Borrower hereby irrevocably appoints METLIFE its true and lawful
attorney with power of substitution and with full power for METLIFE in its own
name and capacity or in the name and capacity of Borrower, from and after
service of a Notice, to demand, collect, receive and give complete acquittances
for any and all rents, income and profits accruing from the Property, either in
its own name or in the name of Borrower or otherwise, which METLIFE may deem
necessary or desirable in order to collect and enforce the payment of the rents,
income and profits of and from the Property. Lessees of the Property are hereby
expressly authorized and directed, following receipt of a Notice from METLIFE,
to pay any and all amounts due Borrower pursuant to the Leases to METLIFE or
such nominee as METLIFE may designate in a writing delivered to and received by
such lessees, and the lessees of the Property are expressly relieved of any and
all duty, liability or obligation to Borrower in respect of all payments so
made.
Upon the occurrence of any Event of Default, from and after service of a
Notice, METLIFE is hereby vested with full power to use all measures, legal and
equitable, deemed by it to be necessary or proper to
17.
<PAGE>
enforce this Section 24 and to collect the rents, income and profits assigned
----------
hereunder, including the right of METLIFE or its designee, to enter upon the
Property, or any part thereof, and take possession of all or any part of the
Property together with all personal property, fixtures, documents, books,
records, papers and accounts of Borrower relating thereto, and METLIFE may
exclude Borrower, its agents and servants, wholly therefrom. Borrower hereby
grants full power and authority to METLIFE to exercise all rights, privileges
and powers herein granted at any and all times after service of a Notice, with
full power to use and apply all of the rents and other income herein assigned to
the payment of the costs of managing and operating the Property and of any
indebtedness or liability of Borrower to METLIFE, including but not limited to
the payment of taxes, special assessments, insurance premiums, damage claims,
the costs of maintaining, repairing, rebuilding and restoring the improvements
on the Property or of making the same rentable, reasonable attorneys' fees
incurred in connection with the enforcement of this Deed, and of principal and
interest payments due from Borrower to METLIFE on the Note and this Deed, all in
such order as METLIFE may determine. METLIFE shall be under no obligation to
exercise or prosecute any of the rights or claims assigned to it hereunder or to
perform or carry out any of the obligations of the lessor under any of the
Leases and does not assume any of the liabilities in connection with or arising
or growing out of the covenants and agreements of Borrower in the Leases. It is
further understood that the assignment set forth in this Section 24 shall not
----------
operate to place responsibility for the control, care, management or repair of
the Property, or parts thereof, upon METLIFE, nor shall it operate to make
METLIFE liable for the performance of any of the terms and conditions of any of
the Leases, or for any waste of the Property by any lessee under any of the
Leases, or any other person, or for any dangerous or defective condition of the
Property or for any negligence in the management, upkeep, repair or control of
the Property resulting in loss or injury or death to any lessee, licensee,
employee or stranger.
25. DEFAULT. The following shall each constitute an event of default
-------
("Event of Default"):
(a) Failure of or refusal by Borrower to pay any portion of the sums
secured by this Deed when due, and such failure or refusal shall continue for a
period of ten (10) days after written notice is given to Borrower by METLIFE
specifying such failure; or
(b) Failure of Borrower within the time required by this Deed to make
any payment for taxes, insurance or for reserves for such payments, or any other
payment necessary to prevent filing of or discharge of any lien, and such
failure shall continue for a period of ten (10) days after written notice is
given to Borrower by METLIFE specifying such failure; or
(c) Failure by Borrower to observe or perform any obligations of
Borrower to METLIFE on or with respect to any transactions, debts, undertakings
or agreements other than the transaction evidenced by the Note following the
giving of any required notice and the expiration of any applicable period of
grace; or
18.
<PAGE>
(d) Failure of Borrower to make any payment or perform any obligation
under any superior liens or encumbrances on the Property, within the time
required thereunder, or commencement of any suit or other action to foreclose
any superior liens or encumbrances; or
(e) Failure by Borrower to observe or perform any of its obligations
under any of the Leases following the giving of any required notice and the
expiration of any applicable cure period; or
(f) The Property is transferred or any agreement to transfer any part
or interest in the Property in any manner whatsoever is made or entered into
without the prior written consent of METLIFE, except as specifically allowed
under this Deed, including without limitation creating or allowing any liens on
the Property or leasing any portion of the Property; or
(g) Filing by Borrower or ABP Co. of a voluntary petition in bankruptcy
or filing by Borrower or ABP Co. of any petition or answer seeking or
acquiescing in any reorganization, arrangement, composition, readjustment,
liquidation, or similar relief for itself under any present or future federal,
state or other statute, law or regulation relating to bankruptcy, insolvency or
other relief for debtors, or the seeking, consenting to, or acquiescing by
Borrower or ABP Co. in the appointment of any trustee, receiver, custodian,
conservator or liquidator for Borrower or ABP Co., any part of the Property, or
any of the income or rents of the Property, or the making by Borrower or ABP Co.
of any general assignment for the benefit of creditors, or the inability of or
failure by Borrower or ABP Co. to pay its debts generally as they become due, or
the insolvency on a balance sheet basis or business failure of Borrower or ABP
Co., or the making or suffering of a preference within the meaning of federal
bankruptcy law or the making of a fraudulent transfer under applicable federal
or state law, or concealment by Borrower or ABP Co. of any of its property in
fraud of creditors, or the imposition of a lien upon any of the property of
Borrower or ABP Co. which is not discharged in the manner permitted by Section 4
---------
of this Deed, or the giving of notice by Borrower or ABP Co. to any governmental
body of insolvency or suspension of operations; or
(h) Filing of a petition against Borrower or ABP Co. seeking any
reorganization, arrangement, composition, readjustment, liquidation, or similar
relief under any present or future federal, state or other law or regulation
relating to bankruptcy, insolvency or other relief for debts, or the appointment
of any trustee, receiver, custodian, conservator or liquidator of Borrower or
ABP Co., of any part of the Property or of any of the income or rents of the
Property, unless such petition shall be dismissed within sixty (60) days after
such filing, but in any event prior to the entry of an order, judgment or decree
approving such petition; or
(i) The institution of any proceeding for the dissolution or
termination of Borrower voluntarily, involuntarily, or by operation of law; or
19.
<PAGE>
(j) A material adverse change occurs in the assets, liabilities or net
worth of Borrower or any of the guarantors of the indebtedness evidenced by the
Note from the assets, liabilities or net worth of Borrower or any of the
guarantors of the indebtedness evidenced by the Note previously disclosed to
METLIFE; or
(k) Any warranty, representation or statement furnished to METLIFE by
or on behalf of Borrower under the Note, this Deed, any of the other Loan
Documents or the Certificate and Indemnity Agreement Regarding Hazardous
Substances, shall prove to have been false or misleading in any material
respect; or
(l) Failure of Borrower to observe or perform any other covenant or
condition contained in the Note and such default shall continue for thirty (30)
days after notice is given to Borrower specifying the nature of the failure. No
notice of default and no opportunity to cure shall be required if during the
prior twelve (12) months METLIFE has already sent a notice to Borrower
concerning default in performance of the same obligation; or
(m) Failure of Borrower to observe or perform any other obligation
under this Deed, any other Loan Document or the Certificate and Indemnity
Regarding Hazardous Substances when such observance or performance is due, and
such failure shall continue beyond the applicable cure period set forth in such
Loan Document, or if the default cannot be cured within such applicable cure
period, Borrower fails within such time to commence and pursue curative action
with reasonable diligence or fails at any time after expiration of such
applicable cure period to continue with reasonable diligence all necessary
curative actions. No notice of default and no opportunity to cure shall be
required if during the prior twelve (12) months METLIFE has already sent a
notice to Borrower concerning default in performance of the same obligation; or
(n) Borrower's abandonment of the Property; or
(o) Any of the foregoing events occur with respect to any guarantor of
any of Borrower's obligations in connection with the Indebtedness, or such
guarantor dies or becomes incompetent; or
(p) The occurrence of any default under any of the documents evidencing
or securing (i) METLIFE Loan No. 5905292, (ii) METLIFE Loan No. 5905392, (iii)
METLIFE Loan No. 5905393, (iv) METLIFE Loan No. 5904594 or (v) any other
indebtedness with Borrower or any of the guarantors of the Indebtedness which is
now or hereafter owed to METLIFE.
26. RIGHTS AND REMEDIES ON DEFAULT.
------------------------------
(a) Remedies. Upon the occurrence of any Event of Default and at any
--------
time thereafter, METLIFE may exercise any one or more of the following rights
and remedies:
(1) METLIFE may declare all sums secured by this Deed immediately due
and payable, including any prepayment premium which Borrower would be required
to pay.
20.
<PAGE>
(2) METLIFE shall have the right to foreclose this Deed in accordance
with applicable law.
(3) In the event of any foreclosure, to the extent permitted by
applicable law, METLIFE will be entitled to a judgment which will provide that
if the foreclosure sale proceeds are insufficient to satisfy the judgment,
execution may issue for any amount by which the unpaid balance of the
obligations secured by this Deed exceeds the net sale proceeds payable to
METLIFE.
(4) With respect to all or any part of the Property that constitutes
personalty, METLIFE shall have all rights and remedies of secured party under
the Uniform Commercial Code.
(5) METLIFE shall have the right to have a receiver appointed to take
possession of any or all of the Property, with the power to protect and preserve
the Property, to operate the Property preceding foreclosure or sale, to collect
all the rents and revenues from the Property and apply the proceeds, over and
above cost of the receivership, against the sums due under this Deed, and to
exercise all of the rights with respect to the Property described in Section 24
----------
above. The receiver may serve without bond if permitted by law. METLIFE's
right to the appointment of a receiver shall exist whether or not apparent value
of the Property exceeds the sums due under this Deed by a substantial amount.
Employment by METLIFE shall not disqualify a person from serving as a receiver.
(6) In the event Borrower remains in possession of the Property after
the Property is sold as provided above or METLIFE otherwise becomes entitled to
possession of the Property upon default of Borrower, Borrower shall become a
tenant at will of METLIFE or the purchaser of the Property and shall pay a
reasonable rental for use of the Property while in Borrower's possession.
(7) METLIFE shall have any other right or remedy provided in this Deed,
the Note, or any other Loan Document or deed delivered by Borrower in connection
therewith, or available at law, in equity or otherwise.
(8) METLIFE shall have all the rights and remedies set forth in
Sections 23 and 24.
- -------- ---------
(b) Sale of the Property. If any Event of Default shall occur
--------------------
hereunder, METLIFE may enter and take possession of the Property, or any portion
thereof, and before or after such entry advertise the sale of the Property, or
any portion thereof, once each week for the four (4) weeks immediately preceding
the sale in the newspaper in which sheriff's advertisements are published in the
county where the real property, or the greatest portion thereof, is located,
giving notice of the time, place, and terms of the sale, and thereafter shall
sell the Property or any part of the Property at public sale or sales at public
outcry at the door of the Superior Courthouse for said county to the highest and
best bidder for cash, in order to pay the Indebtedness and accrued interest
thereon. METLIFE may bid and purchase at such sale. The aforesaid power
21.
<PAGE>
of sale is granted in addition to the other remedies provided by law for
collection of the Indebtedness and shall not be exhausted by one exercise
thereof but may be exercised until METLIFE has received full payment of the
Indebtedness.
If at the time of the sale METLIFE shall deem it best for any reason to
postpone or continue said sale for one or more days, METLIFE may do so, in which
event notice of such postponement or continuance shall be made in such manner as
the METLIFE may deem sufficient under the laws of the State of Georgia. At any
such public sale, METLIFE may execute and deliver to the purchaser a conveyance
of the Property or any part of the Property in fee simple with full warranty
and, to this end, Borrower hereby constitutes and appoints METLIFE as the agent
and attorney-in-fact of Borrower to make such sale and conveyance, and thereby
to divest Borrower of all right, title or equity that Borrower may have in and
to the Property and to vest the same in the purchaser or purchasers at such sale
or sales. Said appointment is coupled with an interest and shall be
irrevocable. Any recitals contained in the conveyance as to the happening of
the default, and such recitals shall be presumptive evidence that all
preliminary acts prerequisite to said sale and deed were in all things duly
complied with, and said recitals shall be conclusive against Borrower.
(c) Application of the Proceeds of Sale. Upon any public sale pursuant
-----------------------------------
to the aforementioned power of sale and agency, the proceeds of said sale shall
be applied as provided by law. In the event that such proceeds are insufficient
to pay all costs and expenses of sale, METLIFE may advance such sums as it in
its sole and absolute discretion shall determine for the purpose of paying all
or any part of such costs and expenses, and all such sums shall be a part of the
Indebtedness, payable on demand with interest at the rate provided in the Note
as applicable upon default. Borrower shall remain liable for any deficiency
resulting if the proceeds of sale are inadequate to repay the Indebtedness.
(d) Notice of Sale. METLIFE shall give Borrower reasonable notice of
--------------
the time and place of any public sale of any personal property or of the time
after which any private sale or other intended disposition of the personal
property is to be made. Reasonable notice shall mean notice given in accordance
with applicable law, including notices given in the manner and at the times
required for notices in a nonjudicial foreclosure.
(e) Waiver; Election of Remedies. A waiver by either party of a breach
----------------------------
of a provision of this Deed shall not constitute a waiver of or prejudice the
party's right otherwise to demand strict compliance with that provision or any
other provision. Election by METLIFE to pursue any remedy shall not exclude
pursuit of any other remedy, and all remedies of METLIFE under this Deed are
cumulative and not exclusive. An election to make expenditures or take action
to perform an obligation of Borrower shall not affect METLIFE's right to declare
a default and exercise its remedies under this Deed.
22.
<PAGE>
27. SATISFACTION OF MORTGAGE. Upon payment of all sums secured by this
------------------------
Deed, METLIFE shall execute a satisfaction of this Deed and shall surrender this
Deed and all notes evidencing Indebtedness secured by this Deed to the person or
persons legally entitled thereto. Such person or persons shall pay METLIFE's
costs incurred in connection with satisfaction of this Deed.
28. FUTURE ADVANCES. Upon request of Borrower, METLIFE, at METLIFE's
---------------
option so long as this Deed secures Indebtedness held by METLIFE, may make
Future Advances to Borrower. Such Future Advances, with interest thereon, shall
be secured by this Deed when evidenced by promissory notes stating that said
notes are secured hereby.
29. IMPOSITION OF TAX BY STATE.
--------------------------
(a) State Taxes Covered. The following constitute state taxes to which
-------------------
this Section applies:
(1) A specific tax upon mortgages or upon all or any part of the
indebtedness secured by a mortgage.
(2) A specific tax on a grantor which the taxpayer is authorized or
required to deduct from payments on the indebtedness secured by a mortgage.
(3) A tax on a mortgage chargeable against the grantee or the holder of
the note secured.
(4) A specific tax on all or any portion of the indebtedness or on
payments of principal and interest made by a grantor.
(b) Remedies. If any state tax to which this Section applies is
--------
enacted subsequent to the date of this Deed, this shall have the same effect as
an Event of Default, and METLIFE may exercise any or all of the remedies
available to it unless the following conditions are met:
(1) Borrower may lawfully pay the tax or charge imposed by state tax,
and
(2) Borrower pays the tax or charge within thirty (30) days after
notice from METLIFE that the tax law has been enacted.
30. ATTORNEYS' FEES. In the event suit or action is instituted to
---------------
enforce or interpret any of the terms of this Deed (including without limitation
efforts to modify or vacate any automatic stay or injunction), the prevailing
party shall be entitled to recover all expenses reasonably incurred at, before
and after trial and on appeal whether or not taxable as costs, or in any
bankruptcy proceeding including, without limitation, attorneys' fees, witness
fees (expert and otherwise), deposition costs, copying charges and other
expenses. Whether or not any court action is involved, all reasonable expenses,
including but not limited to the costs of searching records, obtaining title
reports, surveyor reports, and title insurance, incurred by METLIFE
23.
<PAGE>
that are necessary at any time in METLIFE's opinion for the protection of its
interest or enforcement of its rights shall become a part of the Indebtedness
payable on demand and shall bear interest from the date of expenditure until
repaid at the interest rate as provided in the Note. The term "attorneys' fees"
as used in the Loan Documents shall be deemed to mean such fees as are
reasonable and are actually incurred.
31. GOVERNING LAW; SEVERABILITY. This Deed shall be governed by the law
---------------------------
of the State of Georgia applicable to contracts made and to be performed therein
(excluding choice-of-law principles). In the event that any provision or clause
of this Deed or the Note conflicts with applicable law, such conflict shall not
affect other provisions of this Deed or the Note which can be given effect
without the conflicting provision, and to this end the provisions of this Deed
and the Note are declared to be severable.
32. TIME OF ESSENCE. Time is of the essence of this Deed.
---------------
33. CHANGES IN WRITING. This Deed and any of its terms may only be
------------------
changed, waived, discharged or terminated by an deed in writing signed by the
party against which enforcement of the change, waiver, discharge or termination
is sought. Any agreement subsequently made by Borrower or METLIFE relating to
this Deed shall be superior to the rights of the holder of any intervening lien
or encumbrance.
34. NO OFFSET. Borrower's obligation to make payments and perform all
---------
obligations, covenants and warranties under this Deed and under the Note shall
be absolute and unconditional and shall not be affected by any circumstance,
including without limitation any setoff, counterclaim, abatement, suspension,
recoupment, deduction, defense or other right that Borrower or any guarantor may
have or claim against METLIFE or any entity participating in making the loan
secured hereby. The foregoing provisions of this section, however, do not
constitute a waiver of any claim or demand which Borrower or any guarantor may
have in damages or otherwise against METLIFE or any other person, or preclude
Borrower from maintaining a separate action thereon; provided, however, that
Borrower waives any right it may have at law or in equity to consolidate such
separate action with any action or proceeding brought by METLIFE.
35. AUTHORIZATION TO INSERT. [INTENTIONALLY DELETED.]
-----------------------
36. MAXIMUM INTEREST CHARGES. Notwithstanding anything contained
------------------------
herein or in any of the Loan Documents to the contrary, in no event shall
METLIFE be entitled to receive interest on the loan secured by this Deed (the
"Loan") in amounts which, when added to all of the other interest charged, paid
to or received by METLIFE on the Loan, causes the rate of interest on the Loan
to exceed the highest lawful rate. Borrower and METLIFE intend to comply with
the applicable law governing the highest lawful rate and the maximum amount of
interest payable on or in connection with the Loan. If the applicable law is
ever judicially interpreted so as to render usurious any amount called for under
the Loan Documents, or contracted for, charged, taken, reserved or received with
respect to the Loan, or if acceleration of the final
24.
<PAGE>
maturity date of the Loan or if any prepayment by Borrower results in Borrower
having paid or demand having been made on Borrower to pay, any interest in
excess of the amount permitted by applicable law, then all excess amounts
theretofore collected by METLIFE shall be credited on the principal balance of
the Note (or, if the Note has been or would thereby be paid in full, such excess
amounts shall be refunded to Borrower), and the provisions of the Note, this
Deed and any demand on Borrower shall immediately be deemed reformed and the
amounts thereafter collectible thereunder and hereunder shall be reduced,
without the necessity of the execution of any new document, so as to comply with
the applicable law, but so as to permit the recovery of the fullest amount
otherwise called for thereunder and hereunder. The right to accelerate the final
maturity date of the Loan does not include the right to accelerate any interest
which has not otherwise accrued on the date of such acceleration, and METLIFE
does not intend to collect any unearned interest in the event of acceleration.
All sums paid or agreed to be paid to METLIFE for the use, forbearance or
detention of the Loan shall, to the extent permitted by applicable law, be
amortized, prorated, allocated and spread through the full term of the Loan
until payment in full so that the rate or amount of interest on account of the
Loan does not exceed the applicable usury ceiling. By execution of this Deed,
Borrower acknowledges that it believes the Loan to be nonusurious and agrees
that if, at any time, Borrower should have reason to believe that the Loan is in
fact usurious, it will give METLIFE written notice of its belief and the reasons
why Borrower believes the Loan to be usurious, and Borrower agrees that METLIFE
shall have ninety (90) days following its receipt of such written notice in
which to make appropriate refund or other adjustment in order to correct such
condition if it in fact exists.
IMPORTANT: READ BEFORE SIGNING. THE TERMS OF THIS AGREEMENT SHOULD
BE READ CAREFULLY BECAUSE ONLY THOSE TERMS IN WRITING ARE ENFORCEABLE. NO
OTHER TERMS OR ORAL PROMISES NOT CONTAINED IN THIS WRITTEN CONTRACT MAY BE
LEGALLY ENFORCED. YOU MAY CHANGE THE TERMS OF THIS AGREEMENT ONLY BY
ANOTHER WRITTEN AGREEMENT.
BY EXECUTION OF THIS DEED, BORROWER EXPRESSLY: ACKNOWLEDGES THE
RIGHT TO ACCELERATE THE INDEBTEDNESS EVIDENCED BY THE NOTE AND THE POWER
GIVEN HEREIN TO METLIFE TO SELL THE PROPERTY BY NONJUDICIAL FORECLOSURE
UPON DEFAULT BY BORROWER WITHOUT ANY JUDICIAL HEARING AND WITHOUT ANY
NOTICE OTHER THAN SUCH NOTICE AS IS SPECIFICALLY REQUIRED TO BE GIVEN UNDER
THE NOTE OR PROVISIONS OF THIS DEED OR BY LAW; ACKNOWLEDGES THAT THE
UNDERSIGNED HAS READ THIS DEED AND THAT ANY AND ALL QUESTIONS REGARDING THE
LEGAL EFFECT OF THIS DEED AND ITS PROVISIONS HAVE BEEN EXPLAINED FULLY TO
BORROWER. BORROWER HAS CONSULTED WITH ITS COUNSEL PRIOR TO EXECUTING THIS
DEED AND ACKNOWLEDGES THAT ALL WAIVERS OF THE AFORESAID RIGHTS OF BORROWER
HAVE BEEN MADE KNOWINGLY, INTENTIONALLY AND WILLINGLY BY THE UNDERSIGNED,
ON BEHALF OF BORROWER, AS PART OF A BARGAINED-FOR LOAN TRANSACTION AND THAT
THIS DEED IS VALID AND ENFORCEABLE BY METLIFE AGAINST BORROWER IN
ACCORDANCE WITH ALL THE TERMS AND CONDITIONS HEREOF.
25.
<PAGE>
IN WITNESS WHEREOF, Borrower has executed this Deed or has caused the
same to be executed by its representatives thereunto duly authorized.
BORROWER:
GRAPHIC INDUSTRIES, INC.,
a Georgia corporation
By:/s/ Mark C. Pope III
-----------------------------------------
Mark C. Pope, III, Chairman & CEO
Attest:/s/ Donald P. Hunnicutt
-------------------------------------
Donald P. Hunnicutt, Secretary
[seal]
Signed, sealed, delivered, and notarized
this 28th day of December 1994 in the
----
presence of:
/s/ Dorothy J. Atkins
- ----------------------------------------
Signature of Unofficial Witness
/s/ Barbara Blindre
- ----------------------------------------
Signature of Notary Public
[Seal]
My commission expires: Notary Public, Fulton County, Georgia,
My Commission Expires May 5, 1998
--------------------------------------
Exhibits:
- --------
Exhibit A - Description of Property
Schedule 1 - Description of Debtor and Secured Party
Schedule 2 - Permitted Exceptions
26.
