<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
-----------------
FORM 10-K
(Mark One)
[x] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 [FEE REQUIRED]
For the fiscal year ended January 31, 1996
-----------------------------------------
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
For the transition period from _________ to _________
Commission file number 0-12204
GRAPHIC INDUSTRIES, INC.
(Exact name of Registrant as specified in its charter)
GEORGIA 58-1101633
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
2155 MONROE DRIVE, N.E., ATLANTA, GEORGIA 30324
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code 404/874-3327
Securities registered pursuant to Section 12(b) of the Act:
NONE
Securities registered pursuant to Section 12(g) of the Act:
COMMON STOCK, $.10 PAR VALUE
(Title of class)
Indicate by check mark whether the Registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months
(or for such shorter period that the Registrant was required to
file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes x No
[Cover page 1 of 2 pages]
<PAGE>
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [ x ]
THE AGGREGATE MARKET VALUE OF THE VOTING STOCK HELD BY
NONAFFILIATES OF THE REGISTRANT WAS $52,833,401 AS OF APRIL 22,
1996 BASED UPON THE CLOSING SALE PRICE AS REPORTED ON THE
NASDAQ NATIONAL MARKET SYSTEM THAT DAY.
SHARES OF COMMON STOCK, $.10 PAR VALUE, OUTSTANDING AT APRIL, 22,
1996 - 7,060,575; SHARES OF CLASS B COMMON STOCK, $.10 PAR VALUE,
OUTSTANDING AT APRIL 22, 1996 - 4,519,117.
Documents incorporated by reference:
PORTIONS OF THE GRAPHIC INDUSTRIES, INC. ANNUAL SHAREHOLDERS REPORT FOR THE YEAR
ENDED JANUARY 31, 1996 ARE INCORPORATED BY REFERENCE INTO PART I AND PART II.
PORTIONS OF THE GRAPHIC INDUSTRIES, INC. DEFINITIVE PROXY STATEMENT FOR ANNUAL
MEETING OF SHAREHOLDERS TO BE HELD MAY 21, 1996 ARE INCORPORATED BY REFERENCE
INTO PART III.
[Cover page 2 of 2 pages]
<PAGE>
PART I
------
ITEM 1. BUSINESS
--------
General
- -------
Graphic Industries, Inc. (the "Company" or "Graphic") engages in all
aspects of financial and corporate printing, reprographic services, commercial
printing, direct mail printing and other graphic communications. The Company
ranks approximately 18th by sales among commercial printing firms in North
America. Graphic has expanded its printing and graphic arts services and its
markets through a continuing program of acquisitions of established companies in
its industry and through internal growth and development. The Company's
competitive position has been strengthened in recent years by its substantial
capital investments in advanced equipment, including computerized multicolor
presses and digital prepress equipment.
The Company's growth strategy is to pursue profitable expansion in its
industry on a regional and national basis through acquisitions and internal
growth together with emphasis on the use of state-of-the-art technology.
The Company was incorporated in Georgia in 1970 and serves as the
parent of its operating subsidiaries and divisions. As used herein, the terms
"Graphic" and "Company" include Graphic Industries, Inc. and its subsidiaries
and divisions unless the context indicates otherwise.
Acquisition History
- -------------------
Since its incorporation in 1970, Graphic has expanded from a
regionally based business with only six operating companies into national
network of 19 companies providing full service printing and graphic
communication services. These operations, located in key markets in the United
States, comprise the nation's largest network of short-to-medium run, high
quality, full color commercial printing companies. In addition, Graphic's
operations offer print related services including: multimedia, Internet,
fulfillment, on-demand printing, creative design and reprographic services.
Acquisitions have been made by the payment of either cash, a
combination of cash and notes issued to the sellers or by the use of stock. The
Company has generally maintained the acquired company as a subsidiary that
continues to operate under its own name and in most cases with the previous
management.
In considering acquisition candidates, the Company seeks those
companies which offer opportunities for increased geographic coverage, improved
productivity and profitability, complementary products and services, added
technology, capacity and equipment, strong management in place, and a reasonable
purchase price.
The following table lists the Company's principal operating
subsidiaries and divisions, the dates of their founding or acquisition by the
Company or its predecessors, and shows their principal products and services.
-2-
<PAGE>
<TABLE>
<CAPTION>
Fiscal Year
in which
Organized
Name and Founded or Acquired Principal Services
Location in by Company or Products
- -------------------------------------------------------------------------
<S> <C> <C> <C>
A.C. Scanning, Inc. 1982 1985 Color separations
(1)
Bedford, MA
A & E Reprographic 1979 1981 Reprographic services
& Supply Co. (2)
Jacksonville, FL
Allied Reprographics, 1986 1996 Reprographic services
Inc.
Atlanta, GA
Arco Blueprinter 1961 1986 Reprographic services
Asheville, NC (2)
Atlanta Blue Print 1919 1963 Reprographic services;
Co. architectural,
Atlanta, GA engineering and office
products and supplies
Atlantic Reprographics 1983 1989 Reprographic services;
(2) architectural,
Myrtle Beach, SC engineering and office
supplies
Baum Printing House, 1923 1989 Financial and
Inc. corporate printing;
Philadelphia, PA graphic communications
Carolina Reprographics 1938 1989 Reprographic services;
(2)(3) architectural,
Columbia, SC engineering and office
supplies
Carpenter Reserve 1946 1996 Financial and corporate
Printing Company printing; graphic
Cleveland, OH communications
Cobb Reprographics & 1971 1971 Reprographic services
Office Supply(2)
Marietta, GA
Craftsman Printing 1957 1985 Financial and
Company corporate printing;
Charlotte, NC graphic communications
</TABLE>
-3-
<PAGE>
<TABLE>
Fiscal Year
in which
Organized
Name and Founded or Acquired Principal Services
Location in by Company or Products
- -----------------------------------------------------------------------
<S> <C> <C> <C>
Executive Courier, 1983 1991 Courier services
Inc.(4)
Atlanta, GA
Graphic Direct, Inc.- 1906 1987 Direct mail and
Illinois(5) business forms
Elmhurst, IL printing
Heritage Press, 1923 1986 Financial and
Inc. corporate printing;
Dallas, TX graphic communications
Hoechstetter Printing 1963 1989 Financial and
Company, Inc. corporate printing;
Pittsburgh, PA graphic communications
Imaging Technologies 1992 1993 Reprographic services
Services(2)
Augusta, GA
Imaging Technologies 1954 1986 Reprographic services;
Services(2)(6) architectural,
Greenville, SC engineering and office
supplies
Imaging Technologies 1962 1986 Reprographic services
Services(2)(8)
Spartanburg, SC
IPD Printing & 1978 1986 Financial and
Distributing, Inc. corporate printing;
Atlanta, GA graphic
communications;
direct mail printing
Macon Blue Print 1918 1984 Reprographic services;
Company(2) architectural
Macon, GA engineering and office
supplies
Mercury Printing 1961 1989 Financial and
Company, Inc. corporate printing;
Memphis, TN graphic communications
</TABLE>
-4-
<PAGE>
<TABLE>
<CAPTION>
Fiscal Year
in which
Organized
Name and Founded or Acquired Principal Services
Location in by Company or Products
- ----------------------------------------------------------------------------
<S> <C> <C> <C>
Monroe Litho, Inc. 1960 1990 Financial and
Rochester, NY corporate printing;
graphic communications
Prizma Photographics 1973 1981 Photographic services
(2)(7)
Atlanta, GA
Quadras, Inc. 1983 1996 Creative Design agency
Doraville, GA
Southern Signatures, 1991 1995 Graphic communications
Inc.
Atlanta, GA
State Printing 1891 1988 Financial and
Company, Inc. corporate printing;
Columbia, SC graphic communications
The Central Press 1965 1985 Graphic communications
of Miami, Inc.(1)
Pompano Beach, FL
The Stein Printing 1924 1978 Financial and
Company, Inc. corporate printing;
Atlanta, GA graphic communi-
cations; point-of-
purchase materials;
educational services;
W.E. Andrews Co., 1953 1985 Financial and
Inc. corporate printing;
Bedford, MA graphic communication;
educational services
</TABLE>
-5-
<PAGE>
<TABLE>
<CAPTION>
Fiscal Year
in which
Organized
Name and Founded or Acquired Principal Services
Location in by Company or Products
- ------------------------------------------------------------------------
<S> <C> <C> <C>
W.E. Andrews Co., 1959 1985 Financial and
Inc. of Connecticut corporate printing;
(1) graphic communications
Hartford, CT
Wetmore & Company 1947 1986 Financial and
Houston, TX corporate printing;
graphic communications
Williams Printing 1922 1922 Financial and
Company(9) corporate printing;
Atlanta, GA graphic communications; point-
of-purchase materials
</TABLE>
- ----------------------
(1) Subsidiary of W. E. Andrews Co., Inc.
(2) Division of Atlanta Blue Print Co.
(3) Former name - Capital Blueprint Company.
(4) Subsidiary of Atlanta Blue Print Co.
(5) Former name - A.J. Kennedy & Co., Inc.
(6) Former name - Piedmont Printmakers.
(7) Former name - General Color.
(8) Former name - Spartan Blueprinters.
(9) Predecessor to the Company.
-6-
<PAGE>
Services and Products
- ---------------------
The following table indicates the approximate percentages of
total gross revenues of the Company attributable to each class of
service provided by the Company for the indicated periods:
<TABLE>
<CAPTION>
Fiscal Years
-------------------
Class of Service 1996 1995 1994
- ---------------------------------- ----- ----- -----
<S> <C> <C> <C>
Financial and Corporate Printing 35% 34% 34%
Graphic Communications 43 43 41
Reprographic Services 7 7 7
Point-of-Purchase Materials 6 6 6
Direct Mail 6 7 9
Educational Services 3 3 3
---- ---- ----
Total 100% 100% 100%
---- ---- ----
</TABLE>
Due to the broad range of printing and graphic arts services provided
by the Company, the Company's business as a whole is not considered to be
seasonal.
Financial and Corporate Printing. This category of printing consists
---------------------------------
primarily of the printing of annual reports to shareholders, quarterly reports,
registration statements, offering circulars, 10-Ks and related documents,
corporate magazines and product announcements.
In this market segment, the demand for multicolor printing requires the
latest technology for successful competition. Graphic has the capability of
providing full service in-house with its numerous high-speed, computerized
multicolor presses at greater cost efficiency than companies lacking such
capabilities. Graphic's modern equipment is complemented by strategically
located production facilities in many of the major U.S. markets for financial
and corporate printing.
Graphic Communications. The Company provides a broad line of graphic
-----------------------
communications services including multicolor product brochures, magazines, gift
catalogs, fine art reproductions, promotional calendars, labels, point of
purchase materials, check registers and sports programs. Like other Graphic
products, these are marketed to local, regional and large national corporations.
-7-
<PAGE>
To service this market, the Company relies on new technology in both
prepress and printing production. State-of-the-art equipment includes the
computerized production of previously labor intensive composition and pagination
for producing plates for printing. Quality color reproductions are achieved
with laser scanners for color separations and other sophisticated prepress
processes such as digital typesetting and capabilities for receiving texts from
clients via telecommunications.
Reprographic Services. Graphic's 14 reprographic facilities in Georgia,
----------------------
Florida, North Carolina and South Carolina comprise the largest reprographic
operation in the Southeast, serving more than 8,000 customers, principally
architects, engineers and photographers. Among the services provided by the
reprographic division are: diazo printing (blue on a white background), drafting
and office supplies, custom color and black-and-white photographic services,
color laser copying, desktop publishing, xerography, specifications printing,
and laser plotting and scanning.
The broad line of Graphic services, modern equipment and number of
personnel provide the Company with the capability of handling high volume, fast
turnaround reprographic projects seven days a week. The Company operates on-
premise reprographic service centers for a number of architectural and
engineering firms and also provides highly specialized production of photomural
displays with backlighting for marketing products and services of clients such
as airlines, supermarkets, fast food chains and ad agencies.
Direct Mail. Personalized direct mail requires sophisticated technology to
------------
produce the high quality services and products demanded by this market segment,
which includes many leading U.S. corporations. Among the specialized services
provided by Graphic are ink jet and laser imprinting, die cutting, foil
stamping, blow-on labeling, scratch-off inking and remoistenable glue,
continuous forms and the handling of complete mail packages for clients.
Educational Services. The Company serves a large number of leading
---------------------
colleges and universities as well as regional and local institutions. The
Company provides a wide range of services from design and copy writing to
production and fulfillment for educational clients.
Ancillary Services
- ------------------
The Company offers a full line of ancillary services to achieve greater
integration of its printing and graphic communications operations. These
services include creative staff, either in-house or by contract for research,
concept development, copywriting, editing, graphic design, photography and
production art. By providing such services, the Company enhances its marketing
effort and builds customer loyalty. Revenues attributable to these ancillary
services are included in the table of revenues above under the class of service
or product for which such services were performed.
-8-
<PAGE>
Warehousing, packaging, shipping and delivery services are also critical
elements in the printing industry and the Company is equipped to provide these
services by storing printed materials for its customers, handling bulk shipments
and mailing to meet customer needs. The Company operates a number of radio-
dispatched and other delivery trucks in certain market areas or utilizes courier
services to provide customers with pickup and delivery services.
Capital Expenditures
- --------------------
The Company has increased its capabilities for printing products and
services significantly through purchases of new equipment in recent years. The
following table indicates the expenditures for capital improvements (excluding
assets of acquired businesses) during each of the last five years:
Fiscal Year Aggregate Capital Expenditures
----------- ------------------------------
1992 $13,243,479
1993 6,631,110
1994 21,126,441
1995 21,927,430
1996 24,982,790
-----------
TOTAL $87,911,250
===========
Except for the purchase of land, buildings and building improvements of
$2,424,782, $1,401,369, $4,709,006, $5,246,153 and $2,213,282 during fiscal
1992, 1993, 1994, 1995 and 1996 respectively (see Item 7, Management's
Discussion and Analysis of Financial Condition and Results of Operations, and
Item 13, Certain Relationships and Related Transactions, of this Report), the
expenditures in the table above represent additional equipment acquisitions.
These equipment additions increase the Company's production capacity while
permitting production operations to be more labor-efficient and cost-efficient
and capable of higher quality output.
The following is a description of certain equipment used by the Company in
its operations:
Computerized Phototypesetting and Telecommunications. Equipment includes
-----------------------------------------------------
various electronic typesetting systems utilizing computer hardware and software
to maximize speed, versatility and quality, as well as capabilities for
telecommunications linked directly to customers' word processors or computers to
perform typesetting.
Computerized Ink Control Panels. Seventy-five of the Company's four-,
--------------------------------
five-, six-, seven- and eight-color presses are equipped with computerized
control panels which automatically control the application of ink and produce
high quality reproduction at high press speeds.
-9-
<PAGE>
Specialized Equipment. The Company's specialized equipment, in addition to
----------------------
the above, includes sixteen color manipulation systems which produce color
separations by computerized scanning, replacing labor-intensive handwork and
camera work, improving the quality of the product and turnaround time, and
reducing the unit cost of a separation (used in color printing).
The Company also owns 43 saddle stitcher/collator/trimmers and perfect
binding machines. This equipment includes a 27-pocket automatic perfect binder
which collates, binds and trims up to 864 pages in one operation and is used for
producing telephone directories and bulky catalogs.
Printing Presses. During fiscal 1996, the Company operated an aggregate of
-----------------
116 sheetfed offset presses, web offset presses and letterpresses, including 83
which print four to eight colors simultaneously.
Sales and Marketing
- -------------------
The Company seeks to maximize the benefits of its diversification by
decentralized marketing efforts of the various subsidiaries, each of which has
expertise in certain printing specialties. Collectively, the subsidiaries have
enabled the Company to improve its overall market position in the printing
industry.
At January 31, 1996, the Company's services were marketed by 272 full-time
salaried and commissioned sales persons employed by the Company's subsidiaries.
Although each sales person has primary responsibility to represent his own
company, he has access to the full range of services performed by the Company,
thus maximizing his potential sales volume and the sales potential of Graphic.
This strategy is based on orientation of accounts by the Company's organization
to serve the total printing and graphic arts needs of its customers.
Company sales persons participate in a comprehensive training program
operated by the particular subsidiary employing those persons, who also may
receive additional training at other subsidiaries. The Company has experienced
a low rate of turnover among its sales force.
Customers are billed upon completion or termination of an entire job. The
dollar amount of backlog orders, therefore, is not meaningful in the Company's
business as jobs are generally completed shortly after an order is received.
At January 31, 1996, the Company had more than 10,000 customer accounts.
No customer accounted for as much as 10% of the Company's revenues during fiscal
1996.
-10-
<PAGE>
Employees
- ---------
The Company employed 3,379 associates at January 31, 1996. Approximately
10 percent of the Company's associates are represented by one of five unions
covering mostly pressroom and bindery personnel. Collective bargaining
contracts are negotiated on an individual plant basis. The Company has not
experienced any significant work stoppages in more than 10 years.
Competition
- -----------
The printing and graphic arts industry is one of the largest and most
geographically dispersed manufacturing industries in the United States. The
U.S. Department of Commerce estimates there are approximately 37,000 commercial
printing plants in the nation with shipments of commercial printing reaching
approximately $66.0 billion in 1994. Most of the Company's operations are
included in the commercial printing category.
Competition in the printing industry is principally based on quality,
service and price. The Company believes it competes effectively on all of these
bases. The Company competes directly with a number of printers throughout the
nation, some of which are subsidiaries or divisions of companies having much
greater financial resources than the Company.
Material
- --------
Although the Company purchases a number of different materials for its
operations, such as paper, ink, film and plates, only the purchase of paper is
significant. The Company purchases paper from various mills and local
suppliers, with many alternate sources of paper available. The Company has
experienced no difficulty in obtaining adequate suppliers of paper or other
materials nor is any difficulty anticipated in the future.
-11-
<PAGE>
ITEM 2. PROPERTIES
----------
The following table contains information regarding the Company's facilities
as of April 22, 1996, all of which are leased except as otherwise noted:
<TABLE>
<CAPTION>
Facility Square Feet Use (1)
- -------------------------------- ----------- ------------------------------
<S> <C> <C>
Graphic Industries, Inc.(2)(3) 9,080 Corporate
Atlanta, GA headquarters
A & E Reprographic & 9,150 Production, sales and office
Supply Co.
Jacksonville, FL
Allied Reprographics,Inc. 20,750 Production, sales and office
Atlanta, GA
Arco Blueprinter 5,000 Production, sales and office
Asheville, NC
Atlanta Blue Print Co. 43,500 Production, sales and office
Atlanta, GA
Atlantic Reprographics 5,000 Production, sales and office
Myrtle Beach, SC
Baum Printing House, Inc. 61,848 Production, sales and office
Philadelphia, PA
Carolina Reprographics(3) 17,700 Production, sales and office
Columbia, SC
Carpener Reserve Printing Co. 39,600 Production, sales and office
Cleveland, OH
Cobb Reprographics & 3,600 Production, sales and office
Office Supply
Marietta, GA
Craftsman Printing Company(2) 94,956 Production, sales, office and
Charlotte, NC warehouse
Executive Courier, Inc.(2) 4,000 Sales and office
Atlanta, GA
Graphic Direct, Inc.- 72,888 Production, sales and office
Illinois(4)
Elmhurst, IL
</TABLE>
-12-
<PAGE>
<TABLE>
<CAPTION>
Facility Square Feet Use (1)
- -------------------------------- ----------- ------------------------------
<S> <C> <C>
Heritage Press, Inc.(2)(3) 106,000 Production, sales, office and
Dallas, TX warehouse
Hoechstetter Printing 138,000 Production, sales and office
Company, Inc.(2)
Pittsburgh, PA
Imaging Technologies 1,200 Production, sales and office
Services
Augusta, GA
Imaging Technologies 15,000 Production, sales and office
Services
Greenville, SC
Imaging Technologies 2,500 Production, sales and office
Services
Spartanburg, SC
IPD Printing & Distributing, 208,440 Production, sales, office and
Inc. (2) warehouse
Atlanta, GA
Macon Blue Print Company 10,000 Production, sales and office
Macon, GA
Mercury Printing Company, 54,134 Production, sales and office
Inc.
Memphis, TN
Monroe Litho, Inc. 53,000 Production, sales and office
Rochester, NY
Prizma Reprographics 1,500 Production, sales and office
Atlanta, GA
Quadras, Inc. 36,000 Production, sales and office
Doraville, GA
Southern Signatures, Inc. 25,000 Production, sales and office
Atlanta, GA
State Printing Company(2) 60,000 Production, sales and office
Columbia, SC
The Central Press of 41,000 Production, sales and office
Miami, Inc.(2)
Pompano Beach, FL
</TABLE>
-13-
<PAGE>
<TABLE>
<CAPTION>
Facility Square Feet Use (1)
- -------------------------------- ----------- ------------------------------
<S> <C> <C>
The Stein Printing Company, 131,624 Administrative offices,
Inc.(2) conference rooms, production
Atlanta, GA and warehouse
W.E. Andrews Co., Inc.(5) 98,709 Production, sales and office
Bedford, MA
W.E. Andrews Co., Inc. of 44,000 Production, sales and office
Connecticut
Hartford, CT
Wetmore & Company(2) 112,043 Production, sales, office and
Houston, TX warehouse
Williams Printing Company(2)(3) 139,160 Production, sales, office and
Atlanta, GA warehouse
</TABLE>
- ----------------------------
(1) Building space used for "production" as shown in the table above includes
functions such as layout, design, typesetting, printing, binding,
photographic processes and finishing. The Company believes that its
facilities are in good condition and adequate for the purposes for which
they are used. The aggregate annual rental cost for the total of
approximately 460,669 square feet of leased space described above is
approximately $1,947,849. See Note 5 of Notes to Consolidated Financial
Statements in Item 8 of this Report.
(2) These facilities are owned by the company.
(3) Includes two facilities.
(4) Includes two facilities, one of which is owned by the Company (30,838
square feet).
(5) Includes two facilities, one of which is owned by the Company (67,015
square feet).
-14-
<PAGE>
ITEM 3. LEGAL PROCEEDINGS
-----------------
At the end of fiscal year 1996, there were no material pending legal
proceedings to which the Company was a party or to which any of its property was
the subject.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
---------------------------------------------------
None.
ITEM 4(A). EXECUTIVE OFFICERS OF THE REGISTRANT
------------------------------------
Officers are elected annually and serve at the discretion of the Board of
Directors. The executive officers of the Company are as follows:
Position with Company,
Principal Occupation,
Business Experience,
Name Other Directorships Age
- ----------------------- ----------------------------- -------
Mark C. Pope III Chairman of the Board of 71
Graphic Industries since
1970 and President of
Graphic Industries 1970-1989
Mark C. Pope IV (1) President of Graphic 45
Industries since 1989,
Vice President of Graphic
Industries 1984-1989,
Assistant Secretary of
Graphic Industries 1979-
1989; President of
Williams Printing
Company 1982-1987 (2)
Alvan A. Herring, Jr. Vice President of Graphic 52
Industries since 1990;
President, Foote & Davies,
Inc. 1989-90; Senior Vice
President Foote & Davies, Inc.
1982-1989
William A. Wood Vice President of Graphic 76
Industries since 1986;
President of The Stein
Printing Company, Inc.
1978-1986 (2)
-15-
<PAGE>
Position with Company,
Principal Occupation,
Business Experience,
Name Other Directorships Age
- ---------------------- ------------------------------- -------
Joseph A. Fasolo Vice President of Graphic 54
Industries since 1994;
President of Baum Printing,
Inc. since 1988 (2)
Jim R. Tidwell Vice President of Graphic 56
Industries since 1993;
President of Craftsman
Printing Company since
1993; President of Heritage
Press, Inc. 1991-93;
President of Wetmore &
Company 1988-91(2)
David S. Fraser Chief Financial Officer and 57
Treasurer of Graphic Industries,
Inc. since 1994; President of
L.S. Brown Co. and Marine
Distributors, Inc. 1986-1994
Donald P. Hunnicutt Secretary of Graphic 52
Industries since 1987;
Controller of Graphic
Industries 1983-1987
- ----------------------
(1) Mark C. Pope IV is the son of Mark C. Pope III.
(2) Baum Printing, Inc., Craftsman Printing Company, Heritage Press, Inc., The
Stein Printing Company, Inc., Wetmore & Company and Williams Printing
Company are wholly-owned subsidiaries of the Company.
-16-
<PAGE>
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
---------------------------------------------------------------------
This information is incorporated by reference to "Market For Common Stock"
and "Dividend Information" on the inside back cover of the Registrant's annual
shareholders report for the year ended January 31, 1996.
ITEM 6. SELECTED FINANCIAL DATA
-----------------------
This information is incorporated by reference to "10-Year Comparative
Summary of Operations" and "10-Year Comparative Consolidated Balance Sheets" on
pages 6-9 of the Registrant's annual shareholders report for the year ended
January 31, 1996.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
-------------------------------------------------
CONDITION AND RESULTS OF OPERATIONS
-----------------------------------
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" on pages 18-19 of the Registrant's annual shareholders report for
the year ended January 31, 1996 are incorporated by reference.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
-------------------------------------------
The report of independent auditors and consolidated financial statements
included on page 20-29 of the Registrant's annual shareholders report for the
year ended January 31, 1996 are incorporated by reference.
"Quarterly Results of Operations" on page 30 of the Registrant's annual
shareholders report for the year ended January 31, 1996 are incorporated herein
by reference.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
---------------------------------------------------------------
FINANCIAL DISCLOSURE
--------------------
Not applicable.
-17-
<PAGE>
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
--------------------------------------------------
Information concerning directors is incorporated by reference to "Proposal
1 - Election of Directors" in the Registrant's definitive Proxy Statement for
the 1996 Annual Meeting of Shareholders, to be filed with the Securities and
Exchange Commission within 120 days of the end of the Registrant's 1996
fiscal year.
Reference is also made to Item 4(A) of Part I of this Report, "Executive
Officers of the Registrant," which information is incorporated herein by
reference.
ITEM 11. EXECUTIVE COMPENSATION
----------------------
This information is incorporated by reference to "Executive Compensation -
Executive Compensation Tables", in the Registrant's definitive Proxy Statement
for the 1996 Annual Meeting of Shareholders, to be filed with the Securities and
Exchange Commission within 120 days of the end of the Registrant's 1996 fiscal
year.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
---------------------------------------------------
MANAGEMENT
----------
This information is incorporated by reference to "Proposal 1 - Election of
Directors" in the Registrant's definitive Proxy Statement for the 1996 Annual
Meeting of Shareholders, to be filed with the Securities and Exchange Commission
within 120 days of the end of the Registrant's 1996 fiscal year.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
----------------------------------------------
This information is incorporated by reference to "Proposal 1 - Election of
Directors - Certain Transactions" in the Registrant's definitive Proxy Statement
for the 1996 Annual Meeting of Shareholders, to be filed with the Securities and
Exchange Commission within 120 days of the end of the Registrant's 1996 fiscal
year.
-18-
<PAGE>
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON
-------------------------------------------------------
FORM 8-K
--------
(a) The following documents are filed as part of this Report:
1. Financial Statements.
The following consolidated financial statements of the Registrant,
included in the annual shareholders report for fiscal year ended
January 31, 1996, are incorporated by reference in Item 8:
* Consolidated Balance Sheets - January 31, 1996 and January 31,
1995.
* Consolidated Statements of Income - fiscal years ended January
31, 1996, 1995 and 1994.
* Consolidated Statements of Shareholders' Equity - fiscal years
ended January 31, 1996, 1995 and 1994.
* Consolidated Statements of Cash Flows - fiscal years ended
January 31, 1996, 1995 and 1994.
* Notes to Consolidated Financial Statements - January 31, 1996.
2. Financial Statement Schedule
Schedule The following consolidated statement schedule of the
Number Registrant is included in Item 14(d):
------
II Valuation and Qualifying Accounts.
-19-
<PAGE>
All other schedules for which provision is made in the applicable accounting
regulations of the Securities and Exchange Commission are not required under the
related instructions or are inapplicable and therefore have been omitted.
3. Exhibits incorporated by reference or filed with this
report:
Exhibit
-------
Number Description
------ -----------
3(a) Amended and Restated Articles of Incorporation of Registrant. (1)
3(b) By-laws of Registrant. (2)
4(a) Instruments defining the rights of security holders. See Articles V
and VI of the Amended and Restated Articles of Incorporation
contained in Exhibit 3(a) and Articles Two and Seven of the By-laws
contained in Exhibit 3(b). (2)
4(b) Form of Indenture, including Form of Debenture, between Registrant
and the First National Bank of Atlanta. (3)
10(a)* Incentive Stock Option Plan and Form of Option Agreement of
Registrant. (4)
10(b)* Profit Sharing Plan and Trust of Registrant, together with Call,
Put and Right of First Refusal Agreement. (5)
10(c)* Payroll-Based Employee Stock Ownership Plan and Trust of
Registrant. (6)
10(d) Officers' and Directors' Liability Insurance Policy issued by
National Union Fire Insurance Co. (5)
10(l) Stock Purchase Agreement dated July 12, 1990 between the Registrant
and Dyment Limited with respect to the sale of Finish It, Inc. (1)
10(m) Asset Purchase Agreement dated October 1, 1990 between the
Registrant and Vista Business Forms, Inc. with respect to the sale
of KAL Forms, Inc. (1)
10(n) Term Loan Agreement dated July 17, 1990 between Monroe Litho, Inc.
and Trust Company Bank with form of Term Note and Guaranty of the
Registrant. (1)
-20-
<PAGE>
10(o) Receivable Financing Agreement dated September 28, 1990 between W.E.
Andrews Co., Inc. of Connecticut and Bank of New England together
with Security Agreement, Installment Promissory Note and Guaranty of
W.E. Andrews Co. (1)
10(p) Receivable Financing Agreement dated December 17, 1990 between
Edwards & Broughton Company and First Citizens Bank together with
Installment Promissory Note, Security Agreement and Guaranty of the
Registrant. (1)
10(q) Receivable Financing Agreement dated December 26, 1990 between Baum
Printing House, Inc. and Philadelphia National Bank together with
Installment Promissory Note, Security Agreement and Guaranty of the
Registrant. (1)
10(u) Stock Purchase Agreement dated as of January 26, 1984 among the
Registrant, W.E.A., Inc. and W.E. Andrews Co. Inc., with exhibits.
(7)
10(aa) Stock Purchase Agreement dated September 11, 1985 among the
Registrant, IPD Acquisition Corp., IPD Printing & Distributing,
Inc., and Equifax, Inc., with exhibits and Articles of Merger. (8)
10(ff) Promissory Note from the Registrant and Craftsman Printing Company
to Life Insurance Company of Georgia; Security Agreement between
Craftsman Printing Company and Life Insurance Company of eorgia;
Deed of Trust among Craftsman Printing Company, Lewis H. Parham,
Jr., and Life Insurance Company of Georgia; and Guaranty from
Registrant to Life Insurance Company of Georgia. (9)
10(gg) Promissory Note from the Registrant and Wetmore & Company to Life
Insurance Company of Georgia; Deed of Trust among Wetmore & Company,
John B. Stewart and Life Insurance Company of Georgia; and Guaranty
Agreement from Registrant to Life Insurance Company of Georgia. (9)
10(hh) Real Estate Note from Registrant and IPD Printing & Distributing,
Inc. to Life Insurance Company of Georgia; Deed to Secure Debt from
IPD Printing & Distributing, Inc. to Life Insurance Company of
Georgia; Security Agreement between IPD Printing & Distributing,
Inc. and Life Insurance Company ofGeorgia; and Guaranty from
Registrant to Life Insurance Company of Georgia. (9)
10(ii) 1988 Incentive Stock Option Plan. (10)
10(jj) Lease Agreement dated December 1, 1981, as amended, and Agreement
and Release of Guaranty dated October 30, 1987. (10)
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<PAGE>
10(kk) Stock Purchase Agreement dated September 14, 1988 among the
Registrant, Mercury Acquisition Company and the Shareholders of
Mercury Printing Company, Inc. with exhibits. (11)
10(ll) Stock Purchase Agreement dated June 8, 1988 among the Registrant,
Harvey A. Hoechstetter, HPC Acquisition Corp., and Hoechstetter
Printing Company, Inc. with exhibits and Articles of Merger. (11)
10(mm) Stock Purchase Agreement dated August 12, 1988 among the Registrant,
Baum Acquisition Co., Baum Printing House, Inc., Seymour Z. Baum,
Joseph A. Fasolo and Seymour Z. Baum, as trustee, with exhibits and
Articles of Merger. (11)
10(qq) First Mortgage Real Estate Note and Deed to Secure Debt and Security
Agreement between the Registrant and Jefferson-Pilot Life Insurance
Company. (11)
10(rr) Real Estate Note and Mortgage between Printing Service, Inc. and
Jefferson-Pilot Life Insurance Company dated June 29, 1988. (11)
10(ss) First Mortgage Real Estate Note and Deed to Secure Debt and Security
Agreement between State Printing Company and Jefferson-Pilot Life
Insurance Company dated May 24, 1988. (11)
10(tt) Stock Purchase Agreement dated July 31, 1989 among the Registrant,
Monroe Litho, Inc., Monroe Acquisition, Inc., and the Shareholders
of Monroe Litho, Inc. with exhibits. (12)
10(ww)* 1991 Incentive Stock Option and Non-Qualified Stock Options Plan
and Form of Option Agreement of Registrant. (2)
10(xx)* 1992 Restricted Stock Award Plan of Registrant. (2)
10(yy) Receivable Financing Agreement and Term Loan Agreement dated March
3, 1992 between NationsBank, Atlanta Blue Print Company, Inc.,
Craftsman Printing Company, Heritage Press, Inc., IPD Printing &
Distributing, Inc., The Stein Printing Company, Inc., Wetmore &
Company, Williams Printing Company and the Registrant. (2)
-22-
<PAGE>
10(zz) Form of Sale and Leaseback Agreement between Fleet Credit
Corporation, W.E. Andrews Co., Inc., W.E. Andrews Co., Inc. of
Connecticut, Baum Printing, Inc., The Central Press of Miami, Inc.,
Graphic Direct, Inc.-Illinois, Heritage Press, Inc., IPD Printing &
Distributing, Inc., The Stein Printing Company, Inc., Wetmore &
Company, Williams Printing Company and the Registrant. (2)
10(aaa) Sale and Leaseback Agreement between Fleet Credit Corporation,
W.E. Andrews Co., Inc. and the Registrant. (5)
10(bbb) First Mortgage Real Estate Note and Deed to Secure Debt and Security
Agreement between Heritage Press, Inc. Protective Life Insurance
Company and the Registrant dated February 4, 1992. (5)
10(ccc) First Mortgage Real Estate Note and Deed to Secure Debt between Baum
Printing, Inc., MetLife Corporation and the Registrant dated August
27, 1992. (5)
10(ddd) First Mortgage Real Estate Note and Deed to Secure Debt between
MetLife Corporation and the Registrant dated August 27, 1992. (5)
10(eee) Receivable Financing Agreement dated October 20, 1992 between
Executive Courier, Inc. and the Merchant Bank of Atlanta together
with Installment Promissory Notes and Guaranty of the Registrant. (5)
10(fff) Term Note Agreement, Promissory Note and Security Agreement between
State Printing Company, Inc., First Union National Bank of Georgia
and the Registrant along with Guaranty of the Registrant. (5)
10(ggg) Letter Loan Agreement, Installment Term Notes and Master Demand Note
between Graphic Direct, Inc.-Illinois, Graphic Direct, Inc.-Michigan,
NBD Bank, NA and the Registrant along with Guaranty of the
Registrant. (5)
10(hhh) Loan and Security Agreement and Form of Promissory Note among the
Registrant, Atlanta Blue Print Co., Baum Printing, Inc., The Central
Press of Miami, Inc., Craftsman Printing Company, Edwards & Broughton
Co., Graphic Direct, Inc.-Illinois, Graphic Direct, Inc.-Michigan,
Heritage Press, Inc., Hoechstetter Printing Company, Inc., IPD
Printing & Distributing, Inc., Mercury Printing Company, Inc., State
Printing Company, Inc., The Stein Printing Company, Inc., W.E.
Andrews Co.,Inc., W.E. Andrews Co., Inc. of Connecticut, Wetmore &
Company, Williams Printing Company, A.C. Scanning, Inc., and the CIT
Group/Equipment Financing, Inc. dated July 29, 1993. (13)
-23-
<PAGE>
10(iii) Amended and restated Financing Agreement, along with the First and
Second Amendment thereto, among the Registrant, Atlanta Blue Print
Co., Baum Printing, Inc., The Central Press of Miami, Inc.,
Craftsman Printing Company, Edwards & Broughton Co., Graphic
Direct, Inc.-Illinois, Graphic Direct, Inc.-Michigan, Heritage
Press, Inc., IPD Printing & Distributing, Inc., Mercury Printing
Company, Inc., State Printing Company, Inc., The Stein Printing
Company, Inc., Wetmore & Company, Williams Printing Company and
NationsBank of Georgia, N.A. dated August 6, 1993. (13)
10(jjj) First Mortgage Real Estate Note and Deed to Secure Debt between
the Registrant and MetLife Corporation dated January 26, 1994.
(13)
10(kkk) Offer to Purchase and Supplement to Offer to Purchase between the
Registrant and Kenneth A. Walt, as Trustee for the Estate of
Graphic Dynamics, Inc. dated January 31, 1994. (13)
10(lll) Agreement and Plan of Reorganization between the Registrant, SS
Acquisition Co., Southern Signatures, Inc., Brian R. Smith, MI
Holdings, Inc. and Steven C. Carson, M.D., Pension Fund dated
April 19, 1994. (14)
10(mmm) Promissory Note and Master Security Agreement between Mercury
Printing Company, Fleet Credit Corporation and the Registrant
dated May 5, 1994. (14)
10(nnn) First Mortgage Real Estate Note and Security Agreement between the
Registrant and MetLife Capital Financial Corporation dated July
21, 1994. (14)
10(ooo) Promissory Note, Credit Agreement and Security Agreement between
Wetmore & Company, Texas Commerce Bank and the Registrant dated
September 14, 1994 along with Guaranty of the Registrant. (14)
10(ppp) Term Loan, Security and Guaranty Agreement between IPD Printing &
Distributing, Inc., Trust Company Bank and the Registrant dated
November 30, 1994. (14)
10(qqq) First Mortgage Real Estate Note, deed to secure debt and Security
Agreement between the Registrant and MetLife Capital Financial
Corporation dated December 27, 1994. (14)
10(rrr) Agreement and Plan of Reorganization between the Registrant,
Quadras Acquisition Company, QQQ, Inc., Quadras, Inc., Sara Senie
Harris and Cynthia A. Morgan dated November 1, 1995.
10(sss) Agreement and Plan of Merger between the Registrant, Allied
Acquisition Corp., Allied Reprographic Services,Inc. and Vernon E.
Langford dated August 1, 1995.
-24-
<PAGE>
10(ttt) Agreement and Plan of Merger between the Registrant, Carpenter
Reserve Printing Company, Carpenter Acquisition Company and the
shareholders of Carpenter Reserve Printing Companay dated
September 21, 1995.
10(uuu) Credit Agreement between the Registrant, co-agents and NationsBank
of Georgia, NA, as agent, dated December 21, 1995.
10(vvv) Asset Sale Agreement between the Registrant, Bausch & Lomb
Incorporated, and Monroe Litho, Inc., a wholly owned subsidiary of
the Registrant, dated December 1, 1995.
11 Computation of Earnings Per Share.
13 The Registrant's 1996 Annual Shareholders Report. With the
exception of information expressly incorporated herein by
reference, the 1996 Annual Shareholders Report is not deemed to be
filed with the commission.
22 Subsidiaries of the Registrant.
23 Consent of Independent Auditors.
* Compensatory Plan, arrangement or management contract.
- --------------------
(1) Incorporated herein by reference to Exhibit of the same number of
the Registrant's Annual Report on Form 10-K for the fiscal year ended January
31, 1991. (File No. 0-12204).
(2) Incorporated herein by reference to Exhibit of the same number of the
Registrants Annual Report on Form 10-K for the fiscal year ended January
31, 1992. (File No. 0-12204)
(3) Incorporated herein by reference to Exhibit of the same number to the
Registrant's Registration Statement on Form S-1 as filed on April 30,
1986 (Reg. No. 33-5277).
(4) Incorporated herein by reference to Exhibit of the same number to
Amendment No. 2 to the Registrant's Registration Statement on Form S-1 filed on
December 13, 1983 (Reg. No. 2-86411).
(5) Incorporated herein by reference to Exhibit of the same number of the
Registrants Annual Report on Form 10-K for the fiscal year ended January
31, 1993. (File No. 0-12204)
(6) Incorporated herein by reference to Exhibit of the same number to the
Registrant's Registration Statement on Form S-1 as filed on October 2, 1985
(Reg. No. 33-600).
(7) Incorporated herein by reference to Exhibit 2 to the
Registrant's Current Report on Form 8-K as filed on February 16, 1984
(File No. 0-12204).
(8) Incorporated herein by reference to the Registrant's Current
Report on Form 8-K as filed on September 26, 1985 (File No. 0-12204).
(9) Incorporated herein by reference to Exhibit of the same number to the
Registrant's Annual Report on Form 10-K for the fiscal year ended January
31, 1987 (File No. 0-12204).
(10) Incorporated herein by reference to Exhibit of the same number to the
Registrant's Annual Report on Form 10-K for the fiscal year ended
January 31, 1988 (File No. 0-12204).
(11) Incorporated herein by reference to Exhibit of the same number to
the Registrant's Annual Report on Form 10-K for the fiscal year ended
January 31, 1989. (File No. O-12204)
(12) Incorporated herein by reference to Exhibit of the same number of the
Registrant's Annual Report on Form 10-K for the fiscal year ended January 31,
1990. (File No. O-12204).
(13) Incorporated herein by reference to Exhibit of same number of the
Registrants Annual Report on Form 10-K for the fiscal year ended January
31, 1994. (File No. 0-12204).
(14) Incorporated herein by reference to Exhibit of same number of the
Registrants Annual Report on Form 10-K for the fiscal year ended January
31, 1995. (File No. 0-12204).
(b) Reports on Form 8-K.
No reports on Form 8-K were filed during the quarter ended
January 31, 1996.
-25-
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, The Registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.
GRAPHIC INDUSTRIES, INC.
Date: April 29, 1996 By: /s/ Mark C. Pope, III
-------------------------
Mark C. Pope, III
Chairman of the Board
Pursuant to the requirements of the Securities Exchange Act
of 1934, this report has been signed below by the following
persons on behalf of the Registrant and in the capacities and on
the dates indicated.
Date: April 29, 1996 /s/ Mark C. Pope, III
-------------------------------
Mark C. Pope, III
Chairman of the Board
(Principal Executive Officer)
Date: April 29, 1996 /s/ David S. Fraser
-------------------------------
David S. Fraser
Chief Financial Officer and
Treasurer
(Principal Financial and
Accounting Officer)
Date: April 29, 1996 /s/ Mark C. Pope, IV
-------------------------------
Mark C. Pope, IV
Director
Date: April 29, 1996 /s/ William A. Wood, Jr.
-------------------------------
William A. Wood, Jr.
Director
Date: April 29, 1996 /s/ John R. Pope
-------------------------------
John R. Pope
Director
Date: April 29, 1996 /s/ Alvan A. Herring, Jr.
-------------------------------
Alvan A. Herring, Jr.
Director
-27-
<PAGE>
Date: April 29, 1996 /s/ Clifford M. Kirtland, Jr.
------------------------------
Clifford M. Kirtland, Jr.
Director
Date: April 29, 1996 /s/ Ralph N. Strayhorn, Jr.
------------------------------
Ralph N. Strayhorn, Jr.
Director
Date: April 29, 1996 /s/ Warren E. Andrews
------------------------------
Warren E. Andrews
Director
Date: April 29, 1996 /s/ Carter D. Pope
------------------------------
Carter D. Pope
Director
Date: April 29, 1996 /s/ James A. Hatcher
------------------------------
James A. Hatcher
Director
-28-
<PAGE>
Graphic Industries, Inc. and Subsidiaries
Schedule II--Valuation and Qualifying Accounts
<TABLE>
<CAPTION>
Column A Column B Column C Column D Column E
- ---------------------------------------------------------------------------------------------------------------------
Balance at Charged to
Beginning of Costs and Charged to Balance at End
Classification Period Expenses Other Accounts Deductions(1) of Period
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Year ended January 31, 1996:
Accounts receivable allowance $1,075,000 $1,532,236 $ - $1,357,236 $1,250,000
Year ended January 31, 1995:
Accounts receivable allowance 1,157,794 1,345,038 - 1,427,832 1,075,000
Year ended January 31, 1994:
Accounts receivable allowance 1,079,000 1,778,552 - 1,699,814 1,157,794
(1) Uncollectible accounts written off, net of recoveries.
</TABLE>
<PAGE>
EXHIBIT 10RRR
AGREEMENT AND PLAN OF REORGANIZATION
------------------------------------
THIS AGREEMENT AND PLAN OF REORGANIZATION (the "Agreement"), made and
entered into as of the 1st day of November, 1995, by and among Graphic
Industries, Inc., a Georgia corporation ("Graphic"), Quadras Acquisition
Company, a Georgia corporation and wholly-owned subsidiary of Graphic ("QAC"),
QQQ, Inc., a Georgia corporation ("QQQ"), Quadras, Inc. ("Quadras"), a Georgia
corporation and wholly-owned subsidiary of QQQ; and Sara Senie Harris ("Harris")
and Cynthia A. Morgan ("Morgan"), individual residents of the State of Georgia
(collectively, referred to herein as the "Stockholders" and individually as a
"Stockholder").
W I T N E S S E T H:
--------------------
WHEREAS, the Stockholders own 100% of the outstanding shares of the common
stock, $1.00 par value per share, of QQQ (the "Shares"); and
WHEREAS, QQQ owns all of the issued and outstanding stock of Quadras; and
WHEREAS, the Stockholders, Graphic, QAC and QQQ wish to enter into a
transaction pursuant to which QQQ shall be merged with and into QAC on the terms
and conditions set forth herein (the "Merger").
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
MERGER AND EXCHANGE OF STOCK
2.1 Agreement to Merge. Graphic, QAC and QQQ agree to effect the Merger
------------------
as provided for herein, subject to the terms and conditions set forth herein.
2.2 Merger of QQQ Into QAC. On the Effective Date, QQQ shall be merged
----------------------
into and with QAC in accordance with the provisions of the Georgia Business
Corporation Code. QAC shall be the surviving corporation in the Merger.
2.3 Manner of Converting Shares.
---------------------------
<PAGE>
(a) Each share of stock of QAC issued and outstanding on the Effective
Date, by virtue of the Merger and without any action on the part of the holders
thereof, shall continue to remain outstanding and shall continue to be fully
paid and non-assessable.
(b) The manner and basis of converting the outstanding shares of QQQ Stock
upon consummation of the Merger shall be as follows:
(i) Except as provided in Section 2.3(b)(ii) below, each share of QQQ Stock
issued and outstanding on the Effective Date (other than treasury shares) shall,
as of the Effective Date, and without any action on the part of the holder
thereof, be converted into and exchanged for the number of shares of Graphic
Stock set forth on Schedule 2.3 hereof. Any and all shares of QQQ Stock held as
treasury shares shall automatically be canceled and retired on the Effective
Date, and no consideration shall be issued in exchange therefor.
(ii) No fractional shares of Graphic Stock will be issued as a result of
the Merger. In lieu of fractional shares, the total number of shares of Graphic
Stock to be issued in the Merger shall be rounded up to the nearest whole number
of shares.
2.4 Exchange of Stock Certificates. On the Effective Date, each holder of
------------------------------
any outstanding certificate or certificates theretofore representing QQQ Stock
shall surrender the same to Graphic, and such holder shall be entitled upon such
surrender to receive a certificate or certificates representing the number of
full Initial Shares that she is entitled to receive pursuant to this Agreement
and an acknowledgement of deposit into escrow pursuant to the Escrow Agreement
of a certificate for the maximum number of Escrow Shares to which such
Stockholder is entitled pursuant to the terms of this Agreement.
2.5 Agreement to Issue Graphic Stock.
--------------------------------
(a) Subject to the terms and conditions herein and in exchange for QQQ
Stock outstanding on the Effective Date, Graphic shall issue and deliver: (a)
the Initial Shares to the Stockholders and (b) the Escrow Shares to the Escrow
Agent, pursuant to the Escrow Agreement, in the name of the Escrow Agent as set
forth in Section 2.6 herein.
(b) During the Escrow Period and subject to the terms and conditions of the
Escrow Agreement, the Stockholders shall be entitled to vote the Escrow Shares
in all respects and on all matters as to which shareholders of Graphic are
entitled to vote and any and all dividends or other distributions declared and
paid with respect to the Escrow Shares shall be deposited into escrow and shall
be distributed pursuant to Section 2.6 hereof and the Escrow Agreement.
2.6 Escrow Shares.
-------------
(a) On the Effective Date, Graphic shall issue and deliver to the Escrow
Agent the Escrow Shares to be held in escrow for the Escrow Period. The Escrow
2
<PAGE>
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 QQQ or Quadras as determined under Section
2.10(c) hereof; (ii) adjust the consideration as set forth in Section 2.10
hereof; and (iii) compensate, in whole or in part, Graphic and QAC for a breach
of any representation, warranty or covenant by QQQ or any Stockholder.
(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.
2.7 Effective Date. As soon as practicable after satisfaction or waiver
--------------
of all conditions to the Merger, the parties shall cause the Certificate of
Merger (the "Certificate of Merger") with respect to the Merger to be filed and
recorded with the Secretary of the State of Georgia in accordance with the
Georgia Business Corporation Code and shall take all such further actions as may
be required by law to make the Merger effective. The Merger shall be effective
on the Effective Date. Immediately prior to the filing of the Certificate of
Merger, a closing (the "Closing") will be held on November 1, 1995, at the
offices of Gray, Gilliland & Gold, P.C., Atlanta, Georgia, or such other time
and place as the parties agree, provided that in no event shall the Closing be
held later than November 1, 1995.
2.8 Tax Consequences. It is intended that the Merger shall constitute a
----------------
reorganization within the meaning of Sections 368(a)(1)(A) and 368(a)(2)(D) of
the Code and that this Agreement shall constitute a "plan of reorganization" for
purposes of Section 368 of the Code.
2.9 Articles of Incorporation; Bylaws; Directors and Officers. The
---------------------------------------------------------
Articles of Incorporation and bylaws of QAC as in effect on the Effective Date
shall be the Articles of Incorporation and bylaws of the Surviving Corporation.
The Board of Directors and officers of QAC on the Effective Date shall be the
Board of Directors and officers of the Surviving Corporation.
2.10 Adjustment of Graphic Stock.
---------------------------
(a) Within 30 days following the Closing Date, the Stockholders shall
prepare and deliver to QAC (i) an unaudited, consolidated balance sheet of QQQ
dated as of October 31, 1995 (the "Preliminary Closing Balance Sheet"), which
shall be prepared in accordance with generally accepted accounting principles
consistently applied (except for the revenue recognition method relating to
percentage of completion for contracts which shall be applied consistently with
past practices of QQQ and Quadras) and which shall include the Net Book Value of
QQQ as of the Closing 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 based upon the difference between the Net Book Value
of QQQ 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 2.10(c)(ii) hereof.
3
<PAGE>
(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 QQQ (the "Closing Audit"). The Closing Audit shall be
completed and delivered to the Stockholders within sixty (60) days after the
receipt of the Preliminary Closing Balance Sheet, provided that the Stockholders
shall fully cooperate with Graphic and its auditors in completing the Closing
Audit. The audited closing balance sheet 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
Stockholders shall have notified QAC and Graphic in writing within thirty (30)
days of receipt of the Closing Balance Sheet that they dispute any of the
adjustments or entries set forth on the Closing Balance Sheet. In the event the
Stockholders notify QAC and Graphic of any such dispute, and the parties cannot
resolve such dispute within thirty (30) days after QAC 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, workpapers,
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 Stockholders 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 or QAC hereunder.
In that event, Graphic or QAC shall be entitled to recover pursuant to such
indemnification only those amounts for which Graphic or QAC 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) Subject to Section 9.2 hereof, the consideration to be paid to the
Stockholders for the Merger shall be adjusted, dollar for dollar, as follows:
(i) upward or downward, by the amount by which the Net Book Value of QQQ as
shown on the Closing Balance Sheet, is more or less (whichever is the case) than
the Net Book Value of QQQ as shown on the Interim Balance Sheet (including any
downward adjustment due to any payments based upon the claims asserted against
Quadras by Charles Stroupe and referred to on Schedule 3.7(b) hereto; (ii)
downward, by the face value of any accounts or notes receivable of Quadras or
QQQ 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 twenty (120) days after the date of the Closing
Balance Sheet; provided however, that any customers of Quadras, which, as of the
Closing Date, are making periodic payments on their obligations to Quadras (all
of which shall be identified and the payment plans listed on Schedule 2.10(c)
hereto) and which are current with respect to such payments up to and including
4
<PAGE>
the end of such 120 day period shall not be considered delinquent and such
accounts receivable shall not be subject to adjustment hereunder; (iii)
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 or QAC as a result of the breach of any representation, warranty or
covenant of QQQ or of the Stockholders contained herein, in the schedules
attached hereto, in the Secretary's Certificate, in the Employment Agreements or
in the Escrow Agreement. The foregoing adjustment criteria shall be applied so
as to preclude duplicative adjustments.
(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 pay to the
Stockholders additional consideration in the form of Graphic Common Stock
determined by dividing the amount of such excess by the Market Value Per Share
and each Stockholder shall be entitled to that portion of such additional
consideration as corresponds to the proportionate interest of such Stockholder
as is set forth opposite such Stockholder's name on Schedule 2.3 hereto. If any
additional shares of Graphic Common Stock are issued pursuant to these
adjustments, such shares shall be issued to the Stockholders and to the Escrow
Agent to be held pursuant to the Escrow Agreement in the same ratio as the
Graphic Stock was originally issued hereunder. 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, each of the Stockholders shall pay QAC the amount of any
such deficiency in the form of Graphic Common Stock determined by dividing the
amount of such deficiency by the Market Value Per Share and each Stockholder
shall pay QAC that portion of such additional consideration as corresponds to
the proportionate interest of such Stockholder as is set forth opposite such
Stockholder's name on Schedule 2.3 hereto. Any payment in the form of Graphic
Common Stock under this Section 2.10(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 Stockholders 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
Stockholders. Any deficiency not satisfied with Graphic Stock shall be paid in
cash by the Stockholders.
(e) Nothing in this Section 2.10 shall in any way limit or decrease the
liability of the Stockholders and QQQ (except to the extent of any recovery
hereunder) to Graphic and QAC for any default or breach of this Agreement or the
documents mentioned in Section 2.10(c)(iii) above.
(f) In the event there is a reduction in the consideration to be paid the
Stockholders as set forth in this Agreement, the amount of such reduction shall
be first paid to Graphic or QAC from the Escrow Shares in accordance with the
Escrow Agreement, and if the Escrow Shares are not sufficient to pay such
deficiency, the Stockholders shall remain jointly and severally liable therefor.
Such payment from the Escrow Shares however, shall not be the exclusive remedy
of Graphic or QAC for the payment of such reduction.
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(g) QAC 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 QQQ or Quadras shown on the Closing Balance Sheet. Any Accounts
Receivable that are subject to adjustment in consideration pursuant to Section
2.10(c)(ii) above, shall be assigned to the Stockholders following such
adjustment in consideration of $1.00.
(h) Following the Effective Date, and at such time as Graphic or QAC shall
determine that they are no longer should be maintained, or upon termination of
employment of a Stockholder pursuant to the Employment Agreement for such
Stockholder, whichever occurs first, QAC shall give reasonable notice to such
Stockholder to permit them, or either of them, to purchase, at their then full
cash surrender values, certain life insurance policies now owned by QQQ or
Quadras on the lives of the Stockholders as set forth on Schedule 3.12 attached
hereto.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF STOCKHOLDERS
The Stockholders, jointly and severally, represent and warrant to QAC and
Graphic as follows:
3.1 Organization; Power; Qualification. QQQ and Quadras are each
----------------------------------
corporations duly organized, validly existing and in good standing under the
laws of the State of Georgia. QQQ has no subsidiaries other than Quadras and is
not a party to any joint venture or other entity nor a partner of any
partnership. Quadras has no subsidiaries and is not a party to any joint
venture or other entity nor a partner of any partnership. QQQ has no assets
other than the stock of Quadras. QQQ and Quadras each have the corporate power
and authority to own or lease and operate their respective properties and to
carry on their respective business as now being conducted, and are 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 their respective properties or the
nature of their respective business requires such qualification and
authorization.
3.2 Authority. The execution and delivery of this Agreement by QQQ,
---------
Quadras and each Stockholder constitute valid and legally binding obligations of
the Stockholders, QQQ and Quadras, as the case may be, enforceable in accordance
with its terms. The execution and delivery of the Escrow Agreement by each
Stockholder will constitute the valid and legally binding obligation of such
Stockholder, enforceable in accordance with its terms. The execution and
delivery of the Employment Agreements by the Stockholders will constitute valid
and legally binding obligations of the Stockholders, enforceable in accordance
with its terms.
3.3 Capital Structure.
-----------------
(a) The authorized capital stock of QQQ consists of 100,000 shares, $1.00
par value, common voting stock, of which 400 shares are issued and outstanding
on the date of this Agreement. QQQ holds 200 treasury shares. All of the
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shares of QQQ's stock issued and outstanding as of the date hereof are duly
authorized, validly issued and fully paid and nonassessable under Georgia law.
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 QQQ or other securities of QQQ. As of the date hereof, there is
not any liability for or dividends declared or accumulated but unpaid with
respect to QQQ's capital stock. Between the date of QQQ's incorporation and the
date hereof, QQQ has not directly or indirectly redeemed, purchased or otherwise
acquired any shares of its capital stock. All shares of QQQ'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.
(b) The authorized capital stock of Quadras consists of 100,000 shares,
$0.10 par value, of which 5,000 shares are issued and outstanding and are owned
by record and beneficially by QQQ. There no warrants, rights, options,
subscriptions or agreements to issue shares of any class of capital stock,
securities convertible into capital stock or property of Quadras or other
securities of Quadras. As of the date hereof, there is not any liability for or
dividends declared or accumulated but unpaid with respect to Quadras' capital
stock. Between the date of Quadras' incorporation and the date hereof, Quadras
has not directly or indirectly redeemed, purchased or otherwise acquired any
shares of its capital stock. All shares of Quadras'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. Each of the Stockholders owns the Shares set forth
---------------
opposite such Stockholder's name on Schedule 2.3 hereto, and each Stockholder
has good, valid and marketable title to such Shares, free and clear of any and
all liens, options, contracts, calls, commitments, demands, encumbrances,
equities, pledges or claims whatsoever. Upon consummation of the Merger,
Graphic will obtain good and valid title to the Shares, free and clear of any
and all liens, encumbrances, equities and claims whatsoever.
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 QQQ
or Quadras or any of QQQ's or Quadras'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 by QQQ, Quadras and the
Stockholders in accordance with its terms and the consummation of the
transactions contemplated hereby does not and will not (a) to the Knowledge of
the Stockholders violate any law applicable to QQQ, Quadras or the Stockholders;
(b) conflict with, result in a breach of, or constitute a default under the
Articles of Incorporation or bylaws of QQQ or Quadras or under any indenture,
agreement, or other instrument to which QQQ, Quadras or any of the Stockholders
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 QQQ, Quadras
or any of the Stockholders. No authorization, approval, or consent of, and no
registration or filing with, any governmental or regulatory official body or
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authority is required in connection with the execution, delivery or performance
by Stockholders, QQQ or Quadras of this Agreement or the Escrow Agreement.
3.7 Financial Statements.
--------------------
(a) The Financial Statements and the Interim Balance Sheet (i) are in
accordance with the books and records of QQQ; (ii) present fairly the
consolidated financial condition of QQQ 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) to
the Knowledge of the Stockholders, reflect adequate reserves for all known
liabilities and reasonably anticipated losses.
(b) The accounts receivable shown on the Interim Balance Sheet or acquired
by Quadras after the date thereof and prior to the date hereof have been, and
all accounts receivable acquired after the date hereof and prior to the Closing
Date 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. Except as
set forth on Schedule 3.7(b), all accounts receivable shown on the Interim
Balance Sheet or acquired by Quadras after the date thereof and prior to the
date hereof are fully collectible and free and clear of any and all liens,
claims, charges, encumbrances, security interests or other rights against such
accounts receivable in favor of others. To the Knowledge of the Stockholders
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,
except for certain advance retainer payments (none of which is refundable), no
account receivable represents billings prior to actual shipment of goods,
including "bill and hold" accounts. QQQ has established a bad debt reserve, as
shown on the Interim Balance Sheet and, to the Knowledge of the Stockholders,
there is no fact or circumstance which would impair the validity or
collectibility of Quadras' 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 or to be acquired by Quadras thereafter and prior to the
Closing Date, (i) are and will on the Closing Date be 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 its business, (ii) are now and will
on the Closing Date be located on the regular business premises of Quadras,
(iii) are now and will on the Closing Date be owned by Quadras free of any
liens, claims, charges, encumbrances, security interests or other rights to or
against such inventories in favor of others, except as set forth on Schedule
3.7(c), (iv) have been or will be acquired by Quadras only in bona fide
transactions entered into in the ordinary course of business, and (v) no
material portion thereof is obsolete, damaged or unusable by Quadras in the
ordinary course of its business and are valued at the lower of cost or net
realizable market value thereof. None of such inventory is now, or on the
Closing Date will be, held by Quadras on consignment.
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(d) The books and records of QQQ and Quadras have been maintained in all
material respects in accordance with sound business practices.
(e) 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 QQQ, Quadras or by the
Stockholders with respect to the business of QQQ or Quadras (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 QQQ or Quadras, (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. Neither QQQ nor Quadras has
received any notice of any assessment, tax examination, tax claim or proposed
assessment in connection with any Tax Returns, and, to the Knowledge of the
Stockholders, there are not pending tax examinations of or tax claims asserted
with respect to QQQ or Quadras. There has been no 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 QQQ or Quadras. None of the Stockholders, QQQ or Quadras has any
knowledge of any basis for any additional assessment of any Taxes.
(b) QQQ and Quadras have 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 QQQ or Quadras including a description of the
location of such personal property. Except as set forth on Schedule 3.9(a), QQQ
and Quadras, as the case may be, have good title to all such items, free and
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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 Quadras as it is presently being
conducted and neither QQQ nor Quadras has 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
QQQ or Quadras. 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. All items of leased personal property are adequate for the continued
operation of the business of Quadras as it is presently being conducted and
neither QQQ nor Quadras has 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 these personal
property leases will in no way be affected by the transactions contemplated by
this Agreement.
3.10 Real Property.
-------------
(a) Neither QQQ nor Quadras owns any real property.
(b) The Lease is in full force and effect and Quadras is not in default
with respect thereto. Quadras is not aware of any default under the Lease by
the landlord.
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, copyright applications, trademark
registrations and trademark applications (the "Intellectual Property") used or
useful in the business of QQQ or Quadras that are owned by or registered in the
name of QQQ or Quadras or to which QQQ or Quadras has any rights as licensee or
otherwise, giving in each case a brief description of the terms of such license
or other arrangement. Neither QQQ nor Quadras has infringed or made any
unlawful use or received notice of any such claimed infringement or unlawful use
of any such Intellectual Property. Neither QQQ nor Quadras has received notice
that the manufacture, use or sale by QQQ or Quadras of its products, or any
component or part thereof, nor any manufacturing operation or machinery employed
by QQQ or Quadras, nor any service rendered by QQQ or Quadras violates or
infringes upon any claims of any United States or foreign patent or patent
application owned or held by any third party. QQQ and Quadras own (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
QQQ or Quadras, or in which QQQ or Quadras is named as an insured party. The
properties and business of QQQ or Quadras of an insurable nature are insured to
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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 Stockholders, threatened against or affecting QQQ or Quadras, their
respective properties or its rights or which pertains to the transactions
contemplated by this Agreement. The Stockholders do not know of any reasonably
likely basis for any such litigation, arbitration or similar proceeding, the
result of which would adversely affect QQQ, Quadras or the transactions
contemplated hereby. Neither the Stockholders, QQQ nor Quadras 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 QQQ, Quadras or the transactions
contemplated hereby.
3.14 Compliance with Laws. To the Knowledge of the Stockholders, neither
--------------------
QQQ nor Quadras 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 either of them is subject. Neither
QQQ nor Quadras has received any notice of any such default. QQQ and Quadras
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. Set forth on Schedule 3.14 is a
complete list of all such Authorizations. Neither QQQ nor Quadras is 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.
3.15 Environmental Matters.
---------------------
(a) Except as set forth on Schedule 3.15, to the Knowledge of the
Stockholders, the operations of QQQ and Quadras have been in the past and are
now in compliance 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).
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(b) Neither QQQ, Quadras nor any Stockholder has been notified or is aware
of any violation of any Environmental Laws; neither QQQ, Quadras nor any
Stockholder is otherwise aware that QQQ or Quadras may be potentially
responsible or otherwise liable under any Environmental Laws; and neither QQQ,
Quadras nor any 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) To the Knowledge of the Stockholders, QQQ and Quadras have 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 their respective
operations. QQQ and Quadras have been in the past and are 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) To the Knowledge of the Stockholders: (i) 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 QQQ or Quadras other than in compliance with applicable Environmental Laws;
and (ii) 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 QQQ or Quadras other than
in compliance with applicable Environmental Laws.
(e) To the Knowledge of the Stockholders 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 QQQ or Quadras.
(f) To the Knowledge of the Stockholders, neither QQQ nor Quadras has 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. Neither QQQ nor Quadras has received any
notice of any violation thereof.
(g) To the Knowledge of the Stockholders, 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 QQQ, Quadras or the Stockholders
based on or related to any Environmental Laws or Environmental Permits.
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(h) No lien exists, and, to the Knowledge of the Stockholders, no condition
exists which could result in filing a lien, under any Environmental Laws against
any property owned, leased, operated or otherwise used by QQQ or Quadras.
3.16 Absence of Changes. Since July 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 QQQ or Quadras 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 July 31, 1995) or distribution to the Stockholders or
purchased or redeemed any shares of its capital stock or other securities; (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 cancelled 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 $10,000; (h) sold, assigned or transferred any patents,
trademarks, trade 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 QQQ 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.
----------------------------------
(a) QQQ has no liabilities, claims, charges, encumbrances, liens or any
other obligations of any nature whatsoever, known or unknown, absolute or
contingent, due or to become due. Further, QQQ has no employees and has no
obligations, financial or otherwise to any officer, director, stockholder or any
former employee.
(b) Neither QQQ nor Quadras has any Undisclosed Liabilities.
3.18 Assets. QQQ and Quadras own or lease all equipment, furniture,
------
fixtures, and other personal property and assets necessary for the continued
operation of their respective businesses as presently conducted.
3.19 Employees. Schedule 3.19 contains a true and complete list of all
---------
employees of Quadras, their salaries or wage rates, accrued vacation and their
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location of employment as of November 1, 1995, and a description of all pension,
profit sharing, bonus, medical benefits, group insurance programs or similar
arrangements in effect for employees of Quadras. Quadras 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) QQQ or Quadras has no Benefit Plans (as defined below) except as set
forth on Schedule 3.20.
(b) Except as set forth on Schedule 3.20, QQQ and Quadras have complied,
and currently are in compliance, in all material respects with the applicable
provisions of ERISA and the Code with respect to each employee benefit plan (as
defined under Section 3(3) of ERISA) and all other pension, profit sharing,
retirement, deferred compensation, stock purchase, stock option, incentive,
bonus, vacation, severance, disability, hospitalization, medical, life insurance
or other employee benefit plans, whether written or unwritten, now or previously
maintained by QQQ or Quadras (the "Benefit Plans") and a brief description of
each Benefit Plan now maintained is set forth on Schedule 3.20 hereto;
(c) QQQ and Quadras have not maintained, adopted or established,
contributed to or been required to contribute to, or otherwise participated in
or been required to participate in, any employee benefit plan or other program
or arrangement subject to Title IV of ERISA;
(d) QQQ and Quadras have not incurred any material liability with respect
to the Benefit Plans which has not been satisfied in full or been accrued on the
Financial Statements pending full satisfaction, and no event has occurred, and
there exists no condition or set of circumstances, which could result in the
imposition of any material liability with respect to such Benefit Plans. Each
plan can be terminated on the Closing Date without liability to QQQ, Quadras or
QAC including, without limitation, any additional contributions, penalties,
premiums, fees or other charges.
3.21 Labor Matters. Schedule 3.21 contains a complete and accurate list
-------------
of all claims brought by employees against QQQ or Quadras 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 QQQ or
Quadras by the Occupational Safety and Health Administration or complaints filed
against QQQ or Quadras 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
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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 QAC, which is a:
(i) Contract for employment, or a non-competition agreement with any
present or former employee of QQQ or Quadras:
(ii) Contract with any labor union or other representative of
employees;
(iii) Contract for the lease or use of equipment;
(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 QQQ or Quadras 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 QQQ or Quadras 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).
15
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(b) Each of the Contracts listed in Schedule 3.22 is in full force and
effect and to the Knowledge of the Stockholders, 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 Stockholders contain
any provision with which there is a reasonable likelihood the Stockholders, QQQ,
Quadras or any other party thereto will be unable to comply. Except as
reflected in such Schedule 3.22, the continuation, validity and effectiveness of
such 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.
(c) There exists no actual or, to the Knowledge of the Stockholders,
threatened termination, cancellation or limitation of, or any modification or
change in: (i) the business relationship of QQQ or Quadras with any customer or
group of customers of QQQ or Quadras whose purchases individually or in the
aggregate are material to the operations and financial condition of QQQ or
Quadras, (ii) the business relationship of QQQ or Quadras with any material
supplier to QQQ or Quadras, or (iii) the relationship between QQQ or Quadras 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 QQQ or Quadras 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 QQQ or Quadras, 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 QQQ or
Quadras.
3.25 Corporate Names. Neither QQQ nor Quadras has 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. To the Knowledge of the Stockholders, QQQ and
------------------
Quadras, relations with customers or suppliers 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, the Escrow Agreement, the Employment Agreements or the
Printing Agreement on the part of QQQ, Quadras or any of the Stockholders or the
consummation of the transactions contemplated herein and therein, other than
corporate authority on behalf of QQQ or Quadras.
16
<PAGE>
3.28 Broker's or Finder's Fees. Neither QQQ, Quadras nor any Stockholder
-------------------------
nor any of the directors, officers or employees of QQQ or Quadras 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) Each Stockholder either alone or with her purchaser representative has
such knowledge and experience in financial and business matters that 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 Stockholder 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 her investment in Graphic.
(b) No Stockholder has received any representations or warranties, other
than those set forth in this Agreement, from the officers, directors,
affiliates, agents or representatives of Graphic in making her decision to
exchange her capital stock in QQQ as set forth herein, and each Stockholder is
relying solely on the information contained in this Agreement, and personal
investigation.
(c) Each Stockholder is presently a bona fide resident of the State of
Georgia and has no present intention of becoming a resident of any other state
or jurisdiction.
(d) Each Stockholder has carefully evaluated her financial resources and
investment position and the risks associated with her investment in Graphic and
acknowledges that she is familiar with and able to bear any economic risk of
such investment.
(e) Each Stockholder understands and agrees that the Graphic Stock to be
issued to her 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 to her 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. Each
Stockholder is acquiring the Graphic Stock for her own account, to hold for
investment, and with no present intention of dividing her 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) No Stockholder has received any public solicitation or advertisement
concerning an offer to sell Graphic Stock.
17
<PAGE>
3.30 Correctness of Representations. No representation or warranty of the
------------------------------
Stockholders in this Agreement or in any statement, certificate or schedule
furnished by the Stockholders 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, and 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 QAC pursuant
to this Agreement have been delivered to or have been made available to or will
be made available for inspection by Graphic, QAC and their attorneys and
accountants.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF QAC AND GRAPHIC
QAC and Graphic, jointly and severally, represent and warrant to the
Stockholders as follows:
4.1 Organization; Power; Qualification. Each of QAC and Graphic is a
----------------------------------
corporation duly organized, validly existing and in good standing under the laws
of the State of Georgia. Each of QAC 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 QAC and Graphic has the corporate power and has
---------
taken all necessary corporate action to authorize QAC or Graphic, as the case
may be, to execute, deliver and perform such of the Transaction Documents to
which it is a party and to consummate the transactions contemplated hereby and
thereby. The execution and delivery by each of QAC and Graphic of each of the
Transaction Documents to which it is a party constitutes the valid and legally
binding obligation of QAC or Graphic, as the case maybe, enforceable in
accordance with such Transaction Documents' terms.
4.3 Compliance with Laws and Validity of Contemplated Transactions. The
--------------------------------------------------------------
execution, delivery and performance of this Agreement by Graphic and QAC in
accordance with its 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 or QAC. 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 or QAC of this Agreement.
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<PAGE>
4.4 Investment Representation. Graphic and QAC are aware that QQQ Stock
-------------------------
is not registered under the Act. QAC and Graphic possess such knowledge and
experience in business matters such that they are capable of evaluating the
merits and risks of an investment in QQQ Stock hereunder. QAC is acquiring QQQ
Stock for its own account, for investment purposes only and not with a view to
the distribution thereof. QAC agrees that QQQ Stock will not be sold,
transferred, pledged, offered for sale or otherwise disposed of without
registration under the Act, except pursuant to a valid exemption from
registration under the Act.
4.5 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 QAC or Graphic is a party which relate to or affect the
transfer of the Graphic Stock.
4.6 Broker's or Finders Fees. Neither Graphic nor QAC nor any director,
------------------------
officer or employee of Graphic or QAC 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.
4.7 Graphic Reports. Graphic has delivered to the Stockholders copies of
---------------
Graphic's Annual Report on Form 10-K (including the Annual Report to
Shareholders) for the fiscal year ended January 31, 1995, all Quarterly Reports
on Form 10-Q for fiscal year ended January 31, 1995 and for the fiscal quarters
ended April 30, 1995 and July 31, 1995, and Graphic's Proxy Statement for the
1995 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.
4.8 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.
4.9 Availability of Form S-3. Graphic satisfies all of the conditions
------------------------
precedent for the use of Form S-3 to register for resale the Graphic Stock as
contemplated herein.
19
<PAGE>
4.10 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.
4.11 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 has obtained all licenses, permits, easements,
rights, applications, registrations, filings and franchises or other
governmental authorizations ("Authorizations") necessary to the ownership of its
properties or the conduct of its business. Graphic is not in default or has not
received any notice of any claim of default with respect to any such
Authorization.
4.12 No Other Representations. Neither Graphic nor QAC has received any
------------------------
representations or warranties, other than those set forth in this Agreement,
from the officers, directors, affiliates, agents, representatives or
Stockholders of QQQ or Quadras in making its decision to engage in the
transaction contemplated herein and Graphic and QAC are relying solely on the
information contained in this Agreement and personal investigation.
4.13 Absence of Changes. Since July 31, 1995, 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.
4.14 Correctness of Representations. No representation or warranty of
------------------------------
Graphic or QAC in this Agreement or in any statement, certificate or schedule
furnished by Graphic or QAC 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, and 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 STOCKHOLDERS,
QQQ, AND QUADRAS
5.1 Conduct of Quadras's Business Prior to Closing. From the date hereof
----------------------------------------------
to the Closing Date, and except to the extent that Graphic and QAC shall
otherwise consent in writing, which consent shall not be unreasonably withheld,
delayed or conditioned, the Stockholders, QQQ and Quadras shall, in good faith
and in all commercially reasonable respects:
20
<PAGE>
(a) operate Quadras's business as presently operated and only in the
ordinary course, and use 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) maintain all of the Quadras's properties in good order and condition,
reasonable wear and use excepted;
(c) take all steps reasonably necessary to maintain Quadras's intangible
assets, including without limitation, its patents, trademarks, trade names,
copyrights, licenses and any pending applications therefor;
(d) pay the liabilities or other obligations of Quadras and collect its
accounts receivable in accordance with Quadras's past business practices;
(e) comply with all laws materially applicable to the conduct of the
business of QQQ or Quadras;
(f) not take any action that would constitute a breach of Section 3.16
hereof;
(g) not enter into any settlement regarding any claim, dispute or other
cause of action brought against QQQ or Quadras by any third party except for
settlements of customer disputes made by QQQ or Quadras in the ordinary course
of business;
(h) not sell, or otherwise dispose of, any assets of QQQ or Quadras other
than in the ordinary course of business; and
(i) submit all Contracts to which QQQ or Quadras is to become a party
between the date hereof and the Closing Date for approval by, or on behalf of,
QAC (other than Contracts entered into in the ordinary course of business).
5.2 No Solicitation. From the date hereof to the earlier of the Closing
---------------
Date or termination date hereof, the Stockholders shall not, nor shall they
permit QQQ or any of its officers, directors, employees, agents, or
representatives, directly or indirectly, to (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 QAC in connection with any possible proposal (an
"Acquisition Proposal") regarding the sale, merger, consolidation, or similar
transaction with respect to QQQ. The Stockholders shall notify QAC immediately
if any discussions or negotiations are sought to be initiated or such
information is requested with respect to an Acquisition Proposal.
5.3 Access and Information. From the date hereof to the Closing Date QQQ
----------------------
shall afford to QAC, Graphic, and their counsel, accountants and other
21
<PAGE>
representatives, free and full access to all the offices, properties, books,
Contracts, commitments and records of QQQ and Quadras and to furnish such
persons with all information (including financial and operating data) concerning
their affairs as they may, in their sole discretion, request, including copies
and extracts (at Graphic's expense) of pertinent records, documents and
Contracts. QQQ, Quadras and their employees shall assist QAC, Graphic, and
their counsel, accountants and representatives, in their examination of QQQ's
and Quadras's books and records. To the extent that QQQ shall have control over
same, the accountants of QQQ shall furnish to QAC and Graphic during such period
any and all of their statements, working papers and underlying records and data
as QAC and Graphic, in their sole discretion, may request.
5.4 Notification of Changes. From the date hereof to the Closing Date,
-----------------------
QQQ shall promptly notify QAC and Graphic in writing of any material adverse
change in the financial condition of QQQ or Quadras, the method of conducting
their respective operations, any material damage to or loss of any property used
in the business of QQQ or Quadras, or the institution of or the threat of
institution of legal proceedings against QQQ or Quadras.
5.5 No Default. From the date hereof to the Closing Date, neither QQQ nor
----------
Quadras shall do any act or omit to do any act, or knowingly permit any act or
omission to act, that would cause a material breach of any Contract.
5.6 Tax Returns. All Tax Returns of QQQ or Quadras required to be filed
-----------
by the Closing Date, taking into account any extensions of the filing deadlines
granted to QQQ or Quadras, that have not yet been filed prior to the date hereof
(including those relating to periods after the Closing Date) shall be prepared
by QQQ but shall not be filed without prior examination by, or on behalf of, QAC
and Graphic. QQQ shall use its best efforts to obtain all extensions of time
from governmental authorities necessary to effect this provision.
5.7 Allocation of Taxable Income to Short Period. The Stockholders shall
--------------------------------------------
cause QQQ to close its permanent books and records (including work papers) as of
the close of business on the date immediately preceding the Closing Date in
accordance with Treasury Regulation 1.1502-76(b)(4)(1), in order to permit QQQ's
taxable income for the tax periods ending on the date immediately preceding the
Closing Date to be reported determined on the basis of income shown on their
permanent books and records (including workpapers).
5.8 Other Pre-Closing Returns.
-------------------------
(a) The Stockholders shall cause QQQ and Quadras to prepare and file all
federal and state income tax returns for all tax periods ending on or before the
Closing Date. Such returns will be filed on the basis of the income allocations
described in Section 5.7 above.
(b) The Stockholders shall cause QQQ to include the results of the
respective operations of QQQ and Quadras in any separate state or local income
tax return for any taxable year which is due on or before the Closing Date and
to file such returns on a timely basis.
22
<PAGE>
5.9 Reorganization Treatment. The Stockholders shall cause all tax
------------------------
returns relating to QQQ to be filed on the basis of treating the Merger as a
reorganization pursuant to Sections 368(a)(1)(A) and 368(a)(2)(D) of the Code.
5.10 General Cooperation in Tax Matters. After the Closing Date, the
----------------------------------
Stockholders shall cooperate fully with Graphic and QAC and shall make available
to Graphic and QAC, 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, QQQ or Quadras, for all periods ending
on or before the Closing Date and shall preserve all such information, records,
and documents until the expiration of any applicable statute of limitations or
extensions thereof.
5.11 Compliance with Laws. From the date hereof to the Closing Date QQQ
--------------------
and Quadras shall comply with all applicable laws and regulations including
without limitation, those as may be required for the consummation of the
transactions contemplated by this Agreement.
5.12 Consents of Others. From the date hereof to the Closing Date, 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 QQQ or
Quadras is a party or by which its assets are bound or otherwise, or under any
governmental law or regulation, QQQ and Quadras shall use their best efforts to
obtain any such consent or approval prior to the Closing Date.
ARTICLE 6
COVENANTS OF GRAPHIC AND QAC
6.1 Release of Guaranties; Indemnification Continuation. From the date
---------------------------------------------------
hereof to the Closing Date, QAC and Graphic shall each use their best efforts to
cause the Stockholders to be released from any guaranties, provided that such
efforts shall not include the payment of money in consideration for such
release. The existing indemnification provisions of QQQ's and Quadras's by-laws
for their respective officers and directors shall be retained or replaced for up
to three (3) years after the Closing Date to cover any claims asserted by third
parties (other than claims by Graphic or QAC pursuant to this Agreement) after
the Closing Date and relating to acts or omissions that occurred prior to the
Closing Date and for which such officers or directors would be entitled to
indemnification pursuant to such by-law provisions. To the Knowledge of the
Stockholders, no such claims are pending or threatened.
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 in the Merger.
23
<PAGE>
6.3 Post-Closing Returns.
--------------------
(a) Graphic shall cause QAC to prepare and file all federal and state
income tax returns for the Surviving Corporation for all tax periods beginning
on or after the Closing Date. Such returns will be filed on the basis of the
income allocations described in Section 5.7 above.
(b) Graphic shall cause QAC to include the results of the respective
operations of the Surviving Corporation in any separate state or local income
tax return for any taxable year which is due after the Closing Date and to file
such returns on a timely basis. Graphic shall pay, or cause to be paid, all
local income taxes (including interest and penalties relating thereto) shown as
due on any such return with respect to the Surviving Corporation.
6.4 Reorganization Treatment. Graphic shall cause all tax returns
------------------------
relating to QQQ and QAC to be filed on the basis of treating the Merger as a
reorganization pursuant to Sections 368(a)(1)(A) and 368(a)(2)(D) of the Code.
Further, following the Closing Date, Graphic shall use its best efforts to
preserve the reorganization treatment of the Merger and shall not take any
action that would defeat such treatment.
At the Closing, Graphic and QAC shall deliver a certificate executed by an
officer regarding Graphic's current intentions and plans with regard to conduct
of QAC following the Closing. Such certificate shall be in form and content
reasonably acceptable to the Stockholders and shall provide, among other things,
that neither Graphic nor QAC (i) currently intends to issue any QAC Common Stock
to any independent third party, (ii) currently intends to reacquire any of the
Graphic Stock to be issued in connection with the Merger, (iii) currently
intends to dispose of the stock of QAC, other than to itself or an affiliate,
(iv) currently intends to liquidate or sell its assets otherwise than in the
ordinary course of QAC's business and (v) currently intends to cause QAC,
following the Closing, to discontinue conducting the businesses conducted by
Quadras prior to the Closing.
6.5 General Cooperation in Tax Matters. After the Closing Date, Graphic
----------------------------------
and QAC shall cooperate fully with the Stockholders and shall make available to
the Stockholders, 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, QQQ or Quadras, for all periods ending
on or before the Closing 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 QQQ or Quadras
ending on or before the Closing Date remain open, Graphic shall promptly notify
the Stockholders in writing of any pending or threatened tax audits or
assessments for which the Stockholders have or may have sole, joint or several
liability within thirty (30) days following the receipt by Graphic or any
affiliate of notice of such pending or threatened audit or assessment. Graphic
shall keep the Stockholders reasonably informed as to all aspects of any
administrative or judicial proceeding that may result in the payments by the
Stockholders of any tax.
6.6 Notification of Changes. From the date hereof to the Closing Date,
-----------------------
Graphic and QAC shall promptly notify the Stockholders in writing of any
24
<PAGE>
material adverse change in the financial condition of Graphic or QAC, the method
of conducting their respective operations, any material damage to or loss of any
property used in the business of Graphic or QAC, or the institution of or the
threat of institution of legal proceedings against Graphic or QAC.
6.7 Compliance with Laws. From the date hereof to the Closing Date,
--------------------
Graphic and QAC shall comply with all applicable laws and regulations including
without limitation, those as may be required for the consummation of the
transactions contemplated by this Agreement.
6.8 Consents of Others. From the date hereof to the Closing Date, 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 or QAC is a party or by which its assets are bound or otherwise, or
under any governmental law or regulation, Graphic and QAC shall use their best
efforts to obtain any such consent or approval prior to the Closing Date.
ARTICLE 7
CONDITIONS TO CONSUMMATION OF MERGER
7.1 Conditions to Obligations of QAC and Graphic. The obligation of
--------------------------------------------
QAC and Graphic to consummate the Merger 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 Stockholders
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 Stockholders, QQQ and
Quadras 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 on or before the Closing, and the Stockholders shall have
delivered to QAC 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 Merger or which would have a material adverse effect on QAC's
ability to conduct the business of Quadras as presently conducted or which
claims material damages from QAC or Graphic with respect to the Merger.
(c) The Stockholders shall have delivered to QAC and Graphic a
certificate of QQQ's Secretary certifying as to the requisite corporate or other
action authorizing the Merger, and the status of record ownership of the Shares
by the Stockholders.
(d) The Stockholders shall have submitted to QAC and Graphic
resignations of all current officers and directors of QQQ and Quadras.
25
<PAGE>
(e) Mesdames Harris and Morgan shall have executed and delivered to
QAC and Graphic the Employment Agreements (which contains certain non-compete
provisions), substantially in the form of Exhibit "A" hereto.
(f) The Stockholders shall have executed and delivered to QAC and
Graphic the Escrow Agreement, substantially in the form of Exhibit "B" hereto.
(g) QAC and Graphic shall have received the opinion of Johnson &
Montgomery, counsel to QQQ and the Stockholders, substantially in the form of
Exhibit "D" hereto.
(h) The Certificate of Merger shall be prepared for filing with the
Secretary of State of Georgia.
(i) QAC and Graphic shall have executed the Printing Agreement
substantially in the form of Exhibit "E" attached hereto providing for
substantial quantities of commercial printing for Quadras's clients, for which
Quadras performs creative, design, photography or pre-press services, to be
performed by Graphic or its subsidiaries, with Quadras receiving as
consideration therefor a commission equal to eight percent (8%) of Value Added
Sales.
(j) Quadras shall have terminated its lease for its studio at 239-B
Locust Street, Atlanta, Georgia.
7.2 Conditions to Obligations of the Stockholders. The obligation of
---------------------------------------------
the Stockholders to consummate the Merger 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 QAC and Graphic
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; QAC 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 on or before the Closing Date; and
each of QAC and Graphic shall have delivered to the Stockholders 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 Merger or which would have a material adverse effect on the right
of the Stockholders to consummate the Merger or which claims material damages
from the Stockholders with respect to the Merger.
(c) QAC and Graphic shall have delivered to the Stockholders
certificates of their respective Secretaries certifying as to the requisite
corporate and other action authorizing the Merger and the incumbency of their
respective officers and directors.
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(d) QAC shall have executed and delivered to the Stockholders the
Escrow Agreement, substantially in the form of Exhibit "B" hereto.
(e) The Stockholders shall have received the opinion of Messrs. Gray,
Gilliland & Gold, P.C., counsel to QAC and Graphic, substantially in the form of
Exhibit "G" hereto.
(f) The Certificate of Merger shall be prepared for filing with the
Secretary of State of Georgia.
(g) QAC and Graphic shall have executed and delivered the Employment
Agreements substantially in the form of Exhibit "A" hereto.
(h) QAC and Graphic shall have executed and delivered the Printing
Agreement substantially in the form of Exhibit "E" hereto.
7.3 Fulfillment of Conditions. Each party to this Agreement shall
-------------------------
use his, her 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
Stockholders, and Graphic shall use reasonable best efforts to have such
registration become effective and not abandon the filing. The Stockholders
shall receive a copy of the Registration Statement prior to filing for review,
and the Stockholders shall represent and warrant that the information contained
in the Registration Statement concerning each of them 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.
8.2 Furnishing Information. The Stockholders shall furnish to
----------------------
Graphic such information regarding Stockholders 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. Each Stockholder hereby covenants with
-----------------------
Graphic that she will promptly advise Graphic of any changes in the information
concerning such Stockholder contained in the Registration Statement and that
each Stockholder will not make any sale of Graphic Stock pursuant to the
Registration Statement without complying with the prospectus delivery
27
<PAGE>
requirements of the Act. Each Stockholder 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, each Stockholder 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.
Each Stockholder covenants that she will not sell any shares pursuant to any
prospectus during the period commencing at the time at which Graphic gives each
Stockholder notice of the suspension of the use of a given prospectus and ending
at the time Graphic gives notice that each Stockholder 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 third anniversary of the Closing Date or the sale by the Stockholders
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 Stockholders 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 any Stockholder 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:
(i) furnish to each Stockholder 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
Stockholder may reasonably request;
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(ii) notify each Stockholder promptly of any request by the
Commission for the amending or supplementing of the Registration Statement or
prospectus forming a part thereof;
(iii) advise each Stockholder 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 any of the Stockholders 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 any of
the Stockholders to consummate the disposition of Graphic Stock in any of the
aforementioned jurisdictions; and
(v) notify the Stockholders, 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 Indemnification.
---------------
(a) Graphic agrees to indemnify, defend and hold harmless the
Stockholders 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 Stockholders), 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
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 Stockholders 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 any of the
Stockholders pursuant to Section 8.2 or based upon information furnished to
Graphic in writing by or on behalf of any of the Stockholders expressly for use
therein.
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(b) The Stockholders, jointly and severally, agree 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 any of the Stockholders pursuant to
Section 8.2 or is made in reliance upon or in conformity with information
furnished in writing by or on behalf of any of the Stockholders expressly for
inclusion in the Registration Statement or prospectus contained therein (or any
amendment or supplement thereto), and (ii) the failure by any of the
Stockholders 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.
8.6 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 any of
the Stockholders. Graphic shall pay for the fees and expenses of one counsel
for the Stockholders in connection with its registration obligations hereunder
up to $2,500, in the aggregate.
ARTICLE 9
INDEMNIFICATION
9.1 Definitions. As used in this Article 9:
-----------
(a) "Damages" shall mean actual losses, liabilities, damages, claims,
costs or expenses (including reasonable attorneys fees and disbursements), less
the amount of any actual tax or insurance benefits then available to or received
by the Indemnified Party with respect thereto.
(b) "Indemnified Party" means the party seeking indemnification under
Section 9.2 hereof.
(c) "Indemnifying Party" means the Stockholders, jointly and
severally.
9.2 Indemnification of QAC and Graphic by the Stockholders.
------------------------------------------------------
(a) The Stockholders shall, jointly and severally, from and after the
Closing Date, indemnify, defend, and hold QAC and Graphic and their respective
subsidiaries and Affiliates harmless from, against and in respect of any and all
30
<PAGE>
Damages incurred by any of them arising from or in connection with any breach of
any representation, warranty or covenant made by the Stockholders in this
Agreement or due to any amounts paid by Graphic or QAC pursuant to the
indemnification continuation provisions of Section 6.1 hereof; provided,
however, that the liability of each of the Stockholders to indemnify Graphic or
QAC for any Damages incurred by them arising from or in connection with any
breach of any representation, warranty or covenant made by the Stockholders in
this Agreement or in connection with such indemnification continuation
provisions: (i) must be asserted by Graphic or QAC during the period such
representations, warranties and covenants survive this Agreement as set forth in
Sections 6.1 and 12.11 herein; and (ii), although the liability of the
Stockholders hereunder shall be joint and several, the liability of each
Stockholder shall be limited to the total amount of Graphic Stock (at the Market
Value Per Share used for the Closing) payable to such Stockholder.
(b) No Damages shall be recoverable hereunder unless the aggregate
amount of all Damages exceeds $50,000; provided, however, that once such
threshold is met, the full amount of all Damages over and above the first
$25,000 thereof shall be recoverable.
9.3 Method of Asserting Claims.
--------------------------
(a) In the event that any claim or demand for which an Indemnifying
Party would be liable to an Indemnified Party hereunder is asserted against or
sought to be collected from an Indemnified Party by a third party (a "Third
Party Claim") or an Indemnified Party seeks indemnification from an Indemnifying
Party in connection with any other type of claim for which indemnity may be
sought hereunder (collectively, and including Third Party Claims, a "Claim"),
the Indemnified Party shall use reasonable efforts to notify the Indemnifying
Party in writing of such Claim, specifying the nature of such Claim arising
hereunder and the amount or the estimated amount thereof to the extent then
feasible (which estimate shall not be conclusive of the final amount of such
Claim) (the "Claim Notice"). The Indemnifying Party shall have twenty calendar
days (or such earlier period of time as may be required for the filing of
responsive pleadings to any legal action instituted with respect to the Claim or
required due to contractual deadlines imposed upon the Indemnified Party by the
contract in dispute but in any event, not less than 10 days) from the receipt of
the Claim Notice (the "Response Notice Period") to notify the Indemnified Party,
(A) whether or not it disputes its liability to the Indemnified Party hereunder
with respect to such Claim and (B) notwithstanding any such dispute, if it is a
Third Party Claim, whether or not it will defend, at its sole cost and expense,
the Indemnified Party against such Claim. No failure by an Indemnified Party to
notify the Indemnifying Party of the existence or assertion of a Claim for which
indemnification may be sought shall constitute a defense to or waiver of such
Claim for indemnification except to the extent the Indemnifying Party may be
able to prove that it has been materially prejudiced by such failure or delay.
(b) If the Indemnifying Party disputes its liability with respect to
such Claim or the amount thereof (whether or not the Indemnifying Party desires
to defend the Indemnified Party against such Claim as provided in paragraphs (c)
and (d) below), such dispute shall be resolved in accordance with Section 9.5
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<PAGE>
hereof. Pending the resolution of any dispute by the Indemnifying Party of its
liability with respect to any Third Party Claim, such Claim shall not be settled
without the prior written consent of the Indemnified Party and the Indemnifying
Party, which consent shall not be unreasonably withheld or delayed.
(c) In the event that the Indemnifying Party notifies the Indemnified
Party within the Response Notice Period that it will defend the Indemnified
Party against a Third Party Claim, then the Indemnifying Party shall assume the
defense thereof with counsel reasonably acceptable to the Indemnified Party, and
the Indemnified Party shall cooperate in all reasonable respects in such
defense, including without limitation in making any appropriate counterclaim
against the person asserting the Third Party Claim or any appropriate
crosscomplaint against any person (unless such counterclaim or crosscomplaint
would be against any other entity with which the Indemnified Party has ongoing
business relations and would have a significant likelihood in the good faith
judgment of the Indemnified Party of damaging such business relationships);
provided, however, the Indemnifying Party shall not, without the prior written
consent of the Indemnified Party which consent shall not be unreasonably
withheld, consent to the entry of any judgment against the Indemnified Party or
enter into any settlement or compromise which does not include, as an
unconditional term thereof, the giving by the claimant or plaintiff to the
Indemnified Party of a release, in form and substance reasonably satisfactory to
the Indemnified Party, from all liability in respect of such Third Party Claim.
If any Indemnified Party desires to participate in, but not control, any such
defense or settlement, it may do so at its sole cost and expense. If, in the
reasonable opinion of the Indemnified Party, any such Third Party Claim or the
litigation or resolution of any such Third Party Claim involves an issue or
matter which could reasonably be expected to have a material adverse effect on
Graphic, provided Graphic is the Indemnified Party, then the Indemnified Party
shall have the right to control the defense or settlement of any such Third
Party Claim at its cost and expense, and such legal fees and expenses shall be
included as part of the indemnification obligation of the Indemnifying Party
hereunder. If the Indemnified Party should elect to exercise such right, the
Indemnifying Party shall have the right to participate in, but not control, the
defense or settlement of such Third Party Claim at its sole cost and expense.
(d) If the Indemnifying Party elects not to defend the Indemnified
Party against a Third Party Claim, whether by not giving the Indemnified Party
timely notice within the Response Notice Period as provided above or otherwise,
then the Indemnified Party shall, at the expense of the Indemnifying Party (if
the Indemnified Party is entitled to indemnification hereunder), have the right
to defend, settle or compromise any such Third Party Claim with counsel of its
own choosing. In the event the Indemnified Party proposes to settle a Third
Party Claim, the Indemnified Party shall deliver to the Indemnifying Party
written notice of the proposed settlement of the Third Party Claim, which the
Indemnified Party may reject in its reasonable judgment within thirty days of
receipt of such notice. In the event the Indemnified Party settles such Third
Party Claim over the objection of Indemnifying Party, dispute over such
settlement shall be resolved as provided in Section 9.5 hereof.
(e) In the event an Indemnified Party has a claim for indemnification
against the Indemnifying Party hereunder with respect to a Claim other than a
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<PAGE>
Third Party Claim, the Indemnified Party shall send a Claim Notice with respect
to such Claim to the Indemnifying Party. If the Indemnifying Party disputes its
liability with respect to such Claim, such dispute shall be resolved in
accordance with Section 9.5 hereof. If the Indemnifying Party accepts or agrees
with such Claim or does not notify the Indemnified Party within the Response
Notice Period that it disputes such Claim, the amount of such Claim shall be
conclusively deemed a liability of the Indemnifying Party hereunder.
(f) The use of the indemnification provisions of this Agreement by
any Indemnified Party shall be the exclusive method of recovering for any
Damages sustained by an Indemnified Party due to a breach of any representation,
warranty or covenant contained in this Agreement; provided, however, that if
such indemnification does not fully satisfy the Damages incurred by an
Indemnified Party hereunder, such Indemnified Party may resort to any other
legal remedy available to such party to recover any such Damages not satisfied
through indemnification hereunder, subject, in each instance, to all the
limitations contained in this Agreement on recovery of Damages (including,
without limitation, limitations on time for asserting claims, threshold amounts,
maximum recovery from an individual Indemnifying Party, credits for insurance
benefits and any tax benefits or payments included in the definition of Damages
in this Article 9) set forth in this Agreement. Further, if any dispute
regarding indemnification hereunder is submitted to arbitration as set forth in
Section 9.5 herein, the result of such arbitration shall be final, binding and
conclusive, and no party may resort to other remedies to obtain recovery of any
Damages not awarded through such arbitration.
9.4 Payment. The Indemnifying Party shall pay the Indemnified Party,
-------
within ten days after the final determination of liability under this Article 9,
the amount of any indemnification to which the Indemnified Party is entitled.
Payment may be made by an Indemnifying Party in cash or with Graphic Stock (at
its then current market value). Upon the payment in full of any claim, the
Indemnifying Party shall be subrogated to the rights of the Indemnified Party
against any person, firm or corporation with respect to the subject matter of
such claim.
9.5 Arbitration. All disputes under this Article 9 shall be settled
-----------
by arbitration in Atlanta, Georgia, before a single arbitrator pursuant to the
rules of the American Arbitration Association (the "AAA"). Arbitration may be
commenced at any time by any party hereto by giving written notice to each other
party to a dispute that such dispute has been referred to arbitration under this
Section 9.5. The arbitrator shall be selected by the joint agreement of the
parties, but if they do not so agree within 20 days after the date of the notice
referred to in the preceding sentence, the selection shall be made pursuant to
the rules of the AAA from the panels of arbitrators maintained by the AAA for
commercial disputes. Any award rendered by the arbitrator shall be conclusive
and binding upon the parties hereto; provided, however, that any such award
shall be accompanied by a written opinion of the arbitrator giving the reasons
for the award. This provision for arbitration shall be specifically enforceable
by the parties, and the decision of the arbitrator in accordance herewith shall
be final and binding and there shall be no right of appeal therefrom. Each
party shall pay its own expenses of arbitration and the expenses of the
arbitrator shall be equally shared.
33
<PAGE>
ARTICLE 10
COVENANT NOT TO COMPETE
10.1 Definitions. Capitalized terms used in
-----------
this Article 10 shall have the following meanings:
(a) "Area" shall mean the States of Georgia, Florida, North Carolina,
South Carolina, Alabama, Tennessee, Mississippi and Illinois.
(b) "Competing Business" shall mean any business engaged in the
production for the account of others of advertising materials and sales catalogs
featuring clothing and accessories and industrial and household products,
including required design, copy writing and photography, but excluding color
separation and printing services.
(c) "Proprietary Information" shall mean information related to QQQ,
Quadras, or the business of QQQ or Quadras (i) which derives economic value,
actual or potential, from not being generally known to, or readily ascertainable
by, other persons who can obtain economic value from its disclosure or use and,
(ii) which is the subject of efforts that are reasonable under the circumstances
to maintain its secrecy. Assuming the foregoing criteria are met, Proprietary
Information includes, but is not limited to, techniques or methods used in the
financial affairs, processes, services, customer lists, customer information,
employees, employees' compensation, research, development, existing and future
products and services, product and service plans and designs, purchasing,
accounting, distribution systems, marketing, formulae, compilations, programs,
methods, techniques, drawings, and suppliers of QQQ or Quadras. Proprietary
Information will not include any information or data which before being divulged
by the Stockholders (i) has become generally known to the public through no
wrongful act of the Stockholders; (ii) has been rightfully received by the
Stockholders from a third party without restriction on disclosure and without
breach of an obligation of confidentiality running either directly or indirectly
to QQQ or Quadras; (iii) has been approved for release and released to the
general public by written authorization of the QQQ or Quadras; (iv) has been
disclosed pursuant to a requirement of a governmental agency or of law without
similar restrictions or other protections against public disclosure, or has been
required to be disclosed by operation of law; provided, however, that the
Stockholders must first have given written notice of such required disclosure to
QAC, and taken reasonable steps to allow QAC to seek to protect the
confidentiality of the information required to be disclosed including, without
limitation, to allow QAC to obtain a protective order requiring that the
Proprietary Information so disclosed be used only for the purposes for which
disclosure is required; or (v) is independently developed by the Stockholders
without use, directly or indirectly, of Proprietary Information and does not
relate to the Business of the Company. Proprietary Information may include
information disclosed to QQQ or Quadras by a third party which QQQ or Quadras is
obliged to treat as confidential.
(d) "Restricted Period" shall mean the period commencing with the
Closing Date and ending on the seven (7) year anniversary thereof.
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10.2 Agreement Not to Compete. Unless otherwise consented to in
------------------------
writing by QAC, the Stockholders agree that during the Restricted Period they
will not, within the Area, either directly or indirectly, on their own behalf or
in the service or on behalf of others, engage in any Competing Business or
provide managerial, supervisory, administrative, financial or consulting
services or assistance to, or own a beneficial interest in, any Competing
Business except for the ownership of less than five percent (5 %) of a publicly
traded company.
10.3 Agreement Not to Solicit Employees. The Stockholders agree that
----------------------------------
during the Restricted Period, they will not, without the prior written consent
of QAC, either directly or indirectly, on their own behalf or in the service or
on behalf of others, solicit, divert, or hire away, or attempt to solicit,
divert, or hire away, from the employment of QAC, any person employed by QQQ or
Quadras on the Closing Date.
10.4 Agreement Not to Solicit Customers. The Stockholders agree that
----------------------------------
during the Restricted Period, they will not, either directly or indirectly, on
their own behalf or in the service or on behalf of others, in or for a Competing
Business, solicit or attempt to solicit any person, firm or corporation who was
a customer of QQQ or Quadras during the one-year period immediately preceding
the Closing Date (as shown on the books and records of QQQ).
10.5 Confidentiality.
---------------
(a) After the Closing, the Stockholders (i) will hold the Proprietary
Information in confidence, and (ii) will not use, duplicate, reproduce,
distribute, disclose or otherwise disseminate the Proprietary Information. In
the event that any of the Stockholders determine that they are required by law
to disclose any Proprietary Information, such Stockholder will not make such
disclosure unless (and then only to the extent that) such Stockholder has been
advised by independent legal counsel that such disclosure is required by law and
then only after prior written notice is given to QAC (if reasonably practical)
that such disclosure has been requested and is required by law.
(b) Any and all reproductions of the Proprietary Information in the
custody or control of the Stockholders will prominently display a
confidentiality legend, to the extent practicable.
(c) The Stockholders covenant and agree that on or before the Closing
Date, the Stockholders will deliver to QAC all tangible copies and embodiments
of the Proprietary Information in their possession or control.
10.6 Remedies. The parties hereto specifically acknowledge and agree
--------
that the remedy at law for breach of this Article 10 would be inadequate and
that any party, in addition to any other relief available to it, shall be
entitled to temporary and permanent injunctive relief without the necessity of
proving actual damages.
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ARTICLE 11
TERMINATION; AMENDMENTS; WAIVER
11.1 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 QAC and the Stockholders;
(b) by QAC or the Stockholders if, without a material breach of the
terminating party, the Closing shall not have occurred on or before November 1,
1995, which date may be extended by mutual consent of the parties;
(c) by QAC if there has been a misrepresentation, breach of warranty
or breach of covenant or agreement by the Stockholders, QQQ or Quadras in their
representations, warranties, covenants or agreements set forth herein; or
(d) by the Stockholders if there has been a misrepresentation, breach
of warranty or breach of covenant or agreement by QAC or Graphic in its
representations, warranties, covenants or agreements set forth herein.
11.2 Effect of Termination. In the event of the termination and
---------------------
abandonment of this Agreement pursuant to Section 11.1 hereof, this Agreement
shall forthwith become void and have no effect, other than the provisions of
Section 12.7 which shall survive. Nothing contained in this Section 11.2 shall
relieve any party from liability for any breach of this Agreement occurring
before such termination.
ARTICLE 12
MISCELLANEOUS
12.1 Entire Agreement; Assignment. This Agreement, together with any
----------------------------
confidentiality agreements between the parties hereto, (a) constitutes, 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 QAC may assign its respective
rights and obligations to any direct subsidiary of Graphic, but no such
assignment shall relieve QAC of its obligations hereunder.
12.2 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.
12.3 Notices. All notices, requests, claims, demands and other
-------
communications hereunder shall be in writing and shall be deemed to have been
36
<PAGE>
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:
If to QAC:
Quadras Acquisition Company
c/o Graphic Industries, Inc.
2155 Monroe Drive, N.E.
Atlanta, Georgia 30324
Attention: Mark C. Pope IV, President
with a copy to:
Gray, Gilliland & Gold, P.C.
400 Perimeter Center Terrace
Suite 1050, North Terraces
Atlanta, Georgia 30346
Telecopy: (404) 392-4808
Attention: Lawrence M. Gold, Esq.
If to Graphic, to:
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:
Gray, Gilliland & Gold, P.C.
400 Perimeter Center Terrace
Suite 1050, North Terraces
Atlanta, Georgia 30346
Telecopy: (404) 392-4808
Attention: Lawrence M. Gold, Esq.
If to the Stockholders, at the address
listed on the signature pages hereof.
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If to QQQ or Quadras at:
Quadras, Inc.
3176 Marjan Drive
Atlanta, Georgia 30340
with a copy to:
Johnson & Montgomery
One Buckhead Plaza, Suite 400
3060 Peachtree Road, N.W.
Atlanta, Georgia 30305
Telecopy (404) 262-1222
Attention: Thomas E. Jones, Jr., Esq.
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.
12.4 Governing Law. This Agreement shall be governed by and
-------------
construed in accordance with the laws of the State of Georgia, regardless of the
laws that might otherwise govern under applicable principles of conflicts of
laws thereof.
12.5 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.
12.6 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.
12.7 Expenses. All costs and expenses of Graphic or QAC associated
--------
with legal and audit services incurred in connection with the Merger shall be
paid by Graphic. The Stockholders and QQQ will each pay their respective legal
and other expenses. Any expense incurred by QQQ in connection with the
transactions contemplated by this Agreement shall be accrued in full on the
financial records of QQQ as of the Closing Date and constitute an adjustment to
the Closing Balance Sheet.
12.8 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.
38
<PAGE>
12.9 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.
12.10 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 Merger and the related transactions referred to herein.
39
<PAGE>
12.11 Survivability. The Stockholders' 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 the period of seven (7) years after the Closing Date.
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:
-------------------------------------
QUADRAS ACQUISITION COMPANY
By:
----------------------------------------
Name:
--------------------------------------
Title:
-------------------------------------
QQQ, INC.
By:
----------------------------------------
Name:
--------------------------------------
Title:
-------------------------------------
QUADRAS, INC.
By:
----------------------------------------
Name:
--------------------------------------
Title:
-------------------------------------
[SIGNATURES CONTINUED ON THE FOLLOWING PAGE]
40
<PAGE>
[SIGNATURES CONTINUED FROM THE PRECEDING PAGE]
--------------------------------------------
Sara Senie Harris
Social Security Number:
Address: 261 King Road, N.W.
Atlanta, Georgia 30342
--------------------------------------------
Cynthia A. Morgan
Social Security Number:
Address: 1026 Coronado Drive, N.W.
Atlanta, Georgia 30327
41
<PAGE>
EXHIBIT 10RRR
AGREEMENT AND PLAN OF REORGANIZATION WITH QQQ, INC.
---------------------------------------------------
EXHIBITS
--------
Exhibit "A" - Employment Agreements
Exhibit "B" - Escrow Agreement
Exhibit "C" - Interim Balance Sheet
Exhibit "D" - Opinion of QQQ and Stockholders Counsel
Exhibit "E" - Printing Agreement
Exhibit "F" - DELETED
Exhibit "G" - Opinion of Gray, Gilliland & Gold, P.C.
<PAGE>
SCHEDULES
---------
Schedule 2.3 Stockholders
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 July 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
<PAGE>
GLOSSARY
--------
1. "Acquisition Proposal" shall have the meaning set forth in Section 5.2
herein.
2. "Act" shall mean the Securities Act of 1933, as amended.
3. "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.
4. "Agreement" shall mean this Agreement and Plan of Reorganization as
now existing or as hereafter amended.
5. "Arbitration" and "AAA" shall have the meanings set forth in Section
9.5 herein.
