<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, 1997 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
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 $52,143,312 AS OF APRIL 22, 1997 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, 1997 -
7,211,908; SHARES OF CLASS B COMMON STOCK, $.10 PAR VALUE, OUTSTANDING AT APRIL
22, 1997 - 4,518,817.
Documents incorporated by reference:
PORTIONS OF THE GRAPHIC INDUSTRIES, INC. ANNUAL SHAREHOLDERS REPORT FOR THE YEAR
ENDED JANUARY 31, 1997 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 JUNE 3, 1997 ARE INCORPORATED BY REFERENCE
INTO PART III.
Exhibit Index begins on page ____. Total number of pages: ____.
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PART I
ITEM 1. BUSINESS
--------
General
- -------
Graphic Industries, Inc. (the "Company" or "Graphic") engages in all
aspects of financial and corporate printing, reprographic services, commercial
printing, direct mail printing and other graphic communications. The Company
ranks approximately 17th by sales among commercial printing firms in North
America. Graphic has expanded its printing and graphic arts services and its
markets through a continuing program of acquisitions of established companies in
its industry and through internal growth and development. The Company's
competitive position has been strengthened in recent years by its substantial
capital investments in advanced equipment, including computerized multicolor
presses 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 20 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.
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Fiscal Year
in which
Organized
Name and Founded or Acquired Principal Services
Location in by Company or Products
- --------------------------------------------------------------------------------
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
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Fiscal Year
in which
Organized
Name and Founded or Acquired Principal Services
Location in by Company or Products
- --------------------------------------------------------------------------------
Executive Courier, 1983 1991 Courier services
Inc.(4)
Atlanta, GA
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)(5) architectural,
Greenville, SC engineering and office
supplies
Imaging Technologies 1962 1986 Reprographic services
Services(2)(6)
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
Monroe Litho, Inc. 1960 1990 Financial and
Rochester, NY corporate printing;
graphic communications
-4-
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Fiscal Year
in which
Organized
Name and Founded or Acquired Principal Services
Location in by Company or Products
- --------------------------------------------------------------------------------
Presstar Printing Corp. 1948 1997 Financial and
Silver Spring, MD corporate printing;
graphic communications
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
Stein Educational 1924 1978 Educational services
Marketing Group
Atlanta, GA
W.E. Andrews Co., 1953 1985 Financial and
Inc. corporate printing;
Bedford, MA graphic communication;
educational services
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
-5-
<PAGE>
Fiscal Year
in which
Organized
Name and Founded or Acquired Principal Services
Location in by Company or Products
- --------------------------------------------------------------------------------
Williams Printing 1922 1922 Financial and
Company(7) corporate printing;
Atlanta, GA graphic
communications; point-
of-purchase materials
- ----------------------
(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 - Piedmont Printmakers.
(6) Former name - Spartan Blueprinters.
(7) Predecessor to the Company.
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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:
Fiscal Years
-------------------
Class of Service 1997 1996 1995
- ---------------------------------- ----- ----- -----
Financial and Corporate Printing 38% 35% 34%
Graphic Communications 46 43 43
Reprographic Services 7 7 7
Point-of-Purchase Materials 6 6 6
Direct Mail 1 6 7
Educational Services 2 3 3
---- ---- ----
Total 100% 100% 100%
---- ---- ----
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-
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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-
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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
----------- ------------------------------
1993 6,631,110
1994 21,126,441
1995 21,927,430
1996 24,982,790
1997 23,527,407
-----------
TOTAL $98,195,178
===========
Except for the purchase of land, buildings and building improvements of
$1,401,369, $4,709,006, $5,246,153, $2,213,282 and $ 2,644,716 during fiscal
1993, 1994, 1995, 1996 and 1997 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-four 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-
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Specialized Equipment. The Company's specialized equipment, in addition to
----------------------
the above, includes twenty 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 28 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
-----------------
115 sheetfed offset presses, web offset presses and letterpresses, including 74
which print four to eight colors simultaneously.
Sales and Marketing
- -------------------
The Company seeks to maximize the benefits of its diversification through
the 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.