<PAGE>
SCHEDULE 1
----------
Loan No. 2221594-001
Part 1
------
Description of "Debtor" and "Secured Party"
- -------------------------------------------
A. Debtor:
------
1. Name and Identity or Corporate Structure: Graphic Industries, Inc.
2. Debtor has been using or operating under such name and identity or corporate
structure, without change, since: March 7, 1970.
3. The principal place of business and chief executive office of Debtor are
located at:
2155 Monroe Drive, N.E.
Atlanta, Georgia 30324
Attention: Mark C. Pope, IV, President
B. Secured Party: MetLife Capital Financial Corporation, a Delaware
--------------
corporation.
************************************************************************
Part 2
------
(Notice Mailing Addresses of "Debtor" and "Secured Party")
A. The mailing address of Debtor is:
2155 Monroe Drive, N.E.
Atlanta, Georgia 30324
Attention: Mark C. Pope, IV, President
B. The mailing address of Secured Party is:
MetLife Capital Financial Corporation
Real Estate Department
10900 N.E. 4th Street, Suite 500
Bellevue, Washington 98004
29.
<PAGE>
Loan No: 2221594-001
SCHEDULE 2
----------
(655 Lambert Drive, Atlanta, Georgia)
Permitted Exceptions:
- --------------------
30.
<PAGE>
Prepared by and after
recording return to:
Dorothea Summerell
Hunter, Maclean, Exley & Dunn, P.C.
200 East Saint Julian Street
Post Office Box 9848
Savannah, Georgia 31412
Loan Number: 5909794-002
DEED TO SECURE DEBT, SECURITY AGREEMENT,
ASSIGNMENT OF LEASES AND RENTS,
AND FIXTURE FILING
(685 Lambert Drive, Atlanta, Georgia)
THIS INSTRUMENT IS ALSO TO BE INDEXED IN THE INDEX OF FINANCING STATEMENTS.
THIS DEED TO SECURE DEBT, SECRUITY AGREEMENT, ASSIGNMENT OF LEASES AND RENTS,
AND FIXTURE FILING DEED COVERS GOODS WHICH ARE OR ARE TO BECOME FIXTURES ON THE
REAL PROPERTY DESCRIBED HEREIN. THE BORROWER/DEBTOR HEREUNDER IS THE RECORD
OWNER OF THE REAL PROPERTY.
THE NAMES OF THE "DEBTOR" AND THE "SECURED PARTY", THE MAILING ADDRESS OF THE
"SECURED PARTY" FROM WHICH INFORMATION CONCERNING THE SECURITY INTEREST MAY BE
OBTAINED, THE MAILING ADDRESSES OF THE "DEBTOR" AND A STATEMENT INDICATING THE
TYPES, OR DESCRIBING THE ITEMS, OF COLLATERAL ARE AS DESCRIBED IN ARTICLE III
BELOW, IN COMPLIANCE WITH THE REQUIREMENTS OF ARTICLE 9, SECTION 402 OF THE
UNIFORM COMMERCIAL CODE, O.C.G.A. (S) 11-9-402.
________________________________________________________________________________
THIS DEED TO SECURE DEBT, SECURITY AGREEMENT, ASSIGNMENT OF LEASES AND
RENTS, AND FIXTURE FILING (herein "Deed") is made as of December 27, 1994, by
the Grantor, GRAPHIC INDUSTRIES, INC., a Georgia corporation, whose address is
2155 Monroe Drive, Northeast, Atlanta, Georgia 30324 (herein "Borrower"), in
favor of the Grantee, METLIFE CAPITAL FINANCIAL CORPORATION, a Delaware
corporation, whose address is Real Estate Department, 10900 N.E. 4th Street,
Suite 500, Bellevue, Washington 98004 (herein "METLIFE").
Borrower, in consideration of the indebtedness herein recited does
hereby bargain, sell, transfer, assign, grant, and convey to METLIFE and its
successors and assigns, WITH POWER OF SALE all of Borrower's right, title and
interest, now owned or hereafter acquired, including any reversion or remainder
interest, in the real property located in the City of Atlanta, County of Fulton,
State of Georgia, commonly known as 685 Lambert Road, and more particularly
described on Exhibit A attached hereto and incorporated herein including all
---------
heretofore or hereafter vacated alleys and streets abutting the property, and
all easements, rights, appurtenances, tenements, hereditaments, rents,
royalties, mineral, oil and gas rights and profits, water, water rights, and
water stock appurtenant to the property (collectively "Premises");
<PAGE>
TOGETHER with all of Borrower's estate, right, title and interest, now
owned or hereafter acquired, in:
(a) all buildings, structures, improvements, parking areas, landscaping,
fixtures and articles of property now or hereafter erected on, attached to,
or used or adapted for use in the operation of the Premises; including but
without being limited to, all heating, air conditioning and incinerating
apparatus and equipment; all boilers, engines, motors, dynamos, generating
equipment, piping and plumbing fixtures, water heaters, ranges, cooking
apparatus and mechanical kitchen equipment, refrigerators, freezers,
cooling, ventilating, sprinkling and vacuum cleaning systems, fire
extinguishing apparatus, gas and electric fixtures, carpeting, floor
coverings, underpadding, elevators, escalators, partitions, mantels, built-
in mirrors, window shades, blinds, draperies, screens, storm sash, awnings,
signs, furnishings of public spaces, halls and lobbies, and shrubbery and
plants, and including also all interest of any owner of the Premises in any
of such items hereafter at any time acquired under conditional sale
contract, chattel mortgage or other title retaining or security deed, all
of which property mentioned in this clause (a) shall be deemed part of the
realty covered by this Deed and not severable wholly or in part without
material injury to the freehold of the Premises (all of the foregoing
together with replacements and additions thereto are referred to herein as
"Improvements"); and
(b) all compensation, awards, damages, rights of action and proceeds,
including interest thereon and/or the proceeds of any policies of insurance
therefor, arising out of or relating to a (i) taking or damaging of the
Premises or Improvements thereon by reason of any public or private
improvement, condemnation proceeding (including change of grade), sale or
transfer in lieu of condemnation, or fire, earthquake or other casualty, or
(ii) any injury to or decrease in the value of the Premises or the
Improvements for any reason whatsoever;
(c) return premiums or other payments upon any insurance any time provided
for the benefit of or naming METLIFE, and refunds or rebates of taxes or
assessments on the Premises;
(d) all written and oral leases and rental agreements (including
extensions, renewals and subleases and all usufructuary interest; all of
the foregoing shall be referred to collectively herein as the "Leases") now
or hereafter affecting the Premises including, without limitation, all
rents, issues, profits and other revenues and income therefrom and from the
renting, leasing or bailment of Improvements and equipment, all guaranties
of tenants' performance under the Leases, and all rights and claims of any
kind that Borrower may have against any tenant under the Leases or in
connection with the termination or rejection of the Leases in a bankruptcy
or insolvency proceeding; and the leasehold estate in the event this Deed
is on a leasehold;
2.
<PAGE>
(e) plans, specifications, contracts and agreements relating to the design
or construction of the Improvements; Borrower's rights under any payment,
performance, or other bond in connection with the design or construction of
the Improvements; all landscaping and construction materials, supplies, and
equipment used or to be used or consumed in connection with construction of
the Improvements, whether stored on the Premises or at some other location;
and contracts, agreements, and purchase orders with contractors,
subcontractors, suppliers, and materialmen incidental to the design or
construction of the Improvements;
(f) all contracts (excluding contracts relating to the printing operations
of Atlanta Blue Print Company ("ABP Co."), rights, claims or causes of
action pertaining to or affecting the Premises or the Improvements,
including, without limitation, all options or contracts to acquire other
property for use in connection with operation or development of the
Premises or Improvements, management contracts, service or supply
contracts, permits, licenses, franchises and certificates, and all
commitments or agreements, now or hereafter in existence, intended by the
obligor thereof to provide Borrower with proceeds to satisfy the loan
evidenced hereby or improve the Premises or Improvements, and the right to
receive all proceeds due under such commitments or agreements including
refundable deposits and fees;
(g) all books, records, surveys, reports and other documents related to
the Premises, the Improvements, the Leases, or other items of collateral
described herein; and
(h) all additions, accessions, replacements, substitutions, proceeds and
products of the real and personal property, tangible and intangible,
described herein.
(All of the foregoing described collateral is exclusive of any equipment,
furniture, furnishings or trade fixtures owned and supplied by ABP Co. or
tenants of the Premises. The Premises, the Improvements, the Leases and all of
the rest of the foregoing property are herein referred to as the "Property.")
TO HAVE AND TO HOLD the Property and all parts, rights, members, and
apurtenances thereof to the use, benefit, and behoof of METLIFE and its
successors and assigns in fee simple forever. This instrument is a deed passing
title pursuant to the laws of the State of Georgia governing loan or security
deeds and is not a mortgage as "mortgage" is defined for purposes of real
property laws.
This conveyance is intended to constitute a security agreement as
required under the Uniform Commercial Code as enacted in the State of Georgia.
Debtor's and Secured Party's addresses and the location of the collateral are
set forth on Schedule 1 attached hereto.
----------
This Deed is made to secure METLIFE (a) the repayment of the
indebtedness evidenced by Borrower's promissory note (the "Note") dated of even
date herewith in the principal sum of THREE HUNDRED THOUSAND
3.
<PAGE>
Dollars ($300,000), with interest thereon at the rate of ten percent (10%) per
annum, having a maturity date of January 1, 2010, and all renewals, extensions
and modifications thereof; (b) the repayment of any future advances, with
interest thereon, made by METLIFE to Borrower pursuant to Section 28 hereof
----------
(herein "Future Advances"); (c) the payment of all other sums, with interest
thereon, advanced in accordance herewith to protect the security of this Deed or
to fulfill any of Borrower's obligations hereunder or under the other Loan
Documents (as defined below); (d) the performance of the covenants and
agreements of Borrower contained herein or in the other Loan Documents; and (e)
the repayment of all sums now or hereafter owing to METLIFE by Borrower pursuant
to any instrument which recites that it is secured hereby. The indebtedness and
obligations described in clauses (a)-(e) above are collectively referred to
herein as the "Indebtedness." The Note, this Deed, and all other documents
evidencing, securing or guaranteeing the Indebtedness (except any Certificate
and Indemnity Agreement Regarding Hazardous Substances), as the same may be
modified or amended from time to time, are referred to herein as the "Loan
Documents." The terms of the Note secured hereby may provide that the interest
rate or payment terms or balance due may be indexed, adjusted, renewed, or
renegotiated from time to time, and this Deed shall continue to secure the Note
notwithstanding any such indexing, adjustment, renewal or renegotiation.
Should the indebtedness be paid according to the tenor and effect
thereof where the same shall become due and payable, and should Borrower perform
all covenants herein contained in a timely manner, then this Deed is satisfied,
and METLIFE shall execute a proper cancellation at the expense of Borrower.
Borrower represents and warrants that Borrower has good, marketable and
insurable title to, and has the right to mortgage an indefeasible fee simple
estate in, the Premises, Improvements, rents, and leases (or, if this Deed is on
a leasehold, good, marketable and insurable title to, and the right to convey
the leasehold estate and that the ground lease is in full force and effect
without modification except as noted above and without default on the part of
either lessor or lessee thereunder), and the right to convey the other Property,
that the Property is unencumbered except as disclosed in writing to and approved
by METLIFE prior to the date hereof, and that Borrower will warrant and forever
defend the title to the Property against all claims and demands, subject only to
the permitted exceptions set forth in Schedule 2 attached hereto.
----------
Borrower represents, warrants, covenants and agrees for the benefit of
METLIFE as follows:
1. PAYMENT OF PRINCIPAL AND INTEREST. Borrower shall promptly pay when due
---------------------------------
the principal of and interest on the Indebtedness, any prepayment and other
charges provided in the Loan Documents and all other sums secured by this Deed.
2. FUNDS FOR TAXES, INSURANCE AND OTHER CHARGES. Upon the occurrence of an
--------------------------------------------
Event of Default (hereinafter defined), and at METLIFE's sole option at any time
thereafter, Borrower shall pay in addition to
4.
<PAGE>
each monthly payment on the Note, one-twelfth of the annual real estate taxes,
insurance premiums, assessments, water and sewer rates, ground rents and other
charges (herein "Impositions") payable with respect to the Property (as
estimated by METLIFE in its sole discretion), to be held by METLIFE without
interest to Borrower, for the payment of such obligations.
If the amount of such additional payments held by METLIFE ("Funds") at
the time of the annual accounting thereof shall exceed the amount deemed
necessary by METLIFE to provide for the payment of Impositions as they fall due,
such excess shall be at Borrower's option, either repaid to Borrower or credited
to Borrower on the next monthly installment or installments of Funds due. If at
any time the amount of the Funds held by METLIFE shall be less than the amount
deemed necessary by METLIFE to pay Impositions as they fall due, Borrower shall
pay to METLIFE any amount necessary to make up the deficiency within thirty (30)
days after notice from METLIFE to Borrower requesting payment thereof.
Upon Borrower's breach of any covenant or agreement of Borrower in this
Deed, METLIFE may apply, in any amount and in any order as METLIFE shall
determine in METLIFE's sole discretion, any Funds held by METLIFE at the time of
application (i) to pay Impositions which are now or will hereafter become due,
or (ii) as a credit against sums secured by this Deed. Upon payment in full of
all sums secured by this Deed, METLIFE shall refund to Borrower any Funds held
by METLIFE.
3. APPLICATION OF PAYMENTS. Unless applicable law provides otherwise,
-----------------------
each complete installment payment received by METLIFE from Borrower under the
Note or this Deed shall be applied by METLIFE first in payment of amounts
payable to METLIFE by Borrower under Section 2 hereof, then to interest payable
---------
on the Note, then to principal of the Note, and then to interest and principal
on any Future Advances in such order as METLIFE, at METLIFE's sole discretion,
shall determine. Upon Borrower's breach of any covenant or agreement of
Borrower in this Deed, METLIFE may apply, in any amount and in any order as
METLIFE shall determine in METLIFE's sole discretion, any payments received by
METLIFE under the Note or this Deed. Any partial payment received by METLIFE
shall, at METLIFE's option, be held in a non-interest bearing account until
METLIFE receives funds sufficient to equal a complete installment payment.
4. CHARGES, LIENS. Borrower shall pay all Impositions attributable to
--------------
the Property in the manner provided under Section 2 hereof or, if not paid in
---------
such manner, by Borrower making payment, when due, directly to the payee
thereof, or in such other manner as METLIFE may designate in writing. If
requested by METLIFE, Borrower shall promptly furnish to METLIFE all notices of
Impositions which become due, and in the event Borrower shall make payment
directly, Borrower shall promptly furnish to METLIFE receipts evidencing such
payments. Borrower shall promptly discharge any lien which has, or may have,
priority over or equality with, the lien of this Deed, and Borrower shall pay,
when due, the claims of all persons supplying labor or materials to or in
connection with the Property. Without METLIFE's prior written permission,
Borrower shall not allow any lien inferior to this Deed to be
5.
<PAGE>
perfected against the Property. If any lien inferior to this Deed is filed
against the Property without METLIFE's prior written permission and without the
consent of Borrower, Borrower shall, within thirty (30) days after receiving
notice of the filing of such lien, cause such lien to be released of record and
deliver evidence of such release to METLIFE.
5. INSURANCE. Borrower shall obtain and maintain the following types
---------
of insurance upon and relating to the Property:
(a) "All Risk" property and fire insurance (with extended coverage
endorsement including malicious mischief and vandalism) in an amount not less
than the lesser of the outstanding principal balance of the Note or the full
replacement value of the Property (with a deductible not to exceed $25,000 and
with co-insurance limited to a maximum of 10% of the amount of the policy),
naming METLIFE under a lender's loss payee endorsement (form 438BFU or
equivalent) and including agreed amount, inflation guard, replacement cost and
waiver of subrogation endorsements;
(b) Comprehensive general liability insurance in an amount not less
than $1,000,000 per occurrence and $2,000,000 in the aggregate insuring against
personal injury, death and property damage and naming METLIFE as additional
insured;
(c) Business interruption insurance covering loss of rental or other
income (including all expenses payable by tenants) for up to six (6) months; and
(d) Such other types of insurance or endorsements to existing insurance
as may be required from time to time by METLIFE.
Upon the request of METLIFE, Borrower shall increase the coverages under
any of the insurance policies required to be maintained hereunder or otherwise
modify such policies in accordance with METLIFE's request. All of the insurance
policies required hereunder shall be issued by corporate insurers licensed to do
business in the state in which the Property is located and rated A:X or better
by A.M. Best Company, and shall be in form acceptable to METLIFE. If and to the
extent that the Property is located within an area that has been or is hereafter
designated or identified as an area having special flood hazards by the
Department of Housing and Urban Development or such other official as shall from
time to time be authorized by federal or state law to make such designation
pursuant to any national or state program of flood insurance, Borrower shall
carry flood insurance with respect to the Property in amounts not less than the
maximum limit of coverage then available with respect to the Property or the
amount of the Indebtedness, whichever is less. Certificates of all insurance
required to be maintained hereunder shall be delivered to METLIFE, along with
evidence of payment in full of all premiums required thereunder,
contemporaneously with Borrower's execution of this Deed. All such certificates
shall be in form acceptable to METLIFE and shall require the insurance company
to give to METLIFE at least thirty (30) days' prior written notice before
canceling the policy for any reason or materially amending it. Certificates
evidencing all renewal and substitute policies of insurance shall be delivered
to METLIFE, along with evidence of the payment in full
6.
<PAGE>
of all premiums required thereunder, at least fifteen (15) days before
termination of the policies being renewed or substituted. If any loss shall
occur at any time when Borrower shall be in default hereunder, METLIFE shall be
entitled to the benefit of all insurance policies held or maintained by
Borrower, to the same extent as if same had been made payable to METLIFE, and
upon foreclosure hereunder, METLIFE shall become the owner thereof. METLIFE
shall have the right, but not the obligation, to make premium payments, at
Borrower's expense, to prevent any cancellation, endorsement, alteration or
reissuance of any policy of insurance maintained by Borrower, and such payments
shall be accepted by the insurer to prevent same.
If any act or occurrence of any kind or nature (including any casualty
for which insurance was not obtained or obtainable) shall result in damage to or
destruction of the Property (such event being called a "Loss"), Borrower will
give prompt written notice thereof to METLIFE. All insurance proceeds paid or
payable in connection with any Loss shall be paid to METLIFE. If (i) no Event
of Default has occurred and is continuing hereunder, (ii) Borrower provides
evidence satisfactory to METLIFE of its ability to pay all amounts becoming due
under the Note during the pendency of any restoration or repairs to or
replacement of the Property, (iii) the available insurance proceeds are, in
METLIFE's judgment, sufficient to fully and completely restore, repair or
replace the Property, and (iv) Borrower provides evidence satisfactory to
METLIFE that none of the tenants of the Property will terminate their lease
agreements as a result of either the Loss or the repairs to or replacement of
the Property, Borrower shall have the right to apply all insurance proceeds
received in connection with such Loss either (a) to restore, repair, replace and
rebuild the Property as nearly as possible to its value, condition and character
immediately prior to such Loss, or (b) to the payment of the Indebtedness in
such order as METLIFE may elect. If an Event of Default has occurred and is
continuing hereunder at the time of such Loss, if METLIFE determines that
Borrower will be unable to pay all amounts becoming due under the Note during
the pendency of any restoration or repairs to or replacement of the Property, if
the available insurance proceeds are insufficient, in METLIFE's judgment, to
fully and completely restore, repair or replace the Property or if METLIFE
believes that one or more tenants of the Property will terminate their lease
agreements as a result of either the Loss or the repairs to or replacement of
the Property, then all of the insurance proceeds payable with respect to such
Loss will be applied to the payment of the Indebtedness, or if so instructed by
METLIFE, Borrower will promptly, at Borrower's sole cost and expense and
regardless of whether sufficient insurance proceeds shall be available, commence
to restore, repair, replace and rebuild the Property as nearly as possible to
its value, condition, character immediately prior to such Loss. Borrower shall
diligently prosecute any restoration, repairs or replacement of the Property
undertaken by or on behalf of Borrower pursuant to this Section 5. All such
---------
work shall be conducted pursuant to written contracts approved by METLIFE in
writing. Notwithstanding anything contained herein to the contrary, in the
event the insurance proceeds received by METLIFE following any Loss are
insufficient in METLIFE's judgment to fully and completely restore, repair or
replace the Property, and if Borrower has complied with all of the other
conditions described
7.
<PAGE>
in this Section 5, Borrower may elect to restore, repair or replace the
---------
Property if it first deposits with METLIFE such additional sums as METLIFE
determines are necessary in order to fully and completely restore, repair or
replace the Property. In the event any insurance proceeds remain following the
restoration, repair or replacement of the Property, such proceeds shall be
applied to the Indebtedness in such order as METLIFE may elect.
6. PRESERVATION AND MAINTENANCE OF PROPERTY; LEASEHOLDS. Borrower (a)
----------------------------------------------------
shall not commit waste or permit impairment or deterioration of the Property,
(b) shall not abandon the Property, (c) shall restore or repair promptly and in
a good and workmanlike manner all or any part of the Property to the equivalent
of its original condition, or such other condition as METLIFE may approve in
writing, in the event of any damage, injury or loss thereto, whether or not
insurance proceeds are available to cover in whole or in part the costs of such
restoration or repair, (d) shall keep the Property, including all improvements,
fixtures, equipment, machinery and appliances thereon, in good repair and shall
replace fixtures, equipment, machinery and appliances on the Property when
necessary to keep such items in good repair, (e) shall comply with all laws,
ordinances, regulations and requirements of any governmental body applicable to
the Property, (f) if all or part of the Property is for rent or lease, then
METLIFE, at its option after the occurrence of an Event of Default, may require
Borrower to provide for professional management of the Property by a property
manager satisfactory to METLIFE pursuant to a contract approved by METLIFE in
writing, unless such requirement shall be waived by METLIFE in writing, (g)
shall generally operate and maintain the Property in a manner to ensure maximum
rentals, and (h) shall give notice in writing to METLIFE of and, unless
otherwise directed in writing by METLIFE, appear in and defend any action or
proceeding purporting to affect the Property, the security of this Deed or the
rights or powers of METLIFE hereunder. Neither Borrower nor any tenant or other
person, without the written approval of METLIFE, shall remove, demolish or alter
any improvement now existing or hereafter erected on the Property or any
fixture, equipment, machinery or appliance in or on the Property except when
incident to the replacement of fixtures, equipment, machinery and appliances
with items of like kind.
Borrower represents, warrants and covenants that the Property is and
shall be in compliance with the Americans with Disabilities Act of 1990 and all
of the regulations promulgated thereunder, as the same may be amended from time
to time.
If this Deed is on a leasehold, Borrower (i) shall comply with the
provisions of the ground lease, (ii) shall give immediate written notice to
METLIFE of any default by lessor under the ground lease or of any notice
received by Borrower from such lessor of any default under the ground lease by
Borrower, (iii) shall exercise any option to renew or extend the ground lease
and give written confirmation thereof to METLIFE within thirty (30) days after
such option becomes exercisable, (iv) shall give immediate written notice to
METLIFE of the commencement of any remedial proceedings under the ground lease
by any party thereto and, if required by METLIFE, shall permit METLIFE as
Borrower's attorney-in-fact to control and act for Borrower in any such remedial
proceedings and
8.
