<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON AUGUST 29, 1996
REGISTRATION NO. 33-
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------------
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
----------------
GRAPHIC INDUSTRIES, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
GEORGIA 58-1101633
(I.R.S. EMPLOYER IDENTIFICATION NO.)
(STATE OR OTHER JURISDICTIONOF
INCORPORATION OR ORGANIZATION)
2155 MONROE DRIVE, N.E.
ATLANTA, GEORGIA 30324
(404) 874-3327
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER,
INCLUDING AREA CODE, OF REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
MARK C. POPE ,III
CHAIRMAN OF THE BOARD
GRAPHIC INDUSTRIES, INC.
2155 MONROE DRIVE, N.E.
ATLANTA, GEORGIA 30324
(404) 874-3327
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE
NUMBER, INCLUDING AREA CODE, OF AGENT FOR SERVICE)
----------------
COPIES OF COMMUNICATIONS TO:
LAWRENCE M. GOLD, ESQ.
LAWRENCE M. GOLD, P.C.
100 GALLERIA PARKWAY
SUITE 695
ATLANTA, GEORGIA 30339
(770) 933-9600
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: FROM TIME TO
TIME AFTER THE REGISTRATION STATEMENT BECOMES EFFECTIVE.
----------------
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the
following box. [_]
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or
interest reinvestment plans, check the following box. [X]
CALCULATION OF REGISTRATION FEE
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PROPOSED PROPOSED
AMOUNT MAXIMUM MAXIMUM
TITLE OF EACH CLASS OF TO BE OFFERING PRICE AGGREGATE AMOUNT OF
SECURITIES TO BE REGISTERED REGISTERED PER SHARE(1) OFFERING PRICE REGISTRATION FEE(1)
- --------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock, $.10 par
value................. 53,830 Shares $9.00 $484,470 $167.06
</TABLE>
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
(1) Pursuant to Rule 457(c), the proposed offering price and registration fee
are based upon the last sale price of Common Stock on August 23, 1996 as
reported by the Nasdaq National Market System.
----------------
The Registrant hereby amends this registration statement on such date or
dates as may be necessary to delay its effective date until the Registrant
shall file a further amendment which specifically states that this
registration statement shall thereafter become effective in accordance with
Section 8(a) of the Securities Act of 1933 or until this registration
statement shall become effective on such date as the Commission, acting
pursuant to said Section (8)a, may determine.
<PAGE>
PROSPECTUS
53,830 SHARES
GRAPHIC INDUSTRIES, INC.
COMMON STOCK
----------------
This prospectus relates to 53,830 shares (the "Shares") of common stock,
$.10 par value ("Common Stock"), of Graphic Industries, Inc. (the "Company").
The Shares may be offered by certain shareholders of the Company (the "Selling
Shareholders") from time to time in transactions in the open market, in
negotiated transactions or a combination of such methods of sale, at fixed
prices which may be changed, at market prices prevailing at the time of sale,
at prices related to such prevailing market prices or at negotiated prices.
The Selling Shareholders may effect such transactions by selling the Shares to
or through broker-dealers, and such broker-dealers may receive compensation in
the form of discounts, concessions or commissions from the Selling
Shareholders and/or the purchasers of the Shares for whom such broker-dealers
may act as agents or to whom they sell as principals, or both (which
compensation as to a particular broker-dealer might be in excess of customary
commissions). See "Sale of the Shares."
The Selling Shareholders acquired the Shares from the Company on May 31,
1996, in connection with the Company's acquisition of a company owned by the
Selling Shareholders. Included in the Shares covered by this Prospectus are
16,149 Shares of Common Stock issued into escrow in connection with this
acquisition. See "Recent Development." The Selling Shareholders may be deemed
to be "underwriters" within the meaning of the Securities Act of 1933, as
amended (the "Securities Act"). See "Selling Shareholders" and "Sale of the
Shares."
None of the proceeds from the sale of the Shares by the Selling Shareholders
will be received by the Company. The Company has agreed to bear all expenses
(other than selling commissions) in connection with the registration and sale
of the Shares being offered by the Selling Shareholders, and the Company and
the Selling Shareholders have agreed to indemnify each other against certain
liabilities, including liabilities under the Securities Act.
The Common Stock is listed on the Nasdaq National Market System. On
September , 1996, the last reported sale price of the Common Stock of the
Company reported on the Nasdaq National Market System was $ per share.
----------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION, NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS
A CRIMINAL OFFENSE.
The date of this Prospectus is September , 1996.
<PAGE>
AVAILABLE INFORMATION
The Company has filed with the Securities and Exchange Commission (the
"Commission") a Registration Statement on Form S-3 (the "Registration
Statement"), of which this Prospectus forms a part, covering the Shares to be
sold pursuant to this offering.
As permitted by the rules and regulations of the Commission, this Prospectus
omits certain information, exhibits and undertakings contained in the
Registration Statement. Such additional information, exhibits and undertakings
can be inspected at and obtained from the Commission as set forth below. For
additional information regarding the Company, the Common Stock and related
matters and documents, reference is made to the Registration Statement and
exhibits thereto.
Certain documents previously filed by the Company with the Commission
pursuant to the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), are incorporated by reference in this Prospectus. See "Incorporation of
Certain Documents by Reference." Copies of any documents incorporated herein
by reference, other than exhibits to such documents unless they are
specifically incorporated by reference therein, are available without charge
to any person to whom a Prospectus is delivered upon request to the Secretary,
Graphic Industries, Inc., 2155 Monroe Drive, N.E., Atlanta, Georgia 30324
(telephone: (404) 874-3327).
The Company is subject to the informational and reporting requirements of
the Exchange Act, and accordingly files reports, proxy statements and other
information with the Commission. Such reports, proxy statements and other
information filed with the Commission, as well as the Registration Statement,
are available for inspection and copying at the public reference facilities
maintained by the Commission at Room 1024, 450 Fifth Street, N.W., Judiciary
Plaza, Washington, D.C. 20549 and at certain regional offices of the
Commission located at 500 West Madison Street, Suite 1400, Chicago, Illinois
60661 and 7 World Trade Center, New York, New York 10048. Copies of such
material can be obtained from the Public Reference Section of the Commission,
450 Fifth Street, N.W., Judiciary Plaza, Washington, D.C. 20549 at prescribed
rates.
2
<PAGE>
THE COMPANY
The Company engages in all aspects of financial and corporate printing,
reprographic services, commercial printing, direct mail printing and other
graphic communications. It ranks approximately 17th in sales among commercial
printing firms in North America. 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 has expanded its printing and graphic arts services and its
markets through a continuous program of acquisitions of established companies
in its industry and through internal growth and development. Since its
incorporation in 1970, the Company has grown from a regionally based business
with six operating companies to a network of 15 commercial printing companies
and a reprographics division with operations in the major U.S. market regions
of the Southeast, Northeast, Midwest and Southwest.
The Company's principal executive offices are located at 2155 Monroe Drive,
N.E., Atlanta, Georgia 30324. Its telephone number is (404) 874-3327.
RECENT DEVELOPMENT
On May 31, 1996, the Company acquired certain assets, subject to certain
liabilities of The Wimmer Companies, Inc., Memphis, Tennessee ("Wimmer"),
pursuant to an Agreement and Plan of Reorganization dated as of May 31, 1996
(the "Reorganization Agreement"). In addition, and in connection with this
acquisition, the Company also purchased certain outstanding promissory notes
issued by Wimmer to certain of its shareholders pursuant to a Note Purchase
Agreement dated as of May 31, 1996 (the "Note Purchase Agreement"). The
Reorganization Agreement and the Note Purchase Agreement will be collectively
referred to in this Prospectus as the "Acquisition Agreements." Pursuant to
the Acquisition Agreements, the Company issued an aggregate of 53,830 shares
of its Common Stock, $.10 par value (the "Shares") in consideration for the
assets and notes referred to above. Of the total Shares issued, 16,149 Shares
were issued in the names of the holders of such notes (the"Note Holders") c/o
United American Bank, Memphis, Tennessee, as escrow agent (the "Escrow
Shares"). The Escrow Shares are being held pursuant to an Escrow Agreement
dated May 31, 1996 (the "Escrow Agreement") for twelve months from May 31,
1996 (which period may be extended if any claims as defined in the Escrow
Agreement are then pending) to cover any claims for breaches of
representations, warranties and covenants in the Agreement and certain other
matters. The Escrow Agreement provides for the release of the Shares held in
escrow either to the Note Holders, in which case they may be sold hereunder,
or to the Company, in which event they will be canceled. The Escrow Shares may
be sold while they are subject to the Escrow Agreement, provided that all
proceeds of any such sales are held in escrow subject to the terms and
conditions of the Escrow Agreement. Under the terms of the Acquisition
Agreements, the Company agreed to register the Shares under the Securities Act
for resale by the Selling Shareholders and to indemnify the Selling
Shareholders against certain liabilities, including liabilities under the
Securities Act. The Selling Shareholders have also agreed to indemnify the
Company against certain liabilities, including liabilities under the
Securities Act. The Registration Statement of which this Prospectus is a part
was filed with the Commission pursuant to the registration provisions of the
Acquisition Agreements.
3
<PAGE>
SELLING SHAREHOLDERS
The following table sets forth information regarding Wimmer and the Note
Holders (collectively, the "Selling Shareholders"), based upon information
supplied by the Selling Shareholders, and the number of Shares beneficially
owned by them prior to this offering:
<TABLE>
<CAPTION>
NAME OF SELLING NUMBER OF SHARES NUMBER OF
SHAREHOLDER OWNED DIRECTLY ESCROW SHARES(1) TOTAL
- --------------- ---------------- ---------------- ------
<S> <C> <C> <C>
The Wimmer Companies, Inc. 1 -0- 1
Wimmer Brothers Company (2) 19,163 8,213 27,376
J. Fred Wimmer 18,517 7,936 26,453
------ ------ ------
TOTALS 37,681 16,149 53,830
</TABLE>
- --------
(1) Assumes complete release of all Escrow Shares to the Selling Shareholders.
(2) Wimmer Brothers Company is a general partnership organized under the laws
of the State of Tennessee, having Mr. J. Fred Wimmer and Mrs. Joe E. Wimmer
as its partners.
Prior to the offering, each Selling Shareholder beneficially owned less than
1% of the outstanding shares of Common Stock as of the date of this Prospectus
(assuming complete release of the Escrow Shares to the Selling Shareholders
and calculated without regard to the shares of Common Stock issuable upon
conversion of shares of Class B Common Stock or any of the Company's
Convertible Debentures). Upon completion of the offering, assuming all of the
Shares being offered hereby are sold and that no other changes in the Selling
Shareholders' beneficial ownership occur prior to completion of this offering,
the Selling Shareholders will not beneficially own any shares of Common Stock
of the Company. None of the Selling Shareholders serves as an officer or
director of the Company or any of its subsidiaries.
SALE OF THE SHARES
The sale of the Shares by the Selling Shareholders may be effected from time
to time in transactions in the open market, in negotiated transactions or
through a combination of such methods of sale, at fixed prices, which may be
changed, at market prices prevailing at the time of sale, at prices related to
such prevailing market prices or at negotiated prices. The Selling
Shareholders may effect such transactions by selling the Shares to or through
broker-dealers, and such broker-dealers may receive compensation in the form
of discounts, concessions or commissions from the Selling Shareholders and/or
the purchasers of the Shares for which such broker-dealers may act as agents
or to whom they sell as principals, or both (which compensation as to a
particular broker-dealer may be in excess of customary compensation).
The Selling Shareholders and any broker-dealers who act in connection with
the sale of the Shares hereunder may be deemed to be "underwriters" within the
meaning of Section 2(11) of the Securities Act, and any commissions received
by them and profit on any resale of the Shares as principals might be deemed
to be underwriting discounts and commissions under the Securities Act.
LEGAL MATTERS
A legal opinion to the effect that the Shares are legally issued, fully paid
and nonassessable has been rendered by Lawrence M. Gold, P.C., 100 Galleria
Parkway, Suite 695, Atlanta, Georgia 30339.
4
<PAGE>
EXPERTS
The consolidated financial statements and schedule of the Company appearing
or incorporated by reference in the Company's Annual Report on Form 10-K for
the year ended January 31, 1996, have been audited by Ernst & Young LLP,
independent auditors, as set forth in their report thereon included therein
and incorporated herein by reference. Such consolidated financial statements
and schedule are incorporated herein by reference in reliance upon such report
given upon the authority of such firm as experts in accounting and auditing.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents previously filed by the Company with the Commission
pursuant to the Exchange Act are incorporated herein by this reference:
(1) The Company's Annual Report on Form 10-K for the year ended January
31, 1996 (Commission File No. 0-12204);
(2) The Company's Quarterly Report on Form 10-Q for the period ended
April 30, 1996 (Commission File No. 0-12204);
(3) The description of the Company's Common Stock contained in the
Company's Registration Statement filed pursuant to Section 12 of the
Exchange Act of Form 8-A, as amended (Commission File No. 0-12204).
All documents filed by the Company pursuant to Section 13(a), 13(c), 14 or
15(d) of the Exchange Act subsequent to the date hereof and prior to the date
upon which this offering is terminated shall be deemed to be incorporated by
reference herein and to be part hereof from the date any such document is
filed.
Any statements contained in a document incorporated or deemed to be
incorporated by reference herein shall be deemed to be modified or superseded
for purposes hereof to the extent that a statement contained herein (or in any
other subsequently filed document which is also incorporated by reference
herein) modifies or supersedes such statement. Any statement so modified or
superseded shall not be deemed to constitute a part hereof except as so
modified or superseded. All information appearing in this Prospectus is
qualified in its entirety by the information and financial statements
(including notes thereto) appearing in the documents incorporated herein by
reference, except to the extent set forth in this paragraph.
5
<PAGE>
----------------
NO DEALERS, SALESPERSON OR OTHER INDIVIDUAL HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS NOT CONTAINED OR INCORPORATED BY
REFERENCE IN THIS PROSPECTUS IN CONNECTION WITH THE OFFERING COVERED BY THIS
PROSPECTUS. IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE
RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY OR THE SELLING
SHAREHOLDERS. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL, OR A
SOLICITATION OF AN OFFER TO BUY, THE SHARES OF COMMON STOCK IN ANY
JURISDICTION WHERE, OR TO ANY PERSON TO WHOM, IT IS UNLAWFUL TO MAKE SUCH
OFFER OR SOLICITATION. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE
MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE AN IMPLICATION THAT
THERE HAS NOT BEEN ANY CHANGE IN THE FACTS SET FORTH IN THIS PROSPECTUS OR IN
THE AFFAIRS OF THE COMPANY SINCE THE DATE HEREOF.
----------------
6
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF INSURANCE AND DISTRIBUTION.
<TABLE>
<S> <C>
Registration fee to the Securities And Exchange Commission........... $ 167.06
Nasdaq Additional Listing fee........................................ 2,000.00
Accounting fees and expenses......................................... 2,500.00
Legal fees and expenses.............................................. 3,500.00
Miscellaneous expenses............................................... 200.00
---------
Total............................................................ $8,367.06
</TABLE>
The foregoing items, except for the SEC registration fee and the Nasdaq
additional listing fee, are estimated. The Registrant has agreed to bear all
expenses (other than selling commissions) in connection with the registration
and sale of the Shares.
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Section 14-2-850 et. seq. of the Georgia Business Corporation Code and
Article IX of the Registrant's Bylaws set forth the extent to which the
Registrant's directors and officers may be indemnified by the Registrant
against liability that they may incur while serving in such capacity. These
provisions generally provide that the directors and officers of the registrant
will be indemnified by the Registrant against any losses incurred in
connection with any threatened, pending or completed action, suit or
proceeding, whether civil, criminal, administrative or investigative (other
than an action by or in the right of the Registrant) by reason of the fact
that he is or was a director or officer of the Registrant or served with
another corporation, partnership, joint venture, trust or other enterprise at
the request of the Registrant if such director or officer acted in a manner he
reasonably believed to be in or not opposed to the best interest of the
Registrant, and with respect to any criminal proceeding, had no reasonable
cause to believe his conduct was unlawful. Under these provisions, the
Registrant may provide advances for expenses incurred in defending any such
action, suit or proceeding upon receipt of any undertaking by or on behalf of
such officer or director to repay such advances unless it is ultimately
determined that he is entitled to indemnification by the Registrant.
The Registrant maintains an insurance policy insuring the Registrant and its
directors and officers against certain liabilities, including liabilities
under the Securities Act of 1933.
ITEM 16. EXHIBITS.
2(a) Agreement and Plan of Reorganization dated as of May 31, 1996, among
Graphic Industries, Inc., Mercury Printing Company, Inc., Wimmer
Acquisition Corp., The Wimmer Companies, Inc. and Mr. Glen A. Wimmer.
2(b) Note Purchase Agreement dated as of May 31, 1996, among Graphic
Industries, Inc., Mercury Printing Company, Inc., Wimmer Acquisition
Corp. and the Note Holders designated therein.
3(a) Amended and Restated Articles of Incorporation. (1)
3(b) Bylaws. (2)
4(a) See Articles V and VI of the Amended and Restated Articles of
Incorporation contained in Exhibit 3(a) and Articles II and VII of the
Bylaws contained in Exhibit 3(b).
4(b) Form of Indenture, including Form of Debenture, between the Registrant
and the First National Bank of Atlanta. (3)
II-1
<PAGE>
5 Opinion of Lawrence M. Gold, P.C. as to the legality of the securities
being registered.
23(a) Consent of Ernst & Young LLP (see page immediately preceding signature
page to this Registration Statement).
24 Power of Attorney (see signature page to this Registration Statement).
99 Escrow Agreement dated as of May 31, 1996, among Graphic Industries,
Inc., Mercury Printing Company, Inc., Wimmer Acquisition Corp., Mr.
Glen A. Wimmer, the Note Holders designated therein, and United
American Bank of Memphis.
- --------
(1) Incorporated by reference to Exhibit 3(a) of the Registrant's Annual
Report on Form 10-K for the fiscal year ended January 31, 1991 (File No.
0-12204).
(2) Incorporated by reference to Exhibit 3(b) of the Registrant's Annual
Report on Form 10-K for the fiscal year ended January 31, 1992 (File No.
0-12204).
(3) Incorporated by reference to Exhibit 4(b) of the Registrant's Registration
Statement on Form S-1 filed on April 30, 1986 (Reg. No. 33-5277).
ITEM 17. UNDERTAKINGS.
The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made, a
post-effective amendment to this registration statement:
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933.
(ii) To reflect in the prospectus any facts or events arising after the
effective date of the registration statement (or the most recent post-
effective amendment thereof) which, individually or in the aggregate,
represent a fundamental change in the information set forth in the
registration statement.
(iii) To include any material information with respect to the plan of
distribution not previously disclosed in the registration statement or any
material change to such information in the registration statement;
Provided however, that paragraphs (1)(i) and (1)(ii) do not apply if the
information required to be included in a post-effective amendment by those
paragraphs is contained in periodic reports filed by the Registrant pursuant
to Section 13 or Section 15(d) of the Securities Exchange Act of 1934 that are
incorporated by reference in the registration statement.
(2) That, for the purpose of determining any liability under the Securities
Act of 1933, each such post-effective amendment shall be deemed to be a new
registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial
bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment any
of the securities being registered which remain unsold at the termination of
the offering.
The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
Registrant's annual report pursuant to section 13(a) or section 15(d) of the
Securities Exchange Act of 1934 that is incorporated by reference in the
registration statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona fide offering
thereof.
II-2
<PAGE>
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the foregoing provisions, or otherwise, the Registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the Registrant of expenses
incurred or paid by a director, officer or controlling person of the
Registrant in the successful defense of any action, suit or proceeding) is
asserted by such director, officer or controlling person in connection with
the securities being registered, the Registrant will, unless in the opinion of
its counsel the matter has been settled by controlling precedent, submit to a
court of appropriate jurisdiction the question whether such indemnification by
it is against public policy as expressed in the Act and will be governed by
the final adjudication of such issue.
II-3
<PAGE>
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
We consent to the reference to our firm under the caption "Experts" in the
Registration Statement (Form S-3) and related Prospectus of Graphic
Industries, Inc. for the registration of 53,830 shares of its common stock and
to the incorporation by reference therein of our report dated March 12 , 1996,
with respect to the consolidated financial statements and schedule of Graphic
Industries, Inc. included or incorporated by reference in its Annual Report
(Form 10-K) for the year ended January 31, 1996, filed with the Securities and
Exchange Commission.
ERNST & YOUNG LLP
Atlanta, Georgia
August 26, 1996
II-4
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Atlanta, State of Georgia, on August 28, 1996.
GRAPHIC INDUSTRIES, INC.
BY: /s/ Mark C. Pope, III
-------------------------------
Mark C. Pope, III
Chairman of the Board and
Chief Executive Officer
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS that each person whose signature appears
below constitutes and appoints MARK C. POPE, III and MARK C. POPE, IV, and
each of them, as his true and lawful attorneys-in-fact and agents, with full
power of substitution and resubstitution, for him and in his name, place and
stead, in any and all capacities, to sign any and all amendments (including
post-effective amendments) to this Registration Statement, and to file the
same with all exhibits thereto, and other documents in connection therewith,
with the Securities and Exchange Commission, granting unto said attorneys-in-
fact and agents, and each of them, full power and authority to do and perform
each and every act and thing requisite or necessary to be done in and about
the premises as fully to all intents and purposes as he might or could do in
person, hereby ratifying and confirming all that said attorneys-in-fact and
agents, or either of them, or their or his substitute or substitutes, may
lawfully do or cause to be done by virtue hereof.