During fiscal 1997, the Company added a vice president of marketing to
coordinate and develop a marketing plan to capitalize on the synergies of the
Company's subsidiaries and to develop effective turnkey information distribution
solutions for major corporations.
At January 31, 1997, the Company's services were marketed by 273 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, 1997, the Company had more than 10,000 customer accounts. No
customer accounted for as much as 10% of the Company's revenues during fiscal
1997.
-10-
<PAGE>
Employees
- ---------
The Company employed 3,348 associates at January 31, 1997. Approximately 6
percent of the Company's associates are represented by one of two 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 33,000 commercial
printing plants in the nation with shipments of commercial printing reaching
approximately $45 billion in 1995. 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.
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ITEM 2. PROPERTIES
----------
The following table contains information regarding the Company's facilities
as of April 22, 1997, all of which are leased except as otherwise noted:
Facility Square Feet Use (1)
- -------------------------------- ----------- ------------------------------
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 4,000 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 8,700 Production, sales and office
Columbia, SC
Carpenter 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
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Facility Square Feet Use (1)
- -------------------------------- ----------- ------------------------------
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 3,600 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
Presstar Printing Corporation(2) 83,000 Production, sales and office
Silver Spring, MD
Quadras, Inc. 36,000 Production, sales and office
Doraville, GA
Southern Signatures, Inc.(2) 25,000 Production, sales and office
Atlanta, GA
State Printing Company(2) 60,000 Production, sales and office
Columbia, SC
The Central Press of 40,000 Production, sales and office
Miami, Inc.(2)
Pompano Beach, FL
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Facility Square Feet Use (1)
- -------------------------------- ----------- ------------------------------
Stein Education Marketing 6,000 Sales rooms and production
Group(2)
Atlanta, GA
W.E. Andrews Co., Inc.(4) 104,709 Production, sales and office
Bedford, MA
W.E. Andrews Co., Inc. of 43,726 Production, sales and office
Connecticut
Hartford, CT
Wetmore & Company(2)(5) 129,642 Production, sales, office and
Houston, TX warehouse
Williams Printing Company(2)(3) 139,160 Production, sales, office and
Atlanta, GA warehouse
- ----------------------------
(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 417,218 square feet of leased space described above is
approximately $1,882,125. See Note 6 of Notes to Consolidated Financial
Statements in Item 8 of this Report.
(2) These facilities are owned by the company.
(3) Includes two facilities.
(4) Includes two facilities, one of which is owned by the Company (73,000
square feet).
(5) Includes two facilities, one of which is owned by the Company (112,043
square feet).
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ITEM 3. LEGAL PROCEEDINGS
-----------------
At the end of fiscal year 1997, 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 72
Graphic Industries since
1970 and President of
Graphic Industries 1970-
1989
Alvan A. Herring, Jr. Vice President of Graphic 53
Industries since 1990;
President, Foote & Davies,
Inc. 1989-90; Senior Vice
President Foote & Davies, Inc.
1982-1989
Joseph A. Fasolo Vice President of Graphic 54
Industries since 1994;
President of Baum Printing,
Inc. 1988-1996(1)
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(1)
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<PAGE>
Position with Company,
Principal Occupation,
Business Experience,
Name Other Directorships Age
- ---------------------- ----------------------------------- -------
Ellis T. Alexander Vice President of Graphic 45
Industries since 1996;
President of The Stein Printing
Company, Inc. 1994-1996; Vice
President-Operations Williams
Printing Company 1992-1994, and
Senior Vice President L.P.
Thebault Company 1986-1992 (1)
Donald S. Forshay Vice President-Sales & Marketing 51
of Graphic Industries, Inc. since
1996; Vice President-Sales &
Marketing of Custom Printing Co.
1995-1996; and Vice President
Sales & Marketing Hart Graphics
Co. 1989-1995
Jeff Glover Vice President of Graphic 38
Industries, Inc. since 1996;
President of Wetmore & Company
since 1993; and Executive Vice
President Wetmore & Company
1991-1993 (1)
David S. Fraser Chief Financial Officer and 58
Treasurer of Graphic Industries,
Inc. since 1994; President of
L.S. Brown Co. and Marine
Distributors, Inc. 1986-1994
Donald P. Hunnicutt, Sr. Secretary of Graphic 53
Industries since 1987;
Controller of Graphic
Industries 1983-1987
- ----------------------
(1) 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, 1997.