<PAGE>
(v) shall within thirty (30) days after request by METLIFE obtain from the
lessor under the ground lease and deliver to METLIFE a lessor's estoppel
certificate in form and substance acceptable to METLIFE. Borrower hereby
expressly transfers and assigns to METLIFE the benefit of all covenants
contained in the ground lease, whether or not such covenants run with the land,
but METLIFE shall have no liability with respect to such covenants or any other
covenants contained in the ground lease.
Borrower shall neither surrender the leasehold estate and interests
herein conveyed nor terminate or cancel the ground lease creating said estate
and interests, and Borrower shall not, without the express written consent of
METLIFE, alter or amend said ground lease. There shall not be a merger of the
ground lease, or of the leasehold estate created thereby, with the fee estate
covered by the ground lease by reason of said leasehold estate or said fee
estate, or any part of either, coming into common ownership, unless METLIFE
shall consent in writing to such merger; if Borrower shall acquire such fee
estate, then this Deed shall simultaneously and without further action be spread
so as to become a lien on such fee estate.
7. USE OF PROPERTY. Unless required by applicable law or unless
---------------
METLIFE has otherwise agreed in writing, Borrower shall not allow changes in the
use for which all or any part of the Property was intended at the time this Deed
was executed. Borrower shall not, without METLIFE's prior written consent, (i)
initiate or acquiesce in a change in the zoning classification (including any
variance under any existing zoning ordinance applicable to the Property), (ii)
permit the use of the Property to become a non-conforming use under applicable
zoning ordinances, (iii) file any subdivision or parcel map affecting the
Property, or (iv) amend, modify or consent to any easement or covenants,
conditions and restrictions pertaining to the Property.
8. PROTECTION OF METLIFE'S SECURITY. If Borrower fails to perform
--------------------------------
any of the covenants and agreements contained in this Deed, or if any action or
proceeding is commenced which affects the Property or title thereto or the
interest of METLIFE therein, including, but not limited to, eminent domain,
insolvency, code enforcement, or arrangements or proceedings involving a
bankrupt or decedent, then METLIFE at METLIFE's option may make such
appearances, disburse such sums and take such action as METLIFE deems necessary,
in its sole discretion, to protect METLIFE's interest, including, but not
limited to, (i) disbursement of attorneys' fees, (ii) entry upon the Property to
make repairs, (iii) procurement of satisfactory insurance as provided in Section
-------
5 hereof, and (iv) if this Deed is on a leasehold, exercise of any option to
- -
renew or extend the ground lease on behalf of Borrower and the curing of any
default of Borrower in the terms and conditions of the ground lease.
Any amounts disbursed by METLIFE pursuant to this Section 8, with
---------
interest thereon, shall become additional Indebtedness of Borrower secured by
this Deed. Unless Borrower and METLIFE agree to other terms of payment, such
amounts shall be immediately due and payable and shall bear interest from the
date of disbursement at the highest rate which may be collected from Borrower
under applicable law or, at METLIFE's option,
9.
<PAGE>
the rate stated in the Note. Borrower hereby covenants and agrees that METLIFE
shall be subrogated to the lien of any mortgage or other lien discharged, in
whole or in part, by the Indebtedness. Nothing contained in this Section 8 shall
---------
require METLIFE to incur any expense or take any action hereunder.
9. INSPECTION. METLIFE may make or cause to be made reasonable entries
----------
upon the Property to inspect the interior and exterior thereof.
10. FINANCIAL DATA. Borrower will furnish to METLIFE within one hundred
--------------
twenty (120) days after the close of its fiscal year (i) current financial
statements of Borrower, including a balance sheet and profit and loss statements
prepared in accordance with generally accepted accounting principles and
practices consistently applied and, if METLIFE so requires, accompanied by the
annual audit report of an independent certified public accountant reasonably
acceptable to METLIFE, (ii) if requested by METLIFE, an annual operating
statement, together with other supporting data reflecting all material
information with respect to the operation of the Property and Improvements
during the period covered thereby, and (iii) all other financial information and
reports that METLIFE may from time to time reasonably request.
11. CONDEMNATION. If the Property, or any part thereof, shall be
------------
condemned for any reason, including without limitation fire or earthquake
damage, or otherwise taken for public or quasi-public use under the power of
eminent domain, or be transferred in lieu thereof, all damages or other amounts
awarded for the taking of, or injury to, the Property shall be paid to METLIFE
who shall have the right, in its sole and absolute discretion, to apply the
amounts so received against (a) the costs and expenses of METLIFE, including
reasonable attorneys' fees incurred in connection with collection of such
amounts, and (b) the balance against the Indebtedness; provided, however, that
if (i) no Event of Default shall have occurred and be continuing hereunder, (ii)
Borrower provides evidence satisfactory to METLIFE of its ability to pay all
amounts becoming due under the Note during the pendency of any restoration or
repairs to or replacement of the Property, (iii) METLIFE determines, in its sole
discretion, that the proceeds of such award are sufficient to restore, repair,
replace and rebuild the Property as nearly as possible to its value, condition
and character immediately prior to such taking (or, if the proceeds of such
award are insufficient for such purpose, if Borrower provides additional sums to
METLIFE's satisfaction so that the aggregate of such sums and the proceeds of
such award will be sufficient for such purpose), and (iv) Borrower provides
evidence satisfactory to METLIFE that none of the tenants of the Property will
terminate their lease agreements as a result of either the condemnation or
taking or the repairs to or replacement of the Property, the proceeds of such
award, together with additional sums provided by Borrower, shall be placed in a
separate account for the benefit of METLIFE and Borrower to be used to restore,
repair, replace and rebuild the Property as nearly as possible to its value,
condition and character immediately prior to such taking. All work to be
performed in connection therewith shall be pursuant to a written contract
therefor, which contract shall be subject to the prior approval of METLIFE. To
the extent that any funds remain
10.
<PAGE>
after the Property has been so restored and repaired, the same shall be applied
against the Indebtedness in such order as METLIFE may elect. To enforce its
rights hereunder, METLIFE shall be entitled to participate in and control any
condemnation proceedings and to be represented therein by counsel of its own
choice, and Borrower will deliver, or cause to be delivered to METLIFE such
instruments as may be requested by it from time to time to permit such
participation. In the event METLIFE, as a result of any such judgment, decree or
award, believes that the payment or performance of any of the Indebtedness is
impaired, METLIFE may declare all of the Indebtedness immediately due and
payable.
12. BORROWER AND LIEN NOT RELEASED. From time to time, METLIFE may, at
------------------------------
METLIFE's option, without giving notice to or obtaining the consent of Borrower,
Borrower's successors or assigns or of any junior lienholder or guarantors,
without liability on METLIFE's part and notwithstanding Borrower's breach of any
covenant or agreement of Borrower in this Deed, extend the time for payment of
the Indebtedness or any part thereof, reduce the payments thereon, release
anyone liable on any of the Indebtedness, accept an extension or modification or
renewal note or notes therefor, modify the terms and time of payment of the
Indebtedness, release from the lien of this Deed any part of the Property, take
or release other or additional security, reconvey any part of the Property,
consent to any map or plan of the Property, consent to the granting of any
easement, join in any extension or subordination agreement, and agree in writing
with Borrower to modify the rate of interest or period of amortization of the
Note or change the amount of the monthly installments payable thereunder. Any
actions taken by METLIFE pursuant to the terms of this Section 12 shall not
----------
affect the obligation of Borrower or Borrower's successors or assigns to pay the
sums secured by this Deed and to observe the covenants of Borrower contained
herein, shall not affect the guaranty of any person, corporation, partnership or
other entity for payment of the Indebtedness, and shall not affect the lien or
priority of the lien hereof on the Property. Borrower shall pay METLIFE a
service charge, together with such title insurance premiums and attorneys' fees
as may be incurred at METLIFE's option, for any such action if taken at
Borrower's request.
13. FORBEARANCE BY METLIFE NOT A WAIVER. Any forbearance by METLIFE in
-----------------------------------
exercising any right or remedy hereunder, or otherwise afforded by applicable
law, shall not be a waiver of or preclude the exercise of any other right or
remedy. The acceptance by METLIFE of payment of any sum secured by this Deed
after the due date of such payment shall not be a waiver of METLIFE's right to
either require prompt payment when due of all other sums so secured or to
declare a default for failure to make prompt payment. The procurement of
insurance or the payment of taxes or other liens or charges by METLIFE shall not
be a waiver of METLIFE's right to accelerate the maturity of the Indebtedness
secured by this Deed, nor shall METLIFE's receipt of any awards, proceeds or
damages under Sections 5 and 11 hereof operate to cure or waive Borrower's
-----------------
default in payment of sums secured by this Deed.
14. UNIFORM COMMERCIAL CODE SECURITY AGREEMENT. This Deed is intended
------------------------------------------
to be a security agreement pursuant to the Uniform Commercial Code for any of
the items specified above as part of the Property which,
11.
<PAGE>
under applicable law, may be subject to a security interest pursuant to the
Uniform Commercial Code, and Borrower hereby grants and conveys to METLIFE a
first and prior security interest in all of the Property that constitutes
personalty, whether now owned or hereafter acquired. Borrower agrees that
METLIFE may file this Deed, or a reproduction thereof, in the real estate
records or other appropriate index, as a financing statement for any of the
items specified above as part of the Property. Any reproduction of this Deed or
of any other security agreement or financing statement shall be sufficient as a
financing statement. In addition, Borrower agrees to execute and deliver to
METLIFE, upon METLIFE's request, any financing statements, as well as
extensions, renewals and amendments thereof, and reproductions of this Deed in
such form as METLIFE may require to perfect a security interest with respect to
the foregoing items. Borrower shall pay all costs of filing such financing
statements and any extensions, renewals, amendments and releases thereof, and
shall pay all costs and expenses of any record searches for financing statements
METLIFE may require. Without the prior written consent of METLIFE, Borrower
shall not create or suffer to be created pursuant to the Uniform Commercial Code
any other security interest in said items, including replacements and additions
thereto. Upon Borrower's breach of any covenant or agreement of Borrower
contained in this Deed, including the covenants to pay when due all sums secured
by this Deed, METLIFE shall have the remedies of a secured party under the
Uniform Commercial Code, and METLIFE may also invoke the remedies provided in
Section 26 of this Deed as to such items. In exercising any of said remedies
- ----------
METLIFE may proceed against the items of Property separately or together and in
any order whatsoever, without in any way affecting the availability of METLIFE's
remedies under the Uniform Commercial Code or of the remedies provided in
Section 26 of this Deed. Within ten (10) days following any request therefor by
- ----------
METLIFE, Borrower shall prepare and deliver to METLIFE a written inventory
specifically listing all of the personal property covered by the security
interest herein granted, which inventory shall be certified by Borrower as being
true, correct, and complete.
15. LEASES OF THE PROPERTY. As used in this Section 15, the word
---------------------- ----------
"Lease" shall include subleases if this Deed is on a leasehold. Borrower shall
comply with and observe Borrower's obligations as landlord under all Leases of
the Property or any part thereof. All Leases now or hereafter entered into will
be in form and substance subject to the approval of METLIFE. All Leases of the
Property shall specifically provide that such Leases are subordinate to this
Deed; that the tenant attorns to METLIFE, such attornment to be effective upon
METLIFE's acquisition of title to the Property; that the tenant agrees to
execute such further evidences of attornment as METLIFE may from time to time
request; that the attornment of the tenant shall not be terminated by
foreclosure; and that METLIFE may, at METLIFE's option, accept or reject such
attornments. Borrower shall not, without METLIFE's written consent, request or
consent to the subordination of any Lease of all or any part of the Property to
any lien subordinate to this Deed. If Borrower becomes aware that any tenant
proposes to do, or is doing, any act or thing which may give rise to any right
of set-off against rent, Borrower shall (i) take such steps as shall be
reasonably calculated to prevent the accrual of any right to a set-off against
rent, (ii) immediately
12.
<PAGE>
notify METLIFE thereof in writing and of the amount of said set-offs, and (iii)
within ten (10) days after such accrual, reimburse the tenant who shall have
acquired such right to set-off or take such other steps as shall effectively
discharge such setoff and as shall assure that rents thereafter due shall
continue to be payable without set-off or deduction. Upon METLIFE's receipt of
notice of the occurrence of any default or violation by Borrower of any of its
obligations under the Leases, METLIFE shall have the immediate right, but not
the duty or obligation, without prior written notice to Borrower or to any third
party, to enter upon the Property and to take such actions as METLIFE may deem
necessary to cure the default or violation by Borrower under the Leases. The
costs incurred by METLIFE in taking any such actions pursuant to this paragraph
shall become part of the Indebtedness, shall bear interest at the rate provided
in the Note, and shall be payable by Borrower to METLIFE on demand. METLIFE
shall have no liability to Borrower or to any third party for any actions taken
by METLIFE or not taken pursuant to this paragraph.
16. REMEDIES CUMULATIVE. Each remedy provided in this Deed is distinct
-------------------
and cumulative to all other rights or remedies under this Deed or afforded by
law or equity, and may be exercised concurrently, independently, or
successively, in any order whatsoever.
17. TRANSFERS OF THE PROPERTY OR BENEFICIAL INTERESTS IN BORROWER;
--------------------------------------------------------------
ASSUMPTION. METLIFE may, at its option, declare all sums secured by this Deed
- ----------
to be immediately due and payable, and METLIFE may invoke any remedies permitted
by Section 26 of this Deed, if title to the Property is changed without the
----------
prior written consent of METLIFE, which consent shall be at METLIFE's sole
discretion. Any transfer of any interest in the Property or in the income
therefrom, by sale, lease (except for leases to tenants in the ordinary course
of managing income property which are approved by METLIFE pursuant to Section 15
----------
of this Deed and/or the use and occupation of the Property by ABP Co.),
contract, deed to secure debt, security deed, mortgage, deed of trust, further
encumbrance or otherwise (including any such transfers as security for
additional financing of the Property), and any change in the ownership interests
in Borrower (including any change in the ownership interests of any legal
entities which comprise or control Borrower), except transfers and changes in
ownership by devise or descent, shall be considered a change of title. METLIFE
shall have the right to condition its consent to any proposed sale or transfer
described in this Section 17 upon, among other things, METLIFE's approval of the
----------
transferee's creditworthiness and management ability and the transferee's
execution, prior to the sale or transfer, of a written assumption agreement
containing such terms as METLIFE may require, including, if required by METLIFE,
the imposition of an assumption fee of one percent (1%) of the then outstanding
balance of the Indebtedness, except in the case of a transfer to one of
Borrower's direct or indirect subsidiaries, in which case Borrower will be
liable only for payment of all third-party costs, such as METLIFE's attorneys'
fees and recording costs. In addition to the foregoing, Borrower shall have a
one-time right to transfer the Property to a third party approved by METLIFE
which approval will not be unreasonably withheld, subject to Borrower's payment
of all third-party costs, such as METLIFE's attorneys' fees and recording costs.
Consent by METLIFE to one transfer of the
13.
<PAGE>
Property shall not constitute consent to subsequent transfers or waiver of the
provisions of this Section 17. No transfer by Borrower shall relieve Borrower
----------
of liability for payment of the Indebtedness. METLIFE acknowledges that Graphic
is a publicly-held company and that purchases and sales of its common stock from
time to time on the NASDAQ market and in the ordinary course of business shall
not constitute a transfer of the Property or a change in the ownership interests
in Graphic pursuant to this Section 17. Further, offerings and sales of
----------
additional securities of Graphic, payment of stock dividends, redemptions of
stock, issuance of securities pursuant to stock options, bonus or incentive
plans or other common uses of publicly traded securities shall not be considered
to be changes in the ownership interests in Borrower under this Section 17.
----------
18. NOTICE. Except for any notice required under applicable law to be
------
given in another manner, any and all notices, elections, demands, or requests
permitted or required to be made under this Deed or under the Note shall be in
writing, signed by the party giving such notice, election, demand or request,
and shall be delivered personally, by telegram, or sent by registered,
certified, or Express United States mail, postage prepaid, or by Federal Express
or similar service requiring a receipt, to the other party at the address stated
above, or to such other party and at such other address within the United States
of America as any party may designate in writing as provided herein. The date
of receipt of such notice, election, demand or request shall be the earliest of
(i) the date of actual receipt, (ii) three (3) days after the date of mailing by
registered or certified mail, (iii) one (1) day after the date of mailing by
Express Mail or the delivery (for redelivery) to Federal Express or another
similar service requiring a receipt, or (iv) the date of personal delivery (or
refusal upon presentation for delivery).
19. SUCCESSORS AND ASSIGNS BOUND; JOINT AND SEVERAL LIABILITY; AGENTS;
------------------------------------------------------------------
CAPTIONS. The covenants and agreements herein contained shall bind, and the
- --------
rights hereunder shall inure to, the respective heirs, successors and assigns of
METLIFE and Borrower, subject to the provisions of Section 17 hereof. If
----------
Borrower is comprised of more than one person or entity, whether as individuals,
partners, partnerships or corporations, each such person or entity shall be
jointly and severally liable for Borrower's obligations hereunder. In
exercising any rights hereunder or taking any actions provided for herein,
METLIFE may act through its employees, agents or independent contractors as
authorized by METLIFE. The captions and headings of the sections of this Deed
are for convenience only and are not to be used to interpret or define the
provisions hereof.
20. WAIVER OF STATUTE OF LIMITATIONS. Borrower hereby waives the
--------------------------------
right to assert any statute of limitations as a bar to the enforcement of the
lien of this Deed or to any action brought to enforce the Note or any other
obligation secured by this Deed.
21. WAIVER OF MARSHALLING. Notwithstanding the existence of any other
---------------------
security interests in the Property held by METLIFE or by any other party,
METLIFE shall have the right to determine the order in which any or all of the
Property shall be subjected to the remedies provided herein. METLIFE shall have
the right to determine the order in which any
14.
<PAGE>
or all portions of the Indebtedness secured hereby are satisfied from the
proceeds realized upon the exercise of the remedies provided herein. Borrower,
any party who consents to this Deed and any party who now or hereafter acquires
a security interest in the Property and who has actual or constructive notice
hereof hereby waives any and all right to require the marshalling of assets in
connection with the exercise of any of the remedies permitted by applicable law
or provided herein.
22. HAZARDOUS WASTE. Borrower has furnished to METLIFE a Phase I
---------------
Environmental Assessment dated August 19, 1994, Job No. 13556, Report No. 98615,
prepared by Atlanta Testing & Engineering (the "Engineer"), and related letters
from the Engineer to Borrower dated September 1, 1994, September 6, 1994, and
September 28, 1994, and an Environmental Questionnaire dated December 8, 1994
(collectively, the "Report"). Except as disclosed to METLIFE in the Report,
Borrower has received no notification of any kind suggesting that the Property
or any adjacent property is or may be contaminated with any hazardous waste or
materials or is or may be required to be cleaned up in accordance with any
applicable law or regulation; and Borrower further represents and warrants that,
except as previously disclosed to METLIFE in writing, to the best of its
knowledge as of the date hereof after due and diligent inquiry, there are no
hazardous waste or materials located in, on or under the Property or any
adjacent property, or incorporated in any Improvements, nor has the Property or
any adjacent property ever been used as a landfill or a waste disposal site, or
a manufacturing, handling, storage, distribution or disposal facility for
hazardous waste or materials. As used herein, the term "hazardous waste or
materials" includes any substance or material defined in or designated as
hazardous or toxic wastes, hazardous or toxic material, a hazardous, toxic or
radioactive substance, or other similar term, by any federal, state or local
statute, regulation or ordinance now or hereafter in effect. Borrower shall
promptly comply with all statutes, regulations and ordinances, and with all
orders, decrees or judgments of governmental authorities or courts having
jurisdiction, relating to the use, collection, treatment, disposal, storage,
control, removal or cleanup of hazardous waste or materials in, on or under the
Property or any adjacent property, or incorporated in any Improvements, at
Borrower's expense. In the event that METLIFE at any time believes that the
Property is not free of all hazardous waste or materials or that Borrower has
violated any applicable environmental law with respect to the Property, then
immediately upon request by METLIFE, Borrower shall obtain and furnish to
METLIFE, at Borrower's sole cost and expense, an environmental audit and
inspection of the Property from an expert satisfactory to METLIFE. In the event
that Borrower fails to immediately obtain such audit or inspection, METLIFE or
its agents may perform or obtain such audit or inspection at Borrower's sole
cost and expense. METLIFE may, but is not obligated to, enter upon the Property
and take such actions and incur such costs and expenses to effect such
compliance as it deems advisable to protect its interest in the Property; and
whether or not Borrower has actual knowledge of the existence of hazardous waste
or materials on the Property or any adjacent property as of the date hereof,
Borrower shall reimburse METLIFE as provided in Section 23 below for the full
----------
amount of all costs and expenses incurred by METLIFE prior to METLIFE acquiring
title to the Property through foreclosure or acceptance of a deed in lieu
15.
<PAGE>
of foreclosure, in connection with such compliance activities. Neither this
provision nor any of the other Loan Documents shall operate to put METLIFE in
the position of an owner of the Property prior to any acquisition of the
Property by METLIFE. The rights granted to METLIFE herein and in the other Loan
Documents are granted solely for the protection of METLIFE's lien and security
interest covering the Property, and do not grant to METLIFE the right to control
Borrower's actions, decisions or policies regarding hazardous waste or
materials.
23. ADVANCES, COSTS AND EXPENSES. Borrower shall pay within ten (10)
----------------------------
days after written demand from METLIFE all sums advanced by METLIFE and all
costs and expenses incurred by METLIFE in taking any actions pursuant to the
Loan Documents including attorneys' fees and disbursements, accountants' fees,
appraisal and inspection fees and the costs for title reports and guaranties,
together with interest thereon at the rate applicable under the Note after an
Event of Default from the date such costs were advanced or incurred. All such
costs and expenses incurred by METLIFE, and advances made, shall constitute
advances under this Deed to protect the Property and shall be secured by and
have the same priority as the lien of this Deed. If Borrower fails to pay any
such advances, costs and expenses and interest thereon, METLIFE may apply any
undisbursed loan proceeds to pay the same, and, without foreclosing the lien of
this Deed, may at its option commence an independent action against Borrower for
the recovery of the costs, expenses and/or advances, with interest, together
with costs of suit, costs of title reports and guaranty of title, disbursements
of counsel and reasonable attorneys' fees incurred therein or in any appeal
therefrom.
24. ASSIGNMENT OF LEASES AND RENTS. Borrower, for good and valuable
------------------------------
consideration, the receipt of which is hereby acknowledged, to secure the
Indebtedness, does hereby absolutely and unconditionally grant, bargain, sell,
transfer, assign, convey, set over and deliver unto METLIFE all right, title and
interest of Borrower in, to and under the Leases of the Property, whether now in
existence or hereafter entered into, and all guaranties, amendments, extensions
and renewals of said Leases and any of them, and all rents, income and profits
which may now or hereafter be or become due or owing under the Leases, and any
of them, or on account of the use of the Property.
Borrower represents, warrants, covenants and agrees with METLIFE as
follows:
(a) The sole ownership of the entire lessor's interest in the Leases is
vested in Borrower, and Borrower has not, and shall not, perform any acts or
execute any other instruments which might prevent METLIFE from fully exercising
its rights with respect to the Leases under any of the terms, covenants and
conditions of this Deed.