II-5
<PAGE>
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURES TITLE DATE
---------- ------------------------ ------------------------
<S> <C> <C>
/s/ Mark C. Pope, III Chairman of the Board August 28, 1996
- ------------------------------------------- and Chief Executive
MARK C. POPE, III Officer (Principal
Executive Officer)
/s/ David S. Fraser Chief Financial Officer August 28, 1996
- ------------------------------------------- and Treasurer
DAVID S. FRASER (Principal Financial
and Accounting Officer)
/s/ Mark C. Pope, IV President and Director August 28, 1996
- -------------------------------------------
MARK C. POPE, IV
/s/ William A. Wood, Jr. Director August 28, 1996
- -------------------------------------------
WILLIAM A. WOOD, JR.
/s/ John R. Pope Director August 28, 1996
- -------------------------------------------
JOHN R. POPE
/s/ Clifford M. Kirtland, Jr. Director August 28, 1996
- -------------------------------------------
CLIFFORD M. KIRTLAND, JR.
/s/ James A. Hatcher Director August 28, 1996
- -------------------------------------------
JAMES A. HATCHER
/s/ Ralph N. Strayhorn, Jr. Director August 28, 1996
- -------------------------------------------
RALPH N. STRAYHORN, JR.
/s/ Warren E. Andrews Director August 28, 1996
- -------------------------------------------
WARREN E. ANDREWS
/s/ Carter D. Pope Director August 28, 1996
- -------------------------------------------
CARLTER D. POPE
/s/ Alvan A. Herring, Jr. Director August 28, 1996
- -------------------------------------------
ALVAN A. HERRING, JR.
</TABLE>
II-6
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION PAGE
------- ----------- ----
<C> <S> <C>
2(a) Agreement and Plan of Reorganization dated as of May 31, 1996, 15
among Graphic Industries, Inc., Mercury Printing Company, Inc.,
Wimmer Acquisition Corp.,The Wimmer Companies, Inc., and Mr.
Glen A. Wimmer
2(b) Note Purchase Agreement dated as of May 31, 1996, among Graphic 55
Industries, Inc., Mercury Printing Company, Inc., Wimmer
Acquisition Corp., and the Note Holders designated therein.
3(a) Amended and Restated Articles of Incorporation (1) N/A
3(b) Bylaws. (2) N/A
4(a) See Articles V and VI of the Amended and Restated Articles of N/A
Incorporation contained in Exhibit 3(a) and Articles II and VII
of the Bylaws contained in Exhibit 3(b)
4(b) Form of Indenture, including Form of Debenture, between the N/A
Registrant and First National Bank of Atlanta (3)
5 Opinion of Lawrence M. Gold, P.C. as to the legality of the 77
securities being registered
23(a) Consent of Ernst & Young LLP (see page immediately preceding --
signature page to this Registration Statement).
23(b) The consent of Lawrence M. Gold, P.C. is contained in its --
opinion filed as Exhibit 5 hereto.
24 Power of Attorney (see signature page to this Registration
Statement). --
99 Escrow Agreement dated as of May 31, 1996, among Graphic 78
Industries, Inc., Mercury Printing Company, Inc., Wimmer
Acquisition Corp., The Wimmer Companies, Inc., Mr. Glen A.
Wimmer, the Note Holders designated therein and United American
Bank of Memphis.
</TABLE>
- --------
(1) Incorporated by reference to Exhibit 3(a) of the Registrant's Annual
Report on Form 10-K for the fiscal year ended January 31, 1991 (File No.
0-12204).
(2) Incorporated by reference to Exhibit 3(b) of the Registrant's Annual
Report on Form 10-K for the fiscal year ended January 31, 1992 (File No.
0-12204).
(3) Incorporated by reference to Exhibit 4(b) of the Registrant's Registration
Statement on Form S-1 filed on April 30, 1986 (Reg. No. 33-5277).
II-7
<PAGE>
Exhibit 2(a)
AGREEMENT AND PLAN OF REORGANIZATION
------------------------------------
THIS AGREEMENT (the "Agreement"), made and entered into as of the 31st day
of May, 1996, by and among Graphic Industries, Inc., a Georgia corporation
("Graphic"), Mercury Printing Company, Inc., a Tennessee corporation and wholly-
owned subsidiary of Graphic ("Mercury"), Wimmer Acquisition Corp., a Tennessee
corporation and wholly-owned subsidiary of Mercury ("WAC"); The Wimmer
Companies, Inc., a Tennessee corporation (the "Company") and Glen A. Wimmer, an
individual resident of the State of Tennessee (the "Stockholder").
W I T N E S S E T H:
--------------------
WHEREAS, the Stockholder owns 100% of the outstanding shares of the common
stock, $1.00 par value per share, of the Company; and
WHEREAS, the Stockholder, Graphic, Mercury WAC and the Company wish to
enter into a transaction pursuant to which WAC will acquire from the Company,
certain assets of the Company, subject to certain liabilities of the Company, on
the terms and conditions set forth herein (the "Reorganization"); and
WHEREAS, contemporaneously with the Reorganization, WAC will acquire
certain outstanding notes payable of the Company, more particularly described
herein, pursuant to the terms and conditions of a Note Purchase Agreement of
even date (the "Note Purchase Agreement") among WAC and the holders of such
notes payable (collectively, the "Related Parties").
NOW, THEREFORE, in consideration of the premises and the mutual covenants
set forth below and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, and intending to be legally bound,
the parties hereto agree as follows:
ARTICLE 1
DEFINITIONS
1.1 The capitalized terms used in this Agreement (and not otherwise
expressly defined herein) shall have the meanings set forth in the Glossary
attached hereto and expressly made a part hereof.
ARTICLE 2
ACQUISITION OF ASSETS AND ASSUMPTION OF LIABILITIES
2.1 Purchase and Sale of Assets
---------------------------
(a) Transfer of Assets. Upon the terms and subject to the conditions
------------------
contained herein, the Company shall sell, convey, transfer, assign and deliver
to WAC, and WAC shall acquire from the Company, the Assets, free and clear of
any and all Encumbrances.
<PAGE>
(b) Consideration. Upon the terms and subject to the conditions contained
-------------
herein, as consideration for the purchase of the Assets, WAC shall cause Graphic
to issue and deliver to the Company one (1) share of Graphic Stock and shall
deliver the Assignment and Assumption Agreement.
(c) Delivery of Consideration. Upon the terms and subject to the
-------------------------
conditions contained herein, at the Closing, WAC shall (i) cause Graphic to
issue and deliver the Graphic Stock to the Company, and (ii) assume certain
liabilities of the Company pursuant to Section 2.3(a) herein.
2.2 Assets to Be Retained by the Company. Notwithstanding anything to the
------------------------------------
contrary herein, the Company shall retain all right, title and interest in and
to the following assets of the Company (the "Retained Assets") which are not to
be acquired by WAC hereunder:
(a) any contract, lease or permit as to which consent to assignment is
required but has not been obtained;
(b) any permit, or insurance policy to the extent that each is, by its
terms, not transferable or assignable to a purchaser of the Assets; and
(c) all claims, causes of action, chooses in action, rights of recovery and
rights of set-off of any kind against any person or entity arising out of or
relating to the Assets to the extent, but only to the extent, related to the
Excluded Liabilities.
2.3 Assumed Liabilities; Excluded Liabilities
-----------------------------------------
(a) Upon the terms and conditions contained herein, and subject to Section
2.3(b), WAC shall assume as of the Effective Date (i) the Liabilities of the
Company fully reflected on the Closing Balance Sheet or in the notes thereto,
and which remain outstanding as of the Closing Date; and (ii) the Liabilities
incurred by the Company in the ordinary course of business consistent with past
practice since the date of the Closing Balance Sheet up to, and including, the
Closing Date (none of which relates to any breach of contract, breach of
warranty, tort, infringement or violation of law or which arose out of any
Action). The Liabilities specified in clauses (i) and (ii) of this Section
2.3(a) (subject to Section 2.3(b)) are referred to collectively herein as the
"Assumed Liabilities".
(b) Notwithstanding Section 2.3(a) or any other provision of this
Agreement, the Assumed Liabilities shall not include, WAC shall not assume or be
responsible for, and the Company shall retain and be fully responsible for, and
shall fully discharge and perform, the following Liabilities and obligations of
the Company, whether fixed or contingent, known or unknown, matured or
unmatured, liquidated or unliquidated, choate or inchoate, direct or indirect:
2
<PAGE>
(i) except as set forth in Section 2.3(c) herein, any and all Liabilities
and obligations of the Company to or in respect of any employee or former
employee of the Company including, without limitation, any Liability or
obligation under, arising out of or relating to (A) any employment agreement,
whether or not written, between the Company and any person; (B) any claim of
unfair labor practice or worker's compensation law or regulation or under any
federal or state employment discrimination law or regulation, which shall have
been asserted on or prior to the Effective Date; or (C) any Liability relating
to any Qualified Plan or other employee benefit plan;
(ii) any and all Liabilities and obligations of the Company arising from
any injury to or death of any person or damage to or destruction of any
property, whether based on negligence, breach of warranty, strict liability,
enterprise liability or any other legal or equitable theory arising from defects
in products manufactured or from services performed by or on behalf of the
Company or any other person or entity on or prior to the Effective Date;
(iii) any and all Liabilities and obligations of the Company arising our
of or related to any Action against the Company or any Action which adversely
affects the Assets and which shall have been asserted on or prior to the
Effective Date or the basis of which shall have arisen on or prior to the
Effective Date;
(iv) any and all Liabilities and obligations of the Company with respect to
any Taxes;
(v) any and all Liabilities and obligations of the Company arising out of,
resulting from or relating to the execution, delivery and performance of this
Agreement and the consummation of the transactions contemplated hereby;
(vi) all expenses of the Company (including, without limitation, all fees
and expenses of its attorneys and other representatives) and all fees, incurred
in connection with this Agreement and the transactions contemplated hereby;
(vii) all brokerage fees, finder's fees and similar fees payable by the
Company in connection with this Agreement and the transactions contemplated
hereby;
(viii) any and all Liabilities and obligations of the Company under,
arising out of or relating to those contracts, leases, permits and other
commitments not specifically assumed by WAC pursuant to Section 2.3(a);
(ix) any and all Liabilities and obligations of the Company arising out of
or relating to the Retained Assets; and
3
<PAGE>
(x) any Undisclosed Liabilities.
The Liabilities and obligations excluded from Assumed Liabilities pursuant to
this Section 2.3(b) are referred to herein as the "Excluded Liabilities."
(c) Notwithstanding the foregoing, WAC shall pay to the Company, in cash,
an amount equal to the amount shown or accrued on the Closing Balance Sheet for
all Taxes and payroll-related liabilities, including, without limitation,
payroll taxes and 401(k) contributions and the Company shall use such funds
solely to pay such liabilities and obligations.
(d) The Company shall remain solely responsible for any and all obligations
relating to employees of the Company up to and including the Closing Date,
including, without limitation, all obligations for salary, vacation pay,
severance, health insurance, taxes and other insurance, whether accrued,
contingent or otherwise. None of Mercury, WAC or Graphic shall have or bear any
responsibility or liability for any employee obligations including, without
limitation, any obligations under any supplemental income plans or agreements.
During the period between the Effective Date and the Closing Date, WAC shall
use, in the business of the Company, the employees of the Company on hand as of
the Effective Date, and shall pay the Company for such use the regular, normal
payroll amounts, plus taxes and other benefits customarily paid by the Company,
for such employees. The Company shall terminate all of its employees on and as
of the Closing Date.
2.4 Agreement to Issue Graphic Stock.
--------------------------------
(a) Subject to the terms and conditions herein and in exchange for the
Assets, Graphic shall issue and deliver the Graphic Stock to the Company.
(b) Also on the Closing Date, WAC shall acquire the Notes Payable and
deliver to the Related Parties, and to the Escrow Agent in full and complete
consideration therefor, certain shares of Graphic Stock on the terms and
conditions set forth in the Note Purchase Agreement (the "Related Parties
Shares").
(c) To the extent any additional shares of Graphic Common Stock are issued
pursuant to Section 2.6(d) hereof, all of such shares shall be issued into
escrow pursuant to the Escrow Agreement.
(d) During the Escrow Period and subject to the terms and conditions of the
Escrow Agreement, the Company shall be entitled to vote the Escrow Shares
attributable to the Company in all respects and on all matters as to which a
shareholder of Graphic is entitled to vote. Any and all dividends or other
distributions declared and paid with respect to the Escrow Shares shall be
deposited into escrow and shall be distributed pursuant to the Escrow Agreement.
4
<PAGE>
(e) On the Closing Date, Graphic shall issue and deliver to the Escrow
Agent the Escrow Shares (including that portion of the Related Parties Shares to
be held in escrow pursuant to the Note Purchase Agreement) 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 of the
Company as determined under Section 2.6(c) hereof; (ii) adjust the consideration
as set forth in Section 2.6 hereof; and (iii) compensate, in whole or in part,
Graphic, WAC and Mercury for a breach of any representation, warranty or
covenant by the Company or the Stockholder.
(f) During the Escrow Period no party to the Escrow Agreement shall be
entitled to sell, pledge, hypothecate, assign or otherwise dispose of any Escrow
Shares; provided, however, that during the Escrow Period, the Company shall be
entitled to instruct the Escrow Agent to sell shares of Graphic Stock held in
escrow for the Company, provided that all of the proceeds thereof shall be held
in escrow pursuant to the Escrow Agreement and be invested by the Escrow Agent
in United States government securities or in money market funds which deal only
in United States government securities.
(g) It is intended that the acquisition of the Assets shall constitute a
reorganization within the meaning of Section 368 (a)(1)(C) of the Code and that
this Agreement constitutes a "plan of reorganization" for purposes of Section
368 of the Code.
2.5 Closing; Closing Date; Effective Date. Contemporaneously with the
-------------------------------------
execution and delivery of this Agreement and the execution, delivery and
performance of the Note Purchase Agreement, a closing (the "Closing") will be
held on June 10, 1996, (the "Closing Date") at the offices of Johnson, Grusin,
Kee & Surprise, or at such other time and place as the parties shall mutually
agree. The transactions contemplated in this Agreement shall be deemed
effective on and as of the close of business on May 31, 1996 (the "Effective
Date").
2.6 Adjustment of Graphic Stock.
---------------------------
(a) Within 30 days following the Closing Date, the Stockholder shall
prepare and deliver to Mercury: (i) an unaudited balance sheet of the Company
dated as of May 31, 1996 (the "Preliminary Closing Balance Sheet"), which shall
be prepared in accordance with generally accepted accounting principles
consistently applied and which shall include the Net Book Value of the Company
as of the Effective Date (the "Estimated Net Book Value"); and (ii) a schedule
(the "Financial Schedule") setting forth any proposed adjustment to the number
of shares of Graphic Stock issuable in the Reorganization or pursuant to the
Note Purchase Agreement based upon the difference between the Net Book Value of
the Company shown on the Interim Balance Sheet and the Estimated Net Book Value;
provided, however, that accounts receivable may subsequently be valued in the
manner described in Section 2.6(c)(ii) hereof.
(b) Graphic shall, at its expense, cause its certified public accountants,
Kanes Benator & Company, L.L.C., to conduct an audit of the Preliminary Closing
Balance Sheet of the
5
<PAGE>
Company (the "Closing Audit"). The Closing Audit shall be completed and
delivered to the Stockholder within sixty (60) days after the receipt of the
Preliminary Closing Balance Sheet, provided that the Stockholder shall fully
cooperate with Graphic and its auditors in completing the Closing Audit. The
audited closing balance sheet as of May 31, 1996, resulting from the Closing
Audit (the "Closing Balance Sheet") shall be prepared in accordance with
generally accepted accounting principles consistently applied. The results of
the Closing Audit shall be final, binding and conclusive on all parties hereto
unless the Stockholder shall have notified Mercury and Graphic in writing within
thirty (30) days of receipt of the Closing Balance Sheet that he disputes any of
the adjustments or entries set forth on the Closing Balance Sheet. In the event
the Stockholder notifies Mercury and Graphic of any such dispute, and the
parties cannot resolve such dispute within thirty (30) days after Mercury and
Graphic receive such notice, the parties shall submit such disputes to the
accounting firm of Price Waterhouse & Co. ("PW") for resolution. All parties
shall cooperate fully with PW in such firm's review and investigation of such
disputes; including, without limitation, divulging and delivering to PW all such
records, data, work papers, documents, computer discs and other information as
PW may request. PW's decision regarding any such disputes shall be final,
binding and conclusive on the parties and shall have the same force and effect
as an arbitration award issued in accordance with a formal arbitration
proceeding. Such decision may be enforced and entered as a judgment in any
proceeding brought to enforce such decision and the parties hereby acknowledge
and agree that PW's decision shall have the same effect as a final judgment.
The liability of the Company or the Stockholder for matters identified in the
Closing Audit shall not extend beyond the amounts determined through the Closing
Audit, or through the decisions of PW in connection with any disputes arising
from the Closing Audit; provided, however, that such limitation shall not apply
to the extent that any such matters also give rise to a claim or claims for
indemnification by Graphic, WAC or Mercury hereunder. In that event, Graphic,
WAC or Mercury shall be entitled to recover pursuant to such indemnification
only those amounts for which Graphic, WAC or Mercury have not been fully
compensated through the Closing Audit. The fees and expenses of PW shall be
borne by the party whose position in such dispute resolution proceeding does not
prevail. In the event it is not possible to determine which position prevails,
PW shall allocate its fees and expenses among the parties in reasonable relation
to the substantive decision.
(c) The consideration to be paid to the Company for the Assets shall be
adjusted, dollar for dollar, as follows: (i) upward or downward, by the amount
by which the Net Book Value of the Company as shown on the Closing Balance
Sheet, is more or less (whichever is the case) than the Net Book Value of the
Company as shown on the Interim Balance Sheet; (ii) downward, by the face value
of any accounts or notes receivable of the Company which are (A) shown on the
Closing Balance Sheet, (B) in excess of any bad debt reserve provided for in
the Closing Balance Sheet, and (C) remain uncollected one hundred and eighty
(180) days after the date of the Closing Balance Sheet; (iii) downward, dollar
for dollar, to the extent that (A) any finished goods or work-in-process
inventory on hand at Closing shall remain on hand eleven (11) months after the
Effective Date (less the gross profit received from sales of any such
inventories during such eleven month period; however, in no event shall such
gross profit reduce the adjustment to less than zero); or (B) any raw material
inventory on hand at the Effective Date and remaining on hand eleven (11) months
after the Effective Date; or (C) any inventory sold prior to the Effective Date
is returned to WAC within
6
<PAGE>
eleven months after the Effective Date; with the values of such finished goods
inventory for purposes of this provision being equal to the value thereof as
shown on the Closing Balance Sheet and with the value of such returned inventory
being equal to the amount of credit provided to the customer which initially
purchased such inventory in accordance with the Company's historical practice or
the amount of credit negotiated by WAC with such customer; (iv) downward, 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, WAC or
Mercury as a result of the breach of any representation, warranty or covenant of
the Company or of the Stockholder contained herein, in the schedules attached
hereto, in the Secretary's Certificate, in the Employment Agreement, in the
Indemnification Agreement or in the Escrow Agreement.
(d) If the Net Book Value set forth in the Closing Balance Sheet exceeds
the amount set as shown on the Interim Balance Sheet, Graphic shall issue to the
Company additional consideration in the form of Graphic Common Stock determined
by dividing the amount of such excess by the Market Value Per Share. If any
additional shares of Graphic Common Stock are issued pursuant to these
adjustments, such shares shall be issued to the Escrow Agent to be held pursuant
to the Escrow Agreement. If the Net Book Value set forth in the Closing
Balance Sheet is less than the amount set forth as shown on the Interim Balance
Sheet, the Company and the Related Parties shall pay WAC the amount of any such
deficiency in the form of cash or Graphic Common Stock determined by dividing
the amount of such deficiency by the Market Value Per Share. The Company and
the Related Parties shall pay WAC that portion of such additional consideration
as corresponds to the proportionate interest of the Company and the Related
Parties as is set forth on Schedule 2.3 hereto. Any payment in the form of
Graphic Common Stock under this Section 2.6(d) shall be made by rounding the
number of shares of Graphic Common Stock to the closest whole number and no
fractional shares shall be paid or payable. Payment by the Company or the
Related Parties of any deficiencies hereunder may be made in cash or with
shares of Graphic Stock, and if with Graphic Stock, shall first be made from the
Escrow Shares, and if such payment through Escrow Shares is not sufficient to
fully pay such deficiencies, then payment shall be made from other shares of
Graphic Stock held by the Company and the Related Parties. Any deficiency not
satisfied with Graphic Stock shall be paid in cash by the Company and the
Related Parties.