6. "Area"; "Competing Business"; "Proprietary Information"; and
"Restricted Period" shall have the respective meanings set forth in Section 10.1
herein.
7. "Authorizations" shall have the meaning set forth in Section 3.14
herein.
8. "Benefit Plans" shall have the meaning set forth in Section 3.20
herein.
9. "Certificate of Merger" shall have the meaning set forth in Section
2.7 herein.
10. "Claim" and "Third Party Claim" shall have the respective meanings set
forth in Section 9.3(a) herein.
11. "Claim Notice" and "Response Notice Period" shall have the respective
meanings set forth in Section 9.3(a) herein.
12. "Closing" shall mean the closing of the transactions contemplated in
this Agreement to be held at the date, time and place set forth in Section 2.7
herein.
13. "Closing Audit" shall mean the audit of the Preliminary Balance Sheet
to be conducted by Graphic pursuant to Section 2.10(b) herein.
14. "Closing Balance Sheet" shall mean the audited closing balance sheet
resulting from the Closing Audit.
15. "Closing Date" shall mean the date of Closing.
<PAGE>
16. "Code" shall mean the Internal Revenue Code of 1986, as amended.
17. "Commission" shall mean the Securities and Exchange Commission, or any
other federal agency at the time administering the Act.
18. "QQQ Stock" shall mean the common stock, $1.00 par value, of QQQ.
19. "Competing Business" shall have that meaning set forth in Section
10.1(b) hereof.
20. "Contracts" shall mean the contracts, leases, licenses, warranties,
commitments, agreements, arrangements, credit guaranties, purchase and sale
orders and contracts for the provision of services, whether oral or written, to
which Quadras or QQQ is a party, or pursuant to which Quadras or QQQ has any
right, benefit or obligation.
21. "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.
--- -------------------
22. "Damages"; "Indemnified Party" and "Indemnifying Party" shall have the
respective meanings set forth in Section 9.1 herein.
23. "Effective Date" shall mean the date on which the Articles of Merger
are filed with the Secretary of State of Georgia.
24. "Effective Period" shall have the meaning set forth in Section 8.4
herein.
25. "Employment Agreements" shall mean the Employment Agreements
substantially in the form of Exhibit "A" attached hereto and incorporated herein
by reference between Harris and Morgan, respectively, and the Surviving
Corporation.
26. "Environmental Laws" shall have the meaning set forth in Section
3.15(a) herein.
27. "Environmental Permits" shall have the meaning set forth in Section
3.15(c) herein.
28. "ERISA" shall mean the Employee Retirement Income Security Act of
1974, as amended.
29. "Escrow Agent" shall mean NationsBank of Georgia, N.A., including its
successors and assigns.
30. "Escrow Agreement" shall mean the Escrow Agreement substantially in
the form of Exhibit "B" attached hereto and incorporated herein by reference.
G-2
<PAGE>
31. "Escrow Period" shall mean the period beginning on the Effective Date
and continuing for six (6) months thereafter, unless sooner terminated or
extended, as provided in the Escrow Agreement.
32. "Escrow Shares" shall mean ten percent (10%) 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.
33. "Estimated Net Book Value" shall mean the Net Book Value of QQQ as
shown or reflected in the Preliminary Closing Balance Sheet.
34. "Financial Schedule" shall have the meaning set forth in Section
2.10(a) herein.
35. "Financial Statements" shall mean collectively: (i) the consolidated
and consolidating interim unaudited balance sheet of QQQ as at July 31, 1995,
together with the related statement of income and changes in financial condition
for the period then ended; (ii) the unaudited interim balance sheet of Quadras
as of July 31, 1995, and the related statements of income and changes in
financial position for the period then ended; (iii) unaudited balance sheets and
the related statements of income and changes in financial condition of Quadras
for the fiscal years ended October 31, 1994, and October 31, 1993, respectively.
36. "Graphic Common Stock" shall mean the Common Stock, $0.10 par value
per share, of Graphic.
37. "Graphic Disclosure Documents" shall mean the reports and information
referred to in Section 4.7 of this Agreement.
38. "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 sum of $3,000,000 (subject to adjusted upwards or downwards
pursuant to Section 2.10 hereof) by the Market Value Per Share of Graphic Common
Stock, rounded up to the nearest whole number of shares.
39. "Initial Shares" shall mean the Graphic Stock minus the Escrow Shares.
40. "Intellectual Property" shall have the meaning set forth in Section
3.11 herein.
41. "Interim Balance Sheet" shall mean, collectively, the consolidating
and consolidated interim unaudited balance sheets of QQQ as of July 31, 1995 in
the form attached to this Agreement as Exhibit "C".
G-3
<PAGE>
42. "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.
43. "Lease" shall mean, collectively, those certain lease agreements dated
March 27, 1987 with Herbert Tabb & Associates as landlord and Quadras as Tenant,
including all amendments, extensions and options relating thereto, October, 1993
and February, 1995 (and any prior leases relating thereto) between Henry M.
Hatcher, Jr. d/b/a/ HMH Enterprises as landlord and Quadras as tenant covering
the premises and improvements at 3176-3190 and 3190A Marjan Drive, DeKalb
County, Georgia.
44. "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 Closing Date.
45. "Merger" shall mean the merger of QQQ into and with QAC as set forth
herein.
46. "Net Book Value" shall mean the total assets of QQQ minus the total
liabilities of QQQ, as determined in accordance with generally accepted
accounting principles consistently applied.
47. "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.
48. "Preliminary Closing Balance Sheet" shall mean the unaudited,
consolidated balance sheet of QQQ dated as of the Closing Date and prepared and
delivered in accordance with Section 2.10(a) herein.
49. "Printing Agreement" shall mean the Printing Agreement substantially
in the form of Exhibit "E" attached hereto and incorporated herein by reference.
50. "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 each
Stockholder.
51. "Surviving Corporation" shall mean QAC, the name of which shall be
changed in the Merger to "Quadras, Inc."
52. "Taxes" shall have the meaning set forth in Section 3.8(a) herein.
G-4
<PAGE>
53. "Tax Returns" shall mean all federal, state, local and foreign tax
returns, reports, statements and other similar filings required to be filed by
QQQ, Quadras or the Stockholders with respect to the business of QQQ or Quadras.
54. "Transaction Documents" shall mean this Agreement, the Escrow
Agreement, the Employment Agreements, the Printing Agreement and the other
documents and agreements called for by this Agreement.
55. "Undisclosed Liabilities" shall mean any liability or obligation of
Quadras or QQQ of any nature (whether accrued, absolute, contingent, due, to
become due or otherwise, whether or not incurred in respect of or measured by
the income of Quadras or QQQ and whether or not normally shown in a financial
statement prepared in accordance with generally accepted accounting principles)
not disclosed or reflected, or specifically reserved against, in any financial
statement delivered by QQQ or Quadras in accordance with this Agreement or in
any schedule or exhibit to this Agreement.
56. "Value Added Sales" shall mean the gross collected revenues from the
printing work to be performed pursuant to the Printing Agreement less all direct
materials, costs, freight and outside purchases.
G-5
<PAGE>
EXHIBIT 10SSS
AGREEMENT AND
PLAN OF MERGER
by and among
GRAPHIC INDUSTRIES, INC.,
ALLIED ACQUISITION CORP.,
ALLIED REPROGRAPHIC SERVICES, INC.
and
VERNON E. LANGFORD
AUGUST 1, 1995
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
ARTICLE 1 DEFINITIONS............................................... 1
Section 1.1 "ABP"............................................ 1
Section 1.2 The "Act"........................................ 1
Section 1.3 "Closing Date"................................... 1
Section 1.4 "Code"........................................... 1
Section 1.5 "Commission"..................................... 1
Section 1.6 "Company Note"................................... 1
Section 1.7 "Contracts"...................................... 1
Section 1.8 "Deliverable Consideration"...................... 2
Section 1.9 "Deposit"........................................ 2
Section 1.10 "Effective Time"................................. 2
Section 1.11 "Employment Agreement"........................... 2
Section 1.12 "ERISA".......................................... 2
Section 1.13 "Escrow Agent"................................... 2
Section 1.14 "Escrow Agreement"............................... 2
Section 1.15 "Escrow Period".................................. 2
Section 1.16 "Escrowed Consideration"......................... 2
Section 1.17 "Financial Statements"........................... 2
Section 1.18 "GBCC"........................................... 2
Section 1.19 "Graphic Common Stock"........................... 2
Section 1.20 "Guaranty"....................................... 2
Section 1.21 "Interim Balance Sheet".......................... 3
Section 1.22 "Interim Transaction Value"...................... 3
Section 1.23 "Merger Consideration"........................... 3
Section 1.24 "Notes Payable Stock"............................ 3
Section 1.25 "Option Agreement"............................... 3
Section 1.26 "Stock Price".................................... 3
Section 1.27 "Surviving Corporation".......................... 3
Section 1.28 "Transaction Documents".......................... 3
Section 1.29 "Transaction Stock".............................. 3
ARTICLE 2 THE MERGER................................................. 3
Section 2.1 The Merger....................................... 3
Section 2.2 Effective Time................................... 3
Section 2.3 Tax Consequences................................. 4
Section 2.4 Articles of Incorporation; Bylaws; Directors and
Officers......................................... 4
Section 2.5 Merger Consideration............................. 4
Section 2.6 Payment of the Merger Consideration.............. 4
Section 2.7 Adjustment of Merger Consideration............... 4
</TABLE>
-i-
<PAGE>
<TABLE>
Page
----
<S> <C> <C>
ARTICLE 3 REPRESENTATIONS AND WARRANTIES OF SELLER.................. 6
Section 3.1 Organization; Power; Qualification............... 6
Section 3.2 Authority........................................ 6
Section 3.3 Title of Shares.................................. 6
Section 3.4 No Third Party Options........................... 6
Section 3.5 Compliance with Laws and Validity of
Contemplated Transactions....................... 6
Section 3.6 Financial Statements............................ 7
Section 3.7 Taxes........................................... 7
Section 3.8 Personal Property............................... 7
Section 3.9 Real Property................................... 8
Section 3.10 Intellectual Property........................... 8
Section 3.11 Insurance....................................... 8
Section 3.12 Litigation...................................... 9
Section 3.13 Compliance with Laws............................ 9
Section 3.14 Environmental Matters........................... 9
Section 3.15 Absence of Changes.............................. 10
Section 3.16 Absence of Undisclosed Liabilities.............. 10
Section 3.17 Assets.......................................... 10
Section 3.18 Employees....................................... 10
Section 3.19 Employee Benefit Plans.......................... 11
Section 3.20 Labor Matters................................... 11
Section 3.21 Contracts and Commitments....................... 11
Section 3.22 Banks........................................... 12
Section 3.23 Transactions with Affiliates.................... 12
Section 3.24 Correctness of Representations.................. 12
ARTICLE 4 REPRESENTATIONS AND WARRANTIES OF PURCHASER.............. 13
Section 4.1 Organization; Power; Qualification............. 13
Section 4.2 Authority ..................................... 13
Section 4.3 Compliance with Laws and Validity of
Contemplated Transactions...................... 13
Section 4.4 Investment Representation...................... 13
Section 4.5 Transaction Stock.............................. 13
ARTICLE 5 OBLIGATIONS AND COVENANTS OF SELLER...................... 14
Section 5.1 Conduct of the Company's Business Prior
to Closing..................................... 14
Section 5.2 No Solicitation................................ 14
Section 5.3 Access and Information......................... 14
Section 5.4 Notification of Changes........................ 15
Section 5.5 No Default..................................... 15
Section 5.6 Tax Returns.................................... 15
Section 5.7 Compliance with Laws........................... 15
Section 5.8 Consent of Others.............................. 15
</TABLE>
-ii-
<PAGE>
<TABLE>
Page
----
<S> <C> <C>
ARTICLE 6 CONDITIONS TO CONSUMMATION OF MERGER...................... 15
Section 6.1 Conditions to Obligations of Purchaser.......... 15
Section 6.2 Conditions to Obligations of Seller............. 16
ARTICLE 7 REGISTRATION OF TRANSACTION STOCK......................... 17
Section 7.1 Registration of Transaction Stock............... 17
Section 7.2 Furnishing Information.......................... 18
Section 7.3 Prospectus Requirements......................... 18
Section 7.4 Registration Rights, Etc........................ 18
Section 7.5 Indemnification................................. 19
Section 7.6 Fees and Expenses of Registration............... 20
ARTICLE 8 INDEMNIFICATION........................................... 20
Section 8.1 Definitions.................................... 20
Section 8.2 Indemnification of Purchaser and
Graphic by Seller.............................. 21
Section 8.3 Method of Asserting Claims, Etc................ 21
Section 8.4 Payment........................................ 23
Section 8.5 Arbitration.................................... 23
ARTICLE 9 COVENANT NOT TO COMPETE.................................. 23
Section 9.1 Definitions.................................... 23
Section 9.2 Agreement Not to Compete....................... 24
Section 9.3 Agreement Not to Solicit Employees............. 24
Section 9.4 Agreement Not to Solicit Customers............. 24
Section 9.5 Confidentiality................................ 24
Section 9.6 Remedies....................................... 25
ARTICLE 10 TERMINATION; AMENDMENTS; WAIVER.......................... 25
Section 10.1 Termination.................................... 25
Section 10.2 Effect of Termination.......................... 25
Section 10.3 Effect of Termination on Deposit............... 25
ARTICLE 11 MISCELLANEOUS............................................ 26
Section 11.1 Entire Agreement; Assignment................... 26
Section 11.2 Validity....................................... 26
Section 11.3 Notices........................................ 26
Section 11.4 Governing Law.................................. 28
Section 11.5 Descriptive Headings........................... 28
Section 11.6 Counterparts................................... 28
Section 11.7 Expenses....................................... 28
Section 11.8 Parties in Interest............................ 28
</TABLE>
-iii-
<PAGE>
Exhibits
--------
A Employment Agreement
B Escrow Agreement
C Guaranty
D Option Agreement
E DCL&W Opinion
F PGF&M Opinion
Schedules
---------
1.20 Seller Guarantees
3.1 Qualifications
3.6 Financial Statements
3.8(a) Owned Personal Property
3.8(b) Leased Personal Property
3.10(a) Intellectual Property
3.10(b) Software
3.11 Insurance
3.15 Absence of Changes
3.18 Employees
3.19 Employee Benefit Plans
3.20 Labor Claims
3.21 Contracts
3.22 Banks
-iv-
<PAGE>
AGREEMENT AND PLAN OF MERGER
----------------------------
THIS AGREEMENT AND PLAN OF MERGER (the "Agreement"), made and entered into
---------
this 1st day of August, 1995 by and among Graphic Industries, Inc., a Georgia
corporation ("Graphic"), Allied Acquisition Corp., a Georgia corporation and
-------
wholly owned subsidiary of Graphic ("Purchaser"), Allied Reprographic Services,
---------
Inc., a Georgia corporation (the "Company") and Vernon E. Langford, an
-------
individual resident of the State of Georgia and the sole stockholder of the
Company ("Seller").
------
WITNESSETH:
----------
WHEREAS, Seller owns 100% of the outstanding shares of the Common Stock of
the Company, $0.10 par value per share (the "Shares"); and
------
WHEREAS, Seller and Purchaser wish to enter into a transaction pursuant to
which the Company shall be merged with and into Purchaser on the terms and
conditions set forth herein (the "Merger");
------
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
The following terms used in this Agreement shall have the meaning set forth
below:
Section 1.1 "ABP" shall mean Atlanta Blue Print Co., a Georgia Corporation
---
and wholly-owned subsidiary of Graphic.
Section 1.2 The "Act" shall mean the Securities Act of 1933, as amended.
---
Section 1.3 "Closing Date" shall mean the date upon which the Closing (as
------------
defined herein) shall occur.
Section 1.4 "Code" shall mean the Internal Revenue Code of 1986, as
----
amended.
Section 1.5 "Commission" shall mean the Securities and Exchange
----------
Commission, or any other federal agency at the time administering the Act.
Section 1.6 "Company Note" shall mean that certain promissory note dated
------------
April 1, 1991 in the initial principal amount of $27,000 owed by the Company to
Seller.
<PAGE>
Section 1.7 "Contracts" shall mean the contracts, leases, licenses,
---------
warranties, commitments, agreements, arrangements, credit guaranties, and
purchase and sale orders, whether oral or written, to which the Company is a
party, or pursuant to which the Company receives any right or benefit.
Section 1.8 "Deliverable Consideration" shall mean that number of shares
-------------------------
of Graphic Common Stock determined by subtracting the Escrowed Consideration
from the Merger Consideration.
Section 1.9 "Deposit" shall mean Twenty-Five Thousand Five Hundred Dollars
-------
($25,500), which has been paid to Seller prior to the execution of this
Agreement as a deposit. Such Deposit shall be returned to Purchaser at Closing,
as set forth herein.
Section 1.10 "Effective Time" shall mean such time as the Merger shall
--------------
become effective pursuant to Section 14-2-1105(c) of the GBCC.
Section 1.11 "Employment Agreement" shall mean that certain Employment
--------------------
Agreement to be entered into by and between ABP and Seller, substantially in the
form of Exhibit A hereto.
---------
Section 1.12 "ERISA" shall mean the Employee Retirement Income Security
-----
Act of 1974, as amended.
Section 1.13 "Escrow Agent" shall mean Carter D. Pope and his successors
------------
and assigns.
Section 1.14 "Escrow Agreement" shall mean that certain Escrow Agreement
----------------
to be entered into by and among Graphic, Purchaser, Seller and the Escrow Agent,
substantially in the form of Exhibit B hereto.
---------
Section 1.15 "Escrow Period" shall mean the period beginning on the
-------------
Closing Date, and ending six (6) months thereafter.
Section 1.16 "Escrowed Consideration" shall mean that number of shares of
----------------------
Graphic Common Stock determined by multiplying 15% by the Merger Consideration
and dividing that product by the Stock Price, and rounding to the nearest whole
number.
Section 1.17 "Financial Statements" shall mean the financial statements of
--------------------
the Company for the years ended December 31, 1992, December 31, 1993 and for the
period ended September 30, 1994, all of which are attached hereto as Schedule
--------
3.6.
- ---
Section 1.18 "GBCC" shall mean the Georgia Business Corporation Code.
----
Section 1.19 "Graphic Common Stock" shall mean shares of Common Stock,
--------------------
$0.10 par value, of Graphic.
-2-
<PAGE>
Section 1.20 "Guaranty" shall mean the Guaranty of Graphic, Purchaser and
--------
ABP substantially in the form of Exhibit C hereto, which shall be issued to
---------
Seller at the Closing to secure those certain guaranties of Seller for
obligations of the Company set forth on Schedule 1.20.
-------------
Section 1.21 "Interim Balance Sheet" shall mean the September 30, 1994
---------------------
Balance Sheet of the Company.
Section 1.22 "Interim Transaction Value" shall mean an amount equal to
-------------------------
Fifty Five Thousand Three Hundred Fifty Nine Dollars ($55,359).
Section 1.23 "Merger Consideration" shall mean that number of shares of
--------------------
Graphic Common Stock determined by dividing $544,406.89 by the Stock Price and
rounding such number up to the nearest whole number.
Section 1.24 "Notes Payable Stock" shall mean that number of shares of
-------------------
Graphic Common Stock determined by dividing the balance due on the Company Note
as of the Closing Date by the Stock Price and rounding such number to the
nearest whole number.
Section 1.25 "Option Agreement" shall mean that certain Option Agreement
----------------
to be entered into by and between Graphic and Seller, with respect to 10,000
shares of Graphic Common Stock substantially in the form of Exhibit D hereto.
---------
Section 1.26 "Stock Price" means the average composite price per share of
-----------
Graphic Common Stock as reported in the Wall Street Journal for the period
-------------------
beginning twenty (20) trading days prior to the Closing and ending three (3)
trading days prior to the Closing.
Section 1.27 "Surviving Corporation" shall mean the corporation that
---------------------
survives the Merger.
Section 1.28 "Transaction Documents" shall mean this Agreement, the Escrow
---------------------
Agreement, the Employment Agreement, the Guaranty and the Option Agreement.
Section 1.29 "Transaction Stock" shall mean those shares of Graphic Common
-----------------
Stock representing the Merger Consideration and the Notes Payable Stock.
ARTICLE 2
THE MERGER
Section 2.1 The Merger. The Merger shall occur at the Effective Time upon
----------
the terms and subject to the conditions hereof and in accordance with the GBCC.
Following the Merger, Purchaser shall continue as the Surviving Corporation and
be a wholly-owned subsidiary of Graphic, and the separate corporate existence of
the Company shall cease. Notwithstanding this Section 2.1, Graphic may elect to
-----------
merge the Company into another direct subsidiary of Graphic. In such event, the
parties agree to execute an appropriate amendment to this Agreement in order to
reflect the foregoing.
-3-
<PAGE>
Section 2.2 Effective Time. As soon as practicable after satisfaction or
--------------
waiver of all conditions to the Merger, the parties shall cause articles of
merger (the "Articles of Merger") with respect to the Merger to be filed and
------------------
recorded with the Secretary of the State of Georgia in accordance with Section
14-2-1105 of the GBCC and shall take all such further actions as may be required
by law to make the Merger effective. The Merger shall be effective at the
Effective Time. Immediately prior to the filing of the Articles of Merger, a
closing (the "Closing") will be held on July 24, 1995 at the offices of Powell,
-------
Goldstein, Frazer & Murphy in Atlanta, Georgia, or such other time and place as
the parties agree, provided that in no event shall the Closing be held later
than July 31, 1995.
Section 2.3 Tax Consequences. It is intended that the Merger shall
----------------
constitute a reorganization within the meaning of Sections 368(a)(1)(A) and
368(a)(2)(D) of the Code and that this Agreement shall constitute a "plan of
reorganization" for purposes of Section 368 of the Code.
Section 2.4 Articles of Incorporation; Bylaws; Directors and Officers.
---------------------------------------------------------
The Articles of Incorporation of Purchaser and the Bylaws of Purchaser as in
effect at the Effective Time shall be the Articles of Incorporation and Bylaws
of the Surviving Corporation, except that the name of the Surviving Corporation
shall be Allied Reprographic Services, Inc. The Board of Directors and officers
of Purchaser at the Effective Time shall be the Board of Directors and officers
of the Surviving Corporation.
Section 2.5 Merger Consideration. In exchange for the Shares, Seller
--------------------
shall receive the Merger Consideration, subject to adjustment as set forth in
Section 2.7 below.
- -----------
Section 2.6 Payment of the Merger Consideration. At the Closing, upon (i)
-----------------------------------
surrender by Seller of the stock certificates representing the Shares, duly
endorsed or accompanied by stock powers duly executed by Seller, and (ii) return
of the Deposit to Purchaser, the Merger Consideration shall be paid and
distributed by Purchaser as follows:
(a) Seller shall receive:
(i) stock certificates representing the Deliverable
Consideration; and
(ii) stock certificates representing the Notes Payable Stock as
payment in full of the Company Notes.
(b) The Escrow Agent shall receive stock certificates representing the
Escrowed Consideration, which it shall hold for the Escrow Period, as set
forth in the Escrow Agreement.
Section 2.7 Adjustment of Merger Consideration.
----------------------------------
(a) Within thirty (30) days following the Closing Date, Seller shall
prepare and deliver to Purchaser (i) an unaudited balance sheet of the
Company as of July 31, 1995 (the "Effective Date") (the "Closing Balance
-------------- ---------------
Sheet") determined in accordance with tax basis accounting principles
-----
consistently applied, except that accounts receivable shall be subsequently
valued in the manner described in Section 2.7(e) hereof (the "Estimated Net
-------------- -------------
Book Value"), and (ii) a schedule (the "Schedule") setting forth any
---------- --------
proposed adjustment to the Merger Consideration based upon the difference
between the Interim Transaction Value and the Estimated Net Book Value.
-4-
<PAGE>
(b) Purchaser shall, within ninety (90) days following the receipt of
the Closing Balance Sheet and Schedule, (i) audit the Closing Balance Sheet
and Schedule and (ii) prepare and deliver to Seller an audited closing
balance sheet (the "Audited Closing Balance Sheet") for the Company as of
-----------------------------
the Effective Date (the "Closing Net Book Value") and a schedule (the
----------------------
"Audited Schedule") setting forth any adjustment of the Merger
-----------------
Consideration based upon the difference between the Interim Transaction
Value and the Closing Net Book Value.
(c) Seller shall, within fifteen (15) days following receipt of the
Adjusted Closing Balance Sheet and the Audited Schedule, accept or reject
the calculation of the Merger Consideration reflected therein. If Seller
accepts the calculation, payment of any difference between the Interim
Transaction Value and the Closing Net Book Value shall be made as provided
in Section 2.7(d) hereof. If Seller disagrees with such calculation, he
--------------
shall give written notice of such disagreement and the reason therefore
within such fifteen (15) day period. Should Seller fail to notify
Purchaser of a disagreement within such fifteen (15) day period, Seller
shall be deemed to agree with the calculation of Merger Consideration in
the Audited Schedule. Any disagreement shall be resolved by arbitration,
as set forth in Section 8.5 hereof.
-----------
(d) If the Closing Net Book Value plus $5,593.11 together exceed the
Interim Transaction Value, Purchaser shall pay such difference to Seller in
Graphic Common Stock valued in the same manner as the Deliverable
Consideration within thirty (30) days of the parties' agreement upon the
amount of such difference. If the Interim Transaction Value exceeds the
Closing Net Book Value plus $5,593.11 by an amount in excess of $25,000,
Seller shall pay Purchaser the amount of such excess in Graphic Common
Stock valued in the same manner as the Deliverable Consideration within
thirty (30) days of the parties' agreement upon the amount of such
difference.
(e) For purposes of the Closing Balance Sheet, the Adjusted Closing
Balance Sheet, and the Closing Net Book Value, accounts receivable shall
consist only of (i) accounts receivable of the Company existing on the
Closing Date which are thereafter collected within ninety (90) days
following the Closing Date, and (ii) such other accounts receivable of the
Company existing on the Closing Date as Purchaser and Seller shall jointly
determine to be appropriate to include as accounts receivable on the
Closing Balance Sheet and the Adjusted Closing Balance Sheet. To the
extent accounts receivable of the Company existing on the Closing Date are
not included on the Closing Balance Sheet and the Adjusted Closing Balance
Sheet, the Company shall transfer all of its right, title and interest in
and to such accounts receivable to the Seller for collection.
-5-
<PAGE>
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF SELLER
The Seller represents and warrants to Purchaser and Graphic as
follows:
Section 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 Georgia. The Company has no subsidiaries and is not a party to
any joint venture 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.
Section 3.2 Authority. The execution and delivery of this Agreement,
---------
the Escrow Agreement and the Employment Agreement by Seller constitute valid and
legally binding obligations of Seller, enforceable in accordance with their
respective terms.
Section 3.3 Title of Shares. Seller owns the Shares, and Seller has
---------------
good and marketable title to such Shares, free and clear of any and all liens,
options contracts, calls, commitments, demands, encumbrances, equities, pledges
or claims whatsoever. The Shares represent all of the issued and outstanding
shares of stock of the Company, and the Shares are duly authorized, validly
issued, fully paid and nonassessable.
Section 3.4 No Third Party Options. There are no existing
----------------------
agreements, options, commitments or rights with, of or to any person to acquire
any securities in the Company, or any of the Company's assets, properties, or
rights.
Section 3.5 Compliance with Laws and Validity of Contemplated
-------------------------------------------------
Transactions. The execution, delivery and performance of this Agreement by
- ------------
Seller in accordance with its terms and the consummation of the transactions
contemplated hereby do not and will not (a) violate any law applicable to the
Company or Seller; (b) conflict with, result in a breach of, or constitute a
default under the current Articles of Incorporation or By-Laws of the Company or
under any indenture, agreement, or other instrument to which the Company or
Seller 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 Seller.
-6-
<PAGE>
Section 3.6 Financial Statement
-------------------
(a) The Financial Statements (i) are in accordance with the books and
records of the Company; (ii) are complete and correct and present fairly
the 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 tax basis accounting principles consistently applied; and
(iv) reflect adequate reserves for all known liabilities and reasonably
anticipated losses.
(b) The accounts receivable shown on Financial Statements or acquired
by the Company after the date thereof and prior to the date hereof have
been, and all accounts receivable acquired after the date hereof and prior
to the Closing Date will be, acquired or created only in the ordinary
course of business and represent or will represent bona fide transactions
effected in the ordinary course of the business. No discount or allowance
from any such account receivable has been made or agreed to, except
discounts for prompt payment granted in the ordinary course of business and
reflected in documents evidencing such account and none represents billings
prior to actual shipment of goods, including "bill and hold" accounts.
(c) All inventories reflected on the Financial Statements or acquired
or to be acquired by the Company thereafter and prior to the Closing Date,
(i) are and will on the Closing Date be 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 its business, and meet and will
meet all applicable government standards, (ii) are now and will on the
Closing Date be located on the regular business premises of the Company,
(iii) are now and will on the Closing Date be owned by the Company free of
any liens, claims, charges, encumbrances, security interests or other
rights to or against such in favor of others other than Purchase Money
Security Interests, and (iv) have been or will be acquired by the Company
only in bona fide transactions entered into in the ordinary course of
business. None of such inventory is now, or on the Closing Date will be,
held by the Company on consignment.
Section 3.7 Taxes. All federal, state and other tax informational returns
-----
of the Company required by law to be filed have been duly filed, such returns
are and will be true and correct in all material respects, and all federal,
state, and other taxes, assessments, and other governmental charges or levies
upon the Company and any of its properties, income, profits, and assets that are
due and payable have been paid.
Section 3.8 Personal Property.
-----------------
(a) Schedule 3.8(a) contains a list of all machinery, vehicles and
---------------
equipment and other items of personal property owned by the Company. The
Company has good title to all such items, free and clear of all liens,
claims, charges, security interests and other encumbrances except as
disclosed therein. All such items of personal property are in good
operating condition considering their age, use and the business of the
Company.
-7-
<PAGE>
(b) Schedule 3.8(b) contains a 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 3.8(b) is in full force
---------------
and effect and there are no existing defaults or events of default, or
events which with notice or lapse of time or both would constitute a
default. All items of leased personal property are in good operating
condition and in a state of reasonable maintenance and repair. The
continuation, validity and effectiveness of these personal property leases
will in no way be affected by the transactions contemplated by this
Agreement.
Section 3.9 Real Property.
-------------
(a) The Company does not own any real property.
(b) The Office Lease is the only real property lease to which the
Company is a party. The Office Lease 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 defaults. The
Office Lease is free and clear of any mortgages or liens placed on such
lease by the Company. The continuation, validity and effectiveness of the
Office Lease will in no way be affected by the transactions contemplated by
this Agreement, and it shall be in full force and effect on the Closing
Date.
Section 3.10 Intellectual Property.
---------------------
(a) Schedule 3.10(a) contains a list of all trade names,
----------------
trademarks, trade styles and service marks, patents, patent applications,
copyrights, copyright applications, trademark registrations and trademark
applications (the "Intellectual Property") material to the business of the
---------------------
Company and used by the Company in the ordinary course of the business.
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 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, 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
possesses adequate and enforceable rights to use without payment of
royalties) all Intellectual Property necessary for the conduct of, or use
in, its business as the same is presently being conducted.
(b) Schedule 3.10(b) contains a list of all computer software owned or
----------------
licensed by the Company (the "Software") which is used by the Company in
--------
ordinary business operations. Except as disclosed on Schedule 3.10(b), the
----------------
Company owns, or has a right to use, all Software free and clear of all
liens, claims, charges or encumbrances.
Section 3.11 Insurance. Schedule 3.11 contains a list of the policies of
--------- -------------
fire, liability and other forms of insurance owned or held by the Company or in
which the Company is a named insured, including, without limitation, a
description of all group insurance programs in effect for employees of the
Company. The properties and business of the Company of an insurable nature are
-8-
<PAGE>
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 3.11 will be in full force and effect on the Closing Date, and there
- -------------
does not exist, and will not exist as of the Closing, any claims with respect to
such policies except as disclosed on said schedule.
Section 3.12 Litigation. There is no litigation, arbitration or other
----------
similar proceeding pending or, to the knowledge of Seller, threatened against or
affecting the Company, its properties or its rights.
Section 3.13 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, except defaults that would not have a material adverse effect on the
business of the Company. The Company has obtained all licenses, permits,
franchises or other governmental authorizations necessary to the ownership of
its properties or the conduct of its business.
Section 3.14 Environmental Matters.
---------------------
(a) The operations of the Company have been in the past and are now in
material compliance with all federal, state and local laws, rules and
regulations and other governmental restrictions relating to pollution or
protection of the environment or public or employee health and safety
(collectively, 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., and the Occupational Safety and
Health Act;
(b) The Company has not been notified of an Environmental Laws
violation; neither Seller nor the Company is otherwise aware that the Company is
considered potentially liable under the Environmental Laws; and the Company has
not received any requests for information or other correspondence (including,
without limitation consent orders, consent decrees, judgments, orders or
injunctions) by or from any governmental authority concerning any site, facility
or operation relating to (i) the Environmental Laws, (ii) environmental
protection and health or safety matters, or (iii) any statutory or common law
theory of liability involving environmental or health and safety matters;
(c) The Company has all governmental permits, licenses, consents,
approvals and authorizations relating to environmental protection or health or
safety matters (collectively, "Environmental Permits") necessary to conduct its
---------------------
operations and is in compliance with all the Environmental Permits (including
any information provided on the applications therefor); and
-9-
<PAGE>
(d) Except in compliance with Environmental Permits, no use, disposal,
releases, burial or placement of any materials regulated under or defined by any
Environmental Law has occurred on, in, at, under or about any of the property
owned, leased or operated by the Company.
Section 3.15 Absence of Changes. Except as described on Schedule 3.15,
------------------
since September 30, 1994 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) 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; (d) declared or
made any payment or distribution to Seller or purchased or redeemed any shares
of its capital stock or other securities; (e) 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; (f) 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 cancelled any debts or claims; (g)
sold, assigned or transferred any patents, trademarks, trade names, copyrights,
or other Intellectual Property; (h) suffered any material adverse change in its
business or financial position; (i) made any change in its accounting policies
or practices; (j) made any change in employee compensation or (k) entered into
any transaction other than in the ordinary course of business or as otherwise
contemplated hereby.
Section 3.16 Absence of Undisclosed Liabilities. The Company has no
----------------------------------
liabilities or obligations, either direct or indirect, matured or unmatured or
absolute, contingent or otherwise, except:
(a) those liabilities or obligations set forth on the Financial
Statements and not heretofore paid or discharged;
(b) those liabilities arising in the regular and ordinary course of
business under any Contract; and
(c) those liabilities or obligations incurred, consistently with past
business practice, in or as a result of the regular and ordinary course of
business since September 30, 1994.
Section 3.17 Assets. The Company owns or leases all equipment, furniture,
------
fixtures, and other personal property and assets necessary for the continued
operation of the business of the Company as presently conducted, where the
absence of such property would materially and adversely affect the Company as a
whole.
Section 3.18 Employees. Schedule 3.18 contains a list of all employees
--------- -------------
of the Company, their salaries or wage rates, job title and description as of
April 15, 1995. The Company is not in default with respect to any of its
obligations relating to salaries, wages or group insurance programs in respect
of employees of the Company.
-10-
<PAGE>
Section 3.19 Employee Benefit Plans.
----------------------
(a) 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 employee benefit plan (as defined under Section 3(3) of
ERISA) maintained by the Company (the "Plans") and a brief description of
-----
each such Plan is set forth on Schedule 3.19 hereto;
-------------
(b) 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 employee benefit plan or other
program or arrangement subject to Title IV of ERISA;
(c) The Company has not incurred any material liability with respect
to the Plans under ERISA, the Code or other applicable law, which has not
been satisfied in full or been accrued on the Financial Statements pending
full satisfaction, and no event has occurred, and there exists no condition
or set of circumstances which could result in the imposition of any
material liability under ERISA, the Code or other applicable law with
respect to such Plans.
(d) The Plans, and any insurance policies providing benefits under any
of the Plans, can be terminated on or prior to the Closing Date without
liability (including without limitation, any additional contributions,
penalties, premiums, fees or any other charges as a result of the
termination) to the Company or the Purchaser, except as reflected on
Schedule 3.19.
-------------
Section 3.20 Labor Matters. Schedule 3.20 contains a complete and
------------- -------------
accurate list of all workers compensation claims or other claims of employees
brought against the Company in the past three (3) years.
Section 3.21 Contracts and Commitments.
-------------------------
(a) Schedule 3.21 sets forth an accurate and complete list of each
-------------
contract which is a:
(i) Contract for employment, or a non-competition agreement with
any present or former employee of the Company;
(ii) Contract with any labor union or other representative of
employees;
(iii) Contract for the lease of equipment;
(iv) Contract for the purchase, sale, production or supply of
goods or services (other than sales and purchase orders in amounts not
exceeding $5,000);
(v) Distributor, sales agency or vendor Contract or any franchise
or license agreement;
-11-
<PAGE>
(vi) 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;
(vii) Contract under the terms of which the Company is, directly
or indirectly, liable or obligated in any way to provide funds to
guaranty or to 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
(viii) Contract upon which the business, rights or assets, or
condition, financial or otherwise, of the Company depends or is
materially affected.
(b) Each of the Contracts listed in Schedule 3.21 is in full force and
-------------
effect and there are no existing defaults or events of default or events
which with notice or lapse of time or both would constitute a default.
Except as reflected in such Schedule, the continuation, validity and
effectiveness of such Contracts, and all other material terms thereof, will
in no way be affected by the transactions contemplated by this Agreement.
(c) There exists no actual or 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, or (ii) the business
relationship of the Company with any material supplier to the Company.
Section 3.22 Banks. Schedule 3.22 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.
Section 3.23 Transactions with Affiliates. Neither Seller nor any
----------------------------
officer, director or employee of the Company, nor any member of his or her
immediate family or any other of his or her affiliates, owns or has a 5% or more
ownership interest in any corporation or other entity that is or was during the
past 3 years a party to, or in any property which is or was during the past 3
years the subject of, any Contract, agreement, business arrangement or
relationship with the Company.
Section 3.24 Correctness of Representations. No representation or
------------------------------
warranty of Seller in this Agreement or in any Schedule furnished by Seller
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, and 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 in the Schedules delivered to Purchaser pursuant to
this Agreement have been delivered to or have been made available for inspection
by Purchaser and Purchaser's attorneys and accountants.
-12-
<PAGE>
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF PURCHASER
Purchaser represents and warrants to Seller as follows:
Section 4.1 Organization; Power; Qualification. Each of Purchaser, ABP
----------------------------------
and Graphic is a corporation duly organized, validly existing and in good
standing under the laws of the State of Georgia. Each of Purchaser, ABP 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.
Section 4.2 Authority. Each of Purchaser, ABP and Graphic has the
---------
corporate power and has taken all necessary corporate action, including the
approval of directors and shareholders as necessary, to authorize it to execute,
deliver and perform such of the Transaction Documents to which it is a party and
to consummate the transactions contemplated hereby and thereby. The execution
and delivery by each of Purchaser, ABP and Graphic of each of the Transaction
Documents to which it is a party constitute valid and legally binding
obligations of each of Purchaser, ABP and Graphic, enforceable in accordance
with their respective terms.
Section 4.3 Compliance with Laws and Validity of Contemplated
-------------------------------------------------
Transactions. The execution, delivery and performance of this Agreement by
- ------------
Purchaser in accordance with its terms and the consummation of the transactions
contemplated hereby do not and will not (a) violate any applicable law, (b)
conflict with, result in a breach of, or constitute a default under the Articles
of Incorporation or By-Laws of Purchaser or under any indenture, agreement or
other instrument to which Purchaser is a party or by which it or any of its
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 Purchaser.
Section 4.4 Investment Representation. Purchaser is aware that the
-------------------------
Shares are not registered under the Act. Purchaser possesses such knowledge and
experience in business matters such that it is capable of evaluating the merits
and risks of an investment in the Shares hereunder. Purchaser is acquiring the
Shares for his own account, for investment purposes only and not with a view to
the distribution thereof. Purchaser agrees that the Shares will not be sold,
transferred, pledged, offered for sale or otherwise disposed of without
registration under the Act, except pursuant to a valid exemption from
registration under the Act.
Section 4.5 Transaction Stock. Each share of Transaction 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 Transaction 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 Purchaser, ABP or Graphic is a party which relate to or
affect the transfer of the Transaction Stock.
-13-
<PAGE>
ARTICLE 5
OBLIGATIONS AND COVENANTS OF SELLER
Section 5.1 Conduct of the Company's Business Prior to Closing. From the
--------------------------------------------------
date hereof to the Closing Date, and except to the extent that Purchaser shall
otherwise consent in writing, the Seller shall:
(a) operate its business as presently operated and only in the
ordinary course, and use its 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) maintain all of its properties in good order and condition,
reasonable wear and use excepted;
(c) take all steps reasonably necessary to maintain its intangible
assets, including without limitation, its patents, trademarks, trade names,
copyrights, licenses and any pending applications therefor;
(d) pay its accounts payable and collect its accounts receivable in
accordance with the Company's past business practices;
(e) comply with all laws materially applicable to the conduct of the
business of the Company; and
(f) not take any action that would constitute a breach of Section 3.15
------------
hereof.
Section 5.2 No Solicitation. Seller shall not during the pendency of
---------------
this agreement, nor shall he permit the Company or any of its officers,
directors, employees, agents, or representatives, directly or indirectly, to (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 Purchaser in
connection with any possible proposal (an "Acquisition Proposal") regarding the
--------------------
sale, merger, consolidation, or similar transaction with respect to the Company.
Seller shall notify Purchaser immediately if any discussions or negotiations are
sought to be initiated or such information is requested with respect to an
Acquisition Proposal.
Section 5.3 Access and Information. From the date hereof to the Closing
----------------------
Date the Company shall afford to Purchaser, its counsel, accountants and other
representatives, free and full access to all the offices, properties, books,
Contracts, commitments and records of the Company and to furnish such persons
with all information (including financial and operating data) concerning its
-14-
<PAGE>
affairs as they reasonably may request, including copies and extracts of
pertinent records, documents and Contracts. The Company and its employees shall
assist Purchaser its counsel, accountants and representatives, in their
examination of the Company's books and records. To the extent that the Company
shall have control over same, the accountants of the Company shall furnish to
Purchaser during such period any and all of their statements, working papers and
underlying records and data as Purchaser reasonably may request.
Section 5.4 Notification of Changes. Between the date hereof and the
-----------------------
Closing Date, the Company shall promptly notify Purchaser in writing of any
material 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.
Section 5.5 No Default. The Company shall not after the date hereof and
----------
through the Closing Date do any act or omit to do any act, or knowingly permit
any act or omission to act, that would cause a material breach of any Contract.
Section 5.6 Tax Returns. All income, sales, use, franchise, property
-----------
and other 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 Closing Date) shall be prepared by the Company but
shall not be filed without prior examination by on or behalf of Purchaser. The
Company shall use its best efforts to obtain all extensions of time from
governmental authorities necessary to effect this provision.
Section 5.7 Compliance with Laws. At all times after the date hereof
--------------------
and through the Closing Date the Company shall comply with all applicable laws
and regulations including without limitation, those as may be required for the
consummation of the transactions contemplated by this Agreement.
Section 5.8 Consent 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 prior to the Closing Date, including without limitation the Office
Lease.
ARTICLE 6
CONDITIONS TO CONSUMMATION OF MERGER
Section 6.1 Conditions to Obligations of Purchaser. The obligation of
--------------------------------------
Purchaser to consummate the Merger is subject to the satisfaction at or prior to
the Closing of each of the following conditions:
-15-
<PAGE>
(a) Each of the representations and warranties of Seller shall be true
and correct in all respects as of, and shall not have been violated in any
respect at, the Closing as though made on and as of the Closing; Seller
shall, on or before the Closing, have performed all of his obligations
under this Agreement which by the terms hereof are to be performed on or
before the Closing, and Seller shall have delivered to Purchaser a
certificate dated as of the date of the Closing to the foregoing effect.
(b) The Merger shall have been approved by the Board of Directors of
Purchaser and Graphic, or an Executive Committee of the Board of Directors
of Purchaser and Graphic.
(c) 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 Merger or which would have a material adverse
effect on Purchaser's ability to conduct the business of the Company as
presently conducted or which claims material damages from Purchaser with
respect to the Merger.
(d) Seller shall have delivered to Purchaser a certificate of its
Secretary certifying as to the requisite corporate or other action
authorizing the Merger, and the status of record ownership of the Shares by
Seller.
(e) Seller shall have submitted to Purchaser resignations of all
current officers and directors of the Company.
(f) Seller shall have executed and delivered to Purchaser the
Employment Agreement, substantially in the form of Exhibit A hereto.
---------
(g) Seller shall have executed and delivered to Purchaser the Escrow
Agreement, substantially in the form of Exhibit B hereto.
---------
(h) Purchaser shall have received the opinion of DeLong, Caldwell,
Logue & Wisebram, counsel to Seller, as substantially in the form of
Exhibit E hereto.
---------
(i) The Articles of Merger shall be prepared for filing with the
Secretary of State of Georgia.
Section 6.2 Conditions to Obligations of Seller. The obligation of
-----------------------------------
Seller to consummate the Merger 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 Purchaser shall be
true and correct in all respects as of, and shall not have been violated in
any respect at, the Closing as though made on and as of the Closing;
Purchaser and Graphic shall, on or before the Closing, have performed in
all material respects all of its obligations under this Agreement which by
the terms hereof are to be performed on or before the Closing; and each of
-16-
<PAGE>
Purchaser and Graphic shall have delivered to Seller a certificate of one
of its officers dated as of the date of the Closing to the foregoing
effect.
(b) The Merger shall be approved by the board of directors and the
sole shareholder of the Company.
(c) 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 Merger or which would have a material adverse
effect on the right of Seller to consummate the Merger or which claims
material damages from Seller with respect to the Merger.
(d) Purchaser and Graphic shall have delivered to Seller a certificate
of its Secretary certifying as to the requisite corporate and other action
authorizing the Merger and the incumbency of its officers and directors.
(e) Purchaser shall have executed and delivered to Seller the
Employment Agreement, substantially in the form of Exhibit A hereto.
---------
(f) Purchaser shall have executed and delivered to Seller the Escrow
Agreement, substantially in the form of Exhibit B hereto.
---------
(g) Purchaser shall have executed and delivered to Seller the
Guaranty, substantially in the form of Exhibit C hereto.
---------
(h) Purchaser shall have executed and delivered to Seller the Option
Agreement, substantially in the form of Exhibit D hereto.
---------
(i) Seller shall have received the opinion of Powell, Goldstein,
Frazer & Murphy, counsel to Purchaser, substantially in the form of Exhibit
-------
F hereto.
-
(j) The Articles of Merger shall be prepared for filing with the
Secretary of State of Georgia.
ARTICLE 7
REGISTRATION OF TRANSACTION STOCK
Section 7.1 Registration of Transaction Stock. Graphic shall use its
---------------------------------
best efforts to prepare and file with the Commission a Registration Statement or
Form S-3 as soon as practicable after the final adjustment to the Merger
Consideration pursuant to Section 2.7 is determined and payment is made under
-----------
such Section, pursuant to which Graphic shall request that the Transaction Stock
be registered for resale by the Seller, and shall use its best efforts to have
such registration become effective. Seller shall receive a copy of the
Registration Statement prior to filing for review, and Seller shall represent
and warrant that the information contained in the Registration Statement
concerning him and the intended method of distribution of such securities is
true, complete, and correct.
-17-
<PAGE>
Section 7.2 Furnishing Information. Seller shall furnish to Graphic
----------------------
such information regarding himself or the Transaction Stock, and the intended
method of disposition of such securities, as shall be reasonably requested by
Graphic in order to effect the registration of such shares.
Section 7.3 Prospectus Requirements. Seller hereby covenants with
-----------------------
Graphic that he will promptly advise Graphic of any changes in the information
concerning Seller contained in the Registration Statement and that Seller will
not make any sale of the Transaction Stock pursuant to the Registration
Statement without complying with the prospectus delivery requirements of the
Act. Seller 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,
Seller agrees not to sell any shares of Transaction Stock pursuant to any such
prospectus. Seller covenants that he will not sell any shares pursuant to any
such prospectus during the period commencing at the time at which Graphic gives
Seller notice of the suspension of the use of said prospectus and ending at the
time Graphic gives notice that such Seller may thereafter effect sales pursuant
to said prospectus.
Section 7.4 Registration Rights, Etc.
-------------------------
(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 Transaction Stock until the third anniversary of the Closing Date or
the sale by Seller of all of such 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 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 Seller 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 Seller
expressly for use in the Registration Statement and the related prospectus,
or any amendment or supplement thereto.
-18-
<PAGE>
(c) In connection with the Registration Statement, Graphic agrees to,
as soon as reasonably practicable:
(i) furnish to Seller 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 Seller may reasonably request;
(ii) notify Seller promptly of any request by the Commission
for the amending or supplementing of the Registration Statement
or prospectus forming a part thereof;
(iii) advise Seller 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
Transaction Stock under such other securities or blue sky laws of
such jurisdictions within the United States and Puerto Rico as
Seller 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 Seller to consummate the disposition in such
jurisdiction of such securities; and
(v) notify Seller, 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.
Section 7.5 Indemnification.
---------------
(a) Graphic agrees to indemnify, defend and hold harmless Seller from
and against all loss, damages, liabilities, expenses, costs, fees and
disbursements of counsel (including the reasonable fees and expenses of
legal counsel to Seller), 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 any untrue
-19-
<PAGE>
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 therein a material fact required to be stated
therein or necessary to make the statements in any thereof not misleading,
and will reimburse Seller 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 this information confirmed by
Seller pursuant to Section 7.2 or based upon information furnished to
-----------
Graphic in writing by or on behalf of such Seller expressly for use
therein.
(b) Seller 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 any final prospectus contained in
the Registration Statement (or any amendment or supplement thereto) or
which arises out of or is based upon any omission to state therein a
material fact required to be stated therein or necessary to make the
statement in any thereof not misleading, to the extent that such untrue
statement or omission is contained in the information confirmed by Seller
pursuant to Section 7.2 or is made in reliance upon or in conformity with
-----------
information furnished in writing by or on behalf of Seller expressly for
inclusion in the Registration Statement or prospectus contained therein (or
any amendment or supplement thereto), and (ii) the failure by Seller 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.
Section 7.6 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 counsel
--- ---
or other advisors to Seller.
ARTICLE 8
INDEMNIFICATION
Section 8.1 Definitions. As used in this Article 8:
----------- ---------
(a) "Damages" actual losses, liabilities, damages, deficiency costs or
-------
expenses (including reasonable attorneys fees and dispersements), less the
amount of any actual tax or insurance benefits then available to or
received by the Indemnified Party with respect thereto.
(b) "Indemnified Party" means the party seeking indemnification under
-----------------
Section 8.2 hereof.
-----------
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<PAGE>
(c) "Indemnifying Party" means Seller.
------------------
Section 8.2 Indemnification of Purchaser and Graphic by Seller. On the
--------------------------------------------------
terms set forth in this Agreement, Seller shall, from and after the Closing
Date, indemnify, defend, and hold Purchaser and Graphic and their respective
subsidiaries and affiliates harmless from, against and in respect of any and all
Damages incurred by any of them arising from or in connection with any breach of
any representation, warranty or covenant made by Seller in this Agreement.
The Seller's representations, warranties and covenants set forth in this
Agreement shall, for purposes of this Section 8.2, be deemed to have survived
-----------
for a two (2) year period following the Closing Date except with respect to the
representations, warranties and covenants set forth in Sections 3.1, 3.2, 3.3,
-----------------------
3.4, 3.5, 3.7, 3.14 and 3.19, which shall survive for a period of eight (8)
- ----------------------------
years following the Closing Date.
Section 8.3 Method of Asserting Claims, Etc.
--------------------------------
(a) In the event that any claim or demand for which an Indemnifying
Party would be liable to an Indemnified Party hereunder is asserted against
or sought to be collected from an Indemnified Party by a third party (a
"Third Party Claim"), the Indemnified Party shall use reasonable efforts to
------------------
notify the Indemnifying Party in writing of such Third Party Claim,
specifying the nature of such Third Party Claim and the amount or the
estimated amount thereof to the extent then feasible (which estimate shall
not be conclusive of the final amount of such Third Party Claim) (the
"Claim Notice"). The Indemnifying Party shall have twenty calendar days
-------------
(or such earlier period of time as may be required for the filing of
responsive pleadings to any legal action instituted with respect to the
Third Party Claim or required due to contractual deadlines imposed upon the
Indemnified Party by the contract in dispute but in any event, not less
than 10 days) from the receipt of the Claim Notice (the "Response Notice
---------------
Period") to notify the Indemnified Party, (A) whether or not it disputes
------
its liability to the Indemnified Party hereunder with respect to such Third
Party Claim and (B) notwithstanding any such dispute, whether or not it
will defend, at its sole cost and expense, the Indemnified Party against
such Third Party Claim. No failure by an Indemnified Party to notify the
Indemnifying Party of the existence or assertion of a claim for which
indemnification may be sought shall constitute a defense to a waiver of
such claim except to the extent the Indemnifying Party may be able to prove
that it has been materially prejudiced by such failure or delay.
(b) If the Indemnifying Party disputes its liability with respect to
such Third Party Claim or the amount thereof (whether or not the
Indemnifying Party desires to defend the Indemnified Party against such
Third Party Claim as provided in paragraphs (c) and (d) below), such
dispute shall be resolved in accordance with Section 8.5 hereof. Pending
-----------
the resolution of any dispute by the Indemnifying Party of its liability
with respect to any Third Party Claim, such Third Party Claim shall not be
settled without the prior written consent of the Indemnified Party and the
Indemnifying Party, which consent shall not be unreasonably withheld or
delayed.
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<PAGE>
(c) In the event that the Indemnifying Party notifies the Indemnified
Party within the Response Notice Period that it will defend the Indemnified
Party against such Third Party Claim, then the Indemnifying Party shall
assume the defense thereof with counsel reasonably acceptable to the
Indemnified Party, and the Indemnified Party shall cooperate in all
reasonable respects in such defense, including without limitation in making
any appropriate counterclaim against the person asserting the Third Party
Claim or any appropriate cross-complaint against any person (unless such
counterclaim or cross-complaint would be against any other entity with
which the Indemnified Party has ongoing business relations and would have a
significant likelihood in the good faith judgment of the Indemnified Party
of damaging such business relationships); provided, however, the
Indemnifying Party shall not, without the prior written consent of the
Indemnified Party which consent shall not be unreasonably withheld, consent
to the entry of any judgment against the Indemnified Party or enter into
any settlement or compromise which does not include, as an unconditional
term thereof, the giving by the claimant or plaintiff to the Indemnified
Party of a release, in form and substance reasonably satisfactory to the
Indemnified Party, from all liability in respect of such Third Party Claim.
If any Indemnified Party desires to participate in, but not control, any
such defense or settlement, it may do so at its sole cost and expense. If,
in the reasonable opinion of the Indemnified Party, any such Third Party
Claim or the litigation or resolution of any such Third Party Claim
involves an issue or matter which could reasonably be expected to have a
Material Adverse Effect on the Indemnified Party, then the Indemnified
Party shall have the right to control the defense or settlement of any such
Third Party Claim at its cost and expense, and such legal fees and expenses
shall be included as part of the indemnification obligation of the
Indemnifying Party hereunder. If the Indemnified Party should elect to
exercise such right, the Indemnifying Party shall have the right to
participate in, but not control, the defense or settlement of such Third
Party Claim at its sole cost and expense.
(d) (i) If the Indemnifying Party elects not to defend the
Indemnified Party against such Third Party Claim, whether by not
giving the Indemnified Party timely notice within the Response Notice
Period as provided above or otherwise, then the Indemnified Party
shall, at the expense of the Indemnifying Party (if the Indemnified
Party is entitled to indemnification hereunder), have the right to
defend, settle or compromise any such Third Party Claim with counsel
of its own choosing. In the event the Indemnified Party proposes to
settle a Third Party Claim, the Indemnified Party shall deliver to the
Indemnifying Party written notice of the proposed settlement of the
Third Party Claim, which the Indemnifying Party may reject in its
reasonable judgment within thirty days of receipt of such notice. In
the event the Indemnified Party settles such Third Party Claim over
the objection of Indemnifying Party, dispute over such settlement
shall be resolved as provided in Section 8.5 hereof.
-----------
(ii) In the event an Indemnified Party has a claim for
indemnification against the Indemnifying Party hereunder that does not
involve a Third Party Claim, the Indemnified Party shall send a Claim
Notice with respect to such claim to the Indemnifying Party. If the
Indemnifying Party disputes its liability with respect to such claim
or demand, such dispute shall be resolved in accordance with Section
-------
8.5
---
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<PAGE>
hereof; if the Indemnifying Party accepts or agrees with such claim or
does not notify the Indemnified Party within the Response Notice
Period that it disputes such claim, the amount of such claim shall be
conclusively deemed a liability of the Indemnifying Party hereunder.
Section 8.4 Payment. The Indemnifying Party shall pay the Indemnified
-------
Party, within ten days after the final determination of liability under this
Article 8, the amount of any indemnification to which the Indemnified Party is
- ---------
entitled. Upon the payment in full of any claim, the Indemnifying Party shall
be subrogated to the rights of the Indemnified Party against any person, firm or
corporation with respect to the subject matter of such claim.
Section 8.5 Arbitration. All disputes under this Article 8 or Section
----------- --------- -------
2.7, shall be settled by arbitration in Atlanta, Georgia, before a single
- ---
arbitrator pursuant to the rules of the American Arbitration Association (the
"AAA"). Arbitration may be commenced at any time by any party hereto giving
- ----
written notice to each other party to a dispute that such dispute has been
referred to arbitration under this Section 8.5. The arbitrator shall be
-----------
selected by the joint agreement of the parties, but if they do not so agree
within 20 days after the date of the notice referred to in the preceding
sentence, the selection shall be made pursuant to the rules from the panels of
arbitrators maintained by the AAA. Any award rendered by the arbitrator shall
be conclusive and binding upon the parties hereto; provided, however, that any
such award shall be accompanied by a written opinion of the arbitrator giving
the reasons for the award. This provision for arbitration shall be specifically
enforceable by the parties, and the decision of the arbitrator in accordance
herewith shall be final and binding and there shall be no right of appeal
therefrom. Each party shall pay its own expenses of arbitration and the
expenses of the arbitrator shall be equally shared.
ARTICLE 9
COVENANT NOT TO COMPETE
Section 9.1 Definitions. Capitalized terms used in this Article 9 shall
----------- ---------
have the following meanings:
(a) "Area" shall mean any location within a 40-mile radius of Five
----
Points in Atlanta, Georgia.
(b) "Competing Business" shall mean the business of providing blue
------------------
print and reprographics services.
(c) "Proprietary Information" shall mean information related to the
-----------------------
Company or the business of the Company (i) which derives economic value,
actual or potential, from not being generally known to, or readily
ascertainable by, other persons who can obtain economic value from its
disclosure or use and, (ii) which is the subject of efforts that are
reasonable under the circumstances to maintain its secrecy. Assuming the
foregoing criteria are met, Proprietary Information includes, but is not
limited to, the financial affairs, processes, services, employees,
employees' compensation, research, development, existing
-23-
<PAGE>
and future products and services, product and service plans and designs,
purchasing, accounting, distribution systems, marketing, formulae,
compilations, programs, methods, techniques, drawings, and suppliers of the
Company.
(d) "Restricted Period" shall mean the period commencing with the
-----------------
Closing Date and ending on the three (3) year anniversary thereof.
Section 9.2 Agreement Not to Compete. Unless otherwise consented to in
------------------------
writing by Purchaser, Seller agrees that during the Restricted Period he will
not, within the Area, either directly or indirectly, on his own behalf or in the
service or on behalf of others, engage in any Competing Business or provide
managerial, supervisory, administrative, financial or consulting services or
assistance to, or own a beneficial interest in, any Competing Business except
for the ownership of less than five percent (5%) of a publicly traded company.
Section 9.3 Agreement Not to Solicit Employees. Seller agrees that
----------------------------------
during the Restricted Period, he will not, without the prior written consent of
Purchaser, either directly or indirectly, on his own behalf or in the service or
on behalf of others, solicit, divert, or hire away, or attempt to solicit,
divert, or hire away, from the employment of Purchaser or the Company, any
person employed by Purchaser or the Company on the date of the Closing.
Section 9.4 Agreement Not to Solicit Customers. Seller agrees that
----------------------------------
during the Restricted Period, he will not, either directly or indirectly, on his
own behalf or in the service or on behalf of others, solicit or attempt to
solicit any person, firm or corporation who was a customer of the Company during
the immediately preceding one-year period (as shown on the books and records of
the Company).
Section 9.5 Confidentiality.
---------------
(a) After the Closing, Seller (i) will hold the Proprietary
Information in confidence, and (ii) will not use, duplicate, reproduce,
distribute, disclose or otherwise disseminate the Proprietary Information.
In the event that Seller determines that it is required by law to disclose
any Proprietary Information, Seller will not make such disclosure unless
(and then only to the extent that) Seller has been advised by independent
legal counsel that such disclosure is required by law and then only after
prior written notice is given to Purchaser (if reasonably practical) that
such disclosure has been requested and is required by law.
(b) Any and all reproductions of the Proprietary Information in the
custody or control of the Seller will prominently display a confidentiality
legend.
(c) Seller covenants and agrees that on or before the Closing Date,
Seller will destroy or will deliver to Purchaser all tangible copies and
embodiments of the Proprietary Information in his possession or control.
-24-
<PAGE>
Section 9.6 Remedies. The parties hereto specifically acknowledge and
--------
agree that the remedy at law for breach of this Article 9 will be inadequate and
---------
that any party, in addition to any other relief available to it, shall be
entitled to temporary and permanent injunctive relief without the necessity of
proving actual damages.
ARTICLE 10
TERMINATION; AMENDMENTS; WAIVER
Section 10.1 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 Purchaser and Seller;
(b) by Purchaser or Seller if, without a material breach of the
terminating party, the Closing shall not have occurred on or before July
31, 1995, which date may be extended by mutual consent of the parties;
(c) by Purchaser if there has been a misrepresentation, breach of
warranty or breach of covenant or agreement by the Seller in his
representations, warranties, covenants or agreements set forth herein; or
(d) by Seller if there has been a misrepresentation, breach of
warranty or breach of covenant or agreement by Purchaser in its
representations, warranties, covenants or agreements set forth herein.
Section 10.2 Effect of Termination. In the event of the termination and
---------------------
abandonment of this Agreement pursuant to Section 10.1 hereof, this Agreement
------------
shall forthwith become void and have no effect, other than the provisions of
Section 11.7 which shall survive. Nothing contained in this Section 10.2 shall
- ------------ ------------
relieve any party from liability for any breach of this Agreement occurring
before such termination.
Section 10.3 Effect of Termination on Deposit. In the event this
--------------------------------
Agreement is terminated pursuant to Section 10.1(d) hereunder, Seller shall be
---------------
entitled to keep the Deposit; provided, however, that in the event this
Agreement is terminated pursuant to Section 10.1(a), (b) or (c) hereof, Seller
---------------------------
shall be obligated to return the Deposit to Purchaser within ten (10) days
following demand thereafter.
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<PAGE>
ARTICLE 11
MISCELLANEOUS
Section 11.1 Entire Agreement; Assignment. This Agreement, together with
----------------------------
any confidentiality agreements between the parties hereto, (a) constitutes, 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 Purchaser may assign its
respective rights and obligations to any direct or indirect subsidiary of
Purchaser, but no such assignment shall relieve Purchaser of its obligations
hereunder.
Section 11.2 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.
Section 11.3 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:
If to Purchaser, to it at:
Allied Acquisition Corp.
c/o Graphic Industries, Inc.
2155 Monroe Drive, N.E.
Atlanta, Georgia 30324
with a copy to:
Powell, Goldstein, Frazer & Murphy
Sixteenth Floor
191 Peachtree Street, N.E.
Atlanta, Georgia 30303
Telecopy: 404/572-6999
Attention: Thomas R. McNeill, Esq.
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<PAGE>
If to Graphic, to:
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:
Powell, Goldstein, Frazer & Murphy
Sixteenth Floor
191 Peachtree Street, N.E.
Atlanta, Georgia 30303
Telecopy: (404) 572-6999
Attention: Thomas R. McNeill, Esq.
If to Seller, to it at:
Vernon E. Langford
763 Juniper Street, N.E.
Atlanta, Georgia 30305
Telecopy: (404) 881-8944
with a copy to:
Allied Reprographic Services, Inc.
763 Juniper Street, N.E.
Atlanta, Georgia 30305
Telecopy: (404) 881-8944
If to the Company, to it at:
Allied Reprographic Services, Inc.
763 Juniper Street, N.E.
Atlanta, Georgia 30305
Telecopy: (404) 881-8944
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<PAGE>
with a copy to:
DeLong, Caldwell, Logue & Wisebram
945 E Paces Ferry Road
Suite 1770
Atlanta, Georgia 30326
Attn: Earnest H. DeLong, Esq.
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).
Section 11.4 Governing Law. This Agreement shall be governed by and
-------------
construed in accordance with the internal laws of the State of Georgia,
regardless of the laws that might otherwise govern under applicable principles
of conflicts of laws thereof.
Section 11.5 Descriptive Headings. The descriptive headings 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.
Section 11.6 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.
Section 11.7 Expenses. All costs and expenses incurred in connection
--------
with the Merger shall be paid by the party incurring such expenses, provided
that Seller shall also pay all costs and expenses incurred by the Company in
connection with the Merger.
Section 11.8 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.
-28-
<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: /s/ Mark C. Pope III
---------------------
Name: Mark C. Pope III
-----------------
Title: Chairman and CEO
-----------------
ALLIED ACQUISITION CORP.
By: /s/ Mark C. Pope III
---------------------
Name: Mark C. Pope III
-----------------
Title: Vice President
---------------
/s/ Vernon E. Langford
-----------------------
VERNON E. LANGFORD
ALLIED REPROGRAPHIC SERVICES, INC.
By: /s/ Vernon E. Langford
-----------------------
Name: Vernon E. Langford
-------------------
Title: President
----------
-29-
<PAGE>
EXHIBIT 10TTT
AGREEMENT AND
PLAN OF MERGER
by and among
GRAPHIC INDUSTRIES, INC.,
CARPENTER RESERVE PRINTING COMPANY,
CARPENTER ACQUISITION COMPANY
and
THE STOCKHOLDERS OF CARPENTER
RESERVE PRINTING COMPANY
SEPTEMBER 21, 1995
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
ARTICLE 1 DEFINITIONS.............................................. 1
Section 1.1 "AAA".............................................. 1
Section 1.2 "Acquisition Proposal"............................. 1
Section 1.3 The "Act".......................................... 1
Section 1.4 "Area"............................................. 1
Section 1.5 "Authorizations"................................... 1
Section 1.6 "Certificate of Merger"............................ 1
Section 1.7 "Claim Notice"..................................... 1
Section 1.8 The "Closing"...................................... 1
Section 1.9 "Closing Audit".................................... 1
Section 1.10 "Closing Balance Sheet"............................ 2
Section 1.11 "Closing Date"..................................... 2
Section 1.12 "Code"............................................. 2
Section 1.13 "Commission"....................................... 2
Section 1.14 "Competing Business"............................... 2
Section 1.15 "Contracts"........................................ 2
Section 1.16 "Damages".......................................... 2
Section 1.17 "Deliverable Consideration"........................ 2
Section 1.18 "Effective Period"................................. 2
Section 1.19 "Effective Time"................................... 2
Section 1.20 "Employment Agreement"............................. 2
Section 1.21 "Environmental Laws"............................... 2
Section 1.22 "Environmental Permits"............................ 2
Section 1.23 "ERISA"............................................ 2
Section 1.24 "Escrow Agent"..................................... 2
Section 1.25 "Escrow Agreement"................................. 3
Section 1.26 "Escrow Period".................................... 3
Section 1.27 "Escrow Consideration"............................. 3
Section 1.28 "Estimated Net Book Value"......................... 3
Section 1.29 "Existing Facility Lease".......................... 3
Section 1.30 "Financial Schedule"............................... 3
Section 1.31 "Financial Statements"............................. 3
Section 1.32 "Graphic Common Stock"............................. 3
Section 1.33 "Guaranties"....................................... 3
Section 1.34 "Indemnified Party"................................ 3
Section 1.35 "Indemnifying Party"............................... 3
Section 1.36 "Intellectual Property"............................ 3
Section 1.37 "Interim Balance Sheet"............................ 3
Section 1.38 "Lease Agreement".................................. 4
Section 1.39 "Merger Consideration"............................. 4
Section 1.40 "Net Book Value"................................... 4
</TABLE>
-i-
<PAGE>
<TABLE>
Page
----
<S> <C> <C>
Section 1.41 "Non Third Party Claim"............................ 4
Section 1.42 "Ohio Corporate Law"............................... 4
Section 1.43 "Plans" ........................................... 4
Section 1.44 "Preliminary Closing Balance Sheet"................ 4
Section 1.45 "Principal Stockholders"........................... 4
Section 1.46 "Proprietary Information".......................... 4
Section 1.47 "Purchase Adjustments"............................. 4
Section 1.48 "Registration Statement"........................... 4
Section 1.49 "Response Notice Period"........................... 4
Section 1.50 "Restricted Period"................................ 4
Section 1.51 "Stock Price"...................................... 4
Section 1.52 "Surviving Corporation"............................ 5
Section 1.53 "Tax Returns"...................................... 5
Section 1.54 "Taxes"............................................ 5
Section 1.55 "Transaction Documents"............................ 5
Section 1.56 "Third Party Claim"................................ 5
Section 1.57 "Undisclosed Liabilities".......................... 5
ARTICLE 2 THE MERGER............................................... 5
Section 2.1 The Merger......................................... 5
Section 2.2 Effective Time..................................... 5
Section 2.3 Tax Consequences................................... 5
Section 2.4 Articles of Incorporation; Regulations; Directors
and Officers....................................... 6
Section 2.5 Merger Consideration............................... 6
Section 2.6 Payment of the Merger Consideration................ 6
Section 2.7 Adjustment of Merger Consideration................. 6
ARTICLE 3 REPRESENTATIONS AND WARRANTIES OF STOCKHOLDERS........... 8
Section 3.1 Organization; Power; Qualification................. 8
Section 3.2 Authority.......................................... 9
Section 3.3 Capital Structure.................................. 9
Section 3.4 Title to Shares.................................... 9
Section 3.5 No Third Party Options............................. 9
Section 3.6 Compliance with Laws and Validity of Contemplated
Transactions....................................... 9
Section 3.7 Financial Statements............................... 10
Section 3.8 Tax and Other Returns and Reports.................. 11
Section 3.9 Personal Property.................................. 12
Section 3.10 Real Property...................................... 12
Section 3.11 Intellectual Property.............................. 12
Section 3.12 Insurance.......................................... 13
Section 3.13 Litigation......................................... 13
Section 3.14 Compliance with Laws............................... 13
</TABLE>
-ii-
<PAGE>
<TABLE>
Page
----
<S> <C> <C>
Section 3.15 Environmental Matters.............................. 13
Section 3.16 Absence of Changes................................. 15
Section 3.17 Absence of Undisclosed Liabilities................. 15
Section 3.18 Assets............................................. 15
Section 3.19 Employees.......................................... 15
Section 3.20 Employee Benefit Plans............................. 16
Section 3.21 Labor Matters...................................... 16
Section 3.22 Contracts and Commitments.......................... 16
Section 3.23 Banks.............................................. 18
Section 3.24 Transactions with Affiliates....................... 18
Section 3.25 Corporate Names.................................... 18
Section 3.26 Customer Relations................................. 18
Section 3.27 Consents........................................... 18
Section 3.28 Broker's or Finder's Fees.......................... 18
Section 3.29 Securities Representations......................... 18
Section 3.30 Correctness of Representations..................... 20
ARTICLE 4 REPRESENTATIONS AND WARRANTIES OF
ACQUISITION AND GRAPHIC.................................. 20
Section 4.1 Organization; Power; Qualification.................. 20
Section 4.2 Authority........................................... 20
Section 4.3 Compliance with Laws and Validity of Contemplated
Transactions........................................ 20
Section 4.4 Investment Representation........................... 21
Section 4.5 Merger Consideration................................ 21
Section 4.6 Broker's or Finders Fees............................ 21
Section 4.7 Graphic Reports..................................... 21
ARTICLE 5A OBLIGATIONS AND COVENANTS OF THE
STOCKHOLDERS AND THE COMPANY............................ 21
Section 5A.1 Conduct of the Company's Business Prior to Closing. 21
Section 5A.2 No Solicitation.................................... 22
Section 5A.3 Access and Information............................. 22
Section 5A.4 Notification of Changes............................ 23
Section 5A.5 No Default......................................... 23
Section 5A.6 Tax Returns........................................ 23
Section 5A.7 Allocation of Taxable Income to Short Period....... 23
Section 5A.8 Other Pre-Closing Returns.......................... 23
Section 5A.9 Tax Free Reorganization Treatment.................. 24
Section 5A.10 General Cooperation in Tax Matters................. 24
Section 5A.11 Compliance with Laws............................... 24
Section 5A.12 Consent of Others.................................. 24
</TABLE>
-iii-
<PAGE>
<TABLE>
Page
----
<S> <C> <C>
ARTICLE 5B COVENANTS OF GRAPHIC AND ACQUISITION..................... 24
Section 5B.1 Release of Guaranties.............................. 24
Section 5B.2 Filing of Notice................................... 24
Section 5B.3 Post-Closing Returns............................... 24
Section 5B.4 Tax Free Reorganization Treatment.................. 25
Section 5B.5 General Cooperation in Tax Matters................. 25
Section 5B.6 Employee Bonuses................................... 25
ARTICLE 6 CONDITIONS TO CONSUMMATION OF MERGER...................... 26
Section 6.1 Conditions to Obligations of Acquisition and
Graphic............................................ 26
Section 6.2 Conditions to Obligations of the Stockholders...... 27
ARTICLE 7 REGISTRATION OF MERGER CONSIDERATION...................... 28
Section 7.1 Registration of Merger Consideration............... 28
Section 7.2 Furnishing Information............................. 28
Section 7.3 Prospectus Requirements............................ 28
Section 7.4 Registration Rights, Etc........................... 29
Section 7.5 Indemnification.................................... 30
Section 7.6 Fees and Expenses of Registration.................. 31
ARTICLE 8 INDEMNIFICATION.......................................... 31
Section 8.1 Definitions........................................ 31
Section 8.2 Indemnification of Acquisition and Graphic by the
Stockholders....................................... 31
Section 8.3 Method of Asserting Claims......................... 32
Section 8.4 Payment............................................ 34
Section 8.5 Arbitration........................................ 34
ARTICLE 9 COVENANT NOT TO COMPETE................................... 34
Section 9.1 Definitions........................................ 34
Section 9.2 Agreement Not to Compete........................... 35
Section 9.3 Agreement Not to Solicit Employees................. 35
Section 9.4 Agreement Not to Solicit Customers................. 35
Section 9.5 Confidentiality.................................... 35
Section 9.6 Remedies........................................... 36
ARTICLE 10 TERMINATION; AMENDMENTS; WAIVER.......................... 36
Section 10.1 Termination........................................ 36
Section 10.2 Effect of Termination.............................. 36
ARTICLE 11 MISCELLANEOUS............................................ 36
Section 11.1 Entire Agreement; Assignment....................... 36
Section 11.2 Validity........................................... 37
</TABLE>
-iv-
<PAGE>
<TABLE>
Page
----
<S> <C> <C>
Section 11.3 Notices............................................ 37
Section 11.4 Governing Law...................................... 38
Section 11.5 Descriptive Headings............................... 38
Section 11.6 Counterparts....................................... 38
Section 11.7 Expenses........................................... 39
Section 11.8 Parties in Interest................................ 39
</TABLE>
-v-
<PAGE>
Exhibits
--------
A Employment Agreement
B Escrow Agreement
C Guaranties
D Lease Agreement
E W&H Opinion
F PGF&M Opinion
Schedules
---------
1 List of Stockholders
1.33 Guaranties
3.1 Qualifications
3.3 Shares of Capital Stock Reacquired
3.4 Title to Shares
3.7 Financial Statements
3.7(b) Liens on Accounts Receivable Shown in the Financial
Statements
3.7(c) Inventory
3.9(a) Owned Personal Property
3.9(b) Leased Personal Property
3.10(b) Real Property Lease Defaults
3.11 Intellectual Property
3.12 Insurance
3.13 Litigation
3.14 Authorizations
3.15(a) Environmental Matters
3.16 Absence of Changes
3.19 Employees
3.20 Employee Benefit Plans
3.21 Labor Claims
3.22 Contracts
3.23 Banks
3.24 Transactions with Affiliates
3.25 Corporate Names
3.27 Consents
3.29(c) Stockholders' States of Residence
-vi-
<PAGE>
AGREEMENT AND PLAN OF MERGER
----------------------------
THIS AGREEMENT AND PLAN OF MERGER (the "Agreement"), made and entered into
---------
this 21st day of September, 1995 by and among Graphic Industries, Inc., a
Georgia corporation ("Graphic"), Carpenter Acquisition Company, an Ohio
-------
corporation and wholly-owned subsidiary of Graphic ("Acquisition"), Carpenter
-----------
Reserve Printing Company, an Ohio corporation (the "Company") and the
-------
stockholders of the Company listed on Schedule 1 hereto (collectively, referred
----------
to herein as the "Stockholders" and individually as a "Stockholder").
------------ -----------
WITNESSETH:
----------
WHEREAS, the Stockholders own 100% of the outstanding shares of the common
stock of the Company (the "Common Stock"), no par value per share (the
------------
"Shares"); and
------
WHEREAS, the Stockholders and Acquisition wish to enter into a transaction
pursuant to which the Company shall be merged with and into Acquisition on the
terms and conditions set forth herein (the "Merger");
------
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
The following terms used in this Agreement shall have the meaning set forth
below:
Section 1.1 "AAA" shall have that meaning set forth in Section 8.5
--- -----------
hereof.
Section 1.2 "Acquisition Proposal" shall have that meaning set forth in
--------------------
Section 5.2 hereof.
- -----------
Section 1.3 The "Act" shall mean the Securities Act of 1933, as amended.
---
<PAGE>
Section 1.4 "Area" shall have that meaning set forth in Section 9.1(a)
---- --------------
hereof.
Section 1.5 "Authorizations" shall have that meaning set forth in
--------------
Section 3.14 hereof.
- ------------
Section 1.6 "Certificate of Merger" shall have that meaning set forth in
---------------------
Section 2.2 hereof.
- -----------
Section 1.7 "Claim Notice" shall have that meaning set forth in Section
------------ -------
8.3(a) hereof.
- ------
Section 1.8 The "Closing" shall have that meaning set forth in Section
------- -------
2.2 hereof.
- ---
Section 1.9 "Closing Audit" shall have that meaning set forth in Section
------------- -------
2.7(b) hereof.
- ------
Section 1.10 "Closing Balance Sheet" shall have that meaning set forth in
---------------------
Section 2.7(b) hereof.
- --------------
Section 1.11 "Closing Date" shall mean the date upon which the Closing
------------
(as defined herein) shall occur.
Section 1.12 "Code" shall mean the Internal Revenue Code of 1986, as
----
amended.
Section 1.13 "Commission" shall mean the Securities and Exchange
----------
Commission, or any other federal agency at the time administering the Act.
Section 1.14 "Competing Business" shall have that meaning set forth in
------------------
Section 9.1(b) hereof.
- --------------
Section 1.15 "Contracts" shall mean the contracts, leases, licenses,
---------
warranties, commitments, agreements, arrangements, credit guaranties, purchase
and sale orders and contracts for the provision of services, whether oral or
written, to which the Company is a party, or pursuant to which the Company has
any right, benefit or obligation.
-2-
<PAGE>
Section 1.16 "Damages" shall have that meaning set forth in Section
------- -------
8.1(a) hereof.
- ------
Section 1.17 "Deliverable Consideration" shall mean that number of shares
-------------------------
of Graphic Common Stock determined by subtracting the Escrow Consideration
(defined below) from the Merger Consideration (defined below).
Section 1.18 "Effective Period" shall have that meaning set forth in
----------------
Section 7.4(a) hereof.
- --------------
Section 1.19 "Effective Time" shall mean such time as the Merger shall
--------------
become effective pursuant to Section 1701.78 of the Ohio Corporate Law.
Section 1.20 "Employment Agreement" shall mean that certain Employment
--------------------
Agreement to be entered into by and between Richard A. Amendola and Acquisition,
substantially in the form of Exhibit A hereto.
---------
Section 1.21 "Environmental Laws" shall have that meaning set forth in
------------------
Section 3.15(a) hereof.
- ---------------
Section 1.22 "Environmental Permits" shall have that meaning set forth in
---------------------
Section 3.15(c) hereof.
- ---------------
Section 1.23 "ERISA" shall mean the Employee Retirement Income Security
-----
Act of 1974, as amended.
Section 1.24 "Escrow Agent" shall mean National City Bank of Cleveland
------------
and its successors and assigns.
Section 1.25 "Escrow Agreement" shall mean that certain Escrow Agreement
----------------
to be entered into by and among Graphic, Acquisition, Stockholders and the
Escrow Agent, substantially in the form of Exhibit B hereto.
---------
Section 1.26 "Escrow Period" shall mean the period beginning on the
-------------
Closing Date, and ending six (6) months thereafter except as such period may be
extended pursuant to the terms of the Escrow Agreement.
-3-
<PAGE>
Section 1.27 "Escrow Consideration" shall mean that number of shares of
--------------------
Graphic Common Stock determined by multiplying 10% by the Merger Consideration
rounded to the nearest whole number.
Section 1.28 "Estimated Net Book Value" shall have that meaning set forth
------------------------
in Section 2.7(a) hereof.
--------------
Section 1.29 "Existing Facility Lease" shall refer to the lease for the
-----------------------
Company's facility between the Company and RAM Enterprises dated April 1, 1995.
Section 1.30 "Financial Schedule" shall have that meaning set forth in
------------------
Section 2.7(a) hereof.
- --------------
Section 1.31 "Financial Statements" shall mean the financial statements
--------------------
of the Company for the years ended December 31, 1992, December 31, 1993,
December 31, 1994 and for the period ended May 31, 1995, all of which are
attached hereto as Schedule 3.7.
------------
Section 1.32 "Graphic Common Stock" shall mean shares of Common Stock,
--------------------
$0.10 par value per share, of Graphic.
Section 1.33 "Guaranties" shall mean the Guaranties of Graphic
----------
substantially in the form of Exhibit C hereto, which shall be issued to
---------
financial institutions or other entities or individuals at the Closing to secure
those certain guaranties of the Stockholders for obligations of the Company set
forth on Schedule 1.33.
-------------
Section 1.34 "Indemnified Party" shall have that meaning set forth in
-----------------
Section 8.1(b) hereof.
- --------------
Section 1.35 "Indemnifying Party" shall have that meaning set forth in
------------------
Section 8.1(c) hereof.
- --------------
Section 1.36 "Intellectual Property" shall have that meaning set forth in
---------------------
Section 3.11 hereof.
- ------------
Section 1.37 "Interim Balance Sheet" shall mean the May 31, 1995 Balance
---------------------
Sheet of the Company.
-4-
<PAGE>
Section 1.38 "Lease Agreement" shall mean that certain Lease Agreement
---------------
between the Company and RAM Enterprises, substantially in the form of Exhibit D
---------
hereto.
Section 1.39 "Merger Consideration" shall mean that number of shares of
--------------------
Graphic Common Stock determined by dividing $2,500,000 by the Stock Price and
rounding such number up to the nearest whole number.
Section 1.40 "Net Book Value" shall mean the total assets of the Company
--------------
minus the total liabilities (contingent or otherwise) of the Company, as
determined in accordance with generally accepted accounting principles
consistently applied.
Section 1.41 "Non Third Party Claim" shall have that meaning set forth in
---------------------
Section 8.3(a) hereof.
- --------------
Section 1.42 "Ohio Corporate Law" shall means the General Corporation Law
------------------
of Ohio.
Section 1.43 "Plans" shall have that meaning set forth in Section 3.20(a)
----- ---------------
hereof.
Section 1.44 "Preliminary Closing Balance Sheet" shall have that meaning
---------------------------------
set forth in Section 2.7(a) hereof.
--------------
Section 1.45 "Principal Stockholders" shall mean Richard A. Amendola and
----------------------
Ronald R. Meredith, stockholders collectively owning 6660 shares of Common
Stock.
Section 1.46 "Proprietary Information" shall have that meaning set forth
-----------------------
in Section 9.1(c) hereof.
--------------
Section 1.47 "Purchase Adjustments" shall means those adjustments, if
--------------------
any, to the Merger Consideration as set forth in Section 2.7 herein.
-----------
Section 1.48 "Registration Statement" shall mean the Registration
----------------------
Statement on Form S-3, including any prospectus, supplements, amendments or
post-effective amendments and exhibits to be filed by Graphic with the
Securities Exchange Commission relating to the resell of the Merger
Consideration by the Stockholders.
-5-
<PAGE>
Section 1.49 "Response Notice Period" shall have that meaning set forth
----------------------
in Section 8.3(a) hereof.
--------------
Section 1.50 "Restricted Period" shall have that meaning set forth in
-----------------
Section 9.1(d) hereof.
- --------------
Section 1.51 "Stock Price" means the average closing price per share of
-----------
Graphic Common Stock as reported in the Wall Street Journal for each of the
-------------------
twenty (20) consecutive trading days preceding the third trading day prior to
the Closing.
Section 1.52 "Surviving Corporation" shall mean the corporation that
---------------------
survives the Merger as set forth in the Certificate of Merger.
Section 1.53 "Tax Returns" shall have that meaning set forth in Section
----------- -------
3.8 hereof.
- ---
Section 1.54 "Taxes" shall have that meaning set forth in Section 3.8
----- -----------
hereof.
Section 1.55 "Transaction Documents" shall mean this Agreement, the
---------------------
Escrow Agreement, the Lease Agreement, the Employment Agreement and the
Guaranties.
Section 1.56 "Third Party Claim" shall have that meaning set forth in
-----------------
Section 8.3(a) hereof.
- --------------
Section 1.57 "Undisclosed Liabilities" shall mean any other liability or
-----------------------
obligation of the Company of any nature, direct or indirect, matured or
unmatured, absolute or contingent or otherwise, whether accrued, due, to become
due or otherwise, whether or not incurred in respect of or measured by the
income of the Company and whether or not normally shown in a financial statement
prepared in accordance with generally accepted accounting principles, not
disclosed or reflected, or specifically reserved against, in any financial
statement delivered by the Company in accordance with this Agreement.
-6-
<PAGE>
ARTICLE 2
THE MERGER
Section 2.1 The Merger. The Merger shall occur at the Effective Time
----------
upon the terms and subject to the conditions hereof and in accordance with Ohio
Corporate Law. Following the Merger, Acquisition shall continue as the
Surviving Corporation and be a wholly-owned subsidiary of Graphic, and the
separate corporate existence of the Company shall cease. Notwithstanding this
Section 2.1, Graphic may elect to merge the Company into another direct
- -----------
subsidiary of Graphic. In such event, the parties agree to execute an
appropriate amendment to this Agreement in order to reflect the foregoing.
Section 2.2 Effective Time. As soon as practicable after satisfaction
--------------
or waiver of all conditions to the Merger, the parties shall cause a certificate
of merger (the "Certificate of Merger") with respect to the Merger to be filed
---------------------
and recorded with the Secretary of the State of Ohio in accordance with Section
1701.78 of Ohio Corporate Law and shall take all such further actions as may be
required by law to make the Merger effective. The Merger shall be effective at
the Effective Time. Immediately prior to the filing of the Certificate of
Merger, a closing (the "Closing") will be held on [SEPTEMBER ____, 1995] at the
-------
offices of Walter & Haverfield, Cleveland, Ohio or such other time and place as
the parties agree, provided that in no event shall the Closing be held later
than [OCTOBER 31, 1995].
Section 2.3 Tax Consequences. It is intended that the Merger shall
----------------
constitute a reorganization within the meaning of Sections 368(a)(1)(A) and
368(a)(2)(D) of the Code and that this Agreement shall constitute a "plan of
reorganization" for purposes of Section 368 of the Code.
Section 2.4 Articles of Incorporation; Regulations; Directors and
-----------------------------------------------------
Officers. The Articles of Incorporation of Acquisition and the Regulations of
- --------
Acquisition as in effect at the Effective Time shall be the Articles of
Incorporation and Regulations of the Surviving Corporation, except that the name
of the Surviving Corporation shall be Carpenter Reserve Printing Company. The
Board of Directors and officers of Acquisition at the Effective Time shall be
the Board of Directors and officers of the Surviving Corporation.
-7-
<PAGE>
Section 2.5 Merger Consideration. In exchange for the Shares, each of
--------------------
the Stockholders shall be entitled to receive a number of shares of Graphic
Common Stock determined by the following formula, subject to adjustment as set
forth in Section 2.7 below:
-----------
A x B
-
C
where:
A = Merger Consideration
B = Number of Shares held by such Stockholder as set forth on
Schedule 1
- ----------
C = Aggregate Number of Shares or 8,885
-----
Section 2.6 Payment of the Merger Consideration. At the Closing, upon
-----------------------------------
surrender by each of the Stockholders of the stock certificates representing the
Shares to be conveyed to Acquisition by each such Stockholder, each such
certificate being duly endorsed or accompanied by a stock power duly executed by
the Stockholder conveying such certificate, the Merger Consideration shall be
paid and distributed by Acquisition as follows:
(a) Each Stockholder shall receive a stock certificate representing
that portion of the Deliverable Consideration as is determined using the
formula set forth in Section 2.5 above, with any fractional share being
-----------
rounded to the nearest whole number; and
(b) The Escrow Agent shall receive stock certificates representing the
Escrow Consideration, which it shall hold for the Escrow Period, as set
forth in the Escrow Agreement.
Section 2.7 Adjustment of Merger Consideration.
----------------------------------
(a) Within 30 days following the Closing Date, the Stockholders shall
prepare and deliver to Acquisition (i) an unaudited balance sheet of the
Company dated as of the Closing Date (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 Closing Date (the "Estimated Net Book
------------------
Value") and (ii) a schedule (the "Financial Schedule") setting forth any
----- ------------------
proposed adjustment to the Merger Consideration 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
-------
2.7(c)(ii) hereof.
----------
-8-
<PAGE>
(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 Company (the "Closing Audit"). The
-------------
Closing Audit shall be completed within sixty (60) days after the receipt
of the Preliminary Closing Balance Sheet. The audited closing balance sheet
resulting from the Closing Audit (the "Closing Balance Sheet") shall be
---------------------
prepared in accordance with generally accepted accounting principles
consistently applied; provided, however, that if any portion of the
liability of the Company for deferred compensation payable in part to
Ronald Meredith pursuant to that certain agreement between the Company and
Ronald Meredith dated __________, 1990 as set forth on the Interim Balance
Sheet is extinguished by reason of the consummation of the Merger, Graphic
agrees that the amount so extinguished shall be included as income for the
Company on the Closing Balance Sheet, regardless of whether such inclusion
is in accordance with GAAP.
(c) Subject to Section 8.2 hereof, the Merger Consideration to be paid
-----------
to the Stockholders for the Merger 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 than
(whichever is the case) 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 in favor 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 twenty
(120) days after the date of the Closing Balance Sheet; (iii) 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
or Acquisition as a result of the breach of any representation, warranty or
covenant of the Company or of the Stockholders contained herein, in the
schedules attached hereto, in the Secretary's Certificate, in the
Employment Agreement (in the case of Richard A. Amendola) or in the Escrow
Agreement.
-9-
<PAGE>
(d) The Stockholders holding a majority of the Shares shall, within 15
days following receipt by the Stockholders of the Closing Balance Sheet,
accept or reject the calculation of the Net Book Value reflected therein.
If the Stockholders holding a majority of the Shares accept the calculation
of Net Book Value, any payment due as a result of any adjustment to the
Merger Consideration as set forth in Section 2.7(c) above shall be made as
--------------
provided in Section 2.7(e) hereof. If the Stockholders holding a majority
--------------
of the Shares disagree with such calculation of Net Book Value, they shall
give written notice of such disagreement and the reason(s) therefore within
such 15 day period. Should the Stockholders holding a majority of the
Shares fail to notify Acquisition of a disagreement within such 15 day
period, all of the Stockholders shall be deemed to agree with any
adjustment to the Merger Consideration made in accordance with Section
-------
2.7(c) hereof. Any disagreement shall be resolved by arbitration, as set
------
forth in Section 8.5 hereof.
-----------
(e) If the Net Book Value set forth in the Closing Balance Sheet
exceeds the amount set forth in Section 2.7(c)(i) above, Acquisition shall
-----------------
pay to the Stockholders additional consideration in the form of Graphic
Common Stock determined by dividing the
amount of such excess by the Stock Price and each Stockholder shall be
entitled to that portion of such additional consideration as corresponds to
the proportionate interest of such Stockholder as is set forth opposite
such Stockholder's name on Schedule 1 hereto. If the Net Book Value set
----------
forth in the Closing Balance Sheet is less than the amount set forth in
Section 2.7(c)(i) above, each of the Stockholders shall pay Acquisition
-----------------
additional consideration in the form of Graphic Common Stock determined by
dividing the amount of such deficiency by the Stock Price and each
Stockholder shall pay Acquisition that portion of such additional
consideration as corresponds to the proportionate interest of such
Stockholder as is set forth opposite such Stockholder's name on Schedule 1
hereto. Any payment in the form of Graphic Common Stock under this Section
-------
2.7(e) 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.
-10-
<PAGE>
(f) Nothing in this Section 2.7 shall in any way limit or decrease the
-----------
liability of the Stockholders and the Company to Graphic and Acquisition
for any default or breach of this Agreement or the documents mentioned in
Section 2.7(c)(iii) above (with the exception of the Employment Agreement),
-------------------
except as set forth in subsection (g) below.
(g) In the event there is a reduction in the Merger Consideration to
be paid the Stockholders as set forth in this Agreement, the amount of such
reduction shall be first paid to Graphic or Acquisition from the Escrow
Consideration in accordance with the Escrow Agreement, and if the Escrow
Consideration is not sufficient to pay such deficiency, the Principal
Stockholders shall remain jointly and severally liable therefor and the
remaining Stockholders shall be severally liable therefore; provided,
however, that the liability of each of the Principal Stockholders in
connection with such deficiency shall be limited to the combined total
amount of Merger Consideration payable to all of the Principal
Stockholders, and the liability of each of the remaining Stockholders in
connection with such deficiency shall be limited to the aggregate amount of
Merger Consideration payable to such Stockholders pursuant to this
Agreement. Such payment from the Escrow Consideration, however, shall not
be the exclusive remedy of Graphic or Acquisition for the payment of such
reduction.
-11-
<PAGE>
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF STOCKHOLDERS
The Stockholders, jointly and severally, represent and warrant to
Acquisition and Graphic as follows:
Section 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 Ohio. The Company has no subsidiaries and is not a party to any
joint venture 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.
Section 3.2 Authority. The execution and delivery of this Agreement by
---------
the Company and each Stockholder constitute valid and legally binding
obligations of the Stockholders and the Company, enforceable in accordance with
its terms. The execution and delivery of the Lease Agreement by the Company
will constitute the valid and legally binding obligation of the Company,
enforceable in accordance with its terms. The execution and delivery of the
Escrow Agreement by each Stockholder will constitute the valid and legally
binding obligation of such Stockholder, enforceable in accordance with its
terms. Richard A. Amendola represents that the execution and delivery of the
Employment Agreement by Mr. Amendola will constitute a valid and legally binding
obligation of Mr. Amendola, enforceable in accordance with its terms.
Section 3.3 Capital Structure. The authorized capital stock of the
-----------------
Company consists of 20,000 shares, no par value common voting stock, of which
8,885 shares are issued and outstanding on the date of this Agreement. The
Company does not hold any shares of its authorized capital stock in its
treasury. 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 under Ohio Corporate Law and all predecessor statutes. There are
no warrants, rights, options, subscriptions or agreements to issue shares of any
class of capital stock, securities convertible into capital stock or property of
the Company or other securities of the Company. As of the date hereof, there is
not any liability or dividends declared or accumulated but unpaid with respect
to the Company's capital stock. Between the date of the Company's incorporation
and the date hereof, the Company has not directly or indirectly redeemed,
purchased or otherwise acquired any shares of its capital stock except as listed
in Schedule 3.3. 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.
-12-
<PAGE>
Section 3.4 Title to Shares. Each of the Stockholders owns the Shares
---------------
set forth opposite such Stockholder's name on Schedule 1 hereto and, except as
----------
disclosed on Schedule 3.4 hereto, each Stockholder has good, valid and
------------
marketable title to such Shares, free and clear of any and all liens, options,
contracts, calls, commitments, demands, encumbrances, equities, pledges or
claims whatsoever. The Shares represent all of the issued and outstanding
shares of the capital stock of the Company, and the Shares are duly authorized,
validly issued, fully paid and nonassessable. Upon consummation of the Merger,
Graphic will obtain good and valid title to the Shares, free and clear of any
and all liens, encumbrances, equities and claims whatsoever.
Section 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.
Section 3.6 Compliance with Laws and Validity of Contemplated
-------------------------------------------------
Transactions. The execution, delivery and performance of this Agreement by the
- ------------
Company and the Stockholders in accordance with its terms and the consummation
of the transactions contemplated hereby does not and will not (a) violate any
law applicable to the Company or the Stockholders; (b) conflict with, result in
a breach of, or constitute a default under the Articles of Incorporation or
Regulations of the Company or under any indenture, agreement, or other
instrument to which the Company or any of the Stockholders 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 any of the
Stockholders. 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
Stockholders or the Company of this Agreement or the Escrow Agreement.
-13-
<PAGE>
Section 3.7 Financial Statements.
--------------------
(a) The Financial Statements and the Interim Balance Sheet (i) are in
accordance with the books and records of the Company; (ii) are complete and
correct and present fairly the 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, except the Net Book
Value of the Company as shown on the Interim Balance Sheet is subject to
adjustment for applicable income taxes in an amount to be agreed in writing
between Graphic and the Stockholders.
(b) The accounts receivable shown on Financial Statements or acquired
by the Company after the date thereof and prior to the date hereof have
been, and all accounts receivable acquired after the date hereof and prior
to the Closing Date 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. Except as set forth on Schedule 3.7(b), all
---------------
accounts receivable shown on the Financial Statements or acquired by the
Company after the date thereof and prior to the date hereof are free and
clear of any and all liens, claims, charges, encumbrances, security
interests or other rights against such 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. The
Company has established a bad debt reserve, as shown on the Financial
Statements, and there is no fact or circumstance which would impair the
validity or collectibility of the Company's accounts receivable in an
amount in excess of such bad debt reserve.
-14-
<PAGE>
(c) Except as set forth on Schedule 3.7(c), inventories reflected on
---------------
the Financial Statements or acquired or to be acquired by the Company
thereafter and prior to the Closing Date, (i) are and will on the Closing
Date be 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 its business, and meet and will meet all applicable
government standards, (ii) are now and will on the Closing Date be located
on the regular business premises of the Company, (iii) are now and will on
the Closing Date be 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, except as set forth on Schedule
--------
3.7(c), and (iv) have been or will be acquired by the Company only in bona
------
fide transactions entered into in the ordinary course of business. None of
such inventory is now, or on the Closing Date will be, held by the Company
on consignment.
(d) The books and records of the Company have been maintained in all
material respects in accordance with sound business practices.
Section 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 Stockholders 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
-15-
<PAGE>
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, or heretofore or hereafter claimed to be due by any
taxing authority 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 assessment or proposed assessment in connection
with any Tax Returns and there are not pending tax examinations of or tax
claims asserted with respect to the Company. There has been no 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. None of the
Stockholders nor the Company has any 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.
Section 3.9 Personal Property.
-----------------
(a) Schedule 3.9(a) contains an accurate and complete 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 in good operating condition and 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. All items of leased personal
property are in good operating condition and in a state of reasonable
maintenance and repair. The continuation, validity and effectiveness of
these personal property leases will in no way be affected by the
transactions contemplated by this Agreement.
-16-
<PAGE>
Section 3.10 Real Property.
-------------
(a) The Company does not own any real property.
(b) The Existing Facility Lease is the only real property lease to
which the Company is a party. Such Existing Facility Lease is in full
force and effect and, except as disclosed on Schedule 3.10(b), 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 defaults. The
Existing Facility Lease is free and clear of any mortgages or liens and is
not subject to any deeds of trust, assignments, subleases, or rights of any
third parties other than the lessor thereof.
(c) The Existing Facility Lease will be in full force and effect on
the Closing Date.
Section 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, copyright applications,
trademark registrations and trademark applications (the "Intellectual Property")
---------------------
used or useful in the business of the Company 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 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, violates or
-17-
<PAGE>
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 possesses
adequate and enforceable rights to use without payment of royalties) all
Intellectual Property necessary for the conduct of, or used in, its business as
the same is presently being conducted.
Section 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.
Section 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 Stockholders, threatened against or affecting the Company, its
properties or its rights or which pertains to the transactions contemplated by
this Agreement. The Stockholders 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.
Neither the Stockholders nor the Company is a party or subject to the provisions
of any judgement, order, writ, injunction decree or award of any court,
arbitrator, or governmental or regulatory official body or authority which may
adversely affect the Company or the transactions contemplated hereby.
Section 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 to the ownership of its properties
--------------
or the conduct of its business. Set forth on Schedule 3.14 is a complete list
-------------
all such Authorizations. The Company is not in default nor has it 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.
-18-
<PAGE>
Section 3.15 Environmental Matters.
---------------------
(a) Except as set forth on Schedule 3.15(a), operations of the Company
----------------
have been in the past and are now in compliance 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 (collectively, 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 all common law
(including, without limitation, nuisance, trespass, negligence and toxic torts).
(b) Neither the Company nor any Stockholder has been notified or is
aware of any violation of any Environmental Laws; neither the Company nor any
Stockholder is otherwise aware that the Company may be potentially responsible
or otherwise liable under the Environmental Laws; and neither the Company nor
any 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.
-19-
<PAGE>
(c) The Company has had in the past and presently has all governmental
permits, licenses, consents, approvals and authorizations relating to
environmental protection or health or safety matters (collectively,
"Environmental Permits") necessary to conduct its operations and 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 has 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 or defined by any Environmental Laws has occurred in the past or
is presently occurring 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 or the Stockholders; and no materials regulated under or
defined by Environmental Laws 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 or the
Stockholders.
(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 or the Stockholders.
(f) Neither the Company nor any Stockholder has used any waste
disposal site or otherwise disposed of, transported, or arranged for the
transportation of any material regulated under or defined by any Environmental
Laws to any place or location.
-20-
<PAGE>
(g) 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 or the Stockholders based on or related
to any Environmental Laws or Environmental Permits.
(h) No lien exists, and 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.
Section 3.16 Absence of Changes. Since May 31, 1995 except as described
------------------
on Schedule 3.16, 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 or distribution to the
Stockholders or purchased or redeemed any shares of its capital stock or other
securities; (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 cancelled any debts or claims; (h) sold, assigned or transferred any
patents, trademarks, trade 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.
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<PAGE>
Section 3.17 Absence of Undisclosed Liabilities. The Company has no
----------------------------------
Undisclosed Liabilities.
Section 3.18 Assets. The Company owns or leases all equipment, furniture,
------
fixtures, and other personal property and assets necessary for the continued
operation of the business of the Company as presently conducted, where the
absence of such property would materially and adversely affect the Company as a
whole.
Section 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 _______________, 1995 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
attached salaries, wages or group insurance programs in respect of employees of
the Company.
Section 3.20 Employee Benefit Plans.
----------------------
(a) Except as set forth on Schedule 3.20, 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 employee
benefit plan (as defined under Section 3(3) of ERISA) and all other
pension, profit sharing, retirement, deferred compensation, stock purchase,
stock option, incentive, bonus, vacation, severance, disability,
hospitalization, medical, life insurance or other employee benefit plans,
whether written or unwritten, now or previously maintained by the Company
(the "Plans") and a brief description of each such Plan now maintained is
-----
set forth on Schedule 3.20 hereto;
-------------
(b) 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 employee benefit plan or other
program or arrangement subject to Title IV of ERISA;
-22-
<PAGE>
(c) The Company has not incurred any material liability with respect
to the Plans which has not been satisfied in full or been accrued on the
Financial Statements pending full satisfaction, and no event has occurred,
and there exists no condition or set of circumstances, which could result
in the imposition of any material liability with respect to such Plans.
Each plan could be terminated on the Closing Date without liability to the
Company or Acquisition, including, without limitation, any additional
contributions, penalties, premiums, fees or other charges.
Section 3.21 Labor Matters. 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 of the Company 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.
Section 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 Acquisition, which is a:
(i) Contract for employment, or a non-competition agreement with
any present or former employee of the Company;
-23-
<PAGE>
(ii) Contract with any labor union or other representative of
employees;
(iii) Contract for the lease or use of equipment;
(iv) Contract for the purchase, sale, production or supply of
goods or services (other than purchase orders in amounts not exceeding
$10,000);
(v) Distributor, sales agency or vendor Contract or any franchise
or license agreement;
(vi) 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;
(vii) 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
(viii) Contract upon which the business, rights or assets, or
condition, financial or otherwise, of the Company depends or is
materially affected.
(ix) 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).
-24-
<PAGE>
(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. Except as set forth on Schedule 3.22, none of the
-------------
Contracts listed in Schedule 3.22, in the reasonable opinion of the
-------------
Stockholders contain any provision with which there is a reasonable
likelihood the Stockholders, 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 such Contracts, and all other
material terms thereof, will in no way be affected by the transactions
contemplated by this Agreement. Except as set forth on Schedule 3.22, 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.
(c) There exists no actual or 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.
Section 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.
Section 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.
-25-
<PAGE>
Section 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, except
as disclosed on Schedule 3.25 hereof.
-------------
Section 3.26 Customer Relations. To the best knowledge of the
------------------
Stockholders and the Company, relations with customers or suppliers are
continuing in good order, and there are no known outstanding disputes with
customers or suppliers.
Section 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, the Escrow Agreement, or the Employment Agreement
on the part of the Company or any of the Stockholders or the consummation of the
transactions contemplated herein and therein, other than corporate authority on
behalf of the Company.
Section 3.28 Broker's or Finder's Fees. Neither the Company nor any
-------------------------
Stockholder nor any of the Company's directors or employees 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.
Section 3.29 Securities Representations.
--------------------------
(a) Each Stockholder either alone or with his or her 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 Common Stock and making an investment in Graphic. No
assurances have been made as to the future income or success of Graphic.
Each Stockholder has had an opportunity to ask questions and receive
satisfactory answers from the officers and directors of Graphic concerning
Graphic and the terms and conditions of his or her investment in capital
stock of Graphic.
-26-
<PAGE>
(b) No Stockholder has received any representations or warranties,
other than those set forth in this Agreement, from the officers, directors,
affiliates, agents or representatives of Graphic in making his or her
decision to exchange his or her capital stock in the Company for the Merger
Consideration, and each Stockholder is relying solely on the information
contained in this Agreement, in any prospectus delivered to him or her, and
personal investigation.
(c) Each Stockholder is presently a bona fide resident of the state
listed on Schedule 3.29(c) attached hereto and has no present intention of
----------------
becoming a resident of any other state or jurisdiction.
(d) Each Stockholder has made other investments of this type and, by
reason of his or her business and financial experience and of the business
and financial experience of those persons he or she has retained to advise
him or her with respect to his or her acquisition of the Merger
Consideration he or she has obtained the capacity to protect his or her own
interest in investments of this nature. In reaching the conclusion that he
or she desires to acquire the Merger Consideration, each Stockholder has
carefully evaluated his or her financial resources and investment position
and the risks associated with his or her investment in Graphic and
acknowledges that he or she is familiar with and able to bear any economic
risk of such investment.
(e) Each Stockholder understands and agrees that the Merger
Consideration is to be issued to him or her without registration under any
state or federal law relating to the registration of securities and will be
issued to him or her 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. Each Stockholder is acquiring the Merger Consideration for
------------
his or her own account, to hold for investment, and with no present
intention of dividing his or her participation with others or reselling or
otherwise participating, directly or indirectly, in the distribution of the
Merger Consideration and shall not make any transfer, sale, or other
disposition of the Merger Consideration: (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 Merger Consideration does not cause the transactions
contemplated by this Agreement to fail to qualify as a reorganization under
Section 368 of the Code.
-27-
<PAGE>
(f) No Stockholder has received any public solicitation or
advertisement concerning an offer to sell Graphic Common Stock. Each
Stockholder has received and reviewed copies of Graphic's Annual Report on
Form 10-K (including the Annual Report to Shareholders) for the fiscal year
ended January 31, 1995, all Quarterly Reports on Form 10-Q for fiscal year
ended January 31, 1995, and Graphic's Proxy Statement for the 1995 Annual
Meeting of Shareholders.
Section 3.30 Correctness of Representations. No representation or
------------------------------
warranty of the Stockholders in this Agreement or in any statement, certificate
or schedule furnished by the Stockholders pursuant hereto, or in connection with
the transactions contemplated hereby, 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, and 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 Acquisition
pursuant to this Agreement have been delivered to or have been made available to
or will be made available for inspection by Acquisition and Acquisition's
attorneys and accountants.
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<PAGE>
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF ACQUISITION AND GRAPHIC
Acquisition and Graphic, jointly and severally, represents and warrants to
the Stockholders as follows:
Section 4.1 Organization; Power; Qualification. Each of Acquisition and
----------------------------------
Graphic is a corporation duly organized, validly existing and in good standing
under the laws of the State of Ohio and Georgia, respectively. Each of
Acquisition 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.
Section 4.2 Authority. Each of Acquisition and Graphic has the
---------
corporate power and has taken all necessary corporate action to authorize
Acquisition or Graphic, as the case may be, to execute, deliver and perform such
of the Transaction Documents to which it is a party and to consummate the
transactions contemplated hereby and thereby. The execution and delivery by
each of Acquisition and Graphic of each of the Transaction Documents to which it
is a party constitutes the valid and legally binding obligation of Acquisition
or Graphic, as the case maybe, enforceable in accordance with such Transaction
Documents' terms.
Section 4.3 Compliance with Laws and Validity of Contemplated
-------------------------------------------------
Transactions. The execution, delivery and performance of this Agreement by
- ------------
Acquisition in accordance with its 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 the Articles of Incorporation or By-Laws of Acquisition or under
any indenture, agreement or other instrument to which Acquisition is a party or
by which it or any of its 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 Acquisition. 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 Acquisition of this Agreement.