(b) The Leases are and shall be valid and enforceable in accordance
with their terms and have not been and shall not be altered, modified, amended,
terminated, canceled, renewed or surrendered except as approved in writing by
METLIFE. The terms and conditions of the Leases have not been and shall not be
waived in any manner whatsoever except as approved in writing by METLIFE.
16.
<PAGE>
(c) Borrower shall not materially alter the term or the amount of rent
payable under any Lease without prior written notice to METLIFE and METLIFE's
consent, which shall not be unreasonably withheld.
(d) To the best of Borrower's knowledge, there are no defaults now
existing under any of the Leases and there exists no state of facts which, with
the giving of notice or lapse of time or both, would constitute a default under
any of the Leases.
(e) Borrower shall give prompt written notice to METLIFE of any notice
received by Borrower claiming that a default has occurred under any of the
Leases on the part of Borrower, together with a complete copy of any such
notice.
(f) Each of the Leases shall remain in full force and effect
irrespective of any merger of the interest of lessor and any lessee under any of
the leases.
(g) Borrower will not permit any Lease to become subordinate to any lien
other than the lien of this Deed.
This assignment is absolute, is effective immediately, and is
irrevocable by Borrower so long as the Indebtedness remains outstanding.
Notwithstanding the foregoing, until a Notice is sent to Borrower in writing
that an Event of Default has occurred (which notice is hereafter called a
"Notice"), Borrower may receive, collect and enjoy the rents, income and profits
accruing from the Property.
Upon the occurrence of an Event of Default hereunder, METLIFE may, at
its option, after service of a Notice, receive and collect all such rents,
income and profits from the Property as they become due. METLIFE shall
thereafter continue to receive and collect all such rents, income and profits,
as long as such default or defaults shall exist, and during the pendency of any
foreclosure proceedings.
Borrower hereby irrevocably appoints METLIFE its true and lawful
attorney with power of substitution and with full power for METLIFE in its own
name and capacity or in the name and capacity of Borrower, from and after
service of a Notice, to demand, collect, receive and give complete acquittances
for any and all rents, income and profits accruing from the Property, either in
its own name or in the name of Borrower or otherwise, which METLIFE may deem
necessary or desirable in order to collect and enforce the payment of the rents,
income and profits of and from the Property. Lessees of the Property are hereby
expressly authorized and directed, following receipt of a Notice from METLIFE,
to pay any and all amounts due Borrower pursuant to the Leases to METLIFE or
such nominee as METLIFE may designate in a writing delivered to and received by
such lessees, and the lessees of the Property are expressly relieved of any and
all duty, liability or obligation to Borrower in respect of all payments so
made.
Upon the occurrence of any Event of Default, from and after service of a
Notice, METLIFE is hereby vested with full power to use all measures, legal and
equitable, deemed by it to be necessary or proper to
17.
<PAGE>
enforce this Section 24 and to collect the rents, income and profits assigned
----------
hereunder, including the right of METLIFE or its designee, to enter upon the
Property, or any part thereof, and take possession of all or any part of the
Property together with all personal property, fixtures, documents, books,
records, papers and accounts of Borrower relating thereto, and METLIFE may
exclude Borrower, its agents and servants, wholly therefrom. Borrower hereby
grants full power and authority to METLIFE to exercise all rights, privileges
and powers herein granted at any and all times after service of a Notice, with
full power to use and apply all of the rents and other income herein assigned to
the payment of the costs of managing and operating the Property and of any
indebtedness or liability of Borrower to METLIFE, including but not limited to
the payment of taxes, special assessments, insurance premiums, damage claims,
the costs of maintaining, repairing, rebuilding and restoring the improvements
on the Property or of making the same rentable, reasonable attorneys' fees
incurred in connection with the enforcement of this Deed, and of principal and
interest payments due from Borrower to METLIFE on the Note and this Deed, all in
such order as METLIFE may determine. METLIFE shall be under no obligation to
exercise or prosecute any of the rights or claims assigned to it hereunder or to
perform or carry out any of the obligations of the lessor under any of the
Leases and does not assume any of the liabilities in connection with or arising
or growing out of the covenants and agreements of Borrower in the Leases. It is
further understood that the assignment set forth in this Section 24 shall not
----------
operate to place responsibility for the control, care, management or repair of
the Property, or parts thereof, upon METLIFE, nor shall it operate to make
METLIFE liable for the performance of any of the terms and conditions of any of
the Leases, or for any waste of the Property by any lessee under any of the
Leases, or any other person, or for any dangerous or defective condition of the
Property or for any negligence in the management, upkeep, repair or control of
the Property resulting in loss or injury or death to any lessee, licensee,
employee or stranger.
25. DEFAULT. The following shall each constitute an event of default
-------
("Event of Default"):
(a) Failure of or refusal by Borrower to pay any portion of the sums
secured by this Deed when due, and such failure or refusal shall continue for a
period of ten (10) days after written notice is given to Borrower by METLIFE
specifying such failure; or
(b) Failure of Borrower within the time required by this Deed to make
any payment for taxes, insurance or for reserves for such payments, or any other
payment necessary to prevent filing of or discharge of any lien, and such
failure shall continue for a period of ten (10) days after written notice is
given to Borrower by METLIFE specifying such failure; or
(c) Failure by Borrower to observe or perform any obligations of
Borrower to METLIFE on or with respect to any transactions, debts, undertakings
or agreements other than the transaction evidenced by the Note following the
giving of any required notice and the expiration of any applicable period of
grace; or
18.
<PAGE>
(d) Failure of Borrower to make any payment or perform any obligation
under any superior liens or encumbrances on the Property, within the time
required thereunder, or commencement of any suit or other action to foreclose
any superior liens or encumbrances; or
(e) Failure by Borrower to observe or perform any of its obligations
under any of the Leases following the giving of any required notice and the
expiration of any applicable cure period; or
(f) The Property is transferred or any agreement to transfer any part
or interest in the Property in any manner whatsoever is made or entered into
without the prior written consent of METLIFE, except as specifically allowed
under this Deed, including without limitation creating or allowing any liens on
the Property or leasing any portion of the Property; or
(g) Filing by Borrower or ABP Co. of a voluntary petition in bankruptcy
or filing by Borrower or ABP Co. of any petition or answer seeking or
acquiescing in any reorganization, arrangement, composition, readjustment,
liquidation, or similar relief for itself under any present or future federal,
state or other statute, law or regulation relating to bankruptcy, insolvency or
other relief for debtors, or the seeking, consenting to, or acquiescing by
Borrower or ABP Co. in the appointment of any trustee, receiver, custodian,
conservator or liquidator for Borrower or ABP Co., any part of the Property, or
any of the income or rents of the Property, or the making by Borrower or ABP Co.
of any general assignment for the benefit of creditors, or the inability of or
failure by Borrower or ABP Co. to pay its debts generally as they become due, or
the insolvency on a balance sheet basis or business failure of Borrower or ABP
Co., or the making or suffering of a preference within the meaning of federal
bankruptcy law or the making of a fraudulent transfer under applicable federal
or state law, or concealment by Borrower or ABP Co. of any of its property in
fraud of creditors, or the imposition of a lien upon any of the property of
Borrower or ABP Co. which is not discharged in the manner permitted by Section 4
---------
of this Deed, or the giving of notice by Borrower or ABP Co. to any governmental
body of insolvency or suspension of operations; or
(h) Filing of a petition against Borrower or ABP Co. seeking any
reorganization, arrangement, composition, readjustment, liquidation, or similar
relief under any present or future federal, state or other law or regulation
relating to bankruptcy, insolvency or other relief for debts, or the appointment
of any trustee, receiver, custodian, conservator or liquidator of Borrower or
ABP Co., of any part of the Property or of any of the income or rents of the
Property, unless such petition shall be dismissed within sixty (60) days after
such filing, but in any event prior to the entry of an order, judgment or decree
approving such petition; or
(i) The institution of any proceeding for the dissolution or termination
of Borrower voluntarily, involuntarily, or by operation of law; or
19.
<PAGE>
(j) A material adverse change occurs in the assets, liabilities or net
worth of Borrower or any of the guarantors of the indebtedness evidenced by the
Note from the assets, liabilities or net worth of Borrower or any of the
guarantors of the indebtedness evidenced by the Note previously disclosed to
METLIFE; or
(k) Any warranty, representation or statement furnished to METLIFE by
or on behalf of Borrower under the Note, this Deed, any of the other Loan
Documents or the Certificate and Indemnity Agreement Regarding Hazardous
Substances, shall prove to have been false or misleading in any material
respect; or
(l) Failure of Borrower to observe or perform any other covenant or
condition contained in the Note and such default shall continue for thirty (30)
days after notice is given to Borrower specifying the nature of the failure. No
notice of default and no opportunity to cure shall be required if during the
prior twelve (12) months METLIFE has already sent a notice to Borrower
concerning default in performance of the same obligation; or
(m) Failure of Borrower to observe or perform any other obligation
under this Deed, any other Loan Document or the Certificate and Indemnity
Regarding Hazardous Substances when such observance or performance is due, and
such failure shall continue beyond the applicable cure period set forth in such
Loan Document, or if the default cannot be cured within such applicable cure
period, Borrower fails within such time to commence and pursue curative action
with reasonable diligence or fails at any time after expiration of such
applicable cure period to continue with reasonable diligence all necessary
curative actions. No notice of default and no opportunity to cure shall be
required if during the prior twelve (12) months METLIFE has already sent a
notice to Borrower concerning default in performance of the same obligation; or
(n) Borrower's abandonment of the Property; or
(o) Any of the foregoing events occur with respect to any guarantor of
any of Borrower's obligations in connection with the Indebtedness, or such
guarantor dies or becomes incompetent; or
(p) The occurrence of any default under any of the documents evidencing
or securing (i) METLIFE Loan No. 5905292, (ii) METLIFE Loan No. 5905392, (iii)
METLIFE Loan No. 5905393, (iv) METLIFE Loan No. 5904594 or (v) any other
indebtedness with Borrower or any of the guarantors of the Indebtedness which is
now or hereafter owed to METLIFE.
26. RIGHTS AND REMEDIES ON DEFAULT.
------------------------------
(a) Remedies. Upon the occurrence of any Event of Default and at any
--------
time thereafter, METLIFE may exercise any one or more of the following rights
and remedies:
(1) METLIFE may declare all sums secured by this Deed immediately due
and payable, including any prepayment premium which Borrower would be required
to pay.
20.
<PAGE>
(2) METLIFE shall have the right to foreclose this Deed in accordance
with applicable law.
(3) In the event of any foreclosure, to the extent permitted by
applicable law, METLIFE will be entitled to a judgment which will provide that
if the foreclosure sale proceeds are insufficient to satisfy the judgment,
execution may issue for any amount by which the unpaid balance of the
obligations secured by this Deed exceeds the net sale proceeds payable to
METLIFE.
(4) With respect to all or any part of the Property that constitutes
personalty, METLIFE shall have all rights and remedies of secured party under
the Uniform Commercial Code.
(5) METLIFE shall have the right to have a receiver appointed to take
possession of any or all of the Property, with the power to protect and preserve
the Property, to operate the Property preceding foreclosure or sale, to collect
all the rents and revenues from the Property and apply the proceeds, over and
above cost of the receivership, against the sums due under this Deed, and to
exercise all of the rights with respect to the Property described in Section 24
----------
above. The receiver may serve without bond if permitted by law. METLIFE's
right to the appointment of a receiver shall exist whether or not apparent value
of the Property exceeds the sums due under this Deed by a substantial amount.
Employment by METLIFE shall not disqualify a person from serving as a receiver.
(6) In the event Borrower remains in possession of the Property after
the Property is sold as provided above or METLIFE otherwise becomes entitled to
possession of the Property upon default of Borrower, Borrower shall become a
tenant at will of METLIFE or the purchaser of the Property and shall pay a
reasonable rental for use of the Property while in Borrower's possession.
(7) METLIFE shall have any other right or remedy provided in this Deed,
the Note, or any other Loan Document or deed delivered by Borrower in connection
therewith, or available at law, in equity or otherwise.
(8) METLIFE shall have all the rights and remedies set forth in
Sections 23 and 24.
- ------------------
(b) Sale of the Property. If any Event of Default shall occur
--------------------
hereunder, METLIFE may enter and take possession of the Property, or any portion
thereof, and before or after such entry advertise the sale of the Property, or
any portion thereof, once each week for the four (4) weeks immediately preceding
the sale in the newspaper in which sheriff's advertisements are published in the
county where the real property, or the greatest portion thereof, is located,
giving notice of the time, place, and terms of the sale, and thereafter shall
sell the Property or any part of the Property at public sale or sales at public
outcry at the door of the Superior Courthouse for said county to the highest and
best bidder for cash, in order to pay the Indebtedness and accrued interest
thereon. METLIFE may bid and purchase at such sale. The aforesaid power
21.
<PAGE>
of sale is granted in addition to the other remedies provided by law for
collection of the Indebtedness and shall not be exhausted by one exercise
thereof but may be exercised until METLIFE has received full payment of the
Indebtedness.
If at the time of the sale METLIFE shall deem it best for any reason to
postpone or continue said sale for one or more days, METLIFE may do so, in which
event notice of such postponement or continuance shall be made in such manner as
the METLIFE may deem sufficient under the laws of the State of Georgia. At any
such public sale, METLIFE may execute and deliver to the purchaser a conveyance
of the Property or any part of the Property in fee simple with full warranty
and, to this end, Borrower hereby constitutes and appoints METLIFE as the agent
and attorney-in-fact of Borrower to make such sale and conveyance, and thereby
to divest Borrower of all right, title or equity that Borrower may have in and
to the Property and to vest the same in the purchaser or purchasers at such sale
or sales. Said appointment is coupled with an interest and shall be irrevocable.
Any recitals contained in the conveyance as to the happening of the default, and
such recitals shall be presumptive evidence that all preliminary acts
prerequisite to said sale and deed were in all things duly complied with, and
said recitals shall be conclusive against Borrower.
(c) Application of the Proceeds of Sale. Upon any public sale pursuant
-----------------------------------
to the aforementioned power of sale and agency, the proceeds of said sale shall
be applied as provided by law. In the event that such proceeds are insufficient
to pay all costs and expenses of sale, METLIFE may advance such sums as it in
its sole and absolute discretion shall determine for the purpose of paying all
or any part of such costs and expenses, and all such sums shall be a part of the
Indebtedness, payable on demand with interest at the rate provided in the Note
as applicable upon default. Borrower shall remain l iable for any deficiency
resulting if the proceeds of sale are inadequate to repay the Indebtedness.
(d) Notice of Sale. METLIFE shall give Borrower reasonable notice of
--------------
the time and place of any public sale of any personal property or of the time
after which any private sale or other intended disposition of the personal
property is to be made. Reasonable notice shall mean notice given in accordance
with applicable law, including notices given in the manner and at the times
required for notices in a nonjudicial foreclosure.
(e) Waiver; Election of Remedies. A waiver by either party of a breach
----------------------------
of a provision of this Deed shall not constitute a waiver of or prejudice the
party's right otherwise to demand strict compliance with that provision or any
other provision. Election by METLIFE to pursue any remedy shall not exclude
pursuit of any other remedy, and all remedies of METLIFE under this Deed are
cumulative and not exclusive. An election to make expenditures or take action
to perform an obligation of Borrower shall not affect METLIFE's right to declare
a default and exercise its remedies under this Deed.
22.
<PAGE>
27. SATISFACTION OF MORTGAGE. Upon payment of all sums secured by this
------------------------
Deed, METLIFE shall execute a satisfaction of this Deed and shall surrender this
Deed and all notes evidencing Indebtedness secured by this Deed to the person or
persons legally entitled thereto. Such person or persons shall pay METLIFE's
costs incurred in connection with satisfaction of this Deed.
28. FUTURE ADVANCES. Upon request of Borrower, METLIFE, at METLIFE's
---------------
option so long as this Deed secures Indebtedness held by METLIFE, may make
Future Advances to Borrower. Such Future Advances, with interest thereon, shall
be secured by this Deed when evidenced by promissory notes stating that said
notes are secured hereby.
29. IMPOSITION OF TAX BY STATE.
--------------------------
(a) State Taxes Covered. The following constitute state taxes to which
-------------------
this Section applies:
(1) A specific tax upon mortgages or upon all or any part of the
indebtedness secured by a mortgage.
(2) A specific tax on a grantor which the taxpayer is authorized or
required to deduct from payments on the indebtedness secured by a mortgage.
(3) A tax on a mortgage chargeable against the grantee or the holder of
the note secured.
(4) A specific tax on all or any portion of the indebtedness or on
payments of principal and interest made by a grantor.
(b) Remedies. If any state tax to which this Section applies is enacted
--------
subsequent to the date of this Deed, this shall have the same effect as an Event
of Default, and METLIFE may exercise any or all of the remedies available to it
unless the following conditions are met:
(1) Borrower may lawfully pay the tax or charge imposed by state tax,
and
(2) Borrower pays the tax or charge within thirty (30) days after notice
from METLIFE that the tax law has been enacted.
30. ATTORNEYS' FEES. In the event suit or action is instituted to
---------------
enforce or interpret any of the terms of this Deed (including without limitation
efforts to modify or vacate any automatic stay or injunction), the prevailing
party shall be entitled to recover all expenses reasonably incurred at, before
and after trial and on appeal whether or not taxable as costs, or in any
bankruptcy proceeding including, without limitation, attorneys' fees, witness
fees (expert and otherwise), deposition costs, copying charges and other
expenses. Whether or not any court action is involved, all reasonable expenses,
including but not limited to the costs of searching records, obtaining title
reports, surveyor reports, and title insurance, incurred by METLIFE
23.
<PAGE>
that are necessary at any time in METLIFE's opinion for the protection of its
interest or enforcement of its rights shall become a part of the Indebtedness
payable on demand and shall bear interest from the date of expenditure until
repaid at the interest rate as provided in the Note. The term "attorneys' fees"
as used in the Loan Documents shall be deemed to mean such fees as are
reasonable and are actually incurred.
31. GOVERNING LAW; SEVERABILITY. This Deed shall be governed by the law
---------------------------
of the State of Georgia applicable to contracts made and to be performed therein
(excluding choice-of-law principles). In the event that any provision or clause
of this Deed or the Note conflicts with applicable law, such conflict shall not
affect other provisions of this Deed or the Note which can be given effect
without the conflicting provision, and to this end the provisions of this Deed
and the Note are declared to be severable.
32. TIME OF ESSENCE. Time is of the essence of this Deed.
---------------
33. CHANGES IN WRITING. This Deed and any of its terms may only be
------------------
changed, waived, discharged or terminated by an deed in writing signed by the
party against which enforcement of the change, waiver, discharge or termination
is sought. Any agreement subsequently made by Borrower or METLIFE relating to
this Deed shall be superior to the rights of the holder of any intervening lien
or encumbrance.
34. NO OFFSET. Borrower's obligation to make payments and perform all
---------
obligations, covenants and warranties under this Deed and under the Note shall
be absolute and unconditional and shall not be affected by any circumstance,
including without limitation any setoff, counterclaim, abatement, suspension,
recoupment, deduction, defense or other right that Borrower or any guarantor may
have or claim against METLIFE or any entity participating in making the loan
secured hereby. The foregoing provisions of this section, however, do not
constitute a waiver of any claim or demand which Borrower or any guarantor may
have in damages or otherwise against METLIFE or any other person, or preclude
Borrower from maintaining a separate action thereon; provided, however, that
Borrower waives any right it may have at law or in equity to consolidate such
separate action with any action or proceeding brought by METLIFE.
35. AUTHORIZATION TO INSERT. [INTENTIONALLY DELETED.]
-----------------------
36. MAXIMUM INTEREST CHARGES. Notwithstanding anything contained
------------------------
herein or in any of the Loan Documents to the contrary, in no event shall
METLIFE be entitled to receive interest on the loan secured by this Deed (the
"Loan") in amounts which, when added to all of the other interest charged, paid
to or received by METLIFE on the Loan, causes the rate of interest on the Loan
to exceed the highest lawful rate. Borrower and METLIFE intend to comply with
the applicable law governing the highest lawful rate and the maximum amount of
interest payable on or in connection with the Loan. If the applicable law is
ever judicially interpreted so as to render usurious any amount called for under
the Loan Documents, or contracted for, charged, taken, reserved or received with
respect to the Loan, or if acceleration of the final
24.
<PAGE>
maturity date of the Loan or if any prepayment by Borrower results in Borrower
having paid or demand having been made on Borrower to pay, any interest in
excess of the amount permitted by applicable law, then all excess amounts
theretofore collected by METLIFE shall be credited on the principal balance of
the Note (or, if the Note has been or would thereby be paid in full, such excess
amounts shall be refunded to Borrower), and the provisions of the Note, this
Deed and any demand on Borrower shall immediately be deemed reformed and the
amounts thereafter collectible thereunder and hereunder shall be reduced,
without the necessity of the execution of any new document, so as to comply with
the applicable law, but so as to permit the recovery of the fullest amount
otherwise called for thereunder and hereunder. The right to accelerate the final
maturity date of the Loan does not include the right to accelerate any interest
which has not otherwise accrued on the date of such acceleration, and METLIFE
does not intend to collect any unearned interest in the event of acceleration.
All sums paid or agreed to be paid to METLIFE for the use, forbearance or
detention of the Loan shall, to the extent permitted by applicable law, be
amortized, prorated, allocated and spread through the full term of the Loan
until payment in full so that the rate or amount of interest on account of the
Loan does not exceed the applicable usury ceiling. By execution of this Deed,
Borrower acknowledges that it believes the Loan to be nonusurious and agrees
that if, at any time, Borrower should have reason to believe that the Loan is in
fact usurious, it will give METLIFE written notice of its belief and the reasons
why Borrower believes the Loan to be usurious, and Borrower agrees that METLIFE
shall have ninety (90) days following its receipt of such written notice in
which to make appropriate refund or other adjustment in order to correct such
condition if it in fact exists.
IMPORTANT: READ BEFORE SIGNING. THE TERMS OF THIS AGREEMENT SHOULD
BE READ CAREFULLY BECAUSE ONLY THOSE TERMS IN WRITING ARE ENFORCEABLE. NO
OTHER TERMS OR ORAL PROMISES NOT CONTAINED IN THIS WRITTEN CONTRACT MAY BE
LEGALLY ENFORCED. YOU MAY CHANGE THE TERMS OF THIS AGREEMENT ONLY BY
ANOTHER WRITTEN AGREEMENT.