(e) Nothing in this Section 2.6 shall in any way limit or decrease the
liability of the Company, the Stockholder or the Related Parties (except to the
extent of any recovery hereunder) to Graphic, WAC and Mercury for any default or
breach of this Agreement, the Note Purchase Agreement or the documents mentioned
in Section 2.6(c)(iv) above.
(f) In the event there is a reduction in the consideration to be paid the
Company or the Related Parties as set forth in this Agreement, or in the Note
Purchase Agreement the amount of such reduction shall be first paid to WAC from
the Escrow Shares in accordance with the Escrow Agreement, and if the Escrow
Shares are not sufficient to pay such deficiency, the Company, the Stockholder
and the Related Parties shall remain jointly and severally liable therefor.
Such payment
7
<PAGE>
from the Escrow Shares however, shall not be the exclusive remedy of Graphic,
WAC or Mercury for the payment of such reduction.
(g) WAC agrees to use its reasonable efforts, following the Effective Date,
to collect, in the ordinary course of business, all of the accounts or notes
receivable of the Company shown on the Closing Balance Sheet. Any accounts
receivable that are subject to adjustment in consideration pursuant to Section
2.6(c)(ii) above, shall be assigned to the Company following such adjustment in
consideration of $1.00.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
AND THE STOCKHOLDER
The Company and the Stockholder, jointly and severally, represent and
warrant to WAC, Mercury and Graphic as follows:
3.1 Organization; Power; Qualification. The Company is a corporation duly
----------------------------------
organized, validly existing and in good standing under the laws of the State of
Tennessee. The Company has no subsidiaries and is not a party to any joint
venture or other entity nor a partner of any partnership. The Company has the
corporate power and authority to own or lease and operate its properties and to
carry on its business as now being conducted, and is duly qualified and in good
standing and authorized to do business as a foreign corporation in each
jurisdiction set forth on Schedule 3.1, which constitutes each jurisdiction in
which the character of its properties or the nature of its business requires
such qualification and authorization.
3.2 Authority. The execution and delivery of this Agreement by the
---------
Company and Stockholder constitute valid and legally binding obligations of the
Stockholder and the Company, as the case may be, enforceable in accordance with
its terms. The execution and delivery of the Ancillary Agreements by the
Stockholder will constitute the valid and legally binding obligation of the
Stockholder, enforceable in accordance with their respective terms. All
corporate action required to be taken by the Company, including action by its
shareholders, to authorize and approve the execution, delivery and performance
of this Agreement and the Ancillary Agreements, and the consummation of the
transactions contemplated herein and therein has been duly and validly taken.
3.3 Capital Structure. The authorized capital stock of the Company
-----------------
consists of 1000 shares, $1.00 par value, common voting stock, of which 500
shares are issued and outstanding and owned by the Stockholder. The Company has
no treasury shares. All of the shares of the Company's stock issued and
outstanding as of the date hereof are duly authorized, validly issued and fully
paid and nonassessable. There are no warrants, rights, options, subscriptions
or agreements to issue shares of any class of capital stock, securities
convertible into capital stock or property of the Company or other securities
of the Company. There is not any liability for or dividends declared or
accumulated but unpaid with respect to the Company's capital stock. Since the
date of the Company's incorporation, the Company has not directly or indirectly
redeemed, purchased or
8
<PAGE>
otherwise acquired any shares of its capital stock. All shares of the Company's
capital stock have been issued in compliance with applicable and available
exemptions from the registration requirements of the Act and applicable state
securities laws.
3.4 Title to Shares. The Stockholder owns all of the Shares and has good,
---------------
valid and marketable title to the Shares, free and clear of any and all liens,
options, contracts, calls, commitments, demands, encumbrances, equities, pledges
or claims whatsoever except as set forth on Schedule 3.4 hereto.
3.5 No Third Party Options. There are no existing agreements, options,
----------------------
commitments or rights with, of or to any person to acquire any securities of
the Company or any of the Company's assets, properties, or rights, other than
this Agreement.
3.6 Compliance with Laws and Validity of Contemplated Transactions. The
--------------------------------------------------------------
execution, delivery and performance of this Agreement and the Ancillary
Agreements by the Company and the Stockholder in accordance with their
respective terms and the consummation of the transactions contemplated herein
or therein does not and will not (a) violate any law applicable to the
Company, or the Stockholder; (b) conflict with, result in a breach of, or
constitute a default under the Articles of Incorporation or bylaws of the
Company or under any indenture, agreement, or other instrument to which the
Company or the Stockholder is a party or by which they or any portion of their
respective properties may be bound; or (c) result in or require the creation or
imposition of any lien upon or with respect to any property now owned or
hereafter acquired by the Company, or of the Stockholder. No authorization,
approval, or consent of, and no registration or filing with, any governmental or
regulatory official body or authority is required in connection with the
execution, delivery or performance by the Stockholder or the Company of this
Agreement or the Ancillary Agreements.
3.7 Financial Statements.
--------------------
(a) The Financial Statements (i) are in accordance with the books and
records of the Company; (ii) present fairly the assets, liabilities and
financial condition of the Company as of the respective dates indicated and the
results of operations for the respective periods indicated; (iii) with respect
to the determination of Net Book Value, have been prepared in accordance with
generally accepted accounting principles consistently applied; and (iv) reflect
adequate reserves for all known liabilities and reasonably anticipated losses.
The accounting and financial records of the Company have been prepared and
maintained in accordance with sound business practices.
(b) The accounts receivable shown on the Interim Balance Sheet or acquired
by the Company after the date thereof are or will be, acquired or created only
in the ordinary course of business and represent or will represent bona fide
transactions completed in accordance with the terms and provisions contained in
any documents related thereto. All accounts receivable shown on the Interim
Balance Sheet or acquired after the date thereof are fully collectible and free
and clear of any and all liens, claims, charges, encumbrances, security
interests or other rights against such
9
<PAGE>
accounts receivable in favor of others. There are no setoffs, counterclaims or
disputes asserted or conditions precedent to payment therefor with respect to
any such account receivable, no discount or allowance from any such account
receivable has been made or agreed to and, no account receivable represents
billings prior to actual shipment of goods, including "bill and hold" accounts.
Except as set forth on Schedule 3.7, the Company has made no sales on
consignment or subject to return. Schedule 3.7 shall contain a list of any such
consignment or subject to return sales, with a description of the terms and
conditions thereof. The Company has established a bad debt reserve, as shown on
the Interim Balance Sheet and there is no fact or circumstance which would
impair the validity or collectibility of any accounts receivable in an amount in
excess of such bad debt reserve.
(c) Except as set forth on Schedule 3.7(c) all inventories, including raw
materials, work-in-process and finished goods, reflected on the Interim Balance
Sheet or acquired thereafter, (i) are in good condition, consist and will
consist of materials and supplies, of a quality and quantity which are usable or
salable in the ordinary course of business, (ii) are located on the regular
business premises of the Company, (iii) are owned by the Company free of any
liens, claims, charges, encumbrances, security interests or other rights to or
against such inventories in favor of others; (iv) have been or will be acquired
by in bona fide transactions entered into in the ordinary course of business;
and (v) no material portion thereof is obsolete, damaged or unusable in the
ordinary course of the Company's business and are valued at the lower of cost or
net realizable market value thereof. None of such inventory is held on
consignment.
(d) The representations and warranties set forth above in this Section 3.7
shall apply with equal force and effect to the Preliminary Closing Balance Sheet
and to the Closing Balance Sheet and shall be deemed given and made
contemporaneously with the delivery thereof.
3.8 Tax and Other Returns and Reports.
---------------------------------
(a) All federal, state, local and foreign tax returns, reports, statements
and other similar filings required to be filed by the Company, or by the
Stockholder with respect to the business of the Company (the "Tax Returns") in
connection with any federal, state, local or foreign taxes, assessments,
interest, penalties, deficiencies, fees and other governmental charges or
impositions with respect to the business of the Company, (including without
limitation all income tax, unemployment compensation, social security, payroll,
sales and use, excise, privilege, property, ad valorem, franchise, license,
school and any other tax or similar governmental charge or imposition under laws
of the United States or any state or municipal or political subdivision thereof
or any foreign country or political subdivision thereof) (the "Taxes") have been
filed with the appropriate governmental agencies in all jurisdictions in which
such Tax Returns are required to be filed, and all such Tax Returns properly
reflect the liabilities for Taxes for the periods, property or events covered
thereby. All Taxes, including, without limitation, those which are called for
by the Tax Returns have been properly paid or accrued in the Financial
Statements including, without limitation, deferred taxes accrued in accordance
with generally accepted accounting principles. The Company has not received any
notice of any assessment, tax examination, tax claim or proposed assessment in
connection with any Tax Returns, and there are not pending tax examinations of
or tax claims
10
<PAGE>
asserted with respect to the Company. There is no currently outstanding or
effective extension or waiver of the application of any statute of limitations
of any jurisdiction regarding the assessment or collection of any Taxes. There
are no tax liens (other than any lien for current taxes not yet due and payable)
on any of the assets or properties of the Company. The Stockholder has no
knowledge of any basis for any additional assessment of any Taxes.
(b) The Company has withheld and paid all taxes required to have been
withheld and paid in connection with amounts paid or owing to any employee,
independent contractor, creditor, stockholder, or other third party.
3.9 Personal Property.
-----------------
(a) Schedule 3.9(a) contains an accurate and complete, in all material
respects, list of all machinery, vehicles and equipment and other items of
personal property owned by the Company including a description of the location
of such personal property. Except as set forth on Schedule 3.9(a), the Company,
has good title to all such items, free and clear of all liens, claims, charges,
security interests and other encumbrances of any kind or nature. All such items
of personal property are adequate for the continued operation of the business of
the Company as it is presently being conducted, and the Company has not
received any written notification or advice that any of such personal property
does not conform to all applicable laws, ordinances, codes, rules, regulations
and authorizations relating to their construction, use or operation.
(b) Schedule 3.9(b) contains an accurate and complete list of all leases
for machinery, vehicles, equipment or other items of personal property leased by
the Company. Each of the leases disclosed in Schedule 3.9(b) is in full force
and effect and there are no existing defaults or events of default, real or
claimed, or events which with notice or lapse of time, or both, would constitute
a default thereunder. All items of leased personal property are adequate for
the continued operation of the business of the Company as it is presently being
conducted and the Company has not received any written notification or advice
that any of such personal property does not conform to all applicable laws,
ordinances, codes, rules, regulations and authorizations relating to their
construction, use or operation. The continuation, validity and effectiveness of
the personal property leases will in no way be affected by the transactions
contemplated by this Agreement.
3.10 Real Property.
-------------
(a) The Company does not own any real property.
(b) The Lease is in full force and effect and the Company is not in default
with respect thereto. The Company is not aware of any default under the Lease
by the landlord. Except for the Lease, the Company leases no other real
property.
3.11 Intellectual Property. Schedule 3.11 contains an accurate and
---------------------
complete list of all trade names, trademarks, trade styles and service marks,
patents, patent applications, copyrights,
11
<PAGE>
copyright applications, trademark registrations and trademark applications (the
"Intellectual Property") used or useful in the Company's business that are owned
by or registered in the name of the Company or to which the Company has any
rights as licensee or otherwise, giving in each case a brief description of the
terms of such license or other arrangement. The Company has not infringed or
made any unlawful use or received notice of any such claimed infringement or
unlawful use of any such Intellectual Property. The Company has not received
any notice that the manufacture, use or sale by the Company of its products, or
any component or part thereof, nor any manufacturing operation or machinery
employed by the Company, nor any service rendered by the Company violates or
infringes upon any claims of any United States or foreign patent or patent
application owned or held by any third party. The Company owns (or possess
adequate and enforceable rights to use without payment of royalties) all
Intellectual Property necessary for the conduct of, or used in, the business as
the same is presently being conducted.
3.12 Insurance. Schedule 3.12 contains a list and brief description of
---------
the policies of fire, liability and other forms of insurance owned or held by
the Company, or in which the Company is named as an insured party. The
properties and business of the Company of an insurable nature are insured to the
extent and against such risks customarily insured against by corporations of
similar size and in similar businesses. All policies listed on Schedule 3.12
will be outstanding and in full force and effect on the Closing Date, and there
does not exist, and will not exist as of the Closing Date, any claims with
respect to such policies.
3.13 Litigation. Except as set forth on Schedule 3.13, there is no
----------
litigation, arbitration or other similar proceeding pending or, to the Knowledge
of the Stockholder, threatened against or affecting the Company, its respective
properties or its rights or which pertains to the transactions contemplated by
this Agreement. The Stockholder does not know of any reasonably likely basis
for any such litigation, arbitration or similar proceeding, the result of which
would adversely affect the Company, or the transactions contemplated hereby.
Neither the Stockholder nor the Company is a party or subject to the provisions
of any judgment, order, writ, injunction decree or award of any court,
arbitrator, or governmental or regulatory official body or authority which may
adversely affect the Company, its business or the transactions contemplated
hereby.
3.14 Compliance with Laws. The Company is not in default under any order
--------------------
of any court, governmental authority or arbitration board or tribunal, or under
any laws, ordinances, governmental rules or regulations to which it is subject.
The Company has obtained all licenses, permits, easements, rights, applications,
registrations, filings and franchises or other governmental authorizations
("Authorizations") necessary for the ownership or operation of its properties
or the conduct of its business. Set forth on Schedule 3.14 is a complete list
of all such Authorizations. The Company is not in default or has received any
notice of any claim of default with respect to any such Authorization. All of
such Authorizations are renewable in the ordinary course of business without the
need to comply with any special qualification procedures or to pay any amounts
other than routine filing fees. None of such Authorizations will be adversely
affected by consummation of the transactions contemplated hereby.
12
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3.15 Environmental Matters.
---------------------
(a) The operations of the Company have been in the past and are now in
compliance in all material respects with all federal, state and local laws,
statutes, rules, regulations, ordinances, codes, orders, decrees, judgments and
all other governmental requirements and restrictions, now in existence or
hereafter amended or promulgated, relating to pollution, contamination or
protection of the environment or public or employee health or safety (the
"Environmental Laws") including, without limitation, those relating to the
Comprehensive Environmental Response, Compensation and Liability Act of 1980, 42
U.S.C. (S) 9601 et seq., the Resource Conservation and Recovery Act of 1976, 42
U.S.C. (S) 6901 et seq., the Hazardous Materials Transportation Act, 49 U.S.C.
(S) 6901 et seq., the Federal Water Pollution Control Act, 33 U.S.C. (S) 1251 et
seq., the Safe Water Drinking Act, 42, U.S.C. (S) 300f-300j, the Clean Air Act,
42 U.S.C. (S) 7401 et seq., the Occupational Safety and Health Act, and all
other statutory and common law (including, without limitation, nuisance,
trespass, negligence and toxic torts).
(b) Neither the Company nor the Stockholder has been notified or has any
Knowledge that the Company is in violation of any Environmental Laws or that
the Company may be potentially responsible or otherwise liable under any
Environmental Laws. Neither the Company nor the Stockholder has received any
requests for information, notices, pleadings or other documents (including,
without limitation, consent orders, consent decrees, judgments, orders,
complaints or injunctions) relating to (i) the Environmental Laws, (ii)
environmental protection or health or safety matters, or (iii) any statutory or
common law theory of liability involving environmental or health or safety
matters.
(c) The Company has had in the past and presently have all governmental
permits, licenses, consents, approvals and authorizations relating to
environmental protection or health or safety matters (the "Environmental
Permits") necessary to conduct its business. The Company has been in the past
and is presently in compliance with all the Environmental Permits (including,
without limitation, any information provided on the applications therefor and
all restrictions or limitations therein) and have made all appropriate filings
for issuance or renewal of all the Environmental Permits.
(d) No use, storage, treatment, generation recycling, disposal, releases,
threatened releases, handling, burial or placement of any materials regulated
under any Environmental Laws has occurred in the past or is presently occurring
on any property, building or other structure currently or formerly owned,
leased, operated or otherwise used by the Company other than in compliance with
applicable Environmental Laws; and, no materials regulated under any
Environmental Laws have been in the past or are presently on any property,
building or other structure currently or formerly owned, leased, operated or
otherwise used by the Company other than in compliance with applicable
Environmental Laws.
13
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(e) No under or above ground tanks have been in the past or are presently
on, in, at, under, over or about any property, building or other structure
currently or formerly owned, leased, operated or otherwise used by the Company.
(f) The Company has not used any waste disposal site or otherwise disposed
of, transported, or arranged for the transportation of any material regulated
under any Environmental Laws in violation of any Environmental Laws. The
Company has not received any notice of any violation thereof.
(g) To the Knowledge of the Stockholder, there are no past or present
conditions, events, circumstances, facts, activities, incidents, actions,
omissions or plans: (i) that may interfere with or prevent continued compliance
with Environmental Laws and Environmental Permits; or (ii) that give or may give
rise to any liability or other obligation under any Environmental Laws; or (iii)
that form or may form the basis of any claim, action, suit, proceeding, hearing,
investigation or inquiry against or involving the Company, based on or related
to any Environmental Laws or Environmental Permits.
(h) No lien exists, and, to the Knowledge of the Stockholder, no condition
exists which could result in filing a lien, under any Environmental Laws against
any property owned, leased, operated or otherwise used by the Company.
(i) Except as set forth on Schedule 3.15, there are no PCB's or asbestos
located at or on any property owned or leased by the Company.
3.16 Absence of Changes. Since October 31, 1995, except as described on
------------------
Schedule 3.16 and except as Graphic may have consented to in writing, there has
not been any transaction or occurrence in which the Company has: (a) issued or
delivered any stock or other securities or granted any options or rights to
purchase any securities; (b) borrowed any amount or incurred any material
liabilities (absolute or contingent), except in the ordinary course of business;
(c) made any loans or extended any credit to any individual or entity except in
the ordinary course of business; (d) discharged or satisfied any lien or
incurred or paid any obligation or liability (absolute or contingent) other than
current liabilities shown on the Interim Balance Sheet or current liabilities
incurred since such date in the ordinary course of business; (e) declared any
dividend or made any payment (excluding regular compensation which shall not
have changed since October 31, 1995 or distribution to the Stockholder or
purchased or redeemed any shares of its capital stock or other securities
(except for distributions permitted by Section 5.1(i) herein); (f) mortgaged,
pledged or subjected to lien any of its assets, tangible or intangible, other
than liens for current real property taxes not yet due and payable; (g) sold,
assigned or transferred any of its tangible assets, except for sale of inventory
in the ordinary course of business, or entered into any discussions or
negotiations for the sale, assignment or transfer of any such assets, or
canceled any debts or claims other than normal adjustments to customer accounts
in the ordinary course of business and which, in the aggregate do not exceed
$5,000; (h) sold, assigned or transferred any patents, trademarks, trade
14
<PAGE>
names, copyrights, or other Intellectual Property; (i) suffered any material
adverse change in its business or financial position; (j) made any change in its
accounting policies or practices; (k) made any change in employee compensation;
(l) entered into any transaction with a Stockholder, director, officer or
employee of the Company or any member of such person's immediate family; or (m)
entered into any transaction other than in the ordinary course of business or as
otherwise contemplated hereby.
3.17 Absence of Undisclosed Liabilities.
----------------------------------
The Company has no Undisclosed Liabilities.
3.18 Assets. The Company owns or leases all equipment, furniture,
------
fixtures, and other personal property and assets necessary for the continued
operation of its businesses as presently conducted. All the fixed assets of
the Company are in good working order and condition, normal wear and tear
excepted.
3.19 Employees. Schedule 3.19 contains a true and complete list of all
---------
employees of the Company, their salaries or wage rates, accrued vacation and
their location of employment as of May 1, 1996, and a description of all
pension, profit sharing, bonus, medical benefits, group insurance programs or
similar arrangements in effect for employees of the Company. The Company is not
in default with respect to any of its obligations relating to salaries, wages or
group insurance programs in respect of its employees.
3.20 Employee Benefit Plans.
----------------------
(a) The Company has no Plans or Other Benefit Obligations except as set
forth on Schedule 3.20.
(b) The Company has complied, and currently is in compliance, in all
material respects with the applicable provisions of ERISA and the Code with
respect to each Company Plan. and all Other Benefit Obligations. Without
limiting the foregoing:
(A) No transaction prohibited by ERISA (S) 406 and no "prohibited
transaction" under IRC (S) 4975(c) has occurred with respect to any Company
Plan.
(B) The Company has no liability to the IRS with respect to any Plan,
including any liability imposed by Chapter 43 of the Code.
(C) The Company has no liability to the PBGC with respect to any Plan or
has any liability under ERISA (S) 502 or (S) 4071.
15
<PAGE>
(D) All filings required by ERISA and the Code as to each Plan have been
timely filed, and all notices and disclosures to participants required by either
ERISA or the Code have been timely provided.
(E) All contributions and payments made or accrued with respect to all
Company Plans, Other Benefit Obligations, and VEBAs are deductible under Code
(S) 162 or (S) 404. No amount, or any asset of any Company Plan or VEBA, is
subject to tax as unrelated business taxable income.
(c) The Company has not maintained, adopted or established, contributed to
or been required to contribute to, or otherwise participated in or been required
to participate in, any multiemployer plan or any employee benefit plan or other
program or arrangement subject to Title IV of ERISA;
(d) The Company has performed all of its obligations under the Company
Plans and Other Benefit Obligations and VEBA's. The Company has made
appropriate entries in its financial records and statements for all obligations
and liabilities under such Plans, VEBAs and Other Benefit Obligations that have
accrued but are not due.