ITEM 6. SELECTED FINANCIAL DATA
-----------------------
This information is incorporated by reference to "5-Year Comparative
Summary of Operations" and "5-Year Comparative Consolidated Balance Sheets" on
pages 4-7 of the Registrant's annual shareholders report for the year ended
January 31, 1997.
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 18-20 of the Registrant's annual shareholders report for
the year ended January 31, 1997 are incorporated by reference.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
-------------------------------------------
The report of independent auditors and consolidated financial statements
included on page 21-32 of the Registrant's annual shareholders report for the
year ended January 31, 1997 are incorporated by reference.
"Quarterly Results of Operations" on page 33 of the Registrant's annual
shareholders report for the year ended January 31, 1997 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 1997 Annual Meeting of Shareholders, to be filed with the Securities and
Exchange Commission within 120 days of the end of the
Registrant's 1997 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 1997 Annual Meeting of Shareholders, to be filed with the Securities and
Exchange Commission within 120 days of the end of the Registrant's 1997 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 1997 Annual
Meeting of Shareholders, to be filed with the Securities and Exchange Commission
within 120 days of the end of the Registrant's 1997 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 1997 Annual Meeting of Shareholders, to be filed with the Securities and
Exchange Commission within 120 days of the end of the Registrant's 1997 fiscal
year.
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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, 1997, are incorporated by
reference in Item 8:
* Consolidated Balance Sheets - January 31, 1997 and
January 31, 1996.
* Consolidated Statements of Income - fiscal years ended
January 31, 1997, 1996 and 1995.
* Consolidated Statements of Shareholders' Equity - fiscal
years ended January 31, 1997, 1996 and 1995.
* Consolidated Statements of Cash Flows - fiscal years ended
January 31, 1997, 1996 and 1995.
* Notes to Consolidated Financial Statements - January 31,
1997.
2. Financial Statement Schedule
Schedule The following consolidated statement schedule of the
-------- Registrant is included in Item 14(d):
Number
------
II Valuation and Qualifying Accounts.
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<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)
-21-
<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. (15)
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. (15)
-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. (15)
10(uuu) Credit Agreement between the Registrant, co-agents and NationsBank
of Georgia, NA, as agent, dated December 21, 1995. (15)
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. (15)
10(www) Form of First, Second and Third Amendments to Credit Agreement between
the Registrant, co-agents and NationsBank of Georgia, NA, as agent,
dated June 27, 1996, November 18, 1996 and January 31, 1997
respectively.
10(xxx) Promissory Note, Deed to Secure Debt and Security Agreement between the
Registrant and Metlife Capital Financial Corporation dated December 31,
1996.
10(yyy) Promissory Note, Indemnity Deed of Trust and Security Agreement between
the Registrant and Metlife Capital Financial Corporation dated January
31, 1997.
10(zzz) Asset Purchase Agreement between the Registrant, Presstar Acquisition
Corp., and Ex-Speed-ite Service, Inc. dated October 23, 1997.
10(aaaa) Promissory Note, Mortgage and Security Agreement between the Registrant
and Metlife Capital Financial Corporation dated January 31, 1997.
11 Computation of Earnings Per Share.
13 The Registrant's 1997 Annual Shareholders Report. With the exception of
information expressly incorporated herein by reference, the 1997 Annual
Shareholders Report is not deemed to be filed with the commission.
21 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).
-25-
<PAGE>
(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 Jamuary 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. 0-12204).
(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)
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<PAGE>
(15) 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,
1996. (File No. 0-12204).
(b) Reports on Form 8-K.
No reports on Form 8-K were filed during the quarter ended
January 31, 1997.