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<PAGE>
Section 4.4 Investment Representation. Acquisition is aware that the
-------------------------
Shares are not registered under the Act. Acquisition possesses such knowledge
and experience in business matters such that it is capable of evaluating the
merits and risks of an investment in the Shares hereunder. Acquisition is
acquiring the Shares for its own account, for investment purposes only and not
with a view to the distribution thereof. Acquisition agrees that the Shares
will not be sold, transferred, pledged, offered for sale or otherwise disposed
of without registration under the Act, except pursuant to a valid exemption from
registration under the Act.
Section 4.5 Merger Consideration. Each share of Merger Consideration,
--------------------
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 Merger Consideration 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 Acquisition or Graphic is a party
which relate to or affect the transfer of the Merger Consideration.
Section 4.6 Broker's or Finders Fees. Neither Graphic nor Acquisition
------------------------
nor any director or employee of Graphic or Acquisition 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; provided, however, that Graphic and Acquisition make no
representations or warranties with respect to the liability of Graphic to pay
David Whitacre. If any amounts are owed to David Whitacre with respect to the
transactions contemplated by this Agreement, the payment of such amounts shall
be the responsibility of Graphic.
Section 4.7 Graphic Reports. Graphic has delivered to Richard Amendola
---------------
for distribution to each of the Stockholders copies of Graphic's Annual Report
on Form 10-K (including the Annual Report to Shareholders) for the fiscal year
ended January 31, 1995, all Quarterly Reports on Form 10-Q for fiscal year ended
January 31, 1995, and Graphic's Proxy Statement for the 1995 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.
-30-
<PAGE>
ARTICLE 5A
OBLIGATIONS AND COVENANTS OF THE STOCKHOLDERS AND THE COMPANY
Section 5A.1 Conduct of the Company's Business Prior to Closing. From the
--------------------------------------------------
date hereof to the Closing Date, and except to the extent that Acquisition shall
otherwise consent in writing, the Stockholders and the Company shall:
(a) operate the Company's business as presently operated and only in
the ordinary course, and use 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) maintain all of the Company's properties in good order and
condition, reasonable wear and use excepted;
(c) take 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) pay the liabilities or other obligations of the Company and
collect its accounts receivable in accordance with the Company's past
business practices;
(e) comply with all laws materially applicable to the conduct of the
business of the Company;
(f) not take any action that would constitute a breach of Section 3.16
------------
hereof;
(g) not enter 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;
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<PAGE>
(h) not sell, or otherwise dispose of, any assets of the Company
(other than in the ordinary course of business; and
(i) submit 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, Acquisition (other than Contracts entered into in the ordinary course
of business).
Section 5A.2 No Solicitation. From the date hereof to the earlier of the
---------------
Closing Date or termination date hereof, the Stockholders shall not nor shall
they permit the Company or any of its officers, directors, employees, agents, or
representatives, directly or indirectly, to (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 Acquisition in connection with any possible proposal (an
"Acquisition Proposal") regarding the sale, merger, consolidation, or similar
- ---------------------
transaction with respect to the Company. The Stockholders shall notify
Acquisition immediately if any discussions or negotiations are sought to be
initiated or such information is requested with respect to an Acquisition
Proposal.
Section 5A.3 Access and Information. From the date hereof to the Closing
----------------------
Date the Company shall afford to Acquisition, Graphic, and their counsel,
accountants and other representatives, free and full access to all the offices,
properties, books, Contracts, commitments and records of the Company and to
furnish such persons with all information (including financial and operating
data) concerning its affairs as they may, in their sole discretion, request,
including copies and extracts of pertinent records, documents and Contracts. The
Company and its employees shall assist Acquisition, Graphic, and their counsel,
accountants and representatives, in their examination of the Company's books and
records. To the extent that the Company shall have control over same, the
accountants of the Company shall furnish to Acquisition and Graphic during such
period any and all of their statements, working papers and underlying records
and data as Acquisition and Graphic, in their sole discretion, may request.
Section 5A.4 Notification of Changes. From the date hereof to the
-----------------------
Closing Date, the Company shall promptly notify Acquisition 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.
Section 5A.5 No Default. From the date hereof to the Closing date, the
----------
Company shall not do any act or omit to do any act, or knowingly permit any act
or omission to act, that would cause a material breach of any Contract.
Section 5A.6 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 Closing Date) shall be
prepared by the Company but shall not be filed without prior examination by, or
on behalf of, Acquisition and Graphic. The Company shall use its best efforts
to obtain all extensions of time from governmental authorities necessary to
effect this provision.
Section 5A.7 Allocation of Taxable Income to Short Period. The
--------------------------------------------
Stockholders 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 Closing 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 Closing Date to be reported
determined on the basis of income shown on their permanent books and records
(including workpapers).
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<PAGE>
Section 5A.8 Other Pre-Closing Returns.
-------------------------
(a) The Stockholders shall cause the Company to prepare and file all
federal and state income tax returns for the Company for all tax periods ending
on or before the Closing Date. Such returns will be filed on the basis of the
income allocations described in Section 5A.7 above.
------------
(b) The Stockholders shall cause the Company to include the results of
the respective operations of the Company in any separate state or local income
tax return for any taxable year which is due on or before the Closing Date and
to file such returns on a timely basis.
Section 5A.9 Tax Free Reorganization Treatment. The Principal
---------------------------------
Stockholders shall cause all tax returns relating to the Company to be filed on
the basis of treating the Merger as a tax free merger pursuant to Sections
368(a)(1)(A) and 368(a)(2)(D) of the Code.
Section 5A.10 General Cooperation in Tax Matters. After the Closing Date,
----------------------------------
the Shareholders shall cooperate fully with Graphic and Acquisition and shall
make available to Graphic and Acquisition, 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 Closing Date and shall preserve all such
information, records, and documents until the expiration of any applicable
statute of limitations or extensions thereof.
Section 5A.11 Compliance with Laws. From the date hereof to the Closing
--------------------
Date the Company shall comply with all applicable laws and regulations including
without limitation, those as may be required for the consummation of the
transactions contemplated by this Agreement.
Section 5A.12 Consent of Others. From the date hereof to the Closing
-----------------
Date, 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 prior to the Closing
Date.
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<PAGE>
ARTICLE 5B
COVENANTS OF GRAPHIC AND ACQUISITION
Section 5B.1 Release of Guaranties. From the date hereof to the Closing
---------------------
Date, Acquisition and Graphic shall each use their best efforts to cause Richard
A. Amendola to be released from the guaranties, set forth in Schedule 1.33,
provided that such efforts shall not include the payment of money in
consideration for such release. In any event, Acquisition and Graphic shall
deliver the guaranties.
Section 5B.2 Filing of 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 Common Stock to be issued in the Merger.
Section 5B.3 Post-Closing Returns.
--------------------
(a) Graphic shall cause Acquisition to prepare and file all federal
and state income tax returns for the Surviving Corporation for all tax periods
beginning on or after the Closing Date. Such returns will be filed on the basis
of the income allocations described in Section 5A.7 above.
------------
(b) Graphic shall cause Acquisition to include the results of the
respective operations of the Surviving Corporation in any separate state or
local income tax return for any taxable year which is due after the Closing Date
and to file such returns on a timely basis. Graphic shall pay, or cause to be
paid, all local income taxes (including interest and penalties relating thereto)
shown as due on any such return with respect to the Surviving Corporation.
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<PAGE>
Section 5B.4 Tax Free Reorganization Treatment. Graphic shall cause all
---------------------------------
tax returns relating to the Company and Acquisition to be filed on the basis of
treating the Merger as a tax free merger pursuant to Sections 368(a)(1)(A) and
368(a)(2)(D) of the Code.
At the Closing, Graphic and Acquisition shall deliver a certificate
executed by an officer regarding Graphic's current intentions and plans with
regard to conduct of Acquisition following the Closing. Such certificate shall
be in form and content reasonably acceptable to the Principal Stockholders and
shall provide, among other things, that neither Graphic nor Acquisition (i)
currently intends to issue any Acquisition Common Stock to any independent third
party, (ii) currently intends to reacquire any of the Graphic Common Stock to be
issued in connection with the Merger, (iii) currently intends to dispose of the
stock of Acquisition, other than to itself or an affiliate, (iv) currently
intends to liquidate or sell its assets otherwise than in the ordinary course of
Acquisition's business and (v) currently intends to cause Acquisition, following
the Closing, to discontinue conducting the businesses conducted by the Company
prior to the Closing.
Section 5B.5 General Cooperation in Tax Matters. After the Closing Date,
----------------------------------
Graphic and Acquisition shall cooperate fully with the Shareholders and shall
make available to the Shareholders, 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 Closing 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 Closing Date remain open, Graphic shall
promptly notify the Principal Stockholders in writing of any pending or
threatened tax audits or assessments for which the Principal Stockholders have
or may have sole, joint or several liability within thirty (30) days following
the receipt by Graphic or any affiliate of notice of such pending or threatened
audit or assessment. Graphic shall keep the Principal Stockholders reasonably
informed as to all aspects of any administrative or judicial proceeding that may
result in the payments by the Shareholders of any tax.
Section 5B.6 Employee Bonuses. Graphic shall cause the Surviving
----------------
Corporation to pay to the employees of the Surviving Corporation all bonus
amounts earned by such employees from January 1, 1995 through the Closing Date
as set forth on the Closing Balance Sheet, and in accordance with the Surviving
Corporation's policies regarding the payment of such bonuses.
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<PAGE>
ARTICLE 6
CONDITIONS TO CONSUMMATION OF MERGER
Section 6.1 Conditions to Obligations of Acquisition and Graphic.
----------------------------------------------------
The obligation of Acquisition and Graphic to consummate the Merger 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 Stockholders
shall be true and correct in all respects as of, and shall not have been
violated in any respect at, the Closing as though made on and as of the
Closing; the Stockholders and the Company shall, on or before the Closing,
have performed all of their obligations under this Agreement which by the
terms hereof are to be performed on or before the Closing, and the
Stockholders shall have delivered to Acquisition and Graphic a certificate
dated as of the date of the Closing to the foregoing effect.
(b) The Merger shall have been approved by the Board of Directors of
Acquisition and Graphic, or an Executive Committee of the Board of
Directors of Acquisition and Graphic.
(c) 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 Merger or which would have a material adverse
effect on Acquisition's ability to conduct the business of the Company as
presently conducted or which claims material damages from Acquisition or
Graphic with respect to the Merger.
(d) Acquisition and Graphic shall have been satisfied with its
examination of the books and records of the Company and all other due
diligence considered by Acquisition and Graphic.
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<PAGE>
(e) The Stockholders shall have delivered to Acquisition and Graphic a
certificate of the Company's Secretary certifying as to the requisite
corporate or other action authorizing the Merger, and the status of record
ownership of the Shares by the Stockholders.
(f) The Stockholders shall have submitted to Acquisition and Graphic
resignations of all current officers and directors of the Company.
(g) Mr. Richard A. Amendola shall have executed and delivered to
Acquisition and Graphic the Employment Agreement (which contains certain
non-compete provisions), substantially in the form of Exhibit A hereto.
---------
(h) The Stockholders shall have executed and delivered to Acquisition
and Graphic the Escrow Agreement, substantially in the form of Exhibit B
---------
hereto.
(i) Acquisition and Graphic shall have received the opinion of Walter
& Haverfield, counsel to the Company and the Principal Stockholders,
substantially in the form of Exhibit E hereto.
---------
(j) The Certificate of Merger shall be prepared for filing with the
Secretary of State of Ohio.
(k) RAM Enterprises shall have executed the Lease Agreement,
substantially in the form of Exhibit D hereto.
(l) Each of the agreements listed on Schedule 3.4 shall be terminated.
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<PAGE>
Section 6.2 Conditions to Obligations of the Stockholders. The
---------------------------------------------
obligation of the Stockholders to consummate the Merger 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 Acquisition and
Graphic shall be true and correct in all respects as of, and shall not have
been violated in any respect at, the Closing as though made on and as of
the Closing; Acquisition 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 on or before the
Closing; and each of Acquisition and Graphic shall have delivered to the
Stockholders a certificate of one of its officers dated as of the date of
the Closing to the foregoing effect.
(b) The Merger shall be approved by the Stockholders.
(c) 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 Merger or which would have a material adverse
effect on the right of the Stockholders to consummate the Merger or which
claims material damages from the Stockholders with respect to the Merger.
(d) Acquisition and Graphic shall have delivered to the Stockholders
certificates of their respective Secretaries certifying as to the requisite
corporate and other action authorizing the Merger and the incumbency of
their respective officers and directors.
(e) Acquisition shall have executed and delivered to the Stockholders
the Escrow Agreement, substantially in the form of Exhibit B hereto.
---------
(f) Acquisition and Graphic shall have executed and delivered to the
Stockholders the Guaranties, substantially in the form of Exhibit C hereto.
---------
(g) The Stockholders shall have received the opinion of Powell,
Goldstein, Frazer & Murphy, counsel to Acquisition, substantially in the
form of Exhibit F hereto.
---------
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<PAGE>
(h) The Certificate of Merger shall be prepared for filing with the
Secretary of State of Ohio.
(i) The Company and RAM Enterprises shall have executed the Lease
Agreement, substantially in the form of Exhibit D hereto.
(j) Graphic and Acquisition shall have executed and delivered to Mr.
Richard Amendola the Employment Agreement substantially in the form of
Exhibit A hereto.
---------
ARTICLE 7
REGISTRATION OF MERGER CONSIDERATION
Section 7.1 Registration of Merger Consideration. Graphic shall use its
------------------------------------
best efforts to prepare and file with the Commission a Registration Statement as
soon as practicable after the Closing Date, which shall cause the Merger
Consideration to be registered for resale by the Stockholders, and Graphic shall
use reasonable best efforts to have such registration become effective and not
abandon the filing. The Stockholders shall receive a copy of the Registration
Statement prior to filing for review, and the Stockholders shall represent and
warrant that the information contained in the Registration Statement concerning
each of them and the intended method of distribution of the securities covered
by the Registration Statement is true, complete, and correct.
Section 7.2 Furnishing Information. The Stockholders shall furnish to
----------------------
Graphic such information regarding Stockholders or the Merger Consideration, and
the intended method of disposition of such securities, as shall be reasonably
requested by Graphic in order to effect the registration of such Merger
Consideration.
Section 7.3 Prospectus Requirements. Each Stockholder hereby covenants
-----------------------
with Graphic that he or she will promptly advise Graphic of any changes in the
information concerning such Stockholder contained in the Registration Statement
and that each Stockholder will not make any sale of the Merger Consideration
pursuant to the Registration Statement without complying with the prospectus
delivery requirements of the Act. Each Stockholder 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, each Stockholder agrees
not to sell any shares of the Merger Consideration 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. Each Stockholder covenants that they will not sell
any shares pursuant to any prospectus during the period commencing at the time
at which Graphic gives each Stockholder notice of the suspension of the use of a
given prospectus and ending at the time Graphic gives notice that each
Stockholder may thereafter effect sales pursuant to a given prospectus.
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<PAGE>
Section 7.4 Registration Rights, Etc.
-------------------------
(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 Merger Consideration until the third anniversary of the Closing Date or
the sale by the Stockholders of all of the Merger Consideration, 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 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 Stockholders 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 any Stockholder 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:
(i) furnish to each Stockholder 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 Stockholder may reasonably
request;
(ii) notify each Stockholder promptly of any request by the
Commission for the amending or supplementing of the Registration
Statement or prospectus forming a part thereof;
(iii) advise each Stockholder 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;
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<PAGE>
(iv) use its best efforts to register or qualify the Merger
Consideration under such other securities or blue sky laws of
such jurisdictions within the United States and Puerto Rico as
any of the Stockholders 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 any of the Stockholders to
consummate the disposition of the Merger Consideration in any of
the aforementioned jurisdictions; and
(v) notify the Stockholders, 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.
Section 7.5 Indemnification.
---------------
(a) Graphic agrees to indemnify, defend and hold harmless the
Stockholders 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 Stockholders), 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 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
Stockholders 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 any of the
Stockholders pursuant to Section 7.2 or based upon information furnished to
-----------
Graphic in writing by or on behalf of any of the Stockholders expressly for
use therein.
(b) The Stockholders, jointly and severally, agree 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
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<PAGE>
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 any of the Stockholders pursuant
to Section 7.2 or is made in reliance upon or in conformity with
-----------
information furnished in writing by or on behalf of any of the Stockholders
expressly for inclusion in the Registration Statement or prospectus
contained therein (or any amendment or supplement thereto), and (ii) the
failure by any of the Stockholders 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.
Section 7.6 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 counsel
- --- --- ---
or other advisors to any of the Stockholders.
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<PAGE>
ARTICLE 8
INDEMNIFICATION
Section 8.1 Definitions. As used in this Article 8:
----------- ---------
(a) "Damages" actual losses, liabilities, damages, deficiency costs or
-------
expenses (including reasonable attorneys fees and disbursements), less the
amount of any actual tax or insurance benefits then available to or
received by the Indemnified Party with respect thereto.
(b) "Indemnified Party" means the party seeking indemnification under
-----------------
Section 8.2 hereof.
-----------
(c) "Indemnifying Party" means the Stockholders, severally.
------------------
Section 8.2 Indemnification of Acquisition and Graphic by the
-------------------------------------------------
Stockholders.
- ------------
(a) On the terms set forth in this Agreement, the Principal
Stockholders shall, jointly and severally, and the remaining Stockholders
shall severally, from and after the Closing Date, indemnify, defend, and
hold Acquisition and Graphic and their respective subsidiaries and
affiliates harmless from, against and in respect of any and all Damages
incurred by any of them arising from or in connection with any breach of
any representation, warranty or covenant made by the Stockholders in this
Agreement; provided, however, that (i) the liability of each of the
Principal Stockholders to indemnify Graphic or Acquisition for any Damages
incurred by them arising from or in connection with any breach of any
representation, warranty or covenant made by the Stockholders in this
Agreement shall be limited to the combined total amount of Merger
Consideration payable to all of the Principal Stockholders, and (ii) the
liability of the Stockholders other than the Principal Stockholders to
indemnity Graphic or Acquisition for any Damages incurred by them arising
from or in connection with any breach of any representation, warranty or
covenant made by the Stockholders shall be limited to the Merger
Consideration payable to such Stockholders.
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<PAGE>
(b) The Stockholders' representations, warranties and covenants set
forth in this Agreement shall survive for a three (3) year period following
the Closing Date except with respect to the representations, warranties and
covenants set forth in Sections 3.1, 3.2, 3.3, 3.4, 3.5, 3.6, 3.8, 3.15 and
----------------------------------------------------
3.20, which shall survive for a period of eight (8) years following the
----
Closing Date.
(c) Notwithstanding anything to the contrary set forth in this Section
8.2, no Damages shall be recoverable hereunder unless the aggregate amount
of all Damages shall exceed $25,000; it being understood and agreed that
the full amount of any Damages shall be recoverable once such threshold is
met without regard to such threshold.
Section 8.3 Method of Asserting Claims.
--------------------------
(a) In the event that any claim or demand for which an Indemnifying
Party would be liable to an Indemnified Party hereunder is asserted against
or sought to be collected from an Indemnified Party by a third party (a
"Third Party Claim") or an Indemnified Party seeks indemnification from an
------------------
Indemnifying Party in connection with any other type of claim for which
indemnity may be sought hereunder (referred to herein as a "Non Third Party
Claim"), the Indemnified Party shall use reasonable efforts to notify the
Indemnifying Party in writing of such Third Party Claim or Non Third Party
Claim, specifying the nature of such Third Party Claim or Non Third Party
Claim arising hereunder and the amount or the estimated amount thereof to
the extent then feasible (which estimate shall not be conclusive of the
final amount of such Third Party Claim or Non Third Party Claim) (the
"Claim Notice"). The Indemnifying Party shall have twenty calendar days
-------------
(or such earlier period of time as may be required for the filing of
responsive pleadings to any legal action instituted with respect to the
Third Party Claim or Non Third Party Claim or required due to contractual
deadlines imposed upon the Indemnified Party by the contract in dispute but
in any event, not less than 10 days) from the receipt of the Claim Notice
(the "Response Notice Period") to notify the Indemnified Party, (A) whether
----------------------
or not it disputes its liability to the Indemnified Party hereunder with
respect to such Third Party Claim or Non Third Party Claim and (B)
notwithstanding any such dispute, whether or not it will defend, at its
sole cost and expense, the Indemnified Party against such Third Party
Claim. No failure by an Indemnified Party to notify the Indemnifying Party
of the existence or assertion of a claim for which indemnification may be
sought shall constitute a defense to or waiver of such claim for
indemnification except to the extent the Indemnifying Party may be able to
prove that it has been materially prejudiced by such failure or delay.
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<PAGE>
(b) If the Indemnifying Party disputes its liability with respect to
such Third Party Claim or Non Third Party Claim or the amount thereof
(whether or not the Indemnifying Party desires to defend the Indemnified
Party against such Third Party Claim as provided in paragraphs (c) and (d)
below), such dispute shall be resolved in accordance with Section 8.5
-----------
hereof. Pending the resolution of any dispute by the Indemnifying Party of
its liability with respect to any Third Party Claim, such Third Party Claim
shall not be settled without the prior written consent of the Indemnified
Party and the Indemnifying Party, which consent shall not be unreasonably
withheld or delayed.
(c) In the event that the Indemnifying Party notifies the Indemnified
Party within the Response Notice Period that it will defend the Indemnified
Party against a Third Party Claim, then the Indemnifying Party shall assume
the defense thereof with counsel reasonably acceptable to the Indemnified
Party, and the Indemnified Party shall cooperate in all reasonable respects
in such defense, including without limitation in making any appropriate
counterclaim against the person asserting the Third Party Claim or any
appropriate cross-complaint against any person (unless such counterclaim or
cross-complaint would be against any other entity with which the
Indemnified Party has ongoing business relations and would have a
significant likelihood in the good faith judgment of the Indemnified Party
of damaging such business relationships); provided, however, the
Indemnifying Party shall not, without the prior written consent of the
Indemnified Party which consent shall not be unreasonably withheld, consent
to the entry of any judgment against the Indemnified Party or enter into
any settlement or compromise which does not include, as an unconditional
term thereof, the giving by the claimant or plaintiff to the Indemnified
Party of a release, in form and substance reasonably satisfactory to the
Indemnified Party, from all liability in respect of such Third Party Claim.
If any Indemnified Party desires to participate in, but not control, any
such defense or settlement, it may do so at its sole cost and expense. If,
in the reasonable opinion of the Indemnified Party, any such Third Party
Claim or the litigation or resolution of any such Third Party Claim
involves an issue or matter which could reasonably be expected to have a
material adverse effect on the Indemnified Party, then the Indemnified
Party shall have the right to control the defense or settlement of any such
Third Party Claim at its cost and expense, and such legal fees and expenses
shall be included as part of the indemnification obligation of the
Indemnifying Party hereunder. If the Indemnified Party should elect to
exercise such right, the Indemnifying Party shall have the right to
participate in, but not control, the defense or settlement of such Third
Party Claim at its sole cost and expense.
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<PAGE>
(d) If the Indemnifying Party elects not to defend the Indemnified
Party against such Third Party Claim, whether by not giving the Indemnified
Party timely notice within the Response Notice Period as provided above or
otherwise, then the Indemnified Party shall, at the expense of the
Indemnifying Party (if the Indemnified Party is entitled to indemnification
hereunder), have the right to defend, settle or compromise any such Third
Party Claim with counsel of its own choosing. In the event the Indemnified
Party proposes to settle a Third Party Claim, the Indemnified Party shall
deliver to the Indemnifying Party written notice of the proposed settlement
of the Third Party Claim, which the Indemnifying Party may reject in its
reasonable judgment within thirty days of receipt of such notice. In the
event the Indemnified Party settles such Third Party Claim over the
objection of Indemnifying Party, dispute over such settlement shall be
resolved as provided in Section 8.5 hereof.
-----------
(e) In the event an Indemnified Party has a claim for indemnification
against the Indemnifying Party hereunder with respect to a Non Third Party
Claim, the Indemnified Party shall send a Claim Notice with respect to such
claim to the Indemnifying Party. If the Indemnifying Party disputes its
liability with respect to such claim or demand, such dispute shall be
resolved in accordance with Section 8.5 hereof; if the Indemnifying Party
-----------
accepts or agrees with such claim or does not notify the Indemnified Party
within the Response Notice Period that it disputes such claim, the amount
of such claim shall be conclusively deemed a liability of the Indemnifying
Party hereunder.
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<PAGE>
Section 8.4 Payment. The Indemnifying Party shall pay the Indemnified
-------
Party, within ten days after the final determination of liability under this
Article 8, the amount of any indemnification to which the Indemnified Party is
- ---------
entitled. Upon the payment in full of any claim, the Indemnifying Party shall
be subrogated to the rights of the Indemnified Party against any person, firm or
corporation with respect to the subject matter of such claim.
Section 8.5 Arbitration. All disputes under this Article 8 or Section
----------- --------- -------
2.7, shall be settled by arbitration in Chicago, Illinois, before a single
- ---
arbitrator pursuant to the rules of the American Arbitration Association (the
"AAA"). Arbitration may be commenced at any time by any party hereto by giving
- ----
written notice to each other party to a dispute that such dispute has been
referred to arbitration under this Section 8.5. The arbitrator shall be
-----------
selected by the joint agreement of the parties, but if they do not so agree
within 20 days after the date of the notice referred to in the preceding
sentence, the selection shall be made pursuant to the rules of the AAA from the
panels of arbitrators maintained by the AAA. Any award rendered by the
arbitrator shall be conclusive and binding upon the parties hereto; provided,
however, that any such award shall be accompanied by a written opinion of the
arbitrator giving the reasons for the award. This provision for arbitration
shall be specifically enforceable by the parties, and the decision of the
arbitrator in accordance herewith shall be final and binding and there shall be
no right of appeal therefrom. Each party shall pay its own expenses of
arbitration and the expenses of the arbitrator shall be equally shared.
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<PAGE>
ARTICLE 9
COVENANT NOT TO COMPETE
Section 9.1 Definitions. Capitalized terms used in this Article 9 shall
----------- ---------
have the following meanings:
(a) "Area" shall mean the States of Ohio, Pennsylvania, and Kentucky.
----
(b) "Competing Business" shall mean graphic print communications,
------------------
including pre-press operations, printing on paper and other substates and
binding and finishing of printed products.
(c) "Proprietary Information" shall mean information related to the
-----------------------
Company or the business of the Company (i) which derives economic value,
actual or potential, from not being generally known to, or readily
ascertainable by, other persons who can obtain economic value from its
disclosure or use and, (ii) which is the subject of efforts that are
reasonable under the circumstances to maintain its secrecy. Assuming the
foregoing criteria are met, Proprietary Information includes, but is not
limited to, techniques or methods used in printing labels for blow molded
plastic containers, printing on plastic substrates, the financial affairs,
processes, services, customer lists, customer information, employees,
employees' compensation, research, development, existing and future
products and services, product and service plans and designs, purchasing,
accounting, distribution systems, marketing, formulae, compilations,
programs, methods, techniques, drawings, and suppliers of the Company.
(d) "Restricted Period" shall mean the period commencing with the
-----------------
Closing Date and ending on the three (3) year anniversary thereof.
Section 9.2 Agreement Not to Compete. Unless otherwise consented to in
------------------------
writing by Acquisition, the Principal Stockholders agree that during the
Restricted Period they will not, within the Area, either directly or indirectly,
on their own behalf or in the service or on behalf of others, engage in any
Competing Business or provide managerial, supervisory, administrative, financial
or consulting services or assistance to, or own a beneficial interest in, any
Competing Business except for the ownership of less than five percent (5%) of a
publicly traded company.
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<PAGE>
Section 9.3 Agreement Not to Solicit Employees. The Principal
----------------------------------
Stockholders agree that during the Restricted Period, they will not, without the
prior written consent of Acquisition, either directly or indirectly, on their
own behalf or in the service or on behalf of others, solicit, divert, or hire
away, or attempt to solicit, divert, or hire away, from the employment of
Acquisition or the Company, any person employed by Acquisition or the Company on
the date of the Closing.
Section 9.4 Agreement Not to Solicit Customers. The Principal
----------------------------------
Stockholders agree that during the Restricted Period, they will not, either
directly or indirectly, on their own behalf or in the service or on behalf of
others, solicit or attempt to solicit any person, firm or corporation who was a
customer of the Company during the one-year period immediately preceding the
Closing Date (as shown on the books and records of the Company).
Section 9.5 Confidentiality.
---------------
(a) After the Closing, the Stockholders (i) will hold the Proprietary
Information in confidence, and (ii) will not use, duplicate, reproduce,
distribute, disclose or otherwise disseminate the Proprietary Information.
In the event that any of the Stockholders determine that they are required
by law to disclose any Proprietary Information, such Stockholder will not
make such disclosure unless (and then only to the extent that) such
Stockholder has been advised by independent legal counsel that such
disclosure is required by law and then only after prior written notice is
given to Acquisition (if reasonably practical) that such disclosure has
been requested and is required by law.
(b) Any and all reproductions of the Proprietary Information in the
custody or control of the Stockholders will prominently display a
confidentiality legend.
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<PAGE>
(c) The Stockholders covenant and agree that on or before the Closing
Date, the Stockholders will destroy or will deliver to Acquisition all
tangible copies and embodiments of the Proprietary Information in their
possession or control.
Section 9.6 Remedies. The parties hereto specifically acknowledge and
--------
agree that the remedy at law for breach of this Article 9 would be inadequate
---------
and that any party, in addition to any other relief available to it, shall be
entitled to temporary and permanent injunctive relief without the necessity of
proving actual damages.
ARTICLE 10
TERMINATION; AMENDMENTS; WAIVER
Section 10.1 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 Acquisition and the Principal
Stockholders;
(b) by Acquisition or the Principal Stockholders if, without a
material breach of the terminating party, the Closing shall not have
occurred on or before October 31, 1995, which date may be extended by
mutual consent of the parties;
(c) by Acquisition if there has been a misrepresentation, breach of
warranty or breach of covenant or agreement by the Stockholders or the
Company in their representations, warranties, covenants or agreements set
forth herein; or
(d) by the Principal Stockholders if there has been a
misrepresentation, breach of warranty or breach of covenant or agreement by
Acquisition in its representations, warranties, covenants or agreements set
forth herein.
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<PAGE>
Section 10.2 Effect of Termination. In the event of the termination and
---------------------
abandonment of this Agreement pursuant to Section 10.1 hereof, this Agreement
------------
shall forthwith become void and have no effect, other than the provisions of
Section 11.7 which shall survive. Nothing contained in this Section 10.2 shall
- ------------ ------------
relieve any party from liability for any breach of this Agreement occurring
before such termination.
ARTICLE 11
MISCELLANEOUS
Section 11.1 Entire Agreement; Assignment. This Agreement, together
----------------------------
with any confidentiality agreements between the parties hereto, (a) constitutes,
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 Acquisition may
assign its respective rights and obligations to any direct subsidiary of
Graphic, but no such assignment shall relieve Acquisition of its obligations
hereunder.
Section 11.2 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.
Section 11.3 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
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<PAGE>
(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:
If to Acquisition, to it at:
Carpenter Acquisition Company
c/o Graphic Industries, Inc.
2155 Monroe Drive, N.E.
Atlanta, Georgia 30324
Attention: Mark C. Pope IV
President
with a copy to:
Powell, Goldstein, Frazer & Murphy
Sixteenth Floor
191 Peachtree Street, N.E.
Atlanta, Georgia 30303
Telecopy: 404/572-6999
Attention: Thomas R. McNeill, Esq.
If to Graphic, to:
Graphic Industries, Inc.
2155 Monroe Drive, N.E.
Atlanta, Georgia 30324
Telecopy: (404) 874-7589
Attention: Mark C. Pope IV
President
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<PAGE>
with a copy to:
Powell, Goldstein, Frazer & Murphy
Sixteenth Floor
191 Peachtree Street, N.E.
Atlanta, Georgia 30303
Telecopy: (404) 572-6999
Attention: Thomas R. McNeill, Esq.
If to the Stockholders, to each of them at the
address listed on the signature pages hereof.
If to the Company, to it at:
Carpenter Reserve Printing Company
7100 Euclid Avenue
Cleveland, Ohio 44103
with a copy to:
Walter & Haverfield
1300 Terminal Tower
50 Public Square
Cleveland, Ohio 44113
Telecopy: ___________
Attention: Russell C. Shaw
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).
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Section 11.4 Governing Law. This Agreement shall be governed by and
-------------
construed in accordance with the internal laws of the State of Ohio, regardless
of the laws that might otherwise govern under applicable principles of conflicts
of laws thereof.
Section 11.5 Descriptive Headings. The descriptive headings 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.
Section 11.6 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.
Section 11.7 Expenses. All costs and expenses of Graphic or Acquisition
--------
associated with legal and audit services incurred in connection with the Merger
shall be paid by Graphic. The Stockholders and the Company will each 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.
Section 11.8 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.
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<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: /s/ Mark C. Pope IV
-------------------
Name: Mark C. Pope IV
---------------
Title: President
---------
CARPENTER ACQUISITION COMPANY
By: /s/ Mark C. Pope IV
-------------------
Name: Mark C. Pope IV
---------------
Title: President
---------
CARPENTER RESERVE PRINTING COMPANY
By: /s/ Richard A. Amendola
-----------------------
Name: Richard A. Amendola
-------------------
Title: President/CEO
-------------
/s/ Richard A. Amendola
-----------------------
Richard A. Amendola
Social Security Number: ###-##-####
Address: 333 Inwood Trail
Aurora, Ohio 44202
/s/ Ronald R. Meredith
----------------------
Ronald R. Meredith
Social Security Number: ###-##-####
Address: 9 Laurel Drive
Rocky River, Ohio 44116
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/s/ Jack W. Kothera
-------------------
Jack W. Kothera
Social Security Number: ###-##-####
Address: 5259 Case Avenue
Lyndhurst, Ohio 44124
/s/ Sandra L. Kothera
---------------------
Sandra L. Kothera
Social Security Number: ###-##-####
Address: 5259 Case Avenue
Lyndhurst, Ohio 44124
/s/ Geraldine R. Steger
-----------------------
Geraldine R. Steger
Social Security Number: ###-##-####
Address: 7560 Hollycroft Lane #1
Mentor, Ohio 44060
/s/ Rose Mary Bour
------------------
Rose Mary Bour
Social Security Number: ###-##-####
Address: 20991 Wilmore Avenue
Euclid, Ohio 44123
/s/ Robert E. Highman
---------------------
Robert E. Highman
Social Security Number: ###-##-####
Address: 1962 Hopehaven Drive
Parma, Ohio 44134
/s/ Thomas D. Stewart
---------------------
Thomas D. Stewart
Social Security Number: ###-##-####
Address: 3567 Northvale Blvd.
Cleveland Heights, Ohio 44112
------------------------------
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<PAGE>
/s/ E. Alfred Schroeder
-----------------------
E. Alfred Schroeder
Social Security Number: ###-##-####
Address: 485 Suite 14 Bent Creek Oval
Aurora, Ohio 44202
/s/ Russell C. Shaw
-------------------
Russell C. Shaw
Social Security Number: ###-##-####
Address: 401 Ravine Drive
Aurora, Ohio 44202
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<PAGE>
ATTACHMENT A
List of Stockholders
--------------------
Richard A. Amendola
Ronald R. Meredith
Jack W. Kothera
Sandy L. Kothera
Geraldine R. Steger
Rose Mary Bour
Robert E. Highman
Thomas D. Stewart
E. Alfred Schroeder
Russell Shaw
-58-
<PAGE>
EXHIBIT 10UUU
================================================================================
CREDIT AGREEMENT
dated as of December 21, 1995
by and among
GRAPHIC INDUSTRIES, INC.,
as Borrower
THE CO-AGENTS NAMED HEREIN AND THE OTHER
FINANCIAL INSTITUTIONS PARTY HERETO
AND THEIR ASSIGNEES UNDER SECTION 14.6.,
as Lenders
and
NATIONSBANK OF GEORGIA, NATIONAL ASSOCIATION,
as Agent
================================================================================
<PAGE>
TABLE OF CONTENTS/*/
<TABLE>
<S> <C>
ARTICLE I. DEFINITIONS......................................................... 1
Section 1.1. Definitions................................................. 1
Section 1.2. General..................................................... 21
Section 1.3. Accounting Terms and Determinations......................... 21
ARTICLE II. REVOLVING CREDIT FACILITY.......................................... 22
Section 2.1. Revolving Loans............................................. 22
Section 2.2. Rates and Payment of Interest on Revolving Loans............ 22
Section 2.3. Repayment of Revolving Loans................................ 23
Section 2.4. Continuation................................................ 24
Section 2.5. Conversion.................................................. 24
Section 2.6. Revolving Notes............................................. 25
Section 2.7. Voluntary Reductions of Revolving Commitment................ 25
Section 2.8. Extension of Revolving Credit Termination Date.............. 25
ARTICLE III. SWING LINE FACILITY............................................... 26
Section 3.1. Swing Line Loans............................................ 26
Section 3.2. Rates and Payment of Interest on Swing Line Loans........... 27
Section 3.3. Repayment of Swing Line Loans............................... 28
Section 3.4. Evidence of Swing Line Loans................................ 28
Section 3.5. No Lender Participation..................................... 28
ARTICLE IV. PAYMENTS, FEES AND OTHER GENERAL PROVISIONS........................ 28
Section 4.1. Payments.................................................... 28
Section 4.2. Prepayments of Loans........................................ 29
Section 4.3. Pro Rata Treatment.......................................... 29
Section 4.4. Sharing of Payments, Etc.................................... 30
Section 4.5. Insufficient Funds.......................................... 30
Section 4.6. Several Obligations......................................... 31
Section 4.7. Minimum Amounts............................................. 31
Section 4.8. Fees........................................................ 31
Section 4.9. Computations................................................ 33
Section 4.10. Usury...................................................... 33
Section 4.11. Agreement Regarding Interest and Charges................... 33
Section 4.12. Statements of Account...................................... 33
Section 4.13. Defaulting Lenders......................................... 34
Section 4.14. Taxes...................................................... 35
ARTICLE V. YIELD PROTECTION, ETC............................................... 36
Section 5.1. Additional Costs; Capital Adequacy.......................... 36
Section 5.2. Suspension of LIBOR Loans................................... 37
Section 5.3. Illegality.................................................. 38
</TABLE>
_____________________________
/*/ This Table of Contents is not part of the Credit Agreement and is provided
as a convenience only.
-i-
<PAGE>
<TABLE>
<S> <C>
Section 5.4. Compensation................................................ 38
Section 5.5. Affected Lenders............................................ 39
Section 5.6. Treatment of Affected Revolving Loans....................... 39
Section 5.7. Change of Lending Office.................................... 40
Section 5.8. Assumptions Concerning Funding of LIBOR Loans............... 40
ARTICLE VI. CONDITIONS PRECEDENT............................................... 40
Section 6.1. Initial Conditions Precedent................................ 40
Section 6.2. Conditions Precedent to All Loans........................... 43
ARTICLE VII. REPRESENTATIONS AND WARRANTIES.................................... 43
Section 7.1. Representations and Warranties.............................. 43
Section 7.2. Survival of Representations and Warranties, Etc............. 48
ARTICLE VIII. AFFIRMATIVE COVENANTS............................................ 49
Section 8.1. Preservation of Existence and Similar Matters............... 49
Section 8.2. Compliance with Applicable Law and Material Contracts....... 49
Section 8.3. Maintenance of Property..................................... 49
Section 8.4. Conduct of Business......................................... 49
Section 8.5. Insurance................................................... 49
Section 8.6. Payment of Taxes and Claims................................. 50
Section 8.7. Visits and Inspections...................................... 50
Section 8.8. Use of Proceeds............................................. 51
Section 8.9. Additional Subsidiaries..................................... 51
Section 8.10. Environmental Matters...................................... 51
Section 8.11. Books and Records.......................................... 52
ARTICLE IX. INFORMATION........................................................ 52
Section 9.1. Quarterly Financial Statements.............................. 52
Section 9.2. Year-End Statements......................................... 52
Section 9.3. Compliance Certificate...................................... 53
Section 9.4. Borrowing Base Certificate/Receivables Aging Report......... 53
Section 9.5. Notice of Litigation and Other Matters...................... 53
Section 9.6. ERISA....................................................... 54
Section 9.7. Copies of Other Reports..................................... 56
Section 9.8. Other Information........................................... 56
ARTICLE X. NEGATIVE COVENANTS.................................................. 56
Section 10.1. Financial Covenants........................................ 57
Section 10.2. Indebtedness............................................... 58
Section 10.3. Contingent Obligations..................................... 59
Section 10.4. Investments................................................ 60
Section 10.5. Liens; Agreements Regarding Liens; Other Matters........... 61
Section 10.6. Restricted Payments........................................ 61
</TABLE>
-ii-
<PAGE>
<TABLE>
<S> <C>
Section 10.7. Merger, Consolidation, Sales of Assets and Other
Arrangements...................................................... 62
Section 10.8. Fiscal Year................................................ 63
Section 10.9. Subordinated Debt Prepayments; Amendments.................. 63
Section 10.10. Transactions with Affiliates.............................. 63
ARTICLE XI. DEFAULT............................................................ 63
Section 11.1. Events of Default.......................................... 63
Section 11.2. Remedies Upon Event of Default............................. 67
Section 11.3. Performance by Agent....................................... 68
Section 11.4. Rights Cumulative.......................................... 68
ARTICLE XII. THE AGENT......................................................... 68
Section 12.1. Authorization and Action................................... 68
Section 12.2. Agent's Reliance........................................... 69
Section 12.3. Notice of Defaults......................................... 69
Section 12.4. NationsBank of Georgia, National Association as Lender..... 70
Section 12.5. Lender Credit Decision..................................... 70
Section 12.6. Indemnification of Agent................................... 71
Section 12.7. Collateral Matters......................................... 71
Section 12.8. Successor Agent............................................ 72
ARTICLE XIII. INTERCREDITOR ARRANGEMENTS REGARDING LINES
OF CREDIT................................................................. 73
Section 13.1. Lines of Credit............................................ 73
Section 13.2. Structure of Syndicate Lines of Credit..................... 73
Section 13.3. Collateral Pool/No Independent Rights...................... 74
Section 13.4. Rights Upon Syndicate Line of Credit Default............... 75
Section 13.5. Cessation of Funding....................................... 75
Section 13.6. Cure Rights................................................ 76
Section 13.7. Permitted Indebtedness/Claims.............................. 76
Section 13.8. Turnover................................................... 76
ARTICLE XIV. MISCELLANEOUS..................................................... 77
Section 14.1. Notices.................................................... 77
Section 14.2. Expenses................................................... 78
Section 14.3. Stamp, Intangible and Recording Taxes...................... 79
Section 14.4. Setoff..................................................... 79
Section 14.5. Litigation; Jurisdiction; Other Matters; Waivers........... 80
Section 14.6. Successors and Assigns..................................... 81
Section 14.7. Amendments................................................. 83
Section 14.8. Nonliability of Agent and Lenders.......................... 84
Section 14.9. Confidentiality............................................ 85
Section 14.10. Indemnification........................................... 85
Section 14.11. Survival.................................................. 87
</TABLE>
-iii-
<PAGE>
<TABLE>
<S> <C>
Section 14.12. Titles and Captions....................................... 87
Section 14.13. Severability of Provisions................................ 87
Section 14.14. Governing Law............................................. 87
Section 14.15. Counterparts.............................................. 87
Section 14.16. Credit Obligations with Respect to Loan Parties........... 88
Section 14.17. Retention of Borrower's Documents......................... 88
Section 14.18. Marshaling: Payments Set Aside............................ 88
Section 14.19. Independence of Covenants................................. 88
Section 14.20. Independent Nature of Lenders' Rights..................... 88
Section 14.21. No Fiduciary Relationship................................. 89
Section 14.22. Limitation of Liability................................... 89
Section 14.23. No Duty................................................... 89
Section 14.24. Entire Agreement.......................................... 89
Section 14.25. Construction.............................................. 89
</TABLE>
ANNEX I List of Lenders, Commitments and Lending Offices
SCHEDULE 1.01(A) List of Loan Parties
SCHEDULE 1.01(B) Existing Liens
SCHEDULE 1.01(C) Excluded Letters of Credit
SCHEDULE 1.01(D) Locations of Real Property
SCHEDULE 6.1 (j) Indebtedness to be Paid Off on Effective Date
SCHEDULE 6.1 (u) Landlord Waivers Covering Real Property
SCHEDULE 7.1(b) Ownership Structure/Investments
SCHEDULE 7.1(g) Indebtedness and Contingent Obligations
SCHEDULE 7.1(i) Litigation
SCHEDULE 7.1(j) Tax Returns under Audit
SCHEDULE 7.1(m) Existing Defaults
SCHEDULE 7.1(n) Environmental Matters
SCHEDULE 7.1(r) Affiliate Transactions
SCHEDULE 13.1 List of Existing Syndicate Lines of Credit
EXHIBIT A Form of Addendum to Guaranty and Master Security Agreement
EXHIBIT B-1 Form of Compliance Certificate
EXHIBIT B-2 Form of Auditor's Compliance Certificate
EXHIBIT C Form of Assignment and Assumption Agreement
EXHIBIT D Form of Borrowing Base Certificate
EXHIBIT E Form of Notice of Borrowing
EXHIBIT F Form of Notice of Continuation
EXHIBIT G Form of Notice of Conversion
EXHIBIT H Form of Notice of Swing Line Borrowing
EXHIBIT I Form of Revolving Note
EXHIBIT J Form of Swing Line Note
EXHIBIT K Form of Opinion of Counsel to Loan Parties
-iv-
<PAGE>
EXHIBIT L Form of Disbursement Letter
EXHIBIT M Form of Guaranty
EXHIBIT N Form of Master Security Agreement
EXHIBIT O Form of Master Pledge Agreement
EXHIBIT P Form of Intercompany Note
EXHIBIT Q Form of Intercreditor Agreement
-v-
<PAGE>
THIS CREDIT AGREEMENT dated as of December 21, 1995 by and among GRAPHIC
INDUSTRIES, INC., a corporation organized under the laws of the State of Georgia
(the "Borrower"), the Co-Agents named herein and each of the other financial
institutions initially a signatory hereto together with those assignees pursuant
to Section 14.6.(d), as Lenders and NATIONSBANK OF GEORGIA, NATIONAL
ASSOCIATION, as Agent .
WHEREAS, the parties hereto desire to make available to the Borrower
certain financial accommodations on the terms and conditions contained herein.
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged by the parties hereto, the parties
hereto agree as follows:
ARTICLE 1. DEFINITIONS
Section 1.1. Definitions.
In addition to terms defined elsewhere herein, the following terms shall
have the following meanings for the purposes of this Agreement and the Exhibits
and Schedules hereto:
"Addendum" means each Addendum to Guaranty and Master Security Agreement in
--------
substantially the form of Exhibit A required to be executed and delivered by a
Loan Party to the Agent pursuant to Section 8.9.
"Additional Costs" has the meaning given that term in Section 5.1.
----------------
"Additional Pledge Agreement" means each Pledge Agreement in substantially
---------------------------
the form of Exhibit B required to be executed and delivered to the Agent
pursuant to Section 8.9.
"Adjusted LIBO Rate" means, with respect to each Interest Period for any
------------------
LIBOR Loan, the rate obtained by dividing (a) LIBOR for such Interest Period by
(b) a percentage equal to 1 minus the actual rate (stated as a decimal), if any,
of all reserves, if any, required to be maintained against "Eurocurrency
liabilities" as specified in Regulation D of the Board of Governors of the
Federal Reserve System (or against any other category of liabilities which
includes deposits by reference to which the interest rate on LIBOR Loans is
determined or any category of extensions of credit or other assets which
includes loans by an office of any Lender outside of the United States of
America to residents of the United States of America).
"Affected Lender" has the meaning set forth in Section 5.5.
---------------
"Affiliate" of any Person means any other Person: (a) directly or
---------
indirectly controlling, controlled by, or under common control with, the such
first Person; (b) directly or indirectly owning or holding five percent (5.0%)
or more of any equity interest in such first Person; or (c) five percent (5.0%)
or more of whose voting stock or other equity interest is directly or indirectly
owned or held by such first Person. For purposes of this definition, "control"
(including with correlative meanings, the terms "controlling", "controlled by"
and "under
<PAGE>
common control with") means the possession directly or indirectly of
the power to direct or cause the direction of the management and policies of
such first Person, whether through the ownership of voting securities or by
contract or otherwise.
"Agent" means NationsBank of Georgia, National Association, as agent for
-----
the Lenders under the terms of this Agreement, and any successor agent.
"Agreement" means this Credit Agreement, as the same may be amended,
---------
restated, supplemented or otherwise modified from time to time pursuant to the
terms hereof.
"Agreement Date" means the date as of which this Agreement is dated.
--------------
"Applicable Borrowing Subsidiary" has the meaning set forth in Section
-------------------------------
13.2.
"Applicable Law" means all applicable provisions of constitutions,
--------------
statutes, ordinances, laws, rules, regulations and orders of all Governmental
Authorities and all orders, rulings, writs and decrees of all courts, tribunals
and arbitrators.
"Applicable Margin" shall mean (i) with respect to any LIBOR Loan, for
-----------------
the period from the Effective Date through and including the date the Agent and
the Lenders receive the initial set of financial statements required to be
delivered pursuant to Article IX hereof (the "Initial Reporting Date"), 1.75%
and (ii) with respect to any Base Rate Loan, for the period from the Effective
Date through and including the Initial Reporting Date, 0%. For the period from
the Initial Reporting Date through and including the Revolving Termination Date,
the Applicable Margin shall mean, as of any date of determination, the
percentage rate set forth below for each Type of Loan corresponding to the
Consolidated Funded Debt to EBITDA Ratio in effect at such time:
<TABLE>
<CAPTION>
==============================================================================================
Consolidated Funded Debt Applicable Margin Applicable Margin
to EBITDA Ratio for LIBOR Loans for Base Rate
Loans
- ----------------------------------------------------------------------------------------------
<S> <C> <C>
Greater than 4.0 to 1.0 3.00% 0.50%
- ----------------------------------------------------------------------------------------------
Greater than 3.5 to 1.0 but less than or
equal to 4.0 to 1.0 2.50% 0.25%
- ----------------------------------------------------------------------------------------------
Greater than 3.0 to 1.0 but less than or
equal to 3.5 to 1.0 2.00% 0%
- ----------------------------------------------------------------------------------------------
Greater than 2.5 to 1.0 but less than or
equal to 3.0 to 1.0 1.75% 0%
- ----------------------------------------------------------------------------------------------
Greater than 2.0 to 1.0 but less than or
equal to 2.5 to 1.0 1.50% 0%
- ----------------------------------------------------------------------------------------------
Less than or equal to 2.0 to 1.0 1.25% 0%
==============================================================================================
</TABLE>
-2-
<PAGE>
For the period from and after the Initial Reporting Date, the Applicable Margin
shall be determined by the Agent on a quarterly basis. The Consolidated Funded
Debt to EBITDA Ratio shall be determined by the Agent promptly after receipt of
the financial statements and compliance certificates required to be delivered by
the Borrower to the Agent and the Lenders pursuant to Section 9.1., 9.2. and
9.3., as applicable. Any adjustment to the Applicable Margin shall be effective
as of the first Business Day following the receipt of such financial statements
and compliance certificates. In the event the Borrower fails to deliver the
financial statements and accompanying compliance certificate within three
Business Days after the due date therefor as set forth in Sections 9.1, 9.2 and
9.3, as applicable, the Applicable Margin shall, on such third Business Day,
automatically increase from the Applicable Margin then in effect to the next
highest Applicable Margin in the table set forth above. Such new Applicable
Margin shall remain in effect until the date three Business Days after receipt
of the applicable past-due financial statements and certificate. On such date,
the Applicable Margin shall be set in accordance with the Consolidated Funded
Debt to EBITDA Ratio reflected in such financial statements and certificates.
Nothing in this definition shall limit the right of the Requisite Lenders to
declare an Event of Default hereunder by reason of the failure to deliver the
required financial statements and certificates in a timely fashion.
"Assignee" has the meaning given that term in Section 14.6.(d).
--------
"Assignment and Assumption Agreement" means an Assignment and Assumption
-----------------------------------
Agreement among a Lender, an Assignee and the Agent, substantially in the form
of Exhibit C.
"Available Revolving Commitment" means, on any date of determination
------------------------------
thereof, the difference of: (i) the lesser of: (A) the Revolving Commitment in
effect on such date and (B) the sum of the Borrowing Base in effect on such date
plus the Excess Amount in effect on such date minus (ii) the sum of: (X) the
aggregate principal amount of all Revolving Loans outstanding on such date plus
(Y) the aggregate principal amount of all Swing Line Loans outstanding on such
date plus (Z) the aggregate principal amount of all Permitted Notes Payable
outstanding on such date.
"Bankruptcy Proceeding" means any case or other proceeding of the type or
---------------------
kind described in Section ref EventsOfDefault 11.1.(e) or (f).
"Base Rate" means the higher of: (a) the rate which NationsBank of Georgia,
---------
National Association announces from time to time in Atlanta, Georgia as its
prime lending rate and (b) the Federal Funds Rate, as in effect from time to
time, plus one-half of one percent (0.5%) per annum. The prime lending rate of
NationsBank of Georgia, National Association is a reference rate and does not
necessarily represent the lowest or best rate actually charged to any customer.
NationsBank of Georgia, National Association may make commercial loans or other
loans at rates of interest at, above, or below such prime lending rate. Any
change in the Base Rate hereunder shall be effective for purposes of this
Agreement as of the date of such change in the rates described in the
immediately preceding clauses (a) and (b).
-3-
<PAGE>
"Base Rate Loan" means a Revolving Loan bearing interest at a rate based on
--------------
the Base Rate.
"Borrower" has the meaning set forth in the introductory paragraph hereof
--------
and shall include the Borrower's successors and permitted assigns.
"Borrowing" means a borrowing by the Borrower of Revolving Loans pursuant
---------
to Section 2.1. or a borrowing of Swing Line Loans pursuant to Section 3.1.
"Borrowing Base" means, at any time, an amount equal to the sum of (without
--------------
duplication) the following:
(a) 80% (less such reasonable reserves as the Agent may from time to time
establish) of the face value of all outstanding Eligible Receivables at such
time, plus
(b) 50% of the fair market value of all Eligible Raw Material Inventory
at such time, plus
(c) 100% of the face value of all Eligible Current Assets.
The amount of the Borrowing Base shall be determined on a quarterly basis
using the applicable Borrowing Base Certificate delivered to the Agent pursuant
to Section 9.4. hereof.
The Agent and the Requisite Lenders may, at their sole and absolute
discretion, exclude from the Borrowing Base Eligible Receivables and Eligible
Raw Materials Inventory of any Subsidiary or Business Unit that is acquired
after the Agreement Date.
"Borrowing Base Certificate" means a Borrowing Base Certificate in the form
--------------------------
of Exhibit D.
"Business Day" means (a) any day other than a Saturday, Sunday or other day
------------
on which banks in Atlanta, Georgia or New York, New York are authorized or
required to close and (b) with reference to a LIBOR Loan, any such day that is
also a day on which dealings in Dollar deposits are carried out in the London
interbank market.
"Business Unit" means the assets constituting the business or a division or
-------------
operating unit thereof of any Person.
"Capital Expenditures Amount" means, for any Four Quarter Period the lesser
---------------------------
of: (i) 3% of "Revenue" as reported in the financial statements delivered to the
Agent and the Lenders pursuant to Sections 9.1. and 9.2. for such Four Quarter
Period and (ii) "Additions to Property, Plant and Equipment less Proceeds from
Sale of Property, Plant and Equipment" as reported in the financial statements
delivered to the Agent and the Lenders pursuant to Sections 9.1 and 9.2. for
such Four Quarter Period.
-4-
<PAGE>
"Capital Stock" means, as to any Person, any and all shares, interests,
-------------
warrants, participations or other equivalents (however designated) of capital
stock of such Person.
"Capitalized Lease Obligation" means Indebtedness represented by
----------------------------
obligations under a lease that is required to be capitalized for financial
reporting purposes in accordance with GAAP, and the amount of such Indebtedness
shall be the capitalized amount of such obligations determined in accordance
with such principles. Unless otherwise stated, references to Capitalized Lease
Obligations shall be Capitalized Lease Obligations of the Borrower and its
Subsidiaries, on a consolidated basis.
"Cash" means Dollars of the Borrower and its Subsidiaries on deposit with
----
any financial institution.
"Cash Equivalents" means: (a) securities issued, guaranteed or insured by
----------------
the United States of America or any of its agencies with maturities of not more
than one year from the date acquired; (b) certificates of deposit with
maturities of not more than one year from the date acquired issued by a U.S.
federal or state chartered commercial bank of recognized standing, which has
capital and unimpaired surplus in excess of $500,000,000.00 and which bank or
its holding company has a short-term commercial paper rating of at least A-2 or
the equivalent by Standard & Poor's Ratings Services or at least P-2 or the
equivalent by Moody's Investors Services, Inc.; (c) reverse repurchase
agreements with terms of not more than seven days from the date acquired, for
securities of the type described in (a) above and entered into only with
commercial banks having the qualifications described in (b) above; (d)
commercial paper or finance company paper issued by any Person incorporated
under the laws of the United States of America or any State thereof and rated at
least A-2 or the equivalent thereof by Standard & Poor's Ratings Services or at
least P-2 or the equivalent thereof by Moody's Investors Services, Inc., in each
case with maturities of not more than one year from the date acquired; and (e)
investments in money market funds registered under the Investment Company Act of
1940, which have net assets of at least $500,000,000.00 and at least 85% of
whose assets consist of securities and other obligations of the type described
in clauses (a) through (d) above.
"Casualty Loss" has the meaning set forth in Section 8.5.
-------------
"Claims and Expenses" has the meaning set forth in Section 14.10(a).
-------------------
"Collateral" means any collateral security hereafter pledged, granted or
----------
otherwise given by any Loan Party to secure the Credit Obligations or any
portion thereof pursuant to the Loan Documents.
"Commitment" means, as to each Lender (other than the Swing Line Lender in
----------
its capacity as such), such Lender's obligation to make Revolving Loans pursuant
to Section 2.1., in an amount up to, but not exceeding, the amount set forth for
such Lender on Annex I as such Lender's "Initial Commitment Amount", as the same
may be reduced from time to time pursuant to Section 2.7. or terminated pursuant
to Section 11.2.(a).
-5-
<PAGE>
"Commitment Percentage" means at any time, as to each Lender, the ratio,
---------------------
expressed as a percentage, of (a) the amount of such Lender's Commitment at such
time to (b) the aggregate amount of the Commitments of all Lenders hereunder at
such time; provided, however, that if at the time of determination the
Commitments have terminated or been reduced to zero, the "Commitment Percentage"
of each Lender shall be the Commitment Percentage of such Lender in effect
immediately prior to such termination or reduction.
"Consolidated Current Maturities" means, with respect to the Borrower and
-------------------------------
its Subsidiaries, the aggregate amount of all regularly scheduled payments of
principal of the Consolidated Funded Debt of the Borrower and its Subsidiaries
to be made during the four consecutive fiscal quarters immediately following the
determination of the Minimum Fixed Charge Coverage Ratio pursuant to Section
10.1.(c) hereof with respect thereto.
"Consolidated EBITDA" means, with respect to the Borrower and its
-------------------
Subsidiaries for any period of computation thereof, the sum of, without
duplication, (i) Consolidated Net Income plus (ii) Consolidated Interest Expense
for such period plus (iii) taxes on income provided for during such period plus
(iv) amortization for such period plus (v) depreciation for such period, but in
each case only to the extent deducted when calculating Consolidated Net Income.
"Consolidated EBITDAR" means Consolidated EBITDA for any period of
--------------------
computation plus to the extent deducted from Consolidated Net Income, all
Consolidated Rental Payments during such period.
"Consolidated Funded Debt" means all Indebtedness for Money Borrowed of the
------------------------
Borrower and its Subsidiaries.
"Consolidated Funded Debt to EBITDA Ratio" means, for any fiscal quarter of
----------------------------------------
the Borrower, the ratio obtained by dividing the Consolidated Funded Debt
outstanding on the date of determination by Consolidated EBITDA for the Four
Quarter Period ending on the date of computation thereof.
"Consolidated Interest Expense" means, with respect to any period of
-----------------------------
computation thereof, the gross interest expense of the Borrower and its
Subsidiaries, including without limitation: (i) the amortization of debt
discounts; (ii) the amortization of all fees (including, without limitation,
fees payable in respect of any swap or hedging arrangement) payable in
connection with the incurrence of Indebtedness to the extent included in
interest expense; and (iii) the portion of any liabilities incurred in
connection with Capitalized Lease Obligations allocable to interest expense.
"Consolidated Net Income" means, for any period of computation thereof, the
-----------------------
consolidated net income of the Borrower and its Subsidiaries; provided, however,
that the following shall be excluded when determining Consolidated Net Income:
(i) net gains on the acquisition, retirement, sale or other disposition of
Capital Stock and other securities of the Borrower or its Subsidiaries; (ii) net
gains on the collection of proceeds of life insurance policies;
-6-
<PAGE>
(iii) any write-up of any asset; and (iv) any other net gain or credit of an
extraordinary nature (other than net gains on the sale, conversion or other
disposition of capital assets).
"Consolidated Net Worth" means at any time as of which the amount thereof
----------------------
is to be determined, the sum of the following in respect of the Borrower and its
Subsidiaries (determined on a consolidated basis and excluding intercompany
items among the Borrower and its Subsidiaries and any upward adjustment after
the Agreement Date due to revaluation of assets): (i) the amount of issued and
outstanding share capital plus (ii) the amount of additional paid-in capital and
retained income (or, in the case of a deficit, minus the amount of such
deficit).
"Consolidated Rental Payments" shall mean, with reference to any period,
----------------------------
the aggregate amount of all rental expense of the Borrower and its Subsidiaries
for such period.
"Contingent Obligation" means, as applied to any Person, any direct or
---------------------
indirect liability, contingent or otherwise, of that Person: (a) with respect to
any Indebtedness, lease, dividend or other obligation of another Person if the
primary purpose or intent of the Person incurring such liability, or the primary
effect thereof, is to provide assurance to the obligee of such liability that
such liability will be paid or discharged, or that any agreements relating
thereto will be complied with, or that the holders of such liability will be
protected (in whole or in part) against loss with respect thereto including, but
not limited to, (i) the direct or indirect guaranty, endorsement (other than for
collection or deposit in the ordinary course of business), comaking, discounting
with recourse or sale with recourse by such Person of the obligation of another,
(ii) the obligation to make, take or pay or similar payments if required
regardless of nonperformance by any other Person to an agreement, and (iii) any
liability of such Person for the obligations of another through any agreement to
purchase, repurchase or otherwise acquire such obligation or any property
constituting security therefor, to provide funds for the payment or discharge of
such obligation or to maintain the solvency, financial condition or any balance
sheet item or level of income of another; (b) with respect to any letter of
credit issued for the account of that Person or as to which that Person is
otherwise liable for reimbursement of drawings; (c) under interest rate swap
agreements or any similar agreement or arrangement intended to protect a Person
against fluctuations in interest rates; or (d) under any foreign exchange
contract, currency swap agreement or other similar agreements or arrangements
designed to protect that Person against fluctuations in currency values. The
amount of any Contingent Obligation shall be equal to the amount of the
obligation so guaranteed or otherwise supported or, if not a fixed and
determined amount, the maximum amount so guaranteed.
"Continue", "Continuation" and "Continued" each refers to the continuation
-------- ------------ ---------
of a LIBOR Loan from one Interest Period to another Interest Period pursuant to
Section 2.4.
"Convert", "Conversion" and "Converted" each refers to the conversion of a
------- ---------- ---------
Revolving Loan of one Type into a Revolving Loan of another Type pursuant to
Section 2.5.
"Credit Event" means either of the following: (a) the making of any
------------
Revolving Loan; (b) the Conversion of a Revolving Loan; or (c) the making of a
Swing Line Loan.
-7-
<PAGE>
"Credit Obligations" means, individually and collectively: (a) the
------------------
Revolving Loans and the obligation of the Borrower to repay the same and the
accrued interest thereon in accordance with this Agreement and the Revolving
Notes; (b) the Swing Line Loans and the obligation of the Borrower to repay the
same and the accrued interest thereon in accordance with this Agreement and the
Swing Line Note; and (c) all other indebtedness, liabilities, obligations,
covenants and duties of the Borrower and the other Loan Parties owing to the
Agent or any Lender of every kind, nature and description, under or in respect
of this Agreement or any of the other Loan Documents, including, without
limitation, the Fees and indemnification obligations, whether direct or
indirect, absolute or contingent, due or not due, contractual or tortious,
liquidated or unliquidated, and whether or not evidenced by any promissory note.
"Default" means any of the events specified in Section 11.1., whether or
-------
not there has been satisfied any requirement for the giving of notice, the lapse
of time, or both.
"Defaulting Lender" has the meaning set forth in Section 4.13.
-----------------
"Dollars" or "$" means the lawful currency of the United States of America.
------- -
"Effective Date" means the later of: (a) the Agreement Date; and (b) the
--------------
date on which all of the conditions precedent set forth in Section 6.1. shall
have been fulfilled or waived in writing by the Requisite Lenders.
"Eligible Current Assets" means all Cash and Marketable Securities owned
-----------------------
free and clear by the Borrower and its Subsidiaries and not subject to any Lien
which, on the date of determination, would be included as "Current Assets" in
accordance with GAAP, on the financial statements delivered to the Agent and the
Lenders pursuant to Sections 9.2. and 9.2.
"Eligible Raw Material Inventory" means all raw material inventory of the
-------------------------------
Borrower and its Subsidiaries, including all unopened ink and unopened paper
rolls, used in connection with the manufacture of goods or otherwise used or
consumed in such Person's business and in which the Agent has a perfected first-
priority Lien pursuant to the Master Security Agreement and which is reported on
any financial statements of the Borrower and its Subsidiaries delivered to the
Agent and the Lenders as "raw material inventory" and which shall not in any
event include inventory (i) that constitutes work-in-process or finished goods,
(ii) that is held by any of the Loan Parties on consignment or (iii) that is
subject to a repurchase agreement with the supplier thereof.
"Eligible Receivables" means all Receivables of the Borrower and its
--------------------
Subsidiaries in which the Agent has a perfected first-priority Lien pursuant to
the Master Security Agreement, and which is reported on the financial statements
of the Borrower and its Subsidiaries as "trade accounts receivable" excluding,
however, (i) all Receivables having an outstanding Dollar amount equal to or
greater than $5,000 which remain unpaid for more than 90 days after the invoice
date therefor and (ii) all Receivables of the Borrower and its Subsidiaries
owing by any Affiliate of the Borrower or any Subsidiary.
-8-
<PAGE>
"Environmental Laws" means any Applicable Law relating to environmental
------------------
protection or the manufacture, storage, disposal or clean-up of Hazardous
Materials including, without limitation, the following: Clean Air Act, 42 U.S.C.
(S) 7401 et seq; Federal Water Pollution Control Act, 33 U.S.C. (S) 1251 et
seq.; Solid Waste Disposal Act, 42 U.S.C. (S) 6901 et seq.; Comprehensive
Environmental Response, Compensation and Liability Act, 42 U.S.C. (S) 9601 et
seq.; National Environmental Policy Act, 42 U.S.C. (S) 4321 et seq.; regulations
of the Environmental Protection Agency and any applicable rule of common law
relating primarily to the environment or Hazardous Materials.
"Equipment" means all machinery and equipment owned by the Borrower and its
---------
Subsidiaries and which is reflected on the financial statements delivered to the
Agent and the Lenders in accordance with Sections 9.1. and 9.2.
"ERISA" means the Employee Retirement Income Security Act of 1974, as in
-----
effect from time to time.
"ERISA Affiliate" means any entity required at any relevant time to be
---------------
aggregated with the Borrower or any Subsidiary under Sections 414(b) or (c) of
the Internal Revenue Code. In addition, for purposes of any provision of this
Agreement that relates to Section 412(n) of the Internal Revenue Code, the term
ERISA Affiliate shall mean any entity aggregated with the Borrower or any
Subsidiary under Sections 414(b), (c), (m) or (o) of the Internal Revenue Code.
"Event of Default" means any of the events specified in Section 11.1.,
----------------
provided that any requirement for the giving of notice, the lapse of time, a
determination of materiality or the happening of any other condition has been
satisfied.
"Excess Amount" means, on any date of determination as set forth in the
-------------
Borrowing Base Certificate, the lesser of: (i) $30,000,000 and (ii) 50% of the
difference of: (A) the net book value of all Equipment that is owned by the
Borrower and its Subsidiaries minus (B) the aggregate principal amount of all
Indebtedness outstanding at such time and secured by Equipment. The Agent and
the Requisite Lenders may, at their sole and absolute discretion, exclude from
the Excess Amount any Equipment of a Subsidiary or Business Unit that is
acquired after the Agreement Date.
"Existing Indebtedness for Money Borrowed" means the Indebtedness for Money
----------------------------------------
Borrowed of the Borrower and its Subsidiaries outstanding as of the Agreement
Date as set forth on Schedule 7.1.(g).
"Extension Request" has the meaning given that term in Section 2.8.
-----------------
"Federal Funds Rate" means, for any period, a fluctuating interest rate per
------------------
annum equal for each day during such period to the weighted average of the rates
on overnight Federal Funds transactions with members of the Federal Reserve
System arranged by Federal Funds brokers, as published for such day (or, if such
day is not a Business Day, for the next preceding Business Day) by the Federal
Reserve Bank of New York, or, if such rate is not so published for any day
-9-
<PAGE>
that is a Business Day, the average of the quotations for such day on such
transactions received by the Agent from three Federal Funds brokers of
recognized standing selected by the Agent.
"Fee Letter" means the letter agreement dated as of the Agreement Date
----------
between the Agent and the Borrower.
"Fees" means the fees and commissions provided for or referred to in
----
Section 4.8. and any other fees payable by the Borrower hereunder or under any
other Loan Document.
"Foreign Lender" means any Lender organized under the laws of a
--------------
jurisdiction other than the United States of America.
"Four-Quarter Period" means a period of four full consecutive fiscal
-------------------
quarters of the Borrower, taken together as one accounting period, and unless
set forth herein to the contrary, shall mean the four full consecutive fiscal
quarters of the Borrower most recently ending before the day of any computation
of any given financial ratio or covenant contained herein.
"GAAP" means generally accepted accounting principles as set forth in
----
statements from Auditing Standards No. 69 entitled "The Meaning of 'Present
Fairly in Conformance with Generally Accepted Accounting Principles in the
Independent Auditors Reports'" issued by the Auditing Standards Board of the
American Institute of Certified Public Accountants and statements and
pronouncements of the Financial Accounting Standards Board that are applicable
to the circumstances.
"Governmental Approvals" means all authorizations, consents, approvals,
----------------------
licenses and exemptions of, registrations and filings with, and reports to, all
Governmental Authorities.
"Governmental Authority" means any national, state or local government
----------------------
(whether domestic or foreign), any political subdivision thereof or any other
governmental, quasi-governmental, judicial, administrative, public or statutory
instrumentality, authority, body, agency, bureau or entity (including, without
limitation, the Federal Deposit Insurance Corporation, the Comptroller of the
Currency or the Federal Reserve Board, any central bank or any comparable
authority).
"Guaranty" has the meaning given that term in Section 6.1.(m) and shall
--------
include the Guaranty as supplemented by each Addendum.
"Hazardous Materials" means all or any of the following: (a) substances
-------------------
that are defined or listed in, or otherwise classified pursuant to, any
applicable Environmental Laws as "hazardous substances" "hazardous materials",
"hazardous wastes", "toxic substances" or any other formulation intended to
define, list or classify substances by reason of deleterious properties such as
ignitability, corrosivity, reactivity, carcinogenicity, reproductive toxicity or
"TCLP" toxicity; (b) oil, petroleum or petroleum derived substances, natural
gas, natural gas liquids or synthetic gas and drilling fluids, produced waters
and other wastes associated with the exploration, development or production of
crude oil, natural gas or geothermal resources; (c) any
-10-
<PAGE>
flammable substances or explosives or any radioactive materials; and (d)
asbestos in any form or (e) electrical equipment which contains any oil or
dielectric fluid containing levels of polychlorinated biphenyls in excess of
fifty parts per million.
"Indebtedness" as applied to a Person means, without duplication, (a) all
------------
items which in accordance with GAAP would be included in determining total
liabilities as shown on the liability side of a balance sheet of such Person as
at the date as of which Indebtedness is to be determined including, without
limitation, all Capitalized Lease Obligations of such Person and all
reimbursement obligations of such Person under letters of credit and acceptances
issued for its account and (b) but without duplication, all Contingent
Obligations of such Person.
"Indemnity Proceeding" has the meaning set forth in Section 14.10(a).
--------------------
"Initial Reporting Date" has the meaning set forth in the definition of
----------------------
"Applicable Margin".
"Intercompany Loan" means any working capital loan made by the Borrower
-----------------
to any of its Subsidiaries.
"Intercompany Note" means, collectively, each promissory note executed and
-----------------
delivered by each of the Borrower's Subsidiaries in favor of the Borrower
evidencing an Intercompany Loan in substantially the form of Exhibit P hereto.
"Intercreditor Agreement" has the meaning given that term in Section
-----------------------
10.2.(e).
"Interest Period" means (a) with respect to any LIBOR Loan, the period
---------------
commencing on the date of the Borrowing, Conversion or Continuation of such
LIBOR Loan and ending on the last day of the period selected by the Borrower
pursuant to the provisions below and (b) with respect to any Swing Line Loan,
the period commencing on the date of the Borrowing of such Swing Line Loan and
ending on a Business Day no earlier than five days and no later than sixty days
thereafter, as the Borrower may select as provided in Section 3.1. The duration
of each Interest Period for any LIBOR Loan shall be one, two, three or six
months in each case as the Borrower may, in an appropriate Notice of Borrowing,
Notice of Continuation or Notice of Conversion, select. In no event shall any
Interest Period extend beyond the Revolving Termination Date. Whenever the last
day of any Interest Period would otherwise occur on a day other than a Business
Day, the last day of such Interest Period shall be extended to occur on the next
succeeding Business Day; provided, however, that, with respect to any LIBOR
Loan, if such extension would cause the last day of such Interest Period to
occur in the next following calendar month, the last day of such Interest Period
shall occur on the next preceding Business Day.
"Internal Revenue Code" means the Internal Revenue Code of 1986, as
---------------------
amended.
"Investment" means any of the following and whether or not such investment
----------
constitutes a controlling interest in another Person:
-11-
<PAGE>
(a) the purchase or other acquisition by a Person of any share of Capital
Stock, evidence of Indebtedness or other security issued by any other Person;
(b) the purchase or other acquisition by a Person of a Business Unit of
another Person or of all or a portion of the assets of another Person outside
the ordinary course of business;
(c) any loan, advance or extension of credit by a Person to another
Person, or any contribution (in the form of money or goods) to the capital of
any other Person;
(d) any Contingent Obligation of a Person with respect to any other
Person;
(e) any other investment by a Person in any other Person, including all
investments in general and limited partnerships, all joint ventures and other
equity interests or participations in any Person; and
(f) any legally binding commitment of a Person to make an Investment in
any other Person.
"Lender" means each financial institution from time to time identified as a
------
Lender on, for such Lender and for each Type of Loan, the then current Annex I,
including the Swing Line Lender, together with such Lender's respective
successors and permitted assigns.
"Lending Office" means, for each Lender and for each Type of Loan, the
--------------
office of each Lender specified for such Lender on Annex I.
"LIBOR" means, with respect to any Interest Period for LIBOR Loans, the
-----
offered rate per annum in the London interbank market for deposits in Dollars of
amounts equal or comparable to the principal amount of such LIBOR Loan offered
for a term comparable to such Interest Period, as currently shown on the Reuters
Screen LIBOR page as of 11:00 a.m., Greenwich Mean Time, two Business Days prior
to the first day of such Interest Period; provided, however, that (a) if more
than one offered rate as described above appears on the Reuters Screen LIBOR
page, the rate used to determine LIBOR will be the arithmetic average (rounded
upward, if necessary, to the next higher 1/16 of 1%) of such offered rates, or
(b) if no such offered rates appear, the rate used for such Interest Period will
be the arithmetic average (rounded upward, if necessary, to the next higher 1/16
of 1%) of rates quoted by the Agent at approximately 10:00 a.m., New York time,
two Business Days prior to the first day of such Interest Period for deposits in
Dollars offered to leading banks in the London interbank market for a period
comparable to such Interest Period in an amount comparable to the principal
amount of such LIBOR Loans. If the Agent ceases to use the Reuters Screen LIBOR
page for determining interest rates based on eurodollar deposit rates, a
comparable internationally recognized interest rate reporting service shall be
used to determine such offered rates.
"LIBOR Loan" means a Revolving Loan bearing interest at a rate based on
----------
LIBOR.
-12-
<PAGE>
"Lien" as applied to the property of any Person means: (a) any security
----
interest, encumbrance, mortgage, deed to secure debt, deed of trust, pledge,
lien, charge or lease constituting a Capitalized Lease Obligation, conditional
sale or other title retention agreement, or other security title or encumbrance
of any kind in respect of any property of such Person, or upon the income or
profits therefrom; (b) any arrangement, express or implied, under which any
property of such Person is transferred, sequestered or otherwise identified for
the purpose of subjecting the same to the payment of Indebtedness or performance
of any other obligation in priority to the payment of the general, unsecured
creditors of such Person; and (c) the filing of any financing statement under
the Uniform Commercial Code or its equivalent in any jurisdiction.
"Line of Credit" means a line of credit extended by a Line of Credit Lender
--------------
pursuant to a Permitted Note Payable.
"Line of Credit Default" has the meaning set forth in Section 13.4.
----------------------
"Line of Credit Documents" has the meaning set forth in Section 13.2.
------------------------
"Line of Credit Lender" means a Person that has extended Indebtedness for
---------------------
Money Borrowed to the Borrower and/or its Subsidiaries pursuant to a Permitted
Notes Payable and which may include a Lender hereunder.
"Loan Document" means this Agreement, each Revolving Note, the Swing Line
-------------
Note, each Security Document and each other document or instrument now or
hereafter executed and delivered by a Loan Party in connection with, pursuant to
or relating to this Agreement.
"Loan Party" means each of the Borrower, each Subsidiary of the Borrower,
----------
each other Person who guarantees all or a portion of the Credit Obligations
and/or who pledges any collateral security to secure all or a portion of the
Credit Obligations. Schedule 1.01(A) sets forth the Loan Parties in addition to
the Borrower as of the Agreement Date.
"Loans" means, collectively, the Revolving Loans and the Swing Line Loans;
-----
and "Loan" means any Revolving Loan or any Swing Line Loan.
----
"Marketable Securities" means all Cash Equivalents and all other stocks,
---------------------
bonds, options, rights, warrants, government securities, certificates of deposit
and other debt and equity securities and instruments of every kind owned by the
Borrower and its Subsidiaries which constitutes "marketable securities" under
GAAP.
"Master Pledge Agreement" means the Master Pledge Agreement executed by the
-----------------------
Borrower and the other Loan Parties named therein in favor of the Agent pursuant
to Section 6.1. or otherwise.
-13-
<PAGE>
"Master Security Agreement" means the Master Security Agreement to be
-------------------------
executed by each Loan Party in favor of the Agent and the Lenders pursuant to
Section 6.1. or otherwise and shall include the Master Security Agreement as
supplemented by each Addendum.
"Material Adverse Change" means, with respect to any Person, a material
-----------------------
adverse change in such Person's business, assets, liabilities, financial
condition or results of operations. Unless otherwise set forth herein, any
reference to "Material Adverse Change" shall be a reference to the effect on the
Borrower and its Subsidiaries, taken as a whole.
"Material Adverse Effect" means a material adverse effect on (a) the
-----------------------
business ,assets, liabilities, financial condition or results of operations of
the Borrower and its Subsidiaries, taken as a whole, (b) the ability of the
Borrower or any other Loan Party to perform its obligations under any Loan
Document to which it is a party, (c) the validity or enforceability in any
material respect of any of the Loan Documents, (d) the rights and remedies of
Lenders and Agent under any of the Loan Documents or (e) the timely payment of
the principal of or interest on the Loans or other amounts payable in connection
therewith or herewith. Except with respect to representations made or deemed
made by any Loan Party in any of the other Loan Documents to which it is a
party, all determinations of materiality shall be made by the Agent in its
reasonable judgment unless expressly provided otherwise.
"Material Contract" means any contract or other arrangement (other than
-----------------
Loan Documents), whether written or oral, to which the Borrower or any other
Loan Party is a party as to which the breach, nonperformance, cancellation or
failure to renew by any party thereto would reasonably be likely to have a
Material Adverse Effect.
"Maximum Leverage Ratio" has the meaning set forth in Section 10.1(b).
----------------------
"Minimum Net Worth" has the meaning given that term in Section 10.1.(a).
-----------------
"Money Borrowed" means, as applied to the Indebtedness of a Person:
--------------
(a) Indebtedness for money borrowed including all revolving and term
Indebtedness and all other lines of credit;
(b) Indebtedness (other than trade debt of such Person incurred in the
ordinary course of business which constitutes "current debt" under GAAP),
whether or not in any such case the same was for money borrowed:
(i) represented by notes payable, and drafts accepted, that
represent extensions of credit;
(ii) constituting obligations evidenced by bonds, debentures, notes
or similar instruments; or
-14-
<PAGE>
(iii) constituting purchase money indebtedness, conditional sales
contracts, title retention debt instruments or other similar instruments
upon which interest charges are customarily paid or that are issued or
assumed as full or partial payment for property;
(c) Indebtedness that constitutes a Capitalized Lease Obligation;
(d) all reimbursement obligations under any letters of credit or
acceptances (whether or not the same have been presented for payment) issued for
the account of such Person; provided, however, that, for purposes of Section
10.1., this subsection (d) shall not include any reimbursement obligation owing
by a Loan Party in respect of any letter of credit listed on Schedule 1.01(C);
provided, further, that such Schedule 1.01(C) may be amended from time to time
upon the written consent of the Requisite Lenders and the Borrower; or
(e) Contingent Obligations described in paragraph (a) of the definition
thereof, but only to the extent that the Indebtedness or obligation to which
such Contingent Obligation relates would constitute Indebtedness for Money
Borrowed.
"Money Market Rate" has the meaning given that term in Section 3.1.(c).
-----------------
"Multiemployer Plan" means a multiemployer plan defined as such in Section
------------------
3(37) of ERISA to which contributions have been made by the Borrower or any
ERISA Affiliate and which is covered by Title IV of ERISA.
"Non-Stock Consideration" has the meaning set forth in Section 10.4.
-----------------------
"Non-Syndicate Line of Credit" means a Line of Credit extended by a Line of
----------------------------
Credit Lender that is not a Lender hereunder.
"Non-Syndicate Line of Credit Lender" means a Person that extends credit
-----------------------------------
under a Non-Syndicate Line of Credit.
"Notes" means, collectively, the Revolving Notes and the Swing Line Note;
-----
and "Note" means any Revolving Note or the Swing Line Note.
----
"Notice of Borrowing" means a notice in the form of Exhibit E to be
-------------------
delivered to the Agent pursuant to Section 2.1.(b) evidencing the Borrower's
request for a Borrowing of Revolving Loans.
"Notice of Continuation" means a notice in the form of Exhibit F to be
----------------------
delivered to the Agent pursuant to Section 2.4. evidencing the Borrower's
request for the Continuation of a LIBOR Loan.
"Notice of Conversion" means a notice in the form of Exhibit G to be
--------------------
delivered to the Agent pursuant to Section 2.5. evidencing the Borrower's
request for the Conversion of a Revolving Loan from one Type to another Type.
-15-
<PAGE>
"Notice of Rejection" has the meaning specified in Section 2.8(b).
-------------------
"Notice of Swing Line Borrowing" means a notice in the form of Exhibit H
------------------------------
to be delivered to the Agent and the Swing Line Lender pursuant to Section
3.1.(b) evidencing the Borrower's request for an offer from the Swing Line
Lender to make Swing Line Loans.
"Participant" has the meaning given that term in Section 14.6(c).
-----------
"PBGC" means the Pension Benefit Guaranty Corporation and any successor
----
agency.
"Permitted Liens" means, as to any Person: (a) Liens securing taxes,
---------------
assessments and other charges or levies imposed by any Governmental Authority
(excluding any Lien imposed pursuant to any of the provisions of ERISA) or the
claims of materialmen, mechanics, carriers, warehousemen or landlords for labor,
materials, supplies or rentals incurred in the ordinary course of business which
are not required to be paid or discharged under Section 8.6.; (b) Liens
consisting of deposits or pledges made, in the ordinary course of business, in
connection with, or to secure payment of, obligations under workers'
compensation, unemployment insurance or similar Applicable Laws or to secure the
performance of tenders, statutory obligations, surety and appeal bonds, bids,
government contracts and similar obligations incurred in the ordinary course of
business; (c) Liens on real property securing Indebtedness permitted by Section
10.2.(g); provided, however, that such Liens shall only be granted to the extent
necessary to acquire or to secure Indebtedness not in excess of the value of
such real property or to refinance such Indebtedness with respect to such real
property and such Liens shall secure only the Indebtedness so incurred; (d)
Liens created pursuant to any of the Loan Documents; (e) Liens on the assets and
properties of the Borrower's Business Units and Subsidiaries existing on the
Effective Date as set forth in Schedule 1.01(B) or acquired by the Borrower and
its Subsidiaries after the Agreement Date securing Indebtedness that is assumed
by the Borrower or its Subsidiaries in connection with such acquisitions and
that is permitted by Section 10.1.(f) (other than Liens securing the
Indebtedness set forth on Schedule 6.1(j)); (f) Purchase Money Liens or
Capitalized Lease Obligations but only to the extent the Indebtedness secured by
such Liens is permitted pursuant to Section 10.2.(h); (g) Liens arising from
judgments, decrees or attachments in circumstances not constituting an Event of
Default hereunder; (h) Liens incurred or deposits made to secure the performance
of leases of real property entered into in the ordinary course of business; (i)
licenses, leases or subleases granted to third Persons not interfering in any
material respect with the business of the Borrower or its Subsidiaries; (j)
easements, rights of way, restrictions, immaterial defects or irregularities in
title or other similar changes or encumbrances not interfering in any material
respect with the ordinary conduct of business; and (k) a Lien in favor of
SunTrust Bank, Atlanta in Marketable Securities in an aggregate fair market
value not exceeding $1,800,000 to secure the reimbursement obligations of the
Borrower with respect to the letter of credit described in Schedule 1.01(c).
"Permitted Notes Payable" means the lines of credit, notes payable and all
-----------------------
other Indebtedness for Money Borrowed of the Borrower and its Subsidiaries
permitted by Section 10.2.(e) hereof.
-16-
<PAGE>
"Person" means an individual, corporation, partnership, limited liability
------
company, association, trust or unincorporated organization, or a government or
any agency or political subdivision thereof.
"Plan" means an employee benefit or pension plan maintained for employees
----
of the Borrower, any of the other Loan Parties or any Affiliate thereof that is
covered by Title IV of ERISA, including such plans as may be established after
the Agreement Date.
"Post-Default Rate" means, in respect of any principal of any Loan or any
-----------------
other Credit Obligation that is not paid when due (whether at stated maturity,
by acceleration, by optional or mandatory prepayment or otherwise), a rate per
annum during the period from and including the due date to but excluding the
date on which such amount is paid in full equal to two percent (2.00%) plus the
Base Rate as in effect from time to time plus the Applicable Margin for Base
Rate Loans at such time; provided that, if (i) the amount so in default is the
principal of a LIBOR Loan and the due date thereof is a day other than the last
day of the Interest Period therefor, the "Post-Default Rate" for such principal
shall be, for the period from and including such due date to but excluding the
last day of the Interest Period, two percent (2.00%) plus the interest rate for
such LIBOR Loan as provided in Section 2.2.(a)(ii) and thereafter, the rate
first provided for above in this definition; and (ii) the amount so in default
is the principal of a Swing Line Loan and the due date thereof is a day other
than the last day of the Interest Period therefor, the "Post-Default Rate" for
such principal shall be, for the period from and including such due date to but
excluding the last day of the Interest Period, two percent (2.00%) plus the
interest rate for such Swing Line Loan as provided in Section 3.2.(a), and
thereafter, the rate first provided for above in this definition.
"Principal Office" means the main office of the Agent located at 600
----------------
Peachtree Street, 21st Floor, Atlanta, Georgia 30308 or such other office as the
Agent may from time to time designate in writing to the Borrower and the
Lenders.
"Purchase Money Lien" means a Lien on any item of Equipment acquired
-------------------
after the Agreement Date; provided, however, that: (a) such Lien shall attach
only to the Equipment to be acquired; (b) the Indebtedness incurred in
connection with such acquisition shall not exceed the purchase price of such
item of Equipment then being financed; (c) such Lien shall secure only such
Indebtedness; and (d) the Borrower shall furnish to the Agent and each Lender a
description of any Equipment so acquired, the purchase price of which equals or
exceeds $2,000,000.
"Quarterly Date" means the last Business Day of March, June, September and
--------------
December in each year, the first of which shall be December 29, 1995.
"Real Property" means each parcel of real property leased by a Loan Party,
-------------
the locations of which are attached hereto as Schedule 1.01(D).
"Receivables" means, as to any Person, all accounts and any and all rights
-----------
to the payment of money or other forms of consideration of any kind (whether
classified under the Uniform
-17-
<PAGE>
Commercial Code as accounts, chattel paper, general intangibles, or otherwise)
for goods sold or leased or for services rendered by such Person, whether or not
earned by performance, including, but not limited to, accounts receivable,
proceeds of any letters of credit naming such Person as beneficiary, all
contract rights, notes, drafts, instruments, documents, acceptances in favor of
such Person, and all other debts, obligations and liabilities in whatever form
owing by any other Person to such Person.
"Register" has the meaning given that term in Section 14.6.(e).
--------
"Regulatory Change" means, with respect to any Lender, any change effective
-----------------
after the Agreement Date in Applicable Law (including without limitation,
Regulation D of the Board of Governors of the Federal Reserve System) or the
adoption or making after such date of any interpretation, directive or request
applying to a class of banks, including such Lender, of or under any Applicable
Law (whether or not having the force of law and whether or not failure to comply
therewith would be unlawful) by any Governmental Authority or monetary authority
charged with the interpretation or administration thereof or compliance by any
Lender with any request or directive regarding capital adequacy.
"Rejecting Lender" has the meaning set forth in Section 2.8(a) hereof.
----------------
"Reportable Event" has the meaning set forth in Section 4043(b) of ERISA,
----------------
but shall not include a Reportable Event as to which the provision for 30 days'
notice to the PBGC is waived under applicable regulations.
"Requisite Lenders" means, as of any date, Lenders whose combined
-----------------
Commitment Percentages equal or exceed 66-2/3%, or, if the Commitments have been
terminated or reduced to zero, Lenders holding at least 66-2/3% of the principal
amount of all Loans.
"Restricted Payment" means: (a) any dividend or other distribution,
------------------
direct or indirect, on account of any shares of any class of stock of the
Borrower or any of its Subsidiaries now or hereafter outstanding, except a
dividend payable solely in shares of that class of stock to the holders of that
class; (b) any redemption, conversion, exchange, retirement, sinking fund or
similar payment, purchase or other acquisition for value, direct or indirect, of
any shares of any class of stock of the Borrower or any of its Subsidiaries now
or hereafter outstanding; (c) any payment or prepayment of principal of,
premium, if any, or interest on, redemption, conversion, exchange, purchase,
retirement, defeasance, sinking fund or similar payment with respect to, any
Subordinated Debt; and (d) any payment made to retire, or to obtain the
surrender of, any outstanding warrants, options or other rights to acquire
shares of any class of stock of the Borrower or any of its Subsidiaries now or
hereafter outstanding.
"Revolving Commitment" means $110,000,000, as the same may be reduced from
--------------------
time to time pursuant to the terms of this Agreement.
"Revolving Loan" means a loan made by a Lender to the Borrower pursuant to
--------------
Section 2.1.(a).
-18-
<PAGE>
"Revolving Note" has the meaning given that term in Section 2.6.(a).
--------------
"Revolving Termination Date" means December 21, 1997 or as such date may be
--------------------------
extended pursuant to Section 2.8 hereof.
"Securities Act" means the Securities Act of 1933, as amended from time to
--------------
time, together with all rules and regulations issued thereunder.
"Senior Debt" means, at any time, the Consolidated Funded Debt of the
-----------
Borrower and its Subsidiaries outstanding at such time minus the aggregate
principal amount of all Subordinated Debt outstanding at such time.
"Security Document" means the Guaranty, the Master Security Agreement, the
-----------------
Master Pledge Agreement, each Intercreditor Agreement, each Additional Pledge
Agreement, each Addendum and other document or instrument executed by a Loan
Party providing for Collateral.
"Sinking Fund Payments" means the sinking fund payments required to be paid
---------------------
pursuant to paragraph 6 of each Subordinated Debenture.
"Solvent" means, when used with respect to any Person, that (a) the fair
-------
value and the fair salable value of its assets (excluding any Indebtedness due
from any Affiliate of such Person) are each in excess of the fair valuation of
its total liabilities (including all contingent liabilities); and (b) such
Person is able to pay its debts or other obligations in the ordinary course as
they mature and (c) that such Person has capital not unreasonably small to carry
on its business and all business in which it proposes to be engaged.
"Statement of Funds Flow" has the meaning set forth in Section 6.1.
-----------------------
"Stock Consideration" has the meaning set forth in Section 10.4.
-------------------
"Subordinated Debt" means, at any time, the Indebtedness evidenced by the
-----------------
Subordinated Debentures and any other Indebtedness for Money Borrowed of the
Borrower or any of its Subsidiaries that is subordinated in right of payment to
the Loans and the other Credit Obligations in a manner satisfactory to the Agent
and the Requisite Lenders and otherwise permitted by the Agent and the Requisite
Lenders.
"Subordinated Debenture Indenture" means that certain Indenture dated as of
--------------------------------
May 14, 1986 by and between the Borrower and the First National Bank of Atlanta,
as Trustee, as the same may be amended, supplemented or modified from time to
time.
"Subordinated Debentures" means those certain 7% Convertible Subordinated
-----------------------
Debentures due May 15, 2006 issued by the Borrower pursuant to the Subordinated
Debenture Indenture as the same may be amended, supplemented or modified from
time to time.
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<PAGE>
"Subsidiary" means a Person of which an aggregate of 50% or more of the
----------
issued and outstanding capital stock of any class or classes having by the terms
thereof ordinary voting power to elect the directors (or other management
personnel) of such Person or 50% or more of other voting or equity interests is
owned of record, directly or beneficially, by another Person, or by one or more
Subsidiaries of such other Person, or by such other Person and one or more
Subsidiaries of such Person.
"Surrendered Note" has the meaning set forth in Section 14.6(e).
----------------
"Swing Line Amount" means the lesser of: (i) the Commitment of NationsBank
-----------------
of Georgia, National Association in effect from time to time and (ii)
$10,000,00.
"Swing Line Lender" means NationsBank of Georgia, National Association, and
-----------------
its successors and assigns.
"Swing Line Loan" means a loan made by the Swing Line Lender to the
---------------
Borrower pursuant to Section 3.4.
"Swing Line Loan Offer" has the meaning given that term in Section 3.1(c).
---------------------
"Swing Line Note" has the meaning set forth in Section 3.4.
---------------
"Syndicate Line of Credit" has the meaning given that term in Section 13.1.
------------------------
"Syndicate Line of Credit Lender" has the meaning given that term in
-------------------------------
Section 13.1.
"Taxes" has the meaning given that term in Section 4.14.
-----
"Termination Event" means (a) a Reportable Event; (b) the filing of a
-----------------
notice of intent to terminate a Plan or the treatment of a Plan amendment as a
termination under Section 4041 of ERISA or (c) the institution of proceedings to
terminate a Plan by the PBGC under Section 4042 of ERISA, or the appointment of
a trustee to administer any Plan.
"Total Capitalization" means, as of any date of determination, the sum of
--------------------
(i) Senior Debt outstanding on such date plus (ii) Subordinated Debt outstanding
on such date plus (iii) Consolidated Net Worth on such date.
"Total Tangible Assets" means the net book value of all assets of the
---------------------
Borrower and its Subsidiaries (less reserves properly deductible) which in
accordance with GAAP would appear on the consolidated balance sheet of the
Borrower and its Subsidiaries less: (i) intangibles, (ii) minority interests,
and (iii) investments, loans and advances which are not Investments permitted
under Section 10.4 For purposes of determining the book value of the Capital
Stock of a Subsidiary, the net book value of the assets of such Subsidiary shall
be used. In a sale of less than 100% of the Capital Stock of a Subsidiary, the
book value of the Capital Stock so sold shall equal the same percentage of the
net book value of the assets of such Subsidiary.
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<PAGE>
"Transaction Costs" shall mean, with respect to a given transaction, all
-----------------
reasonable brokerage, agency and investment banking fees, fees and expenses of
appraisers and accountants, fees and disbursements of legal counsel and other
reasonable out-of-pocket costs and expenses incurred by Borrower or a Subsidiary
(or required to be paid by Borrower or a Subsidiary) in connection with such
transaction.
"Type" with respect to any Revolving Loan, refers to whether such Revolving
----
Loan is a LIBOR Loan or Base Rate Loan.
SECTION 1.2. GENERAL.
-------
References in this Agreement to "Sections", "Articles", "Exhibits" and
"Schedules" are to sections, articles, exhibits and schedules herein and hereto
unless otherwise indicated. References in this Agreement to any document,
instrument or agreement (a) shall include all exhibits, schedules and other
attachments thereto, (b) shall mean such document, instrument or agreement, as
amended, supplemented or otherwise modified from time to time in accordance with
this Agreement and in effect at any given time. Wherever from the context it
appears appropriate, each term stated in either the singular or plural shall
include the singular and plural, and pronouns stated in the masculine, feminine
or neuter gender shall include the masculine, the feminine and the neuter.
Unless explicitly set forth to the contrary, a reference to "Subsidiary" means a
Subsidiary of the Borrower or a Subsidiary of such Subsidiary and a reference to
an "Affiliate" means a reference to an Affiliate of the Borrower. Unless
otherwise indicated, all references to time are references to Eastern Standard
Time or Eastern Daylight Savings Time, as the case may be.
SECTION 1.3. ACCOUNTING TERMS AND DETERMINATIONS.
-----------------------------------
Except as expressly set forth to the contrary, any determination of
"Consolidated EBITDA", "Consolidated EBITDAR", "Consolidated Funded Debt",
"Consolidated Interest Expense", "Consolidated Net Income", "Consolidated Net
Worth", "Revenue", "Additions to Property, Plant and Equipment less Proceeds
from Sale of Property, Plant and Equipment", "Total Tangible Assets", rental
expense and other accounting or financial terms (including any item expressly
added to or deducted or excluded from any such financial term), and the items
and amounts comprising the Borrowing Base, and any determination of whether the
Borrower is in compliance with Article X hereof, shall be made on a consolidated
basis in accordance with GAAP as in effect on the Agreement Date and applied in
a manner consistent in all material respects with the most recent financial
statements delivered to the Agent prior to the date hereof. All financial
statements required to be delivered hereunder from and after the Agreement Date
and all financial records shall be maintained in accordance with GAAP as in
effect from time to time and shall be prepared in a form and manner consistent
with the most recent financial statements delivered to the Agent prior to the
Agreement Date. In the event a change in GAAP occurs after the Agreement Date,
the Borrower shall prepare supplemental financial statements or notes which
indicate the financial position of the Borrower and its consolidated
Subsidiaries but
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<PAGE>
for such change in GAAP. For purposes of Section 10.1, each reference to
"through [a certain date]" shall be deemed to include such date referenced.
ARTICLE II. REVOLVING CREDIT FACILITY
SECTION 2.1. REVOLVING LOANS.
---------------
(a) Agreement to Make Revolving Loans. Subject to the terms and
---------------------------------
conditions hereof, during the period from the Effective Date to but excluding
the Revolving Termination Date, each Lender severally and not jointly agrees to
make Revolving Loans to the Borrower in an aggregate principal amount at any one
time outstanding up to, but not exceeding, the product of: (i) the Available
Revolving Commitment in effect at such time times (ii) such Lender's Commitment
Percentage. Subject to the terms and conditions of this Agreement, during the
period from the Effective Date to, but excluding, the Revolving Termination
Date, the Borrower may borrow, repay and reborrow Revolving Loans hereunder.
(b) Procedure for Borrowing Revolving Loans. The Borrower shall give the
---------------------------------------
Agent written notice pursuant to a Notice of Borrowing or telephonic notice of
each Borrowing of Revolving Loans. Any such telephonic notice shall include all
information to be specified in a written Notice of Borrowing and shall be
promptly confirmed in writing by the Borrower pursuant to a Notice of Borrowing
sent to the Agent by telecopy on the same day of the giving of such telephonic
notice. Each Notice of Borrowing shall be delivered to the Agent before 11:00
a.m. (a) in the case of LIBOR Loans, on the date three Business Days prior to
the proposed date of such Borrowing and (b) in the case of Base Rate Loans, on
the date one Business Day prior to the proposed date of such Borrowing. The
Agent will transmit by telecopy the Notice of Borrowing (or the information
contained in such Notice of Borrowing) to each Lender promptly upon receipt by
the Agent. Each Notice of Borrowing of Revolving Loans or telephonic notice of
such Borrowing shall be irrevocable once given and binding on the Borrower.
(c) Disbursements of Revolving Loan Proceeds. No later than 12:00 noon on
----------------------------------------
the date specified in the Notice of Borrowing for Revolving Loans, each Lender
will make available for the account of its applicable Lending Office to the
Agent at the address of the Agent set forth on Annex I, in immediately available
funds, the proceeds of the Revolving Loan to be made by such Lender using the
wiring instructions for the Agent set forth on Annex I or as otherwise directed
by the Agent. Unless the Agent shall have been notified by any Lender prior to
the specified date of a Borrowing that such Lender does not intend to make
available to the Agent the Revolving Loan to be made by such Lender on such
date, the Agent may assume that such Lender will make the proceeds of such
Revolving Loan available to the Agent on the date of the requested Borrowing as
set forth in the Notice of Borrowing and the Agent may, in reliance upon such
assumption (but shall not be obligated to), make available to the Borrower the
amount of such Revolving Loan to be provided by such Lender. Provided that the
applicable conditions set forth in Article VI for such Borrowing are fulfilled,
the Agent will make the proceeds of such Borrowing available to the Borrower at
the account specified by the Borrower in such Notice of Borrowing not later than
3:00 p.m. on the date specified in the Notice of Borrowing.
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<PAGE>
SECTION 2.2. RATES AND PAYMENT OF INTEREST ON REVOLVING LOANS.
------------------------------------------------
(a) Rates. The Borrower shall pay to the Agent for account of each Lender
-----
interest on the unpaid principal amount of each Revolving Loan made by such
Lender for the period from and including the date of the making of such
Revolving Loan to but excluding the date such Revolving Loan shall be paid in
full, at the following per annum rates:
(i) during such periods as such Revolving Loan is a Base Rate Loan,
the Base Rate (as in effect from time to time) plus the Applicable Margin;
and
(ii) during such periods as such Revolving Loan is a LIBOR Loan, the
Adjusted LIBO Rate for such Revolving Loan for the Interest Period in
effect therefor plus the Applicable Margin.
Notwithstanding the foregoing, the Borrower shall pay to the Agent for account
of each Lender interest at the applicable Post-Default Rate on any principal of
any Revolving Loan made by such Lender and, to the extent permitted by
Applicable Law, on any other amount payable by the Borrower hereunder or under
the Revolving Note held by such Lender to or for account of such Lender, which
shall not be paid in full when due (whether at stated maturity, by acceleration,
by optional or mandatory prepayment or otherwise), for the period from and
including the due date thereof to but excluding the date the same is paid in
full.
(b) Payment. Accrued interest on each Revolving Loan shall be payable (i)
-------
in the case of a Base Rate Loan, quarterly on the Quarterly Dates, (ii) in the
case of a LIBOR Loan, on the last day of each Interest Period therefor (and, if
such Interest Period is longer than three months, at three-month intervals
following the first day of such Interest Period), and (iii) in the case of any
Revolving Loan, upon the payment, prepayment or Continuation thereof or the
Conversion of such Loan to a Revolving Loan of another Type (but only on the
principal amount so paid, prepaid or Converted), except that interest payable at
the Post-Default Rate shall be payable from time to time on demand. Promptly
after the determination of any interest rate provided for herein or any change
therein, the Agent shall give notice thereof to the Lenders to which such
interest is payable and to the Borrower. All determinations by the Agent of an
interest rate hereunder shall be conclusive and binding on the Lenders and the
Borrower for all purposes, absent manifest error.
(c) There may be no more than four different Interest Periods for LIBOR
Loans outstanding at the same time.
SECTION 2.3. REPAYMENT OF REVOLVING LOANS.
----------------------------
(a) Unless earlier required pursuant to the terms of this Agreement or the
other Loan Documents, the Borrower shall repay the entire outstanding principal
amount of, and all accrued but unpaid interest on, all Revolving Loans on the
Revolving Termination Date.
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<PAGE>
(b) The Borrower shall also repay Revolving Loans to the extent required
by Section 4.2.
SECTION 2.4. CONTINUATION.
------------
So long as no Event of Default shall have occurred and be continuing, the
Borrower may on any Business Day, with respect to any LIBOR Loan, elect to
maintain such LIBOR Loan or any portion thereof as a LIBOR Loan by selecting a
new Interest Period for such LIBOR Loan. Each new Interest Period selected
under this Section shall commence on the last day of the immediately preceding
Interest Period. Each selection of a new Interest Period shall be made by the
Borrower's giving of a Notice of Continuation not later than 11:00 a.m. on the
third Business Day prior to the date of any such Continuation by the Borrower to
the Agent. Promptly after receipt of a Notice of Continuation, the Agent shall
notify each Lender by telecopy, or other similar form of transmission of the
proposed Continuation and the Adjusted LIBO Rate applicable therefor. Such
notice by the Borrower of a Continuation shall be by telephone or telecopy,
confirmed immediately in writing if by telephone, in the form of a Notice of
Continuation, specifying (a) the amount and proposed date of such Continuation,
(b) the LIBOR Loan or portion thereof subject to such Continuation and (c) the
duration of the selected Interest Period, all of which shall be specified in
such manner as is necessary to comply with all limitations on Revolving Loans
outstanding hereunder. Each Notice of Continuation shall be irrevocable by and
binding on the Borrower once given. If the Borrower shall fail to select in a
timely manner a new Interest Period for any LIBOR Loan in accordance with this
Section, such Revolving Loan will automatically, on the last day of the current
Interest Period therefore, Convert into a Base Rate Loan notwithstanding failure
of the Borrower to comply with Section 2.5.
SECTION 2.5. CONVERSION.
----------
So long as no Event of Default shall have occurred and be continuing, the
Borrower may on any Business Day, upon the Borrower's giving of a Notice of
Conversion to the Agent, Convert all or a portion of a Revolving Loan of one
Type into a Revolving Loan of another Type; provided, however, that any
Conversion of a LIBOR Loan into a Base Rate Loan shall be made on, and only on,
the last day of the Interest Period for such LIBOR Loan and, upon Conversion of
a Base Rate Loan into a LIBOR Loan, the Borrower shall pay accrued interest to
the date of Conversion on the principal amount so Converted. Promptly after
receipt of a Notice of Conversion, the Agent shall notify each Lender by telex
or telecopy, or other similar form of transmission of the proposed Conversion
and the applicable Adjusted LIBO Rate or Base Rate, as the case may be,
therefor. Each such Notice of Conversion shall be given not later than 11:00
a.m. on the Business Day immediately prior to the date of any proposed
Conversion into Base Rate Loans, and on the third Business Day prior to the date
of any proposed Conversion into LIBOR Loans. Subject to the restrictions
specified above, each Notice of Conversion shall be by telephone or telecopy
confirmed immediately in writing if by telephone in the form of a Notice of
Conversion specifying (a) the requested date of such Conversion, (b) the Type of
Revolving Loan to be Converted, (c) the portion of such Type of Revolving Loan
to be Converted, (d) the Type of Revolving Loan such Revolving Loan is to be
Converted into and
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<PAGE>
(e) if such Conversion is into a LIBOR Loan, the requested duration of the
Interest Period for such Converted Revolving Loan. Each Notice of Conversion
shall be irrevocable by and binding on the Borrower once given.
SECTION 2.6. REVOLVING NOTES.
---------------
(a) The Revolving Loans made by each Lender shall be evidenced by a single
promissory note of the Borrower substantially in the form of Exhibit I (each a
"Revolving Note"), dated the date hereof, payable to the order of such Lender in
a principal amount up to the amount of its Commitment as originally in effect
and otherwise duly completed.
(b) The date, amount, Type, interest rate and duration of Interest Period
(if applicable) of each Revolving Loan made by each Lender to the Borrower, and
each payment made on account of the principal thereof, shall be recorded by such
Lender on its books and such entries shall be binding on the Borrower absent
manifest error.
SECTION 2.7. VOLUNTARY REDUCTIONS OF REVOLVING COMMITMENT.
--------------------------------------------
Subject to Section 4.2, the Borrower shall have the right to terminate or
reduce the amount of the Revolving Commitment at any time and from time to time
without penalty or premium upon not less than five Business Days prior written
notice to the Agent of such termination or reduction, which notice shall specify
the effective date thereof and the amount of any such reduction and shall be
irrevocable once given and effective only upon receipt by the Agent; provided,
however, that if the Borrower seeks to reduce the Revolving Commitment below
$25,000,000, then the Revolving Commitment shall be reduced to zero and, except
as otherwise provided herein, the provisions of this Agreement shall terminate.
The Agent will promptly transmit such notice to each Lender. The Revolving
Commitment, once terminated or reduced may not be increased or reinstated. The
Borrower shall pay all interest and Fees then due on any Loans required to be
paid by reason of a reduction or termination of the Revolving Commitment accrued
to the date of such reduction or termination of the Revolving Commitment to the
Agent for the account of the Lenders. In the event the Borrower is required to
pay any outstanding LIBOR Loans prior to the end of the applicable Interest
Period therefor pursuant to Section 4.2 by reason of a voluntary reduction or
termination of the Revolving Commitment pursuant to this Section, the Borrower
shall indemnify each Lender against the losses, costs and expenses incurred by
such Lender as described in Section 5.4.