(e) No statement, either written or oral, has been made by the Company to
any Person with regard to any Plan or Other Benefit Obligation that was not in
accordance with the Plan or Other Benefit Obligation and that could have an
adverse economic consequence to the Company.
(f) Each Company Plan can be terminated within thirty days, without payment
of any additional contribution or amount and without the vesting or acceleration
of any benefits promised by such Plan.
(g) Since October 31, 1995, there has been no establishment or amendment of
any Company Plan, VEBA, or Other Benefit Obligation.
(h) No event has occurred or circumstance exists that could result in a
material increase in premium costs of any Plans and Other Benefit Obligations
that are insured, or a material increase in benefit costs of such Plans and
Obligations that are self-insured.
(i) Other than claims for benefits submitted by participants or
beneficiaries, no claim against, or legal proceeding involving any Company Plan,
Other Benefit Obligation, or VEBA is pending or, to the Knowledge of the Company
or the Stockholder is threatened.
(j) No Company Plan is a stock bonus, pension, or profit-sharing plan
within the meaning of Code (S) 401(a).
(k) Each Qualified Plan of the Company is qualified in form and operation
under Code (S) 401(a); each trust for each such Plan is exempt from federal
income tax under Code (S) 501(a).
16
<PAGE>
Each VEBA is exempt from federal income tax. No event has occurred or
circumstance exists that will or could give rise to disqualification or loss of
tax-exempt status of any such Plan or trust.
(l) The Company and each ERISA Affiliate has met the minimum funding
standard, and has made all contributions required, under ERISA (S) 302 and Code
(S) 402.
(m) No Company Plan is subject to Title IV of ERISA.
(n) The Company has paid all amounts due to the PBGC pursuant to ERISA
(S) 4007.
(o) The Company or any ERISA Affiliate has not ceased operations at any
facility or has not withdrawn from any Title IV Plan in a manner that would
subject any entity to liability under ERISA (S) 4062(e), (S) 4063, or (S)
4064.
(p) The Company or any ERISA Affiliate has not filed a notice of intent to
terminate any Plan or has adopted any amendment to treat a Plan as terminated.
The PBGC has not instituted proceedings to treat any Company Plan as terminated.
No event has occurred or circumstances exists that may constitute grounds under
ERISA (S) 4041 for the termination of, or the appointment of a trustee to
administer, any Company Plan.
(q) No amendment has been made, or is reasonably expected to be made, to
any Plan that has required or could require the provision of security under
ERISA (S) 307 or Code (S)401(a)(29).
(r) No accumulated funding deficiency, whether or not waived, exists with
respect to any Company Plan; and no event has occurred or circumstance exists
that may result in an accumulated funding deficiency as of the last day of the
current plan year of any such Plan.
(s) No reportable event (as defined in ERISA (S) 4043 and in regulations
issued thereunder) has occurred.
(t) Except to the extent required under ERISA (S) 601 et seq. and Code
(S)4980B, the Company does not provide health or welfare benefits for any
retired or former employee or is obligated to provide health or welfare benefits
to any active employee following such employee's retirement or other termination
of service.
(u) No payment that is owed or may become due to any director, officer,
employee, or agent of the Company will be non-deductible to the Company or
subject to tax under
Code (S)280G or (S)4999; nor will the Company be required to "gross up" or
otherwise compensate any such person because of the imposition of any excise tax
on a payment to such person.
17
<PAGE>
(v) The consummation of the Merger will not result in the payment, vesting,
or acceleration of any benefit.
3.21 Labor Matters.
-------------
(a) The Company is not a party to any labor agreement with respect to its
employees with any labor organization, union, group or association and there are
no employee unions (nor any other similar labor or employee organizations) under
local statutes, custom or practice. In the past five years, the Company has not
experienced any attempt by organized labor or its representatives to make the
Company conform to demands of organized labor relating to its employees or to
enter into a binding agreement with organized labor that would cover the
employees of the Company. There is no labor strike, slow-down or other work
stoppage or labor disturbance pending or, to the Knowledge of the Company or the
Stockholder, threatened, against the company nor is any grievance currently
being threatened or asserted, and in the past five years the Company has not
experienced a strike, slow-down or other work stoppage or other labor
disturbance or difficulty. The Company is in compliance in all material
respects with all applicable laws respecting employment practices, employee
documentation, terms and conditions of employment and wages and hours and has
not engaged in any unfair labor practice.
(b) The Company is in compliance with all laws relating to employment,
equal opportunity, nondiscrimination, immigration, wage and hour, occupational
safety and health and plant closings. Schedule 3.21 contains a complete and
accurate list of all claims brought by employees against the Company in the past
three (3) years, including, without limitation, (i) workers compensation claims;
(ii) claims brought by employees before the Equal Employment Opportunity
Commission; (iii) claims brought by employees under the Americans with
Disabilities Act, 49 U.S.C. (S) 1201.01 et seq.; (iv) claims brought by
employees under the Age Discrimination in Employment Act 29 U.S.C. (S) 621 et
seq.; (v) charges brought by employees before the National Labor Relations Board
under the National Labor Relations Act, 29 U.S.C. (S) 151 et seq.; (vi) charges
brought against the Company by the Occupational Safety and Health Administration
or complaints filed against the Company by employees with such administration;
(vii) claims brought by employees under the Occupational Safety and Health Act,
29 U.S.C. (S) 651 et seq.; (viii) claims brought by employees under the Fair
Labor Standards Act before the Department of Labor, 29 U.S.C. (S) 201 et seq.;
or (ix) claims brought by employees asserting violations of state law or state
common law.
3.22 Contracts and Commitments.
-------------------------
(a) Schedule 3.22 sets forth an accurate and complete list of each
Contract, true and complete copies of which have been previously provided to
Graphic or Mercury, which is a:
(i) Contract for employment, or a non-competition agreement with any
present or former employee of the Company:
18
<PAGE>
(ii) Contract with any labor union or other representative of employees;
(iii) Contract for the lease or use of equipment or any real property;
(iv) Contract for the purchase of goods or services in amounts exceeding
$5,000;
(v) Contract for the sale, production or supply of goods or services
(other than purchase orders in amounts not exceeding $10,000);
(vi) Distributor, sales agency or vendor Contract or any franchise or
license agreement;
(vii) Note, debenture, bond, equipment trust agreement, letter of credit
agreement, loan agreement, or other Contract for borrowing or
lending of money, or agreement or arrangement for a line of credit
or guaranty, pledge, or undertaking of the indebtedness of any other
person;
(viii) Contract under the terms of which the Company is, directly or
indirectly, liable upon or with respect thereto or is obligated in
any other way to provide funds with respect of, or to guaranty or
assume, any debt or obligation of any other person or entity, except
endorsements made in the ordinary course of business in connection
with the deposit of items for collection; or
(ix) Contract upon which the business, rights or assets, or condition,
financial or otherwise, of the Company depends or is materially
affected.
(x) Contract for the provision of services by any individual or entity
in excess of $10,000 (including, but not limited to, any Contracts
with attorneys, accountants, consultants or contractors).
(b) Each of the Contracts listed in Schedule 3.22 is in full force and
effect and there are no existing defaults or events of default, real or claimed,
or events which with notice or lapse of time or both would constitute a default
thereunder. None of the Contracts listed in Schedule 3.22, in the reasonable
opinion of the Stockholder contains any provision with which there is a
reasonable likelihood the Company or any other party thereto will be unable to
comply. Except as reflected in such Schedule 3.22, the continuation, validity
and effectiveness of the Contracts, and all other material terms thereof, will
in no way be affected by the transactions contemplated by this Agreement. None
of the Contracts listed in Schedule 3.22 requires the consent of any party to
its assignment in connection with the transactions contemplated hereby except
those consents which have been obtained.
19
<PAGE>
(c) There exists no actual or, to the Knowledge of the Stockholder,
threatened termination, cancellation or limitation of, or any modification or
change in: (i) the business relationship of the Company with any customer or
group of customers of the Company whose purchases individually or in the
aggregate are material to the operations and financial condition of the Company,
(ii) the business relationship of the Company with any material supplier to the
Company, or (iii) the relationship between the Company and any of its employees
not occurring in the ordinary course of business.
3.23 Banks. Schedule 3.23 lists all banks or other financial institutions
-----
with which the Company has an account, line of credit or safe deposit box and
the account numbers thereof and names of persons authorized to act in connection
therewith.
3.24 Transactions with Affiliates. Except as set forth in Schedule 3.24,
----------------------------
no Stockholder or any officer, director or employee of the Company, or any
member of their immediate families or any other of their affiliates, has had,
during the past three years, a relationship or an ownership interest in any
corporation or other entity that is or was during the past three years a party
to any Contract, agreement, business arrangement or relationship with the
Company.
3.25 Corporate Names. The Company has not, during the preceding five
---------------
years, been known as or used, directly or through any predecessor, affiliate or
any acquired entity, any other corporate or fictitious name.
3.26 Customer Relations. The relations with customers or suppliers of the
------------------
Company are continuing in good order, and there are no known outstanding
disputes with customers or suppliers.
3.27 Consents. Except as listed on Schedule 3.27 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 or the Ancillary Agreements on the part of the Company or the
Stockholder or the consummation of the transactions contemplated herein and
therein.
3.28 Broker's or Finder's Fees. Neither the Company nor the Stockholder
-------------------------
nor any of the directors, officers or employees of the Company has employed any
broker, agent or finder or incurred any liability for brokerage fees, agents'
commissions or finder's fees in connection with the transactions contemplated by
this Agreement.
3.29 Securities Representations.
--------------------------
(a) The Stockholder either alone or with his purchaser representative has
such knowledge and experience in financial and business matters that he 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. The Stockholder has had
20
<PAGE>
an opportunity to ask questions and receive answers from the officers and
directors of Graphic concerning Graphic and the terms and conditions of his
investment in Graphic.
(b) The Stockholder has not 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 decision to
exchange his capital stock in the Company as set forth herein, and the
Stockholder is relying solely on the information contained in this Agreement,
and personal investigation.
(c) The Stockholder is presently a bona fide resident of the State of
Tennessee and has no present intention of becoming a resident of any other state
or jurisdiction.
(d) The Stockholder has carefully evaluated his financial resources and
investment position and the risks associated with his investment in Graphic and
acknowledges that he is familiar with and able to bear any economic risk of such
investment.
(e) The Stockholder understands and agrees that the Graphic Stock will be
issued to him without registration under any state or federal law relating to
the registration of securities, except as set forth in Article 8 herein and will
be issued 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 3.29. The Stockholder
is acquiring the Graphic Stock for his own account, to hold for investment, and
with no present intention of dividing his participation with others or reselling
or otherwise participating, directly or indirectly, in the distribution thereof
and shall not make any transfer, sale, or other disposition thereof: (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 to an effective registration under the Act or a transaction
otherwise in compliance with the Act; and (iii) in a manner so that the
disposition of such stock does not cause the transactions contemplated by this
Agreement to fail to qualify as a reorganization under Section 368 of the Code.
(f) The Stockholder has not received any public solicitation or
advertisement concerning an offer to sell Graphic Stock.
3.30 Correctness of Representations. No representation or warranty of the
------------------------------
Stockholder in this Agreement or in any statement, certificate or schedule
furnished by the Company or the Stockholder pursuant hereto, contains or, on the
Closing Date will contain, any untrue statement of a material fact or omits or,
on the Closing Date will omit, to state any material fact necessary in order to
make the statements contained therein not misleading. All such statements,
representations, warranties, certificates and schedules will be true and
complete on and as of the Closing Date as though made on that date. True copies
of all deeds, title insurance policies, mortgages, indentures, notes, plans,
Contracts and other instruments listed on or referred to, or otherwise related
to any item referred to, in the schedules delivered or furnished to Mercury
pursuant to this Agreement have been
21
<PAGE>
delivered to or have been made available to or will be made available for
inspection by Graphic, Mercury and their advisors and representatives.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF WAC, MERCURY AND GRAPHIC
WAC, Mercury and Graphic, jointly and severally, represent and warrant to
the Company and the Stockholder as follows:
4.1 Organization; Power; Qualification. Each of WAC, Mercury and Graphic
----------------------------------
is a corporation duly organized, validly existing and in good standing under the
laws of their respective states of incorporation. Each of WAC, Mercury and
Graphic has the corporate power and authority to own or lease and operate its
properties to carry on its business as now being conducted, and is duly
qualified and in good standing and authorized to do business as a foreign
corporation in each jurisdiction in which the character of its properties or the
nature of its business requires such qualification and authorization.
4.2 Authority. Each of WAC, Mercury and Graphic has the corporate power
---------
and has taken all necessary corporate action to authorize WAC, Mercury or
Graphic, as the case may be, to execute, deliver and perform this Agreement and
the Ancillary Agreements to which it is a party and to consummate the
transactions contemplated hereby and thereby. The execution and delivery by
each of WAC, Mercury and Graphic of this Agreement and the Ancillary Agreements
to which it is a party constitutes the valid and legally binding obligation of
WAC, Mercury or Graphic, as the case maybe, enforceable in accordance with their
respective terms.
4.3 Compliance with Laws and Validity of Contemplated Transactions. The
--------------------------------------------------------------
execution, delivery and performance of this Agreement and the Ancillary
Agreements by Graphic, WAC and Mercury in accordance with their respective
terms and the consummation of the transactions contemplated hereby does not and
will not (a) violate any applicable law, (b) conflict with, result in a breach
of, or constitute a default under their respective Articles of Incorporation or
By-Laws or under any indenture, agreement or other instrument to which either of
them is a party or by which they or any of their properties may be bound; or (c)
result in or require the creation or imposition of any lien upon or with respect
to any material property now owned or hereinafter acquired by Graphic, WAC or
Mercury. No authorization, approval, or consent of and no registration or
filing with, any governmental or regulatory official body or authority is
required in connection with the execution, delivery or performance by Graphic,
WAC or Mercury of this Agreement.
4.4 Graphic Stock. Each share of Graphic Stock, when issued and delivered
-------------
as contemplated by this Agreement and the Escrow Agreement, will be duly
authorized, validly issued, fully paid and non-assessable. None of the Graphic
Stock is subject to any liens or other rights, and there are no options,
warrants, purchase agreements, put agreements, call agreements or other
agreements to which Mercury, WAC or Graphic is a party which relate to or affect
the transfer of the Graphic Stock.
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4.5 Broker's or Finders Fees. None of Graphic, WAC or Mercury or any
------------------------
director, officer or employee of Graphic, WAC or Mercury has employed any
broker, agent or finder or incurred any liability for brokerage fees, agents'
commissions or finder's fees in connection with the transactions contemplated by
this Agreement.
4.6 Graphic Reports. Graphic has delivered to the Company and the
---------------
Stockholder copies of Graphic's Annual Report on Form 10-K (including the Annual
Report to Shareholders) for the fiscal year ended January 31, 1996, all
Quarterly Reports on Form 10-Q for fiscal year ended January 31, 1996, and
Graphic's Proxy Statement for the 1996 Annual Meeting of Shareholders. As of
their respective dates, none of the above-mentioned reports contained any untrue
statement of material fact or omitted to state a material fact required to be
stated therein or necessary to make the statements made therein, in light of the
circumstances in which they were made, not misleading.
4.7 Litigation. Except as set forth in the Graphic Disclosure Documents,
----------
there is no litigation, arbitration or other similar proceeding pending or, to
the Knowledge of Graphic, threatened, against or affecting Graphic, its
properties or rights or which pertains to the transactions contemplated by this
Agreement and which would have a material adverse effect on Graphic or its
consolidated financial condition. Graphic is not a party or subject to the
provisions of any judgment, order, writ, injunction, decree or award of any
court, arbitration, or governmental or regulatory official body or authority
which may adversely affect Graphic or the transactions contemplated hereby.
4.8 Availability of Form S-3. Graphic satisfies all of the conditions
------------------------
precedent for the use of Form S-3 to register for resale of the Graphic Stock as
contemplated herein.
4.9 Reporting Obligations. Graphic has filed all periodic and other
---------------------
reports and information required to be filed by Graphic with the Commission
pursuant to the Securities Exchange Act of 1934, as amended.
4.10 Compliance with Laws. To the Knowledge of Graphic, Graphic is not in
--------------------
default under any order of any court, governmental authority or arbitration
board or tribunal, or under any laws, ordinances, governmental rules or
regulations to which it is subject and Graphic has not received any notice of
any such default. Graphic, WAC and Mercury have obtained all licenses, permits,
easements, rights, applications, registrations, filings and franchises or other
governmental authorizations ("Authorizations") necessary to the ownership of
their respective properties or the conduct of their respective business. None
of Graphic, WAC or Mercury is in default or has not received any notice of any
claim of default with respect to any such Authorization.
4.11 No Other Representations. None of Graphic, WAC or Mercury has
------------------------
received any representations or warranties, other than those set forth in this
Agreement, from the officers, directors, affiliates, agents, representatives or
stockholders of the Company in making its decision to engage in the transaction
contemplated herein and Graphic, WAC and Mercury are relying solely on the
information contained in this Agreement and personal investigation.
23
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4.12 Absence of Changes. Since January 31, 1996, and except as set forth
------------------
in the Graphic Disclosure Documents, Graphic has not engaged in any transactions
or suffered any events which, on a consolidated basis, would have a material
adverse effect upon Graphic or its consolidated financial condition.
4.13 Correctness of Representations. No representation or warranty of
------------------------------
Graphic, WAC or Mercury in this Agreement or in any statement, certificate or
schedule furnished by Graphic or Mercury pursuant hereto, contains or, on the
Closing Date will contain, any untrue statement of a material fact or omits or,
on the Closing Date will omit, to state any material fact necessary in order to
make the statements contained therein not misleading. All such statements,
representations, warranties, certificates and schedules will be true and
complete on and as of the Closing Date as though made on that date.
ARTICLE 5
OBLIGATIONS AND COVENANTS OF THE COMPANY
AND THE STOCKHOLDER
5.1 Conduct of Business Prior to Closing. From the Effective Date to the
-------------------------------------
Closing Date, and except to the extent that Graphic, WAC and Mercury shall
otherwise consent in writing, which consent shall not be unreasonably withheld,
delayed or conditioned, the Stockholder and the Company shall have:
(a) operated the Company's business as presently operated and only in the
ordinary course, and used their best efforts to preserve intact its good will,
reputation and present business organization and to preserve its relationships
with persons having business dealings with it;
(b) maintained all of the Company's properties in good order and condition,
reasonable wear and use excepted;
(c) taken all steps reasonably necessary to maintain the Company's
intangible assets, including without limitation, its patents, trademarks, trade
names, copyrights, licenses and any pending applications therefor;
(d) paid the Liabilities or other obligations of the Company and collect
its accounts receivable in accordance with the Company's past business
practices;
(e) complied with all laws materially applicable to the conduct of the
Company's business;
(f) not taken any action that would constitute a breach of Section 3.16
hereof;
24
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(g) not entered into any settlement regarding any claim, dispute or other
cause of action brought against the Company by any third party except for
settlements of customer disputes made by the Company in the ordinary course of
business;
(h) not sold, or otherwise disposed of, any assets of the Company other
than in the ordinary course of business;
(i) not purchased, redeemed or otherwise acquired any shares of Company
Stock or pay or make any distributions with respect to any shares of Company
Stock; provided, however, that the Company shall be entitled to pay to the
Stockholder such amounts as may be necessary to pay his estimated 1995 federal
and state income taxes due to the Company's status as an S corporation;
(j) increased or changed the rate of compensation for any officer,
director, agent or employees of the Company or paid any bonus, incentive
compensation or other amount of any officer, director, agent or employee of the
Company; and
(k) submitted all Contracts to which the Company is to become a party
between the date hereof and the Closing Date for approval by, or on behalf of,
WAC (other than Contracts entered into in the ordinary course of business
including less that $5,000 in annual payments).
5.2 No Solicitation. From the Effective Date to the earlier of the
---------------
Closing Date or termination date hereof, the Company and the Stockholder did
not, (a) initiate, solicit or encourage any inquiries or proposals by, or (b)
enter into any discussions or negotiations with, or disclose directly or
indirectly any information concerning its business and properties to, or afford
any access to its properties, books and records to, any person other than
Mercury in connection with any possible proposal (an "Acquisition Proposal")
regarding the sale, merger, consolidation, or similar transaction with respect
to the Company. The Stockholder shall notify Mercury and Graphic immediately if
any discussions or negotiations are sought to be initiated or such information
is requested with respect to an Acquisition Proposal.
5.3 Notification of Changes. The Company shall promptly notify Mercury,
-----------------------
WAC and Graphic in writing of any material adverse change in the financial
condition of the Company, the method of conducting its operations, any material
damage to or loss of any property used in the business of the Company, or the
institution of or the threat of institution of legal proceedings against the
Company, between the Effective Date and the Closing Date.