-27-
<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, 1997 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, 1997 /s/ Mark C. Pope, III
-------------------------------
Mark C. Pope, III
Chairman of the Board
(Principal Executive Officer)
Date: April 29, 1997 /s/ David S. Fraser
-------------------------------
David S. Fraser
Chief Financial Officer and
Treasurer
(Principal Financial and
Accounting Officer)
Date: April 29, 1997 /s/ Leo Benatar
-------------------------------
Director
Date: April 29, 1997 /s/ William A. Wood, Jr.
-------------------------------
Director
Date: April 29, 1997 /s/ John R. Pope
-------------------------------
John R. Pope
Director
Date: April 29, 1997 /s/ Alvan A. Herring, Jr.
-------------------------------
Alvan A. Herring, Jr.
Director
Date: April 29, 1997 /s/ Ralph N. Strayhorn, Jr.
------------------------------
Ralph N. Strayhorn, Jr.
Director
-28-
<PAGE>
Date: April 29, 1997 /s/ Warren E. Andrews
------------------------------
Warren E. Andrews
Director
Date: April 29, 1997 /s/ Carter D. Pope
-----------------------------
Carter D. Pope
Director
Date: April 29, 1997 /s/ James A. Hatcher
-------------------------------
James A. Hatcher
Director
-29-
<PAGE>
EXHIBIT 10(WWW)
FIRST AMENDMENT TO CREDIT AGREEMENT
THIS FIRST AMENDMENT TO CREDIT AGREEMENT dated as of June 27, 1996 by
and among GRAPHIC INDUSTRIES, INC., a corporation organized under the laws of
the State of Georgia (the "Borrower"), the Lenders appearing on the signature
pages hereof (the "Lenders") and NATIONSBANK, N.A. (SOUTH), successor to
NationsBank of Georgia, National Association, as Agent (the "Agent").
WHEREAS, the Borrower, the Lenders and the Agent entered into that
certain Credit Agreement dated as of December 21, 1995 (the "Credit Agreement")
pursuant to which the Lenders made certain financial accommodations available to
the Borrower;
WHEREAS, the Borrower has requested that the Lenders and the Agent
amend the Credit Agreement in certain respects; and
WHEREAS, the Lenders and the Agent are willing to so amend the Credit
Agreement on the terms and conditions set forth herein.
NOW, THEREFORE, for other good and valuable consideration, the receipt
and sufficiency of which are hereby acknowledged by the parties, the parties
hereto agree as follows:
SECTION 1. AMENDMENT TO CREDIT AGREEMENT. The Credit Agreement is
-----------------------------
hereby amended by deleting in its entirety the defined term "Consolidated
------------
EBITDA" contained in Section 1.1 thereof and substituting in lieu thereof the
- ------
following:
" '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; provided, however, that no part of the
restructuring charge as of April 30, 1996 pertaining to Graphic Direct,
Inc., Illinois and The Stein Printing Company, Inc. in the amount of
$6,026,500 shall be added to or subtracted from clause (i) immediately
above nor shall any of the associated tax benefit of $2,973,500 be added to
or subtracted from clause (iii) above."
-1-
<PAGE>
SECTION 2. CONSENT AND WAIVER. Effective upon the Amendment Effective
------------------
Date (as defined below), the Agent and the Lenders hereby consent to, and waive
any Default or Event of Default arising solely by reason of (a) the sale or
other disposition of assets owned by Graphic Direct, Inc., Illinois ("Graphic
Direct") and The Stein Printing Company, Inc. as described in that certain
letter dated June 5, 1996 from the Borrower to the Agent and each of the
Lenders; and (b) the acquisition by Graphic Direct of that certain Promissory
Note dated May 30, 1996 in the original principal amount of $1,500,000 executed
by Johnson & Quin, Inc. ("Johnson & Quin") in favor of Graphic Direct, which
Promissory Note was issued to Graphic Direct in partial consideration for the
sale of certain assets owned by Graphic Direct pursuant to the terms of that
certain Asset Purchase Agreement dated as of May 30, 1996 among Johnson & Quin,
Graphic Direct and the Borrower. The foregoing waiver shall not be construed to
be a waiver of any other Default or Event of Default that may be in existence
under the Credit Agreement as of the date hereof. Further, such consent and
waiver shall not be construed as a consent or waiver of any future violation of
any of the terms, conditions or other provisions of the Credit Agreement,
including, without limitation, Section 10.4 or Section 10.7 thereof, nor shall
the Borrower, by receipt of the foregoing consent and waiver, expect that such a
consent or waiver will be given in the future.