SECTION 2.8. EXTENSION OF REVOLVING CREDIT TERMINATION DATE.
----------------------------------------------
(a) The Borrower may request the Agent and the Lenders to extend the then
current Revolving Termination Date for up to two successive one-year intervals
by executing and delivering to Agent at least 75 days but no more than 90 days
prior to the date falling one year prior to the then current Revolving
Termination Date, a written request for such extension (an "Extension Request").
The Agent shall forward to each Lender a copy of each Extension Request
delivered to Agent promptly upon receipt thereof. The Borrower understands that
this Section has been included in this Agreement for Borrower's convenience in
requesting an
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<PAGE>
extension and acknowledges that none of the Lenders or the Agent has promised
(either expressly or impliedly), nor shall any of them have any obligation or
commitment whatsoever, to extend the Revolving Termination Date at any time. If
all of the Lenders shall have notified Agent on or prior to the date which is 45
days prior to the current Revolving Termination Date that they accept such
Extension Request, the Revolving Termination Date shall be extended for an
additional one-year period. If any Lender shall not have notified the Agent on
or prior to the date which is 45 days prior to the Revolving Termination Date
that it accepts such Extension Request, the Revolving Termination Date shall not
be extended with respect to such Lender's Commitment and such Lender shall be
deemed to be a Rejecting Lender (as defined below). The Agent shall notify
Borrower no less than 30 days prior to the Revolving Termination Date as to
whether the Extension Request has been accepted or rejected and which Lender or
Lenders rejected (or failed to accept) an Extension Request (each such Lender, a
"Rejecting Lender"). Any failure to give such notice to the Borrower shall be
deemed to be a rejection by the Agent and the Lenders of the Extension Request.
(b) Within five days after notification from the Agent that an Extension
Request has been rejected (a "Notice of Rejection"), and provided that the
aggregate Commitment Percentages of the Rejecting Lenders does not exceed 25% of
the aggregate Commitment Percentage of all Lenders, the Borrower may, with
respect to each such Rejecting Lender, request that such Rejecting Lender assign
its respective Commitment to another Lender or Lenders or other financial
institution acceptable to the Agent for a purchase price equal to the aggregate
principal balance of Loans then outstanding and owing to such Rejecting Lender
plus any accrued but unpaid interest thereon and other Credit Obligations owing
to such Rejecting Lender. If all Rejecting Lenders have assigned their
Commitments to other Lender(s) or financial institutions as contemplated by the
immediately preceding sentence, then the Extension Request which was initially
rejected shall be deemed to have been granted and accordingly the Revolving
Termination Date shall be extended as requested, otherwise the Revolving
Termination Date shall not be extended. If the aggregate Commitment Percentages
of the Rejecting Lenders exceeds 25% of the aggregate Commitment Percentage of
all Lenders, the Revolving Termination Date shall not be extended.
ARTICLE III. SWING LINE FACILITY
SECTION 3.1. SWING LINE LOANS.
----------------
(a) Swing Line Loans. Subject to the terms and conditions hereof, during
----------------
the period from the Effective Date to but excluding the Revolving Termination
Date, the Swing Line Lender may (but shall have no obligation to) make Swing
Line Loans to the Borrower in an aggregate principal amount at any one time
outstanding up to, but not exceeding the Swing Line Amount in effect at such
time; provided, however, that any given Borrowing of a Swing Line Loan, when
taken together with all then outstanding Loans and all then outstanding
Permitted Notes Payable, may not exceed the Available Revolving Commitment in
effect at such time. Within the limits of the preceding sentence, during the
period from the Effective Date to but excluding the Revolving Termination Date,
the Borrower may borrow, repay and reborrow Swing Line Loans in accordance with
the terms and conditions hereunder. The swing line
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<PAGE>
facility established hereby is for the convenience of the Borrower only and
shall not constitute a commitment on the part of the Swing Line Lender to make
Swing Line Loans hereunder. The Swing Line Lender may elect not to advance Swing
Line Loans, regardless of whether an Event of Default or any other occurrence or
circumstance has occurred or exists.
(b) Procedure for Requesting Swing Line Loans. Any request by the
-----------------------------------------
Borrower for an offer from the Swing Line Lender to make a Swing Line Loan shall
be given to the Swing Line Lender and the Agent in a prior written notice
pursuant to a Notice of Swing Line Borrowing or telephonic notice of a request
for a Borrowing of Swing Line Loans. Any such telephonic notice shall include
all information to be specified in a written Notice of Swing Line Borrowing and
shall be promptly confirmed by the Borrower pursuant to a written Notice of
Swing Line Borrowing sent to the Swing Line Lender by telecopy on the same day
of the giving of such telephonic notice. Each Notice of Swing Line Borrowing
shall be delivered to the Swing Line Lender and the Agent before 11:00 a.m. on
the date one Business Day prior to the proposed date of such Borrowing. Each
Notice of Swing Line Borrowing or telephonic notice of such Borrowing shall be
irrevocable once given and binding on the Borrower.
(c) Swing Line Loan Offers/Acceptance by Borrower. Each offer by the
---------------------------------------------
Swing Line Lender to make a Swing Line Loan in response to a Notice of Swing
Line Borrowing (each a "Swing Line Loan Offer") must be submitted to the
Borrower by telecopy not later than 10:00 a.m. on the proposed date of Borrowing
of such Swing Line Loan and shall specify: (i) the principal amount of the Swing
Line Loan for which such offer is being made; (ii) the duration of the Interest
Period applicable thereto; and (iii) the rate of interest per annum (rounded to
the nearest 1/10,000 of 1%)(the "Money Market Rate") offered for such Swing Line
Loan. Not later than 15 minutes after the receipt of a Swing Line Loan Offer
from the Swing Line Lender, the Borrower shall notify the Agent and the Swing
Line Lender by telecopy of the Borrower's acceptance or rejection of the offer
by the Swing Line Lender to make a Swing Line Loan pursuant the terms of the
Swing Line Loan Offer. Any such acceptance or rejection by the Borrower shall be
irrevocable once made. Failure of the Swing Line Lender to receive such notice
from the Borrower within such 15 minute period shall be deemed to be a rejection
by the Borrower of the offer by the Swing Line Lender to make such Swing Line
Loan.
(d) Disbursements of Swing Line Loan Proceeds. Provided that the Borrower
-----------------------------------------
shall have accepted a Swing Line Loan Offer from the Swing Line Lender to make a
Swing Line Loan pursuant to subsection (c) immediately above, and provided that
the applicable conditions set forth in Article VI for such Borrowing are
fulfilled, the Swing Line Lender will make the proceeds of such Borrowing
available to the Borrower at the account specified by the Borrower in such
Notice of Swing Line Borrowing no later than 3:00 p.m. on the date specified in
such Notice of Swing Line Borrowing.
SECTION 3.2. RATES AND PAYMENT OF INTEREST ON SWING LINE LOANS.
-------------------------------------------------
(a) Rates. The Borrower shall pay to the Swing Line Lender interest on the
-----
unpaid principal amount of each Swing Line Loan made by the Swing Line Lender
for the period from and including the date of the making of such Swing Line Loan
to but excluding the date such
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<PAGE>
Swing Line Loan shall be paid in full, at a rate per annum equal to the Money
Market Rate for such Swing Line Loan for the Interest Period in effect therefor.
Notwithstanding the foregoing, the Borrower shall pay to the Swing Line Lender
interest at the applicable Post-Default Rate on any principal of any Swing Line
Loan made by the Swing Line Lender, which shall not be paid in full when due
(whether at stated maturity, by acceleration, by mandatory prepayment or
otherwise), for the period from and including the due date thereof to but
excluding the date the same is paid in full.
(b) Payment. Accrued interest on each Swing Line Loan shall be payable
-------
(i) on the last day of each Interest Period therefor; (ii) upon the payment or
prepayment of such Swing Line Loan (but only on the principal amount so paid or
prepaid); and (iii) at such times as provided in Section 3.3; provided, however,
that interest payable at the Post-Default Rate shall be payable from time to
time on demand. All determinations by the Swing Line Lender of an interest rate
hereunder shall be conclusive and binding on the Borrower for all purposes,
absent manifest error.
SECTION 3.3. REPAYMENT OF SWING LINE LOANS.
-----------------------------
Unless earlier required pursuant to the terms of this Agreement, or unless
otherwise agreed in writing by the Borrower and the Swing Line Lender, the
Borrower shall repay the principal of all Swing Line Loans, and all accrued but
unpaid interest and fees thereon, on the earlier of: (a) at the end of the
Interest Period for each such Loan or (b) the date the Revolving Commitment is
terminated pursuant to the terms hereof.
SECTION 3.4. EVIDENCE OF SWING LINE LOANS.
----------------------------
(a) The Swing Line Loans made by the Swing Line Lender shall be evidenced
by a single promissory note of the Borrower substantially in the form of Exhibit
J (the "Swing Line Note"), dated the date hereof, payable to the order of the
Swing Line Lender in a principal amount equal to the Swing Line Amount as
originally in effect and otherwise duly completed.
(b) The date, amount, interest rate and duration of Interest Period of
each Swing Line Loan made by the Swing Line Lender to the Borrower, and each
payment made on account of the principal thereof, shall be recorded by the Swing
Line Lender on its books and such entries shall be binding on the Borrower
absent manifest error.
SECTION 3.5. NO LENDER PARTICIPATION.
-----------------------
No Lender (other than the Swing Line Lender) shall have any obligation or
right to make Swing Line Loans or otherwise participate therein.
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<PAGE>
ARTICLE IV. PAYMENTS, FEES AND OTHER GENERAL PROVISIONS
SECTION 4.1. PAYMENTS.
--------
Except to the extent otherwise provided herein, all payments of principal,
interest and other amounts to be made by the Borrower under this Agreement or
any other Loan Document shall be made in Dollars, in immediately available
funds, without deduction, set-off or counterclaim, to the Agent at its Principal
Office, not later than 2:00 p.m. on the date on which such payment shall become
due (each such payment made after such time on such due date to be deemed to
have been made on the next succeeding Business Day) and shall be made in
accordance with the wiring instructions set forth for the Agent on Annex I or as
otherwise directed by the Agent. Subject to Sections 4.3 and 4.4, the Agent, or
any Lender for whose account any such payment is made, may (but shall not be
obligated to) debit the amount of any such payment which is not made by such
time from any special or general deposit account of the Borrower with the Agent
or such Lender, as the case may be (with prior written notice to the Borrower,
the other Lenders and the Agent). The Borrower shall, at the time of making each
payment under this Agreement or any Note, specify to the Agent the amounts
payable by the Borrower hereunder or thereunder to which such payment is to be
applied (and in the event that it fails to so specify, or an Event of Default
has occurred and is continuing, the Agent may apply such payment to the Loans or
any other obligation of the Borrower under the Loan Documents in accordance with
Section 4.5). Each payment received by the Agent for the account of a Lender
under this Agreement or any Revolving Note shall be paid promptly to such
Lender, by wire transfer of same day funds in accordance with the wiring
instructions set forth for such Lender on Annex I, for the account of such
Lender at the applicable Lending Office of such Lender. If the Agent fails to
pay such amount to a Lender as provided in the previous sentence, the Agent
shall pay interest on such amount until paid at a rate per annum equal to the
Federal Funds Rate from time to time in effect. If the due date of any payment
under this Agreement or any other Loan Document would otherwise fall on a day
which is not a Business Day such date shall be extended to the next succeeding
Business Day and, in the case of any principal of any Loan, interest shall be
payable on such Loan for the period of such extension.
SECTION 4.2. PREPAYMENTS OF LOANS.
--------------------
(a) Optional. The Borrower may prepay any Loan at any time without
--------
premium or penalty; provided, however, the Borrower may prepay LIBOR Loans and
Swing Line Loans only on the last day of the applicable Interest Period
therefor.
(b) Mandatory. If at any time the aggregate outstanding principal amount
---------
of (i) all Loans plus (ii) all Permitted Notes Payable exceeds the lesser of:
(A) the Revolving Commitment in effect at such time and (B) the sum of (I) the
Borrowing Base in effect at such time plus (II) the Excess Amount in effect at
such time, the Borrower shall immediately pay to the Agent for the respective
accounts of the Lenders the amount of such excess. Such payment shall be
applied to pay all amounts of principal outstanding on the Loans for the
accounts of the Lenders pro rata in accordance with the amounts of principal
owing to the Lenders at such time. Such application shall be made so as to
prepay all Base Rate Loans in full prior to any
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<PAGE>
prepayments of LIBOR Loans or Swing Line Loans. If the Borrower is required to
pay any outstanding LIBOR Loans or Swing Line Loans by reason of this Section
prior to the end of the applicable Interest Period therefor, the Borrower shall
pay all amounts due under Section 5.4.
SECTION 4.3. PRO RATA TREATMENT.
------------------
Except to the extent otherwise provided herein: (a) each Borrowing of
Revolving Loans shall, subject to Section 13.5 hereof, be made from the Lenders,
each payment of the fees under Section 13.5(a) shall be made for account of the
Lenders, and each reduction of the amount of the Revolving Commitment under
Section 4.8 shall be applied to the respective Commitments of the Lenders, pro
rata according to the amounts of their respective Commitments; (b) the making,
Conversion and Continuation of Revolving Loans of a particular Type (other than
Conversions provided for by Section 5.6) shall be made pro rata among the
Lenders according to the amounts of their respective Commitments (in the case of
making of Revolving Loans) or their respective Revolving Loans (in the case of
Conversions and Continuations of Revolving Loans) and the then current Interest
Period for each Lender's portion of each Revolving Loan of such Type shall be
coterminous; (c) each payment or prepayment of principal of Revolving Loans by
the Borrower shall be made for account of the Lenders pro rata in accordance
with the principal amount of Revolving Loans owing to each such Lender; and (d)
each payment of interest on Revolving Loans by the Borrower shall be made for
account of the Lenders pro rata in accordance with the amounts of interest on
such Revolving Loans then due and payable to the respective Lenders.
SECTION 4.4. SHARING OF PAYMENTS, ETC.
------------------------
If a Lender shall obtain payment of any principal of, or interest on, any
Revolving Loan made by it to the Borrower under this Agreement, or shall obtain
payment on any other Credit Obligation owing by the Borrower or a Loan Party
through the exercise of any right of set-off, banker's lien or counterclaim or
similar right or otherwise or through voluntary prepayments directly to a Lender
or other payments made by the Borrower to a Lender not in accordance with the
terms of this Agreement and such amount or such payment, pursuant to Section 4.3
should be distributed to the Lenders pro rata in accordance with Section 4.3,
such Lender shall promptly purchase from the other Lenders participations in
(or, if and to the extent specified by such Lender, direct interests in) the
Revolving Loans made by the other Lenders or other Credit Obligations owed to
such other Lenders in such amounts, and make such other adjustments from time to
time as shall be equitable, to the end that all the Lenders shall share the
benefit of such payment (net of any reasonable expenses which may be incurred by
such Lender in obtaining or preserving such benefit) pro rata in accordance with
Section 4.3. To such end, all the Lenders shall make appropriate adjustments
among themselves (by the resale of participations sold or otherwise) if such
payment is rescinded or must otherwise be restored. The Borrower agrees that any
Lender so purchasing a participation (or direct interest) in the Revolving Loans
or other Credit Obligations owed to such other Lenders made by other Lenders may
exercise all rights of set-off, banker's lien, counterclaim or similar rights
with respect to such participation as fully as if such Lender were a direct
holder of Revolving Loans in the amount of such participation. Nothing contained
herein shall require any Lender to exercise any such right or shall affect the
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<PAGE>
right of any Lender to exercise, and retain the benefits of exercising, any such
right with respect to any other indebtedness or obligation of the Borrower.
SECTION 4.5. INSUFFICIENT FUNDS.
------------------
If the Agent receives funds (including funds received in connection with
the sale, foreclosure or other liquidation of any Collateral) insufficient to
pay in full the principal of any Loans and/or interest and/or Fees and expenses
due and payable on any date such amounts are due, the Agent shall, as amongst
the Agent and the Lenders, distribute any such funds received by it:
(a) first, to pay all Fees and expenses owing to the Agent at such time
(but only in its capacity as Agent and not as a Lender) until such fees and
expenses are paid in full;
(b) second, to pay all Fees and expenses owing to the Lenders pro rata in
accordance with the amount of such Fees and expenses owing to such Lender at
such time until such Fees and expenses are paid in full;
(c) third, to pay all accrued but unpaid interest on all outstanding Loans
pro rata in accordance with the amount of such interest owing to the Lenders at
such time until such interest is paid in full; and
(d) fourth, to pay all amounts of principal outstanding on the Loans pro
rata in accordance with the amount of such principal owing to the Lenders at
such time until such principal is paid in full.
The distribution of funds set forth in this Section 4.5 shall apply only to
distributions as amongst the Agent and the Lenders and shall be subject to
Article XIII hereof.
SECTION 4.6. SEVERAL OBLIGATIONS.
-------------------
No Lender shall be responsible for the failure of any other Lender to make
a Revolving Loan or to perform any other obligation to be made or performed by
such other Lender hereunder or under any of the other Loan Documents, and the
failure of any Lender to make a Revolving Loan or to perform any other
obligation to be made or performed by it hereunder or under any of the other
Loan Documents shall not relieve the obligation of any other Lender to make any
Revolving Loan or to perform any other obligation to be made or performed by
such other Lender hereunder or under any of the other Loan Documents.
SECTION 4.7. MINIMUM AMOUNTS.
---------------
(a) Borrowings/Conversions. Each Borrowing and each Conversion of
----------------------
Revolving Loans shall be in an aggregate minimum amount of $2,500,000 and
integral multiples of $500,000 in excess of that amount. Each Borrowing of
Swing Line Loans shall be in aggregate minimum amount of $500,000 and integral
multiples of $100,000 in excess of that amount.
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<PAGE>
(b) Reductions of Commitments. Each reduction of the Revolving Commitment
-------------------------
under Section 2.7 shall be in an aggregate amount of at least $1,000,000 and
integral multiples of $500,000 in excess of that amount.
(c) Prepayment of Loans. Any prepayment of any Loan pursuant to Section
-------------------
4.2(a) hereof shall be in an amount not less than $500,000 and integral
multiples of $100,000 in excess of that amount.
SECTION 4.8. FEES.
----
(a) Commitment Fees. For the period commencing with the Agreement Date,
---------------
and on a quarterly basis thereafter, the Borrower shall pay to the Agent for the
account of the Lenders a commitment fee on the daily average unused amount of
the Revolving Commitment. The commitment fee shall be calculated on a
percentage per annum basis. For the period from the Effective Date through and
including the Initial Reporting Date, the commitment fee shall be 0.25% of the
daily average unused amount of the Revolving Commitment. For the period from
the Initial Reporting Date through and including the Revolving Termination Date,
the commitment fee shall be determined using the percentage rate set forth below
corresponding to the Consolidated Funded Debt to EBITDA Ratio in effect at such
time:
<TABLE>
<CAPTION>
----------------------------------------------------------------
CONSOLIDATED FUNDED DEBT COMMITMENT FEE
TO EBITDA RATIO PERCENTAGE
----------------------------------------------------------------
<S> <C>
Greater than 4.0 to 1.0 0.375%
----------------------------------------------------------------
Greater than 3.5 to 1.0 but less than or
equal to 4.0 to 1.0 0.375%
----------------------------------------------------------------
Greater than 3.0 to 1.0 but less than or
equal to 3.5 to 1.0 0.25%
----------------------------------------------------------------
Greater than 2.5 to 1.0 but less than or
equal to 3.0 to 1.0 0.25%
----------------------------------------------------------------
Greater than 2.0 to 1.0 but less than or
equal to 2.5 to 1.0 0.25%
----------------------------------------------------------------
Less than or equal to 2.0 to 1.0 0.25%
----------------------------------------------------------------
</TABLE>
Accrued commitment fees shall be payable in arrears on each Quarterly Date
during the term of this Agreement and on the Revolving Termination Date (or on
such earlier date if the Commitments are earlier terminated). For the period
from and after the Initial Reporting Date, the commitment fee and the
Consolidated Funded Debt to EBITDA Ratio shall be determined by the Agent on a
quarterly basis. The Consolidated Funded Debt to EBITDA Ratio shall be
determined by the Agent promptly after receipt of the financial statements and
compliance certificates required to be delivered by the Borrower to the Agent
and the Lenders pursuant to
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<PAGE>
Section 9.1., 9.2., and 9.3., as applicable. Any adjustment in the commitment
fee percentage shall be effective as of the first Business Day following the
receipt of such financial statements and compliance certificates. In the event
the Borrower fails to deliver the financial statements and accompanying
compliance certificate within three Business Days after the due date therefor as
set forth in Sections 9.1, 9.2 and 9.3, as applicable, the commitment fee
percentage used for calculating the commitment fee shall, on such third Business
Day, automatically increase from the commitment fee percentage then in effect to
the next highest commitment fee percentage in the table set forth above. Such
new commitment fee percentage shall remain in effect until the date three
Business Days after receipt of the applicable past-due financial statements and
certificate. On such date, the commitment fee percentage shall be set in
accordance with the Consolidated Funded Debt to EBITDA Ratio reflected in such
financial statements and certificates. Nothing in this definition shall limit
the right of the Requisite Lenders to declare an Event of Default hereunder by
reason of the failure to deliver the required financial statements and
certificates in a timely fashion. For purposes of calculating commitment fee
hereunder, the aggregate amount of all outstanding Permitted Notes Payable and
all outstanding Swing Line Loans shall not be deducted when determining the
unused portion of the Revolving Commitment. The foregoing commitment fee shall
be fully earned when due and shall not be refundable for any reason.
(b) Administrative and Other Fees of Agent. The Borrower agrees to pay
--------------------------------------
the administrative and other fees of the Agent pursuant to the terms of the Fee
Letter.
SECTION 4.9. COMPUTATIONS.
------------
Unless otherwise expressly set forth herein, any accrued interest on any
Loan and any Fees due hereunder shall be computed on the basis of a year of 360
days and the actual number of days elapsed.
SECTION 4.10. USURY.
-----
In no event shall the amount of interest due or payable on the Loans or
other Credit Obligations exceed the maximum rate of interest allowed by
Applicable Law and, if any such payment is paid by the Borrower or received by
any Lender, then such excess sum shall be credited as a payment of principal,
unless the Borrower shall notify the respective Lender in writing that the
Borrower elects to have such excess sum returned to it forthwith. It is the
express intent of the parties hereto that the Borrower not pay and the Lenders
not receive, directly or indirectly, in any manner whatsoever, interest in
excess of that which may be lawfully paid by the Borrower under Applicable Law.
SECTION 4.11. AGREEMENT REGARDING INTEREST AND CHARGES.
----------------------------------------
The parties hereto hereby agree and stipulate that the only charge imposed
upon the Borrower for the use of money in connection with this Agreement is and
shall be the interest specifically described in Sections 2.2(a)(i) and (ii), and
3.2(a). Notwithstanding the foregoing, the parties hereto further agree and
stipulate that all agency fees, administrative fees,
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<PAGE>
commitment fees, underwriting fees, default charges, late charges, funding or
"breakage" charges, increased cost charges, attorneys' fees and reimbursement
for costs and expenses paid by the Agent or any Lender to third parties or for
damages incurred by the Agent or any Lender, are charges made to compensate the
Agent or any such Lender for underwriting or administrative services and costs
or losses performed or incurred, and to be performed or incurred, by the Agent
and the Lenders in connection with this Agreement and shall under no
circumstances be deemed to be charges for the use of money pursuant to Official
Code of Georgia Annotated Sections 7-4-2 and 7-4-18. All charges other than
charges for the use of money shall be fully earned and nonrefundable when due.
SECTION 4.12. STATEMENTS OF ACCOUNT.
---------------------
The Agent will account to the Borrower monthly with a statement of Loans,
accrued interest and Fees, charges and payments made pursuant to this Agreement
and the other Loan Documents, and such account rendered by the Agent shall be
deemed final, binding and conclusive upon Borrower unless the Borrower notifies
the Agent in writing within fifteen days after the date each statement is
delivered to the Borrower that the Borrower objects to the information,
calculations or items therein contained. Such notice shall only be deemed an
objection to those items specifically objected to therein. The failure of the
Agent to deliver such a statement of accounts shall not relieve or discharge the
Borrower from any of its obligations hereunder.
SECTION 4.13. DEFAULTING LENDERS.
------------------
(a) Generally. If for any reason any Lender shall fail or refuse to
---------
perform any of its obligations under this Agreement or any other Loan Document
to which it is a party and such failure or refusal is not expressly excused
pursuant to the terms hereof or of the other Loan Documents (a "Defaulting
Lender") within the time period specified for performance of such obligation or,
if no time period is specified, if such failure or refusal continues for a
period of two Business Days after notice thereof from the Agent, then, in
addition to the rights and remedies that may be available to the Agent or the
Borrower under this Agreement or Applicable Law, such Defaulting Lender's right
to participate in the administration of the Revolving Loans, this Agreement and
the other Loan Documents, including without limitation, any right to vote in
respect of, to consent to or to direct any action or inaction of the Agent or to
be taken into account in the calculation of the Requisite Lenders, shall be
suspended during the pendency of such failure or refusal; provided, however,
that the non-Defaulting Lenders may not amend this Agreement or the other Loan
Documents to increase the Commitment of any Defaulting Lender or subject any
Defaulting Lender to any additional obligations. If a Lender is a Defaulting
Lender because it has failed to make timely payment to the Agent of any amount
required to be paid to the Agent hereunder (without giving effect to any notice
or cure periods) including, but not limited to, the failure of such Defaulting
Lender to reimburse the Agent for any Revolving Loan funded by the Agent on
behalf of the Defaulting Lender pursuant to, and in accordance with, the second
sentence of Section 2.1(c), in addition to other rights and remedies which the
Agent or the Borrower may have under the immediately preceding provisions or
otherwise, the Agent shall be entitled (i) to collect interest from such
Defaulting Lender on such delinquent
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<PAGE>
payment for the period from the date on which the payment was due until the date
on which the payment is made at the Federal Funds Rate, (ii) to withhold or
setoff and to apply in satisfaction of the defaulted payment and any related
interest, any amounts otherwise payable to such Defaulting Lender under this
Agreement or any other Loan Document and (iii) to bring an action or suit
against such Defaulting Lender in a court of competent jurisdiction to recover
the defaulted amount and any related interest. Any amounts received by the Agent
in respect of a Defaulting Lender's Revolving Loans or other Credit Obligations
shall not be paid to such Defaulting Lender and shall be held by the Agent and
either applied against the purchase price of such Revolving Loans under the
following subsection (b) or paid to such Defaulting Lender upon the Defaulting
Lender's curing of its default.
(b) Purchase of Defaulting Lender's Commitment. Any Lender who is not a
------------------------------------------
Defaulting Lender shall have the right, but not the obligation, in its sole
discretion, to acquire all of a Defaulting Lender's Commitment. If more than
one Lender exercises such right, each such Lender shall have the right to
acquire such proportion of such Defaulting Lender's Commitment as they may
mutually agree. Upon any such purchase, such Defaulting Lender's interest in
the Revolving Loans, other Credit Obligations and its other rights hereunder
(but not its liability in respect thereof or under the Loan Documents or this
Agreement to the extent the same relate to the period prior to the effective
date of the purchase) shall terminate on the date of purchase, and such
Defaulting Lender shall promptly execute all documents reasonably requested to
surrender and transfer such interest to the purchaser thereof, including an
appropriate Assignment and Assumption Agreement and, notwithstanding Section
14.6.(d), shall pay to the Agent a single assignment fee in the amount of
$4,000. The purchase price for the Commitment of a Defaulting Lender shall be
equal to the amount of the principal balance of the Revolving Loans and the
other Credit Obligations outstanding and owed by the Borrower to the Defaulting
Lender. Prior to payment of such purchase price to a Defaulting Lender, the
Agent shall apply against such purchase price any amounts retained by the Agent
pursuant to the last sentence of the immediately preceding subsection (a). The
Defaulting Lender shall be entitled to receive amounts owed to it by the
Borrower under the Loan Documents which accrued prior to the date of the default
by the Defaulting Lender, to the extent the same are received by the Agent from
or on behalf of the Borrower. There shall be no recourse against any Lender or
the Agent for the payment of such sums except to the extent of the receipt of
payments from any other party or in respect of the Revolving Loans and the other
Credit Obligations.
SECTION 4.14. TAXES.
-----
(a) Taxes Generally. All payments by the Borrower of principal of, and
---------------
interest on, the Loans and all other Credit Obligations shall be made free and
clear of and without deduction for any present or future excise, stamp or other
taxes, fees, duties, levies, imposts, charges, deductions, withholdings or other
charges of any nature whatsoever imposed by any taxing authority, but excluding
(i) franchise taxes, (ii) any taxes (other than withholding taxes) that would
not be imposed but for a connection between a Lender or the Agent and the
jurisdiction imposing such taxes (other than a connection arising solely by
virtue of the activities of such Lender, the Agent pursuant to or in respect of
this Agreement or any other Loan Document), (iii) any withholding taxes payable
with respect to payments hereunder or under any other Loan
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<PAGE>
Document under Applicable Law in effect on the Agreement Date, (iv) any taxes
imposed on or measured by any Lender's assets, net income, receipts or branch
profits and (v) any taxes arising after the Agreement Date solely as a result of
or attributable to a Lender changing its designated Lending Office after the
date such Lender becomes a party hereto (such non-excluded items being
collectively called "Taxes"). If any withholding or deduction from any payment
to be made by the Borrower hereunder is required in respect of any Taxes
pursuant to any Applicable Law, then the Borrower shall:
(i) pay directly to the relevant Governmental Authority the
full amount required to be so withheld or deducted;
(ii) promptly forward to the Agent an official receipt or other
documentation satisfactory to the Agent evidencing such payment to such
Governmental Authority; and
(iii) pay to the Agent for its account or the account of the
applicable Lender, as the case may be, such additional amount or amounts as
is necessary to ensure that the net amount actually received by the Agent
or such Lender will equal the full amount of the Agent or such Lender would
have received had no such withholding or deduction been required.
(b) Tax Forms. Each Lender or Participant organized under the laws of a
---------
jurisdiction other than the United States of America agrees to deliver to the
Borrower and the Agent such certificates, documents or other evidence, as
required by the Internal Revenue Code, correctly completed and executed by such
Lender or Participant establishing that such payment is (i) not subject to
United States federal withholding tax under the Internal Revenue Code because
such payment is either effectively connected with the conduct by such Lender or
Participant of a trade or business in the United States or totally exempt from
United States federal withholding tax by reason of the application of the
provisions of a treaty to which the United States is a party or such Lender is
otherwise exempt.
(c) Tax Indemnification. If the Borrower fails to pay any Taxes when due
-------------------
to the appropriate taxing authority or fails to remit to the Agent, for its
account or the account of the respective Lender, as the case may be, the
required receipts or other required documentary evidence, the Borrower shall
indemnify the Agent and the Lenders for any incremental Taxes, interest or
penalties that may become payable by the Agent or any Lender as a result of any
such failure. For purposes of this Section, a distribution hereunder by the
Agent or any Lender to or for the account of any Lender shall be deemed a
payment by the Borrower.
ARTICLE V. YIELD PROTECTION, ETC.
SECTION 5.1. ADDITIONAL COSTS; CAPITAL ADEQUACY.
----------------------------------
(a) Additional Costs. The Borrower shall promptly pay to the Agent
----------------
for the account of a Lender from time to time such amounts as such Lender may
determine to be necessary to compensate such Lender for any costs incurred by
such Lender that it determines are attributable
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<PAGE>
to its making or maintaining of any LIBOR Loans or its obligation to make any
LIBOR Loans hereunder, any reduction in any amount receivable by such Lender
under this Agreement or any of the other Loan Documents in respect of any of
such LIBOR Loans or such obligation or the maintenance by such Lender of capital
in respect of its LIBOR Loans or its Commitments (such increases in costs and
reductions in amounts receivable being herein called "Additional Costs"),
resulting from any Regulatory Change that: (i) changes the basis of taxation of
any amounts payable to such Lender under this Agreement or any of the other Loan
Documents in respect of any of such LIBOR Loans (other than taxes imposed on or
measured by the overall assets, net income, receipts or branch profits of such
Lender or of its Lending Office for any of such LIBOR Loans by the jurisdiction
in which such Lender has its principal office or such Lending Office); or (ii)
imposes or modifies any reserve, special deposit or similar requirements (other
than Regulation D of the Board of Governors of the Federal Reserve System or
other reserve requirement utilized in the determination of the Adjusted LIBO
Rate for such LIBOR Loan) relating to any extensions of credit or other assets
of, or any deposits with or other liabilities of, such Lender, or any commitment
of such Lender (including, without limitation, the Commitments of such Lender
hereunder); or (iii) has or would have the effect of reducing the rate of return
on capital of such Lender to a level below that which such Lender could have
achieved but for such Regulatory Change (taking into consideration such Lender's
policies with respect to capital adequacy).
(b) Lender's Suspension of LIBOR Loans. Without limiting the effect
----------------------------------
of the provisions of the immediately preceding subsection (a), if by reason of
any Regulatory Change, any Lender either: (i) incurs Additional Costs based on
or measured by the excess above a specified level of the amount of a category of
deposits or other liabilities of such Lender that includes deposits by reference
to which the interest rate on LIBOR Loans is determined as provided in this
Agreement or a category of extensions of credit or other assets of such Lender
that includes LIBOR Loans or (ii) becomes subject to restrictions on the amount
of such a category of liabilities or assets that it may hold, then, if such
Lender so elects by notice to the Borrower (with a copy to the Agent), the
obligation of such Lender to make or Continue, or to Convert Base Rate Loans
into, LIBOR Loans hereunder shall be suspended until such Regulatory Change
ceases to be in effect (in which case the provisions of Section 5.6 shall
apply).
(c) Notification and Determination of Additional Costs. Each of the
--------------------------------------------------
Agent and each Lender agrees to notify the Borrower of any event occurring after
the Agreement Date entitling the Agent or such Lender to compensation under any
of the preceding subsections of this Section as promptly as practicable;
provided, however, that except as otherwise limited by the next sentence, the
failure of the Agent or any Lender to give such notice shall not release the
Borrower from any of its obligations hereunder. The Agent and/or such Lender
agrees to furnish to the Borrower within 120-days after the occurrence of any
event entitling the Agent or such Lender to compensation, a certificate setting
forth the basis and amount of each request by the Agent or such Lender for
compensation under this Section. Determinations by the Agent or any Lender of
the effect of any Regulatory Change shall be conclusive, provided that such
determinations are made on a reasonable basis and in good faith.
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<PAGE>
SECTION 5.2. SUSPENSION OF LIBOR LOANS.
-------------------------
Anything herein to the contrary notwithstanding, if, on or prior to the
determination of any Adjusted LIBO Rate for any Interest Period:
(a) the Agent reasonably determines (which determination shall
be conclusive) that quotations of interest rates for the relevant deposits
referred to in the definition of LIBOR are not being provided in the
relevant amounts or for the relevant maturities for purposes of determining
rates of interest for LIBOR Loans as provided herein or is otherwise unable
to determine the Adjusted LIBO Rate; or
(b) the Agent reasonably determines (which determination shall
be conclusive) that the relevant rates of interest referred to in the
definition of LIBOR upon the basis of which the rate of interest for LIBOR
Loans for such Interest Period is to be determined are not likely adequate
to cover the cost to the Lenders of making or maintaining LIBOR Loans for
such Interest Period,
then the Agent shall give the Borrower and each Lender prompt notice thereof
and, so long as such condition remains in effect, the Lenders shall be under no
obligation to, and shall not, make additional LIBOR Loans, Continue LIBOR Loans
or Convert Base Rate Loans into LIBOR Loans and the Borrower shall, on the last
day of each current Interest Period for each outstanding LIBOR Loan, either
prepay such LIBOR Loan or Convert such LIBOR Loan into a Base Rate Loan.
SECTION 5.3. ILLEGALITY.
----------
Notwithstanding any other provision of this Agreement, if it becomes
unlawful for any Lender or its Lending Office to honor its obligation to make or
maintain LIBOR Loans hereunder, then such Lender shall promptly notify the
Borrower thereof (with a copy of such notification to the Agent) and such
Lender's obligation to make or Continue, or to Convert Revolving Loans of any
other Type into, LIBOR Loans shall be suspended until such time as such Lender
may again make and maintain LIBOR Loans (in which case the provisions of Section
5.6 shall be applicable).
SECTION 5.4. COMPENSATION.
------------
The Borrower shall pay to the Agent for account of each Lender (including
the Swing Line Lender), upon the request of such Lender through the Agent (or
directly in the case of the Swing Line Lender), such amount or amounts as shall
be sufficient (in the reasonable opinion of such Lender) to compensate it for
any loss, cost or expense that such Lender determines is attributable to:
(a) any payment or prepayment (whether mandatory or optional) of
a LIBOR Loan or a Swing Line Loan, or Conversion of a LIBOR Loan, made by
such Lender for
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<PAGE>
any reason (including, without limitation, acceleration) on a date other
than the last day of the Interest Period for such LIBOR Loan or Swing Line
Loan, as the case may be; or
(b) any failure by the Borrower for any reason (including,
without limitation, the failure of any of the applicable conditions
precedent specified in Article VI to be satisfied) to borrow a LIBOR Loan
or Swing Line Loan from such Lender on the date for such Borrowing, or to
Convert a Base Rate Loan into a LIBOR Loan or Continue a LIBOR Loan on the
requested date of such Conversion or Continuation,
such compensation to include, without limitation, an amount equal to the excess,
if any, of (i) the amount of interest that otherwise would have accrued on the
principal amount so paid, prepaid or Converted or not borrowed for the period
from the date of such payment, prepayment, Conversion or failure to borrow or
Convert to the last day of the then current Interest Period for such Loan (or,
in the case of a failure to borrow or Convert, the Interest Period for such Loan
that would have commenced on the date specified for such Borrowing or
Conversion) at the applicable rate of interest plus such Lender's normal
administrative charges, if any, associated with such payment, prepayment,
Conversion or failure to borrow over (ii) the amount of interest that otherwise
would have accrued on such principal amount at a rate per annum equal to LIBOR
(or, in the case of Swing Line Loans, such Lender's cost of funds upon which the
Money Market Rate was based) at such time for an amount comparable to such
principal amount and for a maturity comparable to such period (as reasonably
determined by such Lender). At the request of the Borrower, any Lender
requesting compensation pursuant to this Section shall provide the Borrower with
a statement setting forth the basis for requesting such compensation and the
method for determining the amount thereof. Any such statement shall be
conclusive absent manifest error.
SECTION 5.5. AFFECTED LENDERS.
----------------
If any Lender requests compensation pursuant to Section 4.14 or Section
5.1., or the obligation of any Lender to make LIBOR Loans or to Continue, or to
Convert Base Rate Loans into, LIBOR Loans shall be suspended pursuant to Section
5.1(b), Section 5.2 or Section 5.3, then, so long as (i) there does not then
exist any Default or Event of Default and (ii) the Requisite Lenders have not
requested such compensation or otherwise invoked Sections 4.14, 5.1, 5.2 or 5.3,
as applicable, the Borrower may either (a) demand that such Lender (the
"Affected Lender"), and upon such demand the Affected Lender shall promptly,
assign its Commitments to another financial institution subject to and in
accordance with the provisions of Section 14.6.(d) for a purchase price equal to
the aggregate principal balance of Revolving Loans and other Credit Obligations
then owing to the Affected Lender, or (b) pay to the Affected Lender the
aggregate principal balance of Revolving Loans and other Credit Obligations then
owing to the Affected Lender, whereupon the Affected Lender shall no longer be a
party hereto or have any rights or obligations hereunder or under any of the
other Loan Documents and, in the case of clause (b) immediately above, the
Revolving Commitment shall immediately and permanently be reduced by an amount
equal to the amount of the Affected Lender's Commitment. The Agent shall
reasonably cooperate in effectuating the replacement of an Affected Lender under
this Section, but at no time shall the Agent be obligated in any way whatsoever
to initiate any such
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replacement. The exercise by the Borrower of its rights under this Section shall
be at the Borrower's sole cost and expense and at no cost or expense to the
Agent, the Affected Lender or any of the other Lenders. The terms of this
Section shall not in any way limit the Borrower's obligation to pay to any
Affected Lender compensation owing to such Affected Lender pursuant to Section
4.41 or Section 5.1.
SECTION 5.6. TREATMENT OF AFFECTED REVOLVING LOANS.
-------------------------------------
If the obligation of any Lender to make LIBOR Loans or to Continue, or to
Convert Base Rate Loans into, LIBOR Loans shall be suspended pursuant to Section
5.1(b), Section 5.2 or Section 5.3, such Lender's LIBOR Loans shall be
automatically Converted into Base Rate Loans on the last day(s) of the then
current Interest Period(s) for such LIBOR Loans (or, in the case of a Conversion
required by Section 5.1.(b) or 5.3.,, on such earlier date as such Lender may
specify to the Borrower with a copy to the Agent) and, unless and until such
Lender gives notice as provided below that the circumstances specified in
Section 5.1., Section 5.2. or 5.3 that gave rise to such Conversion no longer
exist:
(a) to the extent that such Lender's LIBOR Loans have been so
Converted, all payments and prepayments of principal that would otherwise
be applied to such Lender's LIBOR Loans shall be applied instead to its
Base Rate Loans; and
(b) all Revolving Loans that would otherwise be made or Continued by
such Lender as LIBOR Loans shall be made or Continued instead as Base Rate
Loans, and all Base Rate Loans of such Lender that would otherwise be
Converted into LIBOR Loans shall remain as Base Rate Loans.
If such Lender gives notice to the Borrower with a copy to the Agent that the
circumstances specified in Section 5.1. or 5.3. that gave rise to the Conversion
of such Lender's LIBOR Loans pursuant to this Section no longer exist (which
such Lender agrees to do promptly upon such circumstances ceasing to exist) at a
time when LIBOR Loans made by other Lenders are outstanding, such Lender's Base
Rate Loans shall be automatically Converted, on the first day(s) of the next
succeeding Interest Period(s) for such outstanding LIBOR Loans, to the extent
necessary so that, after giving effect thereto, all Revolving Loans held by the
Lenders holding LIBOR Loans and by such Lender are held pro rata (as to
principal amounts, Types and Interest Periods) in accordance with their
respective Commitments.
SECTION 5.7. CHANGE OF LENDING OFFICE.
------------------------
Each Lender agrees that it will use reasonable efforts to designate an
alternate Lending Office with respect to any of its LIBOR Loans affected by the
matters or circumstances described in Sections 4.14., 5.1 or 5.3 to reduce the
liability of the Borrower or avoid the results provided thereunder, so long as
such designation is not disadvantageous to such Lender as determined by such
Lender in its sole discretion.
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<PAGE>
SECTION 5.8. ASSUMPTIONS CONCERNING FUNDING OF LIBOR LOANS.
---------------------------------------------
Calculation of all amounts payable to a Lender under this Article V shall
be made as though that Lender had actually funded its relevant LIBOR Loans
through the purchase of deposits in the relevant market bearing interest at the
rate applicable to such LIBOR Loans in an amount equal to the amount of the
LIBOR Loans and having a maturity comparable to the relevant Interest Period and
through the transfer of such LIBOR Loans from an offshore office of that Lender
to a domestic office of that Lender in the United States of America; provided,
however, that each Lender may fund each of its LIBOR Loans in any manner it sees
fit and the foregoing assumption shall be used only for calculation of amounts
payable under this Article V.
ARTICLE VI. CONDITIONS PRECEDENT
SECTION 6.1. INITIAL CONDITIONS PRECEDENT.
----------------------------
The obligation of the Lenders to make any Loans is subject to the condition
precedent that the Borrower deliver or cause to be delivered to the Agent (with
sufficient copies for each of the Lenders) each of the following, each of which
shall be satisfactory in form and substance to the Agent:
(a) certified copies (certified by the respective Secretary or Assistant
Secretary of each Loan Party (each such Person shall be the "Authenticating
Person" with respect to such Loan Party)) of all corporate or other necessary
action taken by each Loan Party to authorize the execution, delivery and
performance of the Loan Documents to which it is a party;
(b)(i) articles or certificates of incorporation and by-laws of each Loan
Party; (ii) a certificate of existence or other good standing certificate issued
by the Secretary of State of the jurisdiction in which each Loan Party was
formed and a certificate of qualification to transact business or other
comparable certificate issued by the Secretary of State (and any state
department of taxation, as applicable) from each jurisdiction in which such Loan
Party is required to be so qualified; and (iii) certificates of incumbency and
specimen signatures signed by the appropriate Authenticating Person with respect
to each of the officers or other Persons of each Loan Party who are authorized
to execute and deliver the Loan Documents to which such Loan Party is a party;
(c) an opinion of Powell, Goldstein, Frazer & Murphy, counsel to the
Borrower and the other Loan Parties, addressed to the Agent and the Lenders in
substantially the form of Exhibit K;
(d) Copies of all consents, approvals, authorizations, registrations or
filings required to be made or obtained by the Borrower and its Subsidiaries in
connection with the execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby;
(e) a certificate executed by the Chief Executive Officer and Chief
Financial Officer of the Borrower, stating that: (i) on such date, and after
giving effect to the transactions contemplated hereby, no Default or Event of
Default has occurred and is continuing and (ii) the
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representations and warranties set forth in Article VII are true and correct in
all material respects on and as of such date with the same effect as though made
on and as of such date.
(f) a Revolving Note executed and delivered by the Borrower, payable to
each Lender and complying with the terms of Section 2.6.;
(g) a Swing Line Note executed and delivered by the Borrower, payable to
the Swing Line Lender and complying with the terms of Section 3.4.;
(h) a disbursement letter executed by the Borrower in substantially the
form of Exhibit L authorizing the disbursement of the initial Loans;
(i) the Fee Letter;
(j) a payoff letter executed and delivered by each of the institutions
with respect to the Existing Indebtedness for Money Borrowed of the Borrower
being satisfied at the Effective Date as set forth on Schedule 6.1.(j).
(k) a Statement of Funds Flow executed and delivered by the Borrower and
the Agent with respect to the flow of funds in connection with the initial
funding (the "Statement of Funds Flow");
(l) favorable UCC, tax, judgment and lien search reports with respect to
each Loan Party in all necessary or appropriate jurisdictions and under all
legal and appropriate trade names indicating that there are no prior Liens on
any assets of such Person other than Permitted Liens;
(m) the execution and delivery by each Loan Party (other than the
Borrower) of a Guaranty in substantially the form of Exhibit M (the "Guaranty");
(n) the execution and delivery by each Loan Party of a Master Security
Agreement in substantially the form of Exhibit N;
(o) Uniform Commercial Code financing statements naming each Loan Party as
"Debtor" and the Agent, on behalf of the Lenders, as "Secured Party" and
covering the Collateral described in the applicable Security Documents filed in
all necessary and appropriate jurisdictions;
(p) the execution and delivery by the Borrower and the other Loan Parties
named therein of a Master Pledge Agreement in substantially the form of Exhibit
O, together with the delivery to the Agent of the stock certificates evidencing
the capital stock pledged thereby duly endorsed in blank in favor of the Agent,
and the originals of each of the Intercompany Notes;
(q) the execution and delivery by each Subsidiary that is a party to the
Intercompany Security Agreement referenced in item (s) below of an Intercompany
Note in favor of the Borrower;
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<PAGE>
(r) the execution and delivery by the Borrower, the Agent and each
existing Line of Credit Lender that is not a Lender hereunder of an
Intercreditor Agreement;
(s) an executed copy of that certain Intercompany Security Agreement dated
as of the Agreement Date executed by each of the Subsidiaries of the Borrower in
favor of the Borrower;
(t) certificates of insurance with respect to any of the tangible
insurable Collateral, together with loss payable clauses in favor of the Agent,
which comply with the terms of the relevant Loan Documents;
(u) a Landlord Waiver executed by each lessor of Real Property set forth
in Schedule 6.1.(u);
(v) a certified copy of the Subordinated Debenture Indenture;
(w) a Borrowing Base Certificate prepared effective as of the last day of
the most recently completed fiscal quarter preceding the Effective Date; and
(x) such other documents and instruments as the Agent or a Lender may
reasonably request.
SECTION 6.2. CONDITIONS PRECEDENT TO ALL LOANS.
---------------------------------
The obligation of the Lenders to make any Loans is subject to the further
condition precedent that, as of the date of the making of such Loan and after
giving effect thereto: (a) no Default or Event of Default shall have occurred
and be continuing, whether or not as a result thereof; (b) no Material Adverse
Change shall have occurred since the Agreement Date; and (c) the representations
and warranties made or deemed made by each Loan Party in the Loan Documents to
which it is a party, shall be true and correct on and as of the date of the
making of such Loan with the same force and effect as if made on and as of such
date except to the extent that such representations and warranties expressly
relate solely to an earlier date (in which case such representations and
warranties shall have been true and accurate on and as of such earlier date) and
except for changes in factual circumstances specifically and expressly permitted
hereunder. Each Credit Event shall constitute a certification by the Borrower
to the effect set forth in the preceding sentence (both as of the date of the
giving of notice relating to such Credit Event and, unless the Borrower
otherwise notifies the Agent prior to the date of such Credit Event, as of the
date of the occurrence of such Credit Event).
ARTICLE VII. REPRESENTATIONS AND WARRANTIES
SECTION 7.1. REPRESENTATIONS AND WARRANTIES.
------------------------------
In order to induce the Agent and each Lender to enter into this Agreement
and to make Loans, the Borrower hereby represents and warrants to the Agent and
each Lender as follows:
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<PAGE>
(a) Organization; Power; Qualification. Each of the Loan Parties is a
----------------------------------
corporation, duly organized, validly existing and in good standing under the
jurisdiction of its incorporation, has the power and authority to own or lease
its respective properties and to carry on its respective business as now being
and hereafter proposed to be conducted and is duly qualified and is in good
standing as a foreign corporation, and authorized to do business, in each
jurisdiction in which the character of its properties or the nature of its
business requires such qualification or authorization and where the failure to
be so qualified or authorized could reasonably be expected to have, in each
instance, a Material Adverse Effect.
(b) Ownership Structure. As of the Effective Date, Schedule 7.1.(b)
-------------------
accurately sets forth the corporate structure and ownership interests of all of
the Subsidiaries of the Borrower including the correct legal name of the
Borrower and each Subsidiary and their respective percentage equity or voting
interest in such Subsidiaries. Except for the Subordinated Debentures or as set
forth in Schedule 7.1.(b):
(i) neither the Borrower nor any other Loan Party has issued to any
Person (other than a Loan Party) any securities convertible into such Loan
Party's Capital Stock, and
(ii) the outstanding stock and securities of or other equity
interests, as applicable, in each Subsidiary are owned by the Loan Parties
indicated on such Schedule, free and clear of all Liens, warrants, options
and rights of others of any kind whatsoever.
Schedule 7.1(b) also sets forth all other Investments of the Loan Parties other
than Subsidiaries or other than those referenced in Section 10.4(b) through (g).
(c) Authorization. The Borrower and each other Loan Party has the right
-------------
and power, and has taken all necessary action to authorize it, to borrow
hereunder and to execute, deliver and perform this Agreement, the Notes and the
other Loan Documents to which it is a party in accordance with their respective
terms and to consummate the transactions contemplated hereby. This Agreement,
the Notes and each of the other Loan Documents to which the Borrower or other
Loan Party is a party have been duly executed and delivered by the duly
authorized officers of such Person and each is a legal, valid and binding
obligation of such Person enforceable against such Person in accordance with its
respective terms except to the extent that the enforceability thereof may be
limited by applicable bankruptcy, insolvency, reorganization, moratorium or
similar laws affecting creditor's rights and by equitable principles.
(d) Compliance of Loan Documents and Borrowing with Laws. The execution,
----------------------------------------------------
delivery and performance of this Agreement, the Notes and the other Loan
Documents to which the Borrower or any other Loan Party is a party in accordance
with their respective terms and the Borrowings do not and will not, by the
passage of time, the giving of notice, a determination of materiality, the
satisfaction of any condition, any combination of the foregoing, or otherwise:
(i) require any Governmental Approval not otherwise obtained or violate any
Applicable Law (including all Environmental Laws) relating to the Borrower or
any other Loan Party which
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<PAGE>
would have a Material Adverse Effect; (ii) conflict with, result in a breach of
or constitute a default under the articles of incorporation or the bylaws of the
Borrower or the organizational documents of any other Loan Party, or any
Material Contract; or (iii) result in or require the creation or imposition of
any Lien (other than any Permitted Lien) upon or with respect to any property
now owned or hereafter acquired by the Borrower or any other Loan Party other
than in favor of the Agent for the benefit of the Lenders.
(e) Compliance with Law; Governmental Approvals. The Borrower and each
-------------------------------------------
other Loan Party is in compliance with each Governmental Approval applicable to
it and in compliance with all other Applicable Law relating to the Borrower and
such Loan Party except for noncompliances which, and Governmental Approvals the
failure to possess which, would not, singly or in the aggregate, cause an Event
of Default or have a Material Adverse Effect and in respect of which adequate
reserves have been established on the books of the Borrower or such other Loan
Party to the extent required by GAAP.
(f) Titles to Properties. The Borrower and the other Loan Parties have
--------------------
good, marketable and legal title to, or a valid leasehold or usufruct interest
in, their respective properties and assets including, but not limited to, those
reflected on the consolidated balance sheet of the Borrower and its Subsidiaries
as at July 31, 1995, except those which have been disposed of by the Borrower
subsequent to such date in the ordinary course of business and all such
properties and assets are free and clear of all Liens other than Permitted
Liens.
(g) Indebtedness and Contingent Obligations. Schedule 7.1.(g) is a
---------------------------------------
complete and correct listing of all (i) Existing Indebtedness for Money Borrowed
of the Borrower and the other Loan Parties, (ii) material Contingent Obligations
of the Borrower and the other Loan Parties and (iii) all letters of credit and
acceptance facilities extended to the Borrower and/or other Loan Parties. The
Borrower and the other Loan Parties have performed (to the extent performance is
then required) and are in compliance in all material respects with all of the
terms of such Indebtedness and such Contingent Obligations and all instruments
and agreements relating thereto, and no default by the Borrower or any
Subsidiary, or to the Borrower's or such Subsidiary's knowledge, any third
Person, or event of default, or event or condition which with the giving of
notice, the lapse of time, a determination of materiality, the satisfaction of
any other condition or any combination of the foregoing, would constitute such a
default or event of default, exists with respect to any such Indebtedness or
Contingent Obligations. The Credit Obligations constitute "Senior Debt" under
the Subordinated Debenture Indenture.
(h) Material Contracts. Each of the Borrower and the other Loan Parties
------------------
that are parties to any Material Contract has performed (to the extent
performance then is required) and is in compliance in all material respects with
all of the terms of such Material Contract, and no default by the Borrower or
any Subsidiary, or to the Borrower's or such Subsidiary's knowledge, any third
Person, or event of default, or event or condition which with the giving of
notice, the lapse of time, a determination of materiality, the satisfaction of
any other condition or any combination of the foregoing, would constitute such a
default or event of default, exists with respect to any such Material Contract.
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<PAGE>
(i) Litigation. Except as set forth on Schedule 7.1.(i), there are no
----------
actions, suits or proceedings pending (nor, to the knowledge of the Borrower,
are there any actions, suits or proceedings threatened) against or in any other
way relating adversely to or affecting the Borrower or any other Loan Party or
any of their respective properties in any court or before any arbitrator of any
kind or before or by any Governmental Authority which, if adversely determined,
could reasonably be expected to have a Material Adverse Effect, and there are no
strikes, slow downs, work stoppages or walkouts or other labor disputes in
progress or threatened relating to the Borrower or any other Loan Party.
(j) Taxes. All federal, material state and other material tax returns of
-----
the Borrower and the other Loan Parties required by Applicable Law to be filed
have been duly filed, and all federal, state and other taxes, assessments and
other governmental charges or levies upon the Borrower and each other Loan Party
and their properties, income, profits and assets which are due and payable have
been paid, except for immaterial taxes and except for any such nonpayment which
is at the time permitted under Section 8.6. Except as set forth in Schedule
7.1.(j), none of the United States income tax returns of the Borrower or any
Loan Party are under audit. No tax liens have been filed and to the knowledge of
the Borrower or any other Loan Party, no claims are being asserted with respect
to any such taxes. All charges, accruals and reserves on the books of the
Borrower and each of its Subsidiaries in respect of any taxes or other
governmental charges are in accordance with GAAP.
(k) Financial Statements. The Borrower has furnished to the Agent and
--------------------
each Lender copies of the audited consolidated balance sheet of the Borrower and
its Subsidiaries as at January 31, 1995, and the related consolidated statements
of income, retained earnings and cash flow for the periods covered thereby,
together with the opinion of Ernst & Young, LLP, and the unaudited consolidated
balance sheet of the Borrower and its Subsidiaries as at October 31, 1995, and
the related consolidated statements of income, retained earnings and cash flow
of the Borrower and its Subsidiaries for the fiscal quarter and nine month
period ending on such date. All such financial statements (including in each
case related schedules and notes) are complete and correct and present fairly,
in accordance with GAAP consistently applied throughout the periods involved,
the consolidated financial position of the Borrower and its Subsidiaries as at
their respective dates and the results of operations and the cash flow for such
periods. None of the Borrower nor any of its Subsidiaries has on the Agreement
Date any material contingent liabilities, liabilities, liabilities for taxes,
unusual or long-term commitments or unrealized or forward anticipated losses
from any unfavorable commitments, except as referred to or reflected or provided
for in said financial statements. From October 31, 1995 through the Agreement
Date, there has been no material adverse change in the financial condition,
operations or business of the Borrower and its Subsidiaries, taken as a whole.
Each of the Borrower and the other Loan Parties is Solvent.
(l) ERISA. Each Plan, and, to the knowledge of the Borrower, each
-----
Multiemployer Plan, is in compliance in all respects with, and has been
administered in all respects in compliance with, the applicable provisions of
ERISA, the Internal Revenue Code and any other Applicable Law except where
failure to be so in compliance or to be so administered could not reasonably be
expected to result in a Material Adverse Effect, and, on and as of the Agreement
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<PAGE>
Date, no event or condition has occurred and is continuing as to which the
Borrower would be under an obligation to furnish a report to the Lenders under
Section 9.6.
(m) Absence of Defaults. Neither the Borrower nor any other Loan Party is
-------------------
in default under its articles of incorporation, its bylaws or other
organizational documents, and, except as set forth in Schedule 7.1.(m), no event
has occurred and no condition exists, which has not been remedied, cured or
waived: (i) which constitutes a Default or an Event of Default; or (ii) which
constitutes, or which with the passage of time, the giving of notice, a
determination of materiality, the satisfaction of any condition, or any
combination of the foregoing, would constitute, a default or event of default by
the Borrower or any Loan Party under any agreement (other than this Agreement)
or judgment, decree or order to which the Borrower or other Loan Party is a
party or by which the Borrower or other Loan Party or any of their respective
properties may be bound where such default or event of default could,
individually or in the aggregate, have a Material Adverse Effect.
(n) Environmental Laws. Except as set forth in Schedule 7.1(n): (i) the
------------------
Borrower and each other Loan Party has obtained all material Governmental
Approvals which are required under Environmental Laws and is in material
compliance with all terms and conditions of such Governmental Approvals; (ii)
each of the Borrower and each other Loan Party is in material compliance with
all other limitations, restrictions, conditions, standards, prohibitions,
requirements, obligations, schedules, and timetables contained in the
Environmental Laws; (iii) the Borrower is not presently aware of, and has not
received written notice of, any past, present, or future events, conditions,
circumstances, activities, practices, incidents, actions, or plans which, with
respect to the Borrower and/or each other Loan Party, may interfere with or
prevent material compliance or continued material compliance with Environmental
Laws, or may give rise to any common-law or legal liability, or otherwise form
the basis of any claim, action, demand, suit, proceeding or hearing, based on or
related to the manufacture, processing, distribution, use, treatment, storage,
disposal, transport, or handling or the emission, discharge, release or
threatened release into the environment, of any Hazardous Material; and (iv)
there is no civil, criminal, or administrative action, suit, claim, hearing,
written notice, or demand letter, notice of violation, investigation, or
proceeding pending or, to the Borrower's knowledge, threatened, against the
Borrower or any other Loan Party relating in any way to Environmental Laws.
(o) Necessary Agreements, Licenses, Permits/Adverse Contracts. The
---------------------------------------------------------
Borrower and each Loan Party (i) is in compliance with all real and personal
property leases where the failure to so be in compliance could reasonably be
expected to have a Material Adverse Effect and (ii) possess all necessary and
appropriate agreements, contracts, franchise arrangements, patents, trademarks,
licenses, permits and other intellectual property rights free from burdensome or
undue restriction and (iii) has not infringed upon or otherwise violated any
trademark, patent, license or other intellectual property agreement where such
infringement could reasonably be expected to have a Material Adverse Effect.
None of the Loan Parties has assumed liability under or is a party to nor is it
or any of its property subject to or bound by any forward purchase contract,
futures contract, covenant not to compete, unconditional purchase, take or pay
or other agreement which in the reasonable opinion of management of the Borrower
restricts its ability to
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<PAGE>
conduct its business or, either individually or in the aggregate, has a Material
Adverse Effect or could reasonably be expected to have a Material Adverse
Effect.
(p) Investment Company; Public Utility Holding Company. Neither the
--------------------------------------------------
Borrower nor any other Loan Party is (i) an "investment company" or a company
"controlled" by an "investment company" within the meaning of the Investment
Company Act of 1940, as amended, (ii) a "holding company" or a "subsidiary
company" of a "holding company", or an "affiliate" of a "holding company" or of
a "subsidiary company" of a "holding company", within the meaning of the Public
Utility Holding Company Act of 1935, as amended, or (iii) subject to any other
Applicable Law which purports to regulate or restrict its ability to borrow
money or to consummate the transactions contemplated by this Agreement or to
perform its obligations under any Loan Document to which it is a party.
(q) Margin Stock. Neither the Borrower nor any other Loan Party is
------------
engaged principally, or as one of its important activities, in the business of
extending credit for the purpose, whether immediate, incidental or ultimate, of
buying or carrying "margin stock" within the meaning of Regulations G, T, U and
X of the Board of Governors of the Federal Reserve System, and no part of the
proceeds of any extension of credit hereunder will be used to buy or carry any
such "margin stock."
(r) Affiliate Transactions. Except as set forth on Schedule 7.1.(r) or as
----------------------
permitted by Section 10.10., neither the Borrower nor any other Loan Party is a
party to or bound by any agreement or arrangement (whether oral or written) to
which any Affiliate of the Borrower or other Loan Party is a party. Neither the
Borrower nor any other Loan Party is a party to any agreement or arrangement
which restricts or prohibits the payment of dividends or the repayment of inter-
company loans (including, without limitation, the Intercompany Loans) by a
Subsidiary to the Borrower.
(s) Fiscal Year. The Borrower's fiscal year commences on February 1 and
-----------
ends on January 31.
(t) Accuracy and Completeness of Information. All written information,
----------------------------------------
reports and other papers and data furnished to the Agent or any Lender by, on
behalf of, or at the direction of, the Borrower or any other Loan Party were, at
the time the same were so furnished, complete and correct in all material
respects, to the extent necessary to give the recipient a true and accurate
knowledge of the subject matter, or, in the case of financial statements,
present fairly, in accordance with GAAP consistently applied throughout the
periods involved, the financial position of the Persons involved as at the date
thereof and the results of operations for such periods. No fact peculiar to the
Borrower or any Loan Party is known to the Borrower which has had, or may in the
future have (so far as the Borrower can reasonably foresee), a Material Adverse
Effect which has not been set forth in the financial statements referred to in
Section 7.1.(k) or in such information, reports or other papers or data or
otherwise disclosed in writing to the Agent and the Lenders prior to the
Effective Date. No document furnished or written statement made to the Agent or
any Lender in connection with the negotiation, preparation of execution of this
Agreement or any of the other Loan Documents contains or will
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contain any untrue statement of a fact material to the creditworthiness of the
Borrower or any other Loan Party or omits or will omit to state a material fact
necessary in order to make the statements contained therein not misleading.
Notwithstanding anything to the contrary contained in this clause (t), the
representations and warranties contained herein shall not be deemed to apply to
any financial projections now or hereafter provided by the Borrower or any
Subsidiary so long as such financial projections were prepared with reasonable
basis and in good faith.
Section 7.2. Survival of Representations and Warranties, Etc.
-----------------------------------------------
All statements contained in any certificate, financial statement or other
instrument delivered by or on behalf of the Borrower or any other Loan Party to
the Agent or any Lender pursuant to or in connection with this Agreement or any
of the other Loan Documents (including, but not limited to, any such statement
made in or in connection with any amendment thereto or any statement contained
in any certificate, financial statement or other instrument delivered by or on
behalf of the Borrower prior to the Agreement Date and delivered to the Agent or
the Lender in connection with closing the transactions contemplated hereby)
shall constitute representations and warranties made by the Borrower under this
Agreement. All representations and warranties made under this Agreement shall
be deemed to be made at and as of the Agreement Date, the Effective Date and at
and as of the date of any Credit Event, except to the extent that such
representations and warranties expressly relate solely to an earlier date (in
which case such representations and warranties shall have been true and accurate
on and as of such earlier date) and except for changes in factual circumstances
specifically permitted hereunder.
ARTICLE VIII. AFFIRMATIVE COVENANTS
For so long as any of the Credit Obligations remains outstanding, unpaid or
unperformed, or this Agreement is in effect, the Borrower shall:
Section 8.1. Preservation of Existence and Similar Matters.
---------------------------------------------
Except as permitted or not prohibited by Section 10.7., preserve and
maintain, and cause each other Loan Party to preserve and maintain, its
respective existence, rights, franchises, licenses and privileges in the
jurisdiction of its formation and qualify and remain qualified and authorized to
do business in each jurisdiction in which the character of its properties or the
nature of its business requires such qualification and authorization except
where the failure to be so authorized and qualified would not have a Material
Adverse Effect.
Section 8.2. Compliance with Applicable Law and Material Contracts.
-----------------------------------------------------
Comply, and cause each other Loan Party to comply, with (a) all Applicable
Law, including all Environmental Laws and ERISA, and the obtaining of all
Governmental Approvals, except where the failure to so comply would not have a
Material Adverse Effect, and (b) all material terms and conditions of all
Material Contracts to which each such Person is a party, except such terms and
conditions as are being contested in good faith and, in connection therewith,
adequate reserves for which have been established in accordance with GAAP.
- 49 -
<PAGE>
Section 8.3. Maintenance of Property.
-----------------------
In addition to, and not in derogation of, the requirements of any of the
other Loan Documents, (a) protect and preserve, and cause each other Loan Party
to protect and preserve, all of its material assets and properties and maintain
in appropriate working order and condition all tangible properties including,
but not limited to, all tangible Collateral (but excluding assets disposed of in
the ordinary course of business), and (b) from time to time make or cause to be
made, and cause each Loan Party to make or cause to be made, all needed and
appropriate repairs, renewals, replacements and additions to such properties, so
that the business carried on in connection therewith may be properly and
advantageously conducted at all times.
Section 8.4. Conduct of Business.
-------------------
At all times carry on, and cause the other Loan Parties to carry on, its
respective businesses in the same fields as engaged in on the Agreement Date and
not enter, and prohibit the other Loan Parties from entering, into any field of
business not otherwise engaged in by such Person as of the Agreement Date.
Section 8.5. Insurance.
---------
In addition to, and not in derogation of, the requirements of any of the
other Loan Documents, maintain, and cause each other Loan Party to maintain,
insurance with financially sound and reputable insurance companies against such
risks and in such amounts as is customarily maintained by similar businesses or
as may be required by Applicable Law, and from time to time deliver to the Agent
or any of the Lenders upon its request a detailed list, together with copies of
all policies of the insurance then in effect, stating the names of the insurance
companies, the amounts and rates of the insurance, the dates of the expiration
thereof and the properties and risks covered thereby. The Borrower shall
provide written notice to the Agent and each of the Lenders of the occurrence of
any of the following events within five Business Days after the occurrence of
such event: any asset or property owned or used by the Borrower or any other
Loan Party is (i) damaged or destroyed, or suffers any other loss, or (ii) is
condemned, confiscated or otherwise taken, in whole or in part, or the use
thereof is otherwise diminished so as to render impracticable or unreasonable
the use of such asset or property for the purposes to which such asset or
property were used immediately prior to such condemnation, confiscation or
taking, by exercise of the powers of condemnation or eminent domain or
otherwise, and in either case referred to in clauses (i) and (ii) above the
amount of the damage, destruction, loss or diminution in value which is in
excess of $500,000 (collectively, a "Casualty Loss"). The Borrower shall
diligently file and prosecute its claim or claims for any award or payment in
connection with a Casualty Loss. To the extent the Borrower and/or any of the
other Loan Parties receives insurance proceeds as a result of a Casualty Loss
and such Person does not, for any reason, use such proceeds to repair or replace
such assets or property or to reimburse itself for any such repair or
replacement previously undertaken within 120 days following the receipt thereof,
the Borrower, if so directed by the Requisite Lenders, shall use such insurance
proceeds to repay any outstanding Loans, and, if so directed by the Requisite
Lenders, the
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<PAGE>
Revolving Commitment shall be automatically, immediately and permanently reduced
by the amount of such proceeds.
Section 8.6. Payment of Taxes and Claims.
---------------------------
Pay or discharge, and cause each Loan Party to pay and discharge, when due
(taking into account all relevant extensions) (a) all taxes, assessments and
governmental charges or levies imposed upon it or upon its income or profits or
upon any properties belonging to it, and (b) all lawful claims of materialmen,
mechanics, carriers, warehousemen and landlords for labor, materials, supplies
and rentals which, if unpaid, might become a Lien on any properties of such
Person; provided, however, that this Section shall not require the payment or
discharge of any such tax, assessment, charge, levy or claim which is being
contested in good faith by appropriate proceedings which operate to suspend the
collection thereof and for which adequate reserves have been established on the
books of the Borrower or such other Loan Party, as applicable, in accordance
with GAAP.
Section 8.7. Visits and Inspections.
----------------------
Permit, and cause each other Loan Party to permit, representatives or
agents of any Lender or the Agent, from time to time, as often as may be
reasonably requested, but only during normal business hours and upon reasonable
prior written notice, to: (a) visit and inspect all properties of the Borrower
or such other Loan Party; (b) inspect and make extracts from their respective
relevant books and records; and (c) discuss with its principal officers, and its
independent accountants, their respective businesses, assets, liabilities,
financial conditions, results of operations and business prospects. If requested
by the Agent, the Borrower shall execute an authorization letter addressed to
its accountants authorizing the Agent or any Lender to discuss the financial
affairs of the Borrower and any Subsidiary with its accountants. In the event at
any time during the period this Agreement is in effect the aggregate principal
amount of the sum of (i) all Loans outstanding at such time plus (ii) all
Permitted Notes Payable outstanding at such time exceeds the then current
Borrowing Base for a period of 60 consecutive days or more, the Agent and/or the
Requisite Lenders may thereafter direct from time to time at their discretion
that NationsBank Business Services ("NBS") conduct field audits of the Borrower
and its Subsidiaries in scope and substance reasonably satisfactory to such
requesting Person(s). The Borrower shall pay all reasonable fees and out-of-
pocket costs and expenses of NBS incurred in connection with any such audit(s).
Section 8.8. Use of Proceeds.
---------------
(a) Use the proceeds of the initial Loans in accordance with the Statement
of Funds Flow referred to in Section 6.1.(k); (b) use the proceeds of all
subsequent Loans for working capital and general business purposes of the
Borrower and its Subsidiaries only including, but not limited to, the funding of
loans from the Borrower to its Subsidiaries pursuant to the Intercompany Notes;
and (c) not use any part of such proceeds to purchase or carry, or to reduce or
retire or refinance any credit incurred to purchase or carry, any margin stock
(within the
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<PAGE>
meaning of Regulations U and X of the Board of Governors of the Federal Reserve
System) or to extend credit to others for the purpose of purchasing or carrying
any such margin stock.
Section 8.9. Additional Subsidiaries.
-----------------------
Upon the acquisition, incorporation or other creation of a Subsidiary, the
Borrower shall (a) cause such Subsidiary to execute and deliver in favor of the
Agent on behalf of the Lenders promptly upon such acquisition, incorporation or
creation an Addendum; (b) cause such Subsidiary to execute and deliver in favor
of the Borrower an Intercompany Note; (c) cause such Subsidiary to execute and
deliver in favor of the Borrower a security agreement in substantially the form
of the Intercompany Security Agreement referred to in Section 6.1.(s); and (d)
execute and deliver, and cause each other necessary Person to execute and
deliver, to the Agent a pledge agreement in substantially the form of the Master
Pledge Agreement covering: (i) 100% of the issued and outstanding Capital Stock
of such Subsidiary owned by the Borrower or other Loan Party, as applicable,
together with the shares of such stock and stock transfer powers duly executed
and duly endorsed by such Person(s) in blank; (ii) the Intercompany Note issued
by such Subsidiary pursuant to item (b) above; and (iii) the rights and
interests granted to the Borrower pursuant to the security agreement referred to
in item (c) above. The delivery of the items above shall be accompanied by an
opinion of counsel to the Borrower and the other Loan Parties as to matters
regarding due authorization, execution and delivery and enforceability and to
such other matters as the Agent or its counsel shall reasonably request.
Section 8.10. Environmental Matters.
---------------------
Comply, and cause each of the Loan Parties to comply with all Environmental
Laws the failure with which to comply would have a Material Adverse Effect. If
the Borrower or any other Loan Party shall (a) receive written notice that any
material violation of any Environmental Law may have been committed or is about
to be committed by such Person, (b) receive notice that any administrative or
judicial complaint or order has been filed against the Borrower or any other
Loan Party alleging violations of any Environmental Law or requiring the
Borrower or any other Loan Party to take any action in connection with the
release of Hazardous Materials or (c) receive any written notice from a
Governmental Authority or private party alleging that the Borrower or any other
Loan Party may be liable or responsible for costs associated with a response to
or cleanup of a release of a Hazardous Materials or any damages caused thereby,
and such notices, individually or in the aggregate, could have a Material
Adverse Effect, the Borrower shall provide the Agent with a copy of such notice
within thirty days after the receipt thereof by the Borrower or any of the Loan
Parties. The Borrower and the Subsidiaries shall promptly take all actions
necessary to prevent the imposition of any Liens on any of their respective
properties arising out of or related to any Environmental Laws.
Section 8.11. Books and Records.
-----------------
Maintain, and cause each of the other Loan Parties to maintain, books and
records pertaining to its respective business operations in such detail, form
and scope as is consistent with good business practice.
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<PAGE>
ARTICLE IX. INFORMATION
For so long as any of the Credit Obligations remains outstanding, unpaid or
unperformed, or this Agreement is in effect, unless the Requisite Lenders (or,
if required pursuant to Section 14.7., all of the Lenders) shall otherwise
consent in the manner set forth in Section 14.7., the Borrower shall furnish to
each Lender at its Lending Office (or to the Agent if so provided below):
Section 9.1. Quarterly Financial Statements.
------------------------------
As soon as available and in any event within 60 days after the close of
each of the first, second and third fiscal quarters of the Borrower, the
consolidated and consolidating balance sheet of the Borrower and its
Subsidiaries as at the end of such period and the related consolidated and
consolidating statements of income, retained earnings and cash flows of the
Borrower and its Subsidiaries for such period, setting forth in the case of the
statement of income in comparative form the figures for the corresponding
periods of the previous fiscal year, all of which shall be certified by the
Treasurer or Chief Financial Officer of the Borrower, in his or her opinion, to
present fairly, in accordance with GAAP, the consolidated financial position of
the Borrower and its Subsidiaries as at the date thereof and the results of
operations for such period (subject to normal year-end audit adjustments).
Section 9.2. Year-end Statements.
-------------------
As soon as available and in any event, within 120 days after the end of
each fiscal year of the Borrower, the consolidated and consolidating balance
sheet of the Borrower and its Subsidiaries as at the end of such fiscal year and
the related consolidated and consolidating statements of income, retained
earnings and cash flows of the Borrower and its Subsidiaries for such fiscal
year, setting forth in comparative form the figures as at the end of and for the
previous fiscal year, all of which shall be certified by the Treasurer or Chief
Financial Officer of the Borrower, in his or her opinion, to present fairly, in
accordance with GAAP, the financial position of the Borrower and its
Subsidiaries as at the date thereof and the result of operations for such period
and by Ernst & Young, LLP or another independent certified public accountants of
recognized national standing acceptable to the Agent, whose certificate shall be
in scope and substance satisfactory to the Agent and who shall have authorized
the Borrower to deliver such financial statements and certification thereof to
the Agent and the Lenders pursuant to this Agreement.
Section 9.3. Compliance Certificate.
----------------------
At the time the financial statements are furnished pursuant to Sections
9.1. and 9.2. a certificate executed by the Treasurer or Chief Financial Officer
in substantially the form of Exhibit B-1 hereto and in the case of the audited
annual financial statements, a certificate executed by the independent public
accountants performing the audit of such statements in substantially the form of
Exhibit B-2 hereto:
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<PAGE>
(a) in the case of the officer's certificate, setting forth as at the end
of such quarterly accounting period the calculations required to establish
whether or not the Borrower, and when appropriate its consolidated Subsidiaries,
were in compliance with the covenants contained in Sections 10.1., 10.2., 10.3.,
10.3., 10.4., and 10.7. and, in the case of the accountant's certificate,
certifying as to the matters set forth in Exhibit B-2; and
(b) stating that, to the best of his/her or their knowledge, information
and belief, no Default or Event of Default exists, or, if such is not the case,
specifying such Default or Event of Default and its nature, when it occurred
and, in the case of the certificate executed by the Treasurer or Chief Financial
Officer, whether it is continuing and the steps being taken by the Borrower with
respect to such event, condition or failure.
Section 9.4. Borrowing Base Certificate/Receivables Aging Report.
---------------------------------------------------
As soon as available for each fiscal quarter and in any event within 30
days after the end of each fiscal quarter (or, if at any time the aggregate
principal amount of the sum of (i) all Loans plus (ii) all Permitted Notes
Payable exceeds the Borrowing Base for sixty consecutive days and the Requisite
Lenders so request, for each month, within 30 days after the end of each month)
of the Borrower (a) a Borrowing Base Certificate, which shall be as of the last
Business Day of each such applicable period and (b) an aging report indicating
the Receivables having a face amount of $5,000 or more that remain unpaid for
more than 90 days after the invoice date therefor, each certified by the Chief
Financial Officer of the Borrower and otherwise in form and substance reasonably
satisfactory to the Agent.
Section 9.5. Notice of Litigation and Other Matters.
--------------------------------------
Prompt notice of:
(a) to the extent the Borrower is aware of the same, the commencement of
any proceeding or investigation by or before any Governmental Authority and any
action or proceeding in any court or other tribunal or before any arbitrator
against or in any other way relating adversely to, or adversely affecting, the
Borrower or any other Loan Party or any of their respective properties, assets
or businesses which, if determined or resolved adversely to such Person, could
have a Material Adverse Effect;
(b) any change in the president, any vice president, the chief financial
officer or the treasurer of the Borrower and any change in the business, assets,
liabilities, financial condition, results of operations or business prospects of
the Borrower or any other Loan Party which has had or might reasonably be
expected to have Material Adverse Effect;
(c) the occurrence of any Default or Event of Default or any event which
constitutes or which with the passage of time, the giving of notice, the
satisfaction of any condition or any combination of any of the foregoing would
constitute a default or event of default by the
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<PAGE>
Borrower or any other Loan Party under any Material Contract to which any such
Person is a party or by which any such Person or any of its respective
properties may be bound;
(d) any adverse change or amendment in any material respect of any of the
material terms upon which suppliers of the Borrower or any other Loan Party do
business with the Borrower or such other Loan Party;
(e) any order, judgment or decree in excess of $1,000,000 having been
entered against the Borrower or any other Loan Party or any of their respective
properties or assets;
(f) any notification of a material violation of any Applicable Law or any
inquiry shall have been received by the Borrower or any of the Subsidiaries from
any Governmental Authority;
(g) the acquisition, incorporation or other creation of any Subsidiary,
the purpose for such Subsidiary and the nature of the assets and liabilities
thereof;
(h) the proposed sale, transfer or other disposition of any material
assets of the Borrower or any other Loan Party to any other Subsidiary,
Affiliate or other Person; or
(i) any strikes, slow downs, work stoppages or walkouts or other labor
disputes in progress or threatened relating to the Borrower or any other Loan
Party.
SECTION 9.6. ERISA.
-----
The following information at the times specified below:
(a) within ten Business Days after the Borrower, any Subsidiary or any
ERISA Affiliate knows or has reason to believe that a Termination Event has
occurred, a written statement of the Chief Financial Officer of the Borrower
describing such Termination Event and the action, if any, which the Borrower or
other such entities have taken, are taking or propose to take with respect
thereto, and when known, any action taken or threatened by the Internal Revenue
Service, Department of Labor or PBGC with respect thereto;
(b) within ten Business Days after the Borrower, any Subsidiary or any
ERISA Affiliate knows or has reason to know that a non-exempt prohibited
transaction (as defined in Sections 406 of ERISA and 4975 of the Internal
Revenue Code) has occurred with respect to a Plan, a statement of the chief
financial officer of the Borrower describing such transaction and the action
which the Borrower or other such entities have taken, are taking or propose to
take with respect thereto, except where the liability resulting therefrom could
not reasonably exceed $500,000;
(c) within three Business Days after the request by the Agent therefor,
after the filing thereof with the Department of Labor, Internal Revenue Service
or PBGC, copies of each annual
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<PAGE>
report (form 5500 series), including Schedule B thereto, filed with respect to
each Plan which is a defined benefit plan as defined in ERISA (S)3(35);
(d) within three Business Days after the request by the Agent therefor,
after receipt by the Borrower, any Subsidiary or any ERISA Affiliate of each
actuarial report for any Plan which is a defined benefit plan as defined in
ERISA (S)3(35) or Multiemployer Plan and each annual report for any
Multiemployer Plan, copies of each such report;
(e) within three Business Days after the filing thereof with the Internal
Revenue Service, a copy of each funding waiver request filed with respect to any
Plan and all communications received by the Borrower, any Subsidiary or any
ERISA Affiliate with respect to such request;
(f) within ten Business Days after the occurrence thereof, notification of
any increase in excess of $500,000 in the aggregate for any fiscal year in the
benefits of any existing Plan (other than payroll practices) or the
establishment of any new Plan (other than payroll practices) or the commencement
of contributions to any Plan (other than payroll practices) to which the
Borrower, any Subsidiary or any ERISA Affiliate was not previously contributing;
(g) within three Business Days after receipt by the Borrower, any
Subsidiary or any ERISA Affiliate of the PBGC's intention to terminate a Benefit
Plan or to have a trustee appointed to administer a Benefit Plan, copies of each
such notice;
(h) within ten Business Days after receipt by the Borrower, any Subsidiary
or any ERISA Affiliate of any unfavorable determination letter from the Internal
Revenue Service regarding the qualification of a Plan under Section 401(a) of
the Internal Revenue Code, copies of each such letter;
(i) within ten Business Days after receipt by the Borrower, any Subsidiary
or any ERISA Affiliate of a notice regarding the imposition of withdrawal
liability under a Multiemployer Plan, copies of each such notice;
(j) within three Business Days after the Borrower, any Subsidiary or any
ERISA Affiliate fail to make a required installment payment in excess of
$5,000.00 or any other required payment under Section 412 of the Internal
Revenue Code (as calculated by the Plan actuary or as reflected in any Plan
actuarial report available before the due date for such payment) to a Plan on or
before the due date for such payment, a notification of such failure; and
(k) within three Business Days after the Borrower, any Subsidiary or any
ERISA Affiliate knows (a) a Multiemployer Plan has been terminated, (b) the
administrator or plan sponsor of a Multiemployer Plan intends to terminate a
Multiemployer Plan, or (c) the PBGC has instituted or will institute proceedings
under Section 4042 of ERISA to terminate a Multiemployer Plan, a written
statement setting forth any such event or information.
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<PAGE>
For purposes of this Section, the Borrower, any Subsidiary and any ERISA
Affiliate shall be deemed to know all facts known by the administrator of any
Plan of which such entity is the plan sponsor.
The Borrower shall establish, maintain and operate all Plans to comply in
all material respects with the provisions of ERISA, Internal Revenue Code, and
all other Applicable Laws, and the regulations and interpretations thereunder
other than to the extent that Borrower is in good faith contesting by
appropriate proceedings the validity or implication of any such provision, law,
rule, regulation or interpretation.
Section 9.7. Copies of Other Reports.
-----------------------
(a) Promptly upon their becoming available, copies of all registration
statements and other periodic or special reports, if any, which the Borrower
shall file with the Securities and Exchange Commission (or any Governmental
Authority substituted therefor) or any national securities exchange; and
(b) Promptly upon the mailing thereof to the shareholders of the Borrower
generally, copies of all financial statements, reports and proxy statements so
mailed.
Section 9.8. Other Information.
-----------------
From time to time and promptly upon each request, such data, certificates,
reports, statements, opinions of counsel, documents or further information
regarding the business, assets, liabilities, financial condition, results of
operations or business prospects of the Borrower and the other Loan Parties as
any Lender or the Agent may reasonably request. The rights of the Lenders and
the Agent under this Section are in addition to and not in limitation of their
rights under any other provision of this Agreement or any of the other Loan
Documents.
ARTICLE X. NEGATIVE COVENANTS
For so long as any of the Credit Obligations remains outstanding, unpaid or
unperformed, or this Agreement is in effect, the Borrower shall not, directly or
indirectly:
Section 10.1. Financial Covenants.
-------------------
(a) Minimum Consolidated Net Worth. Permit, at the end of each fiscal
------------------------------
quarter of the Borrower during the period this Agreement is in effect, its
Consolidated Net Worth to be less than $76,000,000 plus the sum of: (i) 100% of
the aggregate proceeds (net of Transaction Costs) received by the Borrower or
any of its Subsidiaries from the sale or issuance by the Borrower or any of its
Subsidiaries of any of its respective Capital Stock for the period from the
Agreement Date to the end of such fiscal quarter during which the computation of
Consolidated Net Worth is being made plus (ii) 75% of the cumulative, positive
Consolidated Net Income generated from the Agreement Date to the end of such
fiscal quarter during which the computation of Consolidated Net Worth is being
made; it being understood that any net loss sustained by the
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<PAGE>
Borrower and its Subsidiaries during any period during the effectiveness of this
Agreement shall not be deducted when determining the amount set forth in
subparagraph (ii) above.
(b) Maximum Leverage Ratio. Permit, at the end of each fiscal quarter of
----------------------
the Borrower during the following periods, the ratio of Senior Debt to Total
Capitalization (the "Maximum Leverage Ratio") to exceed the applicable ratio set
forth below for such period:
<TABLE>
<CAPTION>
---------------------------------------------------------
PERIOD MAXIMUM LEVERAGE RATIO
---------------------------------------------------------
<S> <C>
Effective Date through
January 31, 1997 0.60 to 1.00
----------------------------------------------------------
February 1, 1997 through
January 31, 1998 0.55 to 1.00
----------------------------------------------------------
February 1, 1998 and
thereafter 0.52 to 1.00
----------------------------------------------------------
</TABLE>
(c) Minimum Fixed Charge Coverage Ratio. Permit, at the end of each
-----------------------------------
fiscal quarter of the Borrower, the ratio of (i) Consolidated EBITDAR for the
Four-Quarter Period ending on the date of determination to (ii) (A) Consolidated
Interest Expense for such Four-Quarter Period plus (B) Consolidated Rental
Payments for such Four-Quarter Period plus (C) dividends paid or declared by the
Borrower during such Four-Quarter Period plus (D) Capitalized Lease Obligations
scheduled to become due during the immediately following four consecutive fiscal
quarters plus (E) Consolidated Current Maturities outstanding at the end of such
fiscal quarter plus (F) the quotient of: (x) the amount by which the sum of (i)
all Loans plus (ii) all Permitted Notes Payable outstanding as of the end of
such fiscal quarter exceeds the then current Borrowing Base divided by (y) 5
plus (G) the Capital Expenditures Amount for such Four-Quarter Period plus (H)
Sinking Fund Payments scheduled to become due during the immediately following
four consecutive fiscal quarters, to be less than 1.25 to 1.00.
(d) Maximum Funded Debt to EBITDA Ratio. Permit, at the end of any fiscal
-----------------------------------
quarter of the Borrower, the Consolidated Funded Debt to EBITDA Ratio to exceed
4.50 to 1.00.
Section 10.2. Indebtedness.
------------
Create, incur, assume, or permit or suffer to exist, or permit any other
Loan Party to create, incur, assume, or permit or suffer to exist, any
Indebtedness other than the following:
(a) the Credit Obligations;
(b) Existing Indebtedness for Money Borrowed; provided, however, that such
Indebtedness may not be renewed, extended, amended or refinanced without the
prior written consent of the Requisite Lenders;
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<PAGE>
(c) the Subordinated Debentures in an aggregate outstanding principal
amount not to exceed $20,787,000;
(d) the Intercompany Notes;
(e) lines of credit, notes payable and other Indebtedness for Money
Borrowed incurred for working capital purposes up to an aggregate principal
amount at any one time outstanding not to exceed $30,000,000 so long as: (i)
when incurred, and after giving effect thereto, no Default or Event of Default
exists and (ii) on or prior to the incurrence of such Indebtedness, the
Borrower, the Agent and each Line of Credit Lender that is not a Lender
hereunder shall have entered into an Intercreditor Agreement in substantially
the form of Exhibit Q with respect to such Indebtedness (with such changes as
may be agreed upon by the Line of Credit Lender and the Agent); provided,
however, that the aggregate principal amount of such Indebtedness at any one
time outstanding and owing to Line of Credit Lenders that are not Lenders under
this Agreement shall not exceed $10,000,000;
(f) Indebtedness (including Indebtedness constituting Capital Lease
Obligations) owing by any Person that is acquired by the Borrower or a
Subsidiary of the Borrower after the Agreement Date (including by way of merger
or consolidation with and into the Borrower or a Subsidiary); provided, however,
that (i) the aggregate principal amount of the Indebtedness described in this
subsection (f) at any one time outstanding may not exceed $10,000,000 (except as
otherwise may be consented to by the Requisite Lenders) and (ii) such
acquisition, merger or consolidation is permitted by Section 10.4. and/or 10.7.;
(g) Indebtedness secured by real property owned by the Borrower or any
Subsidiary thereof; provided, however, that (i) the principal amount of such
Indebtedness shall not exceed the purchase price or the fair market value of
real property then being financed; (ii) such real property shall be used in the
business of the Borrower and/or its Subsidiaries and shall not be acquired or
held as an investment; and (iii) a description is furnished to the Agent of any
real property so acquired after the Agreement Date, the purchase price of which
equals or exceeds $1,000,000;
(h) Indebtedness secured by Purchase Money Liens and Indebtedness
constituting Capitalized Lease Obligations; provided, however, that the
aggregate principal amount of the Indebtedness described in this subsection (h)
at any one time outstanding may not exceed $5,000,000;
(i) trade payables incurred by the Borrower and its Subsidiaries in the
ordinary course of business; and
(j) Indebtedness arising as a result of Contingent Obligations permitted
under Section 10.3.
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<PAGE>
Section 10.3. Contingent Obligations.
----------------------
Become or remain liable, or permit any other Loan Party to become or remain
liable, on or under any Contingent Obligation other than the following:
(a) Contingent Obligations in existence as of the Agreement Date and set
forth in Schedule 7.1.(g) and not required to be terminated as a condition
precedent to the making of the initial Loans;
(b) Guaranties of Indebtedness owing by officers and employees of the
Borrower incurred by such Persons in the ordinary course of business; provided,
however, that the aggregate principal amount of such Indebtedness permitted to
be guarantied pursuant to this paragraph (b) at any one time outstanding shall
not exceed $1,000,000;
(c) Contingent Obligations resulting from endorsement of negotiable
instruments for collection in the ordinary course of business;
(d) Contingent Obligations under the Guaranty executed by the Loan Parties
in favor of the Agent and the Lenders;
(e) Contingent Obligations with respect to customary indemnification and
purchase price adjustment obligations incurred in connection with permitted
Investments;
(f) Contingent Obligations incurred in the ordinary course of business
with respect to leases, licenses, surety and appeal bonds, performance and
return-of-money bonds and other similar obligations;
(g) Contingent Obligations under interest rate swap or similar hedging
agreements entered into by a Loan Party and a Lender to protect such Loan Party
against fluctuations in interest rates; and
(h) Guaranties executed by the Borrower and its Subsidiaries covering
Indebtedness permitted by Section 10.2.
Section 10.4. Investments.
-----------
(i) Acquire or purchase, or permit any other Loan Party to acquire or
purchase, after the Agreement Date, any Business Unit of another Person or
(ii)(A) acquire, make or purchase, or permit any other Loan Party to acquire,
make or purchase, after the Agreement Date, any Investment or (B) permit any
Investment of the Borrower or any other Loan Party to be outstanding on and
after the Agreement Date other than the following:
(a) Investments in Subsidiaries and other Persons in existence on the
Agreement Date and set forth on Schedule 7.1.(b);
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(b) Investments in Marketable Securities;
(c) Investments that constitute Indebtedness permitted under Section
10.2.;
(d) Acquisitions and purchases by the Borrower, or any of its Subsidiaries
(including by way of merger or consolidation) outside the ordinary course of
business of (i) all or substantially all of the assets or properties of another
Person; (ii) any Business Unit of another Person or (iii) all or a controlling
interest of the Capital Stock of another Person so long as the following
conditions are satisfied: (A) the Board of Directors (or other similar
management body) of the Person to be acquired recommends to its shareholders
that the shareholders approve such acquisition; (B) that immediately prior to,
and immediately after, the consummation of such acquisition or purchase, no
Default or Event of Default has occurred and is continuing; (C) the assets or
Person so purchased or acquired relate directly to the same lines of business as
conducted by the Borrower and its Subsidiaries on the Agreement Date; (D) if the
Borrower creates a Subsidiary to effect such acquisition or purchase, the
Borrower and such Subsidiary shall comply with the provisions of Section 8.9;
(E) if such acquisition or purchase is consummated through a merger or
consolidation, the Borrower (or, after giving effect to the merger, a Subsidiary
of the Borrower including the acquired entity if it is the survivor of the
merger) shall be the surviving corporation; (F) immediately after giving effect
to such acquisition or purchase, the Borrower would, on a pro forma basis, be in
compliance with the financial covenants set forth in Section 10.1.; provided
further, however, that (x) the aggregate amount of all Non-Stock Consideration
(as defined below) paid by the Borrower and its Subsidiaries in connection with
such acquisition and purchases may not exceed $15,000,000 during any fiscal year
during which this Agreement is in effect and (y) the aggregate amount of all
Stock Consideration (as defined below) paid by the Borrower and its Subsidiaries
in connection with such acquisition and purchases may not exceed $30,000,000
during any fiscal year during which this Agreement is in effect;
(e) intercompany Indebtedness among the Borrower and its Subsidiaries
provided that: (i) such Indebtedness is permitted by the terms of Section 10.2.
and (ii) in the case of loans or extensions of credit from the Borrower to any
of its Subsidiaries (or from a Subsidiary to another Subsidiary), the borrowing
Subsidiary shall have executed an Intercompany Note and become a party to the
Intercompany Security Agreement;
(f) Loans and advances to employees for moving, entertainment, travel and
other similar expenses in the ordinary course of business consistent with past
practices not to exceed $1,000,000 in the aggregate at any one time outstanding;
and
(g) other Investments not to exceed in the aggregate an acquisition cost
of $1,000,000 at any time.
For purposes of this Section, "Non-Stock Consideration" means all cash,
Cash Equivalents, promissory notes and other instruments of indebtedness and all
other assets (other than Capital Stock) paid by the Borrower and its
Subsidiaries. When determining the amount of Non-Stock Consideration paid by
the Borrower and its Subsidiaries, the value of all promissory
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notes and other instruments of indebtedness shall be the face value thereof and
the value of all other assets and Cash Equivalents shall be the fair market
value thereof. The term "Stock Consideration" means all Capital Stock paid or
issued by the Borrower and its Subsidiaries to the seller(s). When determining
the amount of Stock Consideration paid by the Borrower and its Subsidiaries, the
fair market value of such Capital Stock shall be used.
Section 10.5. Liens; Agreements Regarding Liens; Other Matters.
------------------------------------------------
(a) Create, assume, incur or permit or suffer to exist or to be created,
assumed or incurred, or permit any other Loan Party to create, assume or suffer
to exist or be created, any Lien upon any of its properties, assets, income or
profits of any character whether now owned or hereafter acquired other than (i)
Permitted Liens and (ii) non-consensual Liens which are fraudulently procured or
created and which are terminated or released within 30 days after the Borrower
receives knowledge thereof;
(b) Enter into or assume any agreement (other than the Loan Documents), or
permit any Loan Party to enter into or assume any agreement (other than the Loan
Documents), prohibiting the creation or assumption of any Lien upon its
properties or assets, whether now owned or hereafter acquired; or
(c) Create or otherwise cause or suffer to exist or become effective, or
permit any Subsidiary to create or otherwise cause or suffer to exist or become
effective, any consensual encumbrance or restriction of any kind on the ability
of any Subsidiary to: (i) pay dividends or make any other distribution on any of
such Subsidiary's Capital Stock owned by the Borrower or any Subsidiary of the
Borrower; (ii) pay any Indebtedness owed to the Borrower or any other
Subsidiary; (iii) make loans or advances to the Borrower or any other
Subsidiary; (iv) transfer any of its property or assets to the Borrower or any
other Subsidiary; or (v) grant or convey Liens on its properties or assets.
Section 10.6. Restricted Payments.
-------------------
Declare or make any, or permit any other Loan Party to declare or make, any
Restricted Payment; provided, however, that (i) Subsidiaries may pay Restricted
Payments to the Borrower or any of its Subsidiaries; (ii) the Borrower may pay
dividends and make distributions in respect of any class of shares of stock of
the Borrower so long as: (a) no Default or Event of Default shall have occurred
and be continuing or would result after giving effect thereto and (b) after
giving effect to the Restricted Payment, the Borrower would, on a pro forma
basis, be in compliance with Section 10.1.; (iii) the Borrower may make payments
with respect to any of the Subordinated Debentures to the extent permitted under
Section 10.9. (including any payment in kind resulting from purchases of
Subordinated Debentures by the Borrower); (iv) the Borrower may make payments
with respect to any other Subordinated Debt permitted by the terms of Section
10.2. as required in accordance with the terms thereof but only, in each case,
to the extent required by, and subject to the subordination provisions contained
in, the promissory note, indenture or other agreement pursuant to which such
Indebtedness was issued or otherwise as
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approved in writing by the Requisite Lenders; and (v) the Borrower and each
other Loan Party may make any Restricted Payments required under the terms of
any Plan or Multiemployer Plan.
Section 10.7. Merger, Consolidation, Sales of Assets and Other
------------------------------------------------
Arrangements.
------------
(a) Except pursuant to Section 10.4.(d), enter into, or permit any Loan
Party to enter into, any transaction of merger or consolidation with any Person;
(b) liquidate, wind-up or dissolve itself (or suffer any liquidation or
dissolution) or permit any Loan Party to do any of the foregoing; or (c) convey,
sell, lease, sublease, transfer or otherwise dispose of, in one transaction or a
series of transactions, all or any part of its business or assets, or the
Capital Stock of any of its Subsidiaries, whether now owned or hereafter
acquired or permit any Loan Party to do any of the foregoing; provided, however,
that:
(i) Subsidiaries of the Borrower may merge or consolidate with
other Subsidiaries of the Borrower;
(ii) a Subsidiary may sell, transfer or dispose of its assets to the
Borrower or another Subsidiary of the Borrower;
(iii) the Borrower or any other Loan Party may sell its inventory in
the ordinary course of business;
(iv) so long as no Default or Event of Default exists, the Borrower
and its Subsidiaries may, during any rolling twelve-month period, sell,
transfer or dispose of assets (including the Capital Stock of Subsidiaries)
which, when taken together with all other sales, transfers or other
dispositions of assets during such rolling twelve-month period, have an
aggregate net book value in an amount not to exceed 10% of Total Tangible
Assets of the Borrower and its Subsidiaries, taken as a whole, as measured
at the beginning of such rolling twelve-month period; and
The Borrower shall notify the Agent and each Lender in writing upon the sale,
transfer or other disposition of assets pursuant to clause (iv) above having a
net book value in excess of $500,000, together with a certificate demonstrating
compliance with this Section 10.7. Further, neither the Borrower nor any
Subsidiary shall enter into any sale-leaseback transactions or other transaction
by which the Borrower or a Subsidiary shall remain liable as lessee (or the
economic equivalent thereof) of any real or personal property that it has sold
or leased to another Person.
Section 10.8. Fiscal Year.
-----------
Change its fiscal year from that in effect as of the Agreement Date.
SECTION 10.9. Subordinated Debt Prepayments; Amendments.
-----------------------------------------
Prepay any principal of, or accrued interest on, any Subordinated Debt or
otherwise make any voluntary or optional payment with respect to any principal
of, or accrued interest on, any
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Subordinated Debt prior to the originally scheduled maturity date thereof or
otherwise redeem or acquire for value any Subordinated Debt or permit any Loan
Party to do any of the foregoing; provided, however, that, so long as (i) no
Default or Event of Default shall have occurred and be continuing and (ii) the
Borrower would, on a pro forma basis, be in compliance with Section 10.1. after
giving effect to any such prepayment, the Borrower may prepay any principal of,
or accrued interest on, any of the Subordinated Debentures. Further, the
Borrower shall not, or permit any Loan Party to, amend or modify, or permit the
amendment or modification of, any agreement or instrument evidencing any
Subordinated Debt.
SECTION 10.10. TRANSACTIONS WITH AFFILIATES.
----------------------------
Permit to exist or enter into, and will not permit any of the other Loan
Parties to enter into or permit to exist, any transaction (including the
purchase, sale, lease or exchange of any property or the rendering of any
service) with any Affiliate of the Borrower or any other Loan Party (excluding
however, transactions between or among the Borrower and its Subsidiaries),
except (a) as set forth on Schedule 7.1.(r) or (b) transactions in the ordinary
course of and pursuant to the reasonable requirements of the business of the
Borrower or any of its Subsidiaries and upon fair and reasonable terms which are
fully disclosed to the Agent and the Lenders and are no less favorable to the
Borrower or such Subsidiary than would be obtained in a comparable arm's length
transaction with a Person that is not an Affiliate of the Borrower.
Notwithstanding the foregoing, no payments may be made with respect to any items
set forth on Schedule 7.1.(r) upon the occurrence and during the continuation of
a Default or Event of Default.
ARTICLE XI. DEFAULT
Section 11.1. Events Of Default.
-----------------
Each of the following shall constitute an Event of Default, whatever the
reason for such event and whether it shall be voluntary or involuntary or be
effected by operation of Applicable Law or pursuant to any judgment or order of
any Governmental Authority:
(a) Default in Payment. (i) The Borrower shall fail to pay when due
------------------
(whether upon demand, at maturity, by reason of acceleration, by mandatory
prepayment or otherwise) the principal of any of the Loans; or (ii) the Borrower
shall fail to pay when due any interest on any of the Loans or any of the other
payment Credit Obligations owing by the Borrower under this Agreement or any
other Loan Document and the continuance of such failure for a period of five
days; or (iii) any other Loan Party shall fail to pay when due and payable any
Credit Obligation owing by such Loan Party under any Loan Document to which it
is a party.
(b) Default in Performance. (i) The Borrower shall fail to perform or
----------------------
observe any term, covenant, condition or agreement contained in Article X. or
(ii) the Borrower or any other Loan Party shall fail to perform or observe any
other term, covenant, condition or agreement contained in this Agreement or any
other Loan Document to which it is a party and not otherwise mentioned in this
Section and such failure shall continue for a period of thirty days after the
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<PAGE>
earlier of (x) the date upon which the Borrower or such Loan Party obtains
actual knowledge of such failure or (y) the date upon which the Borrower has
received written notice of such failure from the Agent.
(c) Misrepresentations. Any written statement, representation or warranty
------------------
made or deemed made by or on behalf of the Borrower or any other Loan Party
under this Agreement or under any other Loan Document, or any amendment hereto
or thereto, or in any other writing or statement at any time furnished or made
or deemed made by or on behalf of the Borrower or any other Loan Party to the
Agent or any Lender, shall at any time prove to have been incorrect or
misleading in any material respect when furnished or made.
(d) Indebtedness Cross-Default.
--------------------------
(i) The Borrower or any other Loan Party shall fail to pay when due
and payable the principal of, or interest on, or any sinking fund payment
with respect to, the Subordinated Debentures, or any of the Permitted Notes
Payable and, in the case of any Permitted Notes Payable, the continuance of
such event for a period of 15 days; or
(ii) The Borrower or any other Loan Party shall fail to pay when due
and payable the principal of, or interest on, any other Indebtedness (other
than the Loans) or any Contingent Obligations having an aggregate
outstanding principal amount of $500,000 or more; or
(iii) the maturity of any such Indebtedness described in
subparagraphs (i) or (ii) immediately above shall have (x) been accelerated
in accordance with the provisions of any indenture, contract or instrument
evidencing, providing for the creation of or otherwise concerning such
Indebtedness or (y) been required to be prepaid prior to the stated
maturity thereof.
(e) Voluntary Bankruptcy Proceeding. The Borrower or any other Loan Party
-------------------------------
shall: (i) commence a voluntary case under the Bankruptcy Code of 1978, as
amended or other federal bankruptcy laws (as now or hereafter in effect); (ii)
file a petition seeking to take advantage of any other Applicable Laws, domestic
or foreign, relating to bankruptcy, insolvency, reorganization, winding-up, or
composition or adjustment of debts; (iii) consent to, or fail to contest in a
timely and appropriate manner, any petition filed against it in an involuntary
case under such bankruptcy laws or other Applicable Laws or consent to any
proceeding or action described in the immediately following subsection; (iv)
apply for or consent to, or fail to contest in a timely and appropriate manner,
the appointment of, or the taking of possession by, a receiver, custodian,
trustee, or liquidator of itself or of a substantial part of its property,
domestic or foreign; (v) admit in writing its inability to pay its debts as they
become due; (vi) make a general assignment for the benefit of creditors; (vii)
make a conveyance fraudulent as to creditors under any Applicable Law; or (viii)
take any corporate or partnership action for the purpose of effecting any of the
foregoing.
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<PAGE>
(f) Involuntary Bankruptcy Proceeding. A case or other proceeding shall
---------------------------------
be commenced against the Borrower or any other Loan Party, in any court of
competent jurisdiction seeking: (i) relief under the Bankruptcy Code of 1978, as
amended or other federal bankruptcy laws (as now or hereafter in effect) or
under any other Applicable Laws, domestic or foreign, relating to bankruptcy,
insolvency, reorganization, winding-up, or composition or adjustment of debts;
or (ii) the appointment of a trustee, receiver, custodian, liquidator or the
like of such Person, or of all or any substantial part of the assets, domestic
or foreign, of such Person, which case or proceeding remains undismissed or
unstayed 60 days after its commencement.
(g) Litigation. The Borrower or any other Loan Party shall disavow,
----------
revoke or terminate any Loan Document (including, without limitation, the
Guaranty) to which it is a party or shall otherwise challenge or contest in any
action, suit or proceeding in any court or before any Governmental Authority the
validity or enforceability of this Agreement, any Note or any other Loan
Document.
(h) Judgment. A judgment or order for the payment of money shall be
--------
entered against the Borrower or any Loan Party by any court or other tribunal
which exceeds, individually or together with all other such judgments or orders
entered and unsatisfied against the Borrower and the Loan Parties, $1,000,000 in
amount (to the extent not covered by insurance) (or which shall otherwise have a
Material Adverse Effect) and such judgment or order shall continue for a period
of 60 days without being stayed, bonded or dismissed through appropriate
proceedings.
(i) Attachment. A warrant, writ of attachment, execution or similar
----------
process shall be issued against any property of the Borrower or any other Loan
Party which exceeds, individually or together with all other such warrants,
writs, executions and processes, $1,000,000 in amount and such warrant, writ,
execution or process shall not be discharged, vacated, stayed or bonded for a
period of 30 days; provided, however, that if a bond has been issued in favor of
the claimant or other Person obtaining such warrant, writ, execution or process,
the issuer of such bond shall execute a waiver or subordination agreement in
form and substance reasonably satisfactory to the Agent and the Requisite
Lenders pursuant to which the issuer of such bond subordinates its right of
reimbursement, contribution or subrogation to the Credit Obligations and waives
or subordinates any Lien it may have on the assets of any Loan Party.
(j) ERISA. (i) Any Termination Event with respect to a Plan shall occur;
-----
(ii) any Plan shall incur an "accumulated funding deficiency" (as defined in
Section 412 of the Internal Revenue Code or Section 302 of ERISA) for which a
waiver has not been obtained in accordance with the applicable provisions of the
Internal Revenue Code and ERISA; or (iii) the Borrower is in "default" (as
defined in Section 4219(c)(5) of ERISA) with respect to payments to a
Multiemployer Plan resulting from the Borrower's complete or partial withdrawal
(as described in Section 4203 or 4205 of ERISA) from such Multiemployer Plan.
(k) Loan Documents. An Event of Default (as defined therein) shall occur
--------------
under any of the other Loan Documents.
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<PAGE>
(l) Change of Control/Change in Management. (i)(A) If any Person (or two
--------------------------------------
or more Persons acting in concert) shall acquire "beneficial ownership" within
the meaning of Rule 13d-3 of the Securities and Exchange Act of 1934, as
amended, of the Capital Stock or securities of the Borrower representing 50% or
more of the aggregate voting power of all classes of Capital Stock and
securities of the Borrower entitled to vote for the election of directors or (B)
during any twelve-month period (commencing both before and after the Agreement
Date), individuals who at the beginning of such period were directors of the
Borrower shall cease for any reason (other than death or mental or physical
disability) to constitute a majority of the board of directors of the Borrower;
or (ii) if both Mark C. Pope III and Mark C. Pope IV shall cease for any reason
(including death or disability) to be the chief executive officer and the
president, respectively, of the Borrower or shall otherwise cease to be
principally involved in the executive and strategic management of the Borrower
on a full-time basis.
(m) Injunction. The Borrower or any of its Subsidiaries is enjoined,
----------
restrained or in any way prevented by the order of any Governmental Authority
from conducting all or any material part of its business and such order
continues for more than thirty days.