5.4 Tax Returns. All Tax Returns of the Company required to be filed by
-----------
the Closing Date, taking into account any extensions of the filing deadlines
granted to the Company, that have not yet been filed prior to the date hereof
(including those relating to periods after the Effective Date) shall be prepared
by the Company but shall not be filed without prior examination by, or on behalf
of, Mercury, WAC and Graphic. The Company shall use its best efforts to obtain
all extensions of time from governmental authorities necessary to effect this
provision.
25
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5.5 Allocation of Taxable Income to Short Period. The Stockholder shall
--------------------------------------------
cause the Company to close its permanent books and records (including work
papers) as of the close of business on the date immediately preceding the
Effective Date in accordance with Treasury Regulation 1.1502-76(b)(4)(1), in
order to permit the Company's taxable income for the tax periods ending on the
date immediately preceding the Effective Date to be reported determined on the
basis of income shown on their permanent books and records (including
workpapers).
5.6 Other Pre-Closing Returns.
-------------------------
(a) The Stockholder shall cause the Company to prepare and file all
federal and state income tax returns for all tax periods ending on or before the
Effective Date. Such returns will be filed on the basis of the income
allocations described in Section 5.5 above.
(b) The Stockholder shall cause the Company to include the results of the
Company's operations in any separate state or local income tax return for any
taxable year which is due on or before the Effective Date and to file such
returns on a timely basis.
5.7 General Cooperation in Tax Matters. After the Closing Date, the
----------------------------------
Stockholder and the Company shall cooperate fully with Graphic, WAC and Mercury
and shall make available to Graphic and Mercury, as reasonably requested, and to
any taxing authority, all information, records, or documents relating to
liabilities or potential liabilities for taxes of, or related to, the Company,
for all periods ending on or before the Effective Date and shall preserve all
such information, records, and documents until the expiration of any applicable
statute of limitations or extensions thereof.
5.8 Compliance with Laws. Between the Effective Date and the Closing Date
--------------------
the Company shall have complied with all applicable laws and regulations
including without limitation, those as may be required for the consummation of
the transactions contemplated by this Agreement.
5.9 Consents of Others. To the extent that the consummation of the
------------------
transactions provided for herein requires the consent or approval of a third
party, whether to avoid the occurrence of an event of default under any
Contract, license, lease or agreement to which the Company is a party or by
which its assets are bound or otherwise, or under any governmental law or
regulation, the Company shall use its best efforts to obtain any such consent or
approval.
5.10 Reorganization Treatment. The Company shall prepare and file all
------------------------
tax returns of the Company on the basis of treating this transaction as a
reorganization pursuant to Section 368(a)(1)(C) of the Code.
26
<PAGE>
ARTICLE 6
COVENANTS OF GRAPHIC, WAC AND MERCURY
6.1 Release of Guaranties. Mercury, WAC and Graphic shall each use
---------------------
their best efforts to cause the Stockholder to be released from any guaranties,
provided that such efforts shall not include the payment of money in
consideration for such release.
6.2 Filing of NASDAQ Notice. Graphic shall file a NASDAQ National Market
-----------------------
Notification for Listing Additional Shares pursuant to SEC Rule 10(b)-17 as soon
as practicable after the determination of the number of shares of Graphic Stock
to be issued hereunder.
6.3 General Cooperation in Tax Matters. After the Closing Date, Graphic,
----------------------------------
WAC and Mercury shall cooperate fully with the Company and shall make available
to the Company, as reasonably requested, and to any taxing authority, all
information, records, or documents relating to liabilities or potential
liabilities for taxes of, or related to, the Company, for all periods ending on
or before the Effective Date and shall preserve all such information, records,
and documents until the expiration of any applicable statute of limitations or
extensions thereof. So long as taxable periods of, or related to the Company
ending on or before the Effective Date remain open, Graphic shall promptly
notify the Company in writing of any pending or threatened tax audits or
assessments for which the Company has liability within thirty (30) days
following the receipt by Graphic or any affiliate of notice of such pending or
threatened audit or assessment.
6.4 Notification of Changes. Graphic, WAC and Mercury shall promptly
-----------------------
notify the Company in writing of any material adverse change in the financial
condition of Graphic, WAC or Mercury, the method of conducting their respective
operations, any material damage to or loss of any property used in the business
of Graphic, WAC or Mercury, or the institution of or the threat of institution
of legal proceedings against Graphic, WAC or Mercury between the Effective Date
and the Closing Date.
6.5 Compliance with Laws. Between the Effective Date and the Closing
--------------------
Date, Graphic, WAC and Mercury shall have complied with all applicable laws
and regulations including without limitation, those as may be required for the
consummation of the transactions contemplated by this Agreement.
6.6 Consents of Others. To the extent that the consummation of the
------------------
transactions provided for herein requires the consent or approval of a third
party, whether to avoid the occurrence of an event of default under any
contract, license, lease or agreement to which Graphic, WAC or Mercury is a
party or by which its assets are bound or otherwise, or under any governmental
law or regulation, Graphic, WAC and Mercury shall use their best efforts to
obtain any such consent or approval.
27
<PAGE>
ARTICLE 7
CONDITIONS TO CONSUMMATION OF TRANSACTION
7.1 Conditions to Obligations of Mercury, WAC and Graphic. The
------------------------------------------------------
obligation of Mercury, WAC and Graphic to consummate the Reorganization is
subject to the satisfaction at or prior to the Closing of each of the following
conditions:
(a) Each of the representations and warranties of the Company and the
Stockholder contained in this Agreement shall be true and correct in all
material respects as of, and shall not have been violated in any material
respect at, the Closing Date as though made on and as of the Closing Date; the
Stockholder and the Company shall, on or before the Closing Date, have performed
in all material respects all of their obligations under this Agreement which by
the terms hereof are to be performed by them on or before the Closing; and the
Stockholder and the Company shall have delivered to Mercury, WAC and Graphic a
certificate dated as of the date of the Closing to the foregoing effect.
(b) No action or proceeding by or before any court or other governmental
body shall have been instituted by any governmental body or other person or
entity or threatened in writing which seeks to restrain, prohibit or invalidate
the Reorganization or the Note Purchase Agreement or which would have a
material adverse effect on WAC's ability to conduct the business of the Company
as presently conducted or which claims material damages from Mercury, WAC or
Graphic with respect to the Reorganization.
(c) The Company shall have delivered to Mercury and Graphic a certificate
of the Company's Secretary certifying as to the requisite corporate or other
action authorizing the Reorganization, incumbency and related matters.
(d) All current officers and directors of the Company shall have submitted
their resignations to WAC.
(e) The Stockholder shall have executed and delivered the Employment
Agreement, substantially in the form of Exhibit "A" hereto.
(f) The Stockholder and the Company shall have executed and delivered the
Escrow Agreement, substantially in the form of Exhibit "B" hereto.
(g) The Stockholder shall have executed and delivered the Indemnification
Agreement, substantially in the form of Exhibit "C" hereto.
(h) The owner of the Leased Facility shall have executed and delivered the
Lease Agreement and Amendment, substantially in the form of Exhibit "E" hereto.
28
<PAGE>
(i) The Related Parties and WAC shall have executed and delivered the Note
Purchase Agreement. The closing of the transactions contemplated in the Note
Purchase Agreement shall occur simultaneously with the Closing.
(j) Mercury, WAC and Graphic shall have received the opinion of Johnson,
Grusin, Kee & Surprise, counsel to the Company and the Stockholder,
substantially in the form of Exhibit "F" hereto.
(k) The Company shall have executed and delivered the Bill of Sale
substantially in the form of Exhibit "H" hereto; the Assignment and Assumption
Agreement substantially in the form of Exhibit "I" hereto; and such other bills
of sale, endorsements, assignments third party consents and other instruments of
sale, conveyance or assignment, in form and substance satisfactory to WAC,
Mercury and Graphic, sufficient to vest in WAC title to the Assets, free and
clear of any Encumbrances.
7.2 Conditions to Obligations of the Company and the Stockholder. The
------------------------------------------------------------
obligation of the Company and the Stockholder to consummate the Reorganization
is subject to the satisfaction at or prior to the Closing of each of the
following conditions:
(a) Each of the representations and warranties of Mercury, WAC and Graphic
contained in this Agreement shall be true and correct in all material respects
as of, and shall not have been violated in any material respect at, the Closing
Date as though made on and as of the Closing Date; Mercury, WAC and Graphic
shall, on or before the Closing, have performed in all material respects all of
their obligations under this Agreement which by the terms hereof are to be
performed by them on or before the Closing Date; and each of Mercury, WAC and
Graphic shall have delivered to the Company a certificate of one of its officers
dated as of the date of the Closing to the foregoing effect.
(b) No action or proceeding by or before any court or other governmental
body shall have been instituted by any governmental body or other person or
entity or threatened in writing which seeks to restrain, prohibit or invalidate
the Reorganization or the transactions contemplated in the Note Purchase
Agreement which would have a material adverse effect on the right of the
Company to consummate the Reorganization or which claims material damages from
the Company with respect to the Reorganization.
(c) Mercury, WAC and Graphic shall have delivered to the Company
certificates of their respective corporate secretaries certifying as to the
requisite corporate and other action authorizing the Reorganization and the
incumbency of their respective officers and related matters.
(d) Mercury, WAC and Graphic shall have executed and delivered the Escrow
Agreement, substantially in the form of Exhibit "B" hereto.
29
<PAGE>
(e) Mercury, and WAC shall have executed and delivered the Employment
Agreement, substantially in the form of Exhibit "A" hereto.
(f) Mercury, WAC and Graphic shall each have executed and delivered the
Indemnification Agreement, substantially in the form of Exhibit "C" hereto.
(g) Mercury and WAC shall have executed and delivered the Lease Assignment
and Amendment, substantially in the form of Exhibit "E" hereto.
(h) WAC, Mercury, Graphic and the Related Parties shall have executed and
delivered the Note Purchase Agreement. The closing of the transactions
contemplated in the Note Purchase Agreement shall occur simultaneously with the
Closing.
(i) The Company shall have received the opinion of Lawrence M. Gold, P.C.,
counsel to Mercury, WAC and Graphic, substantially in the form of Exhibit "G"
hereto.
(j) Mercury and WAC shall have executed and delivered the Assignment and
Assumption Agreement substantially in the form of Exhibit "I" hereto.
7.3 Fulfillment of Conditions. Each party to this Agreement shall use
-------------------------
his, or its best efforts to satisfy each and every condition to such party's
obligation to consummate the transactions contemplated herein.
ARTICLE 8
REGISTRATION OF GRAPHIC STOCK
8.1 Registration. Graphic shall prepare and file with the Commission a
------------
Registration Statement on Form S-3 as soon as practicable after the Closing
Date, and in no event later than ninety (90) days after the Effective Date,
which shall cause the Graphic Stock to be registered for resale by the Company,
and Graphic shall use reasonable best efforts to have such registration become
effective and not abandon the filing. The Company shall receive a copy of the
Registration Statement prior to filing for review, and the Company shall
represent and warrant that the information contained in the Registration
Statement concerning him and the intended method of distribution of the
securities covered by the Registration Statement is true, complete, and correct.
If at any time during the Effective Period, Graphic is unable to maintain such
registration on Form S-3, Graphic shall utilize Form S-1 or such other
registration form as Graphic deems appropriate in order to fulfill its
obligations under this Article 8. No registration shall be made, however, with
respect to any Graphic Stock issued pursuant to Sections 2.6(c) and (d) herein
as the result of any upward adjustment in consideration for the Reorganization
and the provisions of this Article 8 shall not apply to any such shares of
Graphic Stock.
30
<PAGE>
8.2 Furnishing Information. The Company shall furnish to Graphic such
----------------------
information regarding the Company or the Graphic Stock and the intended method
of disposition of such securities, as shall be reasonably requested by Graphic
in order to effect such registration.
8.3 Prospectus Requirements. The Company hereby covenants with Graphic
-----------------------
that it will promptly advise Graphic of any changes in the information
concerning the Company contained in the Registration Statement and that the
Company will not make any sale of Graphic Stock pursuant to the Registration
Statement without complying with the prospectus delivery requirements of the
Act. The Company acknowledges that occasionally there may be times when
Graphic must temporarily suspend the use of the prospectus forming a part of the
Registration Statement until such time as an amendment to the Registration
Statement has been filed by Graphic and declared effective by the Commission,
the relevant prospectus has been supplemented by Graphic or until such time as
Graphic has filed an appropriate report with the Commission pursuant to the
Securities Exchange Act of 1934, as amended. During any such period in which
sales are suspended and upon reasonable prior notice of such suspension from
Graphic, the Company agrees not to sell any shares of Graphic Stock pursuant to
any such prospectus; provided however that Graphic shall use its reasonable best
efforts to file any required amendment, supplement, or report with the
Commission within 30 days of such suspension. The Company covenants that it
will not sell any shares pursuant to any prospectus during the period commencing
at the time at which Graphic gives the Company notice of the suspension of the
use of a given prospectus and ending at the time Graphic gives notice that the
Company may thereafter effect sales pursuant to a given prospectus.
8.4 Maintenance.
-----------
(a) Graphic agrees to (i) use its best efforts to keep the Registration
Statement continuously effective (including by filing amendments and supplements
thereto) in order to permit the disposition of the Graphic Stock until the
second anniversary of the Closing Date or the sale by the Company of all of the
Graphic Stock, whichever is earlier (collectively, the "Effective Period"), and
(ii) prepare and file with the Commission, as soon as reasonably practicable,
such amendments and supplements to the Registration Statement as may be
necessary to keep the Registration Statement effective continuously during the
Effective Period.
(b) Graphic agrees to cause the Registration Statement and the related
prospectus, and any amendment or supplement thereto, as of the effective date of
the Registration Statement, amendment, or supplement during the Effective
Period, (1) to comply in all material respects with the applicable registration
requirements of the Act and the rules and regulations promulgated by the
Commission thereunder, and (2) not to contain any untrue statement of a material
fact or omit to state a material fact required to be stated therein or necessary
to make the statements therein not misleading, other than information confirmed
by the Company pursuant to Section 8.2 or statements or omissions made in
reliance upon and in conformity with information furnished to Graphic in writing
by or on behalf of the Company expressly for use in the Registration Statement
and the related prospectus, or any amendment or supplement thereto.
31
<PAGE>
(c) In connection with the Registration Statement, Graphic agrees, as soon
as reasonably practicable, to:
(i) furnish to the Company such number of copies of the Registration
Statement, each amendment and supplement thereto, and prospectus included in the
Registration Statement and such other related documents as the Company may
reasonably request;
(ii) notify the Company promptly of any request by the Commission for the
amending or supplementing of the Registration Statement or prospectus forming a
part thereof;
(iii) advise the Company after Graphic receives notice or otherwise
obtains knowledge of the issuance of any order by the Commission suspending the
effectiveness of the Registration Statement or amendment or supplement thereto
or of the initiation or threatening of any proceeding for that purpose, and
promptly use its best efforts to prevent the issuance of any stop order or to
obtain its withdrawal promptly if such stop order should be issued;
(iv) use its best efforts to register or qualify the Graphic Stock under
such other securities or blue sky laws of such jurisdictions within the United
States and Puerto Rico as the Company shall reasonably request (provided that
Graphic shall not be obligated to qualify as a foreign corporation to do
business under the laws of any jurisdiction in which it is not then qualified or
to file any general consent to service of process), and do such other reasonable
acts and things as may be required of it to enable the Company to consummate the
disposition of Graphic Stock in any of the aforementioned jurisdictions; and
(v) notify the Company at any time when a prospectus relating to the
Registration Statement is required to be delivered under the Act, of the
happening of any event as a result of which the Registration Statement contains
an untrue statement of material fact or omits to state any material fact
required to be stated therein or necessary to make the statements therein not
misleading, and prepare a supplement or amendment to the Registration Statement
so that the Registration Statement will not contain any untrue statement of a
material fact or omit to state any material fact required to be stated therein
or necessary to make the statements therein not misleading.
8.5 Combined Registration Statement. The Company expressly acknowledges
-------------------------------
and agrees that in fulfilling its registration obligations pursuant to this
Article 8, Graphic may combine the registration of the Graphic Stock issued in
the Reorganization and the Graphic Stock issued pursuant to the Note Purchase
Agreement into one Registration Statement and multiple Registration Statements
shall not be required.
8.6 Indemnification.
---------------
(a) Graphic agrees to indemnify, defend and hold harmless the Company from
and against all loss, damages, liabilities, expenses, costs, fees and
disbursements of counsel (including the reasonable fees and expenses of legal
counsel to the Company), and actions to which
32
<PAGE>
they may become subject, under the Act or otherwise, insofar as such loss,
damage, liability, expense or claim (or action in respect thereof) arises out of
or is based upon any untrue statement or alleged untrue statement of a material
fact contained in the Registration Statement or prospectus contained therein (or
any amendment or supplement thereto) or arises out of or is based upon any
omission or alleged omission to state in any thereof a material fact required to
be stated therein or necessary to make the statements in any thereof not
misleading, and will reimburse the Company and such other persons for any legal
or any other expenses incurred in connection with investigating or defending any
such action or claim, except insofar as the same may have been caused by any
untrue statement or omission contained in the information confirmed by the
Company pursuant to Section 8.2 or based upon information furnished to Graphic
in writing by or on behalf of the Company expressly for use therein.
(b) The Company agrees to indemnify, defend and hold harmless Graphic and
its officers, directors, affiliates, agents, employees and controlling persons
(within the meaning of Section 15 of the Act) from and against all loss,
damages, liabilities, expenses, costs, fees and disbursements of counsel
(including the reasonable fees and expenses of legal counsel to Graphic), and
actions to which they may become subject, under the Act or otherwise, insofar as
such loss, damage, liability, expense or claim (or action in respect thereof)
arises out of or is based upon (i) any untrue statement of a material fact
contained in the Registration Statement or in any prospectus contained therein
(or any amendment or supplement thereto) or which arises out of or is based upon
any failure to state a material fact required to be stated therein or necessary
to make any statement contained therein not misleading, to the extent that such
untrue statement or omission is contained in the information confirmed by the
Company pursuant to Section 8.2 or is made in reliance upon or in conformity
with information furnished in writing by or on behalf of the Company expressly
for inclusion in the Registration Statement or prospectus contained therein (or
any amendment or supplement thereto), and (ii) the failure by the Company to
comply with the covenants contained in Section 8.3 above, and will reimburse
Graphic and such other persons for any legal or any other expenses incurred in
connection with investigating or defending any such action or claim.
8.7 Fees and Expenses of Registration. Graphic will pay all expenses and
---------------------------------
fees incident to the performance of its obligations in Sections 8.1, 8.3 and 8.4
other than selling commissions and fees and expenses of advisors to the Company.
ARTICLE 9
TERMINATION; AMENDMENTS; WAIVER
9.1 Termination. This Agreement may be terminated, and the transaction
-----------
contemplated hereby may be abandoned, at any time prior to the Closing Date:
(a) by the written consent of Mercury, WAC, Graphic and the Company;
33
<PAGE>
(b) by Mercury, Graphic or the Company if, without a material breach of the
terminating party, the Closing shall not have occurred on or before June 15,
1996, which date may be extended by mutual consent of the parties;
(c) by Mercury, WAC or Graphic if there has been a misrepresentation,
breach of warranty or breach of covenant or agreement by the Stockholder or the
Company in their representations, warranties, covenants or agreements set forth
herein; or
(d) by the Stockholder or the Company if there has been a
misrepresentation, breach of warranty or breach of covenant or agreement by
Mercury, WAC or Graphic in their representations, warranties, covenants or
agreements set forth herein.
9.2 Effect of Termination. In the event of the termination and
---------------------
abandonment of this Agreement pursuant to Section 9.1 hereof, this Agreement
shall forthwith become void and have no effect, other than the provisions of
Section 10.7 which shall survive. Nothing contained in this Section 9.2 shall
relieve any party from liability for any breach of this Agreement occurring
before such termination.
ARTICLE 10
MISCELLANEOUS
10.1 Entire Agreement; Assignment. This Agreement, together with any
----------------------------
confidentiality agreements between the parties hereto, and the Ancillary
Agreements: (a) constitute, with the schedules and the exhibits hereto, the
entire agreement among the parties with respect to the subject matter hereof and
supersedes all prior agreements and understandings, both written and oral, among
the parties or any of them with respect to the subject matter hereof and thereof
and (b) shall not be assigned by operation of law or otherwise, provided that
Mercury may assign its respective rights and obligations to any direct
subsidiary of Graphic, but no such assignment shall relieve Mercury of its
obligations hereunder.
10.2 Validity. The invalidity or unenforceability of any provision of
--------
this Agreement shall not affect the validity or enforceability of any other
provisions of this Agreement, each of which shall remain in full force and
effect.
10.3 Notices. All notices, requests, claims, demands and other
-------
communications hereunder shall be in writing and shall be deemed to have been
duly given, effective and received when delivered in person or by electronic
facsimile transmission, cable, telegram, telex, or a courier, or five (5) days
following the date such notice is mailed by registered or certified mail
(postage prepaid, return receipt requested), to the respective parties as
follows:
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If to Mercury, WAC or Graphic:
Graphic Industries, Inc.
2155 Monroe Drive, N.E.
Atlanta, Georgia 30324
Telecopy: (404) 874-7589
Attention: Mark C. Pope IV, President
with a copy to:
Mercury Printing Company, Inc.