SECTION 3. EFFECTIVENESS OF AMENDMENT. This First Amendment shall not be
--------------------------
effective until the date (the "Amendment Effective Date") the following
conditions precedent to effectiveness shall be satisfied:
(a) this First Amendment shall be executed and delivered by the Borrower,
the Agent and each of the Lenders; and
(b) the Agent shall have received a certificate from the Treasurer of the
Borrower certifying that, after giving effect to this First Amendment, no
Default or Event of Default under the Credit Agreement will be in existence.
-2-
<PAGE>
SECTION 4. REAFFIRMATION OF REPRESENTATIONS AND WARRANTIES.
-----------------------------------------------
(a) In order to induce the Agent and the Lenders to enter into this First
Amendment, the Borrower hereby reaffirms each of the representations and
warranties of the Borrower contained in the Credit Agreement as of the date
hereof except to the extent that such representations and warranties expressly
relate solely to an earlier date (in which case such representations and
warranties were true and accurate on and as of such earlier date) and except for
changes in factual circumstances specifically and expressly permitted under the
Credit Agreement.
(b) After giving effect to this First Amendment, the Borrower represents
and warrants to the Agent and the Lenders that no Default or Event of Default
has occurred or is continuing under the Credit Agreement.
(c) The execution, delivery and performance of this First Amendment by the
Borrower does not require the consent of any other Person under any document,
instrument or agreement to which the Borrower is a party or under which the
Borrower is bound.
SECTION 5. REFERENCES TO THE CREDIT AGREEMENT. Each reference to the
----------------------------------
Credit Agreement in any of the Loan Documents shall be deemed to be a reference
to the Credit Agreement, as amended by this First Amendment, and as the same may
be further amended, restated, supplemented or otherwise modified from time to
time in accordance with Section 14.7 of the Credit Agreement. Further, the
Borrower hereby acknowledges and agrees that all references to "NationsBank of
Georgia, National Association" in its individual capacity or in its capacity as
Agent (and any defined term used to designate "NationsBank of Georgia, National
Association" in its individual capacity or in its capacity as Agent) contained
in the Credit Agreement and the other Loan Documents shall be deemed to be
references to "NationsBank, N.A. (South)".
SECTION 6. BENEFITS. This First Amendment shall be binding upon, and
--------
shall inure to the benefit of, the parties hereto and their respective
successors and assigns.
SECTION 7. GOVERNING LAW. THIS FIRST AMENDMENT SHALL BE GOVERNED BY, AND
-------------
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF GEORGIA.
SECTION 8. EFFECT. Except as expressly herein amended, the terms and
------
conditions of the Credit Agreement shall remain in full force and effect without
amendment or modification, express or implied.
-3-
<PAGE>
SECTION 9. COUNTERPARTS. This First Amendment may be executed in any
------------
number of counterparts, each of which shall be deemed to be an original and
shall be binding upon all parties, their successors and assigns.
SECTION 10. DEFINITIONS. All capitalized terms which are used herein and
-----------
not otherwise defined herein shall have the meanings given such terms as set
forth in the Credit Agreement.
[SIGNATURES CONTAINED ON FOLLOWING PAGE]
-4-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this First Amendment to
Credit Agreement to be executed under seal by their duly authorized officers as
of the date first above written.
THE BORROWER:
GRAPHIC INDUSTRIES, INC.
By:
---------------------------------------------------
Title:
---------------------------------------------
THE AGENT:
NATIONSBANK, N.A. (SOUTH), as Agent and
as a Lender
By:
---------------------------------------------------
Title:
---------------------------------------------
[SIGNATURES CONTINUED ON NEXT PAGE]
-5-
<PAGE>
[SIGNATURE PAGE TO FIRST AMENDMENT TO CREDIT AGREEMENT DATED
AS OF JUNE 27, 1996 WITH GRAPHIC INDUSTRIES, INC.]