BY EXECUTION OF THIS DEED, BORROWER EXPRESSLY: ACKNOWLEDGES THE RIGHT
TO ACCELERATE THE INDEBTEDNESS EVIDENCED BY THE NOTE AND THE POWER GIVEN
HEREIN TO METLIFE TO SELL THE PROPERTY BY NONJUDICIAL FORECLOSURE UPON
DEFAULT BY BORROWER WITHOUT ANY JUDICIAL HEARING AND WITHOUT ANY NOTICE
OTHER THAN SUCH NOTICE AS IS SPECIFICALLY REQUIRED TO BE GIVEN UNDER THE
NOTE OR PROVISIONS OF THIS DEED OR BY LAW; ACKNOWLEDGES THAT THE
UNDERSIGNED HAS READ THIS DEED AND THAT ANY AND ALL QUESTIONS REGARDING THE
LEGAL EFFECT OF THIS DEED AND ITS PROVISIONS HAVE BEEN EXPLAINED FULLY TO
BORROWER. BORROWER HAS CONSULTED WITH ITS COUNSEL PRIOR TO EXECUTING THIS
DEED AND ACKNOWLEDGES THAT ALL WAIVERS OF THE AFORESAID RIGHTS OF BORROWER
HAVE BEEN MADE KNOWINGLY, INTENTIONALLY AND WILLINGLY BY THE UNDERSIGNED,
ON BEHALF OF BORROWER, AS PART OF A BARGAINED-FOR LOAN TRANSACTION AND THAT
THIS DEED IS VALID AND ENFORCEABLE BY METLIFE AGAINST BORROWER IN
ACCORDANCE WITH ALL THE TERMS AND CONDITIONS HEREOF.
25.
<PAGE>
IN WITNESS WHEREOF, Borrower has executed this Deed or has caused the
same to be executed by its representatives thereunto duly authorized.
BORROWER:
GRAPHIC INDUSTRIES, INC.,
a Georgia corporation
By:/s/ Mark C. Pope III
-----------------------------------------
Mark C. Pope, III, Chairman & CEO
Attest:/s/ Donald P. Hunnicutt
-------------------------------------
Donald P. Hunnicutt, Secretary
[seal]
Signed, sealed, delivered, and notarized
this 28th day of December 1994 in the
----
presence of:
/s/ Dorothy J. Atkins
- ----------------------------------------
Signature of Unofficial Witness
/s/ Barbara Blindre
- ----------------------------------------
Signature of Notary Public
[Seal]
My commission expires: Notary Public, Fulton County, Georgia
My Commission Expires May 6, 1998
-------------------------------------
Exhibits:
- --------
Exhibit A - Description of Property
Schedule 1 - Description of Debtor and Secured Party
Schedule 2 - Permitted Exceptions
26.
<PAGE>
SCHEDULE 1
----------
Loan No. 2221594-002
Part 1
------
Description of "Debtor" and "Secured Party"
- -------------------------------------------
A. Debtor:
------
1. Name and Identity or Corporate Structure: Graphic Industries, Inc.
2. Debtor has been using or operating under such name and identity or corporate
structure, without change, since: March 7, 1970.
3. The principal place of business and chief executive office of Debtor are
located at:
2155 Monroe Drive, N.E.
Atlanta, Georgia 30324
Attention: Mark C. Pope, IV, President
B. Secured Party: MetLife Capital Financial Corporation, a Delaware
--------------
corporation.
********************************************************************************
Part 2
------
(Notice Mailing Addresses of "Debtor" and "Secured Party")
A. The mailing address of Debtor is:
2155 Monroe Drive, N.E.
Atlanta, Georgia 30324
Attention: Mark C. Pope, IV, President
B. The mailing address of Secured Party is:
MetLife Capital Financial Corporation
Real Estate Department
10900 N.E. 4th Street, Suite 500
Bellevue, Washington 98004
<PAGE>
Exhibit 11
Graphic Industries, Inc.
Computation of Earnings Per Share
<TABLE>
<CAPTION>
YEAR ENDED JANUARY 31
----------------------------------------------
1995 1994 1993
----------------------------------------------
<S> <C> <C> <C>
COMPUTATION FOR STATEMENT OF
INCOME
Weighted average common shares
outstanding (1) 10,556,833 10,031,893 9,752,295
==============================================
Net income $ 8,405,734 $ 6,500,470 $3,718,889
==============================================
Net income per common share $ .80 $ .65 $ .38
==============================================
</TABLE>
1
<PAGE>
Exhibit 11
Graphic Industries, Inc.
Computation of Earnings Per Share (continued)
<TABLE>
<CAPTION>
YEAR ENDED JANUARY 31
----------------------------------------------
1995 1994 1993
----------------------------------------------
<S> <C> <C> <C>
ADDITIONAL PRIMARY COMPUTATION
(2)
Additional adjustment to weighted
average number of shares
outstanding:
Weighted average number of
shares outstanding, per
primary computation above 10,556,833 10,031,893 9,752,295
Add dilutive effect of
outstanding options (as
determined by the application
of the treasury stock method)
(3) 78,425 94,745 --
----------------------------------------------
Weighted average number of
shares outstanding, as
adjusted 10,635,258 10,126,638 9,752,295
==============================================
Net income per common share, as
adjusted $ .79 $ .64 $ .38
==============================================
</TABLE>
2
<PAGE>
Exhibit 11
Graphic Industries, Inc.
Computation of Earnings Per Share (continued)
<TABLE>
<CAPTION>
YEAR ENDED JANUARY 31
------------------------------------------------
1995 1994 1993
------------------------------------------------
<S> <C> <C> <C>
COMPUTATION FOR STATEMENT OF
INCOME
Fully diluted computation:
Net income $8,405,734 $6,500,470 $3,718,889
Add interest on 7% convertible
subordinated debentures (4) 897,791 902,156 902,156
------------------------------------------------
$9,303,525 $7,402,626 $4,621,045
================================================
Weighted average number of
shares outstanding 10,556,833 10,031,893 9,752,295
Add common shares applicable to
assumed conversion of 7%
convertible subordinated
debentures 1,279,200 1,279,200 1,279,200
------------------------------------------------
Weighted average number of
shares outstanding, as adjusted
(5) 11,836,033 11,405,838 11,031,495
================================================
Fully diluted net income per
common share (6) $ .79 $ .65 $ .38
================================================
</TABLE>
3
<PAGE>
Exhibit 11
Graphic Industries, Inc.
Computation of Earnings Per Share (continued)
(1) No significant dilutive common stock equivalents were outstanding in any
year.
(2) This calculation is submitted in accordance with Regulation S-K Item
601(b)(11) although not required by footnote 2 to paragraph 14 of APB
Opinion No. 15 because it results in dilution of less than 3%.
(3) The effect of outstanding options is antidilutive or would not materially
dilute net income per share for 1993 and, therefore, is not included in the
primary earnings per share calculation.
(4) Net of income tax effect.
(5) The effect of outstanding options and convertible subordinated debentures
for 1994 and 1993 is antidilutive or would not materially dilute net income
per share.
(6) Fully diluted earnings per share for 1994 and 1993, as computed, were not
dilutive and, therefore, equal primary earnings per share.
4
<PAGE>
GRAPHIC INDUSTRIES, INC. EXHIBIT 13
1995 Annual Report
- ---------------------------------------------------
[ARTWORK APPEARS HERE]
[LOGO OF GRAPHIC INDUSTRIES, INC. APPEARS HERE]
<PAGE>
FINANCIAL SUMMARY
<TABLE>
<CAPTION>
Year Ended January 31
----------------------------------
In millions except per share data 1995 1994 1993
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
Net sales $348.1 $335.5 $316.9
Net income 8.4 6.5 3.7
Net income per common share .80 .65 .38
Shareholders' equity $ 74.9 $ 66.4 $ 58.3
------- ------- -------
</TABLE>
NET SALES
(In Millions)
[BAR GRAPH APPEARS HERE]
NET INCOME
(In Millions)
[BAR GRAPH APPEARS HERE]
SHAREHOLDERS' EQUITY
(In Millions)
[BAR GRAPH APPEARS HERE]
<PAGE>
CONTENTS
1 Corporate Profile
------------------------------------------------------
2 Letter to Shareholders
------------------------------------------------------
4 10-Year Comparative Summary of Operations
------------------------------------------------------
6 10-Year Comparative Consolidated Balance Sheets
------------------------------------------------------
Leading in Technology 8
- --------------------------------
[ARTWORK The image on page eight
APPEARS was created with a high
HERE] resolution line screen
and is printed using a
waterless process
Leading by Networking 10
- --------------------------------
[ARTWORK The image on page eleven was created
APPEARS utilizing sophisticated digital image
HERE] manipulation software and is printed
using a waterless process
Commitment to Quality 12
- --------------------------------
[ARTWORK The image on page twelve was created
APPEARS with geometric line screens and is
HERE] printed using a waterless process
14 The Final Product
------------------------------------------------------
16 The Graphic Network
------------------------------------------------------
17 Financial Table of Contents
------------------------------------------------------
Graphic Industries, Inc. is a diversified, full-service graphics
communications company, providing corporate, commercial and financial
printing, direct response, reprographic and educational printing services.
Subsidiaries include 16 commercial printing companies and a reprographics
division with 13 locations serving major markets throughout the United States.
Products and services of Graphic are marketed through a direct sales
force, and the Company ranked 17th in sales among commercial printing
companies in fiscal year 1994.
1
<PAGE>
"Graphic Industries, Inc. increased earnings substantially for the third
consecutive year in fiscal 1995 as revenues advanced to a record level."
[PHOTO APPEARS HERE]
Left Mark C. Pope III
Chairman and Chief Executive Officer
---------------------------------------------
Right Mark C. Pope IV
President and Chief Operating Officer
"Net income gained 29% to $8.4 million compared with
$6.5 million for the preceding year."
<PAGE>
LETTER TO SHAREHOLDERS
Graphic Industries, Inc. increased earnings substantially for the third
consecutive year in fiscal 1995 as revenues advanced to a record level. The
Company strengthened its position for future growth through operations-wide
improvements in efficiency, productivity, and networking.
Revenues reached $348.1 million compared to $335.5 million the previous
year, a gain of 3.8%. Excluding the operations which were closed in fiscal year
1994, as previously announced, and Southern Signatures, Inc., which was acquired
in fiscal 1995, revenues increased by a healthy 7.4%. Net income gained 29% to
$8.4 million compared with $6.5 million for the preceding year. Earnings per
share rose to $.80 against $.65 for fiscal 1994.
Strong improvements in profit margins were achieved as the result of
efficiencies in operations and our inter-company and external networking
advantages, including the ability to attain increased utilization of our
equipment and technology. Also contributing to our performance were significant
economies of scale, volume purchasing programs, and the strong economy.
Major investments were made in strategic equipment during the year,
including full-size web presses installed at our companies in Houston, Boston
and Atlanta. We anticipate a positive impact on the Company's performance for
fiscal 1996 as a result of the expanded production capacity and the opening of
new market opportunities for these companies. Graphic invested approximately $22
million in property, plant and equipment last year. Over the past five years,
our capital expenditures have exceeded $74 million, demonstrating our long-
standing commitment to stay on the leading edge of technology.
Technology drives our industry, creating a threat to business as usual, but
opening profitable new opportunities for those companies with the vision,
skilled people and technological leadership required for success. This is
seldom, if ever, an overnight accomplishment; rather, it is an ongoing process
that demands the commitment of capital and people over the longer term before
the rewards can be realized. This approach fits with our commitment not to
sacrifice long-term growth for the sake of short-term gains.
Exemplifying the type of technology required in today's marketplace is our
subsidiary, Integrated Graphic Services (IGS), formed last year to provide
electronic page assembly through high-speed, digital data transmission via
telecommunications.
Graphic entered into another major strategic partnership in the past year.
Under this agreement, we are supplying all the printing needs of the Atlanta-
based American Cancer Society. This provides a model for future partnerships
with other organizations and corporations.
In the past year, the Company continued an active program of external
growth. We acquired Southern Signatures, Inc., a privately held commercial
printing company in Atlanta, a leader in its market niche of short-run length,
sheet-fed printing. The acquisition was for stock and was anti-dilutive to
Graphic shareholders, a pattern we expect to repeat in future acquisitions.
We anticipate continuing strong growth. With the commitment and skills of
our Associates throughout the Graphic network of companies, we believe this will
be another good year.
Thank you for your interest and support of Graphic Industries.
Sincerely,
/s/ Mark C. Pope III
Mark C. Pope III
Chairman and Chief Executive Officer
/s/ Mark C. Pope IV
Mark C. Pope IV
President and Chief Operating Officer
April 18, 1995
3
<PAGE>
10-YEAR COMPARATIVE SUMMARY OF OPERATIONS
<TABLE>
<CAPTION>
Fiscal Years Ended January 31
--------------------------------------------------------------------
1995 1994 1993 1992/(1)/
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Net sales 348,130,390 335,467,743 316,880,544 310,736,371
Cost of sales 263,485,570 257,549,959 243,109,921 237,401,855
----------- ----------- ----------- -----------
Gross profit 84,644,820 77,917,784 73,770,623 73,334,516
Selling, general and administrative expenses 63,040,317 61,260,267 59,961,199 62,765,635
----------- ----------- ----------- -----------
Operating profit 21,604,503 16,657,517 13,809,424 10,568,881
Other income 1,716,054 2,469,351 2,454,356 1,996,729
----------- ----------- ----------- -----------
23,320,557 19,126,868 16,263,780 12,565,610
Interest expense 9,539,823 8,426,398 9,103,891 11,588,838
----------- ----------- ----------- -----------
Income before taxes, extraordinary item
and cumulative effect of change in
accounting principle 13,780,734 10,700,470 7,159,889 976,772
Income taxes 5,375,000 4,200,000 3,441,000 911,000
----------- ----------- ----------- -----------
Income before extraordinary item and
cumulative effect of change in
accounting principle 8,405,734 6,500,470 3,718,889 65,772
Extraordinary item/(7)/ - - - -
Cumulative effect of change in
accounting principle/(8)/ - - - -
----------- ----------- ----------- -----------
Net income 8,405,734 6,500,470 3,718,889 65,772
=========== =========== =========== ===========
Primary earnings per share/(9)/:
Income before extraordinary item and
cumulative effect of change in
accounting principle .80 .65 .38 .01
Extraordinary item/(7)/ - - - -
Cumulative effect of change in
accounting principle/(8)/ - - - -
=========== =========== =========== ===========
Net income .80 .65 .38 .01
=========== =========== =========== ===========
Average outstanding shares/(9)/ 10,556,833 10,031,893 9,752,295 9,728,685
=========== =========== =========== ===========
Dividends paid per common share/(9)/ .07 .07 .07 .07
Dividends paid per Class B common share .05 - - -
=========== =========== =========== ===========
Current ratio 1.62/1 1.73/1 1.59/1 1.53/1
Return on shareholders' equity 12.7% 11.2% 7.0% 0.1%
Working capital 45,791,339 48,637,738 40,392,323 34,833,190
Depreciation and amortization 14,113,780 12,850,096 12,318,921 12,624,505
Additions to property, plant and equipment 21,927,430 21,126,441 6,631,110 13,243,479
Number of employees 2,961 2,833 2,671 2,715
----------- ----------- ----------- -----------
</TABLE>
NOTES TO 10-YEAR COMPARATIVE SUMMARY OF OPERATIONS
1. Fiscal 1992 Results include the operations of Ryco, Inc. and Band &
White, Inc., which were merged into other subsidiaries during the year
resulting in a pretax loss of approximately $1,100,000. Operations for
fiscal 1992 also reflect the settlement of litigation involving one of the
Company's subsidiaries which resulted in a pretax loss of approximately
$1,250,000.
2. Fiscal 1990 Results include the operations of Monroe Litho, Inc. from
July 31, 1989, the date of purchase. Pro forma results of operations as if
Monroe Litho, Inc. had been acquired February 1, 1988 would be net sales of
$306,417,000 in 1989 and $321,183,000 in 1990; net income of $8,373,000 in
1989 and $4,382,000 in 1990; and net income per common share of $.87 in
1989 and $.45 in 1990.
3. Fiscal 1989 Results include the operations of Hoechstetter Printing
Company, Inc. from May 31, 1988, Mercury Printing Company, Inc. from August
28, 1988, and Baum Printing, Inc. from August 31, 1988, and State Printing
Company and Band and White, Inc. from October 30, 1987, the respective
dates of purchase. Pro forma results of operations as if Hoechstetter,
Mercury, Baum, State, and Band & White had been acquired February 1, 1987
would be net sales of $283,911,000 in 1989 and $258,082,000 in 1988; net
income of $8,704,000 in 1989 and $6,795,000 in 1988; and net income per
common share of $.90 in 1989 and $.71 in 1988.
4. Fiscal 1988 Results include the operations of State Printing Company
and Band & White, Inc. from October 30, 1987, and Graphic Direct, Inc.-
Michigan (GDM) from September 1, 1986 and Graphic Direct, Inc.-Illinois
(GDI) from December 1, 1986, the respective dates of purchase. Pro forma
results of operations as if State, Band & White, GDM and GDI had been
acquired February 1, 1986 would be net sales of $199,485,000 in 1987 and
$233,922,000 in 1988; net income of $5,938,000 in 1987 and $8,076,000 in
1988; and net income per common share of $.62 in 1987 and $.84 in 1988.
5. Fiscal 1987 Results include the operations of Heritage Press, Inc.
from May 1, 1985 and IPD Printing and Distributing, Inc., and Wetmore &
Company from August 30, 1985 and Graphic Direct, Inc.-Michigan (GDM) from
September 1, 1986 and Graphic Direct, Inc.-Illinois (GDI) from December 1,
1986, the respective dates of purchase. Pro forma results of operations as
if Heritage, IPD, Wetmore, GDM and GDI had been acquired February 1, 1985
would be net sales of $183,588,000 in 1986 and $186,368,000 in 1987; net
income of $5,847,000 in 1986 and $6,173,000 in 1987; and net income per
common share of $.63 in 1986 and $.65 in 1987.
4
<PAGE>
Graphic Industries, Inc. and Subsidiaries
<TABLE>
<CAPTION>
Fiscal Years Ended January 31
- ---------------------------------------------------------------------------------------------------------
1991 1990/(2)/ 1989/(3)/ 1988/(4)/ 1987/(5)/ 1986/(6)/
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
329,123,260 310,330,144 270,212,226 223,489,599 167,920,042 130,442,164
249,647,590 233,879,289 203,141,130 166,191,112 123,980,977 96,463,904
----------- ----------- ----------- ----------- ----------- -----------
79,475,670 76,450,855 67,071,096 57,298,487 43,939,065 33,978,260
60,920,519 56,760,896 46,324,381 39,192,100 30,621,260 22,770,253
----------- ----------- ----------- ----------- ----------- -----------
18,555,151 19,689,959 20,746,715 18,106,387 13,317,805 11,208,007
2,804,784 2,330,173 3,218,108 2,287,354 3,404,419 1,090,099
----------- ----------- ----------- ----------- ----------- -----------
21,359,935 22,020,132 23,964,823 20,393,741 16,722,224 12,298,106
14,707,121 13,804,258 10,007,355 6,991,041 5,248,816 3,823,062
----------- ----------- ----------- ----------- ----------- -----------
6,652,814 8,215,874 13,957,468 13,402,700 11,473,408 8,475,044
3,119,000 3,300,000 4,953,000 5,500,000 5,319,000 3,620,000
----------- ----------- ----------- ----------- ----------- -----------
3,533,814 4,915,874 9,004,468 7,902,700 6,154,408 4,855,044
969,867 - - - - -
(983,000) - - - - -
----------- ----------- ----------- ----------- ----------- -----------
3,520,681 4,915,874 9,004,468 7,902,700 6,154,408 4,855,044
=========== =========== =========== =========== =========== ===========
.36 .51 .93 .83 .64 .52
.10 - - - - -
(.10) - - - - -
=========== =========== =========== =========== =========== ===========
.36 .51 .93 .83 .64 .52
=========== =========== =========== =========== =========== ===========
9,725,672 9,714,433 9,664,555 9,557,789 9,550,095 9,375,244
=========== =========== =========== =========== =========== ===========
.07 .07 .065 .082/(10)/ -0- -0-
- - - - - -
=========== =========== =========== =========== =========== ===========
1.85/1 1.77/1 1.93/1 1.99/1 2.06/1 1.83/1
7.0% 10.7% 24.4% 27.2% 26.2% 27.0%
51,865,330 53,030,486 52,684,947 46,803,319 40,084,001 22,697,982
12,954,704 10,833,994 8,765,081 6,311,969 4,530,170 3,494,649
11,363,684 29,222,054 26,605,953 12,014,415 13,222,097 4,976,589
2,900 3,070 2,978 2,525 2,100 1,830
----------- ----------- ----------- ----------- ----------- -----------
</TABLE>
6. Fiscal 1986 Results include the operations of Craftsman Printing
Company from August 20, 1984, Heritage Press, Inc. from May 1, 1985, and
IPD Printing and Distributing, Inc., and Wetmore & Company from August 30,
1985, the respective dates of purchase. Pro forma results of operations as
if Heritage, IPD, Wetmore and Craftsman had been acquired February 1, 1984
would be net sales of $148,382,000 in 1985 and $156,771,000 in 1986; net
income of $3,483,000 in 1985 and $5,401,000 in 1986; and net income per
common share of $.37 in 1985 and $.57 in 1986.
7. Extraordinary gain from early extinguishment of debt in 1991 of
$1,569,867, net of applicable income taxes of $600,000, which resulted
from the Company's repurchase of $4,213,000 of the 7% convertible
subordinated debentures in January 1991.
8. The Company adopted Statement of Financial Accounting Standards No.
109, "Accounting for Income Taxes," ("SFAS 109") effective as of February
1, 1990. The adoption of SFAS 109 resulted in a cumulative effect charge
of $983,000, or $.10 per common share, at February 1, 1990. Excluding the
cumulative effect charge, the application of SFAS 109 decreased net income
by $529,000 or $.06 per common share in 1991.
9. Adjusted for two 3-for-2 stock splits and a 12.4 for 1 stock split of
the common effected in the form of stock dividends on October 28, 1987,
and August 26, 1985, respectively.