2929 Convair Road
Memphis, Tennessee
Attn: Mr. Bill Hyatt, President
and with a copy to:
Lawrence M. Gold, P.C.
100 Galleria Parkway
Suite 695
Atlanta, Georgia 30339
Telecopy: (770) 933-9605
If to the Stockholder, at the address
listed on the signature pages hereof.
If to the Company at:
The Wimmer Companies, Inc.
4210 B.F. Goodrich Blvd.
Memphis, Tennessee 38118
with a copy to:
Johnson, Grusin, Kee & Surprise
Suite 202
780 Ridge Lake Blvd.
Memphis, Tennessee 38120
Attn: Martin A. Grusin, Esquire
or to such other address as the person to whom notice is given may have
previously furnished to the others in writing in the manner set forth above
(provided that notice of any change of address shall be effective only upon
actual receipt thereof.
35
<PAGE>
10.4 Governing Law. This Agreement shall be governed by and construed in
-------------
accordance with the laws of the State of Tennessee, regardless of the laws that
might otherwise govern under applicable principles of conflicts of laws thereof.
10.5 Descriptive Captions. The descriptive captions herein are inserted
--------------------
for convenience of reference only and are not intended to be part of or to
affect the meaning or interpretation of this Agreement.
10.6 Counterparts. This Agreement may be executed in two or more
------------
counterparts, each of which shall be deemed to be an original, but all of which
together shall constitute one and the same agreement.
10.7 Expenses. All costs and expenses of Graphic, WAC or Mercury
--------
associated with legal and audit services incurred in connection with the
Reorganization shall be paid by Graphic. The Company will pay its legal and
other expenses. Any expense incurred by the Company in connection with the
transactions contemplated by this Agreement shall be accrued in full on the
financial records of the Company as of the Closing Date and constitute an
adjustment to the Closing Balance Sheet.
10.8 Parties in Interest. This Agreement shall be binding upon and inure
-------------------
solely to the benefit of each party hereto, and nothing in this Agreement,
express or implied, is intended to confer upon any other person any rights or
remedies of any nature whatsoever under or by reason of this Agreement.
10.9 No Waiver. No failure on the part of any party hereto to exercise,
---------
and no delay in exercising any right, power or remedy 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.
10.10 Best Efforts. All parties to this Agreement hereby covenant and
------------
agree to use their best efforts to perform all of their respective covenants,
agreements and obligations hereunder and to cooperate fully with each other to
consummate the Reorganization and the related transactions referred to herein.
10.11 Survivability. The representations, warranties and covenants set
-------------
forth in this Agreement shall survive for a three (3) year period following the
Closing Date, except for the representations, warranties and covenants set forth
in Sections 3.4, 3.5, 3.8, 3.20 and 3.29 which shall survive for a period of
seven (7) years after the Closing Date.
36
<PAGE>
10.12 Bulk Sales Waiver. The parties hereto mutually waive compliance
-----------------
with the bulk sales laws of the State of Tennessee in connection with the
transactions contemplated herein and hereby indemnify and agree to hold harmless
each other from and against any and all liability, claim, loss, damage or
expense (including court costs and reasonable attorney's fees) arising out of or
in any manner relating to failure to comply with such bulk sales laws.
37
<PAGE>
IN WITNESS WHEREOF, each of the parties has caused this Agreement to be
executed as of the day and year first above written.
GRAPHIC INDUSTRIES, INC.
By:
-------------------------------------
Name:
-----------------------------------
Title:
----------------------------------
MERCURY PRINTING COMPANY, INC.
By:
-------------------------------------
Name:
-----------------------------------
Title:
----------------------------------
WIMMER ACQUISITION CORP.
By:
-------------------------------------
Name:
-----------------------------------
Title:
----------------------------------
THE WIMMER COMPANIES, INC.
By:
-------------------------------------
Name:
-----------------------------------
Title:
----------------------------------
----------------------------------------
Glen A. Wimmer
SSN:
------------------------------------
Address:
--------------------------------
--------------------------------
38
<PAGE>
AGREEMENT AND PLAN OF REORGANIZATION
------------------------------------
WITH
----
THE WIMMER COMPANIES, INC.
--------------------------
EXHIBITS
--------
Exhibit "A" - Employment Agreement
Exhibit "B" - Escrow Agreement
Exhibit "C" - Indemnification Agreement
Exhibit "D" - [Omitted]
Exhibit "E" - Lease Assignment and Amendment
Exhibit "F" - Opinion of Counsel for Company and the Stockholder
Exhibit "G" - Opinion of Lawrence M. Gold, P.C.
Exhibit "H" - Bill of Sale
Exhibit "I" - Assignment and Assumption Agreement
The Schedules and Exhibits to this Agreement have been omitted from this
filing, however, copies will be filed supplementally with the Commission upon
request.
39
<PAGE>
SCHEDULES
---------
Schedule 3.1 Foreign Qualifications
Schedule 3.7(b) Claims Against Accounts Receivable
Schedule 3.7(c) Inventory Claims
Schedule 3.9(a) Personal Property
Schedule 3.9(b) Leases
Schedule 3.11 Intellectual Property
Schedule 3.12 Insurance
Schedule 3.13 Litigation
Schedule 3.14 Authorizations
Schedule 3.15 Environmental Matters
Schedule 3.16 Changes Since October 31, 1995
Schedule 3.19 Employees
Schedule 3.20 Benefit Plans
Schedule 3.21 Labor Claims
Schedule 3.22 Contracts
Schedule 3.23 Bank Accounts
Schedule 3.24 Transactions with Affiliates
Schedule 3.27 Consents
40
<PAGE>
Exhibit 2(b)
NOTE PURCHASE AGREEMENT
THIS AGREEMENT is made and entered into as of the 31st day of May, 1996,
between and among those persons and entities listed on Exhibit "A" attached
hereto and made a part hereof, with the states of organization or counties of
residence, as the case may be, also set forth in Exhibit "A", each of whom is
the bona fide holder of certain promissory notes issued by The Wimmer Companies,
Inc., a Tennessee corporation (the "Company"), and more particularly described
herein (individually a "Note Holder" and collectively, the "Note Holders");
Wimmer Acquisition Corp., a Tennessee corporation ("WAC"); Mercury Printing
Company, Inc., a Tennessee corporation ("Mercury"); and Graphic Industries,
Inc., a Georgia corporation ("Graphic"), and the Company.
Mercury, WAC and Graphic have entered into that certain Agreement And Plan
of Reorganization of even date (the "Reorganization Agreement") with the
Company, pursuant to which the Company will transfer certain assets, subject to
certain liabilities, to WAC (the "Reorganization").
WAC is a wholly-owned subsidiary of Mercury, and Mercury is a wholly-owned
subsidiary of Graphic.
In connection with the Reorganization, and as a condition thereto, WAC has
agreed to purchase, and the Note Holders have agreed to sell, those certain
promissory notes issued by the Company to the Note Holders more particularly
described on Exhibit "A" attached hereto (individually a "Note" and
collectively, the "Notes"), subject to the terms and conditions hereof.
THEREFORE, in consideration of the mutual promises and covenants contained
herein, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto do hereby agree
as follows.
ARTICLE I
DEFINITIONS
1.1 The capitalized terms used in this Agreement and not expressly defined
herein shall have the meanings set forth in the Glossary attached hereto and
made a part hereof.
ARTICLE II
PURCHASE AND SALE OF THE NOTES
2.1 Purchase and Sale of the Notes. At the Closing, WAC shall purchase
------------------------------
from the Note Holders, and the Note Holders shall sell to WAC, the Notes, for
the consideration hereinafter set forth, free and clear of any liens, claims,
charges or encumbrances of any kind or nature whatsoever. The purchase and sale
of the Notes shall be deemed effective as of May 31, 1996 (the "Effective
Date").
<PAGE>
2.2 Issuance of Graphic Stock. In full consideration for the purchase of
-------------------------
the Notes by WAC, Graphic shall issue and deliver: (a) the Initial Shares to the
Note Holders in accordance with their pro-rata holdings of the Notes as set
forth on Schedule 2.2 hereto; and (b) the Escrow Shares to the Escrow Agent,
pursuant to the Escrow Agreement in the name of the Escrow Agent.
2.3 Determination of Number of Shares to be Issued. The number of shares
----------------------------------------------
of Graphic Stock to be issued to the Note Holders in consideration for the
purchase and sale of the Notes shall be determined as follows:
(a) The Notes shall be valued at the full outstanding principal amount
thereof as of the Closing Date, as determined from the books and records of the
Company, plus accrued interest to and through the Closing Date. The value of
the Notes as so determined shall be referred to herein collectively as the "Note
Value."
(b) The Note Value shall be divided by the Market Value Per Share and the
resulting quotient shall then be rounded up to the nearest whole number of
shares of Graphic Common Stock and this result shall equal the number of shares
of Graphic Stock to be issued to the Note Holders in exchange and in
consideration for the Notes.
(c) The Note Value shall be subject to adjustment based upon adjustments,
if any, to the consideration for the Reorganization as set forth in Section 2.6
of the Reorganization Agreement.
2.4 Exchange of Notes. On the Closing Date, each Note Holder shall
-----------------
surrender and deliver the original of each Note to WAC marked "Fully Paid and
Satisfied", or, alternatively, as WAC may elect, in its sole discretion,
endorsed "Assigned Without Recourse to Wimmer Acquisition Corp., its successors
and assigns" and signed by each Note Holder. In exchange therefor, the Note
Holders shall receive certificates for the Initial Shares as set forth above,
and Graphic shall deliver the Escrow Shares to the Escrow Agent.
2.5 Escrow.
------
(a) On the Closing Date, Graphic shall issue and deliver to the Escrow
Agent the Escrow Shares pursuant to the Escrow Agreement 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 of certain accounts receivable of the Company as determined
under Section 2.6(c) of the Reorganization Agreement; (ii) adjust the
consideration as set forth in Section 2.6 of the Reorganization Agreement; and
(iii) compensate Mercury, WAC and Graphic, in whole or in part, for a breach of
any representation, warranty or covenant by the Company or the Stockholder in
the Reorganization Agreement or by the Company or the Note Holders in this
Agreement.
2
<PAGE>
(b) During the Escrow Period no party to the Escrow Agreement shall be
entitled to sell, pledge, hypothecate, assign or otherwise dispose of any Escrow
Shares; provided, however, that during the Escrow Period, the Note Holders shall
be entitled to instruct the Escrow Agent to sell shares of Graphic Stock held in
escrow, provided that all of the proceeds thereof shall be held in escrow
pursuant to the Escrow Agreement and invested by the Escrow Agent in United
States government securities or in money market funds which deal only in United
States government securities.
2.6 Payment. Any amount due to WAC, Mercury or Graphic from the Note
-------
Holders pursuant to any adjustments in consideration for the Reorganization
Agreement pursuant to Section 2.6(c) of the Reorganization Agreement shall be
paid, at the Note Holder's election, in cash, through the return of shares of
Graphic Stock (valued at the Market Value Per Share as defined in the
Reorganization Agreement) or through return of Escrow Shares pursuant to the
Escrow Agreement or any combination thereof.
2.7 Simultaneous Closing. The Closing of the purchase and sale of the
--------------------
Notes shall occur simultaneously with, and shall be expressly conditioned upon,
the Closing of the transaction contemplated in the Reorganization Agreement.
The time and place of the Closing shall be the same as the time and place of
Closing pursuant to the Reorganization Agreement.
2.8 Deliveries at Closing. At the Closing, and in addition to the
---------------------
delivery of the original Notes, marked or endorsed as set forth in Section 2.4
above, the Note Holders shall execute and deliver to Mercury, WAC and Graphic
such additional documents, certificates, instruments and writings as Mercury,
WAC or Graphic shall reasonably request, including an opinion of counsel for the
Note Holders substantially in the form of Exhibit "D" attached hereto.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company hereby restates, reaffirms and incorporates herein by
reference, as if fully set forth herein, each of the representations and
warranties of the Company set forth in Article 3 of the Reorganization
Agreement. All of such representations and warranties shall be deemed given and
made by the Company with respect to this Agreement and the Ancillary Agreements
with equal force, effect and consequence as set forth in the Reorganization
Agreement.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF THE NOTE HOLDERS
Each of the Note Holders hereby jointly and severally represents and
warrants to and with Mercury, WAC and Graphic as follows:
4.1 Organization; Capacity; Power. Each Note Holder: (a) if a
-----------------------------
corporation, is a corporation duly organized, validly existing and in good
standing under the laws of the state of
3
<PAGE>
its incorporation; (b) if a partnership, joint venture, limited liability
company, limited liability partnership or other form of business entity, is duly
organized, validly existing as such entity and is in good standing under the
laws of the state of its organization or formation; (c) has the corporate or
other requisite power and authority to own or lease its properties and to carry
on its business as now being conducted and is authorized and qualified to do
business in each jurisdiction in which the character of its properties or the
nature of its business requires such qualification and authorization; (d) if an
individual, has the full, unrestricted capacity and power to enter into, deliver
and perform this Agreement, the Ancillary Agreements and his or her respective
obligations hereunder and thereunder.
4.2 Authority. The execution and delivery of this Agreement and the
---------
Ancillary Agreements by the Note Holders, and the performance of their
respective obligations hereunder and thereunder, constitute valid and legally
binding obligations of the Note Holders enforceable in accordance with their
respective terms. All corporate or other action required to be taken by the
Note Holders to authorize and approve the execution, delivery and performance of
this Agreement and the Ancillary Agreements, and the consummation of the
transactions contemplated herein and therein has been duly and validly taken.
4.3 Title to the Notes. Each Note Holder has good, valid and unrestricted
------------------
title to the Notes held by him or it, free and clear of any and all liens,
options, contracts, calls, commitments, demands, encumbrances, equities, pledges
or claims whatsoever (collectively, "Encumbrances"). Upon consummation of the
transaction contemplated in this Agreement, Mercury will obtain good and valid
title to the Notes, free and clear of any Encumbrances.
4.4 Compliance with Laws and Validity of Contemplated Transactions. The
--------------------------------------------------------------
execution, delivery and performance of this Agreement and the Ancillary
Agreements by the Note Holders in accordance with their respective terms and
the consummation of the transactions contemplated herein or therein does not and
will not: (a) violate any law applicable to the Note Holders; (b) conflict
with, result in a breach of, or constitute a default under the Articles of
Incorporation or bylaws, or the governing documents of any Note Holder or under
any indenture, agreement, or other instrument to which any of the Note Holders
is a party or by which they or any portion of their respective properties may be
bound; or (c) result in or require the creation or imposition of any lien upon
or with respect to any property now owned or hereafter acquired by the Note
Holders. No authorization, approval, or consent of, and no registration or
filing with, any governmental or regulatory official body or authority, or any
third party is required in connection with the execution, delivery or
performance by the Note Holders of this Agreement or the Ancillary Agreements.
4.5 Status of the Notes.
-------------------
(a) Each Note represents a bona fide, valid, lawful and binding obligation
of the Company, enforceable in accordance with its terms, and there are no
defenses, claims, setoffs, disputes pending, or to the Knowledge of the Note
Holders, threatened with respect to the Notes.
4
<PAGE>
(b) The outstanding principal balance of each Note is as set forth on the
Interim Balance Sheet, and there are no principal or other amounts due with
respect to the Notes other than as set forth on the Interim Balance Sheet.
(c) All interest due or accrued on or with respect to the Notes, or any
other amounts due with respect to the Notes, is shown or reflected on the
Interim Balance Sheet and will be paid, in full, at Closing by the Company.
(d) Each Note represents a valid obligation for money loaned or advanced to
the Company by the Note Holders.
(e) Except as set forth on Schedule 4.5, there is no collateral or
security of any kind or nature whatsoever for the indebtedness evidenced by the
Notes, and no Note Holder holds security title to or a valid security interest
in or to any asset or property of the Company or any stockholder of the Company
relating to the Notes.
4.6 Litigation. Except as set forth on Schedule 4.6, there is no
----------
litigation, arbitration or other similar proceeding pending or, to the Knowledge
of the Note Holders, threatened against or affecting any of the Note Holders,
their respective properties or its rights or which pertains to the transactions
contemplated by this Agreement. The Note Holders do not know of any reasonably
likely basis for any such litigation, arbitration or similar proceeding, the
result of which would adversely affect the Company, or the transactions
contemplated hereby. No Note Holder is a party or subject to the provisions of
any judgment, order, writ, injunction decree or award of any court, arbitrator,
or governmental or regulatory official body or authority which may adversely
affect the Note Holders or the transactions contemplated hereby.
4.7 Compliance with Laws. No Note Holder is in default under any order of
--------------------
any court, governmental authority or arbitration board or tribunal, or under any
laws, ordinances, governmental rules or regulations to which it is subject.
4.8 Consents. 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 or the Ancillary Agreements
on the part of the Note Holders or the consummation of the transactions
contemplated herein or therein.
4.9 Broker's or Finder's Fees. Neither the Company nor any Note Holder,
-------------------------
nor any of the directors, officers or employees of the Company has employed any
broker, agent or finder or incurred any liability for brokerage fees, agents'
commissions or finder's fees in connection with the transactions contemplated by
this Agreement.
5
<PAGE>
4.10 Securities Representations.
--------------------------
(a) Each Note Holder, either alone or with his or her respective purchaser
representative has such knowledge and experience in financial and business
matters that he or she 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 Note Holder
has had an opportunity to ask questions and receive answers from the officers
and directors of Graphic concerning Graphic and the terms and conditions of his
investment in Graphic.
(b) The Note Holders have not 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 their respective
decisions to exchange the Notes for Graphic Stock as set forth herein, and the
Note Holders are relying solely on the information contained in this Agreement,
and personal investigation.
(c) The Note Holders are presently bona fide residents of the State of
Tennessee and have no present intention of becoming a resident of any other
state or jurisdiction.
(d) The Note Holders have carefully evaluated their respective financial
resources and investment position and the risks associated with this investment
in Graphic and acknowledges that they are familiar with and able to bear any
economic risk of such investment.
(e) The Note Holders understand and agree that the Graphic Stock will be
issued to them without registration under any state or federal law relating to
the registration of securities, except as set forth in Article 7 herein and will
be issued 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 4.10. The Note
Holders are acquiring the Graphic Stock for their own accounts, to hold for
investment, and with no present intention of dividing their participation with
others or reselling or otherwise participating, directly or indirectly, in the
distribution thereof and shall not make any transfer, sale, or other disposition
thereof: (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 to an effective registration under the Act
or a transaction otherwise in compliance with the Act.
(f) The Note Holders have not received any public solicitation or
advertisement concerning an offer to sell Graphic Stock.
4.11 Correctness of Representations. No representation or warranty of the
------------------------------
Note Holders in this Agreement or in any statement, certificate or schedule
furnished by the Note Holders pursuant hereto, contains or, on the Closing Date
will contain, any untrue statement of a material fact or omits or, on the
Closing Date will omit, to state any material fact necessary in
6
<PAGE>
order to make the statements contained therein not misleading. All such
statements, representations, warranties, certificates and schedules will be true
and complete on and as of the Closing Date as though made on that date. True
copies of the Notes and other instruments listed on or referred to, or otherwise
related to any item referred to, in the schedules delivered or furnished to WAC
pursuant to this Agreement have been delivered to or have been made available to
or will be made available for inspection by Graphic, Mercury, WAC and their
advisors and representatives.
ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF MERCURY, WAC AND GRAPHIC
Mercury, WAC and Graphic each hereby restates, reaffirms and incorporates
herein by reference, as if fully set forth herein, each of the representations
and warranties of Mercury, WAC and Graphic set forth in Article 4 of the
Reorganization Agreement. All of such representations and warranties shall be
deemed given and made by Mercury, WAC and Graphic with respect to this
Agreement and the Ancillary Agreements with equal force, effect and consequence
as set forth in the Reorganization Agreement.
ARTICLE 6
CONDITIONS TO CONSUMMATION OF PURCHASE AND SALE
OF THE NOTES
6.1 Conditions to Obligations of Mercury, WAC and Graphic. The obligation
-----------------------------------------------------
of Mercury, WAC and Graphic to consummate the transactions contemplated in this
Agreement is subject to the satisfaction at or prior to the Closing of each of
the following conditions:
(a) Each of the representations and warranties of the Company and the Note
Holders contained in this Agreement shall be true and correct in all material
respects as of, and shall not have been violated in any material respect at, the
Closing Date as though made on and as of the Closing Date; the Note Holders and
the Company shall, on or before the Closing Date, have performed in all material
respects all of their obligations under this Agreement which by the terms hereof
are to be performed by them on or before the Closing; and the Note Holders and
the Company shall have delivered to Mercury, WAC and Graphic a certificate
dated as of the date of the Closing to the foregoing effect.
(b) No action or proceeding by or before any court or other governmental
body shall have been instituted by any governmental body or other person or
entity or threatened in writing which seeks to restrain, prohibit or invalidate
the transactions contemplated in this Agreement or the Reorganization Agreement
or which would have a material adverse effect on WAC's ability to use the Assets
to conduct the business of the Company as presently conducted or which claims
material damages from Mercury, WAC or Graphic with respect to the transactions
contemplated in this Agreement or the Reorganization Agreement.