THE LENDERS:
SUNTRUST BANK, ATLANTA
By:
---------------------------------------------------
Title:
---------------------------------------------
By:
---------------------------------------------------
Title:
---------------------------------------------
TEXAS COMMERCE BANK, NATIONAL
ASSOCIATION
By:
---------------------------------------------------
Title:
---------------------------------------------
BANK OF AMERICA, F.S.B.
By:
---------------------------------------------------
Title:
---------------------------------------------
CORESTATES BANK, NATIONAL
ASSOCIATION
By:
---------------------------------------------------
Title:
---------------------------------------------
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<PAGE>
[SIGNATURE PAGE TO FIRST AMENDMENT TO CREDIT AGREEMENT DATED
AS OF JUNE 27, 1996 WITH GRAPHIC INDUSTRIES, INC.]
FLEET NATIONAL BANK
By:
---------------------------------------------------
Title:
---------------------------------------------
MARINE MIDLAND BANK, N.A.
By:
---------------------------------------------------
Title:
---------------------------------------------
PNC BANK, NATIONAL ASSOCIATION
By:
---------------------------------------------------
Title:
---------------------------------------------
-7-
<PAGE>
SECOND AMENDMENT TO CREDIT AGREEMENT
THIS SECOND AMENDMENT TO CREDIT AGREEMENT dated as of November 18,
1996 by and among GRAPHIC INDUSTRIES, INC., a corporation organized under the
laws of the State of Georgia (the "Borrower"), the Lenders appearing on the
signature pages hereof (the "Lenders") and NATIONSBANK, N.A. (SOUTH), successor
to NationsBank of Georgia, National Association, as Agent (the "Agent").
WHEREAS, the Borrower, the Lenders and the Agent entered into that
certain Credit Agreement dated as of December 21, 1995, as amended by that
certain First Amendment to Credit Agreement dated as of June 27, 1996 (as so
amended, the "Credit Agreement") pursuant to which the Lenders made certain
financial accommodations available to the Borrower;
WHEREAS, the Borrower has requested that the Lenders and the Agent
amend the Credit Agreement in certain respects; and
WHEREAS, the Lenders and the Agent are willing to so amend the Credit
Agreement on the terms and conditions set forth herein.
NOW, THEREFORE, for other good and valuable consideration, the receipt
and sufficiency of which are hereby acknowledged by the parties, the parties
hereto agree as follows:
SECTION 1. SPECIFIC AMENDMENTS TO CREDIT AGREEMENT.
---------------------------------------
(a) The Credit Agreement is hereby amended by deleting the defined
term "Excess Amount" contained in Section 1.1 thereof and substituting in lieu
-------------
thereof the following:
" 'Excess Amount' means, on any date of determination as set forth in
-------------
the Borrowing Base Certificate, the lesser of: (i) $35,000,000 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."
-1-
<PAGE>
(b) The Credit Agreement is hereby further amended by deleting the defined
term "Revolving Commitment" contained in Section 1.1 thereof and substituting in
--------------------
lieu thereof the following:
" 'Revolving Commitment' means $120,000,000, as the same may be
--------------------
reduced from time to time pursuant to the terms of this Agreement."
(c) The Credit Agreement is hereby further amended by deleting the defined
term "Revolving Termination Date" contained in Section 1.1 thereof and
--------------------------
substituting in lieu thereof the following:
" 'Revolving Termination Date' means December 21, 1998 or such date as
--------------------------
may be extended pursuant to Section 2.8 hereof."
(d) The Credit Agreement is hereby further amended by deleting the Annex I
attached to the Credit Agreement and substituting in lieu thereof the Annex I
attached hereto as Exhibit A.