10. Includes a one-time special dividend of .052 per share.
5
<PAGE>
10-YEAR COMPARATIVE CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
January 31
-----------------------------------------------------------------
1995 1994 1993 1992
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Assets
Current assets
Cash & marketable securities 28,287,722 32,332,007 26,258,163 18,828,088
Receivables 59,917,946 58,552,570 58,261,811 54,141,893
Inventories 26,984,609 20,890,321 21,937,869 24,963,521
Prepaid and other items 3,990,781 3,629,109 2,735,905 2,763,790
----------- ----------- ----------- -----------
Total current assets 119,181,058 115,404,007 109,193,748 100,697,292
----------- ----------- ----------- -----------
Other assets 21,461,440 14,709,016 15,603,802 14,944,100
----------- ----------- ----------- -----------
Property, plant & equipment 187,166,830 174,357,094 152,910,173 156,798,315
Accumulated depreciation 74,643,058 67,064,692 57,318,867 53,800,770
----------- ----------- ----------- -----------
Net fixed assets 112,523,772 107,292,402 95,591,306 102,997,545
----------- ----------- ----------- -----------
Total assets 253,166,270 237,405,425 220,388,856 218,638,937
=========== =========== =========== ===========
Liabilities and Shareholders' Equity
Current liabilities
Notes payable 21,909,936 21,666,820 24,821,257 26,454,093
Accounts payable 25,308,635 18,752,280 19,486,747 20,233,160
Other current liabilities 15,083,800 16,803,392 13,604,703 11,187,860
Current portion-
Long-term debt 11,087,348 9,543,777 10,888,718 7,988,989
----------- ----------- ----------- -----------
Total current liabilities 73,389,719 66,766,269 68,801,425 65,864,102
Long-term debt 68,781,374 67,560,368 57,519,213 63,827,197
Deferred income taxes 15,306,327 15,860,278 15,004,631 14,762,690
7% convertible subordinated debentures 20,787,000 20,787,000 20,787,000 20,787,000
----------- ----------- ----------- -----------
Shareholders' equity
Common stock 1,075,357 1,039,136 1,003,404 975,753
Additional paid-in capital 9,322,787 6,698,015 4,701,940 3,203,903
Retained earnings 65,298,086 58,854,707 52,742,718 49,389,767
----------- ----------- ----------- -----------
75,696,230 66,591,858 58,448,062 53,569,423
Less treasury stock 794,380 160,348 171,475 171,475
----------- ----------- ----------- -----------
Total shareholders' equity 74,901,850 66,431,510 58,276,587 53,397,948
----------- ----------- ----------- -----------
Total liabilities and shareholders' equity 253,166,270 237,405,425 220,388,856 218,638,937
=========== =========== =========== ===========
</TABLE>
6
<PAGE>
Graphic Industries, Inc. and Subsidiaries
<TABLE>
<CAPTION>
January 31
-----------------------------------------------------------------------------------------------------------
1991 1990 1989 1988 1987 1986
-----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
28,630,911 29,430,295 26,095,890 28,219,071 23,071,232 8,456,372
57,238,049 62,873,210 55,168,772 44,313,386 35,227,091 28,550,483
24,629,718 28,851,626 27,107,393 19,849,649 17,910,004 11,918,161
2,579,239 970,965 1,132,765 1,724,291 1,663,035 959,046
----------- ----------- ----------- ----------- ----------- ----------
113,077,917 122,126,096 109,504,820 94,106,397 77,871,362 49,884,062
----------- ----------- ----------- ----------- ----------- ----------
18,012,742 15,629,988 12,575,332 6,274,178 5,717,574 4,338,446
----------- ----------- ----------- ----------- ----------- ----------
155,249,816 148,671,463 117,059,439 82,455,549 65,839,392 45,925,148
46,082,607 37,568,400 28,178,800 20,670,390 14,769,900 10,744,666
----------- ----------- ----------- ----------- ----------- ----------
109,167,209 111,103,063 88,880,639 61,785,159 51,069,492 35,180,482
----------- ----------- ----------- ----------- ----------- ----------
240,257,868 248,859,147 210,960,791 162,165,734 134,658,428 89,402,990
=========== =========== =========== =========== =========== ==========
19,971,531 26,761,456 20,954,730 15,634,449 10,682,599 6,021,515
16,703,262 18,018,520 15,854,949 12,794,500 10,628,568 9,263,317
12,598,782 13,440,209 10,459,959 12,148,705 10,484,406 6,318,234
11,939,012 10,875,425 9,550,235 6,725,424 5,991,788 5,583,014
----------- ----------- ----------- ----------- ----------- ----------
61,212,587 69,095,610 56,819,873 47,303,078 37,787,361 27,186,080
88,842,266 91,758,179 72,252,580 44,461,010 35,009,857 33,295,830
15,808,654 12,594,920 10,804,321 8,459,514 7,820,033 5,430,993
20,787,000 25,000,000 25,000,000 25,000,000 25,000,000 -
----------- ----------- ----------- ----------- ----------- ----------
974,427 974,427 973,684 965,833 638,782 638,597
3,132,275 3,132,275 3,086,819 2,624,077 2,540,950 3,353,096
49,705,035 46,574,169 42,023,514 33,352,222 25,861,445 19,707,037
----------- ----------- ----------- ----------- ----------- ----------
53,811,737 50,680,871 46,084,017 36,942,132 29,041,177 23,698,730
204,376 270,433 - - - 208,643
----------- ----------- ----------- ----------- ----------- ----------
53,607,361 50,410,438 46,084,017 36,942,132 29,041,177 23,490,087
----------- ----------- ----------- ----------- ----------- ----------
240,257,868 248,859,147 210,960,791 162,165,734 134,658,428 89,402,990
=========== =========== =========== =========== =========== ==========
</TABLE>
7
<PAGE>
HIGH RESOLUTION LINE SCREEN
Waterless printing permits the use of extremely high resolution line screens
which allow for greater color saturation, detail and definition than is possible
with conventional, lower resolution screens.
[PHOTO APPEARS HERE]
- --------------------------------------------------------------------------------
[PHOTO APPEARS HERE] The definition gained by using a high resolution 300-
line screen becomes clearer upon closer inspection. This
sample, taken from the image above, highlights the
increased color saturation and detail.
8
<PAGE>
LEADING IN TECHNNOLOGY
- --------------------------------------------------------------------------------
Digital technology is reshaping the commercial printing industry -- from
electronic page assembly to digitally controlled high-speed, multicolor presses.
In the forefront of these changes, Graphic has from its inception been committed
to investing in new technologies to provide customers with the most efficient
and cost-effective production methods available, investing an average of more
than $14 million annually over the last five years.
Rising demand for color printing has combined with the computerization of
the printing processes to create an ever higher capability of printing
production. The latest technology has raised the performance of web and sheet-
fed presses to new levels, offering greater flexibility and efficiency of
operation. Graphic's large complement of web presses, now totaling 23, includes
new full-size equipment, rivaling the best in the industry. The Company's sheet-
fed presses, numbering in excess of 80, continue to be a mainstay of production
and establish Graphic as a leader in this market niche.
Electronic Prepress
Electronic prepress equipment has sharply accelerated the preparation process,
enabling customers to maintain extensive control over their projects, from page
design and components to last-minute alterations. Nine out of 10 printing
projects received by Graphic from customers are delivered on electronic media
such as floppy disks or via computer modem.
Graphic's new subsidiary, Integrated Graphic Services (IGS), uses state-of-
the-art technology to provide page assembly and design via an integrated
services digital network (ISDN) telecommunications line. IGS supplies page
assembly services with an in-house computer network for its clients. Data is
transmitted between Atlanta and other major cities at high speed, allowing the
instantaneous
- --------------------------------------------------------------------------------
ELECTRONIC PREPRESS EQUIPMENT HAS SHARPLY ACCELERATED THE PREPARATION PROCESS,
ENABLING CUSTOMERS TO MAINTAIN EXTENSIVE CONTROL OVER THEIR PROJECTS, FROM PAGE
DESIGN AND COMPONENTS TO LAST-MINUTE ALTERATIONS.
- --------------------------------------------------------------------------------
exchange of files during production and unprecedented flexibility in scheduling.
Similar technology enables Graphic companies in distant cities, such as Boston
and Houston, to service customers in California.
Emerging Technologies
Electronic printing technologies include "on-demand printing," using filmless,
digital imaging processes for much faster production than is possible on
conventional printing equipment. On-demand printing is a rapidly growing,
emerging market, and Graphic is continuing to move into this area as another
product in its commercial printing lines.
Graphic constantly reviews and evaluates all the newest technologies,
including stochastic screening, a software-based technique of imaging for
printing films and plates that provides higher quality production. Computer-to-
plate technology is also emerging under the impetus of digital page assembly and
other digital processes. These developments will continue to improve cost-
efficiency in production, a driving force in Graphic's commitment to superior
customer service.
9
<PAGE>
LEADING BY NETWORKING
- --------------------------------------------------------------------------------
Graphic specializes in localized personal service, but has the capacity to
provide services to national accounts through its network of 16 commercial
printing companies in key locations and a reprographic division with 13
locations serving clients throughout the United States. Graphic is the largest
network of printers in its niche of medium-run, high-quality, full-color
process, sheet-fed and web printing in the nation.
Graphic's network of companies provides the rapid response and print
capacity needed for success in today's highly competitive national marketplace
and is a key to the Company's growth strategy. For example, large time-sensitive
projects may be spread among several companies. A leader in annual report
printing, the Graphic network produces more than 200 annual reports for
corporations, colleges, foundations and governmental agencies.
Unique Capability
Graphic's network capability, unmatched by any local printer, enables each
company to market a full range of products, utilizing the specialized equipment
and skills of various sister companies.
Cross-selling of products and services has significantly expanded sales
opportunities within the Graphic network. In Graphic's commercial printing
niche, no salesperson in the nation can offer the total services and
geographical coverage of a Graphic representative. To achieve increasing
benefits from this important feature of the network, the Company has launched a
national program for its sales people. The result is broader coverage of the
marketplace and expanded services to customers.
- --------------------------------------------------------------------------------
GRAPHIC IS THE LARGEST NETWORK OF PRINTERS IN ITS NICHE OF MEDIUM-RUN,
HIGH-QUALITY, FULL-COLOR PROCESS, SHEET-FED AND WEB PRINTING IN THE NATION.
- --------------------------------------------------------------------------------
Network Advances
A major advantage of the network is its purchasing power, assuring volume
discounts for virtually every raw material, from paper to film, and even in
acquiring equipment. Shared knowledge and expertise are other benefits of the
network. Through an exchange program for all the companies, technical expertise
is shared in prepress and manufacturing, while company controllers learn from
each other in improving financial management.
Networking provides for dissemination of critical information among the
Graphic companies in the selection and use of new equipment and technology. With
major departments exchanging test and evaluation data, costly errors are avoided
and full productivity of equipment is achieved more quickly and efficiently. As
a result, Graphic gains strategic advantages in quality, productivity and
customer service.
10
<PAGE>
-----------------------------------------------
DIGITAL IMAGE MANIPULATION
Graphic Industries' capabilities in digital
image processing allow for sophisticated
manipulation of color. This technology is
used to achieve desired color balances,
and to create unique imagery otherwise
unattainable with conventional methods.
[ARTWORK APPEARS HERE]
-----------------------------------------
This detail of the above image shows two pieces
of the photograph which have been overlapped to [ARTWORK APPEARS HERE]
create the illusion of being transparent.
11
<PAGE>
- ---------------------------------------------------------------------
GEOMETRIC LINE SCREEN
Geometric line screens, which create the appearance of a higher
resolution, are one of several new screening methods available today.
Graphic Industries offers experience in these alternative methods.
[ARTWORK APPEARS HERE]
------------------------------------------------------
[ARTWORK APPEARS HERE] This section of the above image has been enlarged 500%
to illustrate the unique qualities of the geometric
line screen.
12
<PAGE>
COMMITMENT TO QUALITY
- --------------------------------------------------------------------------------
Two of the key principles of the Graphic business philosophy are: "A commitment
to our associates and a commitment to excellence." This drive for superior
products and services led to the introduction of Total Quality Management more
than four years ago.
Graphic associates have had training in effective problem solving, and TQM
teams composed of seven or eight associates meet weekly to develop ways of
improving processes and procedures. A substantial benefit is the improvement in
communications through the open exchange of ideas. Responsibility and
accountability have been pushed far down with a resulting response of stronger
commitment to excellence by Graphic associates.
Measuring Quality
Quality measurements now in place are integral to TQM with a full-time director
of quality improvement overseeing the efforts of each Graphic location. In
addition to monthly reports on the progress of each TQM team, the director
monitors overall performance and individual TQM meetings through frequent site
visits. The Graphic Manufacturing Audit Committee monitors quality standards at
each facility.
Key Quality Indicators, used in assessing manufacturing processes, include
on-time prepress proofs, on-time customer press approvals, plate remakes, cost
of reprints as a percentage of sales, and on-time deliveries. In addition, each
facility monitors other key indicators of performance on a daily, weekly and
monthly basis. These measurements include: productivity of equipment, efficiency
of systems and procedures and operating standards for vendors.
- --------------------------------------------------------------------------------
IN STRIVING FOR THE OBJECTIVE OF REMAINING A LEADING COMPANY IN ITS MARKET
NICHE, GRAPHIC IS MOVING ITS NETWORK TOWARD AN EVEN CLOSER INTERNAL WORKING
RELATIONSHIP, FOLLOWING CUSTOMIZED TOTAL QUALITY MANAGEMENT CONCEPTS AND
INCREASING THE TRANSFER OF OPTIMUM SYSTEMS AND PROCEDURES IN THE MANUFACTURING
PROCESS.
- --------------------------------------------------------------------------------
Meeting Customer Expectations
Graphic's total quality concept has encouraged associates in every department of
each company to be more customer-oriented and to go to great lengths to satisfy
our customers. Meeting with our customers on a consistent basis forms a vital
part of the drive for continuous quality and service improvements.
The Graphic strategy centers on becoming even more flexible and responding
more quickly to market changes and other developments in this technology-driven
and market-driven industry. In striving for the objective of remaining a leading
company in its market niche, Graphic is moving its network toward an even closer
internal working relationship, following customized total quality management
concepts and increasing the transfer of optimum systems and procedures in the
manufacturing process.
With this dedication by its associates to technological leadership and
quality, Graphic has positioned itself to improve its market share and to
continue its profitable growth.
13
<PAGE>
[ARTWORK APPEARS HERE]
14
<PAGE>
[ARTWORK APPEARS HERE]
15
<PAGE>
THE GRAPHIC NETWORK
[MAP APPEARS HERE]
Graphic Industries is headquartered in Atlanta, Georgia. Graphic's subsidiaries
include 16 commercial printing companies and a reprographics division with 13
locations serving major markets and customers throughout the United States and
Mexico.
For Member Company addresses, please refer to page 32 in this annual report.
CONNECTICUT
Hartford
FLORIDA
Miami
Jacksonville
GEORGIA
Atlanta
Augusta
Chamblee
Macon
Marietta
ILLINOIS
Chicago
MASSACHUSETTS
Boston
Mexico
Monterrey
NEW YORK
Rochester
NORTH CAROLINA
Asheville
Charlotte
PENNSYLVANIA
Philadelphia
Pittsburgh
SOUTH CAROLINA
Columbia
Greenville
Myrtle Beach
Spartanburg
TENNESSEE
Memphis
TEXAS
Dallas
Houston
16
<PAGE>
FINANCIAL CONTENTS
18 Management's Discussion and Analysis
-----------------------------------------------------------------------------
20 Consolidated Balance Sheets
-----------------------------------------------------------------------------
21 Consolidated Statements of Income
-----------------------------------------------------------------------------
22 Consolidated Statements of Shareholders' Equity
-----------------------------------------------------------------------------
23 Consolidated Statements of Cash Flows
-----------------------------------------------------------------------------
24 Notes to Consolidated Financial Statements
-----------------------------------------------------------------------------
29 Report of Independent Auditors
-----------------------------------------------------------------------------
30 Quarterly Results of Operations
-----------------------------------------------------------------------------
31 Board of Directors and Officer Listing
-----------------------------------------------------------------------------
32 Member Companies
-----------------------------------------------------------------------------
IBC Corporate Data
-----------------------------------------------------------------------------
17
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
BASIS OF PRESENTATION: In fiscal year 1995, the Company adopted Statement of
Financial Accounting Standards No. 115, "Accounting for Investments in Debt
and Equity Securities" ("SFAS 115"). In applying SFAS 115, the Company
recorded a cumulative decrease in retained earnings in fiscal year 1995 of
approximately $1,313,000, net of income taxes of approximately $909,000, and
a corresponding decrease in the carrying value of its marketable securities.
This decline in the fair value of the Company's marketable securities was due
entirely to the effect of increases in market interest rates during fiscal
year 1995 and does not necessarily reflect the ultimate realization on these
investments.
The following table sets forth items from the Consolidated Statements of
Income as a percentage of net sales for the indicated years.
<TABLE>
<CAPTION>
Year Ended January 31
--------------------------------
1995 1994 1993
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
Net sales 100.0% 100.0% 100.0%
Cost of sales 75.7 76.8 76.7
Selling, general and
administrative expenses 18.1 18.3 18.9
Interest and other
income-net 0.5 0.7 0.8
Interest expense 2.7 2.5 2.9
------ ------ ------
Income before income taxes 4.0 3.2 2.3
Provision for income taxes 1.6 1.3 1.1
------ ------ ------
Net income 2.4% 1.9% 1.2%
====== ====== ======
</TABLE>
GENERAL: The Company has experienced significant growth over the last 10 fiscal
years. Net sales increased in nine of the fiscal years during this time period.
Over the 1986-1995 fiscal periods, the Company experienced a compounded annual
growth rate of 11.5% in sales. This performance has been accomplished both
through the acquisition of established businesses in the printing and graphic
arts industry and through internal growth and development.
During the past five fiscal years, the Company invested approximately $74.3
million in additional property, plant and equipment, including new multi-color
presses, automated scanning equipment, electronic prepress equipment and other
computerized equipment.
During fiscal 1994, the Company merged Edwards & Broughton Company ("E&B") of
Raleigh, North Carolina, with Craftsman Printing Company, Charlotte, North
Carolina. During fiscal 1994, the Company acquired the assets of Graphic
Dynamics Inc. of Pompano Beach, Florida and during fiscal 1995, the Company
relocated its Miami subsidiary into the Pompano Beach, Florida location. During
fiscal 1995, the company merged Graphic Direct, Inc.-Michigan ("GDM") of Madison
Heights, Michigan with Graphic Direct, Inc.-Illinois ("GDI") of Elmhurst,
Illinois. Also during fiscal 1995, the Company acquired Southern Signatures,
Inc. ("SSI"), of Atlanta, Georgia. SSI is primarily engaged in the printing of
graphic communications.
NET SALES: Net sales for fiscal 1995 increased approximately $12.7 million or
3.8% over fiscal 1994. Of this increase, approximately $4.0 million was
attributable to the net sales of SSI and approximately $8.7 million to increased
sales volume. Excluding from fiscal year 1995 the net sales of SSI and from
fiscal year 1994 the net sales of E&B and GDM, net sales on a fully comparable
basis increased approximately $23.8 million or 7.4%. Net sales for fiscal 1994
increased approximately $18.6 million or 5.9% compared to fiscal 1993 due to
increased sales volume.
COST OF SALES: Cost of sales, as a percentage of sales, decreased 1.1% in fiscal
1995 as compared to fiscal 1994. The decrease is due to increased utilization of
equipment and technology, significant economies of scale and volume purchasing
programs. Cost of sales, as a percentage of sales, remained essentially the same
in fiscal 1994 as compared to fiscal 1993.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES: Selling, general and
administrative expenses, as a percentage of sales, decreased 0.2% in fiscal 1995
as compared to fiscal 1994. Selling, general and administrative expenses, as a
percentage of sales, decreased 0.6% in fiscal 1994 as compared to fiscal 1993.
The decrease, in both periods, is primarily due to the effect of the Company's
ongoing focus on operations and expense reduction.
18
<PAGE>
Graphic Industries, Inc. and Subsidiaries
INTEREST AND OTHER INCOME-NET: Interest and other income-net, as a percentage of
sales, decreased 0.2% in fiscal 1995 as compared to fiscal 1994. This decrease
is due to a loss on the disposition of certain assets related to the
combination, during fiscal 1995, of GDM with GDI. Interest and other income -
net, as a percentage of sales, remained essentially the same in fiscal 1994 as
compared to fiscal 1993.
INTEREST EXPENSE: Interest expense, as a percentage of sales, increased 0.2% in
fiscal 1995 as compared to fiscal 1994. The increase is primarily due to an
increase in the prime interest rate during fiscal 1995. Interest expense, as a
percentage of sales, decreased 0.4% in fiscal 1994 as compared to fiscal 1993.
The decrease is due primarily to a lower prime interest rate during the first
half of fiscal 1994 versus the first half of fiscal 1993.
INCOME TAXES: The effective tax rate for fiscal 1995 was 39.0% as compared to
39.3% for fiscal 1994 and 48.1% for fiscal 1993. The effective tax rate for
fiscal 1994 declined as compared to fiscal 1993 due to an increase in the
Company's tax-exempt investments and the favorable results of an Internal
Revenue Service examination completed in fiscal 1994. See Note 5 of Notes to
Consolidated Financial Statements of the Company for additional information.
LIQUIDITY AND CAPITAL RESOURCES
At January 31, 1995, the Company had approximately $45.8 million in working
capital compared with $48.6 million at January 31, 1994. Capital expenditures
for property, plant and equipment during fiscal 1995 were approximately $21.9
million. During fiscal 1995 other assets increased by approximately $6.8
million. This increase was primarily due to advance payments on the purchase of
two web presses to be placed in service in fiscal 1996. The Company's capital
expenditures and increase in other assets in fiscal 1995 were financed by cash
provided by operating activities, additional bank borrowings and by a decrease
in cash. The Company's capital expenditures for property, plant and equipment
during fiscal 1994 were financed by cash provided by operating activities and
additional bank borrowings. The Company's capital expenditures and reduction in
bank borrowing during fiscal 1993 were financed by cash provided by operating
activities. See Notes 3 and 4 of Notes to Consolidated Financial Statements of
the Company for additional information regarding the Company's obligations.
During fiscal 1994, the Company and certain of its subsidiaries refinanced
approximately $39,000,000 of term loans and $44,000,000 of lines of credit
collateralized by accounts receivable. In conjunction with the refinancing,
interest rates on these facilities were reduced, terms of the agreements were
improved, and the maturities were reduced from those required by previous
agreements.
The Company believes that existing working capital, funds provided from
operations, undrawn bank credit lines of approximately $24.6 million and
additional bank financing will be adequate to satisfy the Company's needs for
working capital and capital expenditures, including possible future
acquisitions.
The Company does not provide postretirement benefits and, therefore, does not
have any liability under FAS No. 106, "Employers' Accounting for Postretirement
Benefits Other Than Pensions."
IMPACT OF INFLATION
The Company has experienced increases in the costs of materials, labor,
equipment and machinery, as well as other operating expenses. Its ability to
pass on such increased costs through increased prices has been affected
differently in different time periods; however, the Company has generally been
able to mitigate cost increases by increasing its production efficiencies or by
passing on increased costs to customers.
SERVICE AND PRODUCTS
The following table indicates the approximate percentages of total gross
revenues of the Company attributable to each class of service provided by the
Company for the indicated periods:
<TABLE>
<CAPTION>
Fiscal Year
--------------------------
Class of Service 1995 1994 1993
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
Financial and
Corporate Printing 34% 34% 34%
Graphic Communications 43 41 42
Reprographic Services 7 7 6
Point-of-Purchase Materials 6 6 6
Direct Mail 7 9 9
Educational Services 3 3 3
----- ----- -----
Total 100% 100% 100%
===== ===== =====
</TABLE>
19
<PAGE>
CONSOLIDATED BALANCE SHEETS Graphic Industries, Inc. and Subsidiaries
<TABLE>
<CAPTION>
January 31
1995 1994
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents (Note 9) $ 6,617,595 $ 14,979,980
Marketable securities (at fair value in 1995; at cost in 1994)
(Notes 1 and 9) 21,670,127 17,352,027
Trade accounts receivable, less allowance for doubtful accounts of
$1,075,000 in 1995 and $1,158,000 in 1994 (Note 3) 59,917,946 58,552,570
Inventories (Notes 3 and 4):
Materials 12,325,468 8,209,998
Work in process 14,659,141 12,680,323
------------ ------------
26,984,609 20,890,321
Prepaid expenses and other current assets 1,686,583 1,671,715
Deferred income taxes (Note 5) 2,304,198 1,957,394
------------ ------------
Total current assets 119,181,058 115,404,007
Other assets (Note 1) 21,461,440 14,709,016
Property, plant and equipment (Note 4):
Land 9,618,883 8,909,787
Buildings and improvements 38,976,010 35,708,871
Machinery and equipment 138,571,937 129,738,436
------------ ------------
187,166,830 174,357,094
Less accumulated depreciation 74,643,058 67,064,692
------------ ------------
112,523,772 107,292,402
------------ ------------
$253,166,270 $237,405,425
============ ============
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Notes payable (Notes 3 and 9) $ 21,909,936 $ 21,666,820
Trade accounts payable 25,308,635 18,752,280
Accrued compensation 5,550,754 4,771,275
Other current liabilities 9,533,046 12,032,117
Current portion of long-term obligations 11,087,348 9,543,777
------------ ------------
Total current liabilities 73,389,719 66,766,269
Long-term obligations, less current portion (Notes 4 and 9) 68,781,374 67,560,368
Deferred income taxes (Note 5) 15,306,327 15,860,278
Convertible subordinated debentures (Notes 2 and 9) 20,787,000 20,787,000
Shareholders' equity (Notes 2, 4 and 8):
Preferred stock, no par value-authorized 500,000 shares; none issued - -
Common stock, $.10 par value-authorized 20,000,000 shares; issued and
outstanding 6,234,449 shares in 1995 and 5,872,240 shares in 1994;
including 77,461 shares in 1995 and 14,400 shares in 1994 held in treasury 623,445 587,224
Common stock, Class B, $.10 par value-authorized 10,000,000
shares; issued and outstanding 4,519,117 shares in 1995 and 1994 451,912 451,912
Additional paid-in capital 9,322,787 6,698,015
Retained earnings (Note 9) 65,298,086 58,854,707
------------ ------------
75,696,230 66,591,858
Treasury stock, at cost (794,380) (160,348)
------------ ------------
Total shareholders' equity 74,901,850 66,431,510
Commitments (Note 6)
------------ ------------
$253,166,270 $237,405,425
============ ============
</TABLE>
See accompanying notes.