(n) Damage; Strike; Casualty. Any material damage to, or loss, theft or
------------------------
destruction of, any Collateral, whether or not insured, or any strike, lockout,
labor dispute, embargo, condemnation, act of God or public enemy, or other
casualty which causes, for more than thirty consecutive days beyond the coverage
period of any applicable business interruption insurance, the cessation or
substantial curtailment of revenue producing activities at any facility of the
Borrower or any of its Subsidiaries if any such event or circumstance could
reasonably be expected to have a Material Adverse Effect.
(o) Licenses and Permits. The loss, suspension or revocation of, or
--------------------
failure to renew, any license or permit now held or hereafter acquired by the
Borrower or any of its Subsidiaries, if such loss, suspension, revocation or
failure to renew could have a Material Adverse Effect.
(p) Failure of Security. The Agent does not have or ceases to have a
-------------------
valid and perfected first priority security interest in the Collateral (subject
to Permitted Liens), in each case, for any reason other than the failure of the
Agent or the Lenders to take any action within its control.
(q) Dissolution. Any order, judgment or decree is entered against the
-----------
Borrower or any of its Subsidiaries decreeing the dissolution or split up of the
Borrower or that Subsidiary and such order remains undischarged or unstayed for
a period in excess of thirty days, and, if such order relates to one or more
Subsidiaries, could reasonably be expected to have a Material Adverse Effect.
(r) Suspension of Business. The cessation or substantial curtailment of
----------------------
revenue producing activities of the Borrower or any other Loan Party shall occur
(whether as a result of strike, lockout, labor dispute, embargo, condemnation,
force majeure or otherwise) and continue for a period in excess of 20
consecutive days beyond the coverage period of any applicable
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<PAGE>
business interruption insurance, and the occurrence or continuance of which
could reasonably be expected to have a Material Adverse Effect.
Section 11.2. Remedies Upon Event Of Default.
------------------------------
Upon the occurrence of an Event of Default the following provisions shall
apply:
(a) Acceleration; Termination of Facilities.
---------------------------------------
(i) Automatic. Upon the occurrence of an Event of Default
---------
specified in Sections 11.1.(e) or 11.1.(f) with respect to the Borrower,
(A)(i) the principal of, and all accrued interest on, the Loans and the
Notes at the time outstanding and (ii) all of the other Credit Obligations
of the Borrower, including, but not limited to, the other amounts owed to
the Lenders and the Agent under this Agreement, the Notes or any of the
other Loan Documents shall become immediately and automatically due and
payable by the Borrower without presentment, demand, protest, or other
notice of any kind, all of which are expressly waived by the Borrower and
(B) the credit facility established hereby and the obligation of the
Lenders to make Revolving Loans hereunder pursuant to each Lender's
Commitment shall immediately and automatically terminate.
(ii) Optional. If any other Event of Default shall have occurred
--------
and be continuing, the Requisite Lenders may direct the Agent to, and the
Agent if so directed shall: (I) declare (1) the principal of, and accrued
interest on, the Loans and the Notes at the time outstanding and (2) all of
the other Credit Obligations, including, but not limited to, the other
amounts owed to the Lenders and the Agent under this Agreement, the Notes
or any of the other Loan Documents to be forthwith due and payable,
whereupon the same shall immediately become due and payable without
presentment, demand, protest or other notice of any kind, all of which are
expressly waived by the Borrower and (II) terminate the credit facility
established hereby, each Lender's Commitment and the obligation of the
Lenders to make Revolving Loans hereunder.
(b) Loan Documents. The Requisite Lenders may direct the Agent to, and,
--------------
subject to the terms hereof, the Agent if so directed shall, exercise any and
all of its rights under any and all of the other Loan Documents.
(c) Applicable Law. The Agent may, at the direction of the Requisite
--------------
Lenders, exercise all other rights and remedies it may have under any Applicable
Law.
Section 11.3. Performance by Agent.
--------------------
If the Borrower shall fail to perform any covenant, duty or agreement
contained in any of the Loan Documents, the Agent may perform or attempt to
perform such covenant, duty or agreement on behalf of the Borrower after the
expiration of any cure or grace periods set forth herein and shall promptly
notify the Borrower of such performance. In such event, the Borrower shall, at
the request of the Agent, promptly pay any amount reasonably expended by the
Agent in
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such performance or attempted performance to the Agent, together with interest
thereon at the applicable Post-Default Rate from the date of such expenditure
until paid. Notwithstanding the foregoing, neither the Agent nor any Lender
shall have any liability or responsibility whatsoever for the performance of any
obligation of the Borrower under this Agreement or any other Loan Document.
Section 11.4. Rights Cumulative.
-----------------
The rights and remedies of the Agent and the Lenders under this Agreement
and each of the other Loan Documents shall be cumulative and not exclusive of
any rights or remedies which any of them may otherwise have under Applicable
Law. In exercising their respective rights and remedies the Agent and the
Lenders may be selective and no failure or delay by the Agent or any of the
Lenders in exercising any right shall operate as a waiver of it, nor shall any
single or partial exercise of any power or right preclude its other or further
exercise or the exercise of any other power or right.
ARTICLE XII. THE AGENT
Section 12.1. Authorization And Action.
------------------------
Each Lender hereby appoints and authorizes the Agent to take such action as
agent on such Lender's behalf and to exercise such powers under this Agreement
and the other Loan Documents as are specifically delegated to the Agent by the
terms thereof, together with such powers as are reasonably incidental thereto.
The power of attorney set forth hereinabove shall be irrevocable and coupled
with an interest. The relationship between the Agent and the Lenders shall be
that of principal and agent only and nothing herein shall be construed to deem
the Agent a trustee or fiduciary for any Lender nor to impose on the Agent
duties or obligations other than those expressly provided for herein. At the
request of a Lender, the Agent will forward to each Lender copies or, where
appropriate, originals of the documents delivered to the Agent pursuant to this
Agreement or the other Loan Documents. The Agent will also furnish to any
Lender, upon the request of such Lender, a copy of any certificate or notice
furnished to the Agent by the Borrower, any Loan Party or any other Affiliate of
the Borrower, pursuant to this Agreement or any other Loan Document not already
delivered to such Lender pursuant to the terms of this Agreement or any such
other Loan Document. As to any matters not expressly provided for by the Loan
Documents (including, without limitation, enforcement or collection of any of
the Credit Obligations), the Agent shall not be required to exercise any
discretion or take any action, but shall be required to act or to refrain from
acting (and shall be fully protected in so acting or refraining from acting)
upon the instructions of the Requisite Lenders, and such instructions shall be
binding upon all Lenders and all holders of any of the Credit Obligations;
provided, however, that, notwithstanding anything in this Agreement to the
contrary, the Agent shall not be required to take any action which exposes the
Agent to personal liability or which is contrary to this Agreement or any other
Loan Document or Applicable Law; provided further, however, that if the Agent
shall so refuse to take such action, the Agent shall deliver to each Lender an
opinion of its counsel setting forth the legal basis for so refusing. Not in
limitation of the foregoing, the Agent shall not exercise any right or remedy it
or the Lenders may have under any Loan
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Document upon the occurrence of a Default or an Event of Default unless the
Requisite Lenders have so directed the Agent to exercise such right or remedy.
Section 12.2. Agent's Reliance.
----------------
Neither the Agent nor any of its directors, officers, agents, employees or
counsel shall be liable for any action taken or omitted to be taken by it or
them under or in connection with this Agreement, except for its or their own
gross negligence or willful misconduct. Without limiting the generality of the
foregoing, the Agent: (a) may treat the payee of any Note as the holder thereof
until the Agent receives written notice of the assignment or transfer thereof
signed by such payee and in form satisfactory to the Agent; (b) may consult with
legal counsel (including its own counsel or counsel for the Borrower or any Loan
Party), independent public accountants and other experts selected by it and
shall not be liable for any action taken or omitted to be taken in good faith by
it in accordance with the advice of such counsel, accountants or experts; (c)
makes no warranty or representation to any Lender or any other Person and shall
not be responsible to any Lender or any other Person for any statements,
warranties or representations made by any Person in or in connection with this
Agreement or any other Loan Document; (d) shall not have any duty to ascertain
or to inquire as to the performance or observance of any of the terms, covenants
or conditions of any of this Agreement or any other Loan Document or the
satisfaction of any conditions precedent under this Agreement or any Loan
Document on the part of the Borrower or other Persons or inspect the property,
books or records of the Borrower or any other Person; (e) shall not be
responsible to any Lender for the due execution, legality, validity,
enforceability, genuineness, sufficiency or value of this Agreement or any other
Loan Document, any other instrument or document furnished pursuant thereto or
any Collateral covered thereby or the perfection or priority of any Lien in
favor of the Agent on behalf of the Lenders in any such Collateral; and (f)
shall incur no liability under or in respect of this Agreement or any other Loan
Document by acting upon any notice, consent, certificate or other instrument or
writing (which may be by telephone or telecopy) believed by it to be genuine and
signed, sent or given by the proper party or parties.
Section 12.3. Notice Of Defaults.
------------------
The Agent shall not be deemed to have knowledge or notice of the occurrence
of a Default or Event of Default (other than the non-payment of principal of or
interest on Loans or of Fees) unless the Agent has received notice from a Lender
or the Borrower referring to this Agreement, describing with reasonable
specificity such Default or Event of Default and stating that such notice is a
"notice of default." If any Lender becomes aware of any Default or Event of
Default, it shall promptly send to the Agent such a "notice of default."
Further, if the Agent receives such a "notice of default", the Agent shall give
prompt notice thereof to the Lenders (and shall give each Lender prompt notice
of each such non-payment).
Section 12.4. Nationsbank Of Georgia, National Association As Lender.
------------------------------------------------------
NationsBank of Georgia, National Association, as a Lender, shall have the
same rights and powers under this Agreement and any other Loan Document as any
other Lender and may
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exercise the same as though it were not the Agent; and the term "Lender" or
"Lenders" shall, unless otherwise expressly indicated, include NationsBank of
Georgia, National Association in each case in its individual capacity.
NationsBank of Georgia, National Association and its Affiliates may each accept
deposits from, maintain deposits or credit balances for, invest in, lend money
to, act as trustee under indentures of, serve as financial advisor to, and
generally engage in any kind of business with the Borrower, any other Loan Party
or any other Affiliate thereof as if it were any other bank and without any duty
to account therefor to the other Lenders. Further, the Agent and any Affiliate
thereof may accept fees and other consideration from the Borrower for services
in connection with this Agreement and otherwise without having to account for
the same to the other Lenders.
Section 12.5. Lender Credit Decision.
----------------------
Each Lender expressly acknowledges and agrees that neither the Agent nor
any of its officers, directors, employees, agents, counsel, attorneys-in-fact or
other Affiliates has made any representations or warranties as to the financial
condition, operations, creditworthiness, solvency or other information
concerning the business or affairs of the Borrower, any other Loan Party, any
Subsidiary or other Person to such Lender and that no act by the Agent
hereinafter taken, including any review of the affairs of the Borrower, shall be
deemed to constitute any such representation or warranty by the Agent to any
Lender. Each Lender acknowledges that it has, independently and without reliance
upon the Agent, any other Lender or counsel to the Agent, or any of their
respective officers, directors, employees and agents, and based on the financial
statements of the Borrower, the Subsidiaries or any other Affiliate thereof, and
inquiries of such Persons, its independent due diligence of the business and
affairs of the Borrower, the Loan Parties, the Subsidiaries and other Persons,
its review of the Loan Documents, the legal opinions required to be delivered to
it hereunder, the advice of its own counsel and such other documents and
information as it has deemed appropriate, made its own credit and legal analysis
and decision to enter into this Agreement and any Permitted Notes Payable and
the transaction contemplated hereby. Each Lender also acknowledges that it will,
independently and without reliance upon the Agent, any other Lender or counsel
to the Agent or any of their respective officers, directors, employees and
agents, and based on such review, advice, documents and information as it shall
deem appropriate at the time, continue to make its own decisions in taking or
not taking action under the Loan Documents or under any Permitted Notes Payable.
Except for notices, reports and other documents expressly required to be
furnished to the Lenders by the Agent hereunder, the Agent shall have no duty or
responsibility to provide any Lender with any credit or other information
concerning the business, operations, property, financial and other condition or
creditworthiness of the Borrower, any other Loan Party or any other Affiliate
thereof which may come into possession of the Agent or any of its officers,
directors, employees, agents, attorneys-in-fact or other Affiliates.
Section 12.6. Indemnification Of Agent.
------------------------
Each Lender agrees to indemnify the Agent (to the extent not reimbursed by
the Borrower and without limiting the obligation of the Borrower to do so) pro
rata in accordance with such Lender's respective Commitment Percentage, from and
against any and all liabilities, obligations,
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losses, damages, penalties, actions, judgments, suits, costs, expenses or
disbursements of any kind or nature whatsoever which may at any time be imposed
on, incurred by, or asserted against the Agent in any way relating to or arising
out of the Loan Documents, any transaction contemplated hereby or thereby or any
action taken or omitted by the Agent under the Loan Documents; provided,
however, that no Lender shall be liable for any portion of such liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses or disbursements to the extent resulting from the Agent's gross
negligence or willful misconduct or if the Agent fails to follow the written
direction of the Requisite Lenders unless such failure is pursuant to the advice
of counsel of which the Lenders have received notice. Without limiting the
generality of the foregoing, each Lender agrees to reimburse the Agent promptly
upon demand for its ratable share of any out-of-pocket expenses (including
counsel fees of the counsel(s) of the Agent's own choosing) incurred by the
Agent in connection with the preparation, execution, administration, or
enforcement of, or legal advice with respect to the rights or responsibilities
of the parties under, the Loan Documents, any suit or action brought by the
Agent to enforce the terms of the Loan Documents and/or collect any Credit
Obligations, any "lender liability" suit or claim brought against the Agent
and/or the Lenders, and any claim or suit brought against the Agent and/or the
Lenders arising under any Environmental Laws, to the extent that the Agent is
not reimbursed for such expenses by the Borrower. Such out-of-pocket expenses
(including counsel fees) shall be advanced by the Lenders on the request of the
Agent notwithstanding any claim or assertion that the Agent is not entitled to
indemnification hereunder upon receipt of an undertaking by the Agent that the
Agent will reimburse the Lenders if it is actually and finally determined by a
court of competent jurisdiction that the Agent is not so entitled to
indemnification. The agreements in this Section shall survive the payment of the
Loans and all other Credit Obligations and the termination of this Agreement.
SECTION 12.7. COLLATERAL MATTERS.
------------------
(a) The Agent is authorized on behalf of all of the Lenders (including
those Lenders that are also Syndicate Line of Credit Lenders), without the
necessity of any notice to or further consent from any Lender or any Syndicate
Line of Credit Lender, from time to time prior to an Event of Default, to take
any action with respect to any Collateral or Loan Documents which may be
necessary to perfect and maintain perfected the Liens upon the Collateral
granted pursuant to any of the Loan Documents. Further, but only to the extent
provided in Articles XII and XIII hereof, each Syndicate Line of Credit Lender
hereby appoints the Agent as its collateral agent.
(b) The Lenders hereby authorize the Agent, at its option and in its
discretion, to release any Lien granted to or held by the Agent upon any
Collateral (i) upon termination of the Commitments and payment and satisfaction
of all of the Credit Obligations at any time arising under or in respect of this
Agreement or the Loan Documents or the transactions contemplated hereby or
thereby; (ii) constituting property being sold or disposed of upon receipt of
the proceeds of such sale by the Agent if the Borrower certifies to the Agent
that the sale or disposition is made in compliance with Section 10.7. (and the
Agent may rely conclusively on a certificate of the Borrower, without further
inquiry); (iii) as permitted by, but only in accordance with, the terms of the
applicable Loan Document; or (iv) if approved, authorized or ratified in
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writing by the Requisite Lenders, unless such release is required to be approved
by all of the Lenders hereunder. Further, the Lenders authorize the Agent to
release a Loan Party (other than the Borrower) from its obligations under the
Loan Documents if the Capital Stock of such Loan Party is being sold and the
Borrower certifies to the Agent that such sale is permitted by Section 10.7
hereof (and the Agent may rely conclusively on any such certificate, without
further inquiry). Upon request by the Agent at any time, the Lenders will
confirm in writing the Agent's authority to release particular types or items of
Collateral pursuant to this Section.
(c) Upon any sale and transfer of Collateral which is expressly permitted
pursuant to the terms of this Agreement, or consented to in writing by the
Requisite Lenders or all of the Lenders, as applicable, and upon at least five
Business Days' prior written request by the Borrower, the Agent shall (and is
hereby irrevocably authorized by the Lenders to) execute such documents as may
be necessary to evidence the release of the Liens granted to the Agent for the
benefit of the Lenders herein or pursuant hereto upon the Collateral that was
sold or transferred; provided, however, that (i) the Agent shall not be required
to execute any such document on terms which, in the Agent's opinion, would
expose the Agent to liability or create any obligation or entail any consequence
other than the release of such Liens without recourse or warranty; and (ii) such
release shall not in any manner discharge, affect or impair the Credit
Obligations or any Liens upon (or obligations of the Borrower or any Loan Party
in respect of) all interests retained by the Borrower or any Subsidiary,
including (without limitation) the proceeds of the sale, all of which shall
continue to constitute part of the Collateral. In the event of any sale or
transfer of Collateral, or any foreclosure with respect to any of the
Collateral, the Agent shall be authorized to deduct all of the expenses
reasonably incurred by the Agent from the proceeds of any such sale, transfer or
foreclosure.
(d) The Agent shall have no obligation whatsoever to the Lenders
(including any Syndicate Line of Credit Lender) or to any other Person to assure
that the Collateral exists or is owned by the Borrower or any other Loan Party
or is cared for, protected or insured or that the Liens granted to the Agent
herein or pursuant hereto have been properly or sufficiently or lawfully
created, perfected, protected or enforced or are entitled to any particular
priority, or to exercise or to continue exercising at all or in any manner or
under any duty of care, disclosure or fidelity any of the rights, authorities
and powers granted or available to the Agent in this Section or in any of the
Loan Documents, it being understood and agreed that in respect of the
Collateral, or any act, omission or event related thereto, the Agent may act in
any manner it may deem appropriate, in its sole discretion, given the Agent's
own interest in the Collateral as one of the Lenders and that the Agent shall
have no duty or liability whatsoever to the Lenders (including any Syndicate
Line of Credit Lender), except for its gross negligence or willful misconduct.
Section 12.8. Successor Agent.
---------------
The Agent may resign at any time as Agent under the Loan Documents by
giving ten days' written notice thereof to the Lenders and the Borrower. In the
event of a material breach of its duties hereunder, the Agent may be removed as
Agent under the Loan Documents at any time by the Requisite Lenders (other than
the Agent and without giving effect to the Commitment of the Agent as a Lender)
upon 30-day's prior notice. Upon any such resignation or removal, the
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Requisite Lenders shall have the right to appoint a successor Agent. If no
successor Agent shall have been so appointed by the Requisite Lenders, and shall
have accepted such appointment, within thirty days after the resigning Agent's
giving of notice of resignation or the Requisite Lenders' removal of the
resigning Agent, then the resigning or removed Agent may, on behalf of the
Lenders, appoint a successor Agent, which shall be a Lender, if any Lender shall
be willing to serve, and otherwise shall be a commercial bank having combined
capital and surplus of at least $10,000,000,000. Upon the acceptance of any
appointment as Agent hereunder by a successor Agent, such successor Agent shall
thereupon succeed to and become vested with all the rights, powers, privileges
and duties of the resigning Agent, and the retiring Agent shall be discharged
from its duties and obligations under the Loan Documents. After any resigning
Agent's resignation or removal hereunder as Agent, the provisions of this
Article XII. shall inure to its benefit as to any actions taken or omitted to be
taken by it while it was Agent under the Loan Documents.
ARTICLE XIII. INTERCREDITOR ARRANGEMENTS REGARDING LINES OF CREDIT
Section 13.1. Lines of Credit.
---------------
In accordance with Section 10.2(e) hereof, one or more Lenders hereunder
(referred to in this Article XIII. as a "Syndicate Line of Credit Lender") may
extend financing to the Borrower and/or its Subsidiaries pursuant to Permitted
Notes Payable (such financing referred to in this Article XIII as a "Syndicate
Line of Credit"). Schedule 13.1 sets forth the Syndicate Lines of Credit in
existence as of the Agreement Date. The following sets forth certain
intercreditor arrangements between the Agent and the Lenders, on the one hand,
and various Lenders in their capacity as Syndicate Line of Credit Lenders.
Section 13.2. Structure of Syndicate Lines of Credit.
--------------------------------------
Each Syndicate Line of Credit Lender and the Borrower agree that each
Syndicate Line of Credit shall be structured such that the Borrower and the
applicable Subsidiary to which such Syndicate Line of Credit relates (referred
to in this Article XIII. as the "Applicable Borrowing Subsidiary") shall be co-
borrowers with joint and several liability for the indebtedness and obligations
under the applicable Syndicate Line of Credit; provided, however, that each
Syndicate Line of Credit Lender agrees that various executive officers of the
Applicable Borrowing Subsidiary (the identity of which to be agreed upon by the
Applicable Borrowing Subsidiary and the Syndicate Line of Credit Lender) shall
have authority to request loans and to take other administrative action
regarding the applicable Syndicate Line of Credit. Except as provided in this
Section 13.2. and elsewhere in this Article XIII., the terms and conditions
regarding, and the documents and instruments governing (such documents and
instruments referred to in this Article XIII. as the "Line of Credit
Documents"), the Syndicated Lines of Credit shall be agreed upon by the
applicable Syndicate Line of Credit Lender, the Applicable Borrowing Subsidiary
and the Borrower. The Borrower agrees that, in any event, the occurrence of an
Event of Default hereunder shall constitute an event of default under each
Syndicate Line of Credit. Each Syndicate Line of Credit Lender and the Borrower
agree, if necessary, to execute
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and deliver Line of Credit Documents which conform to the requirements of this
Article XIII. within 30 days after the Agreement Date. Each Syndicate Line of
Credit Lender shall deliver a copy of all Line of Credit Documents to the Agent.
Section 13.3. Collateral Pool/No Independent Rights.
-------------------------------------
Each party hereto agrees that the indebtedness and obligations of the
Borrower and each Applicable Borrowing Subsidiary under each Syndicate Line of
Credit and each Non-Syndicate Line of Credit shall be secured by the Collateral.
Accordingly, upon the occurrence of an Event of Default hereunder, the proceeds
(net of reasonable attorneys fees and other expenses incurred by the Agent) of
any complete or partial liquidation of, or foreclosure upon, or other sale,
transfer or other disposition of, the Collateral conducted or directed by the
Agent at the request of the Requisite Lenders or occurring during the pendency
of any Bankruptcy Proceeding relating to the Borrower or any Applicable
Borrowing Subsidiary shall be distributed to the Agent and the Lenders and all
Line of Credit Lenders pro rata in accordance with the then outstanding amounts
owing to each such Person under the Lines of Credit and the then outstanding
Credit Obligations. However, while the indebtedness and obligations of the
Borrower and the Applicable Borrowing Subsidiary under each Syndicate Line of
Credit shall be secured by the Collateral, no Syndicate Line of Credit Lender
shall have any independent right to foreclose upon, seize or otherwise exercise
any rights or remedies with respect to any Collateral or to require or direct
the Agent to foreclose upon, seize or otherwise exercise any rights or remedies
with respect to the Collateral, regardless of whether a Line of Credit Default
(as defined below) has occurred and is continuing. Each Syndicate Line of
Credit Lender agrees that the exercise of any right or remedy with respect to
the Collateral (including, but not limited to, any right to consent to the sale,
use or other disposition of any Collateral during the pendency of any Bankruptcy
Proceeding) shall be effected solely through the Agent at the request and at the
direction of the Requisite Lenders. Each Syndicate Line of Credit Lender
further agrees that the decision of whether and when to exercise such rights and
remedies with respect to the Collateral, and the manner and extent to which such
rights and remedies are so exercised shall be at the sole and absolute
discretion of the Agent and the Requisite Lenders. In this connection, neither
the Agent nor any Lender shall have any liability to any Syndicate Line of
Credit Lender in the event there exists a deficiency after the foreclosure or
other sale, liquidation or other disposition of any Collateral and the
application of the proceeds thereof as provided above. No Syndicate Line of
Credit Lender shall have any recourse to the Agent or any other Lender for such
deficiency. Further, each Syndicate Line of Credit Lender agrees that, other
than the Liens in favor of the Agent granted under the Loan Documents, it shall
not obtain, seek, accept or receive any other Lien or collateral security of any
kind or nature (whether from the Borrower, the Applicable Borrowing Subsidiary
or other Person) to secure the indebtedness and obligations under the applicable
Syndicate Line of Credit. In this connection, no Syndicate Line of Credit
Lender shall cause or require any financing statement or other filing (or other
document of further assurance) to be executed or filed by or against the
Borrower or the Applicable Borrowing Subsidiary or other Person relating to its
Line of Credit, the Collateral or otherwise. All filings, documents of further
assurance and agreements relating to the Collateral shall be through the Agent
as secured party as the Agent shall, in its sole discretion, deem necessary and
appropriate. Further, the Agent may from time to time, without notice to or the
consent of, any Syndicate Line of Credit Lender, and regardless of
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whether a Line of Credit Default has occurred and is continuing, release all or
a portion of the Collateral from the Lien of the Agent; it being understood that
the foregoing provisions shall bind the Syndicate Line of Credit Lenders solely
in their capacity as such and not in their capacity as Lenders hereunder.
Section 13.4. Rights Upon Syndicate Line of Credit Default.
--------------------------------------------
Upon the occurrence of an event of default under the applicable Syndicate
Line of Credit (a "Line of Credit Default"), and subject to Section 13.3 and
13.6. hereof, the applicable Syndicate Line of Credit Lender may exercise all
rights and remedies it may have under the Line of Credit Documents and under all
Applicable Law (including the exercise of any right of setoff and the
commencement of legal proceedings against either the Borrower, the Applicable
Borrowing Subsidiary or both but, as provided in Section 13.3, excluding its
rights as a secured creditor); provided, however, that such Syndicate Line of
Credit Lender may not exercise any right of pre-judgment attachment, pre-
judgment marshaling of assets or the like nor may such Syndicate Line of Credit
Lender, prior to receipt of an enforceable judgment, seize or institute
foreclosure or other proceedings against any assets or properties (including,
but not limited to, any Collateral) of the Borrower and/or the Applicable
Borrowing Subsidiary. Any monies recovered by the Syndicate Line of Credit
Lender pursuant to the exercise of its right of setoff (net of reasonable
attorneys fees and disbursements and other collection costs) shall be
immediately delivered by the Syndicate Line of Credit Lender to the Agent and
the Agent shall distribute such monies to all Line of Credit Lenders and the
Lenders pro rata in accordance with the then outstanding amounts owing to each
such Person under the Lines of Credit and the then outstanding Credit
Obligations. Further, any Lien obtained by a Syndicate Line of Credit Lender
pursuant to any judgment, attachment, garnishment or otherwise in any Collateral
shall be subordinate and inferior to the Lien of the Agent in the Collateral and
any proceeds of such Lien shall be distributed in accordance with the first
sentence of Section 13.3. Further, the proceeds of any post-judgment attachment
or any post-judgment levy and sale of assets or properties of the Borrower or
Applicable Borrowing Subsidiary constituting or comprising Collateral shall be
immediately delivered to the Agent and the Agent shall distribute such proceeds
to all Line of Credit Lenders and the Lenders pro rata in accordance with the
then outstanding amounts owing to each such Person under the Lines of Credit and
the then outstanding Credit Obligations.
Section 13.5. Cessation of Funding.
--------------------
Upon the occurrence of a Line of Credit Default under a Syndicate Line of
Credit, and after the expiration of the 15-day cure period referenced in Section
13.6., the Syndicate Line of Credit Lender under the Syndicate Line of Credit to
which such Line of Credit relates may immediately cease making Revolving Loans
hereunder regardless of whether or not an Event of Default has been declared
hereunder by reason of the occurrence of such Line of Credit Default or
otherwise or regardless of whether the Agent and/or the Lenders have exercised
their rights and remedies by reason of the occurrence of an Event of Default;
provided, however, that if such Syndicate Line of Credit Lender ceases making
Revolving Loans by reason of the occurrence of such Line of Credit Default and
all of the Lenders (including such Syndicate Line of Credit Lender in its
capacity as a Lender) subsequently waive such Event of Default in accordance
with
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Section 14.7 hereof, such Syndicate Line of Credit Lender shall thereafter be
obligated to make Revolving Loans in accordance with the terms hereof.
Section 13.6. Cure Rights.
-----------
Upon the occurrence of a Line of Credit Default, the Syndicate Line of
Credit Lender under the Syndicate Line of Credit to which such Line of Credit
relates shall give the Agent and each Lender written notice thereof with a copy
to the Borrower. The Agent and the Lenders shall have the right, but not the
obligation, to cure such Line of Credit Default in a manner reasonably
satisfactory to such Syndicate Line of Credit Lender within 15 days of receipt
by the Agent and each Lender of such notice, prior to the exercise by such
Syndicate Line of Credit Lender of any rights and remedies it may have under the
Line of Credit Documents or Applicable Law, including right of setoff, by reason
of such Line of Credit Default.
Section 13.7. Permitted Indebtedness/Claims.
-----------------------------
The Borrower shall have the sole responsibility and liability of
determining whether a given Syndicate Line of Credit is within the limits set
forth in Section 10.2.(e) hereof and the Syndicate Line of Credit Lender shall
not be liable to the Agent or the other Lenders if such Syndicate Line of Credit
was not so permitted under such Section. Other than as set forth in this Credit
Agreement, neither the Agent nor any Lender shall have any duty to any Syndicate
Line of Credit Lender to provide any information of whatever nature regarding
the Borrower or the Applicable Borrowing Subsidiary or regarding the Collateral
or other matters relating to the applicable Syndicate Line of Credit. Neither
the Agent nor any Lender shall have any duty or responsibility regarding the
administration or enforcement of any Line of Credit Documents. In this
connection, neither the Agent nor any Lender shall have any duty to assert on
behalf of any Syndicate Line of Credit Lender any claim or right such Syndicate
Line of Credit Lender may have in any Bankruptcy Proceeding of the Borrower or
the Applicable Borrowing Subsidiary or in any other proceeding or forum;
provided, however, that the Agent shall, in any Bankruptcy Proceeding, cooperate
with any Syndicate Line of Credit Lender in establishing that the Syndicate Line
of Credit Lender's claim is, to the extent of the Collateral, a secured claim.
Section 13.8. Turnover.
--------
If any payment, distribution or security or the proceeds thereof is
received by the Syndicate Line of Credit Lender in contravention of this Article
XIII., such Syndicate Line of Credit Lender shall forthwith deliver the same to
the Agent in the form received (except for the addition of any endorsement or
assignment necessary or appropriate to effect a transfer of such Syndicate Line
of Credit Lender's rights therein). Until so delivered, such payment,
distribution or security shall be held by the Syndicate Line of Credit Lender in
trust for the Agent and the Lenders, and shall not be commingled with other
funds or properties of such Syndicate Line of Credit Lender.
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ARTICLE XIV. MISCELLANEOUS
Section 14.1. Notices.
-------
Unless otherwise provided herein, communications provided for hereunder
shall be in writing and shall be mailed, telecopied or delivered as follows:
If to the Borrower:
2155 Monroe Drive, Northeast
Atlanta, Georgia 30324
Attention: David S. Fraser
Telecopy Number: (404) 874-7589
Telephone Number: (404) 874-3327
with a copy to:
Powell, Goldstein, Frazer & Murphy
16th Floor
One Ninety One Peachtree Street
Atlanta, Georgia 30303
Attention: David M. Armitage, Esq.
Telecopy Number: (404) 572-6999
Telephone Number: (404) 572-6600
If to the Agent:
600 Peachtree Street, Northeast
21st Floor
Atlanta, Georgia 30308-2213
Attention: Douglas J. Wallace
Telecopy Number: (404) 607-6467
Telephone Number: (404) 607-5589
with a copy to:
Alston & Bird
1201 West Peachtree Street
Atlanta, Georgia 30309-3424
Attention: Richard W. Grice, Esq.
Telecopy number: (404) 881-7777
Telephone number: (404) 881-7000
If to a Lender, to such Lender's address or telecopy number, as applicable,
set forth on the then current Annex I.
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or, as to each party at such other address as shall be designated by such party
in a written notice to the other parties delivered in compliance with this
Section. All such notices and other communications shall be effective only when
actually received. Neither the Agent nor any Lender shall incur any liability
to the Borrower (nor shall the Agent incur any liability to the Lenders) for
acting upon any telephonic notice referred to in this Agreement which the Agent
believes in good faith to have been given by a Person authorized to deliver such
notice or for otherwise acting in good faith under hereunder.
Section 14.2. Expenses.
--------
The Borrower will pay all reasonable present and future expenses of the
Agent in connection with the negotiation, preparation, execution, delivery and
administration (excluding, however, out-of-pocket costs and expenses incurred in
connection with the assignment of Commitments pursuant to Section 14.6.(d)
except to the extent of transfers requested by the Borrower pursuant to Section
5.5.) of this Agreement, the Notes and each of the other Loan Documents,
whenever the same shall be executed and delivered, including appraisers' fees,
search fees, recording fees and the fees and disbursements of each special and
local counsel retained by the Agent. Further, the Borrower shall pay all
reasonable future out-of-pocket expenses of the Agent and each of the Lenders in
connection with:
(a) the negotiation, preparation, execution and delivery of any waiver,
amendment or consent by the Agent or any Lender relating to this Agreement, the
Notes or any of the other Loan Documents;
(b) any restructuring, refinancing or "workout" of the transactions
contemplated by this Agreement, the Notes and the other Loan Documents, or any
material amendment to the terms of this Agreement or any other Loan Document,
including the fees and disbursements of counsel to the Agent and any Lender;
(c) consulting with one or more Persons engaged by the Agent, including
appraisers, accountants and lawyers, concerning or related to the servicing of
this Agreement or the nature, scope or value of any right or remedy of the Agent
and any of the Lenders hereunder, under the Notes or under any of the other Loan
Documents, including any review of factual matters in connection therewith,
which expenses shall include the fees and disbursements of such Persons;
(d) the collection or enforcement of the obligations of the Borrower or
any other Loan Party under this Agreement, the Notes or any other Loan Document
including the reasonable fees and disbursements of counsel to the Agent and any
Lender if such collection or enforcement is done by, through or with the
assistance of an attorney;
(e) prosecuting or defending any claim in any way arising out of, related
to, or connected with this Agreement, the Notes or any of the other Loan
Documents, which expenses shall include the fees and disbursements of counsel to
the Agent and any Lender and of experts and other consultants retained by the
Agent or any Lender;
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(f) the exercise by the Agent or any Lender of any right or remedy granted
to it under this Agreement, the Notes or any of the other Loan Documents
including the reasonable fees and disbursements of counsel to the Agent and any
Lender if such exercise is done by, through or with the assistance of any
attorney;
(g) costs and expenses incurred by the Agent or any Lender in gaining
possession of, maintaining, handling, preserving, storing, shipping, appraising,
selling, preparing for sale and advertising to sell any Collateral, whether or
not a sale is consummated; and
(h) to the extent not already covered by any of the preceding subsections,
any bankruptcy or other proceeding of the type described in Sections 11.1.(e) or
ref 11.1.(f), and the reasonable, documented fees and disbursements of counsel
to the Agent and any Lender actually incurred in connection with the
representation of the Agent or such Lender in any matter relating to or arising
out of any such proceeding including, without limitation (i) any motion for
relief from any stay or similar order, (ii) the negotiation, preparation,
execution and delivery of any document relating to the Credit Obligations and
(iii) the negotiation and preparation of any debtor-in-possession financing or
any plan of reorganization of the Borrower, whether proposed by the Borrower,
the Lenders or any other Person, and whether such fees and expenses are incurred
prior to, during or after the commencement of such proceeding or the
confirmation or conclusion of any such proceeding.
Section 14.3. Stamp, Intangible and Recording Taxes.
-------------------------------------
The Borrower will pay any and all stamp, intangible, registration,
recordation and similar taxes, fees or charges and shall indemnify the Agent and
each Lender against any and all liabilities with respect to or resulting from
any delay in the payment or omission to pay any such taxes, fees or charges,
which may be payable or determined to be payable in connection with the
execution, delivery, performance or enforcement of this Agreement, the Notes and
any of the other Loan Documents or the perfection of any rights or Liens
thereunder.
Section 14.4. Setoff.
------
Subject to Section 4.4. and in addition to any rights now or hereafter
granted under Applicable Law and not by way of limitation of any such rights,
each Lender is hereby authorized by the Borrower, at any time or from time to
time, without prior notice to the Borrower, any such prior notice being hereby
expressly waived, to set-off and to appropriate and to apply any and all
deposits (general or special, including, but not limited to, indebtedness
evidenced by certificates of deposit, whether matured or unmatured) and any
other Indebtedness at any time held or owing by such Lender or any Affiliate of
such Lender, to or for the credit or the account of the Borrower against and on
account of any of the Credit Obligations which have not been paid when due (but
irrespective of whether such Credit Obligations have been declared due and
payable by the Requisite Lenders pursuant to Section 11.2). However, each Lender
agrees that it shall not exercise any right of setoff, banker's lien or other
similar right unless the Agent and the Requisite Lenders shall have previously
consented in writing or telephonically to
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such exercise; provided, however, that the foregoing undertaking of each Lender
shall be for the benefit of the other Lenders and the Agent and the failure of a
Lender to obtain the consent of the Requisite Lenders prior to exercising its
right of setoff shall not result in any liability to the Borrower. Promptly upon
the occurrence of any set-off, the applicable Lender shall notify the Borrower
of the set-off effected.
Section 14.5. Litigation; Jurisdiction; Other Matters; Waivers.
------------------------------------------------
(a) EACH PARTY HERETO ACKNOWLEDGES THAT ANY DISPUTE OR CONTROVERSY BETWEEN
OR AMONG THE BORROWER, THE AGENT OR ANY OF THE LENDERS WOULD BE BASED ON
DIFFICULT AND COMPLEX ISSUES OF LAW AND FACT. ACCORDINGLY, TO THE EXTENT
PERMITTED BY APPLICABLE LAW, EACH OF THE LENDERS, THE AGENT AND THE BORROWER
HEREBY WAIVES ITS RIGHT TO A TRIAL BY JURY IN ANY ACTION OR PROCEEDING OF ANY
KIND OR NATURE IN ANY COURT OR TRIBUNAL IN WHICH AN ACTION MAY BE COMMENCED BY
OR AGAINST ANY PARTY HERETO ARISING OUT OF THIS AGREEMENT, THE NOTES, THE
REVOLVING CREDIT FACILITY, THE SWING LINE FACILITY OR ANY OTHER LOAN DOCUMENT OR
IN CONNECTION WITH ANY COLLATERAL OR ANY LIEN OR BY REASON OF ANY OTHER SUIT,
CAUSE OF ACTION OR DISPUTE WHATSOEVER BETWEEN OR AMONG THE BORROWER, THE AGENT
OR ANY OF THE LENDERS OF ANY KIND OR NATURE.
(b) THE BORROWER, THE AGENT AND EACH LENDER EACH HEREBY AGREE THAT THE
FEDERAL DISTRICT COURT OF THE NORTHERN DISTRICT OF GEORGIA OR, AT THE OPTION OF
THE AGENT, ANY STATE COURT LOCATED IN FULTON COUNTY, GEORGIA SHALL HAVE
JURISDICTION TO HEAR AND DETERMINE ANY CLAIMS OR DISPUTES BETWEEN OR AMONG THE
BORROWER, THE AGENT OR ANY OF THE LENDERS, PERTAINING DIRECTLY OR INDIRECTLY TO
THIS AGREEMENT, THE LOANS, THE NOTES OR ANY OTHER LOAN DOCUMENT OR TO ANY MATTER
ARISING HEREFROM OR THEREFROM OR THE COLLATERAL. THE BORROWER AND EACH LENDER
EXPRESSLY SUBMITS AND CONSENTS IN ADVANCE TO SUCH JURISDICTION IN ANY ACTION OR
PROCEEDING COMMENCED IN SUCH COURTS, HEREBY WAIVING PERSONAL SERVICE OF THE
SUMMONS AND COMPLAINT, OR OTHER PROCESS OR PAPERS ISSUED THEREIN, AND AGREEING
THAT SERVICE OF SUCH SUMMONS AND COMPLAINT, OR OTHER PROCESS OR PAPERS MAY BE
MADE BY REGISTERED OR CERTIFIED MAIL ADDRESSED TO SUCH PERSON AT SUCH PERSON'S
ADDRESS FOR NOTICES. SHOULD SUCH PERSON FAIL TO APPEAR OR ANSWER ANY SUMMONS,
COMPLAINT, PROCESS OR PAPERS SO SERVED WITHIN THIRTY DAYS AFTER THE MAILING
THEREOF, IT SHALL BE DEEMED IN DEFAULT AND AN ORDER AND/OR JUDGMENT MAY BE
ENTERED AGAINST IT AS DEMANDED OR PRAYED FOR IN SUCH SUMMONS, COMPLAINT, PROCESS
OR PAPERS.
(c) EACH PARTY FURTHER WAIVES ANY OBJECTION THAT IT MAY NOW OR HEREAFTER
HAVE TO THE VENUE OF ANY SUCH ACTION OR PROCEEDING IN
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ANY SUCH COURT OR THAT SUCH ACTION OR PROCEEDING WAS BROUGHT IN AN INCONVENIENT
FORUM AND EACH AGREES NOT TO PLEAD OR CLAIM THE SAME.
(d) THE CHOICE OF FORUM SET FORTH IN THIS SECTION SHALL NOT BE DEEMED TO
PRECLUDE THE BRINGING OF ANY ACTION BY THE AGENT OR ANY LENDER OR THE
ENFORCEMENT BY THE AGENT OR ANY LENDER OF ANY JUDGMENT OBTAINED IN SUCH FORUM IN
ANY OTHER APPROPRIATE JURISDICTION.
(e) THE BORROWER AGREES THAT ALL OF ITS PAYMENT OBLIGATIONS HEREUNDER
SHALL BE ABSOLUTE, UNCONDITIONAL AND, FOR THE PURPOSES OF MAKING PAYMENTS
HEREUNDER, THE BORROWER HEREBY WAIVES ANY RIGHT TO ASSERT ANY SETOFF,
COUNTERCLAIM (OTHER THAN COMPULSORY COUNTERCLAIMS) OR CROSS-CLAIM.
(f) THE FOREGOING WAIVERS HAVE BEEN MADE WITH THE ADVICE OF COUNSEL AND
WITH A FULL UNDERSTANDING OF THE LEGAL CONSEQUENCES THEREOF, AND SHALL SURVIVE
THE PAYMENT OF THE LOANS AND ALL OTHER AMOUNTS PAYABLE HEREUNDER OR UNDER THE
OTHER LOAN DOCUMENTS AND THE TERMINATION OF THIS AGREEMENT.
Section 14.6. Successors and Assigns.
----------------------
(a) The provisions of this Agreement shall be binding upon and inure to
the benefit of the parties hereto and their respective successors and assigns,
except that the Borrower may not assign or otherwise transfer any of its rights
under this Agreement without the prior written consent of all Lenders.
(b) Any Lender may make, carry or transfer Loans at, to or for the account
of, any of its branch offices or the office of an Affiliate of such Lender
except to the extent such transfer would result in increased costs to the
Borrower.
(c) Any Lender may at any time grant to one or more banks or other
financial institutions (each a "Participant") participating interests in its
Commitment or the Credit Obligations owing to such Lender; provided, however, no
Lender may grant a participating interest in its Commitment, or if the
Commitments have been terminated, the aggregate outstanding principal balance of
Notes held by it, in an amount less than $5,000,000. No Participant shall have
any rights or benefits under this Agreement or any other Loan Document. In the
event of any such grant by a Lender of a participating interest to a
Participant, such Lender shall remain responsible for the performance of its
obligations hereunder, and the Borrower and the Agent shall continue to deal
solely and directly with such Lender in connection with such Lender's rights and
obligations under this Agreement. Any agreement pursuant to which any Lender may
grant such a participating interest shall provide that such Lender shall retain
the sole right and responsibility to enforce the obligations of the Borrower
hereunder including, without limitation, the right to approve any amendment,
modification or waiver of any provision of this
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Agreement; provided, however, such Lender may agree with the Participant that it
will not, without the consent of the Participant, agree to (i) increase, or
extend the term or extend the time or waive any requirement for the reduction or
termination of, such Lender's Commitment, (ii) extend the date fixed for the
payment of principal of or interest on the Loans or portions thereof owing to
such Lender, (iii) reduce the amount of any such payment of principal, (iv)
reduce the rate at which interest is payable thereon or (v) any release of all
or substantially all of the Collateral. An assignment or other transfer which is
not permitted by subsection (d) or (e) below shall be given effect for purposes
of this Agreement only to the extent of a participating interest granted in
accordance with this subsection (c). The selling Lender shall notify the Agent
and the Borrower of the sale of any participation hereunder and the terms
thereof.
(d) Any Lender may with the prior written consent of the Agent and the
Borrower (which consent shall not be unreasonably withheld) assign to one or
more banks or other financial institutions (each an "Assignee") that portion of
its Commitment and its other rights and obligations under this Agreement and the
Notes; provided, however, (i) no such consent by the Borrower or the Agent shall
be required in the case of any assignment to another Lender or any Affiliate of
such Lender or another Lender; (ii) the consent of the Borrower shall not be
required if an assignment shall be effected while an Event of Default shall have
occurred and be continuing; (iii) any partial assignment shall be in an amount
at least equal to $5,000,000 and after giving effect to such assignment the
assigning Lender retains a Commitment, or if the Commitments have been
terminated, holds Notes having an aggregate outstanding principal balance, of at
least 50% times the then Commitment of such assigning Lender; provided, however,
that the foregoing limitations shall not apply to an assignment by a Lender to
an Affiliate of the Lender; (iv) each such assignment shall be effected by means
of an Assignment and Assumption Agreement. Upon execution and delivery of such
instrument and payment by such Assignee to such transferor Lender of an amount
equal to the purchase price agreed between such transferor Lender and such
Assignee, such Assignee shall be deemed to be a Lender party to this Agreement
as of the effective date of the Assignment and Assumption Agreement and shall
have all the rights and obligations of a Lender with a Commitment as set forth
in such Assignment and Assumption Agreement, and the transferor Lender shall be
released from its obligations hereunder to a corresponding extent, and no
further consent or action by any party shall be required. Upon the consummation
of any assignment pursuant to this subsection (d), the transferor Lender, the
Agent and the Borrower shall make appropriate arrangements so that new Notes are
issued to the Assignee and such transferor Lender, as appropriate. In connection
with any such assignment, the transferor Lender shall pay to the Agent an
administrative fee for processing such assignment in the amount of $4,000.
(e) The Agent shall maintain at the Principal Office a copy of each
Assignment and Assumption Agreement delivered to and accepted by it and a
register for the recordation of the names and addresses of the Lenders and the
Commitments of each Lender from time to time (the "Register"). The Agent shall
give each Lender and the Borrower notice of the assignment by any Lender of its
rights as contemplated by this Section. The Borrower, the Agent and the Lenders
may treat each Person whose name is recorded in the Register as a Lender
hereunder for all purposes of this Agreement. The Register and copies of each
Assignment and Assumption Agreement shall be available for inspection by the
Borrower or any Lender at any reasonable time and from time to time upon
reasonable prior notice to the Agent. Upon its receipt of an Assignment and
Assumption Agreement executed by an assigning Lender, together with each Note
subject to such assignment (the "Surrendered Note"), the Agent shall, if such
Assignment and Assumption
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Agreement has been completed and if the Agent receives the processing and
recording fee described in subsection (d) above, (i) accept such Assignment and
Assumption Agreement, (ii) record the information contained therein in the
Register, (iii) give prompt notice thereof to the Borrower and (iv) revise the
information set forth on Annex I to reflect the effect of such Assignment and
Assumption Agreement, and distribute a copy of such revised Annex I to each
Lender and the Borrower. Failure of the Agent to so distribute a revised Annex I
shall not relieve or modify the obligations of the Borrower, the other Loan
Parties or the Lenders owing to the Agent hereunder.
(f) In addition to the assignments and participations permitted under the
foregoing provisions of this Section, any Lender may assign and pledge all or
any portion of its Loans and its Notes to any Federal Reserve Bank as collateral
security pursuant to Regulation A and any Operating Circular issued by such
Federal Reserve Bank, and such Loans and Notes shall be fully transferable as
provided therein. No such assignment shall release the assigning Lender from its
obligations hereunder.
(g) A Lender may furnish any information concerning the Borrower, any
other Loan Party or any of their respective Affiliates in the possession of such
Lender from time to time to Assignees and Participants (including prospective
Assignees and Participants).
(h) Anything in this Section to the contrary notwithstanding, no Lender
may assign or participate any interest in any Loan or other Credit Obligations
held by it hereunder to the Borrower, any other Loan Party or any of their
respective Affiliates or Subsidiaries.
(i) Each Lender agrees that, without the prior written consent of the
Borrower and the Agent, it will not make any assignment hereunder in any manner
or under any circumstances that would require registration or qualification of,
or filings in respect of, any Loan or Note under the Securities Act or any other
securities laws United States of America or of any other jurisdiction.
Section 14.7. Amendments.
----------
Except as otherwise expressly provided in this Agreement, any consent or
approval required or permitted by this Agreement or in any Loan Document to be
given by the Lenders may be given, and any term of this Agreement or of any
other Loan Document may be amended, and the performance or observance by the
Borrower or any other Loan Party of any terms of this Agreement or such other
Loan Document or the continuance of any Default or Event of Default may be
waived (either generally or in a particular instance and either retroactively or
prospectively) with, but only with, the written consent of the Requisite Lenders
(and, in the case of an amendment to any Loan Document, the written consent of
the Borrower). Notwithstanding the foregoing, no amendment, waiver or consent
shall, unless in writing, and signed by all of the Lenders, do any of the
following: (i) increase the Commitments of the Lenders or subject the
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Lenders to any additional obligations; (ii) reduce the principal of, or interest
rates that have accrued or that will be charged on the outstanding principal
amount of, any Loans or other Credit Obligations; (iii) reduce the amount of any
Fees payable hereunder; (iv) postpone any date fixed for any payment of any
principal of, interest on, or Fees with respect to, any Loans or any other
Credit Obligations; (v) change the method of the calculation of the Commitment
Percentages; (vi) amend this Section or amend the definitions of the terms used
in this Agreement or the other Loan Documents insofar as such definitions affect
the substance of this Section; (vii) modify the definition of the term
"Requisite Lenders" or modify in any other manner the number or percentage of
the Lenders required to make any determinations or waive any rights hereunder or
to modify any provision hereof; (viii) waive any Event of Default arising by
reason of the occurrence of a default under a Permitted Notes Payable or Line of
Credit; (ix) amend or modify the definition of "Applicable Margin", "Available
Revolving Commitment", "Consolidated EBITDA", "Consolidated Funded Debt",
"Consolidated Net Income" or "Consolidated Interest Expense"; (x) release any
Loan Party from any of its obligations under any Loan Document; provided,
however, that this subparagraph (x) shall not be construed to require the
consent of the Lenders to the sale of the Capital Stock or assets of a
Subsidiary that would otherwise be permitted by Section 10.7 hereof and the
release of such Loan Party from its obligations under the Loan Documents in
connection with such sale; (xi) subordinate the Liens in favor of the Agent
created pursuant to the Loan Documents or subordinate the Credit Obligations;
(xii) alter the pro rata treatment to be accorded to the Lenders to the extent
set forth herein and in the other Loan Documents; or (xiii) decrease the detail
or frequency of financial or collateral reporting or waive any material default
of Sections 9.1, 9.2, 9.3 or 9.4.. Further, the Borrowing Base Certificate, the
definitions used therein and the percentages and advance rates used in
calculating the Borrowing Base may not be amended in a manner which would
increase the amount of Revolving Loans to be funded by the Lenders without the
written consent of all of the Lenders and the Borrower. Further, no amendment,
waiver or consent unless in writing and signed by the Agent, in addition to the
Lenders required hereinabove to take such action, shall affect the rights or
duties of the Agent under this Agreement or any of the other Loan Documents.
Further, no Collateral shall be released or disposed of by the Agent unless all
of the Lenders so direct the Agent or unless released or disposed of as
permitted by, and in accordance with, Section 12.7. No waiver shall extend to
or affect any obligation not expressly waived or impair any right consequent
thereon and any amendment, waiver or consent shall be effective only in the
specific instance and for the specific purpose set forth therein. No course of
dealing or delay or omission on the part of any Lender or the Agent in
exercising any right shall operate as a waiver thereof or otherwise be
prejudicial thereto. Except as otherwise explicitly provided for herein or in
any other Loan Document, no notice to or demand upon the Borrower shall entitle
the Borrower to other or further notice or demand in similar or other
circumstances. In addition, the Borrower and the Lenders hereby authorize the
Agent to modify this Agreement by unilaterally amending or supplementing Annex I
from time to time in the manner requested by the Borrower, the Agent or any
Lender in order to reflect any assignments or transfers of the Commitments as
provided for hereunder; provided, however, that the Agent shall promptly deliver
a copy of any such modification to the Borrower and each Lender as requested by
such party.
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Section 14.8. Nonliability of Agent and Lenders.
---------------------------------
The relationship between the Borrower and the Lenders and the Agent shall
be solely that of borrower and lender. Neither the Agent nor any Lender shall
have any fiduciary responsibilities to the Borrower. Neither the Agent nor any
Lender undertakes any responsibility to the Borrower to review or inform the
Borrower of any matter in connection with any phase of the Borrower's business
or operations.
Section 14.9. Confidentiality.
---------------
Except as otherwise provided by Applicable Law, the Agent and each Lender
shall utilize all non-public information obtained pursuant to the requirements
of this Agreement which has been identified as confidential or proprietary by
the Borrower in accordance with its customary procedure for handling
confidential information of this nature and in accordance with safe and sound
banking practices but in any event may make disclosure: (a) to any of their
respective Affiliates (provided they shall agree to keep such information
confidential in accordance with the terms of this Section); (b) as reasonably
required by any bona fide transferee or Participant in connection with the
contemplated transfer of any Commitment or participations therein as permitted
hereunder; (c) as required by any Governmental Authority or representative
thereof or pursuant to legal process; (d) to the Agent's or such Lender's
independent auditors and other professional advisors (provided they shall be
notified of the confidential nature of the information); and (e) after the
happening and during the continuance of an Event of Default, to any other
Person, in connection with the exercise by the Agent or the Lenders of rights
hereunder or under any of the other Loan Documents.
Section 14.10. Indemnification.
---------------
(a) The Borrower shall and hereby agrees to indemnify, defend and hold
harmless the Agent, any Affiliate of the Agent and each of the Lenders and their
respective directors, officers, shareholders, agents, employees and counsel
(each referred to herein as an "Indemnified Party") from and against any and all
losses, claims, damages, liabilities, deficiencies, judgments or expenses of
every kind and nature (including, without limitation, amounts paid in
settlement, court costs and the fees and disbursements of counsel incurred in
connection with any litigation, investigation, claim or proceeding or any advice
rendered in connection therewith) (the foregoing items referred to herein as
"Claims and Expenses") incurred by an Indemnified Party arising out of or by
reason of any suit, cause of action, claim, arbitration, investigation or
settlement, consent decree or other proceeding (the foregoing referred to herein
as an "Indemnity Proceeding") which arise out of, or are in any way related
directly or indirectly to: (i) this Agreement or any other Loan Document or the
transactions contemplated thereby; (ii) the making of any Loans; (iii) any
actual or proposed use by the Borrower of the proceeds of the Loans; (iv) the
Agent's or any Lender's entering into this Agreement; (v) the fact that the
Agent and the Lenders have established the credit facility evidenced hereby in
favor of the Borrower; (vi) the fact that the Agent and the Lenders are
creditors of the Borrower and have or are alleged to have information regarding
the financial condition, strategic plans or business operations of the Borrower
and its Subsidiaries; (vii) the fact that the Agent and the Lenders are material
creditors of the Borrower
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and its Subsidiaries; (viii) the exercise of any right or remedy the Agent or
the Lenders may have under this Agreement or the other Loan Documents including,
but not limited to, the foreclosure upon, or seizure of, any Collateral or the
exercise of any other rights of a secured party; (ix) any violation or non-
compliance by the Borrower or any other Loan Party of any Applicable Law
(including any Environmental Law) including, but not limited to, any Indemnity
Proceeding commenced by the Internal Revenue Service or state taxing authority
or any Indemnity Proceeding commenced by any Governmental Authority or other
Person under any Environmental Law including any Indemnity Proceeding commenced
by a Governmental Authority or other Person seeking remedial or other action to
cause the Borrower or its Subsidiaries (or its respective properties) (or the
Agent and/or the Lenders as successors to the Borrower) to be in compliance with
such Environmental Laws; provided, however, that the Borrower shall not be
obligated to indemnify any Indemnified Party for any acts or omissions of such
Indemnified Party in connection with matters described in this subparagraph (a)
that arise as a result of a breach of such Indemnified Party's obligations under
this Agreement or any Loan Document or that constitute gross negligence or
willful misconduct.
(b) This indemnification shall apply to all Indemnity Proceedings arising
out of, or related to, the foregoing whether or not an Indemnified Party is a
named party in such Indemnity Proceeding. In this connection, this
indemnification shall cover all reasonable costs and expenses of any Indemnified
Party in connection with any deposition of any Indemnified Party or compliance
with any subpoena (including any subpoena requesting the production of
documents). This indemnification shall, among other things, apply to any
Indemnity Proceeding commenced by other creditors of the Borrower or any
Subsidiary, any shareholder of the Borrower or any Subsidiary (whether such
shareholder(s) are prosecuting such Indemnity Proceeding in their individual
capacity or derivatively on behalf of the Borrower), any account debtor of the
Borrower or any Subsidiary or by any Governmental Authority.
(c) This indemnification shall apply to any Indemnity Proceeding arising
during the pendency of any bankruptcy proceeding filed by or against the
Borrower and/or any Subsidiary.
(d) All out-of-pocket fees and expenses of, and all amounts paid to third-
persons by, an Indemnified Party shall be advanced by the Borrower at the
request of such Indemnified Party notwithstanding any claim or assertion by the
Borrower that such Indemnified Party is not entitled to indemnification
hereunder upon receipt of an undertaking by such Indemnified Party that such
Indemnified Party will reimburse the Borrower if it is actually and finally
determined by a court of competent jurisdiction that such Indemnified Party is
not so entitled to indemnification hereunder.
(e) An Indemnified Party may conduct its own investigation and defense of,
and may formulate its own strategy with respect to, any Indemnified Proceeding
covered by this Section and, as provided above, all reasonable costs and
expenses of one counsel for the Indemnified Party shall be reimbursed by the
Borrower. No action taken by legal counsel chosen by an Indemnified Party in
investigating or defending against any such Indemnified Proceeding shall vitiate
or in any way impair the obligations and duties of the Borrower hereunder to
indemnify and hold harmless each such Indemnified Party; provided, however, that
if (i) the Borrower is
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required to indemnify an Indemnified Party pursuant hereto and (ii) the Borrower
has provided evidence reasonably satisfactory to such Indemnified Party that the
Borrower has the financial wherewithal to reimburse such Indemnified Party for
any amount paid by such Indemnified Party with respect to such Indemnified
Proceeding, such Indemnified Party shall not settle or compromise any such
Indemnified Proceeding without the prior written consent of the Borrower (which
consent shall not be unreasonably withheld or delayed).
(f) If and to the extent that the obligations of the Borrower hereunder
are unenforceable for any reason, the Borrower hereby agrees to make the maximum
contribution to the payment and satisfaction of such obligations which is
permissible under Applicable Law.
(g) The Borrower's obligations hereunder shall survive any termination of
this Agreement and the other Loan Documents and the payment in full of the
Credit Obligations, and are in addition to, and not in substitution of, any
other of their obligations set forth in this Agreement or any other Loan
Document to which it is a party.
Section 14.11. Survival.
--------
Notwithstanding any termination of this Agreement, or of the other Loan
Documents, the indemnities to which the Agent and the Lenders are entitled under
the provisions of Sections 12.6., 14.2. and 14.10. and any other provision of
this Agreement and the other Loan Documents, the waivers of jury trials and
submissions to jurisdictions contained in Section 14.5., shall continue in full
force and effect and shall protect the Agent and the Lenders against events
arising after such termination as well as before.
Section 14.12. Titles and Captions.
-------------------
Titles and captions of Articles, Sections, subsections and clauses in this
Agreement are for convenience only, and neither limit nor amplify the provisions
of this Agreement.
Section 14.13. Severability of Provisions.
--------------------------
Any provision of this Agreement which is prohibited or unenforceable in any
jurisdiction shall, as to such jurisdiction, be ineffective only to the extent
of such prohibition or unenforceability without invalidating the remainder of
such provision or the remaining provisions or affecting the validity or
enforceability of such provision in any other jurisdiction.
Section 14.14. Governing Law.
-------------
THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE
LAWS OF THE STATE OF GEORGIA.
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Section 14.15. Counterparts.
------------
This Agreement and any amendments, waivers, consents or supplements may be
executed in any number of counterparts and by different parties hereto in
separate counterparts, each of which when so executed and delivered shall be
deemed an original, but all of which counterparts together shall constitute but
one and the same instrument. This Agreement shall become effective upon the
execution of a counterpart hereof by each of the parties hereto.
Section 14.16. Credit Obligations with Respect to Loan Parties.
-----------------------------------------------
The obligations of the Borrower to direct or prohibit the taking of certain
actions by the other Loan Parties as specified herein shall be absolute and not
subject to any defense the Borrower may have that the Borrower does not control
such Loan Parties.
Section 14.17. Retention of Borrower's Documents.
---------------------------------
The Agent and any Lender may, in accordance with the Agent's or such
Lender's customary practices, destroy or otherwise dispose of all documents,
schedules, invoices or other papers, delivered by any Loan Party to the Agent or
such Lender unless the Borrower requests in writing that same be returned. Upon
the Borrower's request and at the Borrower's expense, the Agent or such Lender
shall return such papers when the Agent's or such Lender's actual or anticipated
need for same has terminated.
Section 14.18. Marshaling: Payments Set Aside.
------------------------------
Neither the Agent nor any Lender shall be under any obligation to marshal
any assets in favor of any Loan Party or any other party or against or in
payment of any or all of the Credit Obligations. To the extent that any Loan
Party makes a payment or payments to Agent and/or any Lender, or Agent and/or
any Lender enforce their security interests or exercise their rights of setoff,
and such payment or payments or the proceeds of such enforcement or setoff or
any part thereof are subsequently invalidated, declared to be fraudulent or
preferential, set aside and/or required to be repaid to a trustee, receiver or
any other party under Applicable Law, then to the extent of such recovery, the
Credit Obligations or part thereof originally intended to be satisfied, and all
Liens, rights and remedies therefor, shall be revived and continued in full
force and effect as if such payment had not been made or such enforcement or
setoff had not occurred.
Section 14.19. Independence of Covenants.
-------------------------
All covenants hereunder shall be given in any jurisdiction independent
effect so that if a particular action or condition is not permitted by any of
such covenants, the fact that it would be permitted by an exception to, or be
otherwise within the limitations of, another covenant shall not avoid the
occurrence of a Default or an Event of Default if such action is taken or
condition exists.
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Section 14.20. Independent Nature of Lenders' Rights.
-------------------------------------
Nothing contained in any Loan Document and no action taken by Agent or any
Lender or the Borrower or any Loan Party pursuant hereto or thereto shall be
deemed to constitute Lenders and/or the Agent and/or any Loan Party to be a
partnership, an association, a joint venture or any other kind of entity. The
amounts payable at any time hereunder to each Lender shall be a separate and
independent debt, and each Lender shall be entitled to protect and enforce its
rights arising out of this Agreement and it shall not be necessary for any other
Lender to be joined as an additional party in any proceeding for such purpose.
Section 14.21. No Fiduciary Relationship.
-------------------------
No provision in this Agreement or in any of the other Loan Documents and no
course of dealing between the parties shall be deemed to create any fiduciary
duty by the Agent or any Lender to the Borrower, any other Loan Party or any
other Person.
Section 14.22. Limitation of Liability.
-----------------------
Neither the Agent nor any Lender, nor any Affiliate, officer, director,
employee, attorney, or agent of the Agent or any Lender shall have any liability
with respect to, and the Borrower hereby waives, releases, and agrees not to sue
any of them upon, any claim for any special, indirect, incidental, or
consequential damages suffered or incurred by the Borrower in connection with,
arising out of, or in any way related to, this Agreement or any of the other
Loan Documents, or any of the transactions contemplated by this Agreement or any
of the other Loan Documents. The Borrower hereby waives, releases, and agrees
not to sue the Agent or any Lender or any of the Agent's or any Lender's
Affiliates, officers, directors, employees, attorneys, or agents for punitive
damages in respect of any claim in connection with, arising out of, or in any
way related to, this Agreement or any of the other Loan Documents, or any of the
transactions contemplated by this Agreement or financed hereby.
Section 14.23. No Duty.
-------
All attorneys, accountants, appraisers, and other professional Persons and
consultants retained by the Agent or any Lender shall have the right to act
exclusively in the interest of the Agent or such Lender and shall have no duty
of disclosure, duty of loyalty, duty of care, or other duty or obligation of any
type or nature whatsoever to the Borrower or any of the Borrower's shareholders
or any other Person.
Section 14.24. Entire Agreement.
----------------
This Agreement, the Notes, and the other Loan Documents referred to herein
embody the final, entire agreement among the parties hereto and supersede any
and all prior commitments, agreements, representations, and understandings,
whether written or oral, relating to the subject matter hereof and may not be
contradicted or varied by evidence of prior, contemporaneous, or
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subsequent oral agreements or discussions of the parties hereto. There are no
oral agreements among the parties hereto.
Section 14.25. Construction.
------------
The Agent, the Borrower and each Lender acknowledge that each of them has
had the benefit of legal counsel of its own choice and has been afforded an
opportunity to review this Agreement and the other Loan Documents with its legal
counsel and that this Agreement and the other Loan Documents shall be construed
as if jointly drafted by the Agent, the Borrower and each Lender.
[SIGNATURES ON FOLLOWING PAGES]
- 91 -
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Credit Agreement to
be executed by their authorized officers all as of the day and year first above
written.
BORROWER:
GRAPHIC INDUSTRIES, INC.
By:__________________________________
Title:____________________________
(CORPORATE SEAL)
AGENT:
NATIONSBANK OF GEORGIA,
NATIONAL ASSOCIATION, as Agent
and as a Lender
By:__________________________________
Title:____________________________
CO-AGENTS:
SUNTRUST BANK, ATLANTA, as a Lender
By:__________________________________
Title:____________________________
By:__________________________________
Title:____________________________
- 92 -
<PAGE>
[SIGNATURE PAGE TO NATIONSBANK/GRAPHIC INDUSTRIES
CREDIT AGREEMENT DATED AS OF DECEMBER 21, 1995]
TEXAS COMMERCE BANK, NATIONAL
ASSOCIATION, as a Lender
By:__________________________
Title:____________________
ADDITIONAL LENDERS:
BANK OF AMERICA, F.S.B.
By:__________________________
Title:____________________
CORESTATES BANK, NATIONAL
ASSOCIATION
By:__________________________
Title:____________________
FLEET BANK OF MASSACHUSETTS, N.A.
By:__________________________
Title:____________________
- 93 -
<PAGE>
[SIGNATURE PAGE TO NATIONSBANK/GRAPHIC INDUSTRIES
CREDIT AGREEMENT DATED AS OF DECEMBER 21, 1995]
MARINE MIDLAND BANK, N.A.
By:__________________________
Title:____________________
PNC BANK, NATIONAL ASSOCIATION
By:__________________________
Title:____________________
- 94 -
<PAGE>
ANNEX I
-------
LIST OF LENDERS, COMMITMENT AMOUNTS AND LENDING OFFICES
-------------------------------------------------------
<TABLE>
<S> <C>
Information Regarding Agent
NationsBank of Georgia, National Association
600 Peachtree Street
Atlanta, Georgia 30308
Attention: Douglas J. Wallace
Wiring Instructions for Funding of Revolving Loans to Agent and for Payment of
Revolving Loans/Swing Line Loans by Borrower:
NationsBank of Georgia, National Association
ABA #061-000052 Attn: Corporate Credit Support
Account #: 13662101019970
Reference: Graphic Industries
AGENT COMMITMENT:
NATIONSBANK OF GEORGIA, Initial Commitment Amount: $25,000,000
NATIONAL ASSOCIATION
Commitment Percentage: 22.727272727%
Lending Office (All types):
- --------------
600 Peachtree Street
Atlanta, Georgia 30308
Attention: Douglas J. Wallace
CO-AGENT COMMITMENTS:
SUNTRUST BANK, ATLANTA Initial Commitment Amount: $17,500,000
Lending Office (All types): Commitment Percentage: 15.909090909%
- --------------
25 Park Place
Atlanta, Georgia 30303
Attention: Sheila A. Corcoran
Wiring Instructions:
SunTrust Bank, Atlanta
ABA #: 061000104
Acct.# Wire Clearing General - 013
Attention: Jan Kanapke - 581-1601
Reference: Graphic Industries
</TABLE>
I-1
<PAGE>
<TABLE>
<S> <C>
TEXAS COMMERCE BANK, NATIONAL ASSOCIATION Initial Commitment Amount: $17,500,000
Lending Office (All types): Commitment Percentage: 15.909090909%
- --------------
5177 Richmond Avenue
Houston, Texas 77056
Attention: Joel J. Landis
Wiring Instructions:
Texas Commerce Bank, National Association
ABA #: 113000609
Acct.# 0040266247
Attention: Joel J. Landis
Reference: Graphic Industries
COMMITMENTS OF ADDITIONAL LENDERS:
BANK OF AMERICA F.S.B. Initial Commitment Amount: $10,000,000
Lending Office (All types): Commitment Percentage: 9.090909090%
- --------------
Bank of America F.S.B.
1230 Peachtree Street, Suite 3600
Atlanta, Georgia 30309
Attention: Kelly K. Gibson
Telephone: 404/815-5930 Telecopy: 404/815-5919
Wiring Instructions:
Bank of America F.S.B.
ABA #: 121000358
Acct.#15918 84043
Attention: Mary Nelson
Reference: Graphic Industries
CORESTATES BANK, NATIONAL ASSOCIATION Initial Commitment Amount: $10,000,000
Lending Office (All types): Commitment Percentage: 9.090909090%
- --------------
CoreStates Bank, National Association
1339 Chestnut Street
Philadelphia, Pennsylvania 19107-3579
Attention: James A. Kelly
Wiring Instructions:
CoreStates Bank, National Association
ABA #: 0310-00011
Acct.#0132-0452
Attention:William Crews
Reference: Graphic Industries
</TABLE>
I-2
<PAGE>
<TABLE>
<S> <C>
FLEET BANK OF MASSACHUSETTS, N.A. Initial Commitment Amount: $10,000,000
Lending Office (All types): Commitment Percentage: 9.090909090%
- --------------
Fleet Bank of Massachusetts, N.A.
75 State Street, Mail Stop MA BO F04H
Boston, Massachusetts 02109
Attention: Ann M. Dillon
Wiring Instructions:
Fleet Bank of Massachusetts, N.A.
ABA #: 011-000-138
Acct.# 1510351
Attention: Ann M. Dillon
Reference: Graphic Industries
MARINE MIDLAND BANK, N.A. Initial Commitment Amount: $10,000,000
Lending Office (All types): Commitment Percentage: 9.090909090%
- --------------
Marine Midland Bank
3575 Koger Boulevard, Suite 300
Duluth, Georgia 30136
Attention: James E. Childs, Jr.
Wiring Instructions:
Marine Midland Bank
ABA #: 021001088
Acct.#: 750881267
Attention: Suzanne Prodelski
Reference: Graphic Industries
PNC BANK, NATIONAL ASSOCIATION Initial Commitment Amount: $10,000,000
Lending Office (All types): Commitment Percentage: 9.090909090%
PNC Bank, National Association
One PNC Plaza, 2nd Floor
Pittsburgh, Pennsylvania 15265
Attention: Gaye Allen (Commercial Banking Officer) 412/762-4852
Attention: Denise Simeone (Administration) 412/762-2293
412/762-6484 (fax)
Wiring Instructions:
PNC Bank, National Association
ABA #: 043-000-096
Acct.# N/A
Attention: Commercial Loan Operations
Reference: Graphic Industries
________________________________________
Total Revolving Commitment: $110,000,000
</TABLE>
I-3
<PAGE>
EXHIBIT A
---------
FORM OF ADDENDUM
TO GUARANTY AND MASTER SECURITY AGREEMENT
-----------------------------------------
THIS ADDENDUM TO GUARANTY AND MASTER SECURITY AGREEMENT (the
"Addendum) dated as of ___________, 199_ by ______________________, a
_____________ (the "New Subsidiary") in favor of NATIONSBANK OF GEORGIA,
NATIONAL ASSOCIATION, in its capacity as agent (the "Agent") for the Lenders
under the Credit Agreement (as defined below).
WHEREAS, Graphic Industries, Inc. (the "Borrower"), the Lenders and
the Agent have entered into that certain Credit Agreement dated as of December
21, 1995 (as the same may be amended, supplemented, restated, replaced,
substituted or otherwise modified from time to time, the "Credit Agreement";
capitalized terms used herein and not otherwise defined herein shall have their
respective defined meanings as set forth in the Credit Agreement) pursuant to
which the Lenders have agreed to extend certain financial accommodations to the
Borrower subject to the terms thereof;
WHEREAS, pursuant to the terms of the Credit Agreement, all of the
Subsidiaries of the Borrower have executed and delivered (i) that certain Master
Security Agreement dated as of December 21, 1995 (the "Master Security
Agreement") in favor of the Agent and (ii) that certain Guaranty dated as of
December 21, 1995 (the "Guaranty") in favor of the Agent; and
WHEREAS, it is a condition precedent to the Lenders' obligation to
continue to make loans to the Borrower under the Credit Agreement that the New
Subsidiary join the Master Security Agreement and the Guaranty by executing and
delivering this Addendum.
NOW, THEREFORE, in consideration of the above premises and for other
good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged by the New Subsidiary, the New Subsidiary hereby agrees with the
Agent, for the benefit of the Lenders, as follows:
SECTION 1. MASTER SECURITY AGREEMENT/GRANT OF SECURITY. The New
-------------------------------------------
Subsidiary effective as of the date of this Addendum hereby adopts the Master
Security Agreement and agrees to become a "Debtor" thereunder, and assumes all
obligations of a "Debtor" thereunder, all as if the New Subsidiary had been an
original party to the Master Security Agreement. Without limiting the
generality of the foregoing, the New Subsidiary hereby:
<PAGE>
(a) collaterally assigns and pledges to the Agent for the benefit of
the Lenders, and grants to the Agent for the benefit of the Lenders, a security
interest in, and lien upon, all Collateral (as defined in the Master Security
Agreement);
(b) makes to the Agent and the Lenders as of the date hereof each of
the representations and warranties contained in Section 2 of the Master Security
Agreement and agrees to each of the covenants set forth in Sections 3 and 4 of
the Master Security Agreement, the terms of which are hereby incorporated herein
by reference;
(c) agrees that the Agent and the Lenders shall have the rights and
remedies in respect of the New Subsidiary and the Collateral as set forth in
Section 8 of the Master Security Agreement, the terms of which are hereby
incorporated herein by reference; and
(d) consents and agrees to each other provision set forth in the
Master Security Agreement, all of which are incorporated herein by reference.
SECTION 2. GUARANTY. The New Subsidiary hereby adopts the Guaranty
--------
and agrees to become a "Guarantor" thereunder, and assumes all obligations of a
"Guarantor" thereunder, all as if the New Subsidiary had been an original party
to the Guaranty. Without limiting the generality of the foregoing, the New
Subsidiary hereby:
(a) absolutely, irrevocably and unconditionally guaranties the due
and punctual payment and performance when due, whether at stated maturity, by
acceleration or otherwise, of all Guaranteed Obligations (as defined in the
Guaranty); and
(b) consents and agrees to each provision set forth in the Guaranty,
the terms and conditions of which are hereby incorporated herein by reference.
IN WITNESS WHEREOF, the New Subsidiary has caused this Addendum to be
duly executed and delivered under seal by its duly authorized officer as of the
date first written above.
[NEW SUBSIDIARY]
By:_____________________________________
Title:_______________________________
(CORPORATE SEAL)
Address for Notices:
________________________________________
________________________________________
________________________________________
Telephone:______________________________
A-2
<PAGE>
Telecopy:_________________________
A-3
<PAGE>
EXHIBIT B-1
-----------
FORM OF COMPLIANCE CERTIFICATE
------------------------------
[Date]
NationsBank of Georgia,
National Association
600 Peachtree Street, Northeast
21st Floor
Atlanta, Georgia 30308-2213
Attention: Douglas J. Wallace
Ladies and Gentlemen:
Reference is made to that certain Credit Agreement dated as of December 21,
1995 (as it may be amended, modified, restated or supplemented from time to
time, the "Credit Agreement"; capitalized terms used herein, and not otherwise
defined herein, shall have their respective defined meanings as set forth in the
Credit Agreement) among Graphic Industries, Inc. (the "Borrower"), the Co-Agents
and each of the financial institutions initially a signatory thereto together
with those assignees pursuant to Section 14.6 thereof, as Lenders (the
"Lenders") and NationsBank of Georgia, National Association, as Agent (the
"Agent").
If certificate is submitted by Borrower -- Pursuant to Section 9.3 of the
Credit Agreement, the undersigned hereby certifies to the Agent and the Lenders
on behalf of the Borrower in his/her capacity as an authorized officer of the
Borrower, as follows:
(1) The undersigned is the [Chief Financial Officer/Treasurer] of the
Borrower.
(2) The undersigned has examined the books and records of the Borrower and
has conducted such other examinations and investigations as are reasonably
necessary to provide this [Compliance] Certificate.
(3) As of the date hereof, to the best of the undersigned's knowledge,
information and belief, no Default or Event of Default has occurred and is
continuing [or, if Default exists, specify nature thereof].
(4) The financial statements prepared by the Borrower and used for
purposes of this Certificate have been prepared in a manner (both in form and
substance) consistent with the most recent financial statements delivered to the
Agent prior to the Agreement Date.
The undersigned hereby further certifies to the Agent and the Lenders on
behalf of the Borrower in his/her capacity as an authorized officer of the
Borrower, that the following financial information of the Borrower is true and
correct as of [insert date which is last Business Day of relevant fiscal quarter
of the Borrower] (the "Reporting Date"):
B-1-1
<PAGE>
<TABLE>
<S> <C> <C>
I. MINIMUM CONSOLIDATED NET WORTH
((S)10.1(A))/1/
A. Consolidated Net Worth of Borrower
and its Subsidiaries:
1 Amount of issued and outstanding $_________ plus
share capital
2. Amount of additional paid-in
capital and retained income (or, in
the case of a deficit, minus the
amount of such deficit) $_________ minus
3. Treasury stock $______________
4. Consolidated Net Worth
(A.1.+A.2.+A.3.) $___________
B. Minimum Consolidated Net Worth
under (S)10.1(a):
1. [$70,000,000] plus
2. Net proceeds of sales of
capital stock from Agreement Date
through Reporting Date $_________ plus
3. 75% of cumulative, positive
Consolidated Net Income generated
from Agreement Date through
Reporting Date $_____________
4. Minimum Consolidated Net Worth
(B.1.+B.2.+B.3.) $___________
Is A.4. more than B.4.? (Check one of the following)
___ Yes; ___ No; if Yes, compliance with
covenant
II. MAXIMUM LEVERAGE RATIO ((S)10.1(B))
A. Senior Debt outstanding as of $_____________
the Reporting Date:
</TABLE>
_______________________________________
/1/ Section references contained herein are references to the section of
the Credit Agreement requesting the respective financial data.
B-1-2
<PAGE>
<TABLE>
<S> <C> <C>
B. Total Capitalization as of the Reporting
Date:
(i) Senior Debt $___________
(ii) Subordinated Debt $___________
(iii) Consolidated Net Worth $___________
Total Capitalization (sum of (i)
plus (ii) plus (iii) $_________________
C. Maximum Leverage Ratio (A
divided by B): ______ :_______ maximum ratio permitted:
_____/2/
III. MINIMUM FIXED CHARGE COVERAGE
RATIO ((S)10.1(C))
A. Consolidated EBITDAR for Four-Quarter
Period ending on Reporting Date:
1. Consolidated EBITDA:
a. Consolidated Net Income $__________ plus
b. Consolidated Interest Expense $__________ plus
c. Accrued taxes on income $__________ plus
d. Depreciation and Amortization $__________
Consolidated EBITDA $___________
2. Rental Payments $___________
Consolidated EBITDAR (A.1.+A.2.) $____________
B. Sum of:
1. Consolidated Interest Expense for
Four-Quarter Period ending on
Reporting Date $_________ plus
2. Rental Payments for such Four-
Quarter Period $_________ plus
3. Dividends paid or declared during
such Four-Quarter Period $_________ plus
4. Capitalized Lease Obligations
for next four fiscal quarters plus $_________ plus
Consolidated Current Maturities
outstanding as of Reporting Date
</TABLE>
_______________________________________
/2/ Insert relevant minimum/maximum as set forth in the Credit Agreement.
B-1-3
<PAGE>
<TABLE>
<S> <C> <C>
5. Amount by which all Loans plus
all Permitted Notes Payable exceeds
the Borrowing Base divided by 5 $_________ plus
6. Capital Expenditures Amount for
such Four-Quarter Period $_________ plus
7. Sinking Fund Payments for next
four fiscal quarters $_________
Total (B.1.+B.2.+B.3.+B.4.+B.5.+B.6.+B.7.) $_____________
Minimum Fixed Charge Coverage Ratio ____:1.00 Maximum 1.25 to 1.00
(A. divided by B.)
IV. MAXIMUM FUNDED DEBT TO EBITDA
RATIO ((S)10.1(D))
A. Consolidated Funded Debt: $___________
B. Consolidated EBITDA (III.A.1. $___________
above):
Maximum Funded Debt to EBITDA Ratio: ____:1.00 Maximum 4.50 to 1.00
(A divided by B)
V. PERMITTED INDEBTEDNESS:
UNSECURED INDEBTEDNESS FOR MONEY
BORROWED ((S)10.2(E)):
A. Indebtedness outstanding to
Line of Credit Lenders who are not
Lenders under the Credit Agreement $___________ Maximum: $10,000,000
B. Indebtedness outstanding to
Syndicate Line of Credit Lenders $__________
C. Total (A.+ B.) $__________ Maximum: $30,000,000
VI. PERMITTED INDEBTEDNESS:
INDEBTEDNESS OWING BY PERSON
ACQUIRED BY THE BORROWER OR A $_________ Maximum: $10,000,000
SUBSIDIARY AFTER THE AGREEMENT DATE
((S)10.2(F)):
</TABLE>
B-1-4
<PAGE>
<TABLE>
<S> <C> <C>
VII. PERMITTED INDEBTEDNESS: INDEBTEDNESS
SECURED BY PURCHASE MONEY LIENS AND
INDEBTEDNESS CONSTITUTING CAPITALIZED
LEASE OBLIGATIONS ((S)10.2(H))
A. Indebtedness incurred after the Agreement
Date secured by Purchase Money Liens: $____________
B. Indebtedness incurred after the Agreement
Date constituting Capitalized Lease $____________
Obligations:
C. Total (A. plus B.): $____________ Maximum: $5,000,000
VIII. PERMITTED CONTINGENT OBLIGATIONS: OFFICER
AND EMPLOYEE INDEBTEDNESS ((S)10.3(B)): $____________ Maximum: $1,000,000
IX. PERMITTED INVESTMENTS: ACQUISITIONS
((S)10.4(D)):
A. Aggregate amount of Non-Stock
Consideration paid during fiscal year $____________ Maximum: $15,000,000
B. Aggregate amount of Stock Consideration
paid during fiscal year $____________ Maximum: $30,000,000
X. LOANS: EMPLOYEE TRAVEL AND OTHER EXPENSES
((S)10.4(F)): $____________ Maximum: $1,000,000
XI. SALE OF ASSETS ((S)10.7):
A. Aggregate amount of sales of assets during $____________
past twelve months
B. 10% of Total Tangible Assets as of
beginning of such twelve month period $____________
C. Is A. less than B.? (Check one of the
following) ___ Yes; ___ No; if Yes,
compliance with covenant
</TABLE>
IN WITNESS WHEREOF, the undersigned has executed this certificate as of
the date first above written.
By:_________________________
Title:___________________
B-1-5
<PAGE>
EXHIBIT B-2
-----------
FORM OF COMPLIANCE CERTIFICATE
------------------------------
[Date]
NationsBank of Georgia,
National Association
600 Peachtree Street, Northeast
21st Floor
Atlanta, Georgia 30308-2213
Attention: Douglas J. Wallace
Ladies and Gentlemen:
Reference is made to that certain Credit Agreement dated as of December 21,
1995 (as it may be amended, modified, restated or supplemented from time to
time, the "Credit Agreement"; capitalized terms used herein, and not otherwise
defined herein, shall have their respective defined meanings as set forth in the
Credit Agreement) among Graphic Industries, Inc. (the "Borrower"), the Co-Agents
and each of the financial institutions initially a signatory thereto together
with those assignees pursuant to Section 14.6 thereof, as Lenders (the
"Lenders") and NationsBank of Georgia, National Association, as Agent (the
"Agent").
The undersigned has audited, in accordance with generally accepted auditing
standards, the consolidated balance sheet of the Borrower as of ____________,
19__ and the related consolidated statements of income, shareholders' equity and
cash flows for the year then ended, and have issued our report thereon dated
___________, 19__. In connection with our audit, nothing came to our attention
that caused us to believe that the Borrower failed to comply with the terms,
covenants, provisions or conditions of Sections 9.4, 10.1, 10.2, 10.3, 10.4 and
10.7 of the Credit Agreement insofar as they relate to matters of financial
condition or performance. However, our audit was not directed primarily toward
obtaining knowledge of such non-compliance.
This certificate is intended solely for the use of the Borrower, the Agent
and the Lenders in connection with the Credit Agreement.
IN WITNESS WHEREOF, the undersigned has executed this certificate as of the
date first above written.
By:____________________________________
Title:______________________________
B-2-1
<PAGE>
EXHIBIT C
---------
FORM OF ASSIGNMENT AND ASSUMPTION AGREEMENT
-------------------------------------------
THIS ASSIGNMENT AND ASSUMPTION AGREEMENT dated as of _________, 199__ (the
"Agreement") by and among _________________________ (the "Assignor"),
_____________ (the "Assignee"), GRAPHIC INDUSTRIES, INC., as the Borrower under
the Credit Agreement hereinafter defined (the "Borrower") and NATIONSBANK OF
GEORGIA, NATIONAL ASSOCIATION, as the Agent under the Credit Agreement (the
"Agent").
WHEREAS, the Assignor is a Lender under that certain Credit Agreement dated
as of December 21, 1995 (as it may be amended, supplemented, restated, replaced,
substituted, or otherwise modified from time to time, the "Credit Agreement";
capitalized terms used herein, and not otherwise defined herein, shall have
their respective defined meanings as set forth in the Credit Agreement) among
the Borrower, the Co-Agents and certain other financial institutions initially a
signatory thereto, together with those assignees permitted pursuant to Section
14.6 thereof, as Lenders and the Agent;
WHEREAS, the Assignor desires to assign [all] [a portion] of the Assignor's
Commitment under the Credit Agreement, all on the terms and conditions set forth
herein;
WHEREAS, the Borrower and the Agent consent to such assignment on the terms
and conditions set forth herein.
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which hereby are acknowledged by the parties hereto, the parties
hereto hereby agree as follows:
SECTION 1. ASSIGNMENT. Subject to the terms and conditions of this
----------
Agreement, the Assignor hereby irrevocably sells, transfers and assigns to the
Assignee, without recourse, [[all of the Assignor's right, title and interest in
and to] [an undivided ___________ percent interest in] all Loans made by the
Assignor to the Borrower under the Credit Agreement [a principal amount of
Revolving Loans made by the Assignor to the Borrower under the Credit Agreement
equal to $_______________ [in case of Swing Line Lender only -- and a principal
amount of Swing Line Loans made by the Assignor to the Borrower under the Credit
Agreement equal to $__________]] (such Loans herein referred to as the "Assigned
Loans") together with all rights of the Assignor to receive all payments of
principal and interest from the Borrower with respect to such Assigned Loans and
all rights of collection and enforcement the Assignor may have against the
Borrower with respect to such Assigned Loans. Further, but subject to the terms
and conditions set forth herein, the Assignor hereby irrevocably sells,
transfers and assigns to the Assignee, without recourse, [all of the Assignor's]
[$___________ of the Assignor's] [an undivided ___________ percent interest of
the Assignor's] Commitment under the
C-1
<PAGE>
Credit Agreement (the "Assigned Commitment") including all voting rights of the
Assignor associated with such amount of Assigned Commitment, all rights to
receive all commitment and other fees with respect to such Assigned Commitment
and other rights of the Assignor under the Credit Agreement with respect to such
amount of the Assigned Commitment, all as if the Assignee were an original
Lender under and signatory to the Credit Agreement having a Commitment equal to
the Assigned Commitment. The Assignee, subject to the terms and conditions
hereof, hereby assumes all obligations of the Assignor with respect to the
Assigned Commitment as if the Assignee were an original Lender under and
signatory to the Credit Agreement having a Commitment equal to the Assigned
Commitment, including, but not limited to, the obligation of the Assignor to
make Revolving Loans to the Borrower with respect to the Assigned Commitment and
to indemnify the Agent as provided therein. The Assignor shall have no further
duties or obligations with respect to, and shall have no further interest in,
the Assigned Loans or the Assigned Commitment.
SECTION 2. PAYMENTS BY ASSIGNEE. Upon the execution and delivery of this
--------------------
Agreement, the Assignee shall pay to the Assignor by wire transfer of
immediately available funds pursuant to Section 9 hereof, the sum of
$______________ [principal amount of Loans assigned, interest accrued and other
fees, expenses and adjustments].
SECTION 3. PAYMENTS BY ASSIGNOR. The Assignor shall pay to the Agent an
--------------------
administrative and processing fee of $4,000 immediately upon the execution and
delivery of this Agreement. Further, the Assignor agrees to pay to the Agent
all expenses of the Agent in connection with the negotiation, preparation,
execution and delivery (including the out-of-pocket costs and expenses of
counsel to the Agent) of this Agreement.
SECTION 4. REPRESENTATIONS AND WARRANTIES OF ASSIGNOR. The Assignor
------------------------------------------
hereby represents and warrants to the Assignee that (a) the Assignor is a Lender
under the Credit Agreement having a Commitment under the Credit Agreement
immediately prior to the effective date of this Agreement, equal to $_________
and that the Assignor has not failed or refused to perform any of its
obligations under the Loan Documents to which it is a party except where such
failure or refusal is expressly excused pursuant to the terms of the Loan
Documents; (b) immediately prior to the effective date of this Agreement, the
outstanding principal balance of Revolving Loans owing to the Assignor under the
Credit Agreement is $____________ [and the outstanding principal balance of
Swing Line Loans is $______________]; and (c) the Assignor is the legal and
beneficial owner of the interest being assigned by it hereunder and such
interest is free and clear of any adverse claim created by the Assignor.
SECTION 5. REPRESENTATIONS, WARRANTIES AND AGREEMENTS OF ASSIGNEE. (a)
------------------------------------------------------
The Assignee (i) represents and warrants that (x) it is legally authorized to
enter into this Agreement and (y) it is an "accredited investor" (as such term
is used in Regulation D of the Securities Act of 1933, as amended); (ii)
confirms that it has received a copy of the Credit Agreement, together with
copies of the most recent financial statements of the Borrower delivered
pursuant thereto and such other documents and information
C-2
<PAGE>
(including without limitation the Loan Documents) as it has deemed appropriate
to make its own credit analysis and decision to enter into this Agreement; (iii)
appoints and authorizes the Agent to take such action as agent on its behalf and
to exercise such powers under the Loan Documents as are delegated to the Agent
by the terms thereof together with such powers as are reasonably incidental
thereto; and (iv) agrees that it will become a party to the Credit Agreement and
the other Loan Documents to which the other Lenders are a party upon the
effectiveness of this Agreement and will perform in accordance therewith all of
the obligations which are required to be performed by it as a Lender.
(b) The Assigned Loans and the Assigned Commitment assigned by the
Assignor to the Assignee hereunder shall be without recourse to the Assignor.
The Assignee acknowledges and agrees that, except as set forth in Section 4
above, the Assignor is making no representations or warranties with respect to,
and the Assignee hereby releases and discharges the Assignor for any
responsibility or liability for: (i) the present or future solvency or financial
condition of the Borrower, (ii) any representations, warranties, statements or
information made or furnished by the Borrower in connection with the Credit
Agreement or otherwise, (iii) the validity, efficacy, sufficiency, or
enforceability of the Credit Agreement or any document or instrument executed in
connection therewith, or the collectibility of the Assigned Loans, (iv) the
perfection, priority or validity of any lien, security interest or pledge with
respect to any Collateral at any time securing the obligations of the Borrower
under the Credit Agreement or the Assigned Loans under the Notes or the Credit
Agreement and (v) the performance or failure to perform by the Borrower or any
other Loan Party of any obligation under the Credit Agreement or any other Loan
Document to which it is a party.
(c) Further, the Assignee acknowledges that it has, independently and
without reliance upon the Assignor, the Agent, or on any Affiliate or Subsidiary
thereof, or any other Lender, and based on the financial statements supplied by
the Borrower and such other documents and information as it has deemed
appropriate, made its own credit analysis and decision to become a Lender under
the Credit Agreement. The undersigned also acknowledges that it will,
independently and without reliance upon the Assignor, the Agent or any Lender
and based on such documents and information as it shall deem appropriate at the
time, continue to make its own credit decisions in taking or not taking action
under the Credit Agreement, any Note or any other Loan Document. The Agent
shall have no duty or responsibility, either initially or on a continuing basis,
to provide the Assignee with any credit or other information with respect to the
Borrower or to notify the Assignee of any Event of Default except as provided in
the Credit Agreement. The Assignee has not relied on the Assignor, the Agent or
any other Lender or any Affiliate or Subsidiary thereof as to any legal or
factual matter in connection therewith or in connection with the transactions
contemplated thereunder.
SECTION 6. RECORDING AND ACKNOWLEDGMENT BY THE AGENT. Promptly following
-----------------------------------------
the execution of this Agreement, the Assignor will deliver to the Agent (i) a
duly executed copy of this Agreement for acknowledgment and recording by the
Agent
C-3
<PAGE>
and (ii) the Assignor's Note(s). The Agent shall request the Borrower to, and
the Borrower shall, exchange such Surrendered Note(s) for new notes as provided
in Section 14.6 of the Credit Agreement. Upon such acknowledgment and recording,
from and after the effective date hereof, the Agent shall make all payments in
respect of the interest assigned hereby (including payments of principal,
interest, fees and other amounts) to the Assignee. The Assignor and Assignee
shall make all appropriate adjustments in payments under the Credit Agreement
for periods prior to the effective date hereof directly between themselves.
SECTION 7. AGREEMENTS OF THE BORROWER. The Borrower hereby agrees that
--------------------------
the Assignee shall be a Lender under the Credit Agreement having a Commitment
equal to the Assigned Commitment. The Borrower agrees that the Assignee shall
have all of the rights and remedies of a Lender under the Credit Agreement as if
the Assignee were an original Lender under and signatory to the Credit
Agreement, including, but not limited to, the right of a Lender to receive
payments of principal and interest with respect to the Assigned Loans, if any,
and to the Revolving Loans made by the Lenders after the date hereof and to
receive its share of the commitment and other fees payable to the Lenders as
provided in the Credit Agreement. Further, the Assignee shall be entitled to
the indemnification provisions from the Borrower in favor of the Lenders as
provided in the Credit Agreement. The Borrower further agrees, upon the
execution and delivery of this Agreement, to execute in favor of the Assignee a
promissory note in substantially the form of Exhibit I to the Credit Agreement
in an initial amount equal to the Assigned Commitment. Further, the Borrower
agrees that, upon the execution and delivery of this Agreement, the Borrower
shall owe the Assigned Loans to the Assignee as if the Assignee were the Lender
originally making such Revolving Loans.
SECTION 8. ADDRESSES. The Assignee specifies as its address for notices
---------
and its Lending Office for all Loans, the offices set forth below:
Notice Address:
_____________________________________
_____________________________________
Telephone No.:_______________________
Telecopy No.:________________________
Lending Office:
_____________________________________
_____________________________________
Telephone No. :______________________
Telecopy No.:________________________
SECTION 9. PAYMENT INSTRUCTIONS. All payments to be made to the Assignee
--------------------
under the Credit Agreement shall be made as provided in the Credit Agreement at
its _______ office for the account of ___________, account number _____________,
ABA number ___________, Attention: _________, reference number: _________. All
C-4
<PAGE>
payments to be made to the Assignee under this Agreement by the Assignor shall
be made by wire transfer of immediately available funds to the Assignee at its
___________ office for the account of ___________, account number _____________,
ABA number ___________, Attention: _____________, reference number:__________.
SECTION 10. EFFECTIVENESS OF ASSIGNMENT. This Agreement, and the
---------------------------
assignment and assumption contemplated herein, shall not be effective until the
date by which all of the following have occurred: (a) this Agreement is signed
by each of the Assignor, the Assignee, the Borrower and the Agent; (b) the
payment to the Assignor of the amounts owing, if any, by the Assignee pursuant
to paragraph 2 hereof; and (c) payment to the Agent of the fees owing under
Section 3 of this Agreement. Upon recording and acknowledgment of this
Agreement by the Agent, from and after the effective date hereof, (i) the
Assignee shall be a party to the Credit Agreement and, to the extent provided in
this Agreement, have the rights and obligations of a Lender thereunder and (ii)
the Assignor shall, to the extent provided in this Agreement, relinquish its
rights and be released from its obligations under the Credit Agreement;
provided, however, that if the Assignor does not assign its entire interest
under the Loan Documents, it shall remain a Lender entitled to all of the
benefits and subject to all of the obligations thereunder with respect to its
Commitment.
SECTION 11. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND
-------------
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF GEORGIA.
SECTION 12. COUNTERPARTS. This Agreement may be executed in any number of
------------
counterparts each of which, when taken together, shall constitute one and the
same agreement.
SECTION 13. HEADINGS. Section headings have been inserted herein for
--------
convenience only and shall not be construed to be a part hereof.
SECTION 14. AMENDMENTS; WAIVERS. This Agreement may not be amended,
-------------------
changed, waived or modified except by a writing executed by the parties hereto.
SECTION 15. ENTIRE AGREEMENT. This Agreement embodies the entire
----------------
agreement between the Assignor and the Assignee with respect to the subject
matter hereof and supersedes all other prior arrangements and understandings
relating to the subject matter hereof.
SECTION 16. BINDING EFFECT. This Agreement shall be binding upon and
--------------
inure to the benefit of the parties hereto and their respective successors and
permitted assigns.
[SIGNATURES ON FOLLOWING PAGES]
C-5
<PAGE>
[SIGNATURE PAGE TO ASSIGNMENT AND ASSUMPTION AGREEMENT]
IN WITNESS WHEREOF, the parties hereto have duly executed this Assignment
and Assumption Agreement as of the date and year first written above.
THE ASSIGNOR:
[NAME OF ASSIGNOR]
By:_______________________________
Title:___________________________
THE ASSIGNEE:
[NAME OF ASSIGNEE]
By:______________________________
Title:________________________
Agreed and Consented to
this ___ day of ________, 19__
THE BORROWER:
GRAPHIC INDUSTRIES, INC.
By:_____________________________
Title:________________________
[SIGNATURES CONTINUED ON FOLLOWING PAGE]
C-6
<PAGE>
[SIGNATURE PAGE TO ASSIGNMENT AND ASSUMPTION AGREEMENT]
Accepted and Consented to
this ___ day of ________, 19__
THE AGENT:
NATIONSBANK OF GEORGIA,
NATIONAL ASSOCIATION, as Agent
By:______________________________
Title:_________________________
C-7
<PAGE>
EXHIBIT D
---------
FORM OF BORROWING BASE CERTIFICATE
----------------------------------
[Date]
NationsBank of Georgia,
National Association, as Agent
600 Peachtree Street, Northeast
Atlanta, Georgia 30308
Attention: Douglas J. Wallace
Ladies and Gentlemen:
Reference is hereby made to that certain Credit Agreement dated as of
December 21, 1995 (as the same may be amended, supplemented, restated, replaced,
substituted or otherwise modified from time to time, the "Credit Agreement";
capitalized terms used herein and not otherwise defined herein shall have their
respective defined meanings as set forth in the Credit Agreement) by and among
Graphic Industries, Inc. (the "Borrower"), the Co-Agents and each of the other
financial institutions initially a signatory thereto together with those
assignees pursuant to Section 14.6 thereof, as Lenders (the "Lenders") and
NationsBank of Georgia, National Association (the "Agent").
Pursuant to Section 9.4 of the Credit Agreement, the undersigned hereby
certifies on behalf of the Borrower in his/her capacity as an authorized officer
of the Borrower, to the Agent and the Lenders that the following information is
true and correct and accurately reflects the Borrowing Base and the Excess
Amount as of [insert date which is last Business Day of fiscal quarter or month,
as appropriate] (the "Reporting Date") and the Available Revolving Commitment as
of the date hereof:
I. CALCULATION OF BORROWING BASE
-----------------------------
<TABLE>
<S> <C> <C> <C> <C>
A. Trade Accounts Receivable $_________
B. Accounts over $5,000 and 90 days minus $_________
C. Reserves established by Agent minus $_________
D. Eligible Receivables $_________ x 80% $________
E. Eligible Raw Material Inventory $_________ x 50% $________
F. Eligible Current Assets $_________ $________
</TABLE>
D-1
<PAGE>
<TABLE>
<S> <C> <C> <C> <C>
Borrowing Base (D+E+F) $________
II. DETERMINATION OF EXCESS AMOUNT
A. Net book value of all $_________
Equipment
B. Indebtedness secured by minus $_________
Equipment
C. Net amount $_________ x 50% $________
D. Excess Amount (Lesser of
$30,000,000 or Item II C) $________
III. CALCULATION OF AVAILABLE REVOLVING COMMITMENT
---------------------------------------------
A. Lesser of:
1. Revolving Commitment in effect $_____
on the date hereof
2. Sum of:
(a) Borrowing Base (item I.) $________
(b) Excess Amount (item II.) plus
$________ = $_____
Lesser of A.1. and A.2. = $________
B. Sum of:
1. Aggregate principal amount of all
Revolving Loans outstanding on
the date hereof $_________
plus
2. Aggregate principal amount of all
Swing Line Loans outstanding on
the date hereof $_________
plus
</TABLE>
D-2
<PAGE>
<TABLE>
<S> <C> <C>
3. Aggregate principal amount of all
Permitted Notes Payable
outstanding on the date hereof $_________
= $________
Sum of B.1, B.2. and B.3.
Available Revolving Commitment (III.A. - III.B.) = $
==========
</TABLE>
Attached hereto is a true and correct report, as of the Reporting Date,
of all Receivables having a face amount of $5,000 or more which have remained
unpaid for more than 90 days after the invoice date therefor.
The undersigned certifies to the Agent and the Lenders, on behalf of the
Borrower in his/her capacity as an authorized officer of the Borrower, that the
calculation of the items comprising the Borrowing Base and the Excess Amount as
set forth above conforms to the definitions contained in, and to the
requirements of, the Credit Agreement and that the most recent financial
statements prepared by the Borrower and used for purposes of this Borrowing Base
Certificate have been prepared in a manner consistent with the most recent
financial statements delivered to the Agent prior to the Agreement Date.
The undersigned hereby further certifies to the Agent and the Lenders,
on behalf of the Borrower in his/her capacity as an authorized officer of the
Borrower, that, as of the date hereof, to the best of the undersigned's
knowledge, information and belief, no Default or Event of Default has occurred
and is continuing.
By:___________________________
Title:_____________________
D-3
<PAGE>
EXHIBIT E
---------
FORM OF NOTICE OF BORROWING
---------------------------
________________ ___, 199___
NationsBank of Georgia,
National Association, as Agent
600 Peachtree Street, Northeast
Atlanta, Georgia 30308
Attention: _________________
Ladies and Gentlemen:
Reference is made to that certain Credit Agreement dated as of December 21,
1995 (as it may be amended, supplemented, restated, replaced, substituted, or
otherwise modified from time to time, the "Credit Agreement"; capitalized terms
used herein, and not otherwise defined herein, shall have their respective
defined meanings as set forth in the Credit Agreement) among Graphic Industries,
Inc. (the "Borrower"), the Co-Agents and certain other financial institutions
initially a signatory thereto together with those assignees pursuant to Section
14.6 thereof, as Lenders (the "Lenders") and NationsBank of Georgia, National
Association, as Agent (the "Agent").
Pursuant to Section 2.1(b) of the Credit Agreement, the Borrower hereby
requests that the Lenders make a Revolving Loan in an amount equal to
$_____________ to the Borrower.
The Borrower hereby requests that the Revolving Loan to be made available
by the Lenders pursuant hereto shall be a ___________________ [Select either a
LIBOR Loan or Base Rate Loan]. [In the event the Borrower selects a LIBOR
Loan:] [The Borrower hereby requests that the initial Interest Period for such
LIBOR Loan be for a duration of [one, two, three or six months].]
The Borrower requests that the Revolving Loan be made available to the
Borrower on __________, 199__.
The Agent is instructed to make the proceeds of such Revolving Loan
available to the Borrower at _____________________________________.
The Borrower hereby further certifies to the Agent and the Lenders that:
(i) as of the date hereof, (ii) as of the date of the requested Borrowing, and
(iii) after giving effect to the Revolving Loan requested hereby:
E-1
<PAGE>
(a) No Event of Default or Default has occurred and is continuing,
whether or not as a result of the requesting Borrowing;
(b) No Material Adverse Change has occurred since the Agreement
Date; and
(c) The representations and warranties made or deemed made by each
Loan Party under the Loan Documents remain true and correct on and as of the
date hereof except: (i) to the extent that such representations and warranties
expressly relate solely to an earlier date (in which case such representations
and warranties shall have been true and accurate on and as of such earlier date)
and (ii) for changes in factual circumstances specifically and expressly
permitted under the Credit Agreement.
If notice of this Borrowing has been given previously by telephone, then
this notice, including any facsimile copy hereof, should be considered a written
confirmation of such telephone notice as required by Section 2.1(b) of the
Credit Agreement.
GRAPHIC INDUSTRIES, INC.
By:_________________________________________
Title:___________________________________
E-2
<PAGE>
EXHIBIT F
---------
FORM OF NOTICE OF CONTINUATION
------------------------------
____________________ ____, 199__
NationsBank of Georgia,
National Association, as Agent
600 Peachtree Street, Northeast
Atlanta, Georgia 30308
Attention: _________________
Ladies and Gentlemen:
Reference is made to that certain Credit Agreement dated as of December 21,
1995 (as it may be amended, supplemented, restated, replaced, substituted, or
otherwise modified from time to time, the "Credit Agreement"; capitalized terms
used herein, and not otherwise defined herein, shall have their respective
defined meanings as set forth in the Credit Agreement) among Graphic Industries,
Inc. (the "Borrower"), the Co-Agents and certain other financial institutions
initially a signatory thereto together with those assignees pursuant to Section
14.6 thereof, as Lenders (the "Lenders") and NationsBank of Georgia, National
Association, as Agent (the "Agent").
Pursuant to Section 2.4 of the Credit Agreement, the Borrower hereby gives
notice, irrevocably, that the Borrower hereby requests a Continuation of a
Borrowing under the Credit Agreement, and in that connection sets forth below
the information relating to such Continuation (the "Proposed Continuation") as
required by Section 2.4 of the Credit Agreement:
(i) The requested date of the Proposed Continuation is ____________,
199__.
(ii) The aggregate amount of the LIBOR Loans subject to such Continuation
is $________________________.
(iii) The duration of the selected Interest Period for the LIBOR Loans
which are the subject of such Continuation is: __________________________ [one,
two, three or six months].
The Borrower hereby further certifies to the Agent and the Lenders
that: (i) as of the date hereof, (ii) as of the requested date of the Proposed
Continuation, and (iii) after giving effect to the Continuation requested
hereby, no Event of Default has occurred and is continuing.
F-1
<PAGE>
If notice of this Proposed Continuation has been given previously by
telephone, then this notice, including any facsimile copy hereof, should be
considered a written confirmation of such telephone notice as required by
Section 2.4 of the Credit Agreement.
GRAPHIC INDUSTRIES, INC.
By:_________________________________________
Title:___________________________________
F-2
<PAGE>
EXHIBIT G
---------
FORM OF NOTICE OF CONVERSION
----------------------------
________________ ___, 199___
NationsBank of Georgia,
National Association, as Agent
600 Peachtree Street, Northeast
Atlanta, Georgia 30308
Attention: _________________
Ladies and Gentlemen:
Reference is made to that certain Credit Agreement dated as of December 21,
1995 (as it may be amended, supplemented. restated, replaced, substituted, or
otherwise modified from time to time, the "Credit Agreement"; capitalized terms
used herein, and not otherwise defined herein, shall have their respective
defined meanings as set forth in the Credit Agreement) among Graphic Industries,
Inc. (the "Borrower"), the Co-Agents and certain other financial institutions
initially a signatory thereto together with those assignees pursuant to Section
14.6 thereof, as Lenders (the "Lenders") and NationsBank of Georgia, National
Association, as Agent (the "Agent").
Pursuant to Section 2.5 of the Credit Agreement, the Borrower hereby gives
notice, irrevocably, that the Borrower hereby requests a Conversion of Loans of
one Type into Loans of another Type under the Credit Agreement, and in that
connection sets forth below the information relating to such Conversion (the
"Proposed Conversion") as required by Section 2.5 of the Credit Agreement:
(i) The requested date of the Proposed Conversion is __________________
(the "Conversion Date").
(ii) The Type of Loans to be Converted pursuant hereto are presently
___________________ [Select either a LIBOR Loans or Base Rate Loans] in the
principal amount of $_________ outstanding as of the Conversion Date (the
"Current Loans").