7
<PAGE>
(c) The Note Holders shall have delivered to Mercury, WAC and Graphic a
certificate or certificates from them, or their duly elected corporate
secretaries or other appropriate officers, certifying as to the requisite
corporate or other action authorizing the transactions contemplated in this
Agreement, and the status of record ownership of the Notes by the Note Holders,
incumbency and related matters.
(d) The Note Holders shall have executed and delivered to Mercury, WAC and
Graphic the Escrow Agreement, substantially in the form of Exhibit "B" hereto.
(e) The Note Holders shall have executed and delivered to Mercury, WAC and
Graphic the Indemnification Agreement, substantially in the form of Exhibit "C"
hereto.
(f) Mercury, WAC and Graphic shall have received the opinion of Johnson,
Grusin, Kee & Surprise, counsel to the Company and the Note Holders,
substantially in the form of Exhibit "D" hereto.
(g) The Reorganization Agreement shall be consummated pursuant to the
Reorganization Agreement and all conditions precedent to the consummation
thereof as set forth in the Reorganization Agreement shall have been satisfied
or waived.
6.2 Conditions to Obligations of the Company and the Note Holders. The
-------------------------------------------------------------
obligation of the Company and the Note Holders to consummate the transactions
contemplated in this Agreement is subject to the satisfaction at or prior to the
Closing of each of the following conditions:
(a) Each of the representations and warranties of Mercury, WAC and Graphic
contained in this Agreement shall be true and correct in all material respects
as of, and shall not have been violated in any material respect at, the Closing
Date as though made on and as of the Closing Date; Mercury, WAC and Graphic
shall, on or before the Closing, have performed in all material respects all of
their obligations under this Agreement which by the terms hereof are to be
performed by them on or before the Closing Date; and each of Mercury, WAC and
Graphic shall have delivered to the Note Holders a certificate of one of its
officers dated as of the date of the Closing to the foregoing effect.
(b) No action or proceeding by or before any court or other governmental
body shall have been instituted by any governmental body or other person or
entity or threatened in writing which seeks to restrain, prohibit or invalidate
the transactions contemplated in this Agreement or the Reorganization Agreement
or which would have a material adverse effect on the right of the Note Holders
to consummate the transactions contemplated in this Agreement or which claims
material damages from the Note Holders with respect to the transactions
contemplated in this Agreement.
8
<PAGE>
(c) Mercury, WAC and Graphic shall have delivered to the Note Holders
certificates of their respective corporate secretaries certifying as to the
requisite corporate and other action authorizing the transactions contemplated
in this Agreement and the incumbency of their respective officers and related
matters.
(d) Mercury, WAC and Graphic shall have executed and delivered to the Note
Holders the Escrow Agreement, substantially in the form of Exhibit "B" hereto.
(e) The Note Holders shall have executed and delivered to Mercury, WAC and
Graphic the Indemnification Agreement, substantially in the form of Exhibit "C"
hereto.
(f) The Note Holders shall have received the opinion of Lawrence M. Gold,
P.C., counsel to Mercury, WAC and Graphic, substantially in the form of Exhibit
"E" hereto.
(g) The Reorganization shall be consummated pursuant to the Reorganization
Agreement and all conditions precedent to the consummation thereof as set forth
in the Reorganization Agreement shall have been satisfied or waived.
6.3 Fulfillment of Conditions. Each party to this Agreement shall use
-------------------------
his, or its best efforts to satisfy each and every condition to such party's
obligation to consummate the transactions contemplated herein.
ARTICLE 7
REGISTRATION OF GRAPHIC STOCK
7.1 Registration. Graphic shall prepare and file with the Commission a
------------
Registration Statement on Form S-3 as soon as practicable after the Closing
Date, and in no event later than ninety (90) days after the Effective Date,
which shall cause the Graphic Stock to be registered for resale by the Note
Holders, and Graphic shall use reasonable best efforts to have such registration
become effective and not abandon the filing. The Note Holders shall receive a
copy of the Registration Statement prior to filing for review, and the Note
Holders shall represent and warrant that the information contained in the
Registration Statement concerning them and the intended method of distribution
of the securities covered by the Registration Statement are true, complete, and
correct. If at any time during the Effective Period, Graphic is unable to
maintain such registration on Form S-3, Graphic shall utilize Form S-1 or such
other registration form as Graphic deems appropriate in order to fulfill its
obligations under this Article 7.
7.2 Furnishing Information. The Note Holders shall furnish to Graphic
----------------------
such information regarding the Note Holders or the Graphic Stock and the
intended method of disposition of such securities, as shall be reasonably
requested by Graphic in order to effect such registration.
9
<PAGE>
7.3 Prospectus Requirements. The Note Holders hereby covenant with
-----------------------
Graphic that they will promptly advise Graphic of any changes in the
information concerning the Note Holders contained in the Registration Statement
and that the Note Holders will not make any sale of Graphic Stock pursuant to
the Registration Statement without complying with the prospectus delivery
requirements of the Act. The Note Holders acknowledge that occasionally there
may be times when Graphic must temporarily suspend the use of the prospectus
forming a part of the Registration Statement until such time as an amendment to
the Registration Statement has been filed by Graphic and declared effective by
the Commission, the relevant prospectus has been supplemented by Graphic or
until such time as Graphic has filed an appropriate report with the Commission
pursuant to the Securities Exchange Act of 1934, as amended. During any such
period in which sales are suspended and upon reasonable prior notice of such
suspension from Graphic, the Note Holders agree not to sell any shares of
Graphic Stock pursuant to any such prospectus; provided however that Graphic
shall use its reasonable best efforts to file any required amendment,
supplement, or report with the Commission within 30 days of such suspension.
The Note Holders covenant that they will not sell any shares pursuant to any
prospectus during the period commencing at the time at which Graphic gives the
Note Holders notice of the suspension of the use of a given prospectus and
ending at the time Graphic gives notice that the Note Holders may thereafter
effect sales pursuant to a given prospectus.
7.4 Maintenance.
-----------
(a) Graphic agrees to (i) use its best efforts to keep the Registration
Statement continuously effective (including by filing amendments and supplements
thereto) in order to permit the disposition of the Graphic Stock until the
second anniversary of the Closing Date or the sale by the Note Holders of all
of the Graphic Stock, whichever is earlier (collectively, the "Effective
Period"), and (ii) prepare and file with the Commission, as soon as reasonably
practicable, such amendments and supplements to the Registration Statement as
may be necessary to keep the Registration Statement effective continuously
during the Effective Period.
(b) Graphic agrees to cause the Registration Statement and the related
prospectus, and any amendment or supplement thereto, as of the effective date of
the Registration Statement, amendment, or supplement during the Effective
Period, (1) to comply in all material respects with the applicable registration
requirements of the Act and the rules and regulations promulgated by the
Commission thereunder, and (2) not to contain any untrue statement of a material
fact or omit to state a material fact required to be stated therein or necessary
to make the statements therein not misleading, other than information confirmed
by the Note Holders pursuant to Section 7.2 or statements or omissions made in
reliance upon and in conformity with information furnished to Graphic in writing
by or on behalf of the Note Holders expressly for use in the Registration
Statement and the related prospectus, or any amendment or supplement thereto.
(c) In connection with the Registration Statement, Graphic agrees, as soon
as reasonably practicable, to:
10
<PAGE>
(1) furnish to the Note Holders such number of copies of the Registration
Statement, each amendment and supplement thereto, and prospectus included in the
Registration Statement and such other related documents as each Note Holder may
reasonably request;
(2) notify the Note Holders promptly of any request by the Commission for
the amending or supplementing of the Registration Statement or prospectus
forming a part thereof;
(3) advise the Note Holders after Graphic receives notice or otherwise
obtains knowledge of the issuance of any order by the Commission suspending the
effectiveness of the Registration Statement or amendment or supplement thereto
or of the initiation or threatening of any proceeding for that purpose, and
promptly use its best efforts to prevent the issuance of any stop order or to
obtain its withdrawal promptly if such stop order should be issued;
(4) use its best efforts to register or qualify the Graphic Stock under
such other securities or blue sky laws of such jurisdictions within the United
States and Puerto Rico as the Note Holders shall reasonably request (provided
that Graphic shall not be obligated to qualify as a foreign corporation to do
business under the laws of any jurisdiction in which it is not then qualified or
to file any general consent to service of process), and do such other reasonable
acts and things as may be required of it to enable the Note Holders to
consummate the disposition of Graphic Stock in any of the aforementioned
jurisdictions; and
(5) notify the Note Holders at any time when a prospectus relating to the
Registration Statement is required to be delivered under the Act, of the
happening of any event as a result of which the Registration Statement contains
an untrue statement of material fact or omits to state any material fact
required to be stated therein or necessary to make the statements therein not
misleading, and prepare a supplement or amendment to the Registration Statement
so that the Registration Statement will not contain any untrue statement of a
material fact or omit to state any material fact required to be stated therein
or necessary to make the statements therein not misleading.
7.5 Combined Registration Statement. The Note Holders expressly
-------------------------------
acknowledge and agree that in fulfilling its registration obligations pursuant
to this Article 7, Graphic may combine the registration of the Graphic Stock
issued in the Reorganization and the Graphic Stock issued pursuant to this
Agreement into one Registration Statement and multiple Registration Statements
shall not be required.
7.6 Indemnification.
---------------
(a) Graphic agrees to indemnify, defend and hold harmless the Note Holders
from and against all loss, damages, liabilities, expenses, costs, fees and
disbursements of counsel (including the reasonable fees and expenses of legal
counsel to the Note Holders), and actions to
11
<PAGE>
which they may become subject, under the Act or otherwise, insofar as such loss,
damage, liability, expense or claim (or action in respect thereof) arises out of
or is based upon any untrue statement or alleged untrue statement of a material
fact contained in the Registration Statement or prospectus contained therein (or
any amendment or supplement thereto) or arises out of or is based upon any
omission or alleged omission to state in any thereof a material fact required to
be stated therein or necessary to make the statements in any thereof not
misleading, and will reimburse the Note Holders and such other persons for any
legal or any other expenses incurred in connection with investigating or
defending any such action or claim, except insofar as the same may have been
caused by any untrue statement or omission contained in the information
confirmed by the Note Holders pursuant to Section 7.2 or based upon information
furnished to Graphic in writing by or on behalf of the Note Holders expressly
for use therein.
(b) The Note Holders, agree, jointly and severally, to indemnify, defend
and hold harmless Graphic and its officers, directors, affiliates, agents,
employees and controlling persons (within the meaning of Section 15 of the Act)
from and against all loss, damages, liabilities, expenses, costs, fees and
disbursements of counsel (including the reasonable fees and expenses of legal
counsel to Graphic), and actions to which they may become subject, under the Act
or otherwise, insofar as such loss, damage, liability, expense or claim (or
action in respect thereof) arises out of or is based upon (i) any untrue
statement of a material fact contained in the Registration Statement or in any
prospectus contained therein (or any amendment or supplement thereto) or which
arises out of or is based upon any omission to state in any thereof a material
fact required to be stated therein or necessary to make any statement contained
therein not misleading, to the extent that such untrue statement or omission is
contained in the information confirmed by the Note Holders pursuant to Section
7.2 or is made in reliance upon or in conformity with information furnished in
writing by or on behalf of the Note Holders expressly for inclusion in the
Registration Statement or prospectus contained therein (or any amendment or
supplement thereto), and (ii) the failure by the Note Holders to comply with the
covenants contained in Section 7.3 above, and will reimburse Graphic and such
other persons for any legal or any other expenses incurred in connection with
investigating or defending any such action or claim.
7.7 Fees and Expenses of Registration. Graphic will pay all expenses and
---------------------------------
fees incident to the performance of its obligations in Sections 7.1, 7.3 and 7.4
other than selling commissions and fees and expenses of advisors to the Note
Holders.
ARTICLE 8
TERMINATION; AMENDMENTS; WAIVER
8.1 Termination. This Agreement may be terminated, and the transaction
-----------
contemplated hereby may be abandoned, at any time prior to the Closing Date:
12
<PAGE>
(a) by the written consent of Mercury, WAC, Graphic and the Note Holders;
(b) by Mercury, Graphic, WAC or the Note Holders if, without a material
breach of the terminating party, the Closing shall not have occurred on or
before June 15, 1996, which date may be extended by mutual consent of the
parties;
(c) by Mercury, WAC or Graphic if there has been a misrepresentation,
breach of warranty or breach of covenant or agreement by the Note Holders or the
Company in their representations, warranties, covenants or agreements set forth
herein; or
(d) by the Note Holders or the Company if there has been a
misrepresentation, breach of warranty or breach of covenant or agreement by
Mercury, WAC or Graphic in their representations, warranties, covenants or
agreements set forth herein.
8.2 Effect of Termination. In the event of the termination and
---------------------
abandonment of this Agreement pursuant to Section 8.1 hereof, this Agreement
shall forthwith become void and have no effect, other than the provisions of
Section 9.7 which shall survive. Nothing contained in this Section 8.2 shall
relieve any party from liability for any breach of this Agreement occurring
before such termination.
ARTICLE 9
MISCELLANEOUS
9.1 Entire Agreement; Assignment. This Agreement, together with any
----------------------------
confidentiality agreements between the parties hereto, and the Ancillary
Agreements (a) constitute, with the schedules and the exhibits hereto, the
entire agreement among the parties with respect to the subject matter hereof and
supersedes all prior agreements and understandings, both written and oral, among
the parties or any of them with respect to the subject matter hereof and thereof
and (b) shall not be assigned by operation of law or otherwise, provided that
Mercury or WAC may assign its respective rights and obligations to any direct
subsidiary of Graphic, but no such assignment shall relieve Mercury or WAC of
its obligations hereunder.
9.2 Validity. The invalidity or unenforceability of any provision of this
--------
Agreement shall not affect the validity or enforceability of any other
provisions of this Agreement, each of which shall remain in full force and
effect.
9.3 Notices. All notices, requests, claims, demands and other
-------
communications hereunder shall be in writing and shall be deemed to have been
duly given, effective and received when delivered in person or by electronic
facsimile transmission, cable, telegram, telex, or a courier, or five (5) days
following the date such notice is mailed by registered or certified mail
(postage prepaid, return receipt requested), to the respective parties as
follows:
13
<PAGE>
If to Mercury, WAC or Graphic:
Graphic Industries, Inc.
2155 Monroe Drive, N.E.
Atlanta, Georgia 30324
Telecopy: (404) 874-7589
Attention: Mark C. Pope IV, President
with a copy to:
Mercury Printing Company, Inc.
2929 Convair Road
Memphis, Tennessee
Attn: Mr. Bill Hyatt, President
and with a copy to:
Lawrence M. Gold, P.C.
100 Galleria Parkway
Suite 695
Atlanta, Georgia 30339
Telecopy: (770) 933-9605
If to the Note Holders, at the addresses
listed on Exhibit "A" attached hereto
If to the Company at:
The Wimmer Companies, Inc.
4210 B. F. Goodrich Blvd.
Memphis, Tennessee 38118
with a copy to:
Johnson, Grusin, Kee & Surprise
Suite 202
780 Ridge Lake Blvd.
Memphis, Tennessee 38120
Attn: Martin A. Grusin, Esquire
14
<PAGE>
or to such other address as the person to whom notice is given may have
previously furnished to the others in writing in the manner set forth above
(provided that notice of any change of address shall be effective only upon
actual receipt thereof.
9.4 Governing Law. This Agreement shall be governed by and construed in
-------------
accordance with the laws of the State of Tennessee, regardless of the laws that
might otherwise govern under applicable principles of conflicts of laws thereof.
9.5 Descriptive Captions. The descriptive captions herein are inserted
--------------------
for convenience of reference only and are not intended to be part of or to
affect the meaning or interpretation of this Agreement. The use of personal
pronouns such as "him", "her" or "it" shall not be deemed gender specific and
shall refer to any or all persons or entities regardless of gender.
9.6 Counterparts. This Agreement may be executed in two or more
------------
counterparts, each of which shall be deemed to be an original, but all of which
together shall constitute one and the same agreement.
9.7 Expenses. All costs and expenses of Graphic, Mercury or WAC
--------
associated with legal and audit services incurred in connection with the
transactions contemplated in this Agreement shall be paid by Graphic. The Note
Holders will pay their respective legal and other expenses. Any expense
incurred by the Company in connection with the transactions contemplated by this
Agreement shall be accrued in full on the financial records of the Company as of
the Closing Date and constitute an adjustment to the Closing Balance Sheet under
the terms of the Reorganization Agreement.
9.8 Parties in Interest. This Agreement shall be binding upon and inure
-------------------
solely to the benefit of each party hereto, and nothing in this Agreement,
express or implied, is intended to confer upon any other person any rights or
remedies of any nature whatsoever under or by reason of this Agreement.
9.9 No Waiver. No failure on the part of any party hereto to exercise,
---------
and no delay in exercising any right, power or remedy 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.
9.10 Best Efforts. All parties to this Agreement hereby covenant and
------------
agree to use their best efforts to perform all of their respective covenants,
agreements and obligations hereunder
15
<PAGE>
and to cooperate fully with each other to consummate the transactions
contemplated or referred to herein.
9.11 Survivability. The Note Holders' representations, warranties and
-------------
covenants set forth in this Agreement shall survive for a three (3) year period
following the Closing Date, except for the representations, warranties and
covenants set forth in Sections 4.4 and 4.10 which shall survive for a period
of seven (7) years after the Closing Date.
IN WITNESS WHEREOF, each of the parties has duly executed, or caused this
Agreement to be duly executed, as of the day and year first written above.
THE NOTE HOLDERS:
WIMMER BROTHERS COMPANY,
a Tennesee General Partnership
BY:
------------------------------------
J. Fred Wimmer, General Partner
---------------------------------------
J. Fred Wimmer
THE WIMMER COMPANIES, INC.
BY:
-----------------------------------
Name:
---------------------------------
Title:
--------------------------------
GRAPHIC INDUSTRIES, INC.
BY:
-----------------------------------
Name:
---------------------------------
Title:
--------------------------------
MERCURY PRINTING COMPANY, INC.
BY:
-----------------------------------
Name:
---------------------------------
Title:
--------------------------------
16
<PAGE>
WIMMER ACQUISITION CORP.
BY:
-----------------------------------
Name:
---------------------------------
Title:
--------------------------------
17
<PAGE>
EXHIBIT "A"
NAMES, ADDRESSES AND OTHER INFORMATION
REGARDING THE NOTE HOLDERS
<TABLE>
<CAPTION>
Name and Interest Original Outstanding
Address Date of Note Rate Principal Amount Balance
- -------- -------------- --------- ---------------- -----------
<S> <C> <C> <C> <C>
Wimmer Brothers August 1, 1991 12.75% $442,175.00 $__________
Company
4210 B.F. Goodrich
Boulevard
Memphis, TN 38118
Mr. J. Fred Wimmer August 1, 1991 8.00% $394,247.96 $__________
</TABLE>
18
<PAGE>
GLOSSARY
--------
1. "Act" shall mean the Securities Act of 1933, as amended.
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.
3. "Agreement" shall mean this Note Purchase Agreement as now existing or as
hereafter amended.
4. "Ancillary Agreements" shall mean the Reorganization Agreement, the Escrow
Agreement and the Indemnification Agreement.
5. "Closing" shall mean the date specified in Section 2.7 of the Reorganization
Agreement.
6. "Closing Date" shall mean the date of Closing.
7. "Code" shall mean the Internal Revenue Code of 1986, as amended.
8. "Commission" shall mean the Securities and Exchange Commission, or any other
federal agency at the time administering the Act.
9. "Daily Market Value Per Share" shall mean the closing price for Graphic
Common Stock as reported on the NASDAQ national market system as published
in The Wall Street Journal for any trading day.
-----------------------
10. "Effective Date" shall mean the close of business on May 31, 1996.
11. "Effective Period" shall have the meaning set forth in Section 7.4 herein.
12. "Escrow Agent" shall mean United American Bank, including its successors
and assigns.
13. "Escrow Agreement" shall mean the Escrow Agreement substantially in the
form of Exhibit "B" attached hereto and incorporated herein by reference.
14. "Escrow Period" shall mean the period beginning on the Effective Date and
continuing for twelve (12) months thereafter, unless sooner terminated or
extended, as provided in the Escrow Agreement.
19
<PAGE>
15. "Escrow Shares" shall mean thirty percent (30%) of the value (as determined
pursuant to this Agreement as of the Closing Date) of the Graphic Stock,
rounded to the nearest whole number of shares (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.
16. "Graphic Common Stock" shall mean the Common stock, $0.10 par value per
share, of Graphic.
17. "Graphic Stock" shall mean the total number of shares of Graphic Common
Stock, to be issued hereunder, including the Initial Shares and the Escrow
Shares and which, in the Aggregate shall equal the quotient obtained by
dividing the Note Value by the Market Value Per Share of Graphic Common
Stock, rounded up to the nearest whole number of shares.
18. "Indemnification Agreement" shall mean the Indemnification Agreement
substantially in the form of Exhibit "C" attached hereto and incorporated
herein by reference.
19. "Initial Shares" shall mean the Graphic Stock minus the Escrow Shares.
20. "Interim Balance Sheet" shall mean, collectively, the interim unaudited
balance sheet of the Company as of April 30, 1996.
21. "Knowledge" shall mean information, data, material or knowledge actually
known to a Person or which such Person should have known after reasonable
inquiry or investigation.