20
<PAGE>
CONSOLIDATED STATEMENTS OF INCOME Graphic Industries, Inc. and Subsidiaries
<TABLE>
<CAPTION>
Year Ended January 31
--------------------------------------------------
1995 1994 1993
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Net sales $348,130,390 $335,467,743 $316,880,544
Cost of sales 263,485,570 257,549,959 243,109,921
------------ ------------ ------------
84,644,820 77,917,784 73,770,623
Selling, general and administrative expenses 63,040,317 61,260,267 59,961,199
Interest and other income, net 1,716,054 2,469,351 2,454,356
Interest expense 9,539,823 8,426,398 9,103,891
------------ ------------ ------------
Income before income taxes 13,780,734 10,700,470 7,159,889
Income taxes (Note 5) 5,375,000 4,200,000 3,441,000
------------ ------------ ------------
Net income $ 8,405,734 $ 6,500,470 $ 3,718,889
============ ============ ============
Net income per common share $.80 $.65 $.38
============ ============ ============
</TABLE>
See accompanying notes.
21
<PAGE>
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
Graphic Industries, Inc. and Subsidiaries
<TABLE>
<CAPTION>
Common Stock
Common Stock Class B Additional Treasury Stock Total
-------------------- -------------------- Paid-In Retained ------------------ Shareholders'
Shares Amount Shares Amount Capital Earnings Shares Amount Equity
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
BALANCE AT
JANUARY 31, 1992 5,238,416 $523,841 4,519,117 $451,912 $3,203,903 $49,389,767 15,400 $171,475 $53,397,948
Net income - - - - - 3,718,889 - - 3,718,889
Common stock
award 3,000 300 - - 16,200 - - - 16,500
Common stock
issued from
exercise of
stock options 273,507 27,351 - - 1,481,837 - - - 1,509,188
Cash dividends
on common
stock ($.07) - - - - - (365,938) - - (365,938)
--------- -------- --------- -------- ---------- ----------- ------ -------- -----------
BALANCE AT
JANUARY 31, 1993 5,514,923 551,492 4,519,117 451,912 4,701,940 52,742,718 15,400 171,475 58,276,587
Net income - - - - - 6,500,470 - - 6,500,470
Treasury stock award - - - - (3,502) - (1,000) (11,127) 7,625
Common stock
issued from
exercise of
stock options 357,317 35,732 - - 1,999,577 - - - 2,035,309
Cash dividends
on common
stock ($.07) - - - - - (388,481) - - (388,481)
--------- -------- --------- -------- ---------- ----------- ------ -------- -----------
BALANCE AT
JANUARY 31, 1994 5,872,240 587,224 4,519,117 451,912 6,698,015 58,854,707 14,400 160,348 66,431,510
Net income - - - - - 8,405,734 - - 8,405,734
Cumulative effect
of change in
accounting
principle,
net of tax - - - - - 87,000 - - 87,000
Adjustment to
unrealized loss
on marketable
securities,
net of tax - - - - - (1,400,352) - - (1,400,352)
Treasury stock award - - - - (6,906) - (2,272) (25,299) 18,393
Purchase of
treasury stock - - - - - - 77,461 794,380 (794,380)
Common stock
issued under
non-compete
agreement 77,650 7,765 - - 665,188 - (12,128) (135,049) 808,002
Common stock
issued in
connection with
acquisition of
Southern
Signatures, Inc. 119,337 11,934 - - 993,066 - - - 1,005,000
Common stock
issued from
exercise of
stock options 165,222 16,522 - - 973,424 - - - 989,946
Cash dividends
on common
stock ($.07) - - - - - (423,047) - - (423,047)
Cash dividends on
common stock,
Class B ($.05) - - - - - (225,956) - - (225,956)
----------------------------------------------------------------------------------------------------------
BALANCE AT
JANUARY 31, 1995 6,234,449 $623,445 4,519,117 $451,912 $9,322,787 $65,298,086 77,461 $794,380 $74,901,850
==========================================================================================================
</TABLE>
See accompanying notes.
22
<PAGE>
CONSOLIDATED STATEMENTS OF CASH FLOWS Graphic Industries, Inc. and Subsidiaries
<TABLE>
<CAPTION>
Year Ended January 31
-------------------------------------------------------
1995 1994 1993
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
OPERATING ACTIVITIES
Net income $ 8,405,734 $ 6,500,470 $ 3,718,889
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 14,113,780 12,850,096 12,318,921
Loss (gain) on sale of property, plant
and equipment and investments 623,192 (917,614) (754,450)
Provision for deferred taxes 265,000 607,000 388,000
Changes in operating assets and liabilities:
Trade accounts receivable (118,009) (290,759) (4,119,918)
Inventories (5,705,536) 1,047,548 3,025,652
Prepaid expenses and other current assets 13,030 (253,919) (152,020)
Trade accounts payable 6,010,620 (734,467) (746,413)
Other current liabilities (2,029,170) 2,808,051 2,416,843
----------- ----------- -----------
Net cash provided by operating activities 21,578,641 21,616,406 16,095,504
INVESTING ACTIVITIES
Purchase of property, plant and equipment (21,927,430) (21,126,441) (6,631,110)
Proceeds from sale of property, plant and equipment 3,937,578 652,541 3,028,097
Assets of acquired businesses, net of cash acquired - (3,309,569) (250,000)
Purchase of marketable securities (12,263,429) (37,703,118) (97,202,075)
Proceeds from sale and maturity of marketable securities 5,569,530 23,201,463 95,510,270
Other investing activities (6,110,287) 182,311 (1,170,973)
----------- ----------- -----------
Net cash used in investing activities (30,794,038) (38,102,813) (6,715,791)
FINANCING ACTIVITIES
Borrowings on long-term obligations 12,450,971 51,471,610 13,973,786
Payments on long-term obligations (10,716,358) (42,725,396) (17,382,043)
Net repayments of notes payable (446,557) (3,154,437) (1,632,836)
Purchase of treasury stock (794,380) - -
Stock options exercised 989,946 2,035,309 1,509,188
Other financing activities (630,610) (380,856) (436,847)
----------- ----------- -----------
Net cash provided by (used in) financing activities 853,012 7,246,230 (3,968,752)
----------- ----------- -----------
Net (decrease) increase in cash and cash equivalents (8,362,385) (9,240,177) 5,410,961
Cash and cash equivalents at beginning of year 14,979,980 24,220,157 18,809,196
----------- ----------- -----------
Cash and cash equivalents at end of year $ 6,617,595 $14,979,980 $24,220,157
=========== =========== ===========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Cash paid during the year for:
Income taxes $ 6,306,000 $ 3,845,000 $ 1,089,000
=========== =========== ===========
Interest $ 9,743,000 $ 8,509,000 $ 9,119,000
=========== =========== ===========
</TABLE>
NON-CASH TRANSACTIONS
In April 1994, the Company acquired Southern Signatures, Inc., a commercial
printing company in Atlanta, Georgia. The acquisition, financed through the
issuance of 119,337 shares of the Company's stock valued at $1,005,000, is
accounted for using the purchase method.
During fiscal year 1995, the Company issued 89,778 shares of its stock (valued
at $808,002) to an officer of the Company in settlement of a non-compete
agreement entered into in fiscal year 1990 when the Company acquired Monroe
Litho, Inc. This transaction is recorded in other assets in the accompanying
consolidated balance sheet.
See accompanying notes.
23
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
January 31, 1995
NOTE 1
SUMMARY OF ACCOUNTING POLICIES
Graphic Industries, Inc. and subsidiaries ("GII" or the "Company") are engaged
in providing comprehensive printing and graphic arts services and related
products and supplies. The Company services a diverse customer base and,
therefore, has minimal exposure to credit loss from any particular customer or
industry segment.
The following accounting policies are presented to assist the reader in
understanding the Company's financial statements.
PRINCIPLES OF CONSOLIDATION
The consolidated financial statements include the accounts of the Company and
all of its subsidiaries, Atlanta Blue Print Co., Baum Printing, Inc., The
Central Press of Miami, Inc., Craftsman Printing Company, Graphic Direct, Inc. -
Illinois, Graphic Direct, Inc. - Michigan, Heritage Press, Inc., Hoechstetter
Printing Company, Inc., IPD Printing & Distributing, Inc., Mercury Printing
Company, Inc., Monroe Litho, Inc., State Printing Company, Inc., The Stein
Printing Company, Inc., Wetmore & Company, Williams Printing Company, W.E.
Andrews Co., Inc., A.C. Scanning, Inc. and W.E. Andrews Co., Inc., of
Connecticut. The Central Press of Miami, Inc. acquired the assets of Graphic
Dynamics effective January 31, 1994. The operations of Edwards & Broughton
Company were merged into other subsidiaries during fiscal year 1994. The
operations of Graphic Direct, Inc.- Michigan were merged into other subsidiaries
during fiscal year 1995. The Company acquired Southern Signatures, Inc. in
fiscal year 1995. All significant intercompany accounts and transactions have
been eliminated in consolidation.
REVENUE RECOGNITION
The Company reports revenue, with the related costs, in the accounting period in
which the job is completed and available for delivery to the customer. The
Company generally does not require collateral for its accounts receivable.
CASH EQUIVALENTS
The Company considers all highly liquid investments with a maturity of three
months or less when purchased to be cash equivalents.
INVENTORIES
Inventories are stated at the lower of cost (first-in, first-out basis) or
replacement market.
OTHER ASSETS
Intangible assets, included in other assets, represent the excess of cost over
fair value of net assets of subsidiaries acquired, and are amortized by the
straight-line method over a forty year period. The net unamortized cost over
fair value of net assets of subsidiaries acquired was approximately $11,777,000
and $10,692,000 at January 31, 1995 and 1994, respectively.
The carrying value of intangible assets is reviewed if the facts and
circumstances suggest that it may be impaired. If this review indicates that
the intangible assets will not be recoverable, the Company's carrying value
of the intangible assets would be reduced to its estimated fair value.
PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment is stated on the basis of cost. Depreciation is
computed using the straight-line method over the estimated useful life of each
asset. Leases and leasehold improvements that have been capitalized are
amortized over the lives of the leases. Amortization of these assets is included
in depreciation expense.
<TABLE>
<S> <C>
Buildings 15-30 years
Building improvements 5-25 years
Machinery and equipment 4-10 years
Vehicles 2- 5 years
</TABLE>
STOCK OPTIONS
Proceeds from the sale of stock under options are credited to common stock at
par value and the excess of the option price over par value is credited to
additional paid-in capital.
CHANGE IN ACCOUNTING PRINCIPLES
In fiscal year 1995, the Company adopted Statement of Financial Accounting
Standards No. 115, "Accounting for Investments in Debt and Equity Securities"
("SFAS 115"). In accordance with SFAS 115, prior period financial statements
have not been restated to reflect the change in accounting principle.
The cumulative effect of adopting SFAS 115 at February 1, 1994 increased the
carrying value of the Company's marketable securities by $145,000, and also
increased shareholders' equity by $87,000 (net of $58,000 of deferred income
taxes) to reflect the unrealized holding gains on these securities which were
previously carried at cost.
24
<PAGE>
Graphic Industries, Inc. and Subsidiaries
NET INCOME PER COMMON SHARE
Primary net income per common share is based on the weighted average number of
shares of common stock outstanding during each year. Fully diluted net income
per share is based on the weighted average number of shares of common stock
outstanding and the assumed conversion of convertible securities outstanding,
after appropriate adjustment for interest on convertible debentures during each
year; the convertible securities were not materially dilutive for fiscal 1995,
1994 and 1993 and, therefore, fully diluted net income per common share is not
disclosed in the accompanying financial statements. Shares issuable under the
Company's incentive stock option plans are antidilutive or would not materially
dilute net income per share; therefore, they have not been included in the
computations. The number of shares used in computing net income per common share
was 10,556,833 in 1995, 10,031,893 in 1994 and 9,752,295 in 1993.
NOTE 2
CONVERTIBLE SUBORDINATED DEBENTURES
The Company has outstanding $20,787,000 of 7% convertible subordinated
debentures due May 15, 2006. The debentures are unsecured general obligations of
the Company.
The debentures are convertible into common stock of the Company at any time on
or before May 15, 2006, unless previously redeemed, at a conversion price of
$16.25 per share, subject to adjustment, as defined. Beginning in May 1996, the
debentures are subject to redemption through payment into a sinking fund. The
sinking fund is scheduled to retire 75% of the debentures prior to maturity.
Remaining sinking fund requirements for fiscal years ending January 31 are as
follows:
<TABLE>
<S> <C>
1996 $ -
1997 -
1998 -
1999 1,412,000
2000 1,875,000
Thereafter 17,500,000
-----------
$20,787,000
===========
</TABLE>
NOTE 3
SHORT-TERM BORROWINGS
The Company and certain of its subsidiaries have credit agreements with various
banks to provide short-term financing, collateralized by the companies' accounts
receivable and, in the case of certain subsidiaries, by inventory. These
agreements contain certain covenants, including maintenance of a minimum net
worth and a minimum cash flow to fixed charges ratio.
In August 1993, the Company and certain of its subsidiaries refinanced
approximately $39,000,000 of term loans and $44,000,000 of lines of credit
collateralized by accounts receivable. In conjunction with the refinancing,
interest rates on these facilities were reduced, terms of the agreements were
improved, and the maturities were reduced from those required by previous
agreements.
Under these agreements, the Company can borrow, subject to the availability of
eligible collateral, an aggregate of $54,050,000. Interest rates on these lines
are primarily at the banks' prime interest rates plus .5% (9.0% at January 31,
1995). At January 31, 1995, the available unused portion of the credit lines was
approximately $24,600,000. The credit agreements are renewed and revised
periodically.
NOTE 4
LONG-TERM OBLIGATIONS
Long-term obligations consists of the following:
<TABLE>
<CAPTION>
January 31
-------------------------------
1995 1994
- ------------------------------------------------------------------------------
<S> <C> <C>
Term loan agreement with
interest at the LIBOR
rate plus 3% (9.25% at
January 31, 1995) payable
in installments over five
years from $4.1 million to
$5.2 million annually, with
a balloon payment at the end
of the term of $16.9 million $33,153,033 $37,035,428
Various term loan agreements
with banks with interest
from 6.75% to prime plus
1.5% (10.0% at January 31,
1995) payable in installments
aggregating from $45,000 to
$1,000,000 annually 18,254,084 12,370,514
Real estate mortgage loan
agreements with interest
from 4.5% to 10.4%, payable
in installments aggregating
from $25,000 to $395,000
annually 20,346,536 19,029,700
Capital lease obligations,
payable in installments
aggregating from $16,000
to $281,000 annually with
interest at 6.5% to 11.5% 4,704,498 5,718,222
Industrial development revenue
bonds with interest from
3% to 85.5% of prime (7.3%
at January 31, 1995) 957,898 1,163,364
Other notes with interest at
6% to 10% 2,452,673 1,786,917
----------- -----------
79,868,722 77,104,145
Less amounts due within
one year 11,087,348 9,543,777
----------- -----------
$68,781,374 $67,560,368
=========== ===========
</TABLE>
Substantially all inventories and property, plant and equipment are pledged as
collateral on long-term obligations.
25
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
January 31, 1995
Aggregate maturities of long-term obligations as of January 31, 1995, are
approximately $11,087,000 in 1996, $14,765,000 in 1997, $10,153,000 in 1998,
$23,869,000 in 1999, $4,379,000 in 2000 and $15,616,000 thereafter.
Certain of the loan agreements contain covenants, including maintenance of a
minimum current ratio, minimum net worth, a minimum cash flow to fixed
charges ratio and minimum liquidity.
NOTE 5
INCOME TAXES
The Company accounts for income taxes using the liability method as required by
Statement of Financial Accounting Standard No. 109, "Accounting for Income
Taxes" ("SFAS 109"). SFAS 109 requires the recognition of deferred tax assets
and liabilities for the future tax consequences attributable to differences
between the financial statement carrying amounts of existing assets and
liabilities and their respective tax bases.
The components of income tax expense are as follows:
<TABLE>
<CAPTION>
Year Ended January 31
------------------------------------------
1995 1994 1993
- -------------------------------------------------------------------------------
<S> <C> <C> <C>
Federal
Current $3,661,000 $2,441,000 $2,340,000
Deferred 334,000 689,000 424,000
State
Current 1,449,000 1,152,000 713,000
Deferred (69,000) (82,000) (36,000)
---------- ---------- ----------
$5,375,000 $4,200,000 $3,441,000
========== ========== ==========
</TABLE>
A reconciliation of income tax expense computed at the statutory federal income
tax rate to the Company's effective income tax rate follows:
<TABLE>
<CAPTION>
Year Ended January 31
-------------------------------
1995 1994 1993
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
Federal rate 34.3% 34.0% 34.0%
State, net of federal
tax benefit 6.3 6.6 6.5
Expenses for which
no tax benefits
were recorded 0.9 0.8 4.8
Other, net (2.5) (2.1) 2.8
------ ------ ------
39.0% 39.3% 48.1%
====== ====== ======
</TABLE>
Significant components of the Company's deferred tax liabilities and assets are
as follows:
<TABLE>
<CAPTION>
January 31
-----------------------------
1995 1994
- --------------------------------------------------------------------------------
<S> <C> <C>
Deferred tax liabilities:
Property, plant and
equipment $15,920,917 $16,871,010
Other, net 260,368 188,762
----------- -----------
Total deferred tax liabilities 16,181,285 17,059,772
Deferred tax assets:
State net operating loss
carryforwards (NOLs) (1,096,149) (679,208)
Federal net operating loss
carryforwards (140,516) (169,122)
Alternative minimum tax
carryforwards - (244,014)
Employee benefit accruals (1,011,804) (1,236,015)
Allowance for doubtful
accounts (439,643) (473,503)
Unrealized loss on
marketable securities (908,789) -
Other, net (589,445) (1,034,234)
----------- -----------
Total deferred tax assets (4,186,346) (3,836,096)
Valuation allowance for
state NOLs 1,007,190 679,208
----------- -----------
Net deferred tax liabilities $13,002,129 $13,902,884
=========== ===========
</TABLE>
The deferred tax accounts are presented in the accompanying balance sheets as
follows:
<TABLE>
<CAPTION>
January 31
------------------------------
1995 1994
- -------------------------------------------------------------------------------
<S> <C> <C>
Current portion (net asset) $(2,304,198) $(1,957,394)
Long-term portion
(net liability) 15,306,327 15,860,278
----------- -----------
Net deferred tax liabilities $13,002,129 $13,902,884
=========== ===========
</TABLE>
SFAS 109 requires that a valuation allowance be recognized if it is "more likely
than not" that some or all of the deferred tax assets will not be realized.
Management believes that the future reversal of existing taxable temporary
differences provides evidence that a significant portion of the deferred tax
assets will be realized. The change in the valuation allowance during 1994 and
1993 was not material.
26
<PAGE>
Graphic Industries, Inc. and Subsidiaries
NOTE 6
COMMITMENTS
The Company leases facilities, equipment, machinery and vehicles under operating
leases. Certain land and building leases have renewal options for periods
ranging from one to ten years. Rental expense for operating leases amounted to
$6,655,000, $7,085,000, and $6,959,000 in 1995, 1994, and 1993, respectively.
Future minimum payments under noncancellable leases with initial or remaining
terms of one year or more consisted of the following at January 31, 1995:
<TABLE>
<S> <C>
1996 $ 5,004,000
1997 4,280,000
1998 3,306,000
1999 2,092,000
2000 997,000
-----------
Total $15,679,000
===========
</TABLE>
The Company and its subsidiaries are involved in certain legal actions and
claims arising in the ordinary course of business. Management believes (based on
advice of legal counsel) that such litigation and claims will be resolved
without material effect on the Company's financial position.
NOTE 7
EMPLOYEE BENEFITS
The Company has a profit sharing plan (PSP) which includes a "salary reduction
plan" as described in Section 401(k) of the Internal Revenue Code. The PSP
provides for discretionary employee contributions not in excess of 15% of the
employee's annual salary. The salary reduction plan provides for Company
contributions based on 50% of the first 4% of the covered employee's
contribution. The Company expensed contributions to these plans of approximately
$1,287,000, $1,431,000, and $1,214,000 in 1995, 1994, and 1993, respectively.
The Company has a payroll based employee stock ownership plan (Paysop) which
provides for contributions made by the Company and its subsidiaries, as
determined by the respective board of directors, and covers substantially all
employees. Contributions to the plan for the years ended January 31, 1995, 1994
and 1993 were not significant.
The Company has an employee stock purchase plan which provides for the purchase
of up to 500,000 shares of the Company's outstanding common stock. The plan
provides for employee contributions not to exceed $10,400 per employee in any
one calendar year and allows participants to utilize these contributions to
purchase shares of the Company's common stock at a ten percent discount from
market value. The remaining ten percent and all related fees and expenses are
paid by the Plan. Participants may also purchase up to $10,000 of common stock
per year at market value. The Company expensed contributions to the plan of
approximately $21,000, $39,000, $20,000 during 1995, 1994, and 1993,
respectively.
Pursuant to various collective bargaining agreements, contributions to union-
sponsored multi-employer pension plans made by the Company's three unionized
subsidiaries were approximately $400,000, $337,000 and $351,000 in 1995, 1994,
and 1993, respectively. Information as to the respective subsidiaries' portion
of accumulated plan benefits and plan net assets is not determinable.
The Company does not provide postretirement benefits, such as healthcare and
life insurance, to retirees.