(iii) The portion of the Current Loans to be converted on the Conversion
Date is $___________ (the "Conversion Amount").
(iv) The Conversion Amount is to be converted into a ___________________
[Select either a LIBOR Loan or Base Rate Loan] (the "Converted Loan") on the
Conversion Date.
G-1
<PAGE>
(v) [In the event the Borrower selects a LIBOR Loan:] [The Borrower
hereby requests that the Interest Period for such Converted Loan be for a
duration of ______________ [one, two, three or six months].]
The Borrower hereby further certifies to the Agent and the Lenders
that: (i) as of the date hereof, (ii) as of the Conversion Date and (iii) after
giving effect to the Conversion requested hereby, no Event of Default has
occurred and is continuing.
If notice of this Proposed Conversion has been given previously by
telephone, then this notice, including any facsimile copy hereof, should be
considered a written confirmation of such telephone notice as required by
Section 2.5 of the Credit Agreement.
GRAPHIC INDUSTRIES, INC.
By:_________________________________________
Title:___________________________________
G-2
<PAGE>
EXHIBIT H
---------
FORM OF NOTICE OF SWING LINE BORROWING
--------------------------------------
________________ ___, 199___
NationsBank of Georgia,
National Association, as Agent
and as Swing Line Lender
600 Peachtree Street, Northeast
Atlanta, Georgia 30308
Attention: _________________
Ladies and Gentlemen:
Reference is made to that certain Credit Agreement dated as of December 21,
1995 (as it may be amended, supplemented. restated, replaced, substituted, or
otherwise modified from time to time, the "Credit Agreement"; capitalized terms
used herein, and not otherwise defined herein, shall have their respective
defined meanings as set forth in the Credit Agreement) among Graphic Industries,
Inc. (the "Borrower"), the Co-Agents and certain other financial institutions
initially a signatory thereto together with those assignees pursuant to Section
14.6 thereof, as Lenders (the "Lenders") and NationsBank of Georgia, National
Association, as Agent (the "Agent").
Pursuant to Section 3.1(b) of the Credit Agreement, the Borrower hereby
requests that the Swing Line Lender make a Swing Line Loan Offer to the Borrower
pursuant to Section 3.1(c) of the Credit Agreement.
For purposes of making such Swing Line Loan Offer, the Borrower requests
that:
(i) the proposed date of Borrowing of such Swing Line Loan be
___________;
(ii) the amount of such Swing Line Loan be $___________; and
(iii) the duration of the Interest Period applicable to such Swing Line
Loan be ______ days.
The Borrower hereby further certifies to the Agent and the Swing Line
Lender that: (i) as of the date hereof, (ii) as of the date of the requested
Borrowing and (iii) after giving effect to the Swing Line Loan requested hereby:
(a) No Event of Default or Default has occurred and is continuing,
whether or not as a result of the requested Borrowing;
H-1
<PAGE>
(b) No Material Adverse Change has occurred since the Agreement
Date; and
(c) The representations and warranties made or deemed made by each
Loan Party under the Loan Documents remain true and correct on and as of
the date hereof except: (I) to the extent that either such representations
and warranties expressly relate solely to an earlier date (in which case
such representations and warranties shall have been true and accurate on
and as of such earlier date) and (II) for changes in factual circumstances
specifically and expressly permitted under the Credit Agreement.
If notice of this request for a Swing Line Loan Offer has been given
previously by telephone, then this notice, including any facsimile copy hereof,
should be considered a written confirmation of such telephone notice as required
by Section 3.1(b) of the Credit Agreement.
GRAPHIC INDUSTRIES, INC.
By:_________________________________________
Title:___________________________________
H-2
<PAGE>
EXHIBIT I
---------
FORM OF REVOLVING NOTE
----------------------
$________________ ___________________, 19___
FOR VALUE RECEIVED, the undersigned, GRAPHIC INDUSTRIES, INC., a
corporation organized under the laws of the State of Georgia (the "Borrower"),
promises to pay to the order of ___________________ [Payee Lender] (the
"Lender") in c/o NATIONSBANK OF GEORGIA, NATIONAL ASSOCIATION, as Agent, 600
Peachtree Street, Northeast, Atlanta, Georgia, 30308, in lawful money of the
United States of America and in immediately available funds, the principal
amount of ________________ Dollars ($_____________), or such lesser principal
amount, as may then constitute the unpaid aggregate principal amount of the
Revolving Loans made by the Lender to the Borrower pursuant to the Credit
Agreement (as defined below) on the Revolving Termination Date.
The Borrower further agrees to pay interest at said office, in like money,
on the unpaid principal amount owing hereunder from time to time on the dates
and at the rates and at the times specified in the Credit Agreement.
This Note is one of the Revolving Notes referred to in that certain Credit
Agreement dated as of December 21, 1995 (as it may be amended, supplemented,
restated, replaced, substituted, or otherwise modified from time to time, the
"Credit Agreement"; capitalized terms used herein, and not otherwise defined
herein, shall have their respective defined meanings as set forth in the Credit
Agreement) among the Borrower, the Co-Agents and certain other financial
institutions initially a signatory thereto together with those assignees
pursuant to Section 14.6 thereof, as Lenders (the "Lenders") and NationsBank of
Georgia, National Association, as Agent (the "Agent"), and is subject to, and
entitled to, all provisions and benefits thereof (including all indemnities
contained therein) and is subject to optional and mandatory prepayment in whole
or in part as provided therein. The Credit Agreement, among other things,
provides [after giving effect to the Assignment and Assumption Agreement
executed by the Lender and [name of Assignee] as of date hereof]/1/ for the
making of Revolving Loans by the Lender to the Borrower from time to time in an
aggregate amount not to exceed at any time outstanding the U.S. Dollar amount
first above mentioned.
Upon the occurrence of any one or more of the Events of Default specified
in the Credit Agreement which have not been waived pursuant to the Credit
Agreement, the Agent shall, upon the written request of the Requisite Lenders,
and by delivery of written notice to the Borrower from the Agent, take any and
all of the following actions, without prejudice to the rights of the Agent, the
Lender or any holder of this Note to enforce its claims against the Borrower:
(a) declare all Credit Obligations (including all amounts
_________________________
/1/ To be used for replacement of Surrendered Notes.
I-1
<PAGE>
outstanding hereunder) to be immediately due and payable (except with respect to
any Event of Default set forth in Section 11.1(e) or (f) of the Credit
Agreement, in which case all Credit Obligations due hereunder shall
automatically become immediately due and payable without the necessity of any
notice or other demand) without presentment, demand, protest or any other action
or obligation of the Lender; and (b) immediately terminate the Revolving
Commitment and the obligation of the Lenders to make Revolving Loans under the
Credit Agreement (and, in the case of an Event of Default set forth in Section
11.1(e) or 11.1(f) of the Credit Agreement, such termination shall occur
automatically).
The holder hereof shall be entitled to the benefits of the Credit Agreement
and to the other Loan Documents (to the extent and with the effect as therein
provided) [and this Note re-evidences the indebtedness outstanding on the date
hereof with respect to the Revolving Loans which indebtedness has been assigned
to the Lender pursuant to Section 14.6 of the Credit Agreement.]/2/
The Borrower hereby waives presentment, demand, protest and notice of any
kind. No failure to exercise, and no delay in exercising any rights hereunder
on the part of the holder hereof shall operate as a waiver of such rights.
THE VALIDITY, INTERPRETATION AND ENFORCEMENT OF THIS REVOLVING NOTE SHALL
BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF
GEORGIA WITHOUT GIVING EFFECT TO THE CONFLICT OF LAWS PRINCIPLES THEREOF.
THE PROVISIONS OF SECTION 14.5 OF THE CREDIT AGREEMENT ARE HEREBY EXPRESSLY
INCORPORATED BY REFERENCE HEREIN.
GRAPHIC INDUSTRIES, INC.
Attest:
By:____________________________________
By:______________________________ Title:_______________________________
Title:___________________________
(CORPORATE SEAL)
_________________________
/2/ To be used for replacement of Surrendered Notes.
I-2
<PAGE>
EXHIBIT J
---------
FORM OF SWING LINE NOTE
-----------------------
$10,000,000 ___________________, 19___
FOR VALUE RECEIVED, the undersigned, GRAPHIC INDUSTRIES., INC., a
corporation organized under the laws of the State of Georgia (the "Borrower"),
promises to pay to the order of NATIONSBANK OF GEORGIA, NATIONAL ASSOCIATION
(the "Swing Line Lender"), 600 Peachtree Street, Northeast, Atlanta, Georgia,
30308, in lawful money of the United States of America and in immediately
available funds, the principal amount of Ten Million and 00/100 Dollars
($10,000,000), or such lesser principal amount, as may then constitute the
unpaid aggregate principal amount of the Swing Line Loans made by the Swing Line
Lender to the Borrower pursuant to the Credit Agreement (as defined below) on
the Revolving Termination Date.
The Borrower further agrees to pay interest at said office, in like money,
on the unpaid principal amount owing hereunder from time to time on the dates
and at the rates and at the times specified in the Credit Agreement.
This Note is the Swing Line Note referred to in that certain Credit
Agreement dated as of December 21, 1995 (as it may be amended, supplemented,
restated, replaced, substituted, or otherwise modified from time to time, the
"Credit Agreement"; capitalized terms used herein, and not otherwise defined
herein, shall have their respective defined meanings as set forth in the Credit
Agreement) among the Borrower, the Co-Agents and certain other financial
institutions initially a signatory thereto together with those assignees
pursuant to Section 14.6 thereof, as Lenders (the "Lenders") and NationsBank of
Georgia, National Association, as Agent (the "Agent"), and is subject to, and
entitled to, all provisions and benefits thereof (including all indemnities
contained therein) and is subject to optional and mandatory prepayment in whole
or in part as provided therein. The Credit Agreement, among other things,
provides for the making of Swing Line Loans by the Swing Line Lender to the
Borrower from time to time in an aggregate amount not to exceed at any time
outstanding the U.S. Dollar amount first above mentioned.
Upon the occurrence of any one or more of the Events of Default specified
in the Credit Agreement which have not been waived pursuant to the Credit
Agreement, the Agent shall, upon the written request of the Requisite Lenders,
and by delivery of written notice to the Borrower from the Agent, without
prejudice to the rights of the Agent, the Swing Line Lender or any holder of
this Note to enforce its claims against the Borrower, declare all Credit
Obligations (including all amounts outstanding hereunder) to be immediately due
and payable (except with respect to any Event of Default set forth in Section
11.1(e) or (f) of the Credit Agreement, in which case all Credit Obligations due
hereunder shall automatically become immediately due and payable without the
necessity of any notice or other demand) without presentment, demand, protest or
any other action or obligation of the Swing Line Lender.
J-1
<PAGE>
The holder hereof shall be entitled to the benefits of the Credit Agreement
and to the other Loan Documents (to the extent and with the effect as therein
provided).
The Borrower hereby waives presentment, demand, protest and notice of any
kind. No failure to exercise, and no delay in exercising any rights hereunder
on the part of the holder hereof shall operate as a waiver of such rights.
THE VALIDITY, INTERPRETATION AND ENFORCEMENT OF THIS PROMISSORY NOTE SHALL
BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF
GEORGIA WITHOUT GIVING EFFECT TO THE CONFLICT OF LAWS PRINCIPLES THEREOF.
THE PROVISIONS OF SECTION 14.5 OF THE CREDIT AGREEMENT ARE HEREBY EXPRESSLY
INCORPORATED BY REFERENCE HEREIN.
GRAPHIC INDUSTRIES, INC.
Attest:
By:____________________________________
By:_____________________________ Title:_______________________________
Title:__________________________
(CORPORATE SEAL)
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<PAGE>
EXHIBIT K
---------
FORM OF OPINION OF COUNSEL TO LOAN PARTIES
------------------------------------------
December 21, 1995
NationsBank Of Georgia, National
Association, as Agent
600 Peachtree Street, Northeast
21st Floor
Atlanta, Georgia 30308-2213
Attention: Douglas J. Wallace
The financial institutions that have or may
become Lenders under the below-
referenced Credit Agreement
Alston & Bird
Atlanta, Georgia
Re: Credit Agreement dated as of December 21, 1995 (the "Credit
Agreement") by and among Graphic Industries, Inc., the financial
institutions that have or may become Lenders under the Credit
Agreement (the "Lenders") and NationsBank of Georgia, National
Association, as Agent (the "Agent")
Ladies and Gentlemen:
We have acted as counsel to Graphic Industries, Inc., a Georgia corporation
(the "Borrower"), and the other Loan Parties listed on Schedule 1.01(A) of the
Credit Agreement in connection with the negotiation, execution and delivery of
the Credit Agreement and the other "Loan Documents" described below. This
opinion letter is being delivered pursuant to Section 6.1(c) of the Credit
Agreement. All capitalized terms used but not defined herein shall have the
meanings set forth in the Credit Agreement.
In these capacities, we have reviewed the following documents and
instruments dated, or dated as of, December 21, 1995 (collectively the "Loan
Documents"):
(a) the Credit Agreement;
(b) the Master Security Agreement executed and delivered by the Borrower
and the other Loan Parties in favor of the Agent on behalf of the Lenders;
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(c) the Guaranty executed and delivered by the Subsidiaries in favor of
the Agent on behalf of the Lenders;
(d) the Revolving Notes executed and delivered by the Borrower in favor of
the Agent on behalf of the Lenders;
(e) the Swing Line Note executed and delivered by the Borrower in favor of
the Agent on behalf of the Lenders;
(f) the Master Pledge Agreement executed and delivered by the Borrower in
favor of the Agent on behalf of the Lenders;
(g) the Intercompany Security Agreement executed and delivered by the
Subsidiaries in favor of the Borrower; and
(h) the Intercompany Notes executed and delivered by the Subsidiaries in
favor of the Borrower.
In addition to the foregoing, we have reviewed the articles and/or
certificates of incorporation and by-laws of the Loan Parties and certain
resolutions of the board of directors of the Loan Parties (collectively, the
"Organizational Documents") and have also examined originals or copies,
certified or otherwise identified to our satisfaction, of such documents,
corporate records, and other instruments, and made such other investigations, as
we have deemed necessary or advisable for the purposes of rendering this
opinion. We have also made such examinations of law as we have deemed necessary
to our rendering the opinions set forth herein. In our examination of
documents, we assumed the genuineness of all signatures on documents presented
to us as originals (other than the signatures of officers of the Loan Parties)
and the conformity to originals of documents presented to us as conformed or
reproduced copies.
Based upon the foregoing, and subject to all of the qualifications and
assumptions set forth herein, we are of the opinion that:
1. Each Loan Party (i) is duly organized as a corporation, and is validly
existing and in good standing under the laws of its jurisdiction of
incorporation and (ii) has the corporate power to execute, deliver and perform
the Loan Documents to which it is a party, to own and use its assets, and to
conduct its business as presently conducted and as proposed to be conducted
immediately following the consummation of the transactions contemplated by the
Credit Agreement. Each Loan Party is qualified to transact business as a
foreign corporation in the jurisdictions set forth on Exhibit A attached hereto.
2. Each Loan Party has duly authorized the execution and delivery of the
Loan Documents to which it is a party and all performance by such Loan Party
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<PAGE>
thereunder. Each Loan Party has duly executed and delivered each of the Loan
Documents to which it is a party.
3. The execution and delivery by each Loan Party of the Loan Documents to
which it is a party do not, and if such Loan Party were now to perform its
obligations under such Loan Documents, such performance would not, result in
any:
(a) violation of the Loan Party's Organizational Documents;
(b) violation of any Applicable Law to which the Loan Party or its
assets are subject;
(c) breach or violation of or default under, any agreements,
instruments, indentures or other documents evidencing any indebtedness
for money borrowed or any other material agreement to which, to our
knowledge, the Loan Party is bound or under which the Loan Party or
its assets is subject;
(d) creation or imposition of a contractual lien or security
interest in, on or against the assets of the Loan Party under any
material written agreements to which, to our knowledge, the Loan Party
is a party or by which, to our knowledge, the Loan Party or its assets
are bound (other than liens and security interests in favor of the
Agent for the benefit of the Lenders); or
(e) violation of any judicial or administrative decree, writ,
judgment or order to which, to our knowledge, the Loan Party or its
assets are subject.
4. The execution, delivery and performance by each Loan Party of each
Loan Document to which it is a party, and the consummation of the transactions
thereunder, do not and will not require any registration with, consent or
approval of, or notice to, or other action to, with or by, any federal or
Governmental Authority of the State of Georgia except for filings required in
connection with the perfection of security interests granted pursuant to the
Loan Documents.
5. The Loan Documents constitute the legal, valid and binding obligations
of each Loan Party which is a party thereto, enforceable against such Loan Party
in accordance with their respective terms, except that the foregoing opinion is
subject to: (a) applicable bankruptcy, insolvency, reorganization, moratorium,
arrangement or similar laws relating to or affecting the enforcement of
creditors' rights generally and (b) the fact that equitable remedies or relief
(including, but not limited to, the remedy of specific performance) are subject
to the discretion of the court before which any such remedies or relief may be
sought.
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<PAGE>
6. To our knowledge, except as may be set forth on Schedule 7.1(i) of the
Credit Agreement, there are no judgments outstanding against any Loan Party or
affecting any of its assets, nor is there any litigation or other proceeding
against the Borrower or its assets pending or overtly threatened.
7. No Party is subject to regulation under the Public Utility Holding
Company Act of 1935, the Federal Power Act or the Investment Company Act of 1940
or to any federal or state statute or regulation limiting its ability to incur
indebtedness for borrowed money.
8. The Master Security Agreement creates a valid security interest in the
Collateral (as defined in the Master Security Agreement) in favor of the Agent
on behalf of the Lenders, the creation of a security interest in which is
governed by, and is subject to, the Uniform Commercial Code as in effect on the
date hereof in the State of Georgia (the "Georgia UCC"). (Such Collateral
referred to herein as the "Georgia UCC Collateral") The financing statements
attached hereto as Exhibit B (the "Financing Statements") are in appropriate
form for filing in the office of the Clerk of the Superior Court of Fulton
County, Georgia (the "Filing Office"). Upon the filing of the Financing
Statements with the Filing Office, such security interest in all Georgia UCC
Collateral, a security interest in which may be perfected by the filing of
financing statements in the State of Georgia, shall be perfected.
9. After giving effect to the initial Borrowing of Revolving Loans and
the use of the proceeds of such Revolving Loans to repay the Indebtedness
identified on the Funds Flow Statement, there will, to our knowledge, be no
effective UCC financing statements covering any of the assets and properties of
the Loan Parties except as set forth on the Lien Search Chart attached hereto as
Exhibit C. [Assumptions regarding accuracy of lien searches, reliance on payoff
letters, assumptions regarding actual use of proceeds in accordance with Funds
Flow Statement, limitations regarding scope of lien searches.]
10. No taxes, including, but not limited to, intangible or documentary
stamp taxes, shall be payable to the State of Georgia or any jurisdiction
therein on account of the execution or delivery of the Loan Documents, or the
execution or recording of any document, instrument, agreement or certificate
evidencing any security interest granted in favor of the Agent other than
nominal filing fees.
11. Assuming that Borrower applies the proceeds of the Loans as provided
in the Credit Agreement, the transactions contemplated by the Loan Documents do
not violate the provisions of Regulations G or X of the Federal Reserve Board.
12. The consideration to be paid to the Agent and the Lenders for the
financial accommodations to be provided to the Borrower pursuant to the Credit
Agreement, and their disclosure to the Borrower in the manner set forth in the
Credit Agreement, do not violate any law of the State of Georgia relating to
interest and usury.
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<PAGE>
13. Assuming that the payment obligations of the Borrower are made to the
Agent in the State of Georgia, a Georgia court or a federal court sitting in the
State of Georgia applying Georgia law should uphold the choice of Georgia law as
the governing law of the Loan Documents.
14. Schedule 1 to the Master Pledge Agreement accurately sets forth a
description of the issued and outstanding capital stock of each Subsidiary and
the record owner of such stock. Except as described on such Schedule 1, there
are not, to our knowledge, any preemptive or other outstanding rights, options,
warrants, conversion rights or similar agreements or understandings for the
purchase or acquisition from any Loan Party of any shares of capital stock or
other securities of any such entity. The capital stock of the Subsidiaries
pledged to the Agent under the Master Pledge Agreement constitutes one hundred
percent (100%) of the issued and outstanding capital stock of the Subsidiaries
of the Borrower.
15. The execution and delivery of the Master Pledge Agreement creates a
security interest in the "Pledged Collateral" as security for the "Secured
Obligations" (as such terms are defined in the Master Pledge Agreement), which
as to the "Pledged Securities" (as that term is defined in the Master Pledge
Agreement; herein the "Pledged Securities"), was duly perfected by the delivery
of certificates evidencing Borrower's ownership of the Pledged Securities.
Assuming the continuous physical possession of the Pledge Securities, the
Agent's security interest therein shall be a perfected, first-priority security
interest. Assuming the continuous physical possession of the Intercompany Notes
(as defined in the Master Pledge Agreement), the Agent's security interest in
therein shall be a perfected, first-priority security interest. Upon the filing
of the financing statement attached hereto as Exhibit D, the Agent's security
interest in the Intercompany Security Agreement (as defined in the Master Pledge
Agreement) shall be perfected.
16. The pledge of the Pledged Securities to the Agent pursuant to the
Master Pledge Agreement does not violate the Securities Act of 1933, as amended,
or any applicable Georgia State Blue Sky Law, or the rules and regulations
promulgated thereunder. However, we note that any disposition by the Agent of
any Pledged Securities may be subject to such laws and that the Agent may be
required to comply with the registration, filing and other provisions of such
laws.
17. Under the Georgia UCC, the Intercompany Security Agreement creates a
valid security interest in the Georgia UCC Collateral. The financing statements
attached hereto as Exhibit E (the "GII Financing Statements") are in appropriate
form for filing in the Filing Office. Upon the filing of the GII Financing
Statements with the Filing Office, such security interest in all Georgia UCC
Collateral, a security interest in which may be perfected by the filing of
financing statements, shall be perfected.
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<PAGE>
18. The Credit Obligations constitute "Senior Debt" under the Subordinated
Debenture Indenture.
[Customary Qualifications/Assumptions/Limitations]
Very truly yours,
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<PAGE>
EXHIBIT A TO OPINION OF COUNSEL TO LOAN PARTIES
(Jurisdictions in which each Loan Party
is qualified to transact business as a foreign corporation)
K-7
<PAGE>
EXHIBIT B TO OPINION OF COUNSEL TO LOAN PARTIES
(Master Security Agreement Financing Statements)
K-8
<PAGE>
EXHIBIT C TO OPINION OF COUNSEL TO LOAN PARTIES
(Lien Search Chart)
K-9
<PAGE>
EXHIBIT D TO OPINION OF COUNSEL TO LOAN PARTIES
(Master Pledge Agreement Financing Statement)
K-10
<PAGE>
EXHIBIT E TO OPINION OF COUNSEL TO LOAN PARTIES
(Intercompany Security Agreement GII Financing Statements)
K-11
<PAGE>
EXHIBIT L
---------
FORM OF DISBURSEMENT LETTER
---------------------------
December __, 1995
NationsBank of Georgia,
National Association, as Agent
600 Peachtree Street, Northeast
Atlanta, Georgia 30308
Attention: _________________
Ladies and Gentlemen:
Reference is made to that certain Credit Agreement dated as of December 21,
1995 (as it may be amended, supplemented, restated, replaced, substituted, or
otherwise modified from time to time, the "Credit Agreement"; capitalized terms
used herein, and not otherwise defined herein, shall have their respective
defined meanings as set forth in the Credit Agreement) among Graphic Industries,
Inc. (the "Borrower"), the Co-Agents and certain other financial institutions
initially a signatory thereto together with those assignees pursuant to Section
14.6 thereof, as Lenders (the "Lenders") and NationsBank of Georgia, National
Association, as Agent (the "Agent").
This letter is given pursuant to Section 6.1(h) of the Credit Agreement for
the purpose, among other things, of requesting the initial Revolving Loans
thereunder (the "Initial Borrowing") and to provide disbursement instructions
for the Initial Borrowing.
The Borrower hereby directs the Bank to disburse the proceeds of the
Initial Borrowing to the following accounts:
The Borrower elects that the Initial Borrowing shall be a [Base Rate Loan.]
[LIBOR Loan.] [If a LIBOR Loan - The initial Interest Period for the Initial
Borrowing shall be [1], [2], [3], [6] months.]
GRAPHIC INDUSTRIES, INC.
By:_______________________________________________
Title:_________________________________________
L-1
<PAGE>
EXHIBIT M
---------
FORM OF GUARANTY
----------------
THIS GUARANTY dated as of December 21, 1995 executed and delivered by each
of the Subsidiaries (as defined in the Credit Agreement referred to below) set
forth on the signature pages hereto (each a "Guarantor" and collectively the
"Guarantors") in favor of NATIONSBANK OF GEORGIA, NATIONAL ASSOCIATION, in its
capacity as agent (the "Agent") and in favor of the Lenders under the Credit
Agreement (the Lenders and the Agent being collectively referred to herein as
the "Guaranteed Parties").
WHEREAS, pursuant to that certain Credit Agreement dated as of the date
hereof (as the same may be amended, supplemented, restated, replaced,
substituted or otherwise modified from time to time, the "Credit Agreement";
capitalized terms used herein and not defined herein have their respective
defined meanings as set forth in the Credit Agreement) by and among Graphic
Industries, Inc. (the "Borrower"), the Co-Agents and certain other financial
institutions initially a signatory thereto, together with those assignees
permitted pursuant to Section 14.6 thereof, as Lenders and the Agent, the
Lenders have made available to the Borrower certain financial accommodations on
the terms and conditions set forth in the Credit Agreement;
WHEREAS, the Borrower owns, directly or indirectly, 100% of the issued and
outstanding shares of each of the Guarantors;
WHEREAS, each Guarantor acknowledges that it will derive substantial direct
benefit from the financial accommodations extended by the Agent and the Lenders
to the Borrower by reason of the fact that, among other things, the continued
successful operation of each Guarantor is directly dependent upon the ability of
the Borrower to obtain adequate financing and that the financial accommodations
extended by the Agent and the Lenders will enable the Borrower to fund the
operations of the other Guarantors;
WHEREAS, the Guarantors are therefore willing to guarantee the payment in
full of the principal of, and interest on, all Guaranteed Obligations (as
defined below) owing by the Borrower to the Guaranteed Parties under the Credit
Agreement, the other Loan Documents and otherwise; and
WHEREAS, it is a condition precedent to the Guaranteed Parties' extension
of financial accommodations to the Borrower under the Credit Agreement that the
Guarantors execute and deliver this Guaranty.
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<PAGE>
NOW, THEREFORE, in consideration of the above premises and for other good
and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged by the Guarantors, the Guarantors hereby agree as follows:
SECTION 1. GUARANTY. Each Guarantor hereby absolutely, irrevocably and
--------
unconditionally guarantees the due and punctual payment and performance when
due, whether at stated maturity, by acceleration or otherwise, of the following
(the following being collectively referred to as the "Guaranteed Obligations"):
(a) all of the Credit Obligations; and (b) all costs and expenses incurred by
the Guaranteed Parties in connection with the enforcement or collection of the
obligations of the Guarantors hereunder including, but not limited to, all
reasonable out-of-pocket fees and disbursements of counsel to any Guaranteed
Party actually incurred if such enforcement or collection is done by or through
an attorney.
SECTION 2. GUARANTY OF PAYMENT AND NOT OF COLLECTION. This Guaranty is a
-----------------------------------------
guaranty of payment, and not of collection, and a debt of the Guarantors for
their own account. Accordingly, the Guaranteed Parties shall not be obligated
or required before enforcing this Guaranty against the Guarantors: (a) to
pursue any right or remedy any Guaranteed Party may have against the Borrower,
any Guarantor or any other Loan Party or commence any suit or other proceeding
against the Borrower, any Guarantor or any other Loan Party in any court or
other tribunal; (b) to make any claim in a liquidation or bankruptcy of the
Borrower, any Guarantor or any other Loan Party; or (c) to make demand of the
Borrower, any Guarantor or any other Loan Party or to enforce or seek to enforce
or realize upon any Collateral which may secure any of the Guaranteed
Obligations. In this connection, each Guarantor hereby waives the right of such
Guarantor to require any holder of the Guaranteed Obligations to take action
against the Borrower as provided in Official Code of Georgia Annotated (S)10-7-
24.
SECTION 3. GUARANTY ABSOLUTE. Each Guarantor guarantees that the
-----------------
Guaranteed Obligations will be paid strictly in accordance with the terms of the
documents evidencing the same, regardless of any law, regulation or order now or
hereafter in effect in any jurisdiction affecting any of such terms or the
rights of any Guaranteed Party with respect thereto. The liability of the
Guarantors under this Guaranty shall be absolute and unconditional in accordance
with its terms and shall remain in full force and effect without regard to, and
shall not be released, suspended, discharged, terminated or otherwise affected
by, any circumstance or occurrence whatsoever, including, without limitation,
the following (whether or not the Guarantors consent thereto or have notice
thereof):
(a) (i) any change in the amount, interest rate or due date or other term
of any Guaranteed Obligations, or (ii) any change in the time, place or manner
of payment of all or any portion of the Guaranteed Obligations, or (iii) any
amendment, modification, supplement, or waiver of, or consent to the departure
from or other indulgence with
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<PAGE>
respect to, the Credit Agreement, the other Loan Documents, or any other
document or instrument evidencing any Guaranteed Obligations, or (iv) any
renewal, extension, addition, or supplement to, or deletion from, or any other
action or inaction under or in respect of, the Credit Agreement, the other Loan
Documents, or any other documents, instruments or agreements relating to the
Guaranteed Obligations or any other instrument or agreement referred to therein
or evidencing any Guaranteed Obligations or any assignment or transfer of any of
the foregoing;
(b) any lack of validity or enforceability of the Credit Agreement, the
other Loan Documents, or any other document, instrument or agreement referred to
therein or evidencing any Guaranteed Obligations or any assignment or transfer
of any of the foregoing;
(c) any furnishing to the Guaranteed Parties of any additional security
for the Guaranteed Obligations, or any sale, exchange, full or partial release
or surrender of, or realization on, any Collateral or any release of any other
Loan Party of its obligations hereunder or under any other Loan Document;
(d) any settlement or compromise of any of the Guaranteed Obligations, any
security therefor, or any liability of any other party with respect to the
Guaranteed Obligations, or any subordination of the payment of the Guaranteed
Obligations to the payment of any other liability of the Borrower except to the
extent such settlement or compromise indefeasibly reduces the amount of such
Guaranteed Obligations outstanding;
(e) any Bankruptcy Proceeding relating to any Guarantor or the Borrower or
any other Loan Party or any other Person, or any action taken with respect to
this Guaranty by any trustee or receiver, or by any court, in any such
proceeding;
(f) any nonperfection of any security interest or lien on any Collateral
securing any of the Guaranteed Obligations;
(g) any application of sums paid by the Borrower or any other Person with
respect to the liabilities of the Borrower to the Guaranteed Parties, regardless
of what liabilities of the Borrower remain unpaid;
(h) any defect, limitation or insufficiency in the borrowing powers of the
Borrower or in the exercise thereof;
(i) any act or failure to act by any Guaranteed Party (other than gross
negligence or willful misconduct) which may adversely affect the Guarantors'
subrogation rights, if any, against the Borrower to recover payments made under
this Guaranty;
M-3
<PAGE>
(j) any other circumstance which might otherwise constitute a defense
available to, or a discharge of, the Guarantors; or
(k) any release, discharge or modification of any the obligations of any
Guarantor hereunder except as they relate to such Guarantor.
SECTION 4. ACTION WITH RESPECT TO GUARANTEED OBLIGATIONS. The Agent or
---------------------------------------------
any other Guaranteed Party may, at any time and from time to time, without the
consent of, or notice to, the Guarantors, and without discharging the Guarantors
from their obligations hereunder take any and all actions described in Section 3
above and may otherwise: (a) amend, modify, alter or supplement the terms of any
of the Guaranteed Obligations, including, but not limited to, extending or
shortening the time of payment of any of the Guaranteed Obligations or
increasing, decreasing or otherwise changing the interest rate or fees that may
accrue on any of the Guaranteed Obligations; (b) amend, modify, alter or
supplement the Credit Agreement or the other Loan Documents or any other
document evidencing any Guaranteed Obligations; (c) sell, exchange, release or
otherwise deal with all, or any part, of any Collateral; (d) release any Person,
including any Guarantor hereunder, liable in any manner for the payment or
collection of the Guaranteed Obligations; (e) exercise, or refrain from
exercising, any rights against the Borrower or any other Person (including,
without limitation, any Guarantor hereunder); and (f) apply any sum, by
whomsoever paid or however realized, to the Guaranteed Obligations in such order
as such Guaranteed Party shall elect.
SECTION 5. WAIVER. The Guarantors, to the fullest extent permitted by
------
law, hereby waive notice of acceptance hereof or any presentment, demand,
protest or notice of any kind, and any other act or thing, or omission or delay
to do any other act or thing, which in any manner or to any extent might vary
the risk of the Guarantors or which otherwise might operate to discharge the
Guarantors from their obligations hereunder.
SECTION 6. INABILITY TO ACCELERATE GUARANTEED OBLIGATIONS. If any
----------------------------------------------
Guaranteed Party or the holder of any of the Guaranteed Obligations is prevented
under Applicable Law or otherwise from demanding or accelerating payment thereof
by reason of any automatic stay or otherwise, the Guaranteed Party or such
holder shall be entitled to receive from the Guarantors, upon demand therefor,
the sums which otherwise would have been due had such demand or acceleration
occurred.
SECTION 7. REINSTATEMENT OF GUARANTEED OBLIGATIONS. If claim is ever made
---------------------------------------
upon any Guaranteed Party for repayment or recovery of any amount or amounts
received in payment or on account of any of the Guaranteed Obligations, and any
Guaranteed Party repays all or part of said amount by reason of (a) any
judgment, decree or order of any court or administrative body having
jurisdiction over the Guaranteed Party or any of its property, or (b) any
settlement or compromise of any such claim effected by the
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<PAGE>
Guaranteed Party with any such claimant (including the Borrower, any Guarantor
or a trustee in bankruptcy for the Borrower or such Guarantor), then, and in
such event, the Guarantors agree that any such judgment, decree, order,
settlement or compromise shall be binding on them, notwithstanding any
revocation hereof or the cancellation of the Credit Agreement, the other Loan
Documents, or any other instrument evidencing any liability of the Borrower, and
the Guarantors shall be and remain liable to the Guaranteed Party for the
amounts so repaid or recovered to the same extent as if such amount had never
originally been paid to the Guaranteed Party.
SECTION 8. SUBROGATION. Each Guarantor agrees that it shall not exercise
-----------
or prosecute any right of subrogation or other claims or cause of action it may
have against any other Guarantor or the Borrower by reason of any payment by the
Guarantors to any other Guaranteed Party pursuant to this Guaranty prior to the
full and final indefeasible payment in full of all Credit Obligations.
SECTION 9. PAYMENTS FREE AND CLEAR. All sums payable by the Guarantors
-----------------------
hereunder, whether of principal, interest, fees, expenses, premiums or
otherwise, shall be paid in full, without setoff or counterclaim or any
deduction or withholding whatsoever (including any withholding tax or liability
imposed by any governmental agency or authority, wherever located, or any
statute, rule or regulation promulgated thereby), and in the event that the
Guarantors are required by such applicable law or by such governmental agency or
authority to make any such deduction or withholding, the Guarantors shall pay to
the Guaranteed Parties such additional amount as will result in the receipt by
the Agent on behalf of the Guaranteed Parties of the full amount payable
hereunder had such deduction or withholding not occurred or been required.
SECTION 10. SET-OFF. Each Guarantor authorizes the Agent and the other
-------
Guaranteed Parties at any time and from time to time, without prior notice to
it, which prior notice each Guarantor hereby expressly waives, to set off and
apply any and all deposits (whether general or special, time or demand,
provisional or final, including any negotiable or non-negotiable certificate of
deposit now or hereafter issued by the Agent or the other Guaranteed Parties to
the Guarantors) or other indebtedness owing by such Agent or Guaranteed Party to
such Guarantor, to the then outstanding Guaranteed Obligations then due and
payable. The Agent or any other Guaranteed Party may exercise this right of
setoff whether or not such Agent or Guaranteed Party has made demand for, or
accelerated, any Guaranteed Obligations and shall provide to the affected
Guarantor, promptly after the occurrence of any set-off, a notice advising such
Guarantor of such event. The rights of the Agent and the other Guaranteed
Parties under this Section are in addition to, and not in limitation or
substitution of, other rights and remedies (including, but not limited to, other
rights of set-off) that the Agent and the other Guaranteed Parties may have.
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<PAGE>
SECTION 11. SUBORDINATION OF THE BORROWER'S OBLIGATIONS TO THE GUARANTORS.
-------------------------------------------------------------
As an independent covenant, each Guarantor hereby expressly covenants and agrees
for the benefit of the Guaranteed Parties that all obligations and liabilities
owing by the Borrower to such Guarantor of whatsoever description including,
without limitation, all intercompany receivables owing to it from the Borrower
("Junior Claims") shall be subordinate and junior in right of payment to all
obligations of the Borrower to the Agent and other Guaranteed Parties under the
terms of the Credit Agreement and the other Loan Documents ("Senior Claims").
If an Event of Default shall occur, then, unless and until such Event of
Default shall have been cured, waived, or shall have ceased to exist, no direct
or indirect payment (in cash, property, securities by setoff or otherwise) shall
be made by the Borrower to any Guarantor on account of or in any manner in
respect of any Junior Claim and the Guarantors shall not receive or accept any
such direct or indirect payment.
In the event of a Bankruptcy Proceeding of the Borrower or any Guarantor,
all Senior Claims shall first be paid in full in cash in immediately available
funds before any direct or indirect payment or distribution (in cash, property,
securities by setoff or otherwise) shall be made to any Guarantor on account of
or in any manner in respect of any Junior Claim.
In the event any direct or indirect payment or distribution is made to the
Guarantors in contravention of this Section 11, such payment or distribution
shall be deemed received in trust for the benefit of the Agent and other
Guaranteed Parties and shall be immediately paid over to the Agent for
application against the Guaranteed Obligations in accordance with the terms of
the Credit Agreement.
The Guarantors agree to execute such additional documents as the Agent may
reasonably request to evidence the subordination provided for in this Section
11.
SECTION 12. AUTOMATIC ACCELERATION IN CERTAIN EVENTS. Upon the occurrence
----------------------------------------
of an Event of Default specified in Section 11.1(e) or (f) of the Credit
Agreement, all Guaranteed Obligations shall automatically become immediately due
and payable by the Guarantors, without notice or other action on the part of the
Agent or other Guaranteed Parties, and regardless of whether payment of the
Guaranteed Obligations by the Borrower has then been accelerated.
SECTION 13. SAVINGS CLAUSE; LIMITATION ON GUARANTOR LIABILITY. (a) It is
-------------------------------------------------
the intent of the Guarantors and the Guaranteed Parties that each Guarantor's
maximum liability hereunder shall be, but not in excess of:
(i) in a Bankruptcy Proceeding commenced by or against a Guarantor
on or within one year from the date on which any of the Guaranteed
Obligations
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<PAGE>
are incurred, the maximum amount which would not otherwise cause the
Guaranteed Obligations (or any other obligations of the Guarantors to the
Guaranteed Parties) to be avoidable or unenforceable against such Guarantor
under (A) Section 548 of the Bankruptcy Code of 1978, as amended (the
"Bankruptcy Code") or (B) any state fraudulent transfer or fraudulent
conveyance act or statute applied in such case or proceeding by virtue of
Section 544 of the Bankruptcy Code; or
(ii) in a Bankruptcy Proceeding commenced by or against a Guarantor
subsequent to one year from the date on which any of the Guaranteed
Obligations are incurred, the maximum amount which would not otherwise
cause the Guaranteed Obligations (or any other obligations of the
Guarantors to the Guaranteed Parties) to be avoidable or unenforceable
against such Guarantor under any state fraudulent transfer or fraudulent
conveyance act or statute applied in any such case or proceeding by virtue
of Section 544 of the Bankruptcy Code; or
(iii) in a Bankruptcy Proceeding commenced by or against a Guarantor
under any law, statute or regulation other than the Bankruptcy Code
(including, without limitation, any other bankruptcy, reorganization,
arrangement, moratorium, readjustment of debt, dissolution, liquidation or
similar debtor relief laws), the maximum amount which would not otherwise
cause the Guaranteed Obligations (or any other obligations of the
Guarantors to the Guaranteed Parties) to be avoidable or unenforceable
against such Guarantor under such law, statute or regulation including,
without limitation, any state fraudulent transfer or fraudulent conveyance
act or statute applied in any such case or proceeding.
(The substantive laws under which the possible avoidance or unenforceability of
the Guaranteed Obligations (or any other obligations of the Guarantors to the
Guaranteed Parties) shall be determined in any such case or proceeding shall
hereinafter be referred to as the "Avoidance Provisions").
(b) To the end set forth in Section 13(a), but only to the extent that the
Guaranteed Obligations would otherwise be subject to avoidance under the
Avoidance Provisions if the Guarantor is not deemed to have received valuable
consideration, fair value or reasonably equivalent value for the Guaranteed
Obligations, or if the Guaranteed Obligations would render such Guarantor
insolvent, or leave such Guarantor with an unreasonably small capital to conduct
its business, or cause such Guarantor to have incurred debts (or to have
intended to have incurred debts) beyond its ability to pay such debts as they
mature, in each case as of the time any of the Guaranteed Obligations are deemed
to have been incurred under the Avoidance Provisions, the maximum Guaranteed
Obligations for which such Guarantor shall be liable hereunder shall be reduced
to that amount which, after giving effect thereto, would not cause the
Guaranteed Obligations (or
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any other obligations of the Guarantor to the Guaranteed Parties), as so
reduced, to be subject to avoidance under the Avoidance Provisions.
(c) This Section 13 shall be applicable only in connection with a
Bankruptcy Proceeding brought by or against any Guarantor and is intended solely
to preserve the rights of the Guaranteed Parties hereunder to the maximum extent
that would not cause the Guaranteed Obligations of such Guarantor to be subject
to avoidance under the Avoidance Provisions in connection with any such
Bankruptcy Proceeding. Neither the Guarantors nor any other Person shall have
any right or claim under this Section 13 as against the Guaranteed Parties that
would not otherwise be available to the Guarantors or such other Person outside
of any Bankruptcy Proceeding.
SECTION 14. INFORMATION. Each Guarantor assumes all responsibility for
-----------
being and keeping itself informed of the Borrower's financial condition and
assets, and of all other circumstances bearing upon the risk of nonpayment of
the Guaranteed Obligations and the nature, scope and extent of the risks that
such Guarantor assumes and incurs hereunder, and agrees that none of the
Guaranteed Parties will have any duty to advise such Guarantor of information
known to it or any of them regarding such circumstances or risks.
SECTION 15. APPLICABLE LAW; SEVERABILITY. THIS GUARANTY SHALL BE
-----------------------------
GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF GEORGIA,
WITHOUT GIVING EFFECT TO CONFLICT OF LAW PRINCIPLES. Whenever possible, each
provision of this Guaranty shall be interpreted in such a manner as to be
effective and valid under Applicable Law, but if any provision of this Guaranty
shall be prohibited by or invalid under Applicable Law, such provisions shall be
ineffective only to the extent of such prohibition or invalidity, without
invalidating the remainder of such provisions or the remaining provisions of
this Guaranty.
SECTION 16. JURISDICTION/JURY TRIAL WAIVER/OTHER MATTERS. (a) EACH OF THE
--------------------------------------------
GUARANTEED PARTIES AND EACH GUARANTOR ACKNOWLEDGES AND AGREES THAT ANY
CONTROVERSY WHICH MAY ARISE UNDER THIS GUARANTY OR THE RELATIONSHIP OF THE
GUARANTORS AND THE GUARANTEED PARTIES ESTABLISHED HEREBY, WOULD BE BASED UPON
DIFFICULT AND COMPLEX ISSUES. ACCORDINGLY, TO THE FULLEST EXTENT PERMITTED BY
LAW, EACH OF THE GUARANTORS AND THE GUARANTEED PARTIES HEREBY WAIVES TRIAL BY
JURY IN ANY ACTION OR PROCEEDING OF ANY KIND OR NATURE IN ANY COURT IN WHICH AN
ACTION MAY BE COMMENCED BY OR AGAINST ANY GUARANTOR ARISING OUT OF THIS GUARANTY
OR BY REASON OF ANY OTHER CAUSE OR DISPUTE WHATSOEVER BETWEEN
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SUCH GUARANTOR AND ANY GUARANTEED PARTY OF ANY KIND OR NATURE.
(b) EACH OF THE GUARANTORS AND THE GUARANTEED PARTIES AGREES THAT THE
FEDERAL COURT OF THE NORTHERN DISTRICT OF GEORGIA OR ANY STATE COURT LOCATED IN
FULTON COUNTY, GEORGIA SHALL HAVE JURISDICTION TO HEAR AND DETERMINE ANY CLAIMS
OR DISPUTES BETWEEN ANY GUARANTOR AND ANY GUARANTEED PARTY PERTAINING DIRECTLY
OR INDIRECTLY TO THIS GUARANTY OR TO ANY MATTER ARISING HEREFROM. EACH
GUARANTOR EXPRESSLY SUBMITS AND CONSENTS IN ADVANCE TO SUCH JURISDICTION IN ANY
ACTION OR PROCEEDING COMMENCED IN SUCH COURT. EACH OF THE GUARANTORS AND THE
GUARANTEED PARTIES WAIVE ANY OBJECTION THAT THEY MAY NOW OR HEREAFTER HAVE TO
THE VENUE OF ANY PROCEEDING IN ANY SUCH COURT OR THAT SUCH PROCEEDING WAS
BROUGHT IN AN INCONVENIENT FORUM AND EACH AGREES NOT TO PLEAD OR CLAIM THE SAME.
(c) EACH GUARANTOR HEREBY WAIVES PERSONAL SERVICE OF ANY SUMMONS AND
COMPLAINT, OR OTHER PROCESS OR PAPERS ISSUED THEREIN, AND AGREES THAT SERVICE OF
SUCH SUMMONS AND COMPLAINT, OR OTHER PROCESS OR PAPERS MAY BE MADE BY UNITED
STATES MAIL, POSTAGE PREPAID ADDRESSED TO EACH GUARANTOR AT THE ADDRESS SET
FORTH BELOW ITS SIGNATURE HERETO. SHOULD ANY GUARANTOR FAIL TO APPEAR OR ANSWER
ANY SUMMONS, COMPLAINT, PROCESS OR PAPERS SO SERVED WITHIN THIRTY DAYS AFTER THE
MAILING THEREOF, IT SHALL BE DEEMED IN DEFAULT AND AN ORDER AND/OR JUDGMENT MAY
BE ENTERED AGAINST IT AS PRAYED FOR IN SUCH SUMMONS, COMPLAINT, PROCESS OR
PAPERS.
(d) THE CHOICE OF FORUM SET FORTH IN THIS SECTION SHALL NOT BE DEEMED TO
PRECLUDE THE BRINGING OF ANY ACTION BY THE AGENT OR ANY OTHER GUARANTEED PARTY
OR THE ENFORCEMENT BY THE AGENT OR ANY OTHER GUARANTEED PARTY OF ANY JUDGMENT
OBTAINED IN SUCH FORUM IN ANY OTHER APPROPRIATE JURISDICTION.
(e) EACH GUARANTOR AGREES THAT ALL OF ITS PAYMENT OBLIGATIONS HEREUNDER
SHALL BE ABSOLUTE, UNCONDITIONAL AND, FOR THE PURPOSES OF MAKING PAYMENTS
HEREUNDER, THE GUARANTORS HEREBY WAIVES ANY RIGHT TO ASSERT ANY SETOFF,
COUNTERCLAIM OR CROSS-CLAIM.
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<PAGE>
(f) EACH GUARANTOR ACKNOWLEDGES THAT ALL OF THE WAIVERS IN THIS
SECTION HAVE BEEN MADE WILLINGLY, WITH THE ADVICE OF LEGAL COUNSEL AND WITH A
FULL UNDERSTANDING OF THE LEGAL CONSEQUENCES THEREOF.
SECTION 17. LOAN ACCOUNTS. The Agent on behalf of the other Guaranteed
-------------
Parties may maintain books and accounts setting forth the amounts of principal,
interest and other sums paid and payable with respect to the Guaranteed
Obligations, and in the case of any dispute relating to any Guaranteed
Obligation, the entries in such account shall be binding upon the Guarantors as
to the outstanding amount of such Guaranteed Obligations and the amounts paid
and payable with respect thereto absent manifest error. The failure of the
Agent to maintain such books and accounts shall not in any way relieve or
discharge the Guarantors of any of their obligations hereunder.
SECTION 18. WAIVER OF REMEDIES. No delay or failure on the part of the
------------------
Agent or any other Guaranteed Party in the exercise of any right or remedy it
may have against the Guarantors hereunder or otherwise shall operate as a waiver
thereof, and no single or partial exercise by the Lender of any such right or
remedy shall preclude other or further exercise thereof or the exercise of any
other such right or remedy.
SECTION 19. SUCCESSORS AND ASSIGNS. Each reference herein to the Agent or
----------------------
any other Guaranteed Party shall be deemed to include the Agent's and such other
Guaranteed Party's successors and assigns (including, but not limited to, any
holder of the Guaranteed Obligations) in whose favor the provisions of this
Guaranty also shall inure, and each reference herein to the Guarantors shall be
deemed to include each Guarantor's successors and assigns, upon whom this
Guaranty also shall be binding. The Agent and any other Guaranteed Party may
assign, transfer or sell any Guaranteed Obligation, or grant or sell
participation in any Guaranteed Obligations, pursuant to the terms of the Loan
Documents, to any Person or entity without the consent of, or notice to, the
Guarantors and without releasing, discharging or modifying the Guarantors'
obligations hereunder. Each Guarantor hereby consents to the delivery by the
Agent or any other Guaranteed Party to any assignee, transferee or participant
of any financial or other information regarding the Borrower or the Guarantors.
The Guarantors may not assign or transfer their obligations hereunder to any
Person.
SECTION 20. JOINT AND SEVERAL GUARANTEED OBLIGATIONS. This Guaranty shall
----------------------------------------
be continuing, absolute and unconditional and shall remain in full force and
effect as to each Guarantor hereunder, despite the fact that a Guarantor shall
become dissolved or liquidated or shall otherwise be released or discharged from
its obligations hereunder (except to the extent of such release or discharge as
it relates to the affected Guarantor); the obligation of the Guarantors being
joint and several and each Guarantor is liable for the full amount of the
Guaranteed Obligations.
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<PAGE>
SECTION 21. INDEMNIFICATION. (a) Each Guarantor shall and hereby agrees to
---------------
indemnify, defend and hold harmless the Agent, any Affiliate of the Agent and
each of the Lenders and their respective directors, officers, shareholders,
agents, employees and counsel (each referred to herein as an "Indemnified
Party") from and against any and all losses, claims, damages, liabilities,
deficiencies, judgments or expenses of every kind and nature (including, without
limitation, amounts paid in settlement, court costs and the fees and
disbursements of counsel incurred in connection with any litigation,
investigation, claim or proceeding or any advice rendered in connection
therewith) (the foregoing items referred to herein as "Claims and Expenses")
incurred by an Indemnified Party arising out of or by reason of any suit, cause
of action, claim, arbitration, investigation or settlement, consent decree or
other proceeding (the foregoing referred to herein as an "Indemnity Proceeding")
which arise out of, or are in any way related directly or indirectly to: (i) the
Credit Agreement, this Guaranty or any other Loan Document or the transactions
contemplated hereby or thereby; (ii) the making of any Loans; (iii) any actual
or proposed use by the Borrower of the proceeds of the Loans; (iv) the Agent's
or any Lender's entering into the Credit Agreement; (v) the fact that the Agent
and the Lenders have established the credit facility evidenced by the Credit
Agreement in favor of the Borrower; (vi) the fact that the Agent and the Lenders
are creditors of the Borrower and the Guarantors and have or are alleged to have
information regarding the financial condition, strategic plans or business
operations of the Borrower and the Guarantors; (vii) the fact that the Agent and
the Lenders are material creditors of the Borrower and the Guarantors; (viii)
the exercise of any right or remedy the Agent or the Lenders may have under the
Credit Agreement, this Guaranty or the other Loan Documents including, but not
limited to, the foreclosure upon, or seizure of, any Collateral or the exercise
of any other rights of a secured party; (ix) any violation or non-compliance by
the Borrower, a Guarantor or any other Loan Party of any Applicable Law
(including any Environmental Law) including, but not limited to, any Indemnity
Proceeding commenced by the Internal Revenue Service or state taxing authority
or any Indemnity Proceeding commenced by any Governmental Authority or other
Person under any Environmental Law including any Indemnity Proceeding commenced
by a Governmental Authority or other Person seeking remedial or other action to
cause the Borrower and/or the Guarantors (or their respective properties) (or
the Agent and/or the Lenders as successors to the Borrower or the Guarantors) to
be in compliance with such Environmental Laws; provided, however, that
Guarantors shall not be obligated to indemnify any Indemnified Party for any
acts or omissions of such Indemnified Party in connection with matters described
in this paragraph (a) that arise as a result of a breach of such Indemnified
Party's obligations under any Loan Document or that constitute gross negligence
or willful misconduct.
(b) This indemnification shall apply to all Indemnity Proceedings arising
out of, or related to, the foregoing whether or not an Indemnified Party is a
named party in such Indemnity Proceeding. In this connection, this
indemnification shall cover all reasonable costs and expenses of any Indemnified
Party in connection with any deposition of any Indemnified Party or compliance
with any subpoena (including any
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<PAGE>
subpoena requesting the production of documents). This indemnification shall,
among other things, apply to any Indemnity Proceeding commenced by other
creditors of the Borrower and the Guarantors, any shareholder of the Borrower or
such Guarantor (whether such shareholder(s) are prosecuting such Indemnity
Proceeding in their individual capacity or derivatively on behalf of such
Person), any account debtor of such Person or by any Governmental Authority.
(c) This indemnification shall apply to any Indemnity Proceeding arising
during the pendency of any Bankruptcy Proceeding filed by or against the
Borrower and/or any Guarantor.
(d) All out-of-pocket fees and expenses of, and all amounts paid to third-
persons by, an Indemnified Party shall be advanced by each Guarantor at the
request of such Indemnified Party notwithstanding any claim or assertion by any
Guarantor that such Indemnified Party is not entitled to indemnification
hereunder upon receipt of an undertaking by such Indemnified Party that such
Indemnified Party will reimburse the Guarantors if it is actually and finally
determined by a court of competent jurisdiction that such Indemnified Party is
not so entitled to indemnification hereunder.
(e) An Indemnified Party may conduct its own investigation and defense of,
and may formulate its own strategy with respect to, any Indemnified Proceeding
covered by this Section and, as provided above, all reasonable costs and
expenses of one counsel for the Indemnified Party shall be reimbursed by the
Guarantors. No action taken by legal counsel chosen by an Indemnified Party in
investigating or defending against any such Indemnified Proceeding shall vitiate
or in any way impair the obligations and duties of the Guarantors hereunder to
indemnify and hold harmless each such Indemnified Party; provided, however, that
if (i) a Guarantor is required to indemnify an Indemnified Party pursuant hereto
and (ii) such Guarantor has provided evidence reasonably satisfactory to such
Indemnified Party that such Guarantor has the financial wherewithal to reimburse
such Indemnified Party for any amount paid by such Indemnified Party with
respect to such Indemnified Proceeding, such Indemnified Party shall not settle
or compromise any such Indemnified Proceeding without the prior written consent
of such Guarantor (which consent shall not be unreasonably withheld or delayed).
(f) If and to the extent that the obligations of the Guarantors hereunder
are unenforceable for any reason, each Guarantor hereby agrees to make the
maximum contribution to the payment and satisfaction of such obligations which
is permissible under Applicable Law.
(g) Each Guarantor's obligations hereunder shall survive any termination
of this Guaranty and the other Loan Documents and the payment in full of the
Credit Obligations, and are in addition to, and not in substitution of, any
other of their obligations set forth in this Guaranty or any other Loan Document
to which it is a party.
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<PAGE>
SECTION 22. SURVIVAL OF AGREEMENT. All agreements, representations and
---------------------
warranties made herein shall survive the execution and delivery of this Guaranty
and the Credit Agreement, the making of the Loans and the execution and delivery
of the other Loan Documents.
SECTION 23. AMENDMENTS, ETC. No amendment or waiver of any provision of
---------------
this Guaranty nor consent to any departure of any Guarantor herefrom shall in
any event be effective unless the same shall be in writing and signed by the
Agent and each Guarantor to which such amendment, waiver or consent to departure
relates, and then such waiver or consent shall be effective only in the specific
instance and for the specific purpose for which given.
SECTION 24. PAYMENTS/EXPENSES. All payments made by the Guarantors
-----------------
pursuant to this Guaranty shall be made in the lawful currency of the United
States of America, in immediately available funds to the main office of the
Agent, not later than 11:00 a.m., Atlanta time, on the date three Business Days
after demand therefor. Each Guarantor shall pay, on demand, all costs and
expenses incurred by the Guaranteed Parties in the collection and enforcement of
this Guaranty including the reasonable fees and disbursements of each counsel to
the Guaranteed Parties if collection is sought by or through an attorney.
SECTION 25. NOTICES. All notices, demands or other communications to the
-------
Guarantors hereunder shall be in writing and shall be mailed, first class
postage prepaid, or hand delivered or sent via facsimile transmission to the
address for each Guarantor set forth on the signature pages hereof. All such
notices, demands and communications shall be deemed received by each Guarantor
(a) if mailed, when received; (b) if telecopied, when received; or (c) if hand
delivered, when delivered. All such notices or communications to the Agent
shall be effective when actually received.
SECTION 26. COUNTERPARTS. This Agreement may be executed in several
------------
counterparts, each of which shall be an original and all of which, taken
together, shall constitute but one and the same instrument.
SECTION 27. HEADINGS. Section headings used in this Guaranty are for
--------
convenience only and shall not affect the construction of this Guaranty.
SECTION 28. REVIEW OF CREDIT AGREEMENT/LOAN DOCUMENTS. Each Guarantor
-----------------------------------------
acknowledges that, prior to the execution and delivery of this Guaranty, each
Guarantor has had the opportunity to review and ask questions regarding the
Credit Agreement and the other Loan Documents referred to therein and to discuss
the same and this Guaranty with its counsel.
M-13
<PAGE>
[SIGNATURES CONTAINED ON FOLLOWING PAGE]
M-14
<PAGE>
IN WITNESS WHEREOF, each Guarantor has caused this Guaranty to be duly
executed and delivered under seal by its duly authorized officers as of the date
first written above.
THE GUARANTORS:
ALLIED REPROGRAPHIC SERVICES, INC.
ATLANTA BLUE PRINT CO.
EXECUTIVE COURIER, INC.
TOWER PRINTING COMPANY
BAUM PRINTING HOUSE, INC.
CARPENTER RESERVE PRINTING COMPANY
CRAFTSMAN PRINTING COMPANY
GRAPHIC DIRECT, INC., ILLINOIS
HERITAGE PRESS, INC.
HOECHSTETTER PRINTING COMPANY, INC.
IPD PRINTING & DISTRIBUTING, INC.
MERCURY PRINTING COMPANY, INC.
MONROE LITHO, INC.
QUADRAS, INC.
SOUTHERN SIGNATURES, INC.
STATE PRINTING COMPANY, INC.
THE STEIN PRINTING COMPANY, INC.
A. C. SCANNING, INC.
INTEGRATED GRAPHIC SERVICES, INC.
W. E. ANDREWS CO. INC.
THE CENTRAL PRESS OF MIAMI, INC.
W. E. ANDREWS CO. INC. OF CONNECTICUT
WETMORE & COMPANY
WILLIAMS PRINTING COMPANY
GRAPHIC PRINT SERVICES, INC.
By:___________________________________
Title:_____________________________
Address for Notices:
[Relevant Guarantor]
c/o Graphic Industries, Inc.
2155 Monroe Drive, Northeast
Atlanta, Georgia 30324
Attention: Mark C. Pope IV, Vice President
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<PAGE>
Agreed to, accepted and acknowledged as of the
date first written above:
NATIONSBANK OF GEORGIA,
NATIONAL ASSOCIATION, as
Agent on behalf of the Lenders
By:___________________________________
Title:____________________________
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<PAGE>
EXHIBIT N
---------
FORM OF MASTER SECURITY AGREEMENT
---------------------------------
THIS MASTER SECURITY AGREEMENT dated as of December 21, 1995 executed and
delivered by each of GRAPHIC INDUSTRIES, INC., a Georgia corporation having its
principal place of business and chief executive office located at 2155 Monroe
Drive, N.E., Atlanta, Georgia, 30324 (the "Borrower"), and each of its
Subsidiaries (as defined in the Credit Agreement referred to below) set forth on
the signature pages hereto (the Borrower and each of the Subsidiaries being
referred to herein individually as a "Debtor" and collectively as the "Debtors")
in favor of NATIONSBANK OF GEORGIA, NATIONAL ASSOCIATION, in its capacity as
collateral agent (the "Agent") for the Lenders under the Credit Agreement and
for the Line of Credit Lenders.
WHEREAS, the Borrower, the Lenders and the Agent have entered into that
certain Credit Agreement dated as of the date hereof by and among the Borrower,
the Co-Agents and certain other financial institutions initially a signatory
thereto, together with those assignees permitted pursuant to Section 14.6, as
Lenders and the Agent (as the same may be amended, supplemented, restated,
replaced, substituted or otherwise modified from time to time, the "Credit
Agreement") pursuant to which the Agent and the Lenders have agreed to extend
certain financial accommodations to the Borrower subject to the terms thereof;
WHEREAS, each Debtor acknowledges that it will derive substantial direct
benefit from the financial accommodations to be extended by the Agent and the
Lenders to the Borrower by reason of the fact that, among other things, the
continued successful operation of each Debtor is directly dependent upon the
ability of the Borrower to obtain adequate financing and that the financial
accommodations extended by the Agent and the Lenders will enable the Borrower to
fund the operations of the other Debtors; and
WHEREAS, it is a condition precedent to the Lenders' extension of such
financial accommodations under the Credit Agreement and to the extension by each
Line of Credit Lender of its Line of Credit that each Debtor executes and
delivers to the Agent this Agreement.
NOW, THEREFORE, in consideration of the above premises and for other good
and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged by the Debtors, the Debtors hereby agree as follows:
SECTION 1. GRANT OF SECURITY. To secure the prompt and complete payment,
-----------------
observance and performance when due (whether at stated maturity, by acceleration
or otherwise) of the following (the following collectively referred to as the
"Secured Obligations"): (a) all of the Credit Obligations including, but not
limited to, all of the
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obligations of the Debtors under the Guaranty; (b) all indebtedness, obligations
and liabilities of each Debtor under each Line of Credit to which it is a party
and each document and instrument executed by each Debtor in connection
therewith; and (c) all costs and expenses incurred by the Agent and/or Lenders
in connection with the enforcement or collection of the obligations of the
Debtors hereunder including, but not limited to, all reasonable fees and
disbursements of counsel to the Agent and/or any Lender if such enforcement or
collection is done by or through an attorney, each Debtor hereby collaterally
assigns and pledges to the Agent for the benefit of the Lenders, and grants to
the Agent for the benefit of the Lenders a security interest and lien in and
upon, the Collateral.
SECTION 2. REPRESENTATIONS AND WARRANTIES. Each Debtor represents and
------------------------------
warrants to the Agent and the Lenders as follows:
(a) Names; Taxpayer ID Numbers; Locations of Collateral; Location of Chief
----------------------------------------------------------------------
Executive Office. With respect to each Debtor, Appendix A accurately sets
- ----------------
forth:
(i) the exact legal name of such Debtor;
(ii) all tradenames, d/b/a's, and other fictitious names used by
such Debtor during the past five years;
(iii) the taxpayer ID number of such Debtor as issued by the Internal
Revenue Service;
(iv) the location (including address and county) of where any
Inventory of such Debtor is located; and
(v) the location (including address and county) of such Debtor's
principal place of business and chief executive office.
(b) Liens. None of the Collateral or other properties of the Debtors is,
-----
as of the date hereof, subject to any Lien, except Permitted Liens. Except in
connection with Permitted Liens, no financing statement under the Uniform
Commercial Code of any jurisdiction which names any Debtor as debtor or covers
any of the Collateral or any other property of any Debtor, or any other notice
filed in the public records indicating the existence of a Lien thereon, has been
filed and secures outstanding Indebtedness, and except for the Security
Documents and the financing statements executed in connection therewith, no
Debtor has signed any such financing statement or notice or any security
agreement authorizing any Person to file any such financing statement or notice.
(c) Security Interest. It is the intent of the Debtors that this
-----------------
Agreement create a valid and perfected first-priority security interest in the
Collateral (except for Permitted Liens), securing the payment of the Secured
Obligations, and all filings and other actions
N-2
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necessary or desirable to perfect such security interest under the Uniform
Commercial Code as enacted in any relevant jurisdiction have been duly taken.
(d) Representations and Warranties in Credit Agreement. Each Debtor
--------------------------------------------------
hereby makes and confirms to the Agent and the Lenders each of the
representations and warranties contained in Article VII of the Credit Agreement
on and as of the date hereof as though such representations and warranties were
set forth herein in full.
SECTION 3. CONTINUED PRIORITY OF SECURITY INTEREST.
---------------------------------------
(a) Except with regard to Permitted Liens, the Security Interest shall at
all times be valid, perfected and of first priority and enforceable against the
Debtors and all other Persons, in accordance with the terms of this Agreement,
as security for the Secured Obligations.
(b) The Debtors shall, at their sole cost and expense, take all action
that may be necessary, or that the Agent reasonably may request, so as at all
times to maintain the validity, perfection, enforceability and priority of the
Security Interest in the Collateral in conformity with the requirements of
Section 3(a) hereof, or to enable the Agent to exercise or enforce its rights on
behalf of the Lenders hereunder including, without limitation:
(i) Paying all taxes, assessments and other claims lawfully levied
or assessed on any of the Collateral, except to the extent that such taxes,
assessments and other claims constitute Permitted Liens or are being
contested in accordance with the provisions of the Credit Agreement;
(ii) Obtaining landlords', mortgagees', mechanics', bailees',
warehousemen's or processors' releases, subordinations or waivers with
respect to any or all of the Collateral, in form and substance reasonably
satisfactory to the Agent;
(iii) At the request of the Agent, delivering to the Agent, endorsed
or accompanied by such instruments of assignment as the Agent may specify,
any and all chattel paper, instruments, letters of credit and all other
advices of guaranty and documents evidencing or forming a part of the
Collateral;
(iv) At the request of the Agent, marking conspicuously each
document included in the Collateral and marking all chattel paper and each
of its records pertaining to the Collateral, with a legend, in form and
substance satisfactory to the Agent, indicating that such document, chattel
paper, or Collateral is subject to the Security Interest; and
(v) Executing and delivering financing statements, pledges,
designations, chattel mortgages, hypothecations, notices and assignments,
in each
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<PAGE>
case in form and substance reasonably satisfactory to the Agent, relating
to the creation, validity, perfection, priority or continuation of the
Security Interest in the Collateral under the Uniform Commercial Code or
other Applicable Law.
(c) The Agent is hereby authorized to execute and file in all necessary
and appropriate jurisdictions (as determined by the Agent) one or more financing
or continuation statements (or any other document or instrument referred to in
Section 3(b)(v) above) in the name of any Debtor and to sign such Debtor's name
thereto. Each Debtor authorizes the Agent to file any such financing statement,
document or instrument without the signature of any Debtor to the extent
permitted by Applicable Law. Further, to the extent permitted by Applicable Law,
a carbon, photographic, xerographic or other reproduction of this Agreement or
of any Financing Statement is sufficient as a financing statement.
(d) Each Debtor shall mark its books and records as may be necessary or
appropriate to evidence, protect and perfect the Security Interest and shall
cause its financial statements to reflect the Security Interest.
SECTION 4. COVENANTS REGARDING COLLATERAL GENERALLY.
----------------------------------------
(a) Verification. The Agent shall have the right at any time and from
------------
time to time, in the name of such Agent or in the name of any Debtor, to verify
the validity, amount or any other matter relating to any Receivables by mail,
telephone or otherwise.
(b) Delivery of Instruments. In the event any of the Collateral becomes
-----------------------
evidenced by a promissory note, trade acceptance or any other instrument, the
Debtor which is a party to such instrument will immediately thereafter deliver
such instrument to the Agent, appropriately endorsed to the Agent on behalf of
the Lenders.
(c) Defense of Title. Each Debtor shall at all times be the sole owner of
----------------
each and every item of Collateral and shall defend, at its sole cost and
expense, its title in and to, and the Security Interest in, the Collateral
against the claims and demands of all Persons.
(d) Insurance. Each Debtor shall at all times maintain insurance on the
---------
Inventory and other insurable Collateral against loss or damage by fire, theft,
burglary, pilferage, loss in transit and such other hazards and risks as the
Agent shall reasonably specify, in amounts (which shall not be less than the
aggregate fair market value of such Collateral subject to reasonable
deductibles) and under policies issued by each Debtor's present insurers,
insurers having a reasonably equivalent credit rating, or other insurers
reasonably acceptable to the Agent. All premiums on such insurance shall be
paid by the Debtors and certified copies of the policies, or other evidence of
insurance acceptable to the Agent, shall be delivered to the Agent promptly upon
the Agent's request. The Debtors will not use or permit the Collateral to be
used unlawfully or outside of any insurance coverage. All insurance policies
required under this Section shall contain loss
N-4
<PAGE>
payable clauses on New York standard loss payee forms or other forms
satisfactory to the Agent, naming the Agent as loss payee, and providing that:
(i) All proceeds thereunder shall be payable directly to the Agent
for the benefit of the Lenders;
(ii) No such insurance shall be affected by any act or neglect of
the insured or owner of the property described in such policy;
(iii) Such policies and loss payable clauses may not be canceled,
amended or terminated with respect to the Agent unless at least thirty
days' prior written notice is given to the Agent; and
(iv) There shall be no recourse against the Agent or any Lender for
payment of premiums or other amounts with respect thereto.
Any proceeds of insurance referred to in this Section which are paid to the
Agent shall be applied to the payment or prepayment of the Secured Obligations
in accordance with Section 9 hereof.
(e) Location of Office. Each Debtor's chief executive office and
------------------
principal place of business will continue at the address set forth in Appendix A
attached hereto and no Debtor will change the location of such office and place
of business without giving the Agent thirty days' prior written notice thereof.
(f) Location of Collateral. All Inventory, other than Inventory in
----------------------
transit to any such location, will at all times be kept by each Debtor at the
locations set forth in Appendix A attached hereto for such Debtor, and shall
not, without the thirty days' prior written notice to the Agent, be removed
therefrom except in connection with sales thereof in the ordinary course of
business or transfers to other such locations.
(g) Change of Name, Structure, Etc. Without giving the Agent thirty days'
------------------------------
prior written notice, no Debtor will (i) change its name, identity or structure
or (ii) conduct business under any trade name or other fictitious name other
than those set forth in Appendix A attached hereto.
(h) Records Relating to Collateral. Each Debtor will at all times keep
------------------------------
complete and accurate records of Inventory, itemizing and describing the kind,
type and quantity of Inventory and the Debtor's cost therefor and a current
price list for any Inventory, and keep complete and accurate records of all
other Collateral.
(i) Other Information. Each Debtor shall furnish to the Agent such other
-----------------
information with respect to the Collateral, including, but not limited to,
physical listings of Inventory, as the Agent may request from time to time.
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<PAGE>
(j) Payments Directly to Agent. The Agent may at any time and from time
--------------------------
to time after the occurrence of an Event of Default notify, or request any
Debtor to notify, in writing or otherwise, any account debtor or other obligor
with respect to any one or more of the Receivables to make payment to the Agent
or any agent or designee of the Agent directly, at such address as may be
specified by the Agent. If, notwithstanding the giving of any notice, any
account debtor or other such obligor shall make payment to such Debtor, such
Debtor shall hold all such payments it receives in trust for the Agent, without
commingling the same with other funds or property of or held by such Debtor, and
shall promptly deliver the same to the Agent or any such agent or designee
immediately upon receipt by such Debtor in the identical form received, together
with any necessary endorsements.
(k) Proceeds of Collateral. Each Debtor shall account fully and
----------------------
faithfully for, and upon the Agent's request, promptly pay or turn over to the
Agent for the benefit of the Lenders, proceeds in whatever form received in
disposition in any manner of any of the Collateral. To the extent practicable,
the Debtors shall at all times keep the Collateral and proceeds thereof separate
and distinct from other property of the Debtors and shall keep accurate and
complete records of the Collateral and proceeds thereof.
SECTION 5. THE AGENT APPOINTED ATTORNEY-IN-FACT. The Debtors hereby
------------------------------------
irrevocably appoint the Agent the Debtors' attorney-in-fact, with full authority
in the place and stead of any Debtor and in the name of any Debtor or otherwise,
from time to time upon the occurrence and during the continuance of an Event of
Default, in the Agent's discretion, to take any action and to execute any
instrument or document which the Agent may deem necessary or advisable to
accomplish the purposes of this Agreement and to exercise any rights and
remedies the Agent may have under this Agreement or Applicable Law, including,
without limitation: (a) to obtain and adjust insurance required to be maintained
pursuant to Section 4(e) hereof; (b) to ask, demand, collect, sue for, recover,
compromise, receive and give acquittance and receipts for moneys due and to
become due under or in respect of any of the Collateral including any
Receivable; (c) to receive, endorse, and collect any drafts or other
instruments, documents and chattel paper, in connection with clause (a) or (b)
above; (d) to sell or assign any Receivable upon such terms, for such amount and
at such time or times as the Agent deems advisable, to settle, adjust,
compromise, extend or renew any Receivable or to discharge and release any
Receivable; and (e) to file any claims or take any action or institute any
proceedings which the Agent may deem necessary or desirable for the collection
of any of the Collateral or otherwise to enforce the rights of the Agent on
behalf of the Lenders with respect to any of the Collateral. The power-of-
attorney granted hereby shall be irrevocable and coupled with an interest.
SECTION 6. THE AGENT MAY PERFORM. If the Debtors fail to perform any
---------------------
agreement contained herein, the Agent may, without prior notice to the Debtors,
itself perform, or cause performance of, such agreement, and the expenses of the
Agent incurred in connection therewith shall be payable by the Borrower under
Section 14.2 of the Credit Agreement and by the other Debtors under Section 24
of the Guaranty.
N-6
<PAGE>
SECTION 7. THE AGENT'S DUTIES. The powers conferred on the Agent
------------------
hereunder are solely to protect its interest in the Collateral and shall not
impose any duty upon the Agent to exercise any such powers. Except for the safe
custody of any Collateral in its possession and the accounting for moneys
actually received by it hereunder, the Agent shall have no duty as to any
Collateral. The Agent shall be deemed to have exercised reasonable care in the
custody of the Collateral in its possession if the Collateral is accorded
treatment substantially equal to that which the Agent accords its own property;
it being understood that the Agent shall be under no obligation to take any
necessary steps to preserve rights against prior parties or any other rights
pertaining to any Collateral, but may do so at its option, and all reasonable
expenses incurred in connection therewith shall be for the sole account of the
Debtors and shall be added to the Secured Obligations.
SECTION 8. REMEDIES. In addition to, and not in derogation of, the rights
--------
and remedies provided for in the Credit Agreement, the Agent may take any or all
of the following actions upon the occurrence of an Event of Default.
(a) Inventory.
---------
(i) Entry. The Agent may enter upon any premises on which
-----
Inventory may be located and, without resistance or interference by the
Debtors, take physical possession of any or all thereof and maintain such
possession on such premises or move the same or any part thereof to such
other place or places as the Agent shall choose, without being liable to
any Debtor on account of any loss, damage or depreciation that may occur as
a result thereof, other than for actions constituting gross negligence or
that were not taken in good faith.
(ii) Assembly. Each Debtor shall, upon request of and without
--------
charge to the Agent, assemble the Inventory and maintain or deliver it into
the possession of the Agent or any agent or representative of the Agent at
such place or places as the Agent may designate.
(iii) Warehousing. The Agent may, at the expense of the Debtors,
-----------
cause any of the Inventory to be placed in a public or field warehouse, and
the Agent shall not be liable to the Debtors on account of any loss, damage
or depreciation that may occur as a result thereof, other than for actions
constituting gross negligence or that were not taken in good faith.
(b) Use of Premises. The Agent may:
---------------
(i) without notice, demand or other process, and without payment of
any rent or any other charge enter the Debtors' premises and, without
breach of the peace, until the Agent completes the enforcement of its
rights in the Collateral, take possession of such premises or place
custodians in exclusive control thereof,
N-7
<PAGE>
remain on such premises and use the same and any Debtor's equipment,
subject in all events to the rights of the Debtors' landlords; and
(ii) in the exercise of the rights of the Agent under this
Agreement, without payment or compensation of any kind, use any and all
trademarks, trade styles, trade names, patents, patent applications,
licenses, franchises and the like to the extent of the rights of the
Debtors therein, and each Debtor hereby grants a license to the Agent for
this purpose to the fullest extent permitted by Applicable Law or contract.
(c) Lock Boxes. The Agent may establish or cause to be established one or
----------
more lock boxes or other collection arrangement for the deposit of proceeds of
Receivables, and, in such case, the Debtors shall cause to be forwarded to the
Agent at the Principal Office, on a daily basis, collection reports in form and
substance satisfactory to the Agent.
(d) Rights as a Secured Creditor. The Agent may exercise all of the
----------------------------
rights and remedies of a secured party under other Loan Documents, the Uniform
Commercial Code and under any other Applicable Law, including, without
limitation, the right, without notice except as specified herein or in the
Credit Agreement and with or without taking possession thereof, to sell the
Collateral or any part thereof in one or more parcels at public or private sale
at any location chosen by the Agent, for cash, on credit or for future delivery,
and at such price or prices and upon such other terms as the Agent may deem
commercially reasonable. Each Debtor agrees that, to the extent notice of sale
shall be required by law, at least ten Business Days' notice to such Debtor of
the time and place of any public sale or the time after which any private sale
is to be made shall constitute reasonable notification, but notice given in any
other reasonable manner or at any other reasonable time or as provided by
Applicable Law shall constitute reasonable notification. The Agent shall not be
obligated to make any sale of Collateral regardless of notice of sale having
been given. The Agent may adjourn any public or private sale from time to time
by announcement at the time and place fixed therefor, and such sale may, without
further notice, be made at the time and place to which it was so adjourned. The
Agent may bid all or any portion of the Secured Obligations at any such sale.
(e) Waiver of Marshaling. Each Debtor hereby waives to the fullest extent
--------------------
permitted by Applicable Law any right to require any marshaling of assets
(including, without limitation, the Collateral) and any similar right.
(f) Receivables. The Agent shall have the exclusive right to assert,
-----------
either directly or on behalf of the Debtors, any and all rights and claims any
Debtor may have under any Receivables as the Agent may deem proper and to
receive and collect any and all Receivables and any and all rent, fees, damages,
awards and other moneys arising thereunder or resulting therefrom and to apply
the same on account of any of the Secured Obligations.
N-8
<PAGE>
SECTION 9. APPLICATION OF PROCEEDS. All proceeds from each sale of, or
-----------------------
other realization upon, all or any part of the Collateral following an Event of
Default, and all insurance proceeds payable by reason of any damage or
destruction of any of the Collateral, shall be paid to the Agent and shall be
applied to the payment of the Secured Obligations in the order and manner set
forth in the Credit Agreement until all Secured Obligations are paid in full.
The balance (if any) of such proceeds shall be paid to the Debtors or to
whomsoever may be legally entitled thereto.
The Debtors shall remain liable and shall pay, on demand, any deficiency
remaining in respect of the Secured Obligations, together with interest thereon
at the post-default rates specified therefor, which interest shall constitute
part of the Secured Obligations.
SECTION 10. RIGHTS CUMULATIVE. The rights and remedies of the Agent under
-----------------
this Agreement, the Guaranty, the Credit Agreement and each other Loan Document
shall be cumulative and not exclusive of any rights or remedies which it would
otherwise have, including, but not limited to, those rights afforded by the
Uniform Commercial Code and other Applicable Laws. In exercising its rights and
remedies the Agent may be selective and no failure or delay by the Agent in
exercising any right shall operate as a waiver of it, nor shall any single or
partial exercise of any power or right preclude its other or further exercise or
the exercise of any other power or right.
SECTION 11. AMENDMENTS, ETC. No amendment or waiver of any provision of
----------------
this Agreement nor consent to any departure of any Debtor herefrom shall in any
event be effective unless the same shall be in writing and signed by the Agent
and each Debtor to which such amendment, waiver or consent to departure relates,
and then such waiver or consent shall be effective only in the specific instance
and for the specific purpose for which given.
SECTION 12. NOTICES. Unless otherwise provided herein, all notices,
-------
demands or other communications provided for hereunder shall be in writing and
shall be mailed, or hand delivered or sent via facsimile transmission in the
manner and at the address as provided for, in the case of the Borrower, in the
Credit Agreement and, in the case of the other Debtors, in the Guaranty. All
such notices or communications to the Agent shall be effective when actually
received.
SECTION 13. CONTINUING SECURITY INTEREST. This Agreement shall create a
----------------------------
continuing security interest in the Collateral and shall (a) remain in full
force and effect until indefeasible payment in full of the Secured Obligations,
(b) be binding upon the Debtors, their successors and assigns and (c) inure the
benefit of the Agent, the Lenders, and their successors and assigns. The
Debtors' successors and assigns shall include, without limitation, a receiver,
trustee or debtors-in-possession thereof or therefore.
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<PAGE>
SECTION 14. APPLICABLE LAW; SEVERABILITY. THIS AGREEMENT SHALL BE
----------------------------
GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF GEORGIA,
WITHOUT GIVING EFFECT TO CONFLICT OF LAW PRINCIPLES. Whenever possible, each
provision of this Agreement shall be interpreted in such a manner as to be
effective and valid under Applicable Law, but if any provision of this Agreement
shall be prohibited by or invalid under Applicable Law, such provisions shall be
ineffective only to the extent of such prohibition or invalidity, without
invalidating the remainder of such provisions or the remaining provisions of
this Agreement.
SECTION 15. JURISDICTION/JURY TRIAL WAIVER/OTHER MATTERS. (a) EACH OF THE
--------------------------------------------
AGENT, THE LENDERS AND THE DEBTORS ACKNOWLEDGES AND AGREES THAT ANY CONTROVERSY
WHICH MAY ARISE UNDER THIS AGREEMENT OR THE RELATIONSHIP OF THE DEBTORS AND THE
AGENT OR ANY LENDER ESTABLISHED HEREBY AND THE DOCUMENTS AND INSTRUMENTS
EVIDENCING THE SECURED OBLIGATIONS WOULD BE BASED UPON DIFFICULT AND COMPLEX
ISSUES. ACCORDINGLY, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, EACH OF
THE AGENT AND THE DEBTORS HEREBY WAIVES ITS RESPECTIVE RIGHT TO A TRIAL BY JURY
IN ANY ACTION OR PROCEEDING OF ANY KIND OR NATURE IN ANY COURT OR TRIBUNAL IN
WHICH AN ACTION MAY BE COMMENCED BY OR AGAINST ANY DEBTOR OR THE AGENT ARISING
OUT OF THIS AGREEMENT, THE SECURED OBLIGATIONS OR ANY OTHER DOCUMENT EXECUTED
AND DELIVERED IN CONNECTION HEREWITH OR THEREWITH OR IN CONNECTION WITH THE
COLLATERAL OR THE SECURITY INTEREST THEREIN OR BY REASON OF ANY OTHER CAUSE OR
DISPUTE WHATSOEVER BETWEEN SUCH DEBTOR AND THE AGENT OR ANY LENDER OF ANY KIND
OR NATURE.
(b) EACH OF THE DEBTORS, THE AGENT AND THE LENDERS HEREBY AGREES THAT THE
FEDERAL COURT OF THE NORTHERN DISTRICT OF GEORGIA, OR AT THE OPTION OF AGENT,
ANY STATE COURT LOCATED IN FULTON COUNTY, GEORGIA, SHALL HAVE JURISDICTION TO
HEAR AND DETERMINE ANY CLAIMS OR DISPUTES BETWEEN ANY DEBTOR AND THE AGENT OR
ANY LENDER, PERTAINING DIRECTLY OR INDIRECTLY TO THIS AGREEMENT, THE SECURED
OBLIGATIONS OR TO ANY MATTER ARISING THEREFROM, THE COLLATERAL OR THE SECURITY
INTEREST THEREIN OR ANY OTHER DOCUMENT EXECUTED AND DELIVERED IN CONNECTION
HEREWITH OR THEREWITH. EACH DEBTOR EXPRESSLY SUBMITS AND CONSENTS IN ADVANCE TO
SUCH JURISDICTION IN ANY ACTION OR PROCEEDING COMMENCED IN SUCH COURTS. EACH OF
THE DEBTORS, THE AGENT, THE LENDERS WAIVE ANY OBJECTION THAT IT MAY NOW OR
HEREAFTER HAVE TO THE VENUE OF ANY PROCEEDING IN ANY SUCH COURT OR THAT SUCH
PROCEEDING WAS BROUGHT IN AN INCONVENIENT FORUM AND EACH AGREES NOT TO PLEAD OR
CLAIM THE SAME.
N-10
<PAGE>
(c) EACH DEBTOR HEREBY WAIVES PERSONAL SERVICE OF ANY SUMMONS AND
COMPLAINT, OR OTHER PROCESS OR PAPERS ISSUED THEREIN, AND AGREES THAT SERVICE OF
SUCH SUMMONS AND COMPLAINT, OR OTHER PROCESS OR PAPERS MAY BE MADE BY UNITED
STATES MAIL, POSTAGE PREPAID ADDRESSED TO THE DEBTORS AT THE ADDRESS FOR SUCH
DEBTOR AS SET FORTH IN THE GUARANTY. SHOULD THE DEBTORS FAIL TO APPEAR OR
ANSWER ANY SUMMONS, COMPLAINT, PROCESS OR PAPERS SO SERVED WITHIN THIRTY DAYS
AFTER THE MAILING THEREOF, IT SHALL BE DEEMED IN DEFAULT AND AN ORDER AND/OR
JUDGMENT MAY BE ENTERED AGAINST IT AS PRAYED FOR IN SUCH SUMMONS, COMPLAINT,
PROCESS OR PAPERS.
(d) THE CHOICE OF FORUM SET FORTH IN THIS SECTION SHALL NOT BE DEEMED TO
PRECLUDE THE BRINGING OF ANY ACTION BY THE AGENT OR ANY LENDER OR THE
ENFORCEMENT BY THE AGENT OR ANY LENDER OF ANY JUDGMENT OBTAINED IN SUCH FORUM IN
ANY OTHER APPROPRIATE JURISDICTION.
(e) FURTHER, EACH DEBTOR WAIVES (i) ANY NOTICE PRIOR TO THE TAKING
POSSESSION OR CONTROL OF THE COLLATERAL OR ANY POSTING OF ANY BOND OR SECURITY
WHICH MIGHT BE REQUIRED BY ANY COURT PRIOR TO ALLOWING THE AGENT TO EXERCISE ANY
OF THE AGENT'S OR ANY LENDER'S REMEDIES SET FORTH HEREIN, INCLUDING THE ISSUANCE
OF AN IMMEDIATE WRIT OF POSSESSION AND (ii) THE BENEFIT OF ALL VALUATION,
APPRAISEMENT AND EXEMPTION LAWS.
(f) EACH DEBTOR ACKNOWLEDGES THAT ALL OF THE WAIVERS IN THIS SECTION HAVE
BEEN MADE WILLINGLY, WITH THE ADVICE OF LEGAL COUNSEL AND WITH A FULL
UNDERSTANDING OF THE LEGAL CONSEQUENCES THEREOF.
SECTION 16. BINDING AGREEMENT; ASSIGNMENT. This Agreement shall be
-----------------------------
binding upon and inure to the benefit of the parties hereto and their respective
successors and assigns, except that the Debtors shall not be permitted to assign
this Agreement or any interest herein or in the Collateral, or any part thereof,
or any cash or property held by the Agent as collateral under this Agreement.
SECTION 17 TERMINATION. Upon indefeasible payment in full of all of the
-----------
Secured Obligations, and provided that neither the Agent nor any Lender has any
obligation to the Borrower or any other Debtor, this Agreement shall terminate.
Upon termination of this Agreement in accordance with its terms the Agent agrees
to take such actions as the Debtors may reasonably request, and at the sole cost
and expense of the Debtors, (a) to return the Collateral to the Debtors, and (b)
to evidence the termination of this
N-11
<PAGE>
Agreement, including, without limitation, the filing of any releases or any
termination statements under the Uniform Commercial Code.
SECTION 18. HEADINGS. Section headings used herein are for convenience
--------
only and are not to affect the construction of or be taken into consideration in
interpreting this Agreement.
SECTION 19. COUNTERPARTS. This Agreement may be executed in several
------------
counterparts, each of which shall be an original and all of which, taken
together, shall constitute but one and the same instrument.
SECTION 20. DEFINITIONS. (a) For the purposes of this Agreement:
-----------
"Agent" has the meaning set forth in the first paragraph hereof, and shall
-----
include any successor agent.
"Agreement" means this Master Security Agreement, as the same may be
---------
amended, supplemented, restated, replaced, substituted or otherwise modified
from time to time.
"Collateral" means all right, title and interest of each Debtor in and to
----------
each of the following, wherever located and whether now or hereafter existing,
or now owned or hereafter acquired or arising:
(a) all Receivables;
(b) all Inventory;
(c) all general intangibles of every kind and nature including, but not
limited to, all contract rights, choses in action and causes of action such
Debtor has or may have against any Person or property, all tax refunds owing to
such Debtor, all insurance policies of such Debtor and all rights of such Debtor
to receive moneys thereunder and all licenses, franchises, trademarks, trade
names, trade secrets, patents, copyrights and any and all other intellectual
property of such Debtor and all rights to receive the payment of any
indebtedness owing to such Debtor by any Affiliate or Subsidiary of such Debtor
and all other rights of such Debtor to receive monies from any such Affiliate or
Subsidiary, whether or not evidenced by any note or instrument;
(d) all of each Debtor's rights as an unpaid vendor or lienor (including,
without limitation, stoppage in transit, replevin and reclamation) with respect
to any Inventory of such Debtor;
(e) all books, records, files, computer programs, data processing records,
computer software, documents, correspondence and other information at any time
N-12
<PAGE>
evidencing, describing or pertaining to or in any way related to any of the
foregoing or otherwise pertaining or relating to the business or operations of
each Debtor;
(f) any and all balances, credits, deposits, accounts, items and moneys of
the Debtors now or hereafter with the Agent or any Lender or any Affiliate of
the Agent or any Lender or deposited with the Agent or any Lender or any
financial institution selected by the Agent pursuant to any lock box, deposit,
escrow or other collection agreement or otherwise, and all property of the
Debtors of every kind and description now or hereafter in the possession or
control of the Agent or any Lender for any reason; and
(g) any and all products and proceeds of any of the foregoing (including,
but not limited to, any claims to any items referred to in this definition, and
any claims of the Debtors against third parties for loss of, damage to or
destruction of, any or all of the Collateral or for proceeds payable under, or
unearned premiums with respect to, policies of insurance) in whatever form,
including, but not limited to, cash, instruments, general intangibles, accounts,
equipment, inventory, farm products, other goods, documents and chattel paper
and all proceeds of such proceeds.
"Debtor" or "Debtors" has the meaning set forth in the first paragraph
------ -------
hereof.
"Inventory" means (a) all inventory and all goods intended for sale or
---------
lease, or for display or demonstration; (b) all work-in-process; (c) all raw
materials and other materials and supplies of every nature and description used
or which might be used in connection with the manufacture, packing, shipping,
advertising, selling, leasing or furnishing of such goods or otherwise used or
consumed in the Debtor's business; and (d) all documents relating to any of the
foregoing.
"Lien", as applied to the property of any Person, means any security
----
interest, lien, encumbrance, mortgage, deed to secure debt, deed of trust,
pledge, charge, conditional sale or other title retention agreement, or other
encumbrance of any kind covering any property of such Person, or upon the income
or profits therefrom or any agreement to convey any of the foregoing or any
other agreement or interest covering the property of a Person which is intended
to provide collateral security for the obligation of such Person.
"Receivables" means all accounts and any and all rights to the payment of
-----------
money or other forms of consideration of any kind (whether classified under the
Uniform Commercial Code as accounts, chattel paper, general intangibles, or
otherwise) for goods sold or leased or for services rendered, whether or not
earned by performance, including, but not limited to, accounts receivable,
proceeds of any letters of credit naming any Debtor as beneficiary, all contract
rights, notes, drafts, instruments, documents, acceptances in favor of any
Debtor, and all other debts, obligations and liabilities in whatever form owing
by any Person to any Debtor.
N-13
<PAGE>
"Security Interest" means the Lien of the Agent on behalf of the Lenders
-----------------
upon, and the collateral assignments to the Agent of, the Collateral effected
hereby or pursuant to the terms hereof.
"Uniform Commercial Code" shall mean the Uniform Commercial Code as in
-----------------------
effect in the State of Georgia, as the same may be amended from time to time.
(b) Unless otherwise set forth herein to the contrary, all terms not
otherwise defined herein and which are defined in the Uniform Commercial Code
are used herein with the meanings ascribed to them in the Uniform Commercial
Code.
(c) Capitalized terms used herein and not defined herein are used herein
with the meaning ascribed to them in the Credit Agreement.
(d) Each Debtor acknowledges that, prior to the execution and delivery of
this Master Security Agreement, each Debtor has had the opportunity to review
and ask questions regarding the Credit Agreement and the other Loan Documents
referred to therein and to discuss the same and this Master Security Agreement
with its counsel.
[Signatures on Next Page]
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<PAGE>
IN WITNESS WHEREOF, each Debtor has caused this Agreement to be duly
executed and delivered under seal by its duly authorized officers as of the date
first written above.
THE DEBTORS:
GRAPHIC INDUSTRIES, INC.,
ALLIED REPROGRAPHIC SERVICES, INC.
ATLANTA BLUE PRINT CO.
EXECUTIVE COURIER, INC.
TOWER PRINTING COMPANY
BAUM PRINTING HOUSE, INC.
CARPENTER RESERVE PRINTING COMPANY
CRAFTSMAN PRINTING COMPANY
GRAPHIC DIRECT, INC., ILLINOIS
HERITAGE PRESS, INC.
HOECHSTETTER PRINTING COMPANY, INC.
IPD PRINTING & DISTRIBUTING, INC.
MERCURY PRINTING COMPANY, INC.
MONROE LITHO, INC.
QUADRAS, INC.
SOUTHERN SIGNATURES, INC.
STATE PRINTING COMPANY, INC.
THE STEIN PRINTING COMPANY, INC.
INTEGRATED GRAPHIC SERVICES, INC.
W.E. ANDREWS CO. INC.
A. C. SCANNING, INC.
THE CENTRAL PRESS OF MIAMI, INC.
W. E. ANDREWS CO. INC. OF CONNECTICUT
WETMORE & COMPANY
WILLIAMS PRINTING COMPANY
GRAPHIC PRINT SERVICES, INC.
By: ________________________________
Title:_____________________________
N-15
<PAGE>
Agreed to, accepted and acknowledged as
of the date first written above:
NATIONSBANK GEORGIA,
NATIONAL ASSOCIATION, as
Agent on behalf of the Lenders under the
Credit Agreement and for the Line of
Credit Lenders
By:______________________________
Title:_________________________
N-16
<PAGE>
APPENDIX A TO MASTER SECURITY AGREEMENT
(To be Completed by each Debtor)
N-17
<PAGE>
SCHEDULE OF 1.01(A)
List of Loan Parties
--------------------
A.C. Scanning, Inc.
Allied Reprographic Services, Inc.
Atlanta Blue Print Co.
Baum Printing House, Inc.
Carpenter Reserve Printing Company
Craftsman Printing Company
Executive Courier, Inc.
Graphic Direct, Inc., Illinois
Graphic Industries, Inc.
Graphic Print Services, Inc.
Heritage Press, Inc.
Hoechstetter Printing Company, Inc.
Integrated Graphic Services, Inc.
IPD Printing & Distributing, Inc.
Mercury Printing Company, Inc.
Monroe Litho, Inc.
Quadras, Inc.
Southern Signatures, Inc.
State Printing Company, Inc.
The Central Press of Miami, Inc.
The Stein Printing Company, Inc.
Tower Printing Company
W.E. Andrews Co. Inc.
W.E. Andrews Co. Inc. of Connecticut
Wetmore & Company
Williams Printing Company
<PAGE>
Schedule 1.01(B)
----------------
Existing Liens
--------------
Liens on Real Property owned by the Borrower as listed on Schedule 7.1(g).
Liens listed on chart of Lien Search Results of October/November/
December 1995 attached to and constituting a part of this Schedule 1.01(B).
<PAGE>
Schedule 1.01(C)
----------------
Excluded Letters of Credit
--------------------------
Standby Letter of Credit in the amount of $1,800,000 dated February 10, 1993, as
amended February 7, 1994, issued by SunTrust Bank, Atlanta on behalf of Graphic
Industries, Inc. in favor of The Travelers Indemnity Company of Illinois.
<PAGE>
Schedule 1.01(D)
----------------
Location of Leased Real Property
--------------------------------
1. Allied Reprographic Services, Inc.
----------------------------------
734 Juniper Street, NE
Atlanta, GA 30305
2. Atlanta Blue Print Co.
----------------------
(a) Main Plant
102 West Peachtree Street, NE
Atlanta, GA 30309
(b) A&E Reprographic & Supply Co.
3728 Phillips Hwy.
Suite 201
Jacksonville, FL 32207
(c) Arco Blueprinter
524 McDowell Street
Asheville, NC 28802
(d) Atlantic Reprographics
409 West Broadway
Myrtle Beach, SC 2957
(e) Carolina Reprographics
2730 Millwood Avenue
Columbia, SC 29205
(f) Cobb Reprographics & Office Supply
799 Roswell Street, NE
Marietta, GA 30060
(g) Imaging Technologies Buckhead Branch
235 Pharr Road
<PAGE>
Atlanta, GA 30305
(h) Imaging Technologies
225 S. Academy
Greenville, SC 29602
(i) Imaging Technologies
1030 Reynolds St.
Augusta, GA 30901
(j) Imaging Technologies
1000 Asheville Hwy.
Spartanburg, SC 29303
(k) Macon Blueprint Company
555 Walnut Street
Macon, GA 31201
(l) Tower Printing Company
1206 Spring Street, NW
Atlanta, GA 30309
3. Carpenter Reserve Printing Company
----------------------------------
7100 Euclid Avenue
Cleveland, Ohio 44103
4. Graphic Direct, Inc., Illinois
------------------------------
185 Industrial Drive
Elmhurst, IL 60126
5. Mercury Printing Company, Inc.
------------------------------
2929 Convair Road
Memphis, TN 38132
6. Monroe Litho, Inc.
------------------
39 Delevan Street
Rochester, NY 14605
7. Quadras, Inc.
-------------
3176 Marjan Drive
Atlanta, GA 30340
8. Southern Signatures, Inc.
-------------------------
210 Armour Drive
Atlanta, GA 30324
<PAGE>
9. W.E. Andrews Co. Inc.
---------------------
(Warehouse)
12 Esquire Road
Billerica, MA 18121
10. W.E. Andrews Co. Inc. of Connecticut
------------------------------------
206 Murphy Road
Hartford, CT 06114
<PAGE>
SCHEDULE 6.1 (j)
INDEBTEDNESS TO BE PAID OFF ON EFFECTIVE DATE
(Amounts owed as of October 31, 1995)
<TABLE>
<CAPTION>
LOAN PARTY (BORROWER) DOCUMENT NOTES LONG-TERM
LENDER DATE PAYABLE DEBT
- --------------------------------------- ----------- ------------- -----------
<S> <C> <C> <C>
1. Graphic Industries, Inc.
(a) NationsBank of Georgia, N.A. 8-6-93 $3,357,412
(b) SunTrust Bank, Atlanta 1-29-93 $500,000
2. W.E. Andrews Co. Inc.
(a) CIT 7-29-93 2,266,454
(b) Fleet Bank of Massachusetts, N.A. 6-15-95 335,001 5,000,000
3. W.E. Andrews Co. Inc. of Connecticut
(a) CIT 7-29-93 1,540,581
(b) Shawmut Bank of Connecticut, N.A. 2-16-93 1,271,000
2-16-93 33,331
10-15-93 1,199,999
4-24-95 466,125
4. The Central Press of Miami, Inc.
(a) NationsBank of Georgia, N.A. 8-6-93 958,951
(b) CIT 7-29-93 1,019,324
5. Atlanta Blue Print Co.
(a) NationsBank of Georgia, N.A. 8-6-93 2,019,571
(b) CIT 7-29-93 947,200
6. Baum Printing House, Inc.
(a) NationsBank of Georgia, N.A. 8-6-93 1,029,933
(b) CIT 7-29-93 1,127,435
7. Carpenter Reserve Printing Co.
(a) National City Bank 9-29-95 344,228
(b) Amer. Capital Resources (Orix) 1-19-90 613,672
(c) Amer. Capital Resources (Sanwa) 9-23-93 155,223
8. Craftsman Printing Company
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C> <C> <C>
(a) NationsBank of Georgia, N.A. 8-6-93 877,672
4-1-93 45,833
(b) CIT 7-29-93 521,689
(Edwards & Broughton Co.) 1,470,628
9. Grahic Direct, Inc., Illinois
(a) NationsBank of Georgia, N.A. 8-6-93 2,439,352
(b) CIT 7-29-93 2,158,344
(Graphic Direct, Inc.-Michigan) 745,188
10. Heritage Press, Inc.
(a) NationsBank of Georgia, N.A. 8-6-93 2,873,933
(b) CIT 7-29-93 4,038,690
(c) Texas Commerce Bank, 1-27-95 908,788
National Association
11. Hoechstetter Printing Company, Inc.
(a) PNC Bank, N.A. 9-23-93 996,000
2-4-94 425,377
(b) CIT 7-29-93 1,689,524
12. IPD Printing & Distributing, Inc.
(a) NationsBank of Georgia, N.A. 8-6-93 3,873,759
(b) CIT 7-29-93 2,501,980
(c) SunTrust Bank, Atlanta 9-30-94 3,284,734
13. Mercury Printing Company, Inc.
(a) NationsBank of Georgia, N.A. 8-6-93 400,000
(b) CIT 7-29-93 1,405,596
14. Monroe Litho, Inc.
(a) Marine Midland Bank, N.A 7-28-92 1,525,000
7-31-91 63,892
(b) SunTrust Bank, Atlanta 11-18-94 4,750,000
15. Southern Signatures, Inc.
(a) NationsBank of Georgia, N.A. 8-6-93 865,334
16. State Printing Company, Inc.
(a) NationsBank of Georgia, N.A 8-6-93 1,003,967
(b) CIT 7-29-93 2,007,762
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C> <C>
(c) National Bank of South Carolina 2-25-93 109,792
2-25-93 730,714
17. The Stein Printing Company, Inc.
(a) NationsBank of Georgia, N.A. 8-6-93 1,654,787
(b) CIT 5-21-93 936,333
7-29-93 1,329,841
18. Wetmore & Company
(a) NationsBank of Georgia, N.A. 8-6-93 3,431,279
(b) CIT 7-29-93 2,942,143
(c) Texas Commerce Bank, 10-2-94 3,000,000
National Association
19. Williams Printing Company
(a) NationsBank of Georgia, N.A. 8-6-93 672,460
(b) CIT 7-29-93 2,393,870
----------- -----------
TOTAL $29,929,639 $52,330,062
=========== ===========
</TABLE>
<PAGE>
NationsBank of Georgia, N.A.
Attn: Jeffrey L. Guldner, Vice President
P.O. Box 3406
Atlanta, Georgia 30302-3406
(404) 607-5539
Fax 607-6437
SunTrust Bank, Atlanta
Attn: Sheila A. Corcoran, Banking Officer
25 Park Place, 23rd Floor
Atlanta, Georgia 30303
(404) 588-8196
Fax 588-8833
The CIT Group/Equipment Financing, Inc.
Attn: Senior Vice President-Credit
1211 Avenue of the America
New York, NY 10036
(212) 536-9459
Fax 536-1385
Fleet Bank of Massachusetts, N.A.
Attn: Ann M. Dillon, Assistant Vice President
Mail Stop: MA BO F04H
75 State Street
Boston, MA 02109
(617) 346-1856
Fax 346-1833
Shawmut Bank of Connecticut, N.A.
Attn: William H. Morgan, Senior Vice President
777 Main Street, MSN 237
Hartford, CT 06115
(203) 728-4285
Fax 548-3450
National City Bank
Attn: R. Walter Hammond, Jr., Assistant Vice President
Business Services Group
4600 Great Northern Blvd.
North Olmsted, OH 44070
(216) 476-8027
Fax 777-1250
Texas Commerce Bank, National Association
Attn: Joel J. Landis, Vice President
5177 Richmond Avenue
Houston, Texas 77056
<PAGE>
(713) 850-2467
Fax 850-2459
PNC Bank, N.A.
Attn: Robert J. Madeja, Vice President
Metropolitan Commercial Banking
One PNC Plaza
Pittsburgh, PA 15265
(412) 762-3491
Fax 762-4718
Marine Midland Bank, N.A.
Attn: Ellen M. Wayne, Vice President
One Marine Midland Plaza
Rochester, NY 14639
(716) 238-7286
Fax 238-7992
National Bank of South Carolina
Attn: Fred L. Green, Executive Vice President
P.O. Box 1457
Columbia, SC 29202
(803) 929-2049
Fax 929-2064
American Capaital Resources, Inc.
Attn: David D'Arco
3 University Plaza
Hackensack, NJ 07601
(201) 646-1999
Fax
22790723.WK1
<PAGE>
Schedule 6.1(u)
---------------
Landlord Waivers Covering Real Property
---------------------------------------
Graphic Location Landlord
- ---------------- -----------
1. Allied Reprographic Services, Life Insurance Company of
Inc. Georgia
763 Juniper Street, NE c/o The Investment Centre,
Inc. Atlanta, GA 30305 300 Galleria Parkway, NW
Atlanta, GA 30339
2. Atlanta Blue Print Co. Scanamerican Property Mgmt.
1052 West Peachtree St., NW 615 Peachtree Street
Atlanta, GA 30309 Suite 510
Atlanta, GA 30308
3. Carpenter Reserve Printing RAM Enterprises
Company Richard A. Amendola
7100 Euclid Avenue 7100 Euclid Avenue
<PAGE>
Cleveland, Ohio 44103 Cleveland, Ohio 44103
4. Graphic Direct, Inc., Illinois The Kenmart Company
185 Industrial Drive c/o John Morrissey
Elmhurst, IL 60126 185 Industrial Drive
Elmhurst, IL 60126
5. Mercury Printing Company, George F. Cooley
Inc. 6200 Shady Grove Lane
2929 Convair Road Memphis, TN 38120
Memphis, Tn 38132
6. Monroe Litho, Inc. Huntington Associates
39 Delevan Street 20 Huntington Brook
Rochester, NY 14605 Rochester, NY 14605
7. Southern Signatures, Inc. Trust Company Bank
210 Armour Drive P.O. Box 4655
Atlanta, GA 30324 M.C. 252
Atlanta, GA 30322-4655
8. W.E. Andrews Co. Inc. of Sam Sobol, Trustee of the
Connecticut Sobol Family Partnership
206 Murphy Road 982 Silas Deane Highway
Hartford, CT 06114 Wethersfield, CT 06109
9. A&E Reprographic & Supply Co. Central Park Partners, Ltd.
3728 Phillips Hwy. c/o Phillips & Company
Suite 201 3728 Phillips Hwy., Suite 201
Jacksonville, FL 32207 Jacksonville, FL 32207
10. Carolina Reprographics Thomas D. Kelly, as Trustee
2730 Millwood Avenue 4210 Kilbourne Rd.
Columbia, SC 29205 Columbia, SC 29206
11. Imaging Technologies Mountain Texas Properties
225 S. Academy c/o James Monroe
Greenville, SC 29602 P.O. Box 1355
Easley, SC 29640
12. Macon Blueprint Company The Seers Partnership
555 Walnut Street c/o Frickling & Walker Realtors
Macon, GA 31201 577 Mulberry St.
Macon, GA 31928
<PAGE>
13. W.E. Andrews Co. Inc. Atlantic-Billerica Realty
(Warehouse) Limited Partnership
12 Esquire Rd. 40 Speen Street
Billerica, MA 01821 Framington, MA 01701
<PAGE>
Schedule 7.1(b)
---------------
Ownership Structure/Investments
-------------------------------
Investments (as of October 31, 1995)
- ------------------------------------
<TABLE>
<S> <C> <C>
1. Graphic Industries, Inc.
(a) Common stock of miscellaneous $ 28,004
public printing companies
(b) Grubb & Williams (limited partnership) 195,500
2. Craftsman Printing Company 118,899
Note Receivable from sale of assets
3. Wetmore & Company 51,102
Note Receivable from sale of assets
--------
$393,505
========
</TABLE>
<PAGE>
SCHEDULE 7.1(B)
OWNERSHIP STRUCTURE
<TABLE>
<CAPTION>
Stock Percentage
Certificate Authorized Issued No. of Graphic
No's. No. of Shares of Shares Par Value Ownership
----- ------------- ---------- --------- ----------
<S> <C> <C> <C> <C> <C>
W.E. Andrews Co. Inc. 1 100 100 0.10 100
W.E. Andrews Co. Inc. 1 5,000 2,415 No Par (1)
of Connecticut
The Central Press of 23 100,000 40,000 0.50 (1)
Miami, Inc.
A.C. Scanning, Inc. 1 1,000 250 1.00 (1)
Allied Reprographic Services, 1 10,000 1,000 0.01 100
Inc.
Atlanta Blue Print Co. 170 150,000 99,992 1.00 100
169 6,907
Tower Printing Company 7 10,000,000 10,000 .10 (2)
Executive Courier, Inc. 4 500,000 800 No Par (2)
Baum Printing House, Inc. 35 25,000 500 1.00 100
Carpenter Reserve Printing 1 850 100 1.00 100
Company
Craftsman Printing Company 622 400,000 11,252 1.00 100
no # 88,748
Graphic Direct, Inc., Illinois 1-R 1,000 500 100.00 100
Heritage Press, Inc. 1-R 3,000 1,688 10.00 100
Hoechstetter Printing 1-R 20,000 2,000 10.00 100
Company, Inc.