22. "Market Value Per Share" shall mean the average of the Daily Market Value
Per Share for each of the twenty (20) consecutive trading days preceding
the third trading day prior to the Transaction Date.
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.
24. "Note Value" shall have the meaning set forth in Section 2.3(a) herein.
25. "Registration Statement" shall mean the Registration Statement on Form S-3,
including any prospectuses, supplements, amendments or post-effective
amendments and exhibits to be filed by Graphic with the Commission in
accordance with this Agreement and relating to the resale of the Graphic
stock by the Note Holders.
20
<PAGE>
NOTE PURCHASE AGREEMENT
-----------------------
WITH
----
THE WIMMER COMPANIES, INC.
--------------------------
EXHIBITS
--------
Exhibit "A" - Note Holders Information
Exhibit "B" - Escrow Agreement
Exhibit "C" - Indemnification Agreement
Exhibit "D" - Opinion of Counsel for Company
Exhibit "E" - Opinion of Lawrence M. Gold, P.C.
The Schedules and Exhibits to this Agreement have been omitted from this
filing, however, copies will be filed supplementally with the Commission upon
request.
21
<PAGE>
SCHEDULES
---------
Schedule 4.5 - Note Purchase Agreement
22
<PAGE>
Exhibit 5
August 29, 1996
Graphic Industries, Inc.
2155 Monroe Drive, NE
Atlanta, Georgia 30324
Re: Registration on Form S-3 of Certain Shares of Graphic
Industries, Inc. Common Stock
Gentlemen:
We have served as counsel for Graphic Industries, Inc. ("Graphic") in
connection with the registration on Form S-3 under the Securities Act of 1933,
as amended, of 53,830 outstanding shares (the "Shares") of Common Stock, $.10
par value, of Graphic.
We have examined originals or copies certified or otherwise identified to
our satisfaction of such documents, corporate records and other instruments
relating to the incorporation of Graphic and to the authorization and issuance
of the Shares as we have deemed necessary or appropriate.
Based upon the foregoing, it is our opinion that the Shares have been duly
authorized, validly issued and are fully paid and non-assessable.
We do hereby consent to the reference to our firm under the heading "Legal
Matters" in the prospectus contained in the above-referenced registration
statement and to the filing of this opinion as Exhibit 5 thereto.
Sincerely,
LAWRENCE M. GOLD, P.C.
/s/ Lawrence M. Gold
------------------------------
Lawrence M. Gold
<PAGE>
Exhibit 99
ESCROW AGREEMENT
----------------
THIS AGREEMENT (the "Escrow Agreement") is made as of the 31ST day of May,
1996, by and among THE WIMMER COMPANIES, INC., a Tennessee corporation (the
"Company"), GLEN A. WIMMER an individual resident of the State of Tennessee (the
"Shareholder"); those individuals and entities listed on Exhibit "A" attached
hereto and made a part hereof (individually a "Note Holder" and collectively the
"Note Holders"), GRAPHIC INDUSTRIES, INC., a Georgia corporation ("Graphic"),
MERCURY PRINTING COMPANY, INC., a Tennessee corporation and wholly-owned
subsidiary of Graphic ("Mercury"), WIMMER ACQUISITION CORP., a Tennessee
corporation and wholly-owned subsidiary of Mercury ("WAC") and UNITED AMERICAN
BANK OF MEMPHIS,as Escrow Agent ("Escrow Agent").
Graphic, Mercury, WAC, the Shareholder and the Company, have entered into
that certain Agreement and Plan of Reorganization dated as of May 31, 1996, (the
"Reorganization Agreement"), pursuant to which the Company is transferring
certain assets, subject to certain liabilities, to WAC (the "Reorganization")
and the Company may receive, certain shares of the Common Stock, $.10 par value,
of Graphic ("Graphic Common Stock"), to be issued and held in escrow as provided
in the Reorganization Agreement and herein.
Graphic, Mercury, WAC, the Company and the Note Holders have entered into
that certain Note Purchase Agreement of even date (the "Note Purchase
Agreement") pursuant to which WAC is purchasing certain promissory notes issued
by the Company and held by the Note Holders more particularly described in the
Note Purchase Agreement (collectively the "Notes") and in consideration
therefor, the Note Holders will receive certain shares of Graphic Common Stock,
of which a certain number are to be issued and held in escrow as provided in the
Note Purchase Agreement and herein.
The transactions contemplated in the Reorganization Agreement and in the
Note Purchase Agreement are being consummated simultaneously and are referred to
collectively as the "Transactions." The Reorganization Agreement and the Note
Purchase Agreement will be collectively referred to herein as the "Acquisition
Agreements." Further, pursuant to the Acquisition Agreements, and an
Indemnification Agreement of even date among
1
<PAGE>
Mercury, Graphic, WAC, the Stockholder, the Company and the Note Holders (the
"Indemnification Agreement"), the Company, the Noteholders and the Stockholder
(collectively referred to herein as the "Wimmer Parties") are jointly and
severally liable to Graphic, WAC and Mercury for certain matters more
particularly described herein and therein. As used in this Agreement, the term
"Escrow Shares" shall mean and include any shares of Graphic Common Stock, or
the proceeds thereof, deposited with or held by the Escrow Agent pursuant to the
terms and conditions hereof whether issued in escrow hereunder pursuant to
either of the Acquisition Agreements.
Escrow Agent has agreed to serve in such capacity in accordance with the
terms and conditions hereof.
THEREFORE, in consideration of the mutual promises and covenants contained
herein and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto do hereby agree
as follows.
1. Deposit of Escrow Shares.
------------------------
(a) On the Closing Date (as defined in the Acquisition Agreements), Graphic
shall cause to be issued to and deposited with Escrow Agent, a total of
________shares of Graphic Common Stock (the "Escrow Shares") in connection with
the Transactions. The number of Escrow Shares shall equal, rounded to the
nearest whole number of shares, thirty percent (30%) of the total number of
shares of Graphic Common Stock to be issued in connection with the Transactions.
The Escrow Shares shall be issued in the name of Escrow Agent or in such nominee
name as Escrow Agent may elect, all for the benefit of the parties to this
Agreement, and the Escrow Shares shall be held by Escrow Agent pursuant to the
terms and conditions hereof, and not disposed of or disbursed except in
accordance with the terms and conditions of this Agreement.
(b) The term "Escrow Shares" shall also include any dividends or proceeds
thereof and all interest or income earned on such dividends or proceeds relating
to the Escrow Shares, and any additional shares of Graphic Common Stock
delivered to Escrow Agent due to an increase in the number of shares of Graphic
Common Stock to be issued in the Reorganization in accordance with the
Reorganization Agreement.
2
<PAGE>
2. Escrow Shares. Upon receipt of the Escrow Shares, Escrow Agent shall
-------------
hold the Escrow Shares and invest any such proceeds, interest and dividends as
set forth herein. The Escrow Shares and the proceeds thereof, including
interest and dividends, shall be held intact and delivered to Graphic or the
Wimmer Parties or both, pursuant to the terms hereof. Escrow Agent shall make
no distributions of any Escrow Shares except in strict compliance with the terms
and conditions of this Agreement.
3. No Dispositions. During the term of this Agreement no party shall be
---------------
entitled to, and Escrow Agent shall not, sell, assign, hypothecate, encumber or
otherwise dispose of any of the Escrow Shares; provided, however, that during
the term of this Agreement, the Wimmer Parties, in proportion to their relative
interests in the Escrow Shares, shall be entitled to instruct the Escrow Agent
to sell Escrow Shares so long as any and all proceeds of such sales continue to
be held in escrow pursuant to the terms and conditions hereof and are invested
by the Escrow Agent in United States government securities or in money market
funds which deal only in United States government securities.
3
<PAGE>
4. Voting Rights. During the term of this Agreement, and pending any
-------------
distribution of any of the Escrow Shares to Graphic as herein provided, the
Wimmer Parties shall have the right to vote the Escrow Shares. Escrow Agent
shall execute proxies or other voting instruments so as to give the Wimmer
Parties the right to vote the Escrow Shares, in proportion to their relative
interests in the Escrow Shares.
5. Term. The term of this Escrow Agreement shall be twelve (12) months
----
from the Closing Date or until there are no Escrow Shares held pursuant hereto,
whichever occurs sooner (the "Term"), unless the term hereof is extended by the
mutual written consent of the parties hereto or unless there shall be Claims, as
defined below, pending at the original termination date, in which event, the
Term shall automatically be extended until all such Claims that arose and were
made known in writing to the Wimmer Parties within twelve (12) months from the
Effective Date are resolved. Notwithstanding the foregoing, the indemnification
to Escrow Agent set forth in Section 9 hereof shall survive the termination of
this Escrow Agreement or the resignation of Escrow Agent.
6. Releases from Escrow.
--------------------
(a) The Escrow Shares shall be returned to Graphic in accordance with the
procedures set forth herein and upon the occurrence of any of the following
events: (i) repurchase of certain accounts receivable of the Company as
determined under Section 2.6(c) of the Reorganization Agreement; (ii) other
downward adjustments in the consideration for the Reorganization pursuant to
Section 2.6 of the Reorganization Agreement; (iii) the non-fulfillment, non-
performance or breach of any covenant, agreement, representation or warranty
made any of the Wimmer Parties in the Acquisition Agreements; or (iv) any claim
for indemnification by Graphic, WAC or Mercury pursuant to the Indemnification
Agreement. All of the foregoing matters are hereinafter referred to collectively
as "Claims" or individually as a "Claim." The Wimmer Parties shall be jointly
and severally liable to Graphic, WAC and Mercury for any and all Claims and all
of the Escrow Shares shall be subject to the provisions hereof regardless of
whether a Claim arises under the Acquisition Agreements, or the Indemnification
Agreement.
4
<PAGE>
(b) Upon the occurrence of a Claim, Graphic shall deliver written notice
thereof to Escrow Agent and the Wimmer Parties, which notice shall set forth the
nature and amount of the Claim. If the Wimmer Parties do not notify Escrow
Agent of their Objection (as herein defined) to a Claim, in writing, within
fifteen (15) days after receipt of such written notice, Escrow Agent shall
forthwith charge the Escrow Shares with the full amount of such Claim, remit the
applicable Escrow Shares directly to Graphic and give written notice of such
action to the Wimmer Parties. During the Term, Escrow Agent shall be authorized
to rely solely upon written notice from Graphic, and in accordance with such
written notice shall charge the Escrow Shares for the amount specified in such
written notice if it receives no timely written Objection from the Wimmer
Parties. An Objection to a Claim shall mean a written statement objecting to any
Claim, with the specified reasons for such objection stated therein and signed
by those Wimmer Parties holding at least a majority of the aggregate interests
of the Wimmer Parties (treating the Company, the Shareholder and the Note
Holders as one group).
(c) In the event the Wimmer Parties shall deliver a timely Objection to
Escrow Agent, such dispute shall be resolved as follows: (i) if such Claim
relates to any adjustments made in the Closing Balance Sheet (as defined in the
Reorganization Agreement), such dispute shall be resolved in the manner set
forth in Section 2.6(b) of the Reorganization Agreement; and (ii) if such Claim
relates to any matter for which Graphic, WAC or Mercury claims the right to
indemnification under the Indemnification Agreement (other than for uncollected
accounts or notes receivable as set forth above and in Section 2.6(c) of the
Reorganization Agreement), such dispute shall be resolved in the manner set
forth in Section 2.4 of the Indemnification Agreement. Upon resolution of any
such disputes as herein provided, Escrow Agent shall distribute the Escrow
Shares in accordance with such resolution. If the amount in dispute does not
represent the full value of the Escrow Shares (determined as of the Closing Date
in accordance with the Acquisition Agreements), Escrow Agent shall distribute to
the Wimmer Parties such number of Escrow Shares (rounded to the nearest whole
number of such shares) as may be in excess of the amount in dispute.
5
<PAGE>
(d) Upon the expiration of the Term (including any extensions), if all
the Escrow Shares have not been returned to Graphic in accordance with the
foregoing provisions of this Section 6, Escrow Agent shall deliver the remaining
Escrow Shares to the Wimmer Parties based upon the percentages set forth on
Exhibit "B" attached hereto. Graphic agrees to take such action as shall be
necessary to assist Escrow Agent in reissuing the Escrow Shares, if any, in the
names of the Wimmer Parties at the end of the Term.
(e) Interest, income or dividends earned on Escrow Shares shall be
paid, pro-rata, to Graphic or to the Wimmer Parties, as the case may be, based
upon the respective amount of Escrow Shares paid or released to such party as
compared to the total value of the Escrow Shares (determined as of the Closing
Date in accordance with the Acquisition Agreements). Interest, income or
dividends shall be distributed when the Escrow Shares are distributed.
7. Investment of Escrow Funds. Escrow Agent shall hold the Escrow Shares
--------------------------
delivered to it under the terms of this Escrow Agreement and invest any income
or dividends thereon held by it hereunder in a mutual fund which invests solely
in U.S. Government securities.
8. Agreement of Escrow Agent. Escrow Agent shall be responsible only for
-------------------------
the safekeeping and the investment of the Escrow Shares and the disbursements or
delivery thereof in accordance with the terms of this Escrow Agreement. Escrow
Agent shall not be responsible for the appropriateness, sufficiency or accuracy
of information contained in any written notice given to Escrow Agent.
9. Performance of Escrow Agent.
---------------------------
(a) In performing its duties under this Escrow Agreement, or upon the
claimed failure to perform its duties hereunder, Escrow Agent shall not be
liable to anyone for any damages, losses, or expenses which they may incur as a
result of Escrow Agent so acting, or failing to act; provided, however, Escrow
Agent shall be liable for damages arising out of its willful default or gross
negligence under this Agreement. Accordingly, Escrow Agent shall not incur any
such liability with respect to: (i) any action taken or omitted to be taken in
good faith upon advice of its counsel or counsel for any other party hereto
6
<PAGE>
given with respect to any questions relating to the duties and responsibilities
of Escrow Agent hereunder; or (ii) to any action taken or omitted to be taken in
reliance upon any document, including any written notice or instructions
provided for in this Escrow Agreement, not only as to its due execution and to
the validity and effectiveness of its provisions but also as to the truth and
accuracy of any information contained therein, which Escrow Agent shall in good
faith believe to be genuine, to have been signed or presented by proper person
or persons and to conform with the provisions of this Escrow Agreement.
(b) Graphic and the Wimmer Parties agree to indemnify and hold harmless
Escrow Agent (each group being one-half responsible) against any and all losses,
claims, damages, liabilities and expenses, including without limitation,
reasonable costs of investigation and reasonable counsel fees and disbursements
which may be imposed by Escrow Agent or incurred by it in connection with its
acceptance of this appointment as Escrow Agent hereunder or the performance of
the duties hereunder, including, without limitation any litigation arising from
this Escrow Agreement or involving the subject matter hereof; except, that if
Escrow Agent shall be found guilty of willful default or gross negligence under
this Agreement, then, in that event, Escrow Agent shall bear all such losses,
claims, damages and expenses.
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(c) In the event of a dispute between any of the parties hereto
sufficient in the discretion of Escrow Agent to justify its doing so, Escrow
Agent shall be entitled to tender into the registry or custody of any court or
arbitrator of competent jurisdiction all money or property in its hands under
the terms of this Agreement, and may commence such legal proceedings as it deems
appropriate, and thereupon to be discharged from all further duties under this
Agreement. Any such legal action may be brought in any such court as Escrow
Agent shall determine to have jurisdiction thereof. The filing of any such legal
proceedings shall not deprive Escrow Agent of its compensation earned prior to
such filing.
10. Fees of Escrow Agent. For its ordinary services hereunder (which
--------------------
shall include receipt, investment and disbursement of the Escrow Shares in the
manner described herein), Escrow Agent shall receive compensation of
_______________________.
11. Resignation of Escrow Agent. Escrow Agent or any successor may resign
---------------------------
its position hereunder by giving ten (10) business days written notice to the
parties hereto, and such resignation shall take effect at the end of such ten
(10) business days, provided the Escrow Shares have been tendered into the
registry or custody of any court of competent jurisdiction or upon the earlier
appointment of, and delivery of the Escrow Shares to, a successor. From and
after the effective date of such resignation or appointment of a successor,
Escrow Agent shall not be obligated to perform any of the duties of Escrow Agent
hereunder and will not be liable for any nonperformance thereof nor for any act
or failure to act whatsoever on the part of any successor Escrow Agent.
12. Successor to Escrow Agent. Any corporation resulting from any merger
-------------------------
or consolidation to which Escrow Agent or any successor to it shall be a party,
or any corporation in any manner succeeding to all or substantially all of the
business of Escrow Agent or any successor, provided such corporation shall be a
banking corporation, with trust powers, organized under the laws of the United
States of America or of the State of Tennessee, shall be the successor escrow
agent hereunder without the execution or filing of any paper or any further acts
on the part of any of the parties hereto.
13. Instructions and Notices. In executing and performing its duties
------------------------
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hereunder, Escrow Agent shall be entitled to rely upon instructions of Graphic,
Mercury, WAC and the Wimmer Parties. Any notice, payment, demand, instruction
or communication required or permitted to be given by this Escrow Agreement
shall be in writing and shall be given by hand delivery, overnight messenger or
certified mail, return receipt requested, addressed to the appropriate party at
the address stated below:
9
<PAGE>
If to Graphic:
Graphic Industries, Inc.
2155 Monroe Drive, N.E.
Atlanta, Georgia 30324
Attention: Mark C. Pope, IV, President
If to Mercury or WAC:
Mercury Printing Company, Inc.
2929 Convair Road
Memphis, Tennessee 38132
Attention: Mr. Bill Hyatt, President
In each of the above cases
with a copy to:
Lawrence M. Gold, P.C.
100 Galleria Parkway
Suite 695
Atlanta, Georgia 30339
If to the Wimmer Parties:
The Wimmer Companies, Inc.
4210 B.F.Goodrich Blvd.
Memphis, Tennessee 38118
With a copy to:
Johnson, Grusin, Kee & Surprise
Suite 202, 780 Ridge Lake Blvd.
Memphis, Tennessee 38120
Attn: Martin A. Grusin, Esq.
If to Escrow Agent:
United American Bank
5384 Poplar Drive
Memphis, Tennessee
Attention: __________________
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<PAGE>
Any notice sent by overnight messenger or hand delivery shall be deemed
made on the date received, and any notice sent by certified mail shall be deemed
made three (3) days after mailing.
14. Governing Law. This Escrow Agreement shall be governed
-------------
by and construed in accordance with the laws of the State of Tennessee.
15. Headings. The headings in this Escrow Agreement are inserted for
--------
convenience and identification only and are in no way intended to interpret,
define or limit the scope, extent or intent of this Escrow Agreement or any
provision hereof.
16. Severability. Each provision of this Escrow Agreement is
------------
intended to be severable. If any term or provision hereof is illegal or invalid
for any reason whatsoever, such illegality or invalidity shall not affect the
validity or enforcement of the remainder of this Escrow Agreement.
17. Counterparts. This Escrow Agreement, and any amendment hereto, may be
------------
executed in one or more counterparts, each of which shall be deemed an original,
but all of which together shall constitute one and the same instrument.
18. Amendment. No modification or amendment to this Escrow Agreement
---------
shall be valid unless produced in writing and signed by all of the parties
hereto.
19. Successors. This Agreement shall be binding upon and inure to the
----------
benefit of the parties hereto and their respective heirs, legatees, assigns and
transferees, as the case may be. Escrow Agent shall not be bound by or incur any
liability with respect to the Agreement or any other agreement or understanding
among Graphic, Mercury, WAC and the Wimmer Parties, except as herein expressly
provided. Escrow Agent shall not have any duties hereunder except those
specifically set forth herein.
20. Taxes. The Wimmer Parties shall indemnify Graphic for any tax
-----
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liability relating to the income (other than from dividends) earned on the
Escrow Shares which will be reported for tax purposes by Graphic, based upon the
portion of Escrow Shares distributed to each party and such indemnification may
be withdrawn from the income (other than from dividends) earned. Escrow Agent
shall cause the Form 1099-Div to be issued to the Wimmer Parties for the
dividends paid on the Escrow Shares during the term of this Agreement.
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<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Escrow Agreement to
be executed under seal as of the date first above written by the respective
officers thereunder duly authorized.
GRAPHIC INDUSTRIES, INC.
By:
--------------------------------
Its:
-------------------------------
MERCURY PRINTING COMPANY, INC.
By:
--------------------------------
Its:
-------------------------------
WIMMER ACQUISITION CORP.
By:
-------------------------------
Its:
------------------------------
(SEAL)
----------------------------
GLEN A. WIMMER
ESCROW AGENT:
UNITED AMERICAN BANK OF MEMPHIS
By:
--------------------------------
Its:
-------------------------------
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<PAGE>
Exhibit "A"
Signature Page for Note Holders
Name & Address Principal Amount Signature
- -------------- ---------------- ---------
of Notes
--------
Wimmer Brothers Company
4210 B.F. Goodrich Blvd.
Memphis, Tennessee 38118 $
---------- --------------
J. Fred Wimmer
General Partner
J. Fred Wimmer
- -------------------
- ------------------- ----------- --------------
J. Fred Wimmer
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