NOTE 8
STOCK OPTION AND AWARD PLANS
The Company adopted an Incentive Stock Option Plan in April 1988 ("1988
Plan") which permits the granting of options to officers and key employees to
purchase up to an aggregate of 750,000 shares of the Company's common stock,
no more than 200,000 of which may be issued to persons who are directors of
the Company. In April 1991, the Board of Directors approved an amendment to
the 1988 Plan. The number of shares exercisable each year was changed from
50% in the third and fourth years following the year of grant to 33 1/3%
during January in the three years following the amendment. Additionally, each
subsidiary company President was granted a two year option for 5,000 shares
which are exercisable in two cumulative installments of 50% each year.
Options not exercised within the required times are terminated and cancelled.
The Company adopted a Stock Option Plan in September 1991 ("1991 Plan"). This
Plan permits the granting of incentive stock options or non-qualified stock
options to officers, key employees and outside directors to purchase up to an
aggregate of 1,000,000 shares of the Company's common stock, no more than
250,000 of which may be issued to persons who are directors of the Company.
Options granted under the 1991 Plan are exercisable during January in the three
years following the date of grant in increments of 33 1/3% each year. Options
not exercised within the required times are terminated and cancelled.
27
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
January 31, 1995
Graphic Industries, Inc. and Subsidiaries
A summary of transactions under these plans is as follows:
<TABLE>
<CAPTION>
Shares
Option Price -----------------------------------
Per Share 1995 1994 1993
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Outstanding at
beginning
of year $4.75 to $8.38 375,092 769,478 539,146
Granted 4.75 to 9.38 192,134 28,000 562,450
Exercised 4.75 to 7.88 (165,222) (357,317) (273,507)
Cancelled 5.00 to 8.38 (55,675) (65,069) (58,611)
-------- -------- --------
Outstanding at
January 31
4.75 to 9.38 346,329 375,092 769,478
======== ======== ========
Shares
available
for future
grants 594,695 730,820 693,751
======== ======== ========
</TABLE>
In April 1992 the Company adopted a Stock Award Plan. This plan provides for
awards of the Company's common stock to key employees and directors up to an
aggregate of 400,000 shares. The plan is administered by a committee, appointed
by the Board of Directors, that has full authority to make awards under the
plan. During 1995, 1994 and 1993, 2,272 shares, 1,000 shares and 3,000 shares,
respectively, were awarded under this plan and charged to compensation expense.
NOTE 9
FAIR VALUE OF FINANCIAL INSTRUMENTS AND INVESTMENTS
The following methods and assumptions are used by the Company in estimating
its fair value disclosures for financial instruments.
CASH AND CASH EQUIVALENTS
The carrying value of cash and cash equivalents approximates fair value.
MARKETABLE SECURITIES
Management determines the appropriate classification of securities at the time
of purchase and reevaluates such designations as of each balance sheet date.
All marketable securities are classified as "available-for-sale" and, therefore,
are carried at fair value, with the difference between cost and fair value, net
of tax, reported as a component of retained earnings. At January 31, 1995, this
difference was an unrealized decrease of approximately $1,313,000, net of income
taxes of approximately $909,000. This decrease was due to the effect of
increases in market interest rates on the fair value of these securities.
Realized gains and losses are included in investment income. The cost of
securities sold is based on the specific identification method. Interest and
dividends on securities classified as available for sale are included in
interest income.
The following is a summary of available-for-sale securities at January 31, 1995:
<TABLE>
<CAPTION>
Gross Gross Estimated
Unrealized Unrealized Fair
Cost Gains Losses Value
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
U.S. Treasury
bonds $ 4,012,842 $3,412 $ (189,192) $ 3,827,062
Municipal
bonds 2,839,225 - (223,581) 2,615,644
Municipal
bond funds 12,747,355 - (1,227,228) 11,520,127
----------- ------ ------------ -----------
Total debt
securities 19,599,422 3,412 (1,640,001) 17,962,833
Equity
securities 3,419,733 - (499,626) 2,920,107
Other
securities 873,113 2,888 (88,814) 787,187
----------- ------ ------------ -----------
$23,892,268 $6,300 $(2,228,441) $21,670,127
=========== ====== ============ ===========
</TABLE>
The cost of marketable securities at January 31, 1994 approximates their fair
values. The investments in U.S. Treasury bonds are scheduled to mature in fiscal
years 1998 through 2023. Municipal bonds have maturity dates ranging from 2008
to 2014.
CONVERTIBLE SUBORDINATED DEBENTURES
The fair value of the debentures approximates $17,565,000 and $18,604,000 as of
January 31, 1995 and 1994, respectively, based on its quoted market prices.
SHORT-TERM BORROWINGS AND LONG-TERM OBLIGATIONS
The carrying amounts of the short-term borrowings and long-term obligations
approximate the instruments' fair values.
NOTE 10
RELATED PARTY TRANSACTIONS
In January 1995, the Chairman of GII, purchased certain land from GII for
$750,000, which represents the higher of two MAI appraisals obtained. In
connection with this transaction, GII realized a gain of approximately $450,000.
This transaction was approved by the Board of Directors of the Company.
In fiscal year 1994, GII purchased the Williams Printing Company ("WPC") land
and building from a company ("Seller") controlled by the Chairman of GII for
$3.2 million. WPC, a principal subsidiary of GII, previously leased this
facility from the Seller. Two MAI appraisals were obtained and the transaction
was approved by the Board of Directors of the Company. In connection with the
purchase, GII assumed the mortgage note on the property approximating the
purchase amount.
28
<PAGE>
REPORT OF INDEPENDENT AUDITORS Graphic Industries, Inc. and Subsidiaries
BOARD OF DIRECTORS
GRAPHIC INDUSTRIES, INC.
We have audited the accompanying consolidated balance sheets of Graphic
Industries, Inc. and subsidiaries as of January 31, 1995 and 1994, and the
related consolidated statements of income, shareholders' equity and cash flows
for each of the three years in the period ended January 31, 1995. These
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the consolidated financial position of Graphic
Industries, Inc. and subsidiaries at January 31, 1995 and 1994, and the
consolidated results of their operations and their cash flows for each of the
three years in the period ended January 31, 1995, in conformity with generally
accepted accounting principles.
As discussed in Note 1 to the consolidated financial statements, in 1995 the
Company changed its method of accounting for its investments in marketable
securities.
/s/ Ernst & Young LLP
March 13, 1995
29
<PAGE>
QUARTERLY RESULTS OF OPERATIONS (UNAUDITED)
Graphic Industries, Inc. and Subsidiaries
<TABLE>
<CAPTION>
Three Months Ended
----------------------------------------------------------------------------
(In thousands except per share data) April 30, 1994 July 31, 1994 October 31, 1994 January 31, 1995
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Net sales $88,082 $82,484 $90,398 $87,166
Gross profit 21,905 19,795 22,825 20,120
-------------- ------------- ---------------- ----------------
Net income 2,218 1,757 2,089 2,342
-------------- ------------- ---------------- ----------------
Net income per common share 0.21 0.17 0.20 0.22
-------------- ------------- ---------------- ----------------
<CAPTION>
Three Months Ended
----------------------------------------------------------------------------
(In thousands except per share data) April 30, 1993 July 31, 1993 October 31, 1993 January 31, 1994
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Net sales $84,442 $83,111 $84,033 $83,882
Gross profit 19,729 19,215 20,250 18,724
-------------- ------------- ---------------- ----------------
Net income 1,567 1,211 1,611 2,111
-------------- ------------- ---------------- ----------------
Net income per common share 0.16 0.12 0.16 0.21
-------------- ------------- ---------------- ----------------
</TABLE>
The expected annual income tax rate for fiscal year ended January 31, 1994 was
used in determining the provision for income taxes for each of the first three
quarters. However, the effective income tax rate in fiscal 1994 was less than
management's estimates. The effect of the adjustment to the effective tax rate
increased income in the fourth quarter of fiscal 1994 by approximately $300,000
($.03 per share). In addition, during 1994, the Internal Revenue Service
completed its examination of the Company's fiscal 1992, 1991 and 1990 tax
returns. The favorable outcome of this examination resulted in a decrease in the
Company's effective income tax expense of approximately $300,000 ($.03 per
share).
30
<PAGE>
BOARD OF DIRECTORS AND OFFICERS Graphic Industries, Inc. and Subsidiaries
[PHOTO APPEARS HERE]
Pictured from left to right are: James A. Hatcher, Alvan A. Herring Jr., Carter
D. Pope, Mark C. Pope III, Ralph N. Strayhorn Jr., Mark C. Pope IV, Clifford M.
Kirtland Jr., William A. Wood Jr., Warren E. Andrews and John R. Pope.
DIRECTORS
Mark C. Pope III
Chairman of the Board
Graphic Industries, Inc.
Mark C. Pope IV*
President,
Graphic Industries, Inc.
William A. Wood Jr.
Vice President,
Graphic Industries, Inc.
John R. Pope
President,
Williams Printing Company**
Clifford M. Kirtland Jr.*
Private Investor and
Former Chairman of the Board
Cox Communications, Inc.
James A. Hatcher
Vice President and General Counsel
Cox Cable Communications, Inc.
Ralph N. Strayhorn Jr.*
Of Counsel to Petree Stockton;
Retired General Counsel,
First Wachovia Corporation
Warren E. Andrews
Private Investor and
Former Chairman of the Board,
W.E. Andrews Co., Inc.**
Carter D. Pope
President,
Atlanta Blue Print Company**
Alvan A. Herring Jr.
Vice President,
Graphic Industries, Inc.
* Member of Audit Committee
** Subsidiary of Graphic Industries, Inc.
OFFICERS
Mark C. Pope III
Chairman of the Board
Mark C. Pope IV
President
Alvan A. Herring Jr.
Vice President
William A. Wood Jr.
Vice President
Jim R. Tidwell
Vice President
Joseph A. Fasolo
Vice President
David S. Fraser
Chief Financial Officer and Treasurer
Donald P. Hunnicutt
Secretary
31
<PAGE>
MEMBER COMPANIES Graphic Industries, Inc. and Subsidiaries
GRAPHIC INDUSTRIES, INC.
CORPORATE HEADQUARTERS
2155 Monroe Drive, N.E.
Atlanta, Georgia 30324
Telephone: (404) 874-3327
Fax: (404) 874-7589
W.E. ANDREWS CO., INC.
140 South Road
Bedford, Massachusetts 01730
Telephone: (617) 275-0720
Fax: (617) 275-3256
W.E. ANDREWS CO., INC. OF CONNECTICUT
206 Murphy Road
Hartford, Connecticut 06114
Telephone: (203) 527-5570
Fax: (203) 527-0159
BAUM PRINTING, INC.
9985 Gantry Road
Philadelphia, Pennsylvania 19115
Telephone: (215) 671-9500
Fax: (215) 676-5455
THE CENTRAL PRESS OF MIAMI, INC.
2901 Gateway Drive
Pompano Beach, Florida 33069
Telephone: (305) 978-9958
Fax: (305) 978-9959
CRAFTSMAN PRINTING COMPANY
2700 Westinghouse Boulevard
Charlotte, North Carolina 28217
Telephone: (704) 588-2120
Fax: (704) 588-9466
EXECUTIVE COURIER, INC.*
120 Ottley Drive
Atlanta, Georgia 30324
Telephone: (404) 249-9000
Fax: (404) 249-6620
GRAPHIC DIRECT, INC.-ILLINOIS
185 Industrial Drive
Elmhurst, Illinois 60126
Telephone: (708) 833-0740
Fax: (708) 833-1329
179 Spangler Avenue
Elmhurst, Illinois 60126
(708) 833-0740
HERITAGE PRESS, INC.
8939 Premier Row
Dallas, Texas 75247
Telephone: (214) 637-2700
Fax: (214) 637-2713
HOECHSTETTER PRINTING COMPANY, INC.
218 North Braddock Avenue
Pittsburgh, Pennsylvania 15208
Telephone: (412) 241-8200
Fax: (412) 242-3835
IPD PRINTING & DISTRIBUTING, INC.
5800 Peachtree Road
Chamblee, Georgia 30341
Telephone: (404) 458-6351
Fax: (404) 454-6236
MERCURY PRINTING COMPANY, INC.
2929 Convair Road
Memphis, Tennessee 38132
Telephone: (901) 345-8480
Fax: (901) 396-4683
MONROE LITHO, INC.
39 Delevan Street
Rochester, New York 14605
Telephone: (716) 454-3290
Fax: (716) 454-5013
SOUTHERN SIGNATURES, INC.
201 Armour Drive
Atlanta, Georgia 30324
Telephone: (404) 872-4411
Fax: (404) 872-1620
STATE PRINTING COMPANY, INC.
1210 Key Road
Columbia, South Carolina 29201
Telephone: (803) 799-9550
Fax: (803) 252-2852
THE STEIN PRINTING COMPANY, INC.
2161 Monroe Drive, N.E.
Atlanta, Georgia 30324
Telephone: (404) 875-0421
Fax: (404) 876-7209
WETMORE & COMPANY
1645 West Sam Houston Parkway North
Houston, Texas 77043
Telephone: (713) 468-7175
Fax: (713) 468-8021
WILLIAMS PRINTING COMPANY
1240 Spring Street, N.W.
Atlanta, Georgia 30309
Telephone: (404) 875-6611
Fax: (404) 872-4025
IMAGING TECHNOLOGIES SERVICES, INC.
1052 West Peachtree Street, N.W.
Atlanta, Georgia 30309
Telephone: (404) 873-5911
Fax: (404) 872-1215
IMAGING TECHNOLOGIES SERVICES, INC.
DIVISIONS AND SUBSIDIARIES:
A&E Reprographics & Supply Company
Jacksonville, Florida
Telephone: (904) 399-8946
Fax: (904) 399-0184
Arco Blueprinter
Asheville, North Carolina
Telephone: (704) 254-9536
Fax: (704) 253-8467
Atlanta Blue Print Co.
Atlanta, Georgia
Telephone: (404) 873-5911
Fax: (404) 872-1215
Atlantic Reprographics
Myrtle Beach, South Carolina
Telephone: (803) 626-3641
Fax: (803) 626-6580
Carolina Reprographics
Columbia, South Carolina
Telephone: (803) 254-2561
Fax: (803) 252-7572
Cobb Reprographics & Office Supply
Marietta, Georgia
Telephone: (404) 422-0333
Fax: (404) 422-3441
Macon Blue Print Company
Macon, Georgia
Telephone: (912) 742-7541
Fax: (912) 741-1469
Prizma Photographics
Atlanta, Georgia
Telephone: (404) 874-8400
Fax: (404) 872-1215
Imaging Technologies Services
Buckhead Branch
Atlanta, Georgia
Telephone: (404) 261-2523
Fax: (404) 261-6878
Imaging Technologies Services
Augusta, Georgia
Telephone: (706) 724-7924
Fax: (706) 724-7960
Imaging Technologies Services
Greenville, South Carolina
Telephone: (803) 233-5371
Fax: (803) 233-7742
Imaging Technologies Services
Spartanburg, South Carolina
Telephone: (803) 585-8388
Fax: (803) 582-7152
*Subsidiary of Imaging Technologies Services
32
<PAGE>
CORPORATE DATA
Dividend Information: The Company has paid quarterly dividends on its common
stock since the second quarter of fiscal 1988. The Company has paid quarterly
dividends on its Class B common stock since the first quarter of fiscal 1995.
The per common share dividend paid was $.07 in fiscal 1995 and in fiscal 1 994.
The per Class B common share dividend paid was $.05 in fiscal 1995.
Shareholder Information: To obtain a copy of the Company's Form 10-K report for
fiscal 1995 at no charge, write to: Corporate Secretary, Graphic Industries,
Inc., 2155 Monroe Drive, N.E., Atlanta, Georgia 30324. For other financial
information, write to Investor Relations at the same address. Shareholders with
shares in "Street Name" who desire to receive financial and other information
directly from the Company should contact Investor Relations at the above
address.
ANNUAL SHAREHOLDERS' MEETING
May 23, 1995, 10:00 A.M.
Swissotel Atlanta
3391 Peachtree Road NE
Atlanta, Georgia
TRANSFER AGENT & REGISTRAR
Common Stock
Trust Company Bank
Atlanta, Georgia
TRUSTEE
7% Convertible Subordinated Debentures
Wachovia Bank of Georgia, N.A.
Atlanta, Georgia
MARKET FOR COMMON STOCK:
Graphic Industries Common Stock trades on the Nasdaq Stock Market under the
symbol: GRPH
Newspaper Listing: "GRPHIN"
Wall Street Journal: "GRAPHIND"
MARKET MAKERS:
Anderson & Strudwick, Inc.
Bridge Trading Company
Dean Witter Reynolds, Inc.
First Albany Corporation
Herzog, Heine, Geduld, Inc.
Interstate/Johnson Lane Cp.
Mayer & Schweitzer Inc.
Merrill Lynch, Pierce, Fenner
Nash Weiss/Division of Shatkin, Inv.
Robinson Humphrey Co. Inc.
Sherwood Securities Corp.
Troster Singer Corp.
The high and low sales prices for the Company's Common Stock as reported by the
Nasdaq National Market by quarter during the period from February 1, 1993
through January 31, 1995 are set forth below. Prices are rounded to the nearest
eighth. As of April 17, 1995, there were 602 shareholders of record of the
Company's Common Stock and the Company estimates that there were approximately
1500 "street name" shareholders. The closing sale price of the Company's Common
Stock on that date was $9.75 per share.
<TABLE>
<CAPTION>
Fiscal Year Ended January 31 High Low
- --------------------------------------------------------------------------------
<S> <C> <C>
1994: 1st Quarter 8 7/8 7 5/8
2nd Quarter 9 1/4 7 7/8
3rd Quarter 8 7/8 7
4th Quarter 8 1/2 7
1995: 1st Quarter 10 1/2 7 3/4
2nd Quarter 11 3/8 8 3/4
3rd Quarter 12 1/2 9 1/4
4th Quarter 10 5/8 8 3/8
------ -----
</TABLE>
There is not an established public trading market for the Company's Class B
Common Stock, which, as of April 17, 1995, was held of record by 7 persons.
LEGAL COUNSEL
Powell, Goldstein, Frazer & Murphy
INDEPENDENT AUDITORS
Ernst & Young LLP
ACCOUNTING FIRM
Kanes, Benator & Company L.L.C.
<PAGE>
[LOGO OF GRAPHIC INDUSTRIES, INC. APPEARS HERE]
-------------------------------------------------
Graphic Industries, Inc.
2155 Monroe Drive, N.E.
Atlanta, Georgia 30324
<PAGE>
EXHIBIT 22
SUBSIDIARIES* OF GRAPHIC INDUSTRIES, INC.
- -----------------------------------------
NAME STATE OF INCORPORATION
- ----------------------------------------- ----------------------
ATLANTA BLUE PRINT CO.
d/b/a/ Atlanta Blue Print &
Graphics Co.
Subsidiaries: Executive Courier, Inc. Georgia
Divisions: A&E Reprographics
and Supply Company
Atlantic Reprographics
Reprographics Carolina
Prizma Photographics
Arco Blueprinter
Cobb Reprographics
and Office Supply
Macon Blue Print
Company
Piedmont Printmakers
Reprographic Imaging
Technologies
Spartan Blueprinters
AUTOCOMP, INC. Georgia
BAUM PRINTING HOUSE, INC. Pennsylvania
CRAFTSMAN PRINTING COMPANY North Carolina
Division: Carolina Mailing Company
EDWARDS & BROUGHTON COMPANY North Carolina
GENERAL COLOR INC. ** Georgia
GRAPHIC MICHIGAN, INC. Michigan
<PAGE>
SUBSIDIARIES* OF GRAPHIC INDUSTRIES, INC.
- -----------------------------------------
NAME STATE OF INCORPORATION
- ----------------------------------------- ----------------------
GRAPHIC DIRECT, INC.-ILLINOIS Illinois
GRAPHIC DIRECT, INC.-MICHIGAN Michigan
HERITAGE PRESS, INC. Texas
HOECHSTETTER PRINTING COMPANY, INC. Pennsylvania
IPD PRINTING & DISTRIBUTING, INC. Georgia
MERCURY PRINTING COMPANY Tennessee
MONROE LITHO, INC. New York
STATE PRINTING COMPANY South Carolina
THE STEIN PRINTING COMPANY, INC. Georgia
Subsidiaries: Lex Publishing Company Georgia
Stein Management Service Georgia
W.E. ANDREWS CO. INC. Georgia
Subsidiaries: W.E. Andrews Co.
Inc. of Connecticut Connecticut
A.C. Scanning Inc. Massachusetts
The Central Press
of Miami, Inc. Florida
WETMORE & COMPANY Texas
WILLIAMS PRINTING COMPANY Georgia
________________________________
* All wholly-owned
** Not an operating company
<PAGE>
Exhibit 23
Consent of Independent Auditors
We consent to the incorporation by reference in this Annual Report (Form 10-K)
of Graphic Industries, Inc. and Subsidiaries of our report dated March 13, 1995,
included in the 1995 Annual Report to Shareholders of Graphic Industries, Inc.
and Subsidiaries.
Our audits also included the financial statement schedule of Graphic Industries,
Inc. and Subsidiaries listed in Item 14(a). This schedule is the responsibility
of the Company's management. Our responsibility is to express an opinion based
on our audits. In our opinion, as of the date of our report referred to in the
preceding paragraph, the financial statement schedule referred to above, when
considered in relation to the basic financial statements taken as a whole,
presents fairly in all material respects the information set forth therein.
We also consent to the incorporation by reference in the Registration Statements
(Form S-8 Numbers 33-18120, 33-56018, 33-48564 and 33-57603) pertaining to stock
option, award and purchase plans of Graphic Industries, Inc. and each related
Prospectus of our reports dated March 13, 1995, with respect to the financial
statements and schedule included or incorporated by reference in the Annual
Report (Form 10-K) for the year ended January 31, 1995.
April 25, 1995 Ernst & Young LLP
Atlanta, Georgia
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM FINANCIAL
YEAR ENDING 1/31/95 AUDITED FINANCIAL STATEMENTS AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C> <C>
<PERIOD-TYPE> YEAR YEAR
<FISCAL-YEAR-END> JAN-31-1995 JAN-31-1994
<PERIOD-START> FEB-01-1994 FEB-01-1993
<PERIOD-END> JAN-31-1995 JAN-31-1994
<CASH> 6,617 14,980
<SECURITIES> 21,670 17,352
<RECEIVABLES> 61,076 59,628
<ALLOWANCES> 1,158 1,075
<INVENTORY> 26,985 20,890
<CURRENT-ASSETS> 119,181 115,404
<PP&E> 187,167 174,357
<DEPRECIATION> 74,643 67,065
<TOTAL-ASSETS> 253,167 237,405
<CURRENT-LIABILITIES> 73,390 66,766
<BONDS> 20,787 20,787
<COMMON> 1,075 1,039
0 0
0 0
<OTHER-SE> 73,827 65,393
<TOTAL-LIABILITY-AND-EQUITY> 253,167 237,405
<SALES> 348,131 335,468
<TOTAL-REVENUES> 348,131 335,468
<CGS> 263,486 257,550
<TOTAL-COSTS> 263,486 257,550
<OTHER-EXPENSES> 61,324 58,792
<LOSS-PROVISION> 0 0
<INTEREST-EXPENSE> 9,540 8,426
<INCOME-PRETAX> 13,781 10,700
<INCOME-TAX> 5,375 4,200
<INCOME-CONTINUING> 8,406 6,500
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> 8,406 6,500
<EPS-PRIMARY> .80 .65
<EPS-DILUTED> .79 .65
</TABLE>