IPD Printing & Distributing, 3 1,000 500 1.00 100
Inc.
Mercury Printing Company, 1-R 1,000 1,000 0.01 100
Inc.
Monroe Litho, Inc. 1 500 500 0.01 100
Quadras, Inc. 1 1,000 1,000 0.10 100
Southern Signatures, Inc. 1-R 1,000,000 100 No Par 100
State Printing Company, Inc. 1-R 30,000 30,000 5.00 100
The Stein Printing Company, 1 100,000 100,000 1.00 100
Inc.
Integrated Graphic Services, 1 1,000,000 100 1.00 (3)
Inc.
Wetmore & Company 2 1,000 1,000 0.10 100
Williams Printing Company 38 15,000 2,610 10.00 100
36 7,896 10.00
Graphic Print Services, Inc. 1 100 100 1.00 (4)
</TABLE>
(1) 100% owned by W.E. Andrews Co., Inc.
(2) 100% owned by Atlanta Blue Print Co.
(3) 100% owned by The Stein Printing Company, Inc.
(4) 100% owned by Williams Printing Company
<PAGE>
SCHEDULE 7.1(g)
INDEBTEDNESS AND CONTINGENT OBLIGATIONS
(Amounts Owed as of October 31, 1995)
<TABLE>
<CAPTION>
Loan Party (Borrower)
Lender Type Amount
- ----------------------------------------------------------------------------------------------------------------------------------
Indebtedness For Money Borrowed
1. Graphic Industries, Inc.
<S> <C> <C>
(Graphic Realty)
(a) Life of Georgia Real Estate (Craftsman) $1,403,617
(b) Life of Georgia Real Estate (IPD) 2,155,548
(c) Life of Georgia Real Estate (Wetmore) 1,554,001
(d) MetLife Capital Corporation Real Estate (Graphic Direct) 761,875
(e) Jefferson Pilot Life Real Estate (Stein) 1,767,337
(f) Jefferson Pilot Life Real Estate (State) 1,399,642
(g) Allegheny Valley Development Real Estate (Hoechstetter) 332,468
(h) Southwestern Penn. Econ. Develop. Dist. Real Estate (Hoechstetter) 70,778
(i) Allegheny Valley Development Real Estate (Hoechstetter) 266,528
(j) Protective Life Insurance Real Estate (Hartford) 1,707,917
(k) MetLife Capital Corporation Real Estate (120 Ottley Dr.) 648,639
(l) MetLife Capital Corporation Real Estate (Baum) 956,187
(m) SunTrust Bank, Atlanta Real Estate (Williams) 2,691,458
(n) MetLife Capital Corporation Real Estate (Central) 990,833
(o) MetLife Capital Corporation Real Estate (Lambert Dr.) 1,389,300
(p) Public Issue Convertible Subordinated Debentures 20,787,000
2. A.C. Scanning, Inc.
(a) Imaging Financial Services, Inc. Capitalized Lease 112,466
3. Allied Reprographic Services, Inc.
(a) Tilden Financial Corporation Capitalized Lease 8,137
(b) Citicorp Leasing Capitalized Lease 9,854
(c) Eaton Financial Capitalized Lease 21,430
(d) Eastman Kodak Capitalized Lease 43,234
(e) Azon (K&E Ozalid) Capitalized Lease 28,590
4. Atlanta Blue Print Co.
(a) W.R. Hartzler Note-Purchase of business 49,611
(b) Fleet Credit Corporation Capitalized Lease (71) 25,342
5. Baum Printing House, Inc.
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C>
(a) Fleet Credit Corporation Capitalized Lease (66) 15,125
(b) Fleet Credit Corporation Capitalized Lease (70) 51,680
(c) Fleet Credit Corporation Capitalized Lease (111) 90,373
(d) Fleet Credit Corporation Capitalized Lease (77) 112,585
(e) Fleet Credit Corporation Capitalized Lease (69) 309,116
6. Carpenter Reserve Printing Company
(a) Ameritech Credit Corporation Capitalized Lease 11,874
(b) Heller Financial, Inc. Equipment Loan 113,332
(c) Miles Financial Services, Inc. Capitalized Lease 136,189
(d) Miles Financial Services, Inc. Capitalized Lease 41,382
7. The Central Press of Miami, Inc.
(a) Fleet Credit Corporation Capitalized Lease (64) 86,257
(b) Southeast Bank Leasing Company Capitalized Lease 19,314
(c) Southeast Bank Leasing Company Capitalized Lease 11,437
(d) MetLife Capital Corporation Equipment Loan 826,338
8. Craftsman Printing Company
(a) Fleet Credit Corporation Capitalized Lease (78) 30,016
(b) MetLife Capital Corporation Equipment Loan 147,619
9. Hoechstetter Printing Company
(a) Pennsylvania Industrial Development Equipment Loan 377,884
Authority
10. IPD Printing & Distributing, Inc.
(a) Equifax, Inc. Note-Purchase of business 562,303
11. Integrated Graphic Services, Inc.
(a) Fleet Credit Corporation Capitalized Lease (112) 44,962
12. Mercury Printing Company
(a) Fleet Credit Corporation Equipment Loan (105) 1,709,593
13. Monroe Litho, Inc.
(a) City of Rochester Equipment Loan (IRB) 140,935
(b) County of Monroe Industrial Equipment Loan (IRB) 159,091
Development Authority
(c) MetLife Capital Corporation Equipment Loan 190,118
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C>
14. Southern Signatures, Inc.
(a) U.S. Concord, Inc. Capitalized Lease 668,631
15. State Printing Company
(a) Fleet Credit Corporation Capitalized Lease (68) 70,977
16. The Stein Printing Companay, Inc.
(a) Member Services Corporation Capitalized Lease 14,237
17. W.E. Andrews Co. Inc.
(a) Fleet Credit Corporation Capitalized Lease (65) 275,375
18. W.E. Andrews Co. Inc. of Connecticut
(a) Fleet Credit Corporation Capitalized Lease (67) 122,981
19. Wetmore & Company
(a) MetLife Capital Corporation Equipment Loan 174,867
(b) MetLife Capital Corporation Equipment Loan 487,499
(c) Southwestern Bell Equipment Loan 6,620
(d) Acco International, Inc. Equipment Loan 37,498
20. Williams Printing Company
(a) Fleet Credit Corporation Capitalized Lease (98) 1,225,599
(b) MetLife Capital Corporation Equipment Loan 180,833
-----------
TOTAL $47,634,432
===========
Material Contingent Obligations None
Letters of Credit and Acceptance Facilities
1. Graphic Industries, Inc.
(a) SunTrust Bank, Atlanta Stand-by Letter of Credit in
favor of The Travelers
Indemnity of Illinois $1,800,000
==========
</TABLE>
22790722.WK1
<PAGE>
GRAPHICS INDUSTRIES, INC.
Lien Search Results of October/November/December 1995
Page 1
<TABLE>
<CAPTION>
==================================================================================================================================
Target Jurisdiction Type of Lien Secured Party
---------------------------------------------------------
UCC Tax Judgment
====================================================================================================================================
<S> <C> <C> <C> <C> <C>
A.C. Scanning, Inc. Massachusetts, UCC-1 financing Clear N/A The CIT Group/
Secretary statement; Equipment Financing,
of the Commonwealth UCC 3 partial release Inc.
- ------------------------------------------------------------------------------------------------------------------------------------
UCC-1 financing statement Fleet Credit
Corporation
- ------------------------------------------------------------------------------------------------------------------------------------
UCC-1 financing statement Imaging Financial
Services, Inc.
====================================================================================================================================
A.C. Scanning, Inc. Massachusetts, U.S N/A Clear N/A
District Court
====================================================================================================================================
A.C. Scanning, Inc. Massachusetts,
Bedford Town UCC-1 financing statement Clear N/A Scitex America Corp.
- ------------------------------------------------------------------------------------------------------------------------------------
UCC-1 financing statement Scitex America Corp.
- ------------------------------------------------------------------------------------------------------------------------------------
UCC-1 financing statement The CIT Group/
Equipment Financing,
Inc.
- ------------------------------------------------------------------------------------------------------------------------------------
UCC-1 financing statement Fleet Credit Corporation
- ------------------------------------------------------------------------------------------------------------------------------------
UCC-1 financing statement Imaging Financial
Services, Inc.
====================================================================================================================================
A.C. Scanning, Inc. Massachusetts, Clear Clear Clear
Middlesex South
County
====================================================================================================================================
A.J. Kenney & Co., Illinois, Secretary of Clear Clear N/A
State
====================================================================================================================================
A.J. Kenney & Co., Illinois, Du Page Clear Clear Clear
County
====================================================================================================================================
Allied Reprographic Georgia, Fulton UCC-1 financing Clear Clear Fleet Credit
Services, Inc. County and statement; Corporation
Superior Court UCC 3 continuation
Clerks' Cooperative
Authority
<CAPTION>
============================================================================================================================
Filing Date UCC Number Collateral Covered Status
============================================================================================================================
<S> <C> <C> <C> <C>
A.C. Scanning, Inc. 08/12/93 (fs); 179528 Equipment, Will be terminated
02/24/95 (part. release) including leased
printing equipment,
listed
- ----------------------------------------------------------------------------------------------------------------------------
10/28/93 194119 Leased printing True lease;
equipment (copy of Schedule 100
schedule A not
attached)
- ----------------------------------------------------------------------------------------------------------------------------
02/22/95 294469 Printing equipment Capitalized lease
============================================================================================================================
A.C. Scanning, Inc.
============================================================================================================================
A.C. Scanning, Inc. 01/02/91 91-75 Computer equipment Will be terminated
- ----------------------------------------------------------------------------------------------------------------------------
02/04/91 91-87 Imager and magnetic tape
unit Will be terminated
- ----------------------------------------------------------------------------------------------------------------------------
08/13/93 93-248 Equipment, Will be terminated
including leased
printing equipment, listed
- ----------------------------------------------------------------------------------------------------------------------------
10/27/93 93-300 Leased Scitex True Lease
Prisma workstation
- ----------------------------------------------------------------------------------------------------------------------------
02/23/95 95-33 Printing equipment Capitalized leased
============================================================================================================================
A.C. Scanning, Inc.
============================================================================================================================
A.J. Kenney & Co.,
Inc.
============================================================================================================================
A.J. Kenney & Co.,
Inc.
============================================================================================================================
Allied Reprographic 07/24/89 (fs); 721053 Leased Equipment True Lease
Services, Inc. 06/14/94 (con't)
- -----------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
GRAPHICS INDUSTRIES, INC.
Lien Search Results of October/November/December 1995
<TABLE>
<CAPTION>
===============================================================================================================
Type of Lien
Target Jurisdiction ---------------------------------------------------------------
UCC Tax Judgment
===============================================================================================================
<S> <C> <C> <C> <C> <C>
UCC-1 financing
statement;
UCC 3 continuation
- ---------------------------------------------------------------------------------------------------------------
UCC-1 financing
statement;
UCC 3 continuation
- ---------------------------------------------------------------------------------------------------------------
UCC-1 financing
statement
- ---------------------------------------------------------------------------------------------------------------
UCC-1 financing
statement;
UCC 3 assignment;
UCC-3 amendment
(adds serial numbers)
- ---------------------------------------------------------------------------------------------------------------
UCC-1 financing
statement;
UCC 3 assignment;
UCC-3 amendment
(adds serial numbers)
- ---------------------------------------------------------------------------------------------------------------
UCC-1 financing
statement
- ---------------------------------------------------------------------------------------------------------------
UCC-1 financing
statement
- ---------------------------------------------------------------------------------------------------------------
UCC-1 financing
statement
- ---------------------------------------------------------------------------------------------------------------
UCC-1 financing
statement
- ---------------------------------------------------------------------------------------------------------------
UCC-1 financing
statement
- ---------------------------------------------------------------------------------------------------------------
UCC-1 financing
statement
- ---------------------------------------------------------------------------------------------------------------
UCC-1 financing
statement
===============================================================================================================
<CAPTION>
================================================================================================================================
Secured Party Filing Date UCC Number Collateral Covered Status
================================================================================================================================
<S> <C> <C> <C> <C>
Fleet Credit 07/24/89 (fs);
Corporation 06/14/94 (cont.) 721054 Leased equipment True lease
- ---------------------------------------------------------------------------------------------------------------------------------
Allen Financial 10/09/89 (fs);
Corporation 10/03/94 (cont.) 725201 Copier equipment True lease
- ---------------------------------------------------------------------------------------------------------------------------------
Vanguard Financial 10/22/90 746927 Leased copier UCC has lapsed
Service Corp. equipment
- ---------------------------------------------------------------------------------------------------------------------------------
Coastal Leasing, Inc.; 04/01/91 (fs);
assigned to Tilden 04/22/91 (assign.);
Financial Corporation 05/13/91 (amend) 756015 Leased equipment Capitalized lease
- ---------------------------------------------------------------------------------------------------------------------------------
Coastal Leasing, Inc.; 04/01/91 (fs);
assigned to Citicorp 04/22/91 (assign.);
Leasing, Inc. 05/13/91 (amend) 756016 Leased equipment Capitalized lease
- ---------------------------------------------------------------------------------------------------------------------------------
Smyrna Bank & Trust 4/02/91 756048 Blanket lien on Will be terminated
Co. personal property
- ---------------------------------------------------------------------------------------------------------------------------------
Smyrna Bank & Trust 4/27/92 775176 Copier equipment True lease
Co.
- ---------------------------------------------------------------------------------------------------------------------------------
E.I. DuPont de 8/17/92 780286 DuPont processor Consigened equipment
Nemours & Co
- ---------------------------------------------------------------------------------------------------------------------------------
Eaton Financial 12/28/92 786336 Printing equipment Capitalized lease
- ---------------------------------------------------------------------------------------------------------------------------------
Smyrna Bank & Trust 4/28/94 000810146 Blanket lien on Will be
Co. personal property terminated
- ---------------------------------------------------------------------------------------------------------------------------------
Blanket lien on Will be
inventory, raw terminated
materials, work in
Smyrna Bank & Trust 4/28/94 000810147 process or
Co. consumed in
debtor's business
- ---------------------------------------------------------------------------------------------------------------------------------
K&E Ozalid 10/10/95 060199519350 Office equipment Capitalized lease
=================================================================================================================================
</TABLE>
<PAGE>
GRAPHICS INDUSTRIES, INC.
Lien Search Results of October/November/December 1995
Page 3
<TABLE>
<CAPTION>
=============================================================================================================
Type of Lien
Target Jurisdiction ---------------------------------------------------------
UCC Tax Judgment
=============================================================================================================
<S> <C> <C> <C> <C>
Atlanta Blue Georgia, Fulton UCC-1 financing Clear Clear
Print Co. County and statement;
Superior Court UCC 3 continuation;
Clerk's Cooperative UCC 3 continuation;
Authority UCC 3 partial release;
UCC 3 continuation
- -------------------------------------------------------------------------------------------------------------
UCC-1 financing
statement;
UCC-3 continuation;
UCC-3 continuation;
UCC-3 continuation
- -------------------------------------------------------------------------------------------------------------
UCC-1 financing
statement;
UCC-3 continuation
- -------------------------------------------------------------------------------------------------------------
UCC-1 financing
statement
- -------------------------------------------------------------------------------------------------------------
UCC-1 financing
statement
- -------------------------------------------------------------------------------------------------------------
UCC-1 financing
statement
- -------------------------------------------------------------------------------------------------------------
UCC-1 financing
statement
- -------------------------------------------------------------------------------------------------------------
UCC-1 financing
statement
- -------------------------------------------------------------------------------------------------------------
UCC-1 financing
statement
- -------------------------------------------------------------------------------------------------------------
UCC-1 financing
statement
- -------------------------------------------------------------------------------------------------------------
UCC-1 financing
statement on
Reprographic Imaging
Technologies d/b/a
Atlanta Blueprint &
Graphics Co.
=============================================================================================================
<CAPTION>
====================================================================================================================================
Target Secured Party Filing Date UCC Number Collateral Covered Status
====================================================================================================================================
<S>
Atlanta Blue Citizens and Southern 06/23/78 (fs); 495426 Blanket lien on Will be
Print Co. National Bank 05/04/83 (cont.); inventory; release terminated
05/16/88 (cont.); inventory used
03/21/91 (part. release); at A&E Reprographic
03/04/93 (cont.); & Supply Company
- ------------------------------------------------------------------------------------------------------------------------------------
Citizens and Southern 06/23/78 (fs); 495430 Blanket lien on Will be
National Bank 05/04/83 (cont.); personal property terminated
05/16/88 (cont.);
03/04/93 (cont.)
- ------------------------------------------------------------------------------------------------------------------------------------
Fleet Credit 03/09/90 (fs); 733641 Leased printing Capitalized
Corporation 10/07/94 (cont.) equipment lease;
Schedule 71
- ------------------------------------------------------------------------------------------------------------------------------------
Eaton Financial 10/23/90 747053 Lease of copier True lease;
Corporation equipment lapsed
- ------------------------------------------------------------------------------------------------------------------------------------
Fuji Photo Film 05/6/91 757930 Film processor Consigned
U.S.A., Inc. equipment
- ------------------------------------------------------------------------------------------------------------------------------------
Agfa Corporation 08/15/91 763097 Agfa equipment Consigned
equipment
- ------------------------------------------------------------------------------------------------------------------------------------
Oce USA, Inc. 10/16/92 782847 Leased Oce True lease
equipment
- ------------------------------------------------------------------------------------------------------------------------------------
Fleet Credit 07/16/93 000795845 Leased printing True lease;
Corporation equipment Schedule 97
- ------------------------------------------------------------------------------------------------------------------------------------
The CIT Group/ 08/10/93 000797083 Equipment, Will be
Equipment Financing, including leased terminated
Inc. printing equipment,
listed
- ------------------------------------------------------------------------------------------------------------------------------------
The CIT Group/ 08/10/93 000797084 Equipment, Will be
Equipment Financing, including leased terminated
Inc. printing equipment,
listed
- ------------------------------------------------------------------------------------------------------------------------------------
Bank South Leasing, 12/27/93 000803965 Printing equipment True lease
Inc.
====================================================================================================================================
</TABLE>
<PAGE>
GRAPHICS INDUSTRIES, INC.
LIEN SEARCH RESULTS OF OCTOBER/NOVEMBER/DECEMBER 1995
Page 4
<TABLE>
<CAPTION>
======================================================================================================================
Type of Lien
---------------------------------------------
Target Jurisdiction Secured Party
UCC Tax Judgment
======================================================================================================================
<S> <C> <C> <C> <C> <C>
UCC-1 financing Fleet Credit
statement Corporation
- ----------------------------------------------------------------------------------------------------------------------
UCC-1 financing Fleet Credit
statement; Corporation
UCC-3 amendment
(amends Schedule A)
- ----------------------------------------------------------------------------------------------------------------------
UCC-1 financing Bank South Leasing,
statement Inc.
- ----------------------------------------------------------------------------------------------------------------------
UCC-1 financing Minnesota Mining &
statement Mfg. Co.
- ----------------------------------------------------------------------------------------------------------------------
UCC-1 financing Fleet Credit
statement Corporation
======================================================================================================================
Baum Printing House, Pennsylvania, UCC-1 financing N/A N/A Fleet Credit
Inc. Secretary of statement; Corporation
Commonwealth UCC-3 continuation
- ----------------------------------------------------------------------------------------------------------------------
UCC-1 financing Fleet Credit
statement; Corporation
UCC-3 continuation
- ----------------------------------------------------------------------------------------------------------------------
UCC-1 financing Fleet Credit
statement; Corporation
UCC-3 continuation
- ----------------------------------------------------------------------------------------------------------------------
UCC-1 financing Fleet Credit
statement; Corporation
UCC-3 amendment
(adds serial numbers);
UCC-3 continuation
- ----------------------------------------------------------------------------------------------------------------------
UCC-1 financing David Cutler Industries
statement
- ----------------------------------------------------------------------------------------------------------------------
UCC-1 financing David Cutler Industries
statement
- ----------------------------------------------------------------------------------------------------------------------
UCC-1 financing Scitex America Corp.;
statement; assigned to Fleet Credit
UCC-3 assignment Corporation
- ----------------------------------------------------------------------------------------------------------------------
UCC-1 financing Fleet Credit
statement Corporation
- ----------------------------------------------------------------------------------------------------------------------
<CAPTION>
==================================================================================================
Target Filing Date UCC Number Collateral Covered Status
==================================================================================================
<S> <C> <C> <C> <C>
01/03/94 000804440 Leased computer True lease;
equipment listed Schedule 104
- --------------------------------------------------------------------------------------------------
06/03/94 (fs); 811946 Leased copier and True lease;
10/14/94 (amend.) camera equipment Schedule 109
listed
- --------------------------------------------------------------------------------------------------
12/27/94 000803964 Printing equipment True lease
- --------------------------------------------------------------------------------------------------
02/21/95 060199502072 Rainbow Proofer Consigned
(consigned) equipment
- --------------------------------------------------------------------------------------------------
03/20/95 060199504142 Leased copier and True lease;
office equipment Schedule 115
==================================================================================================
Baum Printing House, 01/09/89 (fs); 16950246 Lease of equipment Capitalized
Inc. 12/14/93 (cont.) listed lease;
Schedule 66
- --------------------------------------------------------------------------------------------------
12/28/89 (fs); 18050176 Lease of equipment Capitalized
09/06/94 (cont.) listed lease;
Schedule 69
- --------------------------------------------------------------------------------------------------
01/22/90 (fs); 18121161 Lease of equipment Capitalized
09/15/94 (cont.) listed lease;
Schedule 70
- --------------------------------------------------------------------------------------------------
05/31/90 (fs); 18581522 Lease of equipment Capitalized
10/22/90 (amend.); listed lease;
01/24/95 (cont.) Schedule 77
- --------------------------------------------------------------------------------------------------
04/25/91 19621737 Baler Consigned
equipment
- --------------------------------------------------------------------------------------------------
04/25/91 19621738 Baler Consigned
equipment
- --------------------------------------------------------------------------------------------------
07/26/91 (fs); 19911415 Printing software True lease;
03/12/92 (assign.) Schedule 89
- --------------------------------------------------------------------------------------------------
08/29/91 20020306 Lease of equipment True lease;
listed Schedule 89
- --------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
GRAPHICS INDUSTRIES, INC.
Lien Search Results of October/November/December 1995
Page 5
<TABLE>
<CAPTION>
====================================================================================================================================
Type of Lien
Target Jurisdiction -------------------------------------------- Secured Party Filing Date
UCC Tax Judgment
====================================================================================================================================
<S> <C> <C> <C> <C> <C> <C>
UCC-1 financing David Cutler Industries 06/19/92
statement
- ------------------------------------------------------------------------------------------------------------------------------------
UCC-1 financing MetLife Capital 09/8/92
statement Corporation
- ------------------------------------------------------------------------------------------------------------------------------------
UCC-1 financing Cannon Financial 01/11/93
statement Services, Inc.
- ------------------------------------------------------------------------------------------------------------------------------------
UCC-1 financing Scitex America Corp. 01/20/93
statement
- ------------------------------------------------------------------------------------------------------------------------------------
UCC-1 financing Miles Financial 03/28/93
statement Services, Inc.
- ------------------------------------------------------------------------------------------------------------------------------------
UCC-1 financing Scitex America Corp. 05/7/93
statement
- ------------------------------------------------------------------------------------------------------------------------------------
UCC-1 financing Fuji Photo Film 06/3/93
statement U.S.A., Inc.
- ------------------------------------------------------------------------------------------------------------------------------------
UCC-1 financing Scitex America Corp. 08/4/93
statement
- ------------------------------------------------------------------------------------------------------------------------------------
UCC-1 financing NationsBank of 08/13/93
statement Georgia, N.A.
- ------------------------------------------------------------------------------------------------------------------------------------
UCC-1 financing Fleet Credit 10/29/93
statement Corporation
- ------------------------------------------------------------------------------------------------------------------------------------
UCC-1 financing Agfa Division of Miles, 04/25/94
statement Inc.
- ------------------------------------------------------------------------------------------------------------------------------------
UCC-1 financing The CIT Group/ 05/31/94
statement Equipment Financing,
Inc.
- ------------------------------------------------------------------------------------------------------------------------------------
UCC-1 financing Miles Financial 06/24/94
statement Services, Inc.
- ------------------------------------------------------------------------------------------------------------------------------------
UCC-1 financing Agfa Division of Miles 07/25/94
statement Inc.
- ------------------------------------------------------------------------------------------------------------------------------------
UCC-1 financing Fleet Credit 07/26/94
statement Corporation
- ------------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
=========================================================================================================
Target UCC Number Collateral Covered Status
=========================================================================================================
<S> <C> <C> <C>
20920111 Baler Consigned
equipment
- ---------------------------------------------------------------------------------------------------------
21170228 Fixture filing Fixture filing
- ---------------------------------------------------------------------------------------------------------
21541126 Canon copier True lease
- ---------------------------------------------------------------------------------------------------------
21570997 Computer Will be
equipment terminated
- ---------------------------------------------------------------------------------------------------------
21770673 Leased equipment Consigned
equipment
- ---------------------------------------------------------------------------------------------------------
21911246 Equipment Will be
terminated
- ---------------------------------------------------------------------------------------------------------
21991040 Processor and Consigned
printer equipment
- ---------------------------------------------------------------------------------------------------------
22271412 Equipment Will be
terminated
- ---------------------------------------------------------------------------------------------------------
22300784 Blanket lien on Will be
personal property terminated
- ---------------------------------------------------------------------------------------------------------
22540101 Lease of Scitex True lease;
equipment Schedule 101
- ---------------------------------------------------------------------------------------------------------
23060256 Equipment Consigned
equipment
- ---------------------------------------------------------------------------------------------------------
23171784 Equipment, Will be
including leased terminated
printing equipment,
listed
- ---------------------------------------------------------------------------------------------------------
23260926 Lease of equipment Consigned
equipment
- ---------------------------------------------------------------------------------------------------------
23369596 Equipment Consigned
equipment
- ---------------------------------------------------------------------------------------------------------
23351770 Scitex computer Capitalized
equipment lease; Schedule
111
- ---------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
GRAPHICS INDUSTRIES, INC.
LIEN SEARCH RESULTS OF OCTOBER/NOVEMBER/DECEMBER 1995
Page 6
<TABLE>
<CAPTION>
============================================================================================================================
Type of Lien
---------------------------------------------
Target Jurisdiction Secured Party
UCC Tax Judgment
============================================================================================================================
<S> <C> <C> <C> <C> <C>
UCC-1 financing Canon Financial
statement Services, Inc.
- ----------------------------------------------------------------------------------------------------------------------------
UCC-1 financing EI DuPont de Nemours
statement & Co.
============================================================================================================================
Baum Printing House, Pennsylvania, UCC-1 (reference is Clear Clear Fleet Credit
Inc. Philadelphia County made to fixture filing Corporation
Prothonotary 1100345966 filed
12/19/88);
UCC-3 continuation
- ----------------------------------------------------------------------------------------------------------------------------
UCC-1 (reference is Fleet Credit
made to fixture filing Corporation
1100345969);
UCC-3 continuation
- ----------------------------------------------------------------------------------------------------------------------------
UCC-1 financing Fleet Credit
statement; Corporation
UCC-3 continuation
- ----------------------------------------------------------------------------------------------------------------------------
UCC-1 financing David Cutler Industries
statement
- ----------------------------------------------------------------------------------------------------------------------------
UCC-1 financing David Cutler Industries
statement
- ----------------------------------------------------------------------------------------------------------------------------
UCC-1 financing Scitex America Corp.;
statement; assigns to Fleet Credit
UCC-3 assignment Corp.
- ----------------------------------------------------------------------------------------------------------------------------
UCC-1 financing Fleet Credit
statement Corporation
- ----------------------------------------------------------------------------------------------------------------------------
UCC-1 financing MetLife Capital
statement Corporation
- ----------------------------------------------------------------------------------------------------------------------------
UCC-1 financing NationsBank of
statement Georgia, N.A.
- ----------------------------------------------------------------------------------------------------------------------------
UCC-1 financing The CIT Group/
statement Equipment Financing,
Inc.
- ----------------------------------------------------------------------------------------------------------------------------
UCC-1 financing Fleet Credit
statement Corporation
- ----------------------------------------------------------------------------------------------------------------------------
<CAPTION>
==================================================================================================
Target Filing Date UCC Number Collateral Covered Status
==================================================================================================
<S> <C> <C> <C> <C>
08/04/94 23390359 Graphics equipment True lease
- --------------------------------------------------------------------------------------------------
03/??/95 24041039 Proofing systems Consigned
equipment
==================================================================================================
Baum Printing House, 01/03/89 (fs); 89 56 Leased printing Capitalized
Inc. 12/14/93 (cont.) equipment lease;
Schedule 66
- --------------------------------------------------------------------------------------------------
01/11/90 (fs); 90-295 Leased printing Capitalized
09/02/94 (cont.) equipment lease;
Schedule 69
- --------------------------------------------------------------------------------------------------
02/05/90 (fs); 90-842 Leased printing Capitalized
09/14/94 (cont.) equipment lease;
Schedule 70
- --------------------------------------------------------------------------------------------------
06/27/91 91 3192 Baler Consigned
equipment
- --------------------------------------------------------------------------------------------------
06/27/91 91 3193 Baler-General Consigned
Hydraulics equipment
- --------------------------------------------------------------------------------------------------
07/30/91 (fs); 91 3798 Printing equipment Will be
01/27/92 (assign.) terminated
- --------------------------------------------------------------------------------------------------
09/04/91 91 4413 Leased printing Capitalized
equipment lease; Schedule
89
- --------------------------------------------------------------------------------------------------
08/31/92 92 4017 Fixture filing Fixture filing
- --------------------------------------------------------------------------------------------------
08/23/93 93 4044 Blanket personal Will be
property terminated
- --------------------------------------------------------------------------------------------------
08/26/93 93 4128 Equipment, Will be
including leased terminated
printing equipment,
listed
- --------------------------------------------------------------------------------------------------
11/02/93 93 5227 Leased computer True lease;
equipment Schedule 101
- --------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
GRAPHICS INDUSTRIES, INC.
Lien Search Results of October/November/December 1995
Page 7
<TABLE>
<CAPTION>
====================================================================================================================================
Type of Lien
--------------------------------------------
Target Jurisdiction Secured Party
UCC Tax Judgement
====================================================================================================================================
<S> <C> <C> <C> <C> <C>
UCC-1 financing Fleet Credit
statement Corporation
====================================================================================================================================
Baum Printing House, Pennsylvania, UCC-1 MetLife Capital
Inc. Philadelphia County Corporation
Recorder of Deeds
====================================================================================================================================
Carpenter Reserve Ohio, Secretary of UCC-1 financing N/A N/A Caterpillar Financial
Printing Company State statement; Services Corporation
UCC-3 continuation
- ------------------------------------------------------------------------------------------------------------------------------------
UCC-1 financing National City Bank
statement
- ------------------------------------------------------------------------------------------------------------------------------------
UCC-1 financing American Capital
statement; Resources, Inc.;
UCC-3 assignment; assigned to ORIX
UCC-3 continuation Credit Alliance, Inc.
- ------------------------------------------------------------------------------------------------------------------------------------
UCC-1 financing Caterpillar Financial
statement Services Corporation
- ------------------------------------------------------------------------------------------------------------------------------------
UCC-1 financing Ameritech Credit
statement Corporation
- ------------------------------------------------------------------------------------------------------------------------------------
UCC-1 financing Miles Financial
statement Services, Inc.
- ------------------------------------------------------------------------------------------------------------------------------------
UCC-1 financing Heller Financial, Inc.
statement
- ------------------------------------------------------------------------------------------------------------------------------------
UCC-1 financing American Capital
statement Resources, Inc.
- ------------------------------------------------------------------------------------------------------------------------------------
UCC-1 financing American Capital
statement; Resources, Inc.;
UCC-3 assignment assigned to Sanwa
Business Credit
Corporation
- ------------------------------------------------------------------------------------------------------------------------------------
UCC-1 financing Ameritech Credit
statement Corporation
- ------------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
=============================================================================================
Filing Date UCC Number Collateral Covered Status
=============================================================================================
<C> <C> <C> <C>
07/26/94 94 3409 Computer Capitalized
equipment lease; Schedule
111
=============================================================================================
10/19/92 0236 243 Fixture filing Fixture filing
=============================================================================================
05/06/87 (fs); Y0031182 Caterpillar Model True lease
04/20/92 (cont.) T30D Lift Truck
- ---------------------------------------------------------------------------------------------
02/03/89 AA0080177 Blanket personal Lapsed;
property Will be
terminated
- ---------------------------------------------------------------------------------------------
01/22/90 (fs); AB0063490 Printing equipment Will be
07/05/90 (assign.); terminated
10/20/94 (cont.)
- ---------------------------------------------------------------------------------------------
06/30/92 AH0052945 Caterpillar Model True lease
T30D Lift Truck
- ---------------------------------------------------------------------------------------------
01/27/93 AH0094735 Omega ZTD Capitalized lease
System, Microlog
Callstar
- ---------------------------------------------------------------------------------------------
02/12/93 AH0097697 Leased computer Capitalized lease
equipment
- ---------------------------------------------------------------------------------------------
08/30/93 005797 Printing equipment Loan
08309330801
AK42979
- ---------------------------------------------------------------------------------------------
09/27/93 006282 Printing equipment Will be
09279350301 terminated
AK48738
- ---------------------------------------------------------------------------------------------
09/27/93 (fs); 006282 Printing equipment Will be
11/08/93 (assign.) 09279350302 terminated
AK48739
- ---------------------------------------------------------------------------------------------
10/06/93 006433 Omega ZTD Capitalized lease
10069303905 System
AK50630
- -------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
GRAPHICS INDUSTRIES, INC.
Lien Search Results of October/November/December 1995
Page 8
<TABLE>
<CAPTION>
====================================================================================================================================
Type of Lien
--------------------------------------------
Target Jurisdiction Secured Party
UCC Tax Judgment
====================================================================================================================================
<S> <C> <C> <C> <C> <C>
UCC-1 financing Minnesota Mining &
statement Mfg. Co.
- ------------------------------------------------------------------------------------------------------------------------------------
UCC-1 financing Miles Financial
statement Services, Inc.
- ------------------------------------------------------------------------------------------------------------------------------------
Carpenter Reserve Ohio, Cuyahoga UCC-1 financing Clear Clear Carpenter [sic]
Printing Company County statement; Financial Services
UCC-3 continuation Corporation
- ------------------------------------------------------------------------------------------------------------------------------------
UCC-1 financing National City Bank
statement;
UCC-3 partial release
(equipment listed
only);
UCC-3 continuation
- ------------------------------------------------------------------------------------------------------------------------------------
UCC-1 financing American Capital
statement; Resources, Inc.;
UCC-3 assignment; assigned to ORIX
UCC-3 continuation Credit Alliance, Inc.
- ------------------------------------------------------------------------------------------------------------------------------------
UCC-1 financing Caterpillar Financial
statement Services Corporation
- ------------------------------------------------------------------------------------------------------------------------------------
UCC-1 financing Ameritech Credit
statement Corporation
- ------------------------------------------------------------------------------------------------------------------------------------
UCC-1 financing Miles Financial
statement Services, Inc.
- ------------------------------------------------------------------------------------------------------------------------------------
UCC-1 financing Heller Financial, Inc.
statement
- ------------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
======================================================================================================
Filing Date UCC Number Collateral Covered Status
======================================================================================================
<S> <C> <C> <C>
11/16/93 007202 Processor Consigned
11169304101 equipment
AK59536
- ------------------------------------------------------------------------------------------------------
09/28/94 013492 Leased printing Capitalized lease
09289415001 equipment
AL31593
- ------------------------------------------------------------------------------------------------------
05/08/87 (fs); 1057946 Lease on True lease
04/13/92 (cont.) Caterpillar Model
T30D Lift Truck
(precautionary)
- ------------------------------------------------------------------------------------------------------
01/30/89 (fs); 1119775 Blanket lien on Will be
09/30/93 (part. release); personal property terminated
12/27/93 (cont.)
- ------------------------------------------------------------------------------------------------------
01/22/90 (fs); 1154424 Printing equipment Will be
06/02/90 (assign.); terminated
10/19/94 (cont.)
- ------------------------------------------------------------------------------------------------------
06/24/92 1226179 Caterpillar Model True lease
T30D Lift Truck
(appears to be a
refiling of 1057946
correcting the
typographical error
relating to the name
of the secured
party)
- ------------------------------------------------------------------------------------------------------
01/20/93 1241365 Omega ZTD Capitalized lease
System, Microlog
Callstar
- ------------------------------------------------------------------------------------------------------
02/10/93 1242078 Lease of MacIntosh Capitalized lease
computer
equipment
(precautionary)
- ------------------------------------------------------------------------------------------------------
09/02/93 1258931 Color scanner Loan
- ------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
GRAPHICS INDUSTRIES, INC.
Lien Search Results of October/November/December 1995
Page 9
<TABLE>
<CAPTION>
=============================================================================================================================
Type of Lien
Target Jurisdiction ------------------------------------------------- Secured Party
UCC Tax Judgement
=============================================================================================================================
<S> <C> <C> <C> <C> <C>
UCC-1 financing American Capital
statement; Resources, Inc.;
UCC-3 assignment assigned to Sanwa
Business Credit
Corporation
- -----------------------------------------------------------------------------------------------------------------------------
UCC-1 financing American Capital
statement Resources, Inc.
- -----------------------------------------------------------------------------------------------------------------------------
UCC-1 financing Ameritech Credit
statement Corporation
- -----------------------------------------------------------------------------------------------------------------------------
UCC-1 financing Minnesota Mining &
statement Mfg. Co.
- -----------------------------------------------------------------------------------------------------------------------------
UCC-1 financing Miles Financial
statement Services, Inc.
=============================================================================================================================
The Central Press Florida, Secretary UCC-1 financing Clear N/A Fleet Credit
of Miami, Inc. of State statement; Corporation
UCC-3 continuation;
UCC-3 amendment
- -----------------------------------------------------------------------------------------------------------------------------
UCC-1 financing Heidelberg Eastern,
statement; Inc.; assigned to
UCC-3 assignment Southeast Bank Leasing
Company
- -----------------------------------------------------------------------------------------------------------------------------
UCC-1 financing statement Southeast Bank Leasing
Company
- -----------------------------------------------------------------------------------------------------------------------------
UCC-1 financing statement Southeast Bank Leasing
Company
- -----------------------------------------------------------------------------------------------------------------------------
UCC-1 financing statement; Scitex America Corp.;
UCC-3 assignment; assigned to Fleet Credit
UCC-3 assignment; Corp.; assigned to Fleet
UCC-3 amendment Bank of New York
(amends debtor's
address)
- -----------------------------------------------------------------------------------------------------------------------------
<CAPTION>
=========================================================================================================================
Filing Date UCC Number Collateral Covered Status
=========================================================================================================================
<S> <C> <C> <C> <C>
09/27/93 (fs); 1260853 Printing equipment Will be
11/03/93 (assign.) terminated
- -------------------------------------------------------------------------------------------------------------------------
09/27/93 1260854 Recorded Will be
instrument missing terminated
from file per
recorder's note
- -------------------------------------------------------------------------------------------------------------------------
10/06/93 1261887 Omega ZTD Capitalized lease
system
- -------------------------------------------------------------------------------------------------------------------------
11/15/93 1265035 Printing equipment Consigned
equipment
- -------------------------------------------------------------------------------------------------------------------------
10/03/94 1292824 Leased printing Capitalized lease
equipment
(precautionary)
=========================================================================================================================
The Central Press 08/15/89 (fs); 890000206577 Leased printing Capitalized
of Miami, Inc. 04/12/94 (cont.) press and lease;
07/01/94 (amend.) equipment Schedule 64
- -------------------------------------------------------------------------------------------------------------------------
12/24/90 (fs); 900000318189 Polar Paper Cutter Capitalized
05/10/91 (assign.) lease;
has been paid off
- -------------------------------------------------------------------------------------------------------------------------
04/08/91 910000076063 Leased paper cutter Capitalized lease
- --------------------------------------------------------------------------------------------------------------------------
04/08/91 910000075715 Leased printing Capitalized lease
press and
equipment
- --------------------------------------------------------------------------------------------------------------------------
08/13/91 (fs); 910000175490 Computer True lease;
01/28/92 (assign.); equipment and Schedule 80
12/15/93 (assign.); software
10/03/94 (amend.)
- ---------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
GRAPHICS INDUSTRIES, INC.
LIEN SEARCH RESULTS OF OCTOBER/NOVEMBER/DECEMBER 1995
Page 10
<TABLE>
<CAPTION>
=======================================================================================================================
Type of Lien
------------------------------------------
Target Jurisdiction Secured Party
UCC Tax Judgment
=======================================================================================================================
<S> <C> <C> <C> <C> <C>
UCC-1 financing Fleet Credit
statement; Corporation; assigned
UCC-3 assignment; to Fleet Bank of New
UCC-3 amendment York
(amends debtor's
address)
- -----------------------------------------------------------------------------------------------------------------------
UCC-1 financing Fleet Credit
statement; Corporation; assigned
UCC-3 assignment; to Fleet Bank of New
UCC-3 amendment York; assigned to Fleet
(amends debtor's Credit Corporation
address);
UCC-3 assignment;
UCC-3 amendment
(amends debtor's name
and address to
Southern Signatures,
Inc.)
- -----------------------------------------------------------------------------------------------------------------------
UCC-1 financing Fleet Credit
statement; Corporation
UCC-3 amendment
(amends debtor's
address)
- -----------------------------------------------------------------------------------------------------------------------
UCC-1 financing NationsBank of
statement; Georgia, N.A.
UCC-3 amendment
(amends debtor's
address)
- -----------------------------------------------------------------------------------------------------------------------
UCC-1 financing The CIT
statement Group/Equipment
Financing, Inc.
- -----------------------------------------------------------------------------------------------------------------------
UCC-1 financing MetLife Capital
statement Corporation
=======================================================================================================================
The Central Press Florida, Broward Clear Clear Clear
of Miami Inc. County
=======================================================================================================================
<CAPTION>
=======================================================================================================
Target Filing Date UCC Number Collateral Covered Status
=======================================================================================================
<S> <C> <C> <C> <C>
12/06/91 (fs); 910000250109 Printing equipment True lease;
12/16/92 (assign.); Schedule 80
10/03/94 (amend.)
- -------------------------------------------------------------------------------------------------------
03/17/92 (fs); 920000053347 Leased printing True lease;
12/15/93 (assign.); press and Schedule 92
07/01/94 (amend.); equipment
01/17/95 (assign.);
05/08/95 (amend.);
- -------------------------------------------------------------------------------------------------------
03/31/92 (fs); 920000063692 Machinery, Safety net filing
07/01/94 (amend.) equipment,
furniture,
furnishings, tools,
tooling, fixtures
and accessories
(leased or financed
by Fleet)
- -------------------------------------------------------------------------------------------------------
08/12/93 (fs); 930000169680 Blanket lien on Will be
07/06/94 (amend.) personal property terminated
- -------------------------------------------------------------------------------------------------------
09/07/93 930000187904 Equipment, Will be
including leased terminated
printing equipment,
listed
- -------------------------------------------------------------------------------------------------------
08/01/94 940000194294 Graphic Art Loan
Printing equipment
=======================================================================================================
=======================================================================================================
</TABLE>
<PAGE>
GRAPHICS INDUSTRIES, INC.
LIEN SEARCH RESULTS OF OCTOBER/NOVEMBER/DECEMBER 1995
Page 11
<TABLE>
<CAPTION>
=======================================================================================================================
Type of Lien
----------------------------------------------
Target Jurisdiction Secured Party
UCC Tax Judgment
=======================================================================================================================
<S> <C> <C> <C> <C> <C>
The Central Press of Florida, Dade UCC-1 financing Clear Clear Fleet Credit
Miami, Inc. County statement; Corporation
UCC-3 continuation;
UCC-3 amendment
(amends debtor's
address)
- ------------------------------------------------------------------------------------------------------------------------
UCC-1 financing Scitex America Corp.;
statement; assigned to Fleet Credit
UCC-3 assignment; Corp.; assigned to Fleet
UCC-3 full Bank of New York
assignment;
UCC-3 amendment
- ------------------------------------------------------------------------------------------------------------------------
UCC-1 financing The CIT Group/
statement Equipment Financing
Inc.
========================================================================================================================
Craftsman Printing UCC-1 financing Clear N/A NationsBank of
Company statement UCC-3 Georgia, N,A., f/k/a
amendment (amends The Citizens and
debtor's address); Southern National Bank
UCC-3 continuation;
UCC-3 amendment
(subordinates security
interest);
UCC-3 partial release;
UCC-3 amendment &
continuation (amends
name of secured party)
- --------------------------------------------------------------------------------------------------------------------------
UCC-1 financing; NationsBank of
statement Georgia, N.A., f/k/a
UCC-3 amendment The Citizens and
(amends Debtor's Southern National Bank
address);
UCC-3 continuation;
UCC-3 amendment
(subordinates security
interest);
UCC-3 partial release;
UCC-3 amendment &
continuation
- -----------------------------------------------------------------------------------------------------------------------
<CAPTION>
==================================================================================================
Target Filing Date UCC Number Collateral Covered Status
==================================================================================================
<S> <C> <C> <C> <C>
08/03/89 (fs); 89R276269 Leased printing True lease;
03/29/94 (cont.); equipment; fixture Schedule 64
08/03/94 (amend.); filing
- --------------------------------------------------------------------------------------------------
08/15/91 (fs) 91R285503 Printing equipment True lease;
02/03/92 (assign.); Bk15151 Schedule 80
12/15/93 (assign.); Pg2873
08/03/94 (amend.);
- --------------------------------------------------------------------------------------------------
08/17/93 93R405865 Equipment, Will be
including leased terminated
printing equipment,
listed
==================================================================================================
12/10/84 (fs); 0076296 Blanket lien on Will be
11/15/?? (amend.); personal property; terminated
10/04/89 (cont.); some equipment
09/19/91 (amend.); released; security
08/17/94 (amend. & interest on some
cont.) equipment is
subordinated
- ---------------------------------------------------------------------------------------------------
12/14/84 (fs); 077535 Blanket lien on Will be
11/??/?? (amend.); personal property; terminated
10/04/89 (cont.); some equipment
09/19/91 (amend.); released; some
08/17/94 (amend. & equipment subject
cont.) to a subordinated
lien
- ---------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
GRAPHICS INDUSTRIES, INC.
LIEN SEARCH RESULTS OF OCTOBER/NOVEMBER/DECEMBER 1995
Page 12
<TABLE>
<CAPTION>
=======================================================================================================================
Type of Lien
------------------------------------------
Target Jurisdiction Secured Party
UCC Tax Judgment
=======================================================================================================================
<S> <C> <C> <C> <C> <C>
UCC-1 financing Life Insurance
statement; Company of Georgia
UCC-3 continuation
- -----------------------------------------------------------------------------------------------------------------------
UCC-1 financing Fleet Credit
statement; Corporation
UCC-3 continuation
- -----------------------------------------------------------------------------------------------------------------------
UCC-1 financing NationsBank of
statement; Georgia, N.A., f/k/a
UCC-3 amendment The Citizens and
(subordinates)security Southern National Bank
interest;
UCC-3 amendment &
continuation (amends
secured party to
NationsBank of
Georgia, N.A.)
- -----------------------------------------------------------------------------------------------------------------------
UCC-1 financing Fleet Credit
statement; Corporation
UCC-3 amendment
(adds serial numbers);
UCC-3 continuation
- -----------------------------------------------------------------------------------------------------------------------
UCC-1 financing The CIT Group/
statement Equipment Financing,
Inc.
- -----------------------------------------------------------------------------------------------------------------------
UCC-1 financing MAN Capital
statement; Corporation; assigned
UCC-3 assignment to Deutsche Credit
Corporation
- -----------------------------------------------------------------------------------------------------------------------
UCC-1 financing Fuji Photo Film
statement U.S.A., Inc.
- -----------------------------------------------------------------------------------------------------------------------
UCC-1 financing Pitney Bowes Credit
statement Corp.
- -----------------------------------------------------------------------------------------------------------------------
UCC-1 financing Caterpillar Financial
statement Services Corporation
- -----------------------------------------------------------------------------------------------------------------------
UCC-1 financing Fuji Photo Film
statement U.S.A., Inc.
- -----------------------------------------------------------------------------------------------------------------------
<CAPTION>
===========================================================================================================
Target Filing Date UCC Number Collateral Covered Status
===========================================================================================================
<S> <C> <C> <C> <C>
09/22/86 (fs); 0256828 Fixture filing Fixture filing
08/15/91 (cont.)
- -----------------------------------------------------------------------------------------------------------
09/25/87 (fs); 0376384 Leased printing Will be
06/08/92 (cont.) equipment terminated
(Schedule A not
attached)
- -----------------------------------------------------------------------------------------------------------
11/15/88 (fs); 0510532 Blanket lien on Will be
09/19/91 (amend.); personal property; terminated
08/31/93 (amend. & some equipment
cont.); released
08/13/93 (part. release)
- -----------------------------------------------------------------------------------------------------------
05/15/90 (fs); 0679364 Computers Capitalized
09/04/90 (amend.); lease;
03/22/95 (cont.) Schedule 78
- -----------------------------------------------------------------------------------------------------------
05/30/91 0789604 Heidelberg Press Will be
terminated
- -----------------------------------------------------------------------------------------------------------
09/12/91 (fs); 0817441 Wohlenberg paper True lease
10/24/91 (assign.) cutter
- -----------------------------------------------------------------------------------------------------------
09/27/91 0821702 Processor Consigned
equipment
- -----------------------------------------------------------------------------------------------------------
12/09/91 0840934 Pitney Bowes True lease
equipment
- -----------------------------------------------------------------------------------------------------------
02/12/92 860347 Truck True lease
- -----------------------------------------------------------------------------------------------------------
12/02/92 0946857 Film processor Consigned
equipment
- -----------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
GRAPHICS INDUSTRIES, INC.
LIEN SEARCH RESULTS OF OCTOBER/NOVEMBER/DECEMBER 1995
Page 13
<TABLE>
<CAPTION>
=======================================================================================================================
Type of Lien
---------------------------------------------
Target Jurisdiction Secured Party
UCC Tax Judgment
=======================================================================================================================
<S> <C> <C> <C> <C> <C>
UCC-1 financing Fuji Photo Film
statement U.S.A., Inc.
- -----------------------------------------------------------------------------------------------------------------------
UCC-1 financing Fuji Photo Film
statement U.S.A., Inc.
- -----------------------------------------------------------------------------------------------------------------------
UCC-3 amendment Fleet Credit
(amends debtor's Corporation
address)
- -----------------------------------------------------------------------------------------------------------------------
UCC-1 financing
statement;
- -----------------------------------------------------------------------------------------------------------------------
UCC-1 financing The CIT Group/
statement Equipment Financing,
Inc.
- -----------------------------------------------------------------------------------------------------------------------
UCC-1 financing Fuji Photo Film
statement U.S.A., Inc.
- -----------------------------------------------------------------------------------------------------------------------
UCC-1 financing MetLife Capital
statement Corporation
- -----------------------------------------------------------------------------------------------------------------------
UCC-1 financing Concord Commercial
statement Corporation
- -----------------------------------------------------------------------------------------------------------------------
UCC-1 financing Fuji Photo Film
statement U.S.A., Inc.
- -----------------------------------------------------------------------------------------------------------------------
UCC-1 financing Fleet Credit
statement Corporation
- -----------------------------------------------------------------------------------------------------------------------
UCC-1 financing Fleet Credit
statement Corporation
- -----------------------------------------------------------------------------------------------------------------------
UCC-1 financing Fuji Photo Film
statement U.S.A., Inc.
- -----------------------------------------------------------------------------------------------------------------------
UCC-1 financing INX International Ink
statement Co.
=======================================================================================================================
<CAPTION>
==================================================================================================
Target Filing Date UCC Number Collateral Covered Status
==================================================================================================
<S> <C> <C> <C> <C>
01/29/93 0963437 Film processor Consigned
equipment
- --------------------------------------------------------------------------------------------------
05/21/93 0999821 Burgess Frame Consigned
equipment
- --------------------------------------------------------------------------------------------------
07/28/93 (fs); 1020059 Leased printing Will be
01/27/94 (amend.) equipment terminated
- --------------------------------------------------------------------------------------------------
08/13/93 1024687 Equipment, Will be
including leased terminated
printing equipment
- --------------------------------------------------------------------------------------------------
12/30/93 063594 Processor and Consigned
printer equipment
- --------------------------------------------------------------------------------------------------
01/07/94 1065911 Harris Double Loan
Form Folder
- --------------------------------------------------------------------------------------------------
01/14/94 1065523 Printing equipment True lease
listed
- --------------------------------------------------------------------------------------------------
03/21/94 1089187 Burgess Frame Consigned
equipment
- --------------------------------------------------------------------------------------------------
06/10/94 1116398 Lease of printing True lease;
equipment Schedule 106
- --------------------------------------------------------------------------------------------------
06/10/94 1116399 Lease of Scitex True lease;
computer Schedule 106
equipment
- --------------------------------------------------------------------------------------------------
07/11/94 1124828 Processor Consigned lease
- --------------------------------------------------------------------------------------------------
09/12/95 1262666 Pumping system Will be
Web Press terminated
==================================================================================================
</TABLE>
<PAGE>
GRAPHICS INDUSTRIES, INC.
LIEN SEARCH RESULTS OF OCTOBER/NOVEMBER/DECEMBER 1995
Page 14
<TABLE>
<CAPTION>
=======================================================================================================================
Type of Lien
---------------------------------------------
Target Jurisdiction Secured Party
UCC Tax Judgment
=======================================================================================================================
<S> <C> <C> <C> <C> <C>
Craftsman Printing North Carolina, UCC-1 financing Clear Clear The Citizens and
Company Mecklenburg statement; Southern National
County Clerk of UCC-3 amendment; Bank; amended to
Superior Court and UCC-3 continuation; NationsBank of
Registry of Deeds UCC-3 partial release Georgia, N.A.
(listed equipment);
UCC-3 continuation &
amendment
- -----------------------------------------------------------------------------------------------------------------------
UCC-1 financing Life Insurance
statement; Company of Georgia
UCC-3 continuation
- -----------------------------------------------------------------------------------------------------------------------
UCC-1 financing Fleet Credit
statement; Corporation
UCC-3 continuation
- -----------------------------------------------------------------------------------------------------------------------
UCC-1 financing The Citizens and
statement; Southern National
UCC-3 continuation & Bank; amended to
amendment; NationsBank of
UCC-3 partial release Georgia, N.A.
(equipment listed)
- -----------------------------------------------------------------------------------------------------------------------
UCC-1 financing Fleet Credit
statement; Corporation
UCC-3 amendment
(adds serial numbers);
UCC-3 continuation
- -----------------------------------------------------------------------------------------------------------------------
UCC-1 financing The CIT Group/
statement Equipment Financing,
Inc.
- -----------------------------------------------------------------------------------------------------------------------
UCC-1 financing Fuji Photo Film
statement U.S.A., Inc.
- -----------------------------------------------------------------------------------------------------------------------
UCC-1 financing Caterpillar Financial
statement Services Corporation
- -----------------------------------------------------------------------------------------------------------------------
UCC-1 financing Fuji Photo Film
statement U.S.A., Inc.
- -----------------------------------------------------------------------------------------------------------------------
UCC-1 financing Fuji Photo Film
statement U.S.A., Inc.
- -----------------------------------------------------------------------------------------------------------------------
UCC-1 financing Fuji Photo Film
statement U.S.A., Inc.
- -----------------------------------------------------------------------------------------------------------------------
<CAPTION>
========================================================================================================
Target Filing Date UCC Number Collateral Covered Status
========================================================================================================
<S> <C> <C> <C> <C>
Craftsman Printing 01/22/85 (fs); 000818 Blanket lien on Will be
Company 11/14/88 (amend.); personal property terminated
11/06/89 (cont.);
08/12/93 (part. release);
08/12/94 (cont. &
amend.)
- --------------------------------------------------------------------------------------------------------
09/19/86 (fs); 010853 Fixture filing Fixture filing
08/14/91 (cont.)
- --------------------------------------------------------------------------------------------------------
09/21/87 (fs); 015766 Leased printing Will be
06/04/92 (cont.) equipment terminated
- --------------------------------------------------------------------------------------------------------
11/14/88 (fs); 020588 Blanket lien on Will be
08/30/93 (cont.); personal property terminated
08/12/93 (part. release)
- --------------------------------------------------------------------------------------------------------
05/15/90 (fs); 007316 Lease of computer Capitalized
08/24/90 (amend.); equipment lease;
03/28/95 (cont.) Schedule 78
- --------------------------------------------------------------------------------------------------------
05/30/91 007006 Heidelberg offset Will be
press terminated
- --------------------------------------------------------------------------------------------------------
09/30/91 012840 Processor Consigned
equipment
- --------------------------------------------------------------------------------------------------------
02/12/92 002094 Crown 35RRTT True lease
Ryder Reach Truck
- --------------------------------------------------------------------------------------------------------
12/08/92 016676 Film processor Consigned
equipment
- --------------------------------------------------------------------------------------------------------
02/01/93 001634 Film processor Consigned
equipment
- --------------------------------------------------------------------------------------------------------
04/24/93 007366 Burgess Frame Consigned
equipment
- --------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
GRAPHICS INDUSTRIES, INC.
LIEN SEARCH RESULTS OF OCTOBER/NOVEMBER/DECEMBER 1995
Page 15
<TABLE>
<CAPTION>
==========================================================================================================================
Type of Lien
---------------------------------------------
Target Jurisdiction Secured Party
UCC Tax Judgment
==========================================================================================================================
<S> <C> <C> <C> <C> <C>
UCC-1 financing The CIT Group/
statement Equipment Financing,
Inc.
- --------------------------------------------------------------------------------------------------------------------------
UCC-1 financing Fuji Photo Film
statement U.S.A., Inc.
- --------------------------------------------------------------------------------------------------------------------------
UCC-1 financing Concord Commercial
statement Corporation
- --------------------------------------------------------------------------------------------------------------------------
UCC-1 financing Scitex America
statement
- --------------------------------------------------------------------------------------------------------------------------
UCC-1 financing MetLife Capital
statement Corporation
- --------------------------------------------------------------------------------------------------------------------------
UCC-1 financing Fuji Photo Film
statement U.S.A., Inc.
- --------------------------------------------------------------------------------------------------------------------------
UCC-1 financing Fuji Photo Film
statement U.S.A., Inc.
==========================================================================================================================
Edwards & Broughton North Carolina, UCC-1 financing N/A N/A Fleet Credit
Company Secretary of State statement; Corporation
UCC-3 continuation
- --------------------------------------------------------------------------------------------------------------------------
UCC-1 financing Fleet Credit
statement; Corporation
UCC-3 amendment
(amends debtor's name
and address);
UCC-3 continuation;
UCC-3 amendment
(amends debtor's
address)
- --------------------------------------------------------------------------------------------------------------------------
UCC-1 financing Pitney Bowes Credit
Statement Corporation
- --------------------------------------------------------------------------------------------------------------------------
UCC-1 financing NationsBank of
statement Georgia, N.A.
- --------------------------------------------------------------------------------------------------------------------------
UCC-1 financing The CIT Group/
statement Equipment Financing,
Inc
==========================================================================================================================
<CAPTION>
==================================================================================================================================
Target Filing Date UCC Number Collateral Covered Status
==================================================================================================================================
<S> <C> <C> <C> <C>
08/12/93 011379 Equipment, Will be
including leased terminated
printing equipment,
listed
- ----------------------------------------------------------------------------------------------------------------------------------
01/04/94 000041 Processor Consigned
equipment
- ----------------------------------------------------------------------------------------------------------------------------------
01/18/94 000789 Printing equipment True lease
and fixtures
- ----------------------------------------------------------------------------------------------------------------------------------
01/25/94 001183 Computer Will be
equipment terminated
- ----------------------------------------------------------------------------------------------------------------------------------
03/08/94 003335 Harris Double Loan
Former Folder
- ----------------------------------------------------------------------------------------------------------------------------------
03/25/94 004281 Burgess Consigned
5K4252VS2 Frame equipment
- ----------------------------------------------------------------------------------------------------------------------------------
07/14/94 009731 Processor Consigned
equipment
==================================================================================================================================
Edwards & Broughton 07/14/88 (fs); 0472007 Leased printing Capitalized lease
Company 06/30/93 (cont.); equipment (transfered to
Central Press of
Miami, Inc.)
Schedule 64
- ----------------------------------------------------------------------------------------------------------------------------------
08/28/89 (fs); 0600371 Leased equipment Capitalized lease
10/13/89 (amend.); listed (transfered to
03/24/94 (cont.); State Street
07/18/94 (amend.) Printing Co.)
Schedule 68
- ----------------------------------------------------------------------------------------------------------------------------------
07/13/93 1014944 Leased equipment True lease
- ----------------------------------------------------------------------------------------------------------------------------------
08/12/93 1024264 Blanket lien on Will be
personal property terminated
- ----------------------------------------------------------------------------------------------------------------------------------
08/13/93 1024686 Equipment, Will be
including leased terminated
equipment, listed
==================================================================================================================================
</TABLE>
<PAGE>
GRAPHICS INDUSTRIES, INC.
LIEN SEARCH RESULTS OF OCTOBER/NOVEMBER/DECEMBER 1995
Page 16
<TABLE>
<CAPTION>
===========================================================================================================================
Type of Lien
----------------------------------------------
Target Jurisdiction Secured Party
UCC Tax Judgment
==============================================================================================================================
<S> <C> <C> <C> <C> <C>
Edwards & Broughton North Carolina, UCC-1 financing Clear See below Fleet Credit
Company Wake County statement; Corporation
UCC-3 continuation
- ------------------------------------------------------------------------------------------------------------------------------
UCC-1 financing NationsBank of
statement Georgia, N.A.
- ------------------------------------------------------------------------------------------------------------------------------
UCC-1 financing The CIT Group/
statement Equipment Financing,
Inc.
- ------------------------------------------------------------------------------------------------------------------------------
Stiles N/A
------
Rich
----
Fifield v.
----------
==============================================================================================================================
Executive Courier, Georgia, Fulton UCC-1 financing Clear Clear The Merchant Bank of
Inc. County and Georgia statement Atlanta
Superior Court
Clerks' Cooperative
Authority
==============================================================================================================================
Graphic Direct, Illinois, Secretary UCC-1 financing Clear N/A Siemens Credit
Inc. of State statement (federal) Corporation
- ------------------------------------------------------------------------------------------------------------------------------
UCC-1 financing Siemens Nixdorf
statement Printing Systems
- ------------------------------------------------------------------------------------------------------------------------------
UCC-1 financing National Equipment
statement with Leasing, Inc., assigned
assignment to Advance Financial
Corporation
- ------------------------------------------------------------------------------------------------------------------------------
UCC-1 financing Advance Financial
statement Corporation
- ------------------------------------------------------------------------------------------------------------------------------
UCC-1 financing Advance Financial
statement with Corporation, assigned
assignment to Bank of Hinsdale
- ------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
=====================================================================================================
Target Filing Date UCC Number Collateral Covered Status
=====================================================================================================
<S> <C> <C> <C> <C>
07/14/88 (fs); 88-13162 Leased printing Capitalized lease
06/29/93 (cont.) equipment (transfered to
Central Press of
Miami, Inc.)
Schedule 64
- -----------------------------------------------------------------------------------------------------
08/12/93 93-13085 Blanket lien on Will be
personal property terminated
- -----------------------------------------------------------------------------------------------------
08/18/93 93-13194 Equipment, Will be
including leased terminated
equipment, listed
- -----------------------------------------------------------------------------------------------------
09/13/85 (complaint 85-CVD-6418 Complaint for Settled
filed); unpaid wages
04/27/89 (judgment following
entered) termination of
employment (no
record of judgement)
=====================================================================================================
10/26/92 783325 Blanket lien on Will be
personal property terminated
and fixture filing
=====================================================================================================
05/05/95 3396820 Leased equipment True lease
listed
- -----------------------------------------------------------------------------------------------------
04/21/95 3391915 Printers and True lease
interfaces listed
- -----------------------------------------------------------------------------------------------------
02/08/95 3362432 Leased vending and True lease
refreshment
machines and
equipment listed
- -----------------------------------------------------------------------------------------------------
07/11/94 3279869 Leased printers and True lease
printing equipment
listed
- -----------------------------------------------------------------------------------------------------
10/08/93 3175929 Telephone and fax True lease
equipment listed
- -----------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
GRAPHICS INDUSTRIES, INC.
LIEN SEARCH RESULTS OF OCTOBER/NOVEMBER/DECEMBER 1995
Page 17
<TABLE>
<CAPTION>
================================================================================================================================
Type of Lien
-----------------------------------------------
Target Jurisdiction Secured Party
UCC Tax Judgment
================================================================================================================================
<S> <C> <C> <C> <C> <C>
UCC-1 financing Advance Financial
statement and Corporation, assigned
assignment to Bank of Hinsdale
- --------------------------------------------------------------------------------------------------------------------------------
UCC-1 financing The CIT
statement Group/Equipment
Financing, Inc.
- --------------------------------------------------------------------------------------------------------------------------------
UCC-1 financing NationsBank of
statement Georgia, N.A.
- --------------------------------------------------------------------------------------------------------------------------------
UCC-1 financing Marcus Auto Lease
statement Corp.
- --------------------------------------------------------------------------------------------------------------------------------
UCC-1 financing Marcus Auto Lease
statement Corp.
- --------------------------------------------------------------------------------------------------------------------------------
UCC-1 financing Fuji Photo Film
statement U.S.A., Inc.
================================================================================================================================
Graphic Direct, Inc. - Illinois, DuPage UCC-1 financing Clear Clear The CIT Group/
Illinois County statement Equipment Financing,
Inc.
================================================================================================================================
Graphic Direct, Michigan, Secretary UCC-1 financing Clear N.A. NationsBank of
Inc.- Michigan of State statement Georgia, N.A.
- --------------------------------------------------------------------------------------------------------------------------------
UCC-1 financing The CIT Group/
statement Equipment Financing,
Inc.
================================================================================================================================
Graphic Direct, Michigan, Oakland UCC-1 financing Clear N.A. The CIT Group/
Inc.- Michigan County statement Equipment Financing,
Inc.
================================================================================================================================
Graphic Industries, Georgia, Fulton UCC-1 financing Clear Clear Citizens and Southern
Inc. County and statement; National Bank
Superior Court UCC-3 continuation;
Clerks' Cooperative UCC-3 amendment
Authority (amends debtor's
address);
UCC-3 continuation;
UCC-3 continuation
- --------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
========================================================================================================
Target Filing Date UCC Number Collateral Covered Status
========================================================================================================
<S> <C> <C> <C> <C>
09/03/93 3163590 Telephone True lease
equipment and
software listed
- --------------------------------------------------------------------------------------------------------
08/24/93 3159775 Equipment, Will be
including leased terminated
printing equipment
listed
- --------------------------------------------------------------------------------------------------------
08/16/93 3156343 Blanket lien on Will be
personal property terminated
- --------------------------------------------------------------------------------------------------------
07/19/93 3146164 Computers and True lease
peripherals listed
- --------------------------------------------------------------------------------------------------------
06/23/93 3136756 Dell computer True lease
equipment listed
- --------------------------------------------------------------------------------------------------------
05/21/93 3124899 Processor listed Consigned
equipment
========================================================================================================
08/11/93 93U-3364 Equipment, Will be
including leased terminated
printing equipment,
listed
========================================================================================================
08/30/93 C752709 Blanket lien on Will be
personal property terminated
- --------------------------------------------------------------------------------------------------------
09/27/93 C761852 Equipment, Will be
including leased terminated
printing equipment
listed
========================================================================================================
09/28/93 93 8471 Equipment, Will be
including leased terminated
printing equipment
listed
========================================================================================================
06/23/78 495428 Blanket lien on raw Will be
materials and goods terminated
- --------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
GRAPHICS INDUSTRIES, INC.
LIEN SEARCH RESULTS OF OCTOBER/NOVEMBER/DECEMBER 1995
Page 18
<TABLE>
<CAPTION>
================================================================================================================================
Type of Lien
----------------------------------------------
Target Jurisdiction Secured Party
UCC Tax Judgment
================================================================================================================================
<S> <C> <C> <C> <C> <C>
UCC-1 financing Citizens and Southern
statement; National Bank
UCC-3 continuation;
UCC-3 amendment
(amends debtor's
address);
UCC-3 continuation;
UCC-3 continuation
- --------------------------------------------------------------------------------------------------------------------------------
UCC-1 financing Jefferson-Pilot Life
statement; Insurance Company
UCC-3 continuation
- --------------------------------------------------------------------------------------------------------------------------------
UCC-1 financing MetLife Capital
statement Corporation
- --------------------------------------------------------------------------------------------------------------------------------
UCC-1 financing MetLife Capital
statement Financial Corporation
- --------------------------------------------------------------------------------------------------------------------------------
UCC-1 financing MetLife Capital
statement Financial Corporation
- --------------------------------------------------------------------------------------------------------------------------------
UCC-1 financing MetLife Capital
statement Financial Corporation
================================================================================================================================
Graphic Print Service, Georgia, Fulton Clear Clear Clear
Inc. County and
Superior Court
Clerk's Cooperative
Authority
================================================================================================================================
Heritage Press, Inc. Texas, Secretary of UCC-1 financing Clear N/A Mercantile National
State statement; Bank at Dallas;
UCC-3 continuation; assigned to Citizens &
UCC-3 assignment; Southern National bank
UCC-3 continuation;
UCC-3 amendment
(amends debtor's name
& address & secured
party's name)
- --------------------------------------------------------------------------------------------------------------------------------
UCC-1 financing NationsBank of
statement (missing); Georgia, N.A., f/k/a
UCC-3 partial release The Citizens and
Southern National Bank
- --------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
======================================================================================================================
Target Filing Date UCC Number Collateral Covered Status
======================================================================================================================
<S> <C> <C> <C> <C>
06/23/78 495431 Blanket lien on Will be
personal property terminated
- ----------------------------------------------------------------------------------------------------------------------
04/29/87 (fs); 674540 Fixture filing Fixture filing
02/10/92 (cont.)
- ----------------------------------------------------------------------------------------------------------------------
08/31/92 780678 Fixture filing Fixture filing
- ----------------------------------------------------------------------------------------------------------------------
07/29/94 000815029 Fixture filing Fixture filing
- ----------------------------------------------------------------------------------------------------------------------
12/30/94 823401 Fixture filing Fixture filing
- ----------------------------------------------------------------------------------------------------------------------
12/30/94 823402 Fixture filing Fixture filing
======================================================================================================================
======================================================================================================================
03/20/78 (fs); 78-037511 Blanket lien Lapsed
02/28/83 (cont.); on accounts receivable
11/15/85 (assign.); and inventory
02/04/88 (cont.);
11/14/88 (amend.)
- ----------------------------------------------------------------------------------------------------------------------
08/14/79 (fs); 79-124300 Original lien Will be
08/11/93 (part. release) missing; all terminated
equipment released
- ----------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
GRAPHICS INDUSTRIES, INC.
LIEN SEARCH RESULTS OF OCTOBER/NOVEMBER/DECEMBER 1995
Page 19
<TABLE>
<CAPTION>
===================================================================================================================
Type of Lien
---------------------------------------------
Target Jurisdiction Secured Party
UCC Tax Judgment
===================================================================================================================
<S> <C> <C> <C> <C> <C>
UCC-1 financing NationsBank of
statement; Georgia, N.A., f/k/a
UCC-3 continuation; The Citizens and
UCC-3 partial release; Southern National Bank
UCC-3 partial release;
UCC-3 partial release;
UCC-3 amendment &
continuation
- -------------------------------------------------------------------------------------------------------------------
UCC-1 financing Fleet Credit
statement; Corporation
UCC-3 amendment
(adds serial numbers);
UCC-3 continuation
- -------------------------------------------------------------------------------------------------------------------
UCC-1 financing Fleet Credit
statement; Corporation
UCC-3 continuation
- -------------------------------------------------------------------------------------------------------------------
UCC-1 financing Fleet Credit
statement; Corporation
UCC-3 continuation
- -------------------------------------------------------------------------------------------------------------------
UCC-1 financing Besco Graphic Systems
statement; Corp.; (no assignment
UCC-3 assignment; to)
UCC-3 continuation Barclays Business
Credit, Inc.; assigned
to Shawmut Capital
Corporation
- -------------------------------------------------------------------------------------------------------------------
UCC-1 financing Eaton Financial
statement Corporation
- -------------------------------------------------------------------------------------------------------------------
UCC-1 financing Eaton Financial
statement Corporation
- -------------------------------------------------------------------------------------------------------------------
UCC-1 financing Fleet Credit
statement; Corporation; assigned
UCC-3 assignment to Fleet Bank of New
York
- -------------------------------------------------------------------------------------------------------------------
<CAPTION>
========================================================================================================
Target Filing Date UCC Number Collateral Covered Status
========================================================================================================
<S> <C> <C> <C> <C>
09/12/85 (fs); 229215 Blanket lien on Will be
06/04/90 (cont.); personal property; terminated
09/18/91 (part. release); release of leased
10/30/92 (part. release); equipment from
08/11/93 (part. release); Fleet Credit
04/21/95 (amend. Corporation;
& cont.) release of
equipment listed;
all equipment
released
- --------------------------------------------------------------------------------------------------------
10/13/86 (fs); 298595 Equipment listed Will be
03/30/87 (amend.); terminated
09/25/91 (cont.)
- --------------------------------------------------------------------------------------------------------
03/07/88 (fs); 00000054858 Leased printing Will be
01/04/93 (cont.) equipment terminated
- --------------------------------------------------------------------------------------------------------
06/08/88 (fs); 00000136773 Leased computer Will be
04/23/93 (cont.) equipment terminated
- --------------------------------------------------------------------------------------------------------
08/27/90 (fs); 00000182051 Consigned goods Consigned
02/02/95 (assign.); and inventory equipment
03/22/95 (cont.)
- --------------------------------------------------------------------------------------------------------
11/21/90 00000244411 Leased copier True lease
equipment
- --------------------------------------------------------------------------------------------------------
12/14/90 00000258764 Leased office True lease
equipment
- --------------------------------------------------------------------------------------------------------
08/30/91 (fs); 00000167980 Leased printing True lease;
12/13/93 (assign.) equipment Schedule 84
- -------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
GRAPHICS INDUSTRIES, INC.
LIEN SEARCH RESULTS OF OCTOBER/NOVEMBER/DECEMBER 1995
Page 20
<TABLE>
<CAPTION>
=======================================================================================================================
Type of Lien
---------------------------------------------
Target Jurisdiction Secured Party
UCC Tax Judgment
=======================================================================================================================
<S> <C> <C> <C> <C> <C>
UCC-1 financing Protective Life
statement Insurance Company
- -----------------------------------------------------------------------------------------------------------------------
UCC-1 financing Eaton Financial Corp.
statement
- -----------------------------------------------------------------------------------------------------------------------
UCC-1 financing Fleet Credit
statement Corporation
- -----------------------------------------------------------------------------------------------------------------------
UCC-1 financing The CIT Group/
statement; Equipment Financing,
UCC-3 partial Inc.; partially assigned
assignment to Texas Commerce
Bank National
Association
- -----------------------------------------------------------------------------------------------------------------------
UCC-1 financing INX International
statement
- -----------------------------------------------------------------------------------------------------------------------
UCC-1 financing Scitex America
statement
- -----------------------------------------------------------------------------------------------------------------------
UCC-1 financing Texas Partners Fund
statement
- -----------------------------------------------------------------------------------------------------------------------
UCC-1 financing DuPont
statement
- -----------------------------------------------------------------------------------------------------------------------
UCC-1 financing Hagen Systems, Inc.
statement
- -----------------------------------------------------------------------------------------------------------------------
UCC-1 financing Texas Commerce Bank
statement National Association
- -----------------------------------------------------------------------------------------------------------------------
UCC-1 financing Man Roland Inc.
statement
- -----------------------------------------------------------------------------------------------------------------------
UCC-1 financing AT&T Capital Leasing
statement Services, Inc.
=======================================================================================================================
<CAPTION>
==================================================================================================
Target Filing Date UCC Number Collateral Covered Status
==================================================================================================
<S> <C> <C> <C> <C>
02/06/92 00000023046 Blanket lien on Fixture filing
personal property
affixed to real
property; fixture
filing
- --------------------------------------------------------------------------------------------------
06/12/92 00000117722 Leased copier True lease
equipment
- --------------------------------------------------------------------------------------------------
06/12/93 00000135408 Leased Scitex True lease;
computer Schedule 102
equipment
- --------------------------------------------------------------------------------------------------
08/11/93 (fs); Equipment, Will be
02/24/95 (part. assign.) 00000156807 including leased terminated
printing equipment,
listed; part of listed
equipment assigned
- --------------------------------------------------------------------------------------------------
10/15/93 00000199226 Lease of INX Consigned
equipment equipment
- --------------------------------------------------------------------------------------------------
01/21/94 009754 Computer Will be
equipment terminated
- --------------------------------------------------------------------------------------------------
05/04/94 0000087662 Blanket lien on N/A (debtor is
personal property not Heritage
Press, Inc.)
- --------------------------------------------------------------------------------------------------
09/26/94 189186 WaterProof Consigned
Proofing System equipment
- --------------------------------------------------------------------------------------------------
10/17/94 203460 Leased computer True lease
equipment and
supplies
- --------------------------------------------------------------------------------------------------
02/13/95 00000029586 Printing equipment Will be
listed terminated
- --------------------------------------------------------------------------------------------------
04/17/95 00000071733 Printing equipment Will be
listed terminated
- --------------------------------------------------------------------------------------------------
08/17/95 00000683305 Lease of copier True lease
equipment
==================================================================================================
</TABLE>
<PAGE>
GRAPHICS INDUSTRIES, INC.
LIEN SEARCH RESULTS OF OCTOBER/NOVEMBER/DECEMBER 1995
Page 21
<TABLE>
<CAPTION>
=======================================================================================================================
Type of Lien
----------------------------------------------
Target Jurisdiction Secured Party
UCC Tax Judgment
=======================================================================================================================
<S> <C> <C> <C> <C> <C>
Heritage Press, Inc. Texas, Dallas UCC-1 financing Clear Clear NationsBank of
County statement; Georgia, N.A., f/k/a
UCC-3 amendment The Citizens and
(amends debtor's name Southern National Bank
to Heritage Press,
Inc.);
UCC-3 continuation;
UCC-3 partial release
(release of trimmer &
paper cutter);
UCC-3 partial release
(release of all
equipment);
UCC-1 continuation &
amendment (amends
name of secured party)
- -----------------------------------------------------------------------------------------------------------------------
UCC-1 financing Fleet Credit
statement; Corporation
UCC-3 amendment
(adds serial numbers);
UCC-3 continuation
- -----------------------------------------------------------------------------------------------------------------------
UCC-1 financing Fleet Credit
statement; Corporation
UCC-3 continuation
- -----------------------------------------------------------------------------------------------------------------------
UCC-1 financing Besco Graphic Systems
statement; Corp.; assigned to
UCC-3 assignment; Barclays Business
UCC-3 assignment; Credit, Inc.; assigned
UCC-3 continuation to Shawmut Capital
Corporation
- -----------------------------------------------------------------------------------------------------------------------
UCC-1 financing Scitex America Corp.
statement
- -----------------------------------------------------------------------------------------------------------------------
UCC-1 financing The CIT Group/
statement Equipment Financing,
Inc.
- -----------------------------------------------------------------------------------------------------------------------
UCC-1 financing Scitex America
statement
=======================================================================================================================
<CAPTION>
=========================================================================================================
Target Filing Date UCC Number Collateral Covered Status
=========================================================================================================
<S> <C> <C> <C> <C>
Heritage Press Inc. 09/09/85 (fs); 012523 Blanket lien on Will be
11/14/88 (amend.); personal property terminated
06/04/90 (cont.); (excluding released
10/30/92 (part. release); equipment)
08/12/93 (part. release);
04/20/95 (amend. &
cont.)
- ---------------------------------------------------------------------------------------------------------
10/13/86 (fs); 011064 Lease of printing True lease;
04/13/87 (amend.); equipment Will be
09/26/91 (cont.) terminated
- ---------------------------------------------------------------------------------------------------------
07/15/88 (fs); 012279 Lease of computer True lease;
04/23/93 (cont.) equipment Will be
terminated
- ---------------------------------------------------------------------------------------------------------
08/27/90 (fs); 010927 Goods and Consigned
01/15/93 (assign); inventory delivered equipment
02/02/95 (assign); by secured party to
03/27/95 (cont.) debtor
- ---------------------------------------------------------------------------------------------------------
08/10/93 003485 Printing equipment Will be
terminated
- ---------------------------------------------------------------------------------------------------------
08/13/93 003521 Equipment, Will be
including leased terminated
printing equipment,
listed
- ---------------------------------------------------------------------------------------------------------
01/24/94 000323 Computer Will be
equipment terminated
=========================================================================================================
</TABLE>
<PAGE>
GRAPHICS INDUSTRIES, INC.
LIEN SEARCH RESULTS OF OCTOBER/NOVEMBER/DECEMBER 1995
Page 22
<TABLE>
<CAPTION>
=======================================================================================================================
Type of Lien
------------------------------------------
Target Jurisdiction Secured Party
UCC Tax Judgment
=======================================================================================================================
<S> <C> <C> <C> <C> <C>
Hoechstetter Printing Pennsylvania, UCC-1 financing N/A N/A PNC Bank, National
Company Secretary of the statement; Association formerly
Commonwealth UCC-3 continuation; Pittsburgh National
UCC-3 partial release Bank
(equipment only)
- -----------------------------------------------------------------------------------------------------------------------
UCC-1 financing Polychrome Americas
statement
- -----------------------------------------------------------------------------------------------------------------------
UCC-1 financing Polychrome Americas
statement
- -----------------------------------------------------------------------------------------------------------------------
UCC-1 financing Phillips & Jacobs, Inc.
statement
- -----------------------------------------------------------------------------------------------------------------------
UCC-1 financing Scitex Americo Corp.
statement
- -----------------------------------------------------------------------------------------------------------------------
UCC-1 financing PNC Bank, National
statement Association
- -----------------------------------------------------------------------------------------------------------------------
UCC-1 financing The CIT Group/
statement Equipment Financing,
Inc.
- -----------------------------------------------------------------------------------------------------------------------
UCC-1 financing EI Dupont De Nemours
statement and Co.
=======================================================================================================================
Hoechstetter Printing Pennsylvania, UCC-1 financing Clear Clear PNC Bank, National
Company, Inc. Allegheny County statement; Association, formerly
Prothonotary UCC-3 partial release Pittsburgh National
(equipment only); Bank
UCC-3 continuation
- -----------------------------------------------------------------------------------------------------------------------
UCC-1 financing Polychrome Americas
statement
- -----------------------------------------------------------------------------------------------------------------------
UCC-1 financing Polychrome Americas
statement
- -----------------------------------------------------------------------------------------------------------------------
UCC-1 financing Scitex America Corp.
statement
- -----------------------------------------------------------------------------------------------------------------------
<CAPTION>
==========================================================================================================
Target Filing Date UCC Number Collateral Covered Status
==========================================================================================================
<S> <C> <C> <C> <C>
Hoechstetter Printing 03/10/89 (fs); 17130064 Blanket lien on Will be
Company 03/04/94 (cont.); personal property terminated
05/31/94 (part. release)
- ----------------------------------------------------------------------------------------------------------
08/19/91 19981196 Printing processor Consigned
equipment
- ----------------------------------------------------------------------------------------------------------
11/20/91 20270738 Printing equipment Consigned
equipment
- ----------------------------------------------------------------------------------------------------------
05/08/92 20780663 Consigned products Consigned
equipment
- ----------------------------------------------------------------------------------------------------------
05/12/93 21930196 Printing equipment Will be
terminated
- ----------------------------------------------------------------------------------------------------------
03/04/94 22890290 Purchase money Will be
security interest in terminated
described
equipment and
prooceeds
- ----------------------------------------------------------------------------------------------------------
06/30/94 23280502 Equipment, Will be
including leased terminated
printing equipment,
listed
- ----------------------------------------------------------------------------------------------------------
01/30/95 23950356 Proofing system Consigned
equipment
==========================================================================================================
03/09/89 (fs); 2048-1989 Blanket lien on Will be
08/19/93 (part. release personal property terminated
of equipment only);
03/01/94 (cont.)
- ----------------------------------------------------------------------------------------------------------
08/20/91 07183 Plate processor Consigned
equipment
- ----------------------------------------------------------------------------------------------------------
11/25/91 09631 Conveyor unit Consigned
equipment
- ----------------------------------------------------------------------------------------------------------
05/13/93 03212 Printing equipment Will be
terminated
- ----------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
GRAPHICS INDUSTRIES, INC.
LIEN SEARCH RESULTS OF OCTOBER/NOVEMBER/DECEMBER 1995
Page 23
<TABLE>
<CAPTION>
==========================================================================================================================
Type of Lien
---------------------------------------------
Target Jurisdiction Secured Party
UCC Tax Judgment
==========================================================================================================================
<S> <C> <C> <C> <C> <C>
UCC-1 financing The CIT Group/
statement Equipment Financing,
Inc.
- --------------------------------------------------------------------------------------------------------------------------
UCC-1 financing PNC Bank, National
statement Association
- --------------------------------------------------------------------------------------------------------------------------
UCC-1 financing EI DuPont de Nemours
statement and Co.
==========================================================================================================================
Hoechstetter Printing Pennsylvania, UCC-1 financing N/A N/A PNC Bank, National
Company, Inc. Allegheny County statement Association (formerly
Recorder of Deeds Pittsburgh National
Bank)
==========================================================================================================================
IPD Printing & Georgia, DeKalb UCC-1 financing Clear Clear The Citizens and
Distributing, Inc. County statement; Southern National
UCC-3 continuation); Bank; assigned to
UCC-3 partial release NationsBank of
(equipment listed); Georgia. N.A.
UCC-3 partial release
(all equipment);
UCC-3 assignment;
UCC-3 continuation
- --------------------------------------------------------------------------------------------------------------------------
UCC-1 financing Paper Recycling, Inc.
statement
- --------------------------------------------------------------------------------------------------------------------------
UCC-1 financing Fleet Credit
statement Corporation
- --------------------------------------------------------------------------------------------------------------------------
UCC-1 financing Polychrome
statement Corporation
- --------------------------------------------------------------------------------------------------------------------------
UCC-1 financing Polychrome
statement Corporation
- --------------------------------------------------------------------------------------------------------------------------
UCC-1 financing AT&T Credit
statement Corporation
- --------------------------------------------------------------------------------------------------------------------------
UCC-1 financing The CIT Group/
statement Equipment Financing,
Inc.
- --------------------------------------------------------------------------------------------------------------------------
<CAPTION>
==================================================================================================================
Target Filing Date UCC Number Collateral Covered Status
==================================================================================================================
<S> <C> <C> <C> <C>
08/23/93 05704 Equipment, Will be
including leased terminated
printing equipment,
listed
- ------------------------------------------------------------------------------------------------------------------
03/02/94 01270 Purchase Money Will be
Security Interest on terminated
printing equipment
and proceeds
- ------------------------------------------------------------------------------------------------------------------
10/24/95 95-6994 Printing equipment Consigned
equipment
==================================================================================================================
Hoechstetter Printing 03/09/89 (fs); 41282 Blanket lien on Will be
Company, Inc. 08/12/93 (part. release personal property terminated
of equipment only);
03/01/94 (cont.)
==================================================================================================================
IPD Printing & 09/12/85 (fs); 85-9510 Blanket lien on Will be
Distributing, Inc. 06/04/90 (cont.); personal property terminated
09/19/91 (part. release); and fixture filing
08/11/93 (part. release);
04/18/95 (assign.)
04/18/95 (cont.)
- ------------------------------------------------------------------------------------------------------------------
03/06/90 90-01845 Loan of equipment Lapsed;
Consigned
equipment
- ------------------------------------------------------------------------------------------------------------------
09/06/91 91-07260 Lease of equipment True lease;
listed Schedule 88
- ------------------------------------------------------------------------------------------------------------------
04/13/92 92-02567 Consignment Consigned
inventory equipment
- ------------------------------------------------------------------------------------------------------------------
04/24/92 92-02954 Plate processor Consigned
equipment
- ------------------------------------------------------------------------------------------------------------------
05/07/93 93-03479 Leased equipment True lease
- ------------------------------------------------------------------------------------------------------------------
08/11/93 93-06297 Equipment, Will be
including leased terminated
printing equipment,
listed
- ------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
GRAPHICS INDUSTRIES, INC.
LIEN SEARCH RESULTS OF OCTOBER/NOVEMBER/DECEMBER 1995
Page 24
<TABLE>
<CAPTION>
===========================================================================================================================
Type of Lien
---------------------------------------------
Target Jurisdiction Secured Party
UCC Tax Judgment
===========================================================================================================================
<S> <C> <C> <C> <C> <C>
UCC-1 financing The CIT Group/
statement Equipment Financing,
Inc.
- ---------------------------------------------------------------------------------------------------------------------------
UCC-1 financing Fleet Credit
statement Corporation
- ---------------------------------------------------------------------------------------------------------------------------
UCC-1 financing Heidelberg Harris, Inc.
statement
- ---------------------------------------------------------------------------------------------------------------------------
UCC-1 financing Trust Company Bank
statement
- ---------------------------------------------------------------------------------------------------------------------------
UCC-1 financing Fleet Credit
statement; Corporation; assigned
UCC-3 assignment to Nederlandsche
Middenstandsbank nv
===========================================================================================================================
Integrated Graphic Georgia, Fulton UCC-1 financing Clear Clear Fleet Credit
Services, Inc. County and statement Corporation
Superior Court
Clerks' Cooperative
Authority
===========================================================================================================================
Mercury Printing Tennessee, UCC-1 financing N/A N/A Western Paper
Company, Inc. Secretary of State statement Company
- ---------------------------------------------------------------------------------------------------------------------------
UCC-1 financing NationsBank of
statement Georgia, N.A.
- ---------------------------------------------------------------------------------------------------------------------------
UCC-1 financing The CIT Group/
statement Equipment Financing,
Inc.
- ---------------------------------------------------------------------------------------------------------------------------
UCC-1 financing Komori America Corp.
statement
- ---------------------------------------------------------------------------------------------------------------------------
UCC-1 financing Fleet Credit
statement Corporation
- ---------------------------------------------------------------------------------------------------------------------------
UCC-1 financing Fleet Credit
statement Corporation
- ---------------------------------------------------------------------------------------------------------------------------
UCC-1 financing Western Paper
statement
===========================================================================================================================
<CAPTION>
==================================================================================================
Target Filing Date UCC Number Collateral Covered Status
==================================================================================================
<S> <C> <C> <C> <C>
08/11/93 93-06298 Equipment, Will be
including leased terminated
printing equipment,
listed
- --------------------------------------------------------------------------------------------------
02/18/94 94-01191 Heidelberg printing Will be
press terminated
- --------------------------------------------------------------------------------------------------
08/31/94 94-06615 Heidelberg printing Will be
press system terminated
- --------------------------------------------------------------------------------------------------
12/20/94 94-09715 Heidelberg printing Will be
press terminated
- --------------------------------------------------------------------------------------------------
10/15/87 (fs); 87-10351 Lease of printing Lapsed
06/28/88 (assign.) equipment
==================================================================================================
Integrated Graphic 07/25/94 000814709 Computer Capitalized
Services, Inc. equipment listed lease;
Schedule 112
==================================================================================================
Mercury Printing 03/12/91 861043 Printing equipment Consigned
Company, Inc. equipment
- --------------------------------------------------------------------------------------------------
08/13/93 93-223994 Blanket lien on Will be
personal property terminated
- --------------------------------------------------------------------------------------------------
08/27/93 229073 Equipment, Will be
including leased terminated
printing equipment
listed
- --------------------------------------------------------------------------------------------------
03/16/94 94-289842 Printing press Will be
terminated
- --------------------------------------------------------------------------------------------------
06/09/94 94-319944 Printing press Loan;
Schedule 105
- --------------------------------------------------------------------------------------------------
06/09/94 94-319945 Lease of computer True lease;
equipment Schedule 107
- --------------------------------------------------------------------------------------------------
12/20/94 94-382375 Densitometer Will be
terminated
==================================================================================================
</TABLE>
<PAGE>
GRAPHICS INDUSTRIES, INC.
LIEN SEARCH RESULTS OF OCTOBER/NOVEMBER/DECEMBER 1995
Page 25
<TABLE>
<CAPTION>
=======================================================================================================================
Type of Lien
---------------------------------------------
Target Jurisdiction Secured Party
UCC Tax Judgment
=======================================================================================================================
<S> <C> <C> <C> <C> <C>
Mercury Printing Tennessee, Shelby UCC-1 financing Clear Clear The CIT Group/
Company, Inc. County Register of statement Equipment Financing,
Deeds Inc.
=======================================================================================================================
Monroe Litho, Inc. New York, UCC-1 financing Clear N/A Marine Midland
Secretary of State statement; Bank--Rochester
UCC-3 continuation;
UCC-3 continuation;
UCC-3 continuation
- -----------------------------------------------------------------------------------------------------------------------
UCC-1 financing Marine Midland Bank,
statement; N.A.--Rochester
UCC-3 continuation;
UCC-3 partial release;
UCC-3 partial release;
UCC-3 continuation;
UCC-3 continuation
(also changes secured
party's address);
UCC-3 partial release
- -----------------------------------------------------------------------------------------------------------------------
UCC-1 financing Marine Midland Bank
statement;
UCC-3 continuation;
UCC-3 continuation;
UCC-3 continuation
(amends secured
party's address)
- -----------------------------------------------------------------------------------------------------------------------
UCC-1 financing Marine Midland Bank
statement;
UCC-3 amendment
(adds serial number);
UCC-3 continuation;
UCC-3 continuation;
UCC-3 continuation
(changes secured
party's address)
- -----------------------------------------------------------------------------------------------------------------------
UCC-1 financing Onondaga Litho Supply
statement Co., Inc.
- -----------------------------------------------------------------------------------------------------------------------
<CAPTION>
==================================================================================================================
Target Filing Date UCC Number Collateral Covered Status
==================================================================================================================
<S> <C> <C> <C> <C>
Mercury Printing 08/23/93 H3 6973 Equipment, Will be
Company,Inc. including leased terminated
printing equipment,
listed
==================================================================================================================
Monroe Litho, Inc. 12/16/76 (fs); 118289 Blanket lien on Will be
07/30/81 (cont.); personal property terminated
07/21/86 (cont.);
07/11/91 (cont.)
- ------------------------------------------------------------------------------------------------------------------
12/16/76 (fs); 118294 Blanket lien on Will be
07/30/81 (cont.); machinery, terminated
08/03/84 (part. release); equipment and
01/06/86 (part. release); fixtures; release of
07/21/86 (cont.); equipment listed;
07/11/91 (cont.); release of
09/18/92 (part. release) equipment financed
with County of
Monroe bond
released; addition
schedule of
released property
- ------------------------------------------------------------------------------------------------------------------
06/08/77 (fs); 75574 Blanket lien on Will be
02/08/92 (cont.); inventory terminated
02/11/87 (cont.);
06/29/92 (cont.)
- ------------------------------------------------------------------------------------------------------------------
08/26/77 (fs); 115118 IBM portable Will be
09/15/77 (amend.); computer terminated
04/05/82 (cont.);
04/21/87 (cont.);
03/19/92 (cont.)
- ------------------------------------------------------------------------------------------------------------------
03/14/91 049031 Equipment and Consigned
products on equipment
consignment
- ------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
GRAPHICS INDUSTRIES, INC.
LIEN SEARCH RESULTS OF OCTOBER/NOVEMBER/DECEMBER 1995
Page 26
<TABLE>
<CAPTION>
=========================================================================================================================
Type of Lien
-------------------------------------------
Target Jurisdiction Secured Party
UCC Tax Judgment
=========================================================================================================================
<S> <C> <C> <C> <C> <C>
UCC-1 financing Scitex America Corp.
statement
- -------------------------------------------------------------------------------------------------------------------------
UCC-1 financing County of Monroe
statement with Industrial Development
assignment Agency; assigned to
Marine Midland Bank,
N.A., as Trustee
- -------------------------------------------------------------------------------------------------------------------------
UCC-1 financing Chase Lincoln First
statement Bank, N.A., as Trustee
- ------------------------------------------------------------------------------------------------------------------------
UCC-1 financing Marine Midland Bank,
statement; N.A.
UCC-3 partial release
- -------------------------------------------------------------------------------------------------------------------------
UCC-1 financing City of Rochester
statement
- -------------------------------------------------------------------------------------------------------------------------
UCC-1 financing MetLife Capital
statement Corporation
- -------------------------------------------------------------------------------------------------------------------------
UCC-1 financing Fleet Credit
statement Corporation
=========================================================================================================================
Monroe Litho, Inc. New York, Monroe UCC-1 financing Clear Clear Marine Midland
County statement; Bank--Rochester
UCC-3 continuation;
UCC-3 continuation;
UCC-3 continuation;
- -------------------------------------------------------------------------------------------------------------------------
UCC-1 financing Marine Midland
statement; Bank--Rochester
UCC-3 continuation;
UCC-3 partial release
(equipment listed);
UCC-3 partial release
(items financed with
bonds);
UCC-3 continuation;
UCC-3 continuation;
UCC 3 partial release
(equipment listed)
- -------------------------------------------------------------------------------------------------------------------------
<CAPTION>
====================================================================================================
Target Filing Date UCC Number Collateral Covered Status
====================================================================================================
<S> <C> <C> <C> <C>
04/12/91 074544 Computer Will be
equipment terminated
- ----------------------------------------------------------------------------------------------------
05/10/91 096907 Leased equipment IRB Loan
and machinery
listed
- ----------------------------------------------------------------------------------------------------
08/19/91 176622 Leased equipment IRB loan
and machinery
purchased with
revenue bonds and
other listed
equipment
- ----------------------------------------------------------------------------------------------------
09/10/91 (fs); 191997 Blanket lien on Will be
08/04/92 (part. release) personal property; terminated
release of property
listed
- ----------------------------------------------------------------------------------------------------
07/31/92 159714 Heidelberg Press IRB loan
- ----------------------------------------------------------------------------------------------------
12/21/93 265216 Printing equipment Loan
listed
- ----------------------------------------------------------------------------------------------------
12/15/94 030136 Offset Press Will be
terminated
====================================================================================================
12/16/76 (fs); 76-22138 Blanket lien on Will be
07/16/81 (cont.); accounts terminated
07/18/86 (cont.); receivable, contract
07/16/91 (cont. rights and chattel
paper
- ----------------------------------------------------------------------------------------------------
12/16/76 (fs); 78-22142 Blanket lien on Will be
07/16/81 (cont.); machinery, terminated
08/03/84 (part. release); equipment and
??/??/?? (part. release); fixtures
07/18/86 (cont.);
07/16/91 (cont.);
07/16/91 (part. release)
- ----------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
GRAPHICS INDUSTRIES, INC.
LIEN SEARCH RESULTS OF OCTOBER/NOVEMBER/DECEMBER 1995
Page 27
<TABLE>
<CAPTION>
=======================================================================================================================
Type of Lien
---------------------------------------------
Target Jurisdiction Secured Party
UCC Tax Judgment
=======================================================================================================================
<S> <C> <C> <C> <C> <C>
UCC-1 financing Marine Midland Bank
statement;
UCC-3 continuation;
UCC-3 continuation;
UCC-3 continuation
- -----------------------------------------------------------------------------------------------------------------------
UCC-1 financing Marine Midland Bank
statement;
UCC-3 amendment
(corrects serial
number);
UCC-3 continuation;
UCC-3 continuation
- -----------------------------------------------------------------------------------------------------------------------
UCC-1 financing Scitex America Corp.
statement
- -----------------------------------------------------------------------------------------------------------------------
UCC-1 financing County of Monroe
statement with Industrial Development
assignment Agency; assigned to
Marine Midland Bank,
N.A., as Trustee
- -----------------------------------------------------------------------------------------------------------------------
UCC-1 financing Chase Lincoln First
statement Bank, N.A., as Trustee
- -----------------------------------------------------------------------------------------------------------------------
UCC-1 financing Marine Midland Bank,
statement; N.A.
UCC-3 partial release
- -----------------------------------------------------------------------------------------------------------------------
UCC-1 financing City of Rochester
statement
- -----------------------------------------------------------------------------------------------------------------------
UCC-1 financing Scitex America Corp.
statement
- -----------------------------------------------------------------------------------------------------------------------
UCC-1 financing MetLife Capital
statement Corporation
- -----------------------------------------------------------------------------------------------------------------------
UCC-1 financing Fleet Credit
statement Corporation
- -----------------------------------------------------------------------------------------------------------------------
UCC-1 financing Onondaga Litho Supply
statement Co.
- -----------------------------------------------------------------------------------------------------------------------
<CAPTION>
==============================================================================================================
Target Filing Date UCC Number Collateral Covered Status
==============================================================================================================
<S> <C> <C> <C> <C>
06/06/77 (fs); 77-08239 Blanket lien on Will be
02/01/92 (cont.); inventory terminated
01/15/87 (cont.);
02/05/92 (cont.)
- --------------------------------------------------------------------------------------------------------------
08/26/77 (fs); 77-13518 Computer system Will be
09/15/77 (amend.); terminated
03/31/82 (cont.);
04/09/87 (cont.);
03/20/92 (cont.)
- --------------------------------------------------------------------------------------------------------------
04/29/91 91-2628 Printing equipment Will be
terminated
- --------------------------------------------------------------------------------------------------------------
05/22/91 91-3276 Lease payments, IRB loan
printing equipment
and fixture filing
- --------------------------------------------------------------------------------------------------------------
08/08/91 91-5553 Printing equipment IRB loan
and machinery and
fixture filing
- --------------------------------------------------------------------------------------------------------------
09/06/91 (fs); 91-06523 Blanket lien on Will be
07/29/92 (part. release) personal property terminated
and fixture filing;
some equiment
released
- --------------------------------------------------------------------------------------------------------------
07/29/92 92-4541 Heidelberg Presses IRB loan
and printing
equipment
- --------------------------------------------------------------------------------------------------------------
08/10/93 93-5380 Printing equipment Will be
terminated
- --------------------------------------------------------------------------------------------------------------
12/27/93 93-8487 Printing equipment Loan
listed
- --------------------------------------------------------------------------------------------------------------
02/16/94 94-1429 Printing press Will be
terminated
- --------------------------------------------------------------------------------------------------------------
03/16/94 94-2053 Supplies on Consigned
consignment equipment
==============================================================================================================
</TABLE>
<PAGE>
GRAPHICS INDUSTRIES, INC.
LIEN SEARCH RESULTS OF OCTOBER/NOVEMBER/DECEMBER 1995
Page 28
<TABLE>
<CAPTION>
=========================================================================================================================
Type of Lien
-----------------------------------------------
Target Jurisdiction Secured Party
UCC Tax Judgment
================================================================================================================================
<S> <C> <C> <C> <C> <C>
Northside Blueprint & Georgia, DeKalb UCC-1 financing Clear Clear The Citizens and
Supply Co County statement; Southern Emory Bank;
UCC-3 continuation; amended to The
UCC-3 amendment Citizens and Southern
(amends debtor's name National Bank
and secured party's
name and address);
UCC-3 continuation;
UCC-3 continuation
- --------------------------------------------------------------------------------------------------------------------------------
UCC-1 financing C&S National Bank;
statement; amended to The
UCC-3 amendment Citizens and Southern
(amends debtor's name National Bank
and secured party's
name and address;
UCC-3 continuation;
UCC-3 continuation
- --------------------------------------------------------------------------------------------------------------------------------
UCC-1 financing The Citizens and
statement; Southern National
UCC-3 amendment Bank;
(amends debtor's name amended to
and secured party's NationsBank of
name and address); Georgia, N.A.
UCC-3 continuation;
UCC-3 amendment
(amends secured
party's name and
address);
UCC-3 continuation
================================================================================================================================
Southern Signatures, Georgia, Fulton See below State tax Clear Georgia Department of
Inc. County and lien on TM Revenue
Superior Court Acquisition
Clerks' Corp. d/b/a
Cooperative Southern
Authority Signatures
- -------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
=================================================================================================================================
Target Filing Date UCC Number Collateral Covered Status
====================================================================================================================================
<S> <C> <C> <C> <C>
Northside Blueprint & 11/02/79 (fs); 211598 Blanket lien on Will be
Supply Co., Inc. 10/08/84 (cont.); personal property terminated
11/10/88 (amend.);
10/23/89 (cont.);
06/07/94 (cont.)
- ------------------------------------------------------------------------------------------------------------------------------------
10/26/84 (fs); 84-10705 Printfold 825 Will be
11/10/88 (amend.); terminated
10/23/89 (cont.);
06/07/94 (cont.)
- ------------------------------------------------------------------------------------------------------------------------------------
10/03/85 85-10404 Blanket lien on Will be
personal property terminated
====================================================================================================================================
05/26/95 Execution No.: Principal $0.00 Lien on former
REV Interest $141.48 owners
94012132A Penalty $756.99
Collection Fee $179.67
Cost $25.00
Total $1,103.06
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
GRAPHICS INDUSTRIES, INC.
LIEN SEARCH RESULTS OF OCTOBER/NOVEMBER/DECEMBER 1995
Page 29
<TABLE>
<CAPTION>
==========================================================================================================================
Type of Lien
-----------------------------------------------
Target Jurisdiction Secured Party
UCC Tax Judgment
==========================================================================================================================
<S> <C> <C> <C> <C> <C>
UCC-1 financing U.S. Concord, Inc.
statement on TM
Acquisition Corp.,
d/b/a Turner Millner
Printing Co.;
UCC-3 amendment
(changes debtor's
name to Southern
Signatures, Inc.);
- --------------------------------------------------------------------------------------------------------------------------
UCC-1 financing U.S. Concord, Inc.
statement on TM
Acquisition Corp.,
d/b/a Turner Millner
Printing Co.;
UCC-3 amendment
(changes debtor's
name and lists record
owner of real
property)
- --------------------------------------------------------------------------------------------------------------------------
UCC-1 financing NationsBank of
statement Georgia, N.A.
- --------------------------------------------------------------------------------------------------------------------------
UCC-1 financing Minnesota Mining &
statement Mfg. Co.
- --------------------------------------------------------------------------------------------------------------------------
UCC-1 financing Minnesota Mining &
statement Mfg. Co.
- --------------------------------------------------------------------------------------------------------------------------
UCC-1 financing Heidelburg USA, Inc.
statement
- --------------------------------------------------------------------------------------------------------------------------
UCC-1 financing Minnesota Mining &
statement Mfg. Co.
==========================================================================================================================
State Printing South Carolina, UCC-1 financing N/A N/A Fuji Photo Film
Company, Inc. Secretary of State statement; U.S.A., Inc.
UCC-3 continuation
- --------------------------------------------------------------------------------------------------------------------------
UCC-1 financing MOM; assigned to
statement with Fiduciary Leasco, Inc.
assignment
- --------------------------------------------------------------------------------------------------------------------------
<CAPTION>
==================================================================================================
Target Filing Date UCC Number Collateral Covered Status
==================================================================================================
<S> <C> <C> <C> <C>
07/08/91 (fs); 761128 Printing equipment True lease
04/15/94 (amend.) listed
- --------------------------------------------------------------------------------------------------
07/08/91 (fs); 761129 Printing equipment True lease
04/15/94 (amend.) and fixture filing
- --------------------------------------------------------------------------------------------------
08/01/94 000815103 Blanket lien on Will be
personal property terminated
- --------------------------------------------------------------------------------------------------
02/17/95 060199501896 Printing processors Consigned
and laminator equipment
- --------------------------------------------------------------------------------------------------
04/10/95 060199505741 Film processor Consigned
pursuant to equipment
Installment
Purchase Contract
- --------------------------------------------------------------------------------------------------
08/11/95 060199515435 Vendor filing on Vendor filing;
Heidelberg Printing paid up in 1996
Press
- --------------------------------------------------------------------------------------------------
09/22/95 060199518267 Proofer pursuant to Consigned
Installment equipment
Purchase Contract
==================================================================================================
03/09/90 (fs); 90-012994 Leased film Consigned
02/10/95 (cont.) processor equipment
- --------------------------------------------------------------------------------------------------
04/24/91 91-020504 Office equipment True lease
- --------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
GRAPHICS INDUSTRIES, INC.
LIEN SEARCH RESULTS OF OCTOBER/NOVEMBER/DECEMBER 1995
Page 30
<TABLE>
<CAPTION>
=======================================================================================================================
Type of Lien
---------------------------------------------
Target Jurisdiction Secured Party
UCC Tax Judgment
=======================================================================================================================
<S> <C> <C> <C> <C> <C>
UCC-1 financing MOM; assigned to
statement with Fiduciary Leasco, Inc.
assignment
- -----------------------------------------------------------------------------------------------------------------------
UCC-1 financing AGFA Financial
statement Services Inc.
- -----------------------------------------------------------------------------------------------------------------------
UCC-1 financing MOM; Fiduciary
statement with Leasco, Inc.
assignment
- -----------------------------------------------------------------------------------------------------------------------
UCC-1 financing Scitex America Corp.
statement
- -----------------------------------------------------------------------------------------------------------------------
UCC-1 financing AGFA Financial
statement Services, Inc.
- -----------------------------------------------------------------------------------------------------------------------
UCC-1 financing Komori America Corp.
statement
- -----------------------------------------------------------------------------------------------------------------------
UCC-1 financing National Bank of South
statement Carolina
- ------------------------------------------------------------------------------------------------------------------------
UCC-1 financing National Bank of South
statement Carolina
- ------------------------------------------------------------------------------------------------------------------------
UCC-1 financing NationsBank of
statement Georgia, N.A.
- ------------------------------------------------------------------------------------------------------------------------
UCC-1 financing The CIT Group/
statement Equipment Financing,
Inc.
- ------------------------------------------------------------------------------------------------------------------------
UCC-1 financing Fleet Credit
statement Corporation
- ------------------------------------------------------------------------------------------------------------------------
UCC-1 financing Fleet Credit
statement Corporation
- ------------------------------------------------------------------------------------------------------------------------
UCC-1 financing EI DuPont de Nemours
statement & Co
- ------------------------------------------------------------------------------------------------------------------------
State Printing South Carolina, UCC-1 financing Clear Clear First Union National
Company, Inc, Richard County statement Bank of Georgia
========================================================================================================================
<CAPTION>
=======================================================================================================
Target Filing Date UCC Number Collateral Covered Status
=======================================================================================================
<S> <C> <C> <C> <C>
10/31/91 91-053072/ Office equipment True lease
91-053077
- -------------------------------------------------------------------------------------------------------
02/10/92 92-006403 Leased printing True lease
equipment
- -------------------------------------------------------------------------------------------------------
07/07/92 92-031710/ Fax machine True lease
92-031713
- -------------------------------------------------------------------------------------------------------
07/27/92 92-034978/ Printing equipment Will be
92-034979 terminated
- -------------------------------------------------------------------------------------------------------
08/03/92 92-036023 Leased printing True lease
equipment
- -------------------------------------------------------------------------------------------------------
02/23/93 930223- Printing equipment Will be
110017A terminated
- -------------------------------------------------------------------------------------------------------
04/09/93 930409- Scitex image setter Will be
110317A terminated
- -------------------------------------------------------------------------------------------------------
06/14/93 930614- Komori Lithrone Will be
112049A terminated
- -------------------------------------------------------------------------------------------------------
08/12/93 930812- Blanket lien on Will be
112248A personal property terminated
- -------------------------------------------------------------------------------------------------------
09/07/93 930907- Equipment,
153625A including leased Will be
printing equipment terminated
- -------------------------------------------------------------------------------------------------------
02/03/94 940203- Leased equipment Will be
132528A (Schedule A not terminated
attached)
- -------------------------------------------------------------------------------------------------------
02/22/94 940222- Printing equipment Capitalized lease;
143635A Schedule 68
- -------------------------------------------------------------------------------------------------------
03/03/95 950303- Printing equipment Consigned
144757A equipment
- -------------------------------------------------------------------------------------------------------
02/12/93 93-0482 Blanket lien on Will be
personal property terminated
and fixture filing
=======================================================================================================
</TABLE>
<PAGE>
GRAPHICS INDUSTRIES, INC.
LIEN SEARCH RESULTS OF OCTOBER/NOVEMBER/DECEMBER 1995
Page 31
<TABLE>
<CAPTION>
=======================================================================================================================
Type of Lien
---------------------------------------------
Target Jurisdiction Secured Party
UCC Tax Judgment
=======================================================================================================================
<S> <C> <C> <C> <C> <C>
The Stein Printing Georgia, Fulton UCC-1 financing Clear Clear NationsBank of
Company, Inc. County and statement; Georgia, N.A., f/k/a
Superior Court UCC-3 partial release; The Citizens and
Clerks' Cooperative UCC-3 continuation; Southern National
Authority UCC-3 continuation; Bank--Factoring
UCC-3 amendment Department
(amends debtors'
address);
UCC-3 continuation;
- -----------------------------------------------------------------------------------------------------------------------
UCC-1 financing The Citizens and
statement; Southern National Bank
UCC-3 continuation;
UCC-3 amendment
(amends debtor's
address);
UCC-3 continuation
- -------------------------------------------------------------------------------------------------------------------------
UCC-1 financing Fleet Credit
statement; Corporation
UCC-3 continuation
- -------------------------------------------------------------------------------------------------------------------------
UCC-1 financing Fleet Credit
statement; Corporation
UCC-3 continuation
- -------------------------------------------------------------------------------------------------------------------------
UCC-1 financing Vendor Funding Co.,
statement Inc.
- -------------------------------------------------------------------------------------------------------------------------
UCC-1 financing United States Leasing
statement;
UCC-3 continuation
(filing in error
Roswell Auto Outlet,
Debtor; Bank South,
N.A., Secured Party)
- --------------------------------------------------------------------------------------------------------------------------
UCC-1 financing Vendor Funding Co.,
statement Inc.
- --------------------------------------------------------------------------------------------------------------------------
UCC-1 financing Vendor Funding Co.,
statement Inc.
- --------------------------------------------------------------------------------------------------------------------------
UCC-1 financing Xerox Corporation
statement
- --------------------------------------------------------------------------------------------------------------------------
UCC-1 financing Xerox Corporation
statement
- --------------------------------------------------------------------------------------------------------------------------
<CAPTION>
==================================================================================================
Target Filing Date UCC Number Collateral Covered Status
==================================================================================================
<S> <C> <C> <C> <C>
07/13/77 (fs); 472033 Blanket lien on Will be
10/02/?? (part. release); personal property; terminated
06/07/82 (cont.); partial release of
03/20/87 (cont.); listed collateral
05/10/88 (amend.);
05/20/92 (cont.)
- --------------------------------------------------------------------------------------------------
05/22/81 (fs); 558543 Blanket lien on Will be
03/24/86(cont.); personal property terminated
11/10/88 (amend.);
01/22/91 (cont.)
- --------------------------------------------------------------------------------------------------
06/02/87 (fs); 676580 Leased printing Will be
01/21/92 (cont.) equipment terminated
- --------------------------------------------------------------------------------------------------
06/02/87 (fs); 676764 Leased printing Will be
01/21/92 (cont.) equipment terminated
- --------------------------------------------------------------------------------------------------
03/30/90 734958 Office equipment Lapsed
- --------------------------------------------------------------------------------------------------
07/23/90 (fs) 741522 Xerox copier Lapsed
- --------------------------------------------------------------------------------------------------
10/05/90 745842 Printing equipment Lapsed
- --------------------------------------------------------------------------------------------------
02/04/91 752959 Computer equipment True lease
- --------------------------------------------------------------------------------------------------
02/19/91 753757 Copier equipment True lease
- --------------------------------------------------------------------------------------------------
02/19/91 753769 Copier equipment True lease
- --------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
GRAPHICS INDUSTRIES, INC.
LIEN SEARCH RESULTS OF OCTOBER/NOVEMBER/DECEMBER 1995
Page 32
<TABLE>
<CAPTION>
=======================================================================================================================
Type of Lien
---------------------------------------------
Target Jurisdiction Secured Party
UCC Tax Judgment
=======================================================================================================================
<S> <C> <C> <C> <C> <C>
UCC-1 financing Xerox Corporation
statement
- -----------------------------------------------------------------------------------------------------------------------
UCC-1 financing Vendor Funding Co.,
statement Inc.
- -----------------------------------------------------------------------------------------------------------------------
UCC-1 financing Xerox Corporation
statement
- -----------------------------------------------------------------------------------------------------------------------
UCC-1 financing Xerox Corporation
statement
- -----------------------------------------------------------------------------------------------------------------------
UCC-1 financing Linotype Hell Company
statement
- -----------------------------------------------------------------------------------------------------------------------
UCC-1 financing Konica Business
statement Machines
- -----------------------------------------------------------------------------------------------------------------------
UCC-1 financing Copelco Credit
statement Corporation
- -----------------------------------------------------------------------------------------------------------------------
UCC-1 financing Xerox Corporation
statement
- -----------------------------------------------------------------------------------------------------------------------
UCC-1 financing Xerox Corporation
statement
- -----------------------------------------------------------------------------------------------------------------------
UCC-1 financing Xerox Corporation
statement
- -----------------------------------------------------------------------------------------------------------------------
UCC-1 financing Member Services
statement Corporation, d/b/a
Member Bank Leasing
- -----------------------------------------------------------------------------------------------------------------------
UCC-1 financing Fleet Credit
statement Corporation
- -----------------------------------------------------------------------------------------------------------------------
UCC-1 financing The CIT Group/
statement Equipment Financing,
Inc.
- -----------------------------------------------------------------------------------------------------------------------
UCC-1 financing The CIT Group/
statement Equipment Financing,
Inc.
- -----------------------------------------------------------------------------------------------------------------------
<CAPTION>
=============================================================================================================
Target Filing Date UCC Number Collateral Covered Status
=============================================================================================================
<S> <C> <C> <C> <C>
03/13/91 754945 Copier equipment True lease
- -------------------------------------------------------------------------------------------------------------
04/10/91 756498 Computer True lease
equipment
- -------------------------------------------------------------------------------------------------------------
10/22/91 766229 Copier equipment True lease
- -------------------------------------------------------------------------------------------------------------
10/22/91 766231 Copier equipment True lease
- -------------------------------------------------------------------------------------------------------------
11/20/92 000784601 Printing equipment Will be
listed terminated
- -------------------------------------------------------------------------------------------------------------
01/04/93 000789187 Leased copier True lease
equipment
- -------------------------------------------------------------------------------------------------------------
02/26/93 000789461 Leased copier True lease
- -------------------------------------------------------------------------------------------------------------
03/04/93 000789477 Copier equipment True lease
- -------------------------------------------------------------------------------------------------------------
03/04/93 000789482 Copier equipment True lease
- -------------------------------------------------------------------------------------------------------------
03/04/93 000789695 Copier equipment True lease
- -------------------------------------------------------------------------------------------------------------
03/10/93 000789695 Leased printing Capitalized lease
equipment listed
- -------------------------------------------------------------------------------------------------------------
05/28/93 000793429 Leased offset True lease;Schedule 96
press
- -------------------------------------------------------------------------------------------------------------
05/28/93 000793431 Equipment, Will be
including leased terminated
printing equipment,
listed and fixture
filing
- -------------------------------------------------------------------------------------------------------------
05/28/93 000793432 Equipment, Will be
including leased terminated
printing equipment,
listed
- -------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
GRAPHICS INDUSTRIES, INC.
LIEN SEARCH RESULTS OF OCTOBER/NOVEMBER/DECEMBER 1995
Page 33
<TABLE>
<CAPTION>
=======================================================================================================================
Type of Lien
---------------------------------------------
Target Jurisdiction Secured Party
UCC Tax Judgment
=======================================================================================================================
<S> <C> <C> <C> <C> <C>
UCC-1 financing Vendor Funding Co.,
statement Inc.
- -----------------------------------------------------------------------------------------------------------------------
UCC-1 financing The CIT Group/
statement Equipment Financing,
Inc.
- -----------------------------------------------------------------------------------------------------------------------
UCC-1 financing E.I. DuPont de
statement Nemours and Co.
- -----------------------------------------------------------------------------------------------------------------------
Tower Printing Georgia, Fulton UCC-1 financing Clear Clear Xerox Corporation
Company County and Georgia statement
Superior Court
Clerks' Cooperative
Authority
- -----------------------------------------------------------------------------------------------------------------------
W.E. Andrews Co., Connecticut, UCC-1 financing Clear Clear Fuji Photo Film
Inc. Secretary of State statement U.S.A., Inc.
- -----------------------------------------------------------------------------------------------------------------------
UCC-1 financing The CIT Group/
statement Equipment Financing,
Inc.
- -----------------------------------------------------------------------------------------------------------------------
W.E. Andrews Co., Connecticut, UCC-1 financing Clear Clear Shawmut Bank
Inc. Hartford County statement; Connecticut, N.A.,
UCC-3 amendment f/k/a Connecticut
(amends secured National Bank
party's name & adds
collateral);
UCC-3 partial release;
UCC-3 amendment
(adds collateral
- -----------------------------------------------------------------------------------------------------------------------
UCC-1 financing Shawmut Bank
statement; Connecticut, N.A.,
UCC-3 amendment f/k/a The Connecticut
(amends name of National Bank
secured party & adds
collateral);
UCC-3 partial release;
UCC-3 amendment
(adds collateral)
- -----------------------------------------------------------------------------------------------------------------------
UCC-1 financing Scitex America Corp.
statement
- -----------------------------------------------------------------------------------------------------------------------
<CAPTION>
==========================================================================================================
Target Filing Date UCC Number Collateral Covered Status
==========================================================================================================
<S> <C> <C> <C> <C>
07/21/93 000794377 Linotype True lease
- ----------------------------------------------------------------------------------------------------------
08/10/93 000797085 Equipment, Will be
including leased terminated
printing equipment,
listed
- ----------------------------------------------------------------------------------------------------------
11/02/94 000819713 WaterProof Consigned
Proofing System equipment
- ----------------------------------------------------------------------------------------------------------
Tower Printing 10/12/90 746269 Copier True lease
Company
- ----------------------------------------------------------------------------------------------------------
W.E. Andrews Co., 04/06/93 1004661 Film processor Consigned
Inc. equipment
- ----------------------------------------------------------------------------------------------------------
08/13/93 1024530 Equipment, Will be
including leased terminated
printing equipment,
listed
- ----------------------------------------------------------------------------------------------------------
W.E. Andrews Co., 03/20/91 (fs); Volume 3147, Printing equipment; Will be
Inc. 03/11/93 (amend.); Page 336 some equipment terminated
08/17/93 (part. release); added; some
??/??/95 (amend.) equipment released
- ----------------------------------------------------------------------------------------------------------
02/27/92 (fs); Volume 3237, Fixture filing; some Will be
03/11/93 (amend.); Page 325 collateral release; terminated
08/17/93 (part. release); some collateral
??/??/95 (amend.) added
- ----------------------------------------------------------------------------------------------------------
01/21/93 Volume 3333, Computer Will be
Page 37 equipment listed terminated
- ----------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
GRAPHICS INDUSTRIES, INC.
LIEN SEARCH RESULTS OF OCTOBER/NOVEMBER/DECEMBER 1995
Page 34
<TABLE>
<CAPTION>
=======================================================================================================================
Type of Lien
---------------------------------------------
Target Jurisdiction Secured Party
UCC Tax Judgment
=======================================================================================================================
<S> <C> <C> <C> <C> <C>
UCC-1 financing The CIT Group/
statement; Equipment Financing,
UCC-3 partial release Inc.
- -----------------------------------------------------------------------------------------------------------------------
UCC-1 financing Shawmut Bank
statement; Connecticut, N.A.
UCC-3 partial release;
UCC-3 amendment
(adds collateral);
UCC-3 amendment
(adds collateral)
- -----------------------------------------------------------------------------------------------------------------------
UCC-1 financing The CIT Group/
statement; Equipment Financing,
UCC-3 release Inc.
- -----------------------------------------------------------------------------------------------------------------------
UCC-1 financing Shawmut Bank
statement; Connecticut, N.A.
UCC-3 amendment
(collateral added)
- -----------------------------------------------------------------------------------------------------------------------
UCC-1 financing Shawmut Bank
statement; Connecticut, N.A.
UCC-3 amendment
(adds collateral)
- -----------------------------------------------------------------------------------------------------------------------
UCC-1 financing Fleet Credit
statement Corporation
- -----------------------------------------------------------------------------------------------------------------------
UCC-1 financing Shawmut Bank
statement Connecticut, N.A.
=======================================================================================================================
<CAPTION>
========================================================================================================
Target Filing Date UCC Number Collateral Covered Status
========================================================================================================
<S> <C> <C> <C> <C>
08/17/93 (fs); Volume 3395, Equipment, Will be
??/??/?? (part. release) Page 119 including leased terminated
printing equipment,
listed; some
collateral released
- --------------------------------------------------------------------------------------------------------
03/11/93 (fs); Volume 3345, Blanket lien on Will be
08/17/93 (part. release); Page 273 personal property terminated
10/25/93 (amend.); and fixture filing;
??/??/95 (amend.) some equipment
released; some
equipment added
- --------------------------------------------------------------------------------------------------------
08/17/93 (fs); Volume 3395, Equipment, Will be
??/??/?? (part. release) Page 106 including leased terminated
printing equipment,
listed; some
equipment released
- --------------------------------------------------------------------------------------------------------
10/25/93 (fs); Volume 3416, Purchase money Will be
??/??/95 (amend.) Page 210 security interest in terminated
property;
equipment added
- --------------------------------------------------------------------------------------------------------
10/25/93 (fs); Volume 3416, Blanket lien on Will be
??/??/95 (amend.) Page 212 personal property terminated
and fixture filing
- --------------------------------------------------------------------------------------------------------
08/04/94 Volume 3503, Equipment listed Capitalized
Page 293 and fixture filing lease;
Schedule 67
- --------------------------------------------------------------------------------------------------------
??/??/95 Volume 3582, Purchase money Will be
Page 106 security interest in terminated
equipment listed
and fixture filing
========================================================================================================
</TABLE>
<PAGE>
GRAPHIC INDUSTRIES, INC.
LIEN SEARCH RESULTS OF OCTOBER/NOVEMBER/DECEMBER 1995
Page 35
<TABLE>
<CAPTION>
=======================================================================================================================
Type of Lien
---------------------------------------------
Target Jurisdiction Secured Party
UCC Tax Judgment
=======================================================================================================================
<S> <C> <C> <C> <C> <C>
W.E. Andrews Co., Connecticut, UCC-1 financing Clear Clear Connecticut National
Inc. of Connecticut Secretary of statement; Bank;
State UCC-3 amendment amended to Shawmut
(amends secured Bank Connecticut,
party's name to N.A.
Shawmut Bank
Connecticut, N.A. and
adds blanket lien on
personal property;
UCC-3 partial release
(releases Planeta
printing press);
UCC-3 partial release
(releases equipment);
UCC-3 amendment
(adds equipment
itemized on schedule
and invoices)
- -----------------------------------------------------------------------------------------------------------------------
UCC-1 financing Fleet Credit
statement Corporation
- ----------------------------------------------------------------------------------------------------------------------
UCC-1 financing Fleet Credit
statement Corporation
- -----------------------------------------------------------------------------------------------------------------------
UCC-1 financing The Connecticut
statement; National Bank;
UCC-3 amendment amended to Shawmut
(amends secured Bank Connecticut,
party's name and adds N.A.
blanket lien on
personal property);
UCC-3 partial release
(releases Planeta
printing press);
UCC-3 partial release
(releases all
equipment);
UCC-3 amendment
(adds itemized
equipment
- -----------------------------------------------------------------------------------------------------------------------
<CAPTION>
==============================================================================================================
Target Filing Date UCC Number Collateral Covered Status
==============================================================================================================
<S> <C> <C> <C> <C>
W.E. Andrews Co. 02/22/91 (fs); 914344 Printing equipment Will be
Inc. of Connecticut 03/11/93 (amend.); listed; blanket lien terminated
06/02/93 (part. release); on personal
08/18/93 (part. release); property added
06/09/95 (amend.) through
amendment;
Planeta printing
press released; all
equipment
released; additional
equipment added
- --------------------------------------------------------------------------------------------------------------
08/30/91 936309 Leased equipment True lease;
listed Schedule 79
- --------------------------------------------------------------------------------------------------------------
08/30/91 936310 Leased equipment True lease;
listed Schedule 81
- --------------------------------------------------------------------------------------------------------------
02/27/92 (fs); 956982 Solar scanner; Will be
03/11/93 (amend.); blanket lien on terminated
06/02/93 (part. release); personal property
08/18/93 (part. release) added; Planeta
06/09/95 printing press
added; all
equipment
released;
equipment listed
itemized on
schedule added
- --------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
GRAPHICS INDUSTRIES, INC.
LIEN SEARCH RESULTS OF OCTOBER/NOVEMBER/DECEMBER 1995
Page 36
<TABLE>
<CAPTION>
=======================================================================================================================
Type of Lien
---------------------------------------------
Target Jurisdiction Secured Party
UCC Tax Judgment
=======================================================================================================================
<S> <C> <C> <C> <C> <C>
UCC-1 financing Shawmut Bank
statement; Connecticut, N.A.
UCC-3 partial release
(release of Planeta
printing press);
UCC-3 partial release
(release of all
equipment);
UCC-3 amendment
(adds equipment);
UCC-3 amendment
(adds itemized
equipment)
- -----------------------------------------------------------------------------------------------------------------------
UCC-1 financing The CIT Group/
statement Equipment Financing,
UCC-3 partial release Inc.
(itemized equipment)
- -----------------------------------------------------------------------------------------------------------------------
UCC-1 financing Shawmut Bank
statement; Connecticut, N.A.
UCC-3 amendment
- -----------------------------------------------------------------------------------------------------------------------
UCC-1 financing Shawmut Bank
statement; Connecticut, N.A.
UCC-3 amendment
(adds itemized
equipment)
- -----------------------------------------------------------------------------------------------------------------------
UCC-1 financing Fleet Credit
statement Corporation
- -----------------------------------------------------------------------------------------------------------------------
UCC-1 financing Shawmut Bank
statement Connecticut, N.A.
=======================================================================================================================
W.E. Andrews Connecticut, UCC-1 financing Clear Clear Fuji Photo Film
Company Inc. of CT Secretary of State statement U.S.A., Inc.
=======================================================================================================================
W.E. Andrews Inc. Connecticut, UCC-1 financing Clear Clear Fuji Photo Film
Company of Secretary of state statement U.S.A., Inc.
Connecticut
=======================================================================================================================
<CAPTION>
===================================================================================================================
Target Filing Date UCC Number Collateral Covered Status
===================================================================================================================
<S> <C> <C> <C> <C>
03/11/93 (fs); 1001325 Blanket lien on Will be
06/02/93 (part. release); personal property; terminated
09/16/93 (part. release); Planeta printing
10/22/93 (amend.); press released; all
06/09/95 (amend.) equipment
released;
Heildelberg Six
Color and Grafix
IR Dryer added;
itemized equipment
added
- -------------------------------------------------------------------------------------------------------------------
08/13/93 (fs); 1024529 Equipment, Will be
06/09/95 (part. release) including leased terminated
equipment, listed;
itemized equipment
released
- -------------------------------------------------------------------------------------------------------------------
10/22/93 (fs); 1032615 Purchase money Will be
06/09/95 (amend.) security interest in terminated
Heidelberg Six
Color and Grafix
IR Dryer; adds
itemized equipment
- -------------------------------------------------------------------------------------------------------------------
10/22/93 (fs); 1032616 Blanket lien on Will be
06/09/95 (amend.) personal property; terminated
adds itemized
equipment
- -------------------------------------------------------------------------------------------------------------------
08/04/94 1067863 Leased Komori Capitalized
printing press lease;
Schedule 69
- -------------------------------------------------------------------------------------------------------------------
05/01/95 1617796 Equipment itemized Will be
on attachments terminated
===================================================================================================================
11/10/94 1586937 Thermoprinter Consigned
equipment
===================================================================================================================
01/18/95 00015993138 Processor Consigned
equipment
- -------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
GRAPHICS INDUSTRIES, INC.
LIEN SEARCH RESULTS OF OCTOBER/NOVEMBER/DECEMBER 1995
Page 37
<TABLE>
<CAPTION>
===============================================================================================================================
Type of Lien
-----------------------------------------------
Target Jurisdiction Secured Party
UCC Tax Judgment
===============================================================================================================================
<S> <C> <C> <C> <C> <C>
UCC-1 financing ??? (not available at
statement this time-recent filing)
===============================================================================================================================
W. E. Andrews Co., Connecticut, UCC-1 financing Clear Clear Fuji Photo Film
Inc. of CT Secretary of State statement U.S.A., Inc.
- -------------------------------------------------------------------------------------------------------------------------------
UCC-1 financing Fuji Photo Film
statement U.S.A., Inc.
===============================================================================================================================
W.E. Andrews- Connecticut, UCC-1 financing Clear Clear Scitex America Corp.
Hartford Secretary of State statement
===============================================================================================================================
W.E. Andrews Co., Massachusetts, UCC-1 financing Clear N/A New England
Inc. Secretary of the statement; Merchants National
Commonwealth UCC-3 partial release; Bank, n/k/a Fleet Bank
UCC-3 partial release; of Massachusetts, N.A.
UCC-3 continuation;
UCC-3 continuation;
UCC-3 continuation;
UCC-3 continuation;
- -------------------------------------------------------------------------------------------------------------------------------
UCC-1 financing Fleet Bank of
statement Massachusetts, N.A.,
UCC-3 partial release; successor to Bank of
UCC-3 continuation; New England, N.A.
UCC-3 partial release;
- -------------------------------------------------------------------------------------------------------------------------------
UCC-1 financing Scitex America Corp.
statement
- -------------------------------------------------------------------------------------------------------------------------------
UCC-1 financing Northland Industrial
statement Truck Co., Inc.
- -------------------------------------------------------------------------------------------------------------------------------
UCC-1 financing NYNEX Credit
statement Company
- -------------------------------------------------------------------------------------------------------------------------------
UCC-1 financing Fleet Credit
statement Corporation
UCC-3 amendment
(adds serial number to
equipment)
- -------------------------------------------------------------------------------------------------------------------------------
UCC-1 financing Northland Industrial
statement with Truck Company, Inc.,
assignment assigned to Yale
Financial Services, Inc.
- -------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
====================================================================================================
Target Filing Date UCC Number Collateral Covered Status
====================================================================================================
<S> <C> <C> <C> <C>
0001652646
====================================================================================================
03/12/91 916291 Processor and tray Consigned
equipment
- ----------------------------------------------------------------------------------------------------
04/18/94 1053863 Processor with Consigned
dryer equipment
====================================================================================================
01/20/93 0995384 Equipment listed Will be
terminated
====================================================================================================
05/21/75 (fs); 914987 Blanket lien on Will be
04/04/80 (cont.); personal property terminated
04/12/85 (cont.); (Heidelberg Harris
03/27/90 (cont.); press and
01/11/93 (part. release); equipment,
09/07/93 (part. release); machinery and
04/03/95 (cont.) furnishings
released)
- ----------------------------------------------------------------------------------------------------
05/24/88 (fs); 787180 Blanket lien on Will be
01/11/93 (part. release); personal property terminated
04/21/93 (cont.); (all equipment
08/12/93 (part. release) released)
- ----------------------------------------------------------------------------------------------------
05/14/91 026216 Printing equipment Will be
terminated
- ----------------------------------------------------------------------------------------------------
01/21/92 069892 Lease of Yale True lease
Motorized Hand
Truck
- ----------------------------------------------------------------------------------------------------
02/10/92 073628 Lease of computer True lease
equipment
- ----------------------------------------------------------------------------------------------------
02/20/92 (fs); 075475 Leased printing True lease;
02/23/93 (amend.) equipment Schedule 91
- ----------------------------------------------------------------------------------------------------
03/02/92 077216 Leased Yale Gas True lease
Forklift
- ----------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
GRAPHICS INDUSTRIES, INC.
LIEN SEARCH RESULTS OF OCTOBER/NOVEMBER/DECEMBER 1995
Page 38
<TABLE>
<CAPTION>
=======================================================================================================================
Type of Lien
---------------------------------------------
Target Jurisdiction Secured Party
UCC Tax Judgment
=======================================================================================================================
<S> <C> <C> <C> <C> <C>
UCC-1 financing Northland Industrial
statement Truck Company, Inc.;
assigned to Yale
Financial Services, Inc.
- ------------------------------------------------------------------------------------------------------------------------
UCC-1 financing Fleet Credit
statement Corporation
- ------------------------------------------------------------------------------------------------------------------------
UCC-1 financing IBM Credit
statement Corporation
- ------------------------------------------------------------------------------------------------------------------------
UCC-1 financing The CIT Group/
statement; Equipment Financing,
UCC-3 partial release Inc.
- ------------------------------------------------------------------------------------------------------------------------
UCC-1 financing Fleet Bank of
statement Massachusetts, Inc.
- ------------------------------------------------------------------------------------------------------------------------
UCC-1 financing Fleet Credit
statement Corporation
- ------------------------------------------------------------------------------------------------------------------------
UCC-1 financing Heidelberg Harris, Inc.
statement
- ------------------------------------------------------------------------------------------------------------------------
UCC-1 financing Sun Chemical Corp.
statement
- ------------------------------------------------------------------------------------------------------------------------
UCC-1 financing Northland Industrial
statement Truck Co., Inc.
- ------------------------------------------------------------------------------------------------------------------------
UCC-1 financing PrimeSource
statement Corporation, d/b/a
Momentum
- ------------------------------------------------------------------------------------------------------------------------
UCC-1 financing Fleet Bank of
statement Massachusetts, Inc.
========================================================================================================================
W.E Andrews Co., Massachuetts, U.S. N/A Clear N/A
Inc. District Court
========================================================================================================================
<CAPTION>
==================================================================================================
Target Filing Date UCC Number Collateral Covered Status
==================================================================================================
<S> <C> <C> <C> <C>
03/02/92 077217 Leased Yale Gas True lease
Forklift
- --------------------------------------------------------------------------------------------------
03/30/92 082511 All tangible Safety net
equipment leased
or financed by
secured party to
debtor
- --------------------------------------------------------------------------------------------------
06/24/92 099437 Leased IBM True lease
equipment listed
- --------------------------------------------------------------------------------------------------
08/12/93 (fs); 179527 Equipment, Will be
06/19/95 (part. including leased terminated
release) printing equipment,
listed
- --------------------------------------------------------------------------------------------------
12/01/93 200973 Blanket lien on Will be
personal property terminated
(except equipment)
- --------------------------------------------------------------------------------------------------
08/04/94 252510 Leased printing Capitalized
equipment lease;
Schedule 65
- --------------------------------------------------------------------------------------------------
09/27/94 263471 Heidelberg Harris Will be
press system terminated
- --------------------------------------------------------------------------------------------------
11/04/94 271842 Office furnishings True lease
and air conditioner
- --------------------------------------------------------------------------------------------------
02/23/95 294817 Yale Model True lease
GLCO60
- --------------------------------------------------------------------------------------------------
06/05/95 316950 Printing equipment Consigned
equipment
- --------------------------------------------------------------------------------------------------
06/15/95 319801 Harris Heidleberg Will be
Web press (Exhibit terminated
A not attached)
==================================================================================================
==================================================================================================
</TABLE>
<PAGE>
GRAPHICS INDUSTRIES, INC.
LIEN SEARCH RESULTS OF OCTOBER/NOVEMBER/DECEMBER 1995
<TABLE>
<CAPTION>
=======================================================================================================================
Type of Lien
---------------------------------------------
Target Jurisdiction Secured Party
UCC Tax Judgment
=======================================================================================================================
<S> <C> <C> <C> <C> <C>
W.E. Andrews Co., Massachusetts, UCC-1 financing Clear N/A Bank of New England,
Bedford Town statement; N.A. (n/k/a Fleet Bank
Clerk UCC-3 partial release; of Mass.)
UCC-3 partial release;
UCC-3 continuation
- -----------------------------------------------------------------------------------------------------------------------
UCC-1 financing Northland Industrial
statement Truck Co., Inc.
- -----------------------------------------------------------------------------------------------------------------------
UCC-1 financing NYNEX Credit
statement Company
- -----------------------------------------------------------------------------------------------------------------------
UCC-1 financing Fleet Credit
statement Corporation
UCC-3 amendment
(adds serial numbers)
- -----------------------------------------------------------------------------------------------------------------------
UCC-1 financing Northland Industrial
statement with Truck Company, Inc.;
assignment
- -----------------------------------------------------------------------------------------------------------------------
UCC-1 financing Northland Industrial
statement Truck Company, Inc.
assigned to Yale
Services, Inc.
- -----------------------------------------------------------------------------------------------------------------------
UCC-1 financing Northland Industrial
statement with Truck; assigned to Yale
assignment Financial Services, Inc.
- -----------------------------------------------------------------------------------------------------------------------
UCC-1 financing IBM Credit
statement Corporation
- -----------------------------------------------------------------------------------------------------------------------
UCC-1 financing Fleet Credit
statement Corporation
- -----------------------------------------------------------------------------------------------------------------------
UCC-1 financing The CIT Group/
statement; Equipment Financing,
UCC-3 partial release Inc.
- -----------------------------------------------------------------------------------------------------------------------
UCC-1 financing Fleet Bank of
statement Massachusetts, Inc.
- -----------------------------------------------------------------------------------------------------------------------
<CAPTION>
=============================================================================================================
Target Filing Date UCC Number Collateral Covered Status
=============================================================================================================
<S> <C> <C> <C> <C>
W.E. Andrews Co., 01/08/90 (fs); 90-116 Blanket lien on Will be
Inc. 01/12/93 (part. release); personal property terminated
08/23/93 (part. release); (equipment and
01/06/95 (cont.) Heidleberg press
released)
- -------------------------------------------------------------------------------------------------------------
01/24/92 92-88 Lease of Yale True lease
Motorized Hand
Truck
- -------------------------------------------------------------------------------------------------------------
02/21/92 92-98 Lease of printing True lease
equipment
- -------------------------------------------------------------------------------------------------------------
02/24/92 (fs); 92-100 Lease of printing True lease
02/22/93 (amend.) equipment Schedule 91
- -------------------------------------------------------------------------------------------------------------
03/23/92 92-115 Lease of Yale Gas True lease
Forklift
- -------------------------------------------------------------------------------------------------------------
03/23/92 92-116 Lease of Yale Gas True lease
Forklift
- -------------------------------------------------------------------------------------------------------------
04/24/92 92-122 Lease of Yale Gas True lease
Forklift
- -------------------------------------------------------------------------------------------------------------
06/30/92 92-153 Leased IBM True lease
equipment
- -------------------------------------------------------------------------------------------------------------
07/13/93 93-226 Lease of Scitex True lease;
prisma workstation Schedule 100
- -------------------------------------------------------------------------------------------------------------
08/13/93 (fs); 93-249 Equipment, Will be
06/23/95 (part. release) including leased terminated
printing equipment,
listed (Heidelberg
Harris printing
system released)
- -------------------------------------------------------------------------------------------------------------
12/06/93 93-328 Blanket personal Will be
property terminated
- -------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
GRAPHICS INDUSTRIES, INC.
LIEN SEARCH RESULT OF OCTOBER/NOVEMBER/DECEMBER 1995
Page 40
<TABLE>
<CAPTION>
======================================================================================================================
Type of Lien
---------------------------------------------
Target Jurisdiction Secured Party
UCC Tax Judgment
======================================================================================================================
<S> <C> <C> <C> <C> <C>
UCC-1 financing Fleet Credit
statement Corporation
- ----------------------------------------------------------------------------------------------------------------------
UCC-1 financing Northland Industrial
statement with Truck Co., Inc.;
assignment assigned to Yale
Financial Services, Inc.
- ----------------------------------------------------------------------------------------------------------------------
UCC-1 financing Fleet Bank of
statement Massachusetts, Inc.
======================================================================================================================
W.E. Andrews Co., Massachusetts, Clear Clear Clear
Inc. Middlesex South
County
======================================================================================================================
Wetmore & Company Texas, Secretary UCC-1 financing Clear N/A Life Insurance
of State statement; Company of Georgia
UCC-3 continuation
- ----------------------------------------------------------------------------------------------------------------------
UCC-1 financing NationsBank of
statement; Georgia, N.A. f/k/a
UCC-3 amendment; The Citizens and
UCC-3 partial release; Southern National Bank
UCC-3 amendment &
continuation (amends
secured party's name
& address);
UCC-3 partial release
- ----------------------------------------------------------------------------------------------------------------------
UCC-1 financing Southwestern Bell
statement Telecommunications,
Inc., d/b/a
Southwestern Bell
Telecom
- ----------------------------------------------------------------------------------------------------------------------
UCC-1 financing Scitex America Corp.;
statement; assigned to Fleet Credit
UCC-3 assignment; Corporation; assigned
UCC-3 assignment; to Fleet Bank of New
UCC-3 continuation York
- ----------------------------------------------------------------------------------------------------------------------
UCC-1 financing Eaton Financial
statement Corporation
- ----------------------------------------------------------------------------------------------------------------------
<CAPTION>
==================================================================================================
Target Filing Date UCC Number Collateral Covered Status
==================================================================================================
<S> <C> <C> <C> <C>
08/04/94 94-134 Leased printing Capitalized
equipment lease;
Schedule 65
- --------------------------------------------------------------------------------------------------
02/17/95 95-35 Yale Model True lease
GLCO60
- --------------------------------------------------------------------------------------------------
06/16/95 95-103 Harris Heidleberg Will be
web press terminated
==================================================================================================
W.E. Andrews Co.,
Inc.
==================================================================================================
Wetmore & Company 09/24/86 (fs); 0278785000 Fixture filing Fixture filing
08/14/91 (cont.)
- --------------------------------------------------------------------------------------------------
04/23/87 (fs); 00000097153 Blanket lien on Will be
07/06/87 (amend.); personal property terminated
10/21/88 (part. and fixtures;
release) releases equipment
09/18/91 leased from Fleet
(part. release); Credit Corporation;
01/21/92 (amend. & releases all
cont.) equipment
08/11/93
(part. release)
- --------------------------------------------------------------------------------------------------
10/31/90 230312 Computer Loan
equipment
- --------------------------------------------------------------------------------------------------
12/21/90 (fs); 282005 Printing equipment True lease;
??/??/?? (assign.); listed Schedule 85
12/13/93 (assign.);
10/23/95 (cont.)
- --------------------------------------------------------------------------------------------------
03/28/91 00000057359 Lease of copier True lease
equipment
- --------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
GRAPHIC INDUSTRIES, INC.
LIEN SEARCH RESULTS OF OCTOBER/NOVEMBER/DECEMBER 1995
Page 41
<TABLE>
<CAPTION>
===================================================================================================================================
TYPE OF LIEN
-----------------------------------------
TARGET JURISDICTION SECURED PARTY FILING DATE UCC NUMBER
UCC TAX JUDGEMENT
====================================================================================================================================
<S> <C> <C> <C> <C> <C> <C>
UCC-1 financing Fleet Credit 08/30/91 (fs); 00000167379
statement; Corporation; assigned 12/13/93 (assign.)
UCC 3 assignment to Fleet Bank of New
York
- ------------------------------------------------------------------------------------------------------------------------------------
UCC-1 financing E.I. Du Pont de 05/19/92 00000100393
statement Nemours and Company
- ------------------------------------------------------------------------------------------------------------------------------------
UCC-1 financing E.I. Du Pont de 06/24/92 00000126024
statement Nemours and Company
- ------------------------------------------------------------------------------------------------------------------------------------
UCC-1 financing Eaton Financial 10/21/92 00000270741
statement Corporation
- ------------------------------------------------------------------------------------------------------------------------------------
UCC-1 financing Scitex America Corp. 08/6/93 151576
statement
- ------------------------------------------------------------------------------------------------------------------------------------
UCC-1 financing The CIT Group/ 08/11/93 (fs); 156806
statement; Equipment Financing, 11/03/94 (amend. &
UCC 3 amendment & Inc.; partial assignment part. assign.)
partial assignment to Texas Commerce
Bank National
Association
- ------------------------------------------------------------------------------------------------------------------------------------
UCC-1 financing MAN Roland, Inc. 12/10/93 00000234432
statement
- ------------------------------------------------------------------------------------------------------------------------------------
UCC-1 financing MetLife Capital 12/20/93 (fs); 00000238758
statement; Corporation 05/26/95 (amend.)
UCC 3 amendment
(adds serial numbers)
- ------------------------------------------------------------------------------------------------------------------------------------
UCC-1 financing Mustang Industrial 12/20/93 (fs); 00000239875
statement; Equipment Company; 10/24/94 (assign.)
UCC 3 assignment assigned to Caterpillar
Financial Services
Corporation
- ------------------------------------------------------------------------------------------------------------------------------------
UCC-1 financing Mustang Industrial 12/20/93 (fs); 00000239918
statement; Equipment Company; 10/24/94 (assign.)
UCC 3 assignment assigned to Caterpillar
Financial Services
Corporation
- ------------------------------------------------------------------------------------------------------------------------------------
UCC-1 financing Industrial Photographic 01/18/94 00000010335
statement Supply, Incorporated
- ------------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
======================================================================
TARGET COLLATERAL COVERED STATUS
======================================================================
<S> <C> <C>
Leased of printing True lease
equipment Schedule 85
- ----------------------------------------------------------------------
Printing equipment Consigned equipment
- ----------------------------------------------------------------------
Printing equipment Consigned equipment
- ----------------------------------------------------------------------
Leased office equipment True lease
- ----------------------------------------------------------------------
Printing equipment listed Will be terminated
- ----------------------------------------------------------------------
Equipment, including leased
printing equipment, listed;
office equipement Will be terminated
- ----------------------------------------------------------------------
Wohlenberg binding systems Vendor filing;
(purchase money security Will be terminated
interest)
- ----------------------------------------------------------------------
Printing equipment listed Loan
- ----------------------------------------------------------------------
Equipment True lease
- ----------------------------------------------------------------------
Fork lift truck True lease
- ----------------------------------------------------------------------
Equipment Consigned equipment
- ----------------------------------------------------------------------
</TABLE>
<PAGE>
GRAPHICS INDUSTRIES, INC.
LIEN SEARCH RESULTS OF OCTOBER/NOVEMBER/DECEMBER 1995
Page 42
<TABLE>
<CAPTION>
======================================================================================================================
Type of Lien
---------------------------------------------
Target Jurisdiction Secured Party
UCC Tax Judgment
======================================================================================================================
<S> <C> <C> <C> <C> <C>
UCC-1 financing statement Acco International, Inc.
- ----------------------------------------------------------------------------------------------------------------------
UCC-1 financing statement Acco International, Inc.
- ----------------------------------------------------------------------------------------------------------------------
UCC-1 financing statement Minnesota Mining & Mfg. Co.,
3M Financing Services
- ----------------------------------------------------------------------------------------------------------------------
UCC-1 financing statement Heidelberg USA, Inc.
- ----------------------------------------------------------------------------------------------------------------------
UCC-1 financing statement MAN Roland, Inc. Sheetfed
Press Division
- ----------------------------------------------------------------------------------------------------------------------
UCC-1 financing statement; Texas Commerce Bank
UCC 3 amendment (amends National Association
description of collateral)
- ----------------------------------------------------------------------------------------------------------------------
UCC-1 financing statement Pitman Company
- ----------------------------------------------------------------------------------------------------------------------
UCC-1 financing statement Texas Commerce Bank National
Association
- ----------------------------------------------------------------------------------------------------------------------
UCC-1 financing statement Tokai Financial Services,
Inc.
- ----------------------------------------------------------------------------------------------------------------------
UCC-1 financing statement Heidelberg USA, Inc.
- ----------------------------------------------------------------------------------------------------------------------
Wetmore & Company Texas, Harris See below Clear for Plaintiff N/A
County Wetmore
- ----------------------------------------------------------------------------------------------------------------------
See below for Plaintiff N/A
Wetmore
- ----------------------------------------------------------------------------------------------------------------------
<CAPTION>
==================================================================================================
Target Filing Date UCC Number Collateral Covered Status
==================================================================================================
<S> <C> <C> <C> <C>
03/09/94 0000041216 Conveyance system Loan
- --------------------------------------------------------------------------------------------------
03/09/94 0000041217 Conveyance system Loan
- --------------------------------------------------------------------------------------------------
05/09/94 091267 Proofer Consigned
equipment
- --------------------------------------------------------------------------------------------------
06/27/94 126358 Leased paper cutter Will be
terminated
- --------------------------------------------------------------------------------------------------
10/18/94 204342 Purchase money Will be
security interest in terminated
Wohlenberg
- --------------------------------------------------------------------------------------------------
11/03/94 (fs); 214672 Blanket lien on Will be
05/08/95 (amend.) personal property terminated
listed
- --------------------------------------------------------------------------------------------------
02/09/95 026420 AGFA Select Set Consigned
equipment
- --------------------------------------------------------------------------------------------------
06/19/95 121251 Blanket lien on Will be
personal property terminated
(including that
listed)
- --------------------------------------------------------------------------------------------------
08/25/95 167100 Leased computer True lease
equipment
- --------------------------------------------------------------------------------------------------
Wetmore & Company 10/19/95 201531 Lease of Heidelberg Vendor filing
printing press (paid up in
1996)
==================================================================================================
02/18/85 ###-##-#### $19,311.34 N/A
- --------------------------------------------------------------------------------------------------
02/19/85 ###-##-#### $12,950.79 N/A
- --------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
GRAPHICS INDUSTRIES, INC.
LIEN SEARCH RESULTS OF OCTOBER/NOVEMBER/DECEMBER 1995
Page 43
<TABLE>
<CAPTION>
=======================================================================================================================
Type of Lien
---------------------------------------------
Target Jurisdiction Secured Party
UCC Tax Judgment
=======================================================================================================================
<S> <C> <C> <C> <C> <C>
See below for Plaintiff N/A
Wetmore
- -----------------------------------------------------------------------------------------------------------------------
See below for Plaintiff N/A
Wetmore
- -----------------------------------------------------------------------------------------------------------------------
See below for Plaintiff N/A
Wetmore
- -----------------------------------------------------------------------------------------------------------------------
See below for Plaintiff N/A
Wetmore
- -----------------------------------------------------------------------------------------------------------------------
See below for Plaintiff N/A
Wetmore
- -----------------------------------------------------------------------------------------------------------------------
See below for Plaintiff N/A
Wetmore
- -----------------------------------------------------------------------------------------------------------------------
See below for Plaintiff N/A
Wetmore
- -----------------------------------------------------------------------------------------------------------------------
See below for Plaintiff N/A
Wetmore
- -----------------------------------------------------------------------------------------------------------------------
See below for Plaintiff N/A
Wetmore
- -----------------------------------------------------------------------------------------------------------------------
See below for Plaintiff N/A
Wetmore
- -----------------------------------------------------------------------------------------------------------------------
UCC-1 financing statement Scitex America Corp.
- -----------------------------------------------------------------------------------------------------------------------
UCC-1 financing statement Scitex America Corp.
- -----------------------------------------------------------------------------------------------------------------------
UCC-1 financing statement Industrial Photographic
Supply, Inc.
=======================================================================================================================
<CAPTION>
==================================================================================================
Target Filing Date UCC Number Collateral Covered Status
==================================================================================================
<S> <C> <C> <C> <C>
06/16/86 ###-##-#### $2,546.64 N/A
- --------------------------------------------------------------------------------------------------
07/10/87 ###-##-#### $5,675.00 N/A
- --------------------------------------------------------------------------------------------------
11/19/87 ###-##-#### $15,403.35 N/A
- --------------------------------------------------------------------------------------------------
01/29/88 ###-##-#### $5,202.41 N/A
- --------------------------------------------------------------------------------------------------
02/01/88 ###-##-#### $14,968.00 N/A
- --------------------------------------------------------------------------------------------------
08/31/90 ###-##-#### $5,537.00 N/A
- --------------------------------------------------------------------------------------------------
09/10/91 ###-##-#### $13,056.07 N/A
- --------------------------------------------------------------------------------------------------
07/10/92 ###-##-#### $9,516.30 N/A
- --------------------------------------------------------------------------------------------------
09/14/92 ###-##-#### $25,000.00 N/A
- --------------------------------------------------------------------------------------------------
04/02/93 ###-##-#### $2,900.53 N/A
- --------------------------------------------------------------------------------------------------
12/??/90 823833 Printing equipment Will be
terminated
- --------------------------------------------------------------------------------------------------
08/10/93 869960 Printing equipment Will be
terminated
- --------------------------------------------------------------------------------------------------
01/18/94 8875850 AGFA Selectset Consigned
equipment
==================================================================================================
</TABLE>
<PAGE>
GRAPHICS INDUSTRIES, INC.
LIEN SEARCH RESULTS OF OCTOBER/NOVEMBER/DECEMBER 1995
Page 44
<TABLE>
<CAPTION>
=======================================================================================================================
Type of Lien
---------------------------------------------
Target Jurisdiction Secured Party
UCC Tax Judgment
=======================================================================================================================
<S> <C> <C> <C> <C> <C>
Williams Printing Georgia, Fulton See below Federal Clear
Company County and tax
Superior Court lien:
Clerk's Bk
Cooperative 11489,
Authority Pg 078
- -----------------------------------------------------------------------------------------------------------------------
UCC-1 financing statement; Citizens and Southern
UCC-3 continuation; National Bank
UCC-3 continuation;
UCC-3 continuation
- -----------------------------------------------------------------------------------------------------------------------
UCC-1 financing statement; Citizens and Southern
UCC-3 continuation; National Bank
UCC-3 continuation;
UCC-3 partial release;
UCC-3 continuation
- -----------------------------------------------------------------------------------------------------------------------
UCC-1 financing statement AGFA Corporation
- -----------------------------------------------------------------------------------------------------------------------
UCC-1 financing statement VMX Credit Corporation
- -----------------------------------------------------------------------------------------------------------------------
UCC-1 financing statement Fuji Photo Film U.S.A., Inc.
- -----------------------------------------------------------------------------------------------------------------------
UCC-1 financing statement Master Lease Corporation
- -----------------------------------------------------------------------------------------------------------------------
UCC-1 financing statement Momentum Graphics
- -----------------------------------------------------------------------------------------------------------------------
UCC-1 financing statement Momentum Graphics
- -----------------------------------------------------------------------------------------------------------------------
UCC-1 financing statement VMX Credit Corporation
- -----------------------------------------------------------------------------------------------------------------------
UCC-1 financing statement; Fleet Credit Corporation;
UCC-3 assignment assigned to Fleet Bank of
New York
- -----------------------------------------------------------------------------------------------------------------------
<CAPTION>
==================================================================================================
Target Filing Date UCC Number Collateral Covered Status
==================================================================================================
<S> <C> <C> <C> <C>
Williams Printing
Company 06/23/78 (fs); 495427 Blanket lien on Will be
05/04/83 (cont.); inventory terminated
05/16/88 (cont.);
03/04/93 (cont.)
- --------------------------------------------------------------------------------------------------
06/23/78 (fs); 495432 Blanket lien on Will be
05/04/83 (cont.); personal property terminated
05/16/88 (cont.); (part of equipment
09/24/91 (part. released)
release);
03/04/93 (cont.)
- --------------------------------------------------------------------------------------------------
09/20/90 745017 Printing equipment Lapsed
- --------------------------------------------------------------------------------------------------
09/26/90 745307 Leased audio Lapsed
equipment
- --------------------------------------------------------------------------------------------------
10/10/90 746086 Film processor Lapsed
- --------------------------------------------------------------------------------------------------
10/15/90 746536 Leased equipment Lapsed
- --------------------------------------------------------------------------------------------------
03/20/91 755332 Supplies Consigned
equipment
- --------------------------------------------------------------------------------------------------
03/20/91 755333 Consignment goods Consigned
equipment
- --------------------------------------------------------------------------------------------------
03/25/91 755586 Leased audio True lease
equipment
- --------------------------------------------------------------------------------------------------
09/11/91 (fs); 763962 Leased printing True lease;
12/13/93 equipment Schedule 86
(assign.)
- --------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
GRAPHICS INDUSTRIES, INC.
LIEN SEARCH RESULTS OF OCTOBER/NOVEMBER/DECEMBER 1995
Page 45
<TABLE>
<CAPTION>
======================================================================================================================
Type Of Lien
---------------------------------------------
Target Jurisdiction Secured Party
Ucc Tax Judgment
======================================================================================================================
<S> <C> <C> <C> <C> <C>
UCC-1 financing Fleet Credit
statement; Corporation; assigned
UCC-3 assignment to Fleet Bank of New
York
- ----------------------------------------------------------------------------------------------------------------------
UCC-1 financing Resource Leasing, Inc.;
statement; assigned to Dana
UCC-3 assignment Commercial Credit
Corporation
- ----------------------------------------------------------------------------------------------------------------------
UCC-1 financing Scitex America Corp.
statement
- ----------------------------------------------------------------------------------------------------------------------
UCC-1 financing Fleet Credit
statement Corporation
- ----------------------------------------------------------------------------------------------------------------------
UCC-1 financing The CIT Group/
statement Equipment Financing,
Inc.
- ----------------------------------------------------------------------------------------------------------------------
UCC-1 financing Scitex America
statement
- ----------------------------------------------------------------------------------------------------------------------
UCC-1 financing MetLife Capital
statement Corporation
- ----------------------------------------------------------------------------------------------------------------------
UCC-1 financing Fleet Credit
statement Corporation
- ----------------------------------------------------------------------------------------------------------------------
UCC-1 financing Scitex America Corp.
statement
- ----------------------------------------------------------------------------------------------------------------------
UCC-1 financing D.S. America (East),
statement Inc.
- ----------------------------------------------------------------------------------------------------------------------
UCC-1 financing Imaging Financial
statement Services, Inc.
======================================================================================================================
<CAPTION>
==================================================================================================
Target Filing Date Ucc Number Collateral Covered Status
==================================================================================================
<S> <C> <C> <C> <C>
09/11/91 (fs); 763964 Leased printing True lease;
12/13/93 (assign.) equipment Schedule 86
- --------------------------------------------------------------------------------------------------
03/09/92 (fs); 772638 Haskins Hyperfold True lease
04/13/92 (assign.) II
- --------------------------------------------------------------------------------------------------
4/19/93 000791576 Computer Will be
equipment terminated
- --------------------------------------------------------------------------------------------------
6/30/93 794885 Printing press Capitalized lease;
Shedule 98
- --------------------------------------------------------------------------------------------------
8/10/93 000797086 Equipment, Will be
including leased terminated
printing equipment,
listed
- --------------------------------------------------------------------------------------------------
11/19/93 000801639 Class screening Will be
upgrade terminated
- --------------------------------------------------------------------------------------------------
1/11/94 000804599 Muller Martini Loan
- --------------------------------------------------------------------------------------------------
2/23/94 000806673 Printing press True lease;
Schedule 83
- --------------------------------------------------------------------------------------------------
3/29/94 000808441 Printing equipment Will be
terminated
- --------------------------------------------------------------------------------------------------
3/1/95 060199502589 Purchase money Will be
security interest terminated
in computer
equipment
- --------------------------------------------------------------------------------------------------
6/19/95 060199511260 Carnfeldt Consigned
equipment
==================================================================================================
</TABLE>
<PAGE>
GRAPHIC INDUSTRIES, INC.
Lien Search Results of October/November/December 1995
Page 46
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
A.C. SCANNING, INC. A.C. SCANNING, INC.
Lien Search Results Lien Search Results
MA, Secretary of the Commonwealth MA, U.S. District Court
A.C. SCANNING, INC. A.C. SCANNING, INC.
Lien Search Results Lien Search Results
MA, Town of Bedford MA, Middlesex South County
A.J. KENNEY & CO., INC. A.J. KENNEY & CO., INC.
Lien Search Results Lien Search Results
IL, Secretary of State IL, Du Page County
ALLIED REPROGRAPHIC SERVICES, INC. ATLANTA BLUE PRINT CO.
Lien Search Results Lien Search Results
GA, Fulton County and SCCCA GA, Fulton County and SCCCA
BAUM PRINTING HOUSE, INC. BAUM PRINTING HOUSE, INC.
Lien Search Results Lien Search Results
PA, Secretary of Commonwealth PA, Philadelphia County Recorder of Deeds
BAUM PRINTING HOUSE, INC. CARPENTER RESERVE PRINTING COMPANY
Lien Search Results Lien Search Results
PA, Philadelphia County Prothonatary OH, Secretary of State
CARPENTER RESERVE PRINTING COMPANY THE CENTRAL PRESS OF MIAMI, INC.
Lien Search Results Lien Search Results
OH, Cuyahoga County FL, Secretary of State
THE CENTRAL PRESS OF MIAMI, INC. THE CENTRAL PRESS OF MIAMI, INC.
Lien Search Results Lien Search Results
FL, Broward County FL, Dade County
CRAFTSMAN PRINTING COMPANY CRAFTSMAN PRINTING COMPANY
Lien Search Results Lien Search Results
NC, Secretary of State NC, Mecklenburg County
EXECUTIVE COURIER, INC. GRAPHIC DIRECT, ING. ILLINOIS
Lien Search Results Lien Search Results
GA, Fulton County and GSCCCA Illinois, Secretary of State
GRAPHIC DIRECT, ING. ILLINOIS GRAPHIC INDUSTRIES, INC.
Lien Search Results Lien Search Results
Illinois, DuPage County GA, Fulton County and GSCCCA
GRAPHIC PRINT SERVICE, INC. HERITAGE PRESS, INC.
Lien Search Results Lien Search Results
GA, Fulton County and GSCCA TX, Secretary of State
HERITAGE PRESS, INC. HOECHSTETTER PRINTING COMPANY
Lien Search Results Lien Search Results
TX, Dallas County PA, Secretary of the Commonwealth
HOECHSTETTER PRINTING COMPANY HOECHSTETTER PRINTING COMPANY
Lien Search Results Lien Search Results
PA, Allegheny County Recorder of Dee PA, Allegheny County Prothonotary
IPD PRINTING & DISTRIBUTING, INC. INTEGRATED GRAPHIC SERVICES, INC.
Lien Search Results Lien Search Results
GA, DeKalb County and SCCCA GA, Fulton County and SCCCA
</TABLE>
<PAGE>
Schedule 7.1(i)
---------------
Litigation
----------
None.
<PAGE>
Schedule 7.1(j)
---------------
Tax Returns Under Audit
-----------------------
The United States Internal Revenue service is currently examining the
Consolidated Federal Income Tax Returns of Graphic Industries, Inc. and its
subsidiaries for the Fiscal Years ended January 31, 1993 and 1994.
<PAGE>
Schedule 7.1(m)
---------------
Existing Defaults
-----------------
None
<PAGE>
SCHEDULE 7.1(n)
---------------
Environmental Matters
---------------------
1. On July 24, 1995, the Georgia Environmental Protection Division
("EPD") was notified by Graphic Development Corporation, pursuant to the Georgia
Hazardous Site Response Act ("HSRA"), that property located at 1045 Spring
Street contained pesticides in the soil and groundwater above the HSRA
notification concentrations. The EPD evaluated the notification and on November
27, 1995 determined that this property would not be listed on the Hazardous Site
Inventory ("HSI"). Since the property is not listed on the HSI, no cleanup is
required.
2. In May, 1995, during the removal of a petroleum underground storage
tank at 1052 West Peachtree Street, Atlanta Blue Print and Graphics Company
discovered a release of petroleum into the soil. The contaminated soil was
overexcavated to applicable cleanup levels. No further cleanup is anticipated,
however, as of this date the EPD has not approved the closure plan.
3. W.E. Andrews Company ("Andrews") is a potentially responsible party
("PRP") along with approximately 31 other PRPs in connection with the Shaffer
Landfill site in Billarica, Massachusetts (the "Site"). Although Andrews
initially participated in the PRP Group in an effort to reach a swift and
expeditious conclusion to its involvement with the Site, throughout its
participation, Andrews consistently maintained that it had no liability at the
Site and disputed and disagreed with the allocation share that the presiding
judge dictated. The contested sliding scale allocation share that was assigned
to Andrews during mediation is $450,000 based upon an approximate overall cost
of $25 million, plus an additional overage percentage if the cost exceeds $25
million. On May 23, 1995, Andrews withdrew from the PRP Group based upon an
intensive evaluation of the raw materials utilized in its printing process and
its waste stream that indicated none of the raw materials or the conceivable
waste stream from its facility during the applicable period of inquiry from 1970
through 1986 contained any hazardous materials detected or contaminants of
concern that have been identified by the federal and state governments at the
Site. The PRP Group disputes Andrews' position.
<PAGE>
Schedule 7.1(r)
---------------
Affiliate Transactions
----------------------
Tower Printing Company, a subsidiary of Atlanta Blue Print Co., occupies space
in a building owned by Mark C. Pope III, Chairman and Chief Executive Officer of
Graphic Industries, Inc.
<PAGE>
Schedule 13.1
-------------
List of Existing Syndicate
--------------------------
Lines of Credit
---------------
<TABLE>
<CAPTION>
Lender/Borrower Amount
- --------------- ------------
<S> <C> <C>
1. NationsBank of Georgia, N.A.
----------------------------
Graphic Industries, Inc. $ 5,000,000
The Central Press of Miami, Inc. 750,000
Craftsman Printing Company 1,000,000
Graphic Direct, Inc., Illinois 1,000,000
State Printing Company, Inc. 500,000
Williams Printing Company 1,500,000
Atlanta Blue Print Co. 1,000,000
2. SunTrust Bank, Atlanta
----------------------
IPD Printing & Distributing, Inc. 1,500,000
Quadras, Inc. 500,000
Southern Signatures, Inc. 750,000
The Stein Printing Company, Inc. 1,000,000
</TABLE>
<PAGE>
<TABLE>
<S> <C>
3. Texas Commerce Bank, National Association
-----------------------------------------
Heritage Press, Inc. 1,500,000
Wetmore & Company 1,500,000
4. CoreStates Bank, National Association
-------------------------------------
Baum Printing House, Inc. 1,000,000
5. Fleet Bank of Massachusetts, N.A.
---------------------------------
W.E. Andrews Co. Inc. 1,000,000
W.E. Andrews Co. Inc. of Connecticut 1,000,000
6. Marine Midland Bank, N.A.
-------------------------
Monroe Litho, Inc. 1,000,000
7. PNC Bank, N.A.
--------------
Hoechstetter Printing Company, Inc. 1,000,000
-----------
TOTAL $22,500,000
===========
</TABLE>
Note: In each case where a subsidiary is indicated, Graphic Industries, Inc. is
a Co-Borrower.
<PAGE>
EXHIBIT 10VVV
ASSET SALE AGREEMENT
by and among
BAUSCH & LOMB INCORPORATED
and
MONROE LITHO INC.
Dated December 1,1995
<PAGE>
THIS ASSET SALE AGREEMENT is dated as of December 1, 1995, and is by and among
Bausch & Lomb Incorporated, a New York corporation ("Seller") and Monroe Litho
Inc., a New York corporation ("Buyer").
WHEREAS, Seller's Graphic Operations Department possesses equipment; personnel
and expertise sufficient to provide for Seller overall capabilities comparable
to commercial printers, including concept design, design and print coordination,
fill service printing of manufacturing, marketing and administrative materials,
and bindery services (the "Business"); and
WHEREAS, Buyer desires to buy substantially all of the assets, obtain certain
rights and assume certain specified liabilities of Seller related to the
Business, and Seller desires to sell and provide such assets and rights to Buyer
upon such assumption, all on the terms and conditions set forth herein.
NOW, THEREFORE, the parties agree as follows:
ARTICLE 1
PURCHASE AND SALE OF ASSETS
---------------------------
1.1 Transfer of Purchased Assets. Upon and subject to this Agreement, and
-----------------------------
except as provided in Section 1.2 hereof, on the Closing Date, (defined in
Section 1.6), in consideration of (i) payment of the Consideration, (defined in
Section 1.4) and (ii) assumption of the Assumed Liabilities, (defined in Section
1.3), Seller shall sell to Buyer, and Buyer shall acquire from Seller, certain
of Seller's assets and rights used exclusively in the Business (collectively,
the "Purchased Assets"), as follows:
----------
(a) Equipment. Supplies and Fixed Assets. The equipment, machinery,
-------------------------------------
supplies, parts, and all other fixed assets and tangible personal property owned
by Seller and used in connection with the Business on the Closing Date, as
further identified on Schedule 1.1 (a) hereto (collectively, the "Equipment.
---------------- -----------
Supplies and Fixed Assets");
- ----------------------------
(b) Inventory. All inventory exclusively related to the Business
----------
including, without limitation, raw materials and work in process, owned by
Seller on the Closing Date, subject to Section 4.2 hereof providing for the
identification by Seller and Buyer of obsolete inventory as of the close of
business on the Closing Date (collectively, the "Inventory");
2
<PAGE>
(c) Contracts. Seller's right, title and interest on the Closing Date
----------
in and to all contracts, arrangements, license agreements, personal property
leases and other agreements of Seller which primarily are related to the
Business and which are identified on Schedule 1.1(c) hereto (collectively, the
---------------
"Assigned Contracts");
- ----------------------
1.2 Excluded Assets. The Purchased Assets transferred pursuant to
----------------
this Agreement shall be only those described in Section 1.1 and shall, without
limitation, not include the following (collectively, the "Excluded Assets"):
-------------------
(a) Cash. Marketable Securities. Any cash and marketable securities
----------------------------
owned by Seller;
(b) Accounts Receivable. Any amounts owed by any third party, or by
--------------------
Seller or any direct or indirect subsidiary of Seller, on the Closing Date to
the Business;
(c) Pension Plan: 401(k) Plan. Any pension and savings plans and
--------------------------
trusts in which the employees of the Business participate and any assets thereof
(d) Excluded Contract Rights. The rights of Seller under any of the
-------------------------
contracts, agreements or understandings described in Schedule 1.2 (d) hereto
----------------
(collectively, the "Excluded Contract Rights");
-------------------------
(e) Film and Plates. Title to film, plates and any other similar
----------------
material including, without limitation, electronic or other media which stores
images or other material which has been created prior to the Closing Date for
the purpose of producing printed material for Seller shall remain in Seller,
while possession of same will be transferred to Buyer for purposes of providing
printing materials to Seller after Closing;
(f) Other Excluded Assets. The rights of Seller in
----------------------
and to any assets which are not exclusively related to the Business.
1.3 Assumption of Liabilities. On the Closing Date, Buyer shall assume
--------------------------
and agree to pay and perform the following liabilities of Seller existing as of
the Closing Date, but only to the extent specifically set forth below
(collectively, the "Assumed Liabilities"):
-----------------------
(a) The obligations of Seller for future performance under the Assigned
Contracts and the obligation to provide Printing Materials (defined in Section
4.10) for 1996 in accordance with the pricing matrices identified on Schedule
--------
4.10(d) hereof,
- -------
(b) Severance. Seller's liability for severance payments to employees
----------
of the Business, as set forth in Section 4.8 hereof,
3
<PAGE>
(c) Work in Process. Completion of uncompleted printing materials as
----------------
of the Closing Date at previously agreed-to Bausch & Lomb prices identified in
the manner set forth on Schedule 1.3(c) hereto, provided that the price paid for
--------
work-in-process, plus the cost to complete same, shall not exceed the internal
price therefor, as set forth in the job jacket, such that Seller shall bear the
exposure for jobs which are over budget because of acts occurring before
transfer.
1.4 Consideration. In consideration of Seller's performance of this
--------------
Agreement and the transfer and delivery of the Purchased Assets to Buyer, Buyer
shall:
(a) Pay to Seller at the Closing TWO MILLION FIVE HUNDRED TWENTY-EIGHT
THOUSAND AND NO/I 00 DOLLARS ($2,528,000.00), adjusted to reflect the fair
market value, as reasonably agreed to by the parties, of equipment added to or
subtracted from the list of equipment set out as Schedule 1.1(a) hereto (the
---------------
"Asset Consideration");
- -----------------------
(b) Pay to Seller at the Closing, BEE HUNDRED ELEVEN THOUSAND AND NO/I
00 DOLLARS ($311,000.00) reflecting Seller's actual direct cost of all Inventory
and supplies on the Closing Date, as reasonably agreed to by the parties (the
"Inventory Consideration") (together, the Asset and Inventory Consideration
shall be referred to as the Consideration);
(c) Assume the Assumed Liabilities; and
(d) The parties shall allocate the Consideration across the Purchased
Assets as set forth on Schedule 1.4(d) hereto. Neither party shall take any tax
---------------
reporting position which is inconsistent with such allocation.
1.5 Post-Closing Adjustments to Consideration.
------------------------------------------
(a) Up to SIX HUNDRED THOUSAND AND NO/lOO DOLLARS ($600,000.00) of the
Asset Consideration shall be subject to repayment by Seller to Buyer in
accordance with Section 4.10(a) hereof
(b) The Inventory Consideration shall be subject to adjustment after
the Closing Date, based upon the difference between the amount calculated in
accordance with Section 1.4(b) hereto and the actual direct cost of Inventory
and supplies sold and transferred by Seller to Buyer. Such actual amount shall
be calculated first by Seller based on financial statements of the Business
prepared in a manner consistent with past practice by Seller as of the Closing
Date. Seller shall provide such calculation to Buyer within thirty (30) days her
the Closing Date. Buyer shall have fifteen (15) days to review same, after which
Buyer shall notify Seller of any exceptions thereto. To the extent any
exceptions are taken, such amount shall be the subject of further resolution as
provided below. Any adjustments which are not
4
<PAGE>
the subject of exception shall be paid immediately by the appropriate party to
the other. Within ten (10) days alter the Buyer's taking of exception, the
parties shall appoint a mutually acceptable third party to review and decide
upon appropriate treatment of any disputed amounts, which review shall be
completed within ten (10) days alter such appointment. If the parties cannot
agree on a third party decision-maker, each shall appoint an agent to decide
upon same, and the parties' agents shall choose a decision-maker, which
decision-maker shall render a decision within ten (10) days alter selection. The
disputed amount shall be paid as appropriate immediately alter rendering of the
decision-maker's decision, which shall be final and binding. The costs and fees
of the decision-maker shall be divided equally between the parties.
1.6 The Closing.
------------
(a) The closing of the transactions provided for in this Agreement
(the "Closing") shall take place at Seller's offices at One Bausch & Lomb Place
in Rochester, New York at 1:00 p.m., local time, on December 1, 1995, or at such
other time and place and on such other date as Buyer and Seller may mutually
agree. The date on which the Closing actually occurs is herein referred to as
the "Closing Date". The Closing shall be effective as of the close of business
---------------
on the Closing Date.
(b) At the Closing, Buyer shall deliver to Seller (i) the Consideration
by wire transfer in immediately available hinds to Seller's account at Citibank
(Account #0000-2022, Reference Print Shop, ABA #021000089); (ii) an agreement
for the assumption by Buyer of the Assumed Liabilities (the "Assignment and
---------------
Assumption Agreement"), duly executed by Buyer; and (iii) such other instruments
- -----------------------
as shall be required of Buyer pursuant to this Agreement.
(c) At the Closing, Seller shall deliver to Buyer (i) the Assignment and
Assumption Agreement, duly executed by Seller, and (ii) a Bill of Sale
transferring to Buyer all of Seller's right, title and interest in and to the
Purchased Assets (the "Bill of Sale"). Buyer shall pay the cost of any
----------------
conveyance, deed, transfer, excise, stamp, sales, use, recording or similar
taxes or fees arising out of the sale, transfer, conveyance or assignment of any
of the Purchased Assets. Without limiting the foregoing, Seller shall collect
New York State Sales Tax of 8% on the Consideration at Closing unless Buyer
provides Seller with a valid exemption certificate for machinery and equipment
and a valid resale certificate for inventory or other evidence, reasonably
acceptable to Seller, to the effect that no such tax is due.
ARTICLE 2
REPRESENTATIONS AND WARRANTIES OF SELLER
----------------------------------------
Seller represents and warrants to Buyer as follows:
5
<PAGE>
2.1 Organization: Qualification. Seller is a corporation duly organized,
----------------------------
validly existing and in good standing under the laws of New York.
2.2 Authority Relative to this Agreement. Seller has hill power and
-------------------------------------
authority to execute, deliver and perform this Agreement and to consummate the
transactions contemplated hereby. All actions necessary to be taken by or on the
part of Seller to execute, deliver and perform this Agreement and consummate the
transactions contemplated hereby have been duly and validly taken. This
Agreement has been duly and validly executed and delivered by Seller and,
assuming due execution and delivery by Buyer, constitutes a valid and binding
agreement of Seller enforceable against Seller in accordance with its terms,
except to the extent that enforceability may be limited by applicable
bankruptcy, reorganization, insolvency, moratorium or similar laws affecting the
enforcement of creditors' rights generally as at the time in effect and by
general principles of equity, regardless of whether such enforceability is
considered in a proceeding in equity or at law.
2.3 Consents and Approvals: No Violation. Neither the execution,
-------------------------------------
delivery and performance of this Agreement by Seller nor the consummation by
Seller of the transactions contemplated hereby require any consent, approval,
authorization or permit of, or filing with or notification to, any governmental
or regulatory authority or any third party, except where the failure to obtain
such consent, approval, authorization or permit, or to make such filing or
notification, would not have a materially adverse effect on the Business.
2.4 Title and Condition of Purchased Assets Etc.
--------------------------------------------
(a) Seller has title to all of the Purchased Assets which are material to
the Business free and clear of all mortgages, security interests, liens, claims,
charges or other encumbrances (collectively "Liens"), except for any Liens for
current taxes and assessments not yet past due.
(b) To Seller's knowledge, the Purchased Assets are in operating
condition.
2.5 Insurance. All material property and casualty insurance policies
----------
which currently insure Seller with respect to the Purchased Assets or the
Business are listed on Schedule 2.5.
-------------
2.6 Employee Benefit Plans: Labor Matters.
--------------------------------------
(a) Except as set forth on Schedule 2.6(a) ("Pension Plans"), there are
----------------------------------
no pension plans (as defined in Section 3(2) of ERISA) which Seller, maintains
or to which Seller is, directly or indirectly, required to contribute in
connection with the Business.
(b) Except as set forth on Schedule 2.6(b) ("Employee Benefit Plans") and
------------------------------------------
except for the Pension Plans, there are no oral or written employee insurance,
health, welfare,
6
<PAGE>
bonus, incentive compensation, retirement, pension or other employee benefit
plans of the Seller in which employees of the Business participate.
(c) Seller' has complied with ERISA with respect to the Pension Plans.
(d) Seller is not obligated by or subject to any
collective bargaining agreement governing employees of the Business.
2.7 Legal Proceedings. Etc. There is no claim, action, proceeding or
-----------------------
investigation pending or, to the knowledge of Seller, threatened against or
relating to Seller with respect to the Purchased Assets or the Business before
any court or governmental or regulatory authority or body.
2.8 Agreements.
-----------
(a) Except for agreements made in connection with this Agreement and
the transactions contemplated hereby, Seller is not as of the date hereof a
party to, or bound by, any material agreement of any kind to be performed in
whole or in part alter the Closing Date and which relates to the Purchased
Assets or the Business. Solely for the purpose of this Section 2.8, the term
"material agreement" shall mean any single agreement which is not entered into
- --------------------
in the ordinary course of business or cancelable by Seller on 60 days' or less
notice and involves the payment by Seller, subsequent to the date of this
Agreement, of more than $10,000 in any 12- month period.
(b) The Assigned Contracts are valid and binding obligations of Seller
and are in hill force and effect and Seller is not in default thereunder, nor
has Seller received notice or information as to a threatened default by the
other party thereto.
(c) All printing materials provided by the Business are paid for alter
completion of performance, it being the intent of the parties that Buyer shall
not assume any accrued liability for Printing Materials which have been paid for
but not performed.
2.9 Brokers. There is no broker or finder or other person who would have
--------
any valid claim against Buyer for a fee, commission or brokerage in connection
with this Agreement or the transactions contemplated hereby as a result of any
agreement, understanding or action by Seller.
2.10 Taxes. Seller has filed, with respect to the Business, all tax
------
returns required to be filed for all periods through the Closing Date, and has
paid all amounts shown to be due thereon.
2.11 Environmental Compliance. Seller has not received notice of, has not
-------------------------
been charged with and does not otherwise have actual knowledge of any failure to
comply, with respect to the Business, with any law, rule or regulation governing
or regulating the use,
7
<PAGE>
handling, storage or disposal of hazardous or toxic chemicals, waste or
substance or other pollutant or contaminant.
2.12 No Other Representations or Warranties. Except for the
---------------------------------------
representations and warranties contained in this Article 2, neither Seller nor
any other person makes any representation or warranty to Buyer, express or
implied, and Seller hereby disclaims any such representation or warranty,
whether by Seller or any of its agents or representatives or any other person,
notwithstanding the delivery or disclosure to Buyer or any of its officers,
directors, employees, agents or representatives or any other person of any
document or other information by Seller or any of its agents or representatives
or any other person. EXCEPT AS SPECIFICALLY PROVIDED HEREIN, SELLER MARES NO
REPRESENTATIONS OR WARRANTIES, EXPRESS OR IMPLIED, WITH RESPECT TO THE EQUIPMENT
-----------
OR OTHER FIXED ASSETS, INCLUDING, WITHOUT LIMITATION, THEIR DESIGN, CAPACITY,
CONDITION, MERCHANTABILITY OR THEIR FITNESS FOR USE OR FOR ANY PARTICULAR
PURPOSE, AND SELLER HEREBY DISCLAIMS ALL SUCH REPRESENTATIONS AND WARRANTIES.
THE SALE OF THE PURCHASED ASSETS IS MADE ON AN "AS IS" BASIS AND "WITH ALL
FAULTS."
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF BUYER
---------------------------------------
Buyer represents and warrants to Seller as follows:
3.1 Organization. Buyer is a corporation duly organized, validly
-------------
existing and in good standing under the laws of New York.
---------
3.2 Authority Relative to this Agreement. Buyer has hill corporate power
-------------------------------------
and authority to execute, deliver and perform this Agreement and to consummate
the transactions contemplated hereby. All actions necessary to be taken by or on
the part of Buyer to execute, deliver and perform this Agreement and consummate
the transactions contemplated hereby have been duly and validly taken. This
Agreement has been duly and validly executed and delivered by Buyer and,
assuming due execution and delivery by Seller, constitutes a valid and binding
agreement of Buyer enforceable against Buyer in accordance with its terms,
except to the extent that enforceability may be limited by applicable
bankruptcy, reorganization, insolvency, moratorium or similar laws affecting the
enforcement of creditors' rights generally as at the time in effect and by
general principles of equity, regardless of whether such enforceability is
considered in a proceeding in equity or at law.
3.3 Consents and Approvals: No Violation. Neither the execution,
-------------------------------------
delivery and performance of this Agreement by Buyer nor the consummation of the
transactions contemplated hereby require any consent, approval, authorization or
permit of, or filing with or notification to, any governmental or regulatory
authority, except where the failure to
8
<PAGE>
obtain such consent, approval, authorization or permit, or to make such filing
or notification, would not affect the ability of Buyer to consummate the
transactions contemplated by this Agreement.
3.4 Financing. Buyer has, and will have at the Closing Date, sufficient
----------
cash to pay Seller the Consideration.
3.5 Trademarks. Buyer shall not use the trade name "Bausch & Lomb" or
-----------
any other intellectual property asset of Seller, in whole or in part. Buyer
acknowledges that Seller is the owner of all right, title and interest in and to
such trade name or other intellectual property assets.
3.6 Inspection. Before entering into this Agreement, Buyer inspected and
-----------
examined the Purchased Assets as hilly as it desired.
3.7 Brokers. There is no broker or finder or other person who would have
--------
any valid claim against Seller for a fee, commission or brokerage in connection
with this Agreement or the transactions contemplated hereby as a result of any
agreement, understanding or action by Buyer. Buyer shall be solely responsible
for all fees and expenses of any broker, finder or other person engaged by or on
behalf of it or otherwise claiming through it in connection with the
transactions contemplated by this Agreement.
ARTICLE 4
COVENANTS OF THE PARTIES
------------------------
4.1. Conduct of the Business. Seller will not, with respect to the
------------------------
Business or the Purchased Assets, prior to the Closing Date without the consent
of Buyer:
(a) Sell or otherwise dispose of or abandon any of the Purchased
Assets other than Inventory in the ordinary course of business;
(b) Increase the rate or terms of compensation payable or to become
payable by Seller to any of the Business' employees, except increases occurring
in the ordinary course of business in accordance with its customary practices
(which shall include normal periodic performance reviews and related
compensation and benefit increases), and except for pro rata merit pay increases
to be instituted immediately before the Employee Transfer Date as described on
Schedule 4.1(b) hereto;
- ---------------
(c) Enter into any agreement, commitment or transaction (including
without limitation any borrowing, capital expenditure or capital financing),
material to the business, operations or financial condition of the Business,
except agreements, commitments
9
<PAGE>
or transactions in the ordinary course of business consistent with past
practice; or
(d) Transfer, mortgage, pledge, grant any security interest or permit
the imposition of any lien or other encumbrance on any of the Purchased Assets.
4.2 Inventory Adjustment. As of the Closing Date, Buyer and Seller shall
---------------------
conduct a joint inspection of the inventory exclusively related to the Business
which is intended to be transferred to Buyer hereby, and the parties shall, at
that time, identify items of inventory which are "obsolete" or "unusable", which
items shall not be included in the Purchased Assets, and the Consideration shall
be adjusted accordingly. Any inventory identified as obsolete or unusable shall
be retained by Seller..
4.3 Access to Information.
----------------------
(a) Between the date of this Agreement and the Closing Date, Seller will,
during ordinary business hours and upon reasonable advance notice, give Buyer
and its authorized representatives reasonable access to the books, records,
offices and other facilities and properties of the Business, provided, however,
------------------
that (i) any such investigation shall be conducted in such a manner as not to
interfere unreasonably with the operation of the business of Seller, (ii) Seller
shall not be required to take any action which would constitute a waiver of the
attorney-client privilege, and (iii) Seller need not supply Buyer with any
information which Seller is under a legal obligation not to supply.
(b) Any information provided pursuant to this Agreement shall be held by
Buyer in accordance with and shall be subject to the terms of the
Confidentiality Agreement, dated September 26, 1995, of Buyer in favor of Seller
(the "Confidentiality Agreement") until the Closing.
----------------------------
4.4 Expenses. All costs and expenses incurred in connection with this
---------
Agreement and the transactions contemplated hereby will be paid by the party
incurring such costs and expenses, whether or not the transactions contemplated
hereby are consummated, except as otherwise expressly provided herein.
4.5 Further Assurances. Subject to the terms and conditions of this
-------------------
Agreement, each of the parties hereto will use all reasonable efforts to take,
or cause to be taken, all action, and to do, or cause to be done, all things
necessary under applicable laws and regulations to consummate the transactions
contemplated by this Agreement.
4.6 Taxes. Seller shall file, with respect to the Business, all tax
------
returns required to be filed for all periods through the Closing Date, and shall
pay all amounts shown to be due thereon. Buyer shall be solely responsible for,
and make timely payment of, any state or local taxes resulting from the
consummation of the transactions contemplated hereby (other than any state or
local income tax liabilities of Seller), including, but not limited to any state
and local sales and use -taxes and state and local transfer taxes imposed as a
result of the
10
<PAGE>
transactions contemplated hereby. Seller shall cooperate in providing any
documents or affidavits necessary for any filings. Buyer shall indemnify, defend
and hold harmless Seller against and from any and all liability, cost, loss or
expense (including reasonable attorneys' fees) to them or any of them arising
out of the imposition of any state or local taxes resulting from the
consummation of the transactions contemplated hereby (other than any state or
local income tax liabilities of Seller). The covenants contained in this Section
4.6 shall survive the Closing Date until hilly discharged.
4.7 Public Announcements. Except as may be required by law or necessary
---------------------
for required reporting purposes, neither Seller nor Buyer shall issue any press
release concerning the transactions contemplated by this Agreement, nor any
public disclosure or announcement which describes material aspects of any such
transaction, without the prior written consent of the other parties hereto as to
both the timing and content of such press release, which consent shall not be
unreasonably withheld. A statement by either party to a third party confirming
that such a transaction took place shall not require the prior written consent
of the other party.
4.8 Employees and Employee Benefit Plans.
-------------------------------------
(a) From the Closing Date until December 29, 1995 (the "Employee
Transfer Date") the employees of the Business shall be made available to Buyer
to operate the Business for the benefit of Buyer during such period. Seller
shall continue to pay such employees salary and benefits at their current rates,
and shall make such withholdings or other payments in connection with the
continued employment of such persons as may be consistent with Seller's ordinary
practices or as may be required by law. Upon the Closing, the parties shall
execute an Employee Leasing Agreement to reflect the foregoing arrangements.
(b) Buyer shall offer all employees listed on Schedule 4. 1(b) and
----------------
who are employed by Seller in the Business on the Employee Transfer Date
employment on and alter the Employee Transfer Date at wages or salaries at least
as favorable as their current employment by Seller. Seller shall assume and pay
for accrued but unused 1995 vacation and personal days of Seller's employees as
of the Employee Transfer Date.
(c) Buyer shall provide the same benefits as those provided by Buyer
to its employees. Buyer shall credit such employees with all time of service
with Seller in any of Buyer's employee benefit plans, including, without
limitation, its pension plans, except to the extent Buyer is legally prevented
from doing so (assuming Buyer's best efforts to avoid the implication of any
legal restrictions). The parties agree that the adjustments, payments and
arrangements reflected on Schedule 4. 8(c) hereto shall satisfy the foregoing
----------------
sentence.
(d) Any former employees of Seller terminated by Buyer within one
year alter the Employee Transfer Date shall be paid severance by Buyer to the
extent they are entitled to same (based upon years of service with Seller as set
forth on Schedule 4.8(d) hereto) in
---------------
11
<PAGE>
accordance with Seller's Severance Policy, a copy of which is attached, together
with a calculation of applicable severance for the employees of Seller as set
forth on Schedule 4.8(d) hereto. The parties acknowledge that Section 4. 10(b)
---------------
provides for reimbursement by Seller of a portion of such severance.
(e) Prior to the Employee Transfer Date, Seller shall take such
actions as are necessary to terminate the active participation of the employees
of the Business in the Pension Plans.
(f) The covenants contained in this Section 4.8 shall survive the
Closing Date until hilly discharged and are intended to benefit Seller and each
employee and retiree of the Business.
4.9 Insurance. Seller shall, until the Closing Date, maintain in
----------
effect the insurance on the Purchased Assets as set forth in Schedule 2.5 and
------------
shall terminate coverage of the Purchased Assets effective at the close of
business on the Closing Date.
4.10 Seller's Purchase Commitment. As an inducement to Seller
-----------------------------
continuing its relationship with the Business by purchasing printing and
"Printing Materials" (which shall mean and include production of marketing
materials, brochures, cartons, and other printed products and components used by
Seller or its affiliates, including bindery and production of film plates and
other pre-press materials-from the Business post-Closing, the parties agree as
follows:
(a) On or before February 28 of each of 1997, 1998 and 1999
(each, a "Payment Date"), Buyer shall rebate (which may be through a charge
against the Consideration or a direct payment, as provided below) to Seller an
amount equal to 5% of all amounts collected by Buyer on account of Sales (as
defined herein) by Buyer, or any affiliate of Buyer, to Seller or any affiliate
of Seller in the fiscal year of Buyer ending immediately prior thereto. Amounts
collected for 1996 shall include amounts collected alter the Closing Date and
before January 31, 1997. In addition, March 31, 1999 shall be a "Payment Date",
and all amounts collected at that time on sales by Buyer or its affiliates to
Seller or its affiliates for work performed before January 31, 1999 shall be
taken into account in calculating the rebates set forth herein. On or before
each Payment Date, Buyer shall provide Seller with a written accounting of all
qualifying sales and the rebates due and owing thereon. Rebates which are due
and owing shall be charged first against $600,000.00 of the Consideration (such
$600,000.00 being referred to herein as the "Rebate Portion of the
Consideration") and, if rebates exceed the Rebate Portion of the Consideration,
it shall be paid directly by Buyer to Seller within thirty (30) days. If, on the
March 31, 1999 Payment Date, the Rebate Portion of the Consideration exceeds
rebates earned, such excess shall be refunded within thirty (30) days by Seller
to Buyer.
(b) (i) As a material inducement to the commitments of Buyer in Section
4.8 hereof, Seller or its affiliates shall purchase a minimum of $1,000,000.00
in Printing
12
<PAGE>
Materials from Buyer and its affiliates ("Committed Purchases") before April 1,
1996, $1,500,000.00 in additional Committed Purchases before each of July 1,
1996 and October 1, 1996, and $2,000,000.00 in additional Committed Purchase
before December 31, 1996. For purposes of the foregoing sentence, Sales in 1995
(including uncompleted work assumed by Buyer, less the cost of work in process
purchased) shall constitute first quarter 1996 Sales. In addition, Sales in
excess of the minimum Committed Purchases for any calendar quarter may be
applied against minimum Committed Purchases for the next succeeding calendar
quarter.
(ii) As Buyer's sole remedy for failure of the commitment identified
in the foregong subparagraph (b)(i), and without affecting rebate entitlement
under subparagraph (a) above, Buyer shall have the right, but not the
obligation, to terminate a pro rata share (rounded to the nearest whole number)
of the 38 employees of Seller whom Buyer has committed to employ (the "Committed
Employees") which corresponds to the percentage by which the Sales for any
quarter as defined above are less than the quarterly purchase commitment set
forth above. For employees terminated pursuant to this Section 4. 10(b), Seller
shall reimburse Buyer the cost of such severance, as calculated pursuant to
Schedule 4.8(d) actually paid (including any unused vacation pay and taxes) in
- ---------------
accordance with Section 4.8(d) hereof at a 50% rate until 50% of the Committed
Employees have been terminated in accordance herewith and at a 100% rate for the
remaining 50% of the Committed Employees terminated in accordance herewith.
(iii) The purchase commitments identified in subparagraph 4.1 0(b)(i)
above shall be reduced on a pro rata basis to the extent the actual number of
employees accepting offers of employment by Buyer alter the Closing is less than
38, in which case the definition of "Committed Employees" set forth in
subparagraph 4.1 0(b)(ii) above shall be adjusted to reflect the greater of such
actual number or thirty (30). The adjustment described herein shall occur as of
the Employee Transfer Date. Seller shall not hire the Committed Employees
identified on Schedule 4.10(b) hereto during the first year alter Closing
----------------
without Buyer's prior approval, which approval shall not be unreasonably
withheld.
(c) For purposes of this Section 4.10, "Sales" shall include the total
amount billed to Seller or its affiliates by Buyer or its affiliates for
printing and Printing Materials (including Committed Purchases), less the actual
direct cost to Buyer of any services which are a component thereof but which are
not, in the ordinary course of business, provided directly by Buyer, it being
the parties' intent that for purposes of determining whether sales by Buyer and
its affiliates should be counted toward the volume commitments and targets
identified herein, portions of Printing Materials which are not provided by
Buyer or its affiliates shall not be included, provided that the foregoing may
--------
not be used to deduct the cost of raw materials from "Sales" or penalize Buyer
for complying with Section 4.13.
(d) The commitments by Seller set forth herein, including the refund
of Consideration by Seller in Section 4.10(a), are contingent upon Buyer (i)
being competitive as to quality (including ability to satisfy specifications),
service and timeliness of delivery;
13
<PAGE>
(ii) providing materials upon the pricing set forth in Schedule 4.10(d) for at
----------------
least one year alter the Closing Date; and (iii) being competitive as to price
thereafter; provided that Seller shall place Buyer on notice of Buyer's
--------
inability to satisfy the foregoing and shall give reasonable opportunity to
cure.
4.11 Physical Transfer of Purchased Assets.
--------------------------------------
(a) Delivery by Seller to Buyer of the Purchased Assets shall take
place at the premises of Seller located at 1400 North Goodman Street, Rochester,
New York (the "Delivery Site"). From the Closing Date until December 29,1995,
Buyer may operate the Purchased Assets on the premises under terms and
conditions of access which are reasonably acceptable to Seller and which shall
not include rent payments. Buyer shall be responsible to dismantle, remove and
transport the Purchased Assets from their present location at the Delivery Site,
at Buyer's sole risk, cost and expense and shall complete same on or before
December 29, 1995, TIME BEING OF THE ESSENCE HEREOF. If Buyer has not vacated by
such date, rent shall be charged (and may be collected by offset of any of
Seller's obligations to Buyer or its affiliates) at two times the internal rates
of Seller (at $19.00 per square foot), except to the extent such failure is
within the control of B&L, in which case rent shall be charged at prevailing
market rate. Seller and Buyer shall agree upon the time and manner of such
transfer, which may or may not occur during regular business hours, depending on
Seller's reasonable business needs. Buyer shall indemnify, defend and hold
Seller harmless from and against all loss, cost, damage and expense arising out
of the acts or omissions of Buyer and its contractors and agents while on the
premises of Seller during the period prior to transfer of the Purchased Assets,
or otherwise in connection with the transfer of the Purchased Assets.
(b) Buyer shall, before entering onto Seller's premises alter Closing,
present certificates evidencing policies of insurance with the coverages,
coverage limits and other features identified on Schedule 4.11 hereto.
-------------
4.12 Buyer's Office Space. For at least three years alter the Closing,
---------------------
Seller shall allow Buyer to use facilities for a mutually agreeable number of
personnel not to exceed six' as reasonably necessary, for estimating graphic
design and customer service activities on Seller's premises at 1400 North
Goodman Street at no cost to Buyer for purposes of Buyer's providing service and
sales support in connection with Seller's purchases of printing materials from
Buyer. Either party may terminate the foregoing arrangement upon 60 days notice
if required in the reasonable management of its business. Extensions of such
time period shall be discussed between the parties and may include reasonable
rental payment. Buyer's use of such premises shall be contingent on Buyer's
maintenance of insurance in accordance with Schedule 4.11 hereto (sections a, b,
-------------
d, e, f and h only). A certificate of insurance shall be provided to Seller 30
days prior to the expiration of the Certificate of Insurance currently on file
with Seller or upon request and shall provide for 30 days advance notice of
cancellation, non-renewal or material change. Such use by Buyer of Seller's
premises shall be in accordance with all applicable policies, rules and
regulations of Seller
14
<PAGE>
of which Buyer has received notice. Seller's remedy for Buyer's violation of
such a policy, rule or regulation shall be termination of Buyer's use of such
premises, having given Buyer a reasonable opportunity to cure such violation.
4.13 Fulfillment Services. For at least three years alter the Closing,
---------------------
Buyer shall use its good faith efforts to purchase fulfillment services that
cannot be provided by Buyer from DeRidder, Inc., assuming competitive pricing
and timely availability of such services.
4.14 Retrieval of Film and Plates. Seller shall use commercially
-----------------------------
reasonable efforts to obtain before and at least one year alter the Closing,
possession of the items described in Section 1.2(e) hereof, wherever they may be
located, and the parties acknowledge that it is in their mutual best interest to
obtain same as soon as possible in order that the commitments identified in
Section 4.10 may be achieved.
ARTICLES
CLOSING CONDITIONS
------------------
5.1 Conditions to Each Party's's Obligations. The respective
-----------------------------------------
obligations of Seller and Buyer to consummate the transactions contemplated by
this Agreement shall be subject to the condition that neither Seller nor Buyer
shall be subject to any order, judgment, decree or injunction of a court of
competent jurisdiction or governmental body, agency or official nor any
applicable law or regulation or executive order which prevents consummation of
the transactions contemplated hereby.
5.2 Conditions to the Obligations of Seller. The obligation of Seller to
----------------------------------------
consummate the transaction contemplated hereby shall be further subject to the
fulfillment on or prior to the Closing Date of each of the following conditions:
(a) Buyer shall have performed and complied in all material respects
with the agreements contained in this Agreement required to be performed and
complied with by it at or prior to the Closing Date;
(b) The representations and warranties of Buyer set forth in this
Agreement shall be true and correct in all material respects as of the Closing
Date as though made at and as of the Closing Data (except as otherwise
contemplated by this Agreement); and
(c) Seller shall have received a certificate, dated the Closing Date,
certifying to the fulfillment of the conditions set forth in paragraphs (a) and
lb) of this Section 5.2 and signed on behalf of Buyer by an authorized officer
of Buyer.
15
<PAGE>
5.3 Conditions to the Obligations of Buyer.
---------------------------------------
(a) The obligation of Buyer to consummate the transactions
contemplated hereby shall be further subject to the fulfillment on or prior to
the Closing Date of each of the following conditions:
(i) Seller shall have performed and complied in all material respects
with the agreements contained in this Agreement required to be performed and
complied by it at or prior to the Closing Date;
(ii) The representations and warranties of Seller set forth in this
Agreement -shall be true and correct in all material respects as of the Closing
Date as though made at and as of the Closing Date (except as otherwise
contemplated by this Agreement);
(iii) Buyer shall have received a certificate, dated the Closing Date,
signed by an authorized officer of Seller certifying to the fulfillment of the
conditions set forth in paragraphs (i) and (ii) of this Section 5.3(a); and
(iv) There shall have occurred no material loss, damage or casualty to
the Purchased Assets.
(b) In the event that Buyer has actual knowledge on or prior to the Closing
Date of any inaccuracy in any representation or warranty of Seller or of any
failure of Seller to perform or comply with any of its agreements or obligations
contained in this Agreement and Buyer nonetheless consummates the Closing
hereunder, Buyer hereby agrees that it shall be deemed to have waived (i) such
inaccuracy or failure to perform or comply as a condition to its obligations
hereunder and (ii) any and all rights, remedies or other recourse against
Seller, or any affiliate thereof, to which Buyer might otherwise be entitled as
a result of such inaccuracy or failure to perform or comply.
ARTICLE 6
TERMINATION
-----------
6.1 Termination. This Agreement may be terminated at any time prior to
------------
the Closing Date:
(a) By mutual written consent of Seller and Buyer;
(b) By Buyer if there has been a material violation or breach by Seller
of any agreement, representation or warranty contained in this Agreement which
has rendered the satisfaction of any condition to the obligations of Buyer
specified in Section 5.3 impossible and such violation or breach has not been
waived by Buyer or cured by Seller within 15 days
16
<PAGE>
alter written notice of such violation or breach; or
(c) By Seller (i) if there has been a material violation or breach by
Buyer of any agreement, representation or warranty contained in this Agreement
which has rendered the satisfaction of any condition to the obligations of
Seller specified in Section 5.2 impossible and such violation or breach has not
been waived by Seller or cured by Buyer within 15 days alter written notice of
such violation or breach or (ii) if the Closing shall not have occurred on or
before December 20,1995, unless such failure to occur is due to the failure of
Seller to perform in all material respects each of its obligations under this
Agreement required to be performed by it at or before the Closing Date..
6.2 Procedure and Effect of Termination. In the event of termination of
------------------------------------
this Agreement pursuant to Section 6.1 (b), written notice thereof shall be
given by the terminating party to the other party and this Agreement shall
terminate, and in the event of termination of this Agreement pursuant to Section
6.1(a) or 6.1(c), this Agreement shall terminate, and in each case the
transactions contemplated hereby shall be abandoned, without further action by
any of the parties hereto, and there shall be no liability on the part of either
party, except as set forth in this Section 6.2 and in Sections 4.3(b) and 4.4,
which Sections shall survive the termination of this Agreement and except that
the foregoing shall not relieve any party from liability for damages actually
incurred as a result of breach by it of this Agreement.
ARTICLE 7
SURVIVAL AND INDEMNIFICATION
----------------------------
7.1 Survival. The representations, warranties, covenants and agreements
---------
of the parties hereto shall survive the execution and delivery hereof and the
delivery of all of the documents executed in connection herewith and shall
continue in full force and effect alter the date hereof and alter the Closing
Date for a period of twelve months alter the Closing Date, except that (i) the
covenants contained in this Article 7 and in Sections 3.5, 4.4 and 4.5 shall
survive in perpetuity, and (ii) any covenants or agreements contained herein or
made pursuant hereto which by their terms are to be performed alter the Closing
Date shall survive until fully discharged. The date until which the
representations, warranties, covenants and agreements of the parties hereto
survive, as set forth herein, is known as the "Expiration Date".
------------------
7.2 Indemnification of Buyer. Seller shall indemnify Buyer and hold
-------------------------
Buyer harmless from and against any and all damage, loss, claim, obligation,
liability, cost (including reasonable attorneys' fees and expenses whether
incurred in a third party action or in an action to enforce this Agreement),
expense or deficiency (collectively, "Loss and Expense") suffered by reason of,
-------------------
arising out of or resulting from (i) any misrepresentation or breach of warranty
made in this Agreement by Seller or (ii) any failure by Seller to fulfil
17
<PAGE>
any covenant or agreement under this Agreement; provided however, that Seller
-----------------
shall not have any liability for indemnity hereunder to Buyer arising from any
misrepresentation or breach of warranty (other than the representations in
Sections 2.1 through 2.4(a) and 2.7 hereof unless the aggregate amount of all
Loss and Expense arising from misrepresentation and breach of warranty exceeds
FIFTY THOUSAND AND NO/lOO DOLLARS ($50,000.00) (the "Deductible") and, in such
-------------
event, B&L shall be required to pay the amount by which the aggregate amount of
all such Loss and Expense exceeds the Deductible (but only for individual items
of Loss and Expense which exceed ONE THOUSAND AND NO/lOO DOLLARS ($1,000.00))
but Seller shall in no event be obligated to provide indemnification for Loss
and Expense arising from misrepresentation and breach of warranty aggregating in
excess of 50% of the Consideration.
7.3 Indemnification of Seller. In addition to the indemnities provided
--------------------------
in Section 4.6 and 4.11 hereof, Buyer shall indemnify Seller and hold it
harmless from and against any and all Loss and Expense suffered by reason of,
arising out of or resulting from (i) any misrepresentation or breach of warranty
made in or pursuant to this Agreement by Buyer, (ii) any failure by Buyer to
fulfill any covenant or agreement under this Agreement, or (iii) the negligence
or misconduct of Buyer in connection with its obligations hereunder, provided
--------
the foregoing shall not apply to the provision by Buyer and its affiliates alter
the Closing of Printing Materials, which shall be pursuant to separate
agreements.
7.4 Defense of Third Party's Claim. The indemnifying party shall have
-------------------------------
the right to conduct and control, at its expense and through counsel of its own
choosing, the defense of any claim, action or suit.
ARTICLE 8
MISCELLANEOUS PROVISIONS
------------------------
8.1 Amendment and Modification. This Agreement may be amended, modified
---------------------------
or supplemented only by written agreement signed by both parties.
8.2 Waiver of Compliance. Except as otherwise provided in this
---------------------
Agreement, any failure of either of the parties to comply with any obligation,
covenant, agreement or condition herein may be waived by the party entitled to
the benefits thereof only by a written instrument signed by the party granting
such waiver, but such waiver or failure to insist upon strict compliance with
such obligation, covenant, agreement or condition shall not operate as a waiver
of, or estoppel with respect to, any subsequent or other failure.
8.3 Notices. All notices and other communications hereunder shall be in
--------
writing and shall be deemed given if delivered personally or three days alter
mailed by registered or certified mail (return receipt requested), postage
prepaid, to the parties at the following addresses (or at such other address for
a party as shall be specified by like notice; provided
--------
18
<PAGE>
however that notices of a change of address shall be effective only upon receipt
- -------
thereof):
(a) if to Seller, to:
Bausch & Lomb Incorporated
One Bausch & Lomb Place
Rochester, New York 14604
Attention: Diane C. Harris, Vice President - Corporate
Development
with copies to:
Stephen A. Hellrung,
Senior Vice President, Secretary and General Counsel
(b) if to Buyer, to:
Monroe Litho Inc.
39 Delevan Street
Rochester, New York 14605
Attention: Bill Turri
with copies to:
Graphic Industries, Inc.
2155 Monroe Drive, N.E.
Atlanta, Georgia 30324
Attention: Mark C. Pope
8.4 Assignment. This Agreement and all of the provisions hereof shall be
-----------
binding upon and inure to the benefit of the parties hereto and their respective
successors and permitted assigns, but, neither this Agreement nor any of the
rights, interests or obligations hereunder shall be assigned by any party
hereto, without the prior written consent of the other party hereto nor is this
Agreement intended to confer upon any other person except the parties hereto and
their respective successors and assigns any rights, remedies, obligations or
liabilities hereunder.
8.5 Governing Law. This Agreement shall be governed by the laws of the
--------------
State of New York.
8.6 Actions and Proceedings. Buyer hereby irrevocably consents to the
------------------------
nonexclusive jurisdiction and venue of the Courts of the State of New York and
of any State or Federal Court located in Monroe County, New York in connection
with any action or proceeding arising out of or relating to this Agreement or
the transactions contemplated hereby.
19
<PAGE>
8.7 Counterparts. This Agreement may be executed in two or more
-------------
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
8.8 Interpretation. The article and section headings contained in this
---------------
Agreement are solely for the purpose of reference, are not part of the agreement
of the parties and shall not in any way affect the meaning or interpretation of
this Agreement.
8.9 Severability. The invalidity or unenforceability of any particular
-------------
provision of this Agreement shall be construed in all respects as if such
invalid or unenforceable provision were omitted. All provisions of this
Agreement shall be enforced to the full extent permitted by law.
8.10 Schedules. Disclosures included in any Schedule delivered pursuant
----------
to this Agreement shall be considered to be made for purposes of all Schedules.
Inclusion of any matter in any Schedule does not imply that such matter would,
under the provisions of this Agreement, have to be included in such Schedule.
8.11 Entire Agreement. This Agreement, including the documents,
-----------------
schedules, certificates and instruments referred to herein, embody the entire
agreement and understanding of the parties hereto in respect of the transactions
contemplated by this Agreement. There are no restrictions, promises,
representations, warranties, covenants or undertakings, other than those
expressly set forth or referred to herein or therein. This Agreement supersedes
all prior agreements and understandings between the parties with respect to such
transactions, whether written or oral.
20
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Agreement as of the day and
year first above written.
BAUSCH & LOMB INCORPORATED
Name:
------------------------------
Title:
-----------------------------
MONRO LITHO
By:
--------------------------------
Name:
------------------------------
Title:
-----------------------------
21
<PAGE>
Exhibit 11
Graphic Industries, Inc.
Computation of Earnings Per Share
Year ended January 31
---------------------------------------
1996 1995 1994
---------------------------------------
COMPUTATION FOR STATEMENT OF INCOME
Weighted average common shares
outstanding(1) 10,894,319 10,556,833 10,031,893
=======================================
Net income $10,630,276 $ 8,405,734 $ 6,500,470
=======================================
Net income per common share $ .98 $ .80 $ .65
=======================================
<PAGE>
Exhibit 11
Graphic Industries, Inc.
Computation of Earnings Per Share (continued)
Year ended January 31
---------------------------------------
1996 1995 1994
---------------------------------------
COMPUTATION FOR STATEMENT OF INCOME
Fully diluted computation:
Net income $10,630,276 $ 8,405,734 $ 6,500,470
Add interest on 7% convertible
subordinated debentures(2) 897,791 897,791 902,156
---------------------------------------
$11,528,067 $ 9,303,525 $ 7,402,626
=======================================
Weighted average number of
shares outstanding 10,894,319 10,556,833 10,031,893
Add common shares applicable to
assumed conversion of 7%
convertible subordinated
debentures 1,279,200 1,279,200 1,279,200
---------------------------------------
Weighted average number of
shares outstanding, as adjusted(1) 12,173,519 11,836,033 11,311,093
=======================================
Fully diluted net income per
common share $ .95 $ .79 $ .65
=======================================
<PAGE>
Exhibit 11
Graphic Industries, Inc.
Computation of Earnings Per Share (continued)
(1) No significant dilutive common stock equivalents were outstanding in any
year.
(2) Net of income tax effect.
<PAGE>
EXHIBIT 22
SUBSIDIARIES* OF GRAPHIC INDUSTRIES, INC.
- -----------------------------------------
NAME STATE OF INCORPORATION
----------------------------------------- ----------------------
ATLANTA BLUE PRINT CO.
d/b/a/ Atlanta Blue Print &
Graphics Co.
Subsidiaries: Executive Courier, Inc. Georgia
Tower Printing Company
Divisions: A&E Reprographics
and Supply Company
Atlantic Reprographics
Carolina Reprographics
Prizma Photographics
Arco Blueprinter
Cobb Reprographics
and Office Supply
Imaging Technologies
Services
Macon Blue Print
Company
Piedmont Printmakers
Reprographic Imaging
Technologies
Spartan Blueprinters
AUTOCOMP, INC. Georgia
ALLIED REPROGRAPHICS, INC. Georgia
BAUM PRINTING HOUSE, INC. Pennsylvania
CARPENTER RESERVE PRINTING COMPANY Ohio
CRAFTSMAN PRINTING COMPANY North Carolina
Division: Carolina Mailing Company
GENERAL COLOR INC. ** Georgia
<PAGE>
SUBSIDIARIES* OF GRAPHIC INDUSTRIES, INC.
- -----------------------------------------
NAME STATE OF INCORPORATION
- ---------------------------------- ----------------------
GRAPHIC MICHIGAN, INC. Michigan
GRAPHIC DIRECT, INC.-ILLINOIS Illinois
HERITAGE PRESS, INC. Texas
HOECHSTETTER PRINTING COMPANY, INC. Pennsylvania
IPD PRINTING & DISTRIBUTING, INC. Georgia
INTEGRATED GRAPHIC SERVICES Georgia
MERCURY PRINTING COMPANY Tennessee
MONROE LITHO, INC. New York
QUADRAS, INC. Georgia
SOUTHERN SIGNATURES, INC. Georgia
STATE PRINTING COMPANY South Carolina
THE STEIN PRINTING COMPANY, INC. Georgia
Subsidiaries: Lex Publishing Company Georgia
Stein Management Service Georgia
W.E. ANDREWS CO. INC. Georgia
Subsidiaries: W.E. Andrews Co.
Inc. of Connecticut Connecticut
A.C. Scanning Inc. Massachusetts
The Central Press
of Miami, Inc. Florida
WETMORE & COMPANY Texas
WILLIAMS PRINTING COMPANY Georgia
Subsidiary: Graphic Print Services Georgia
- ---------------------------------
* All wholly-owned
** Not an operating company
<PAGE>
Exhibit 23
Consent of Independent Auditors
We consent to the incorporation by reference in this Annual Report (Form 10-K)
of Graphic Industries, Inc. and Subsidiaries of our report dated March 12, 1996
Annual Report to Shareholders of Graphic Industries, Inc. and Subsidiaries.
Our audits also included the financial statement schedule of Graphic Industries,
Inc. and Subsidiaries listed in Item 14(a). This schedule is the responsibility
of the Company's management. Our responsibility is to express an opinion based
on our audits. In our opinion, as of the date of our report referred to in the
preceding paragraph, the financial statement schedule referred to above, when
considered in relation to the basic financial statements taken as a whole,
presents fairly in all material respects the information set forth therein.
We also consent to the incorporation by reference in the Registration Statements
(Form S-8 Numbers 33-18120, 33-56018, 33-48564, and 33-57603) pertaining to
stock option, award and purchase plans and Registration Statements (Form S-3
Numbers 33-63989, 33-65223 and 33-00557) pertaining to acquisitions of Graphic
Industries, Inc. and in each related Prospectus of our reports dated March 12,
1996, with respect to the financial statements and schedule included or
incorporated by reference in the Annual Report (Form 10-K) for the year ended
January 31, 1996.
/s/ ERNST & YOUNG
- --------------------------
April 24, 1996
Atlanta, Georgia
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<PAGE>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> JAN-31-1996
<PERIOD-START> FEB-01-1995
<PERIOD-END> JAN-31-1996
<CASH> 14,476
<SECURITIES> 20,032
<RECEIVABLES> 44,882
<ALLOWANCES> 1,075
<INVENTORY> 30,290
<CURRENT-ASSETS> 142,476
<PP&E> 205,481
<DEPRECIATION> 83,041
<TOTAL-ASSETS> 286,503
<CURRENT-LIABILITIES> 58,406
<BONDS> 20,787
0
0
<COMMON> 1,162,337
<OTHER-SE> 92,453
<TOTAL-LIABILITY-AND-EQUITY> 286,503
<SALES> 417,262
<TOTAL-REVENUES> 417,262
<CGS> 318,319
<TOTAL-COSTS> 318,319
<OTHER-EXPENSES> 69,840
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 11,713
<INCOME-PRETAX> 17,390
<INCOME-TAX> 6,760
<INCOME-CONTINUING> 6,760
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 6,760
<EPS-PRIMARY> .98
<EPS-DILUTED> .95
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