SECTION 2. ACKNOWLEDGMENT REGARDING REVOLVING TERMINATION DATE
---------------------------------------------------
EXTENSIONS/ADDITIONAL LOAN PARTY. The parties hereto acknowledge and agree that
- --------------------------------
(i) notwithstanding the amendment and resulting extension of the Revolving
Termination Date pursuant to Section 1(c) above, the Borrower may request up to
two successive one-year extensions of the Revolving Termination Date pursuant
to, and in accordance with, Section 2.8 of the Credit Agreement and (ii)
effective as of November 4, 1996, Presstar Printing Corporation, a Maryland
corporation, became a Loan Party under the Credit Agreement.
SECTION 3. EFFECTIVENESS OF AMENDMENT. This Second Amendment shall not be
--------------------------
effective until the date the following conditions precedent to effectiveness
shall be satisfied:
(a) this Second Amendment shall be executed and delivered by the Borrower,
the Agent and each of the Lenders;
(b) the Borrower shall have delivered to the Agent duly executed
replacement Revolving Notes, dated the date hereof, payable to the order of each
Lender, and in a principal amount equal to the amount of each such Lender's
Commitment after giving effect to this Second Amendment;
(c) the Agent shall have received a certificate from the Treasurer of the
Borrower certifying that, after giving effect to this Second Amendment, no
Default or Event of Default under the Credit Agreement will be in existence; and
-2-
<PAGE>
(d) the Agent shall have received a certificate from the Secretary or
Assistant Secretary of the Borrower certifying (i) the names and true signatures
of the officers of the Borrower authorized to sign certain instruments and
documents required to be delivered by the Company pursuant to this Second
Amendment; and (ii) certain matters relating to the articles of incorporation
and by-laws of the Borrower and the resolutions of the Board of Directors of the
Borrower approving the transactions contemplated hereby.
SECTION 4. REPRESENTATIONS AND WARRANTIES.
------------------------------
(a) In order to induce the Agent and the Lenders to enter into this Second
Amendment, the Borrower hereby reaffirms each of the representations and
warranties of the Borrower contained in the Credit Agreement as of the date
hereof except to the extent that such representations and warranties expressly
relate solely to an earlier date (in which case such representations and
warranties were true and accurate on and as of such earlier date) and except for
changes in factual circumstances specifically and expressly permitted under the
Credit Agreement.
(b) The Borrower hereby represents and warrants to the Agent and the
Lenders that, after giving effect to this Second Amendment: (i) no Default or
Event of Default has occurred or is continuing under the Credit Agreement; (ii)
no Material Adverse Change has occurred since the Agreement Date; and (iii) the
Credit Obligations constitute "Senior Debt" under and as defined in the
Subordinated Debenture Indenture.
(c) The Borrower hereby represents and warrants to the Agent and the
Lenders that the execution, delivery and performance of this Second Amendment by
the Borrower, and the performance by the Borrower of its obligations under the
Credit Agreement (as amended hereby) in accordance with its terms, do not and
will not, by the passage of time, the giving of notice or otherwise: (i)
require any Government Approval or violate any Applicable Law relating to the
Borrower; (ii) conflict with, result in a breach of or constitute a default
under the articles of incorporation or by-laws of the Borrower, or any
indenture, agreement or other instrument to which the Borrower is a party or by
which it or any of its properties may be bound; (iii) 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 Borrower; or (iv) require the consent of any
other Person under any document, instrument or agreement to which the Borrower
is a party or under which the Borrower is bound.
SECTION 5. REFERENCES TO THE CREDIT AGREEMENT. Each reference to the
----------------------------------
Credit Agreement in any of the Loan Documents shall be deemed to be a reference
to the Credit Agreement, as amended by this Second Amendment, and as the same
-3-
<PAGE>
may be further amended, restated, supplemented or otherwise modified from time
to time in accordance with Section 14.7 of the Credit Agreement.
SECTION 6. EXPENSES. Pursuant to Section 14.2 of the Credit Agreement,
--------
the Borrower shall reimburse the Agent upon demand for all costs and expenses
(including reasonable attorneys' fees) incurred by the Agent in connection with
the preparation, negotiation, execution and delivery of this Second Amendment
and the other agreements, certificates and documents executed and delivered in
connection herewith.
SECTION 7. BENEFITS. This Second Amendment shall be binding upon, and
--------
shall inure to the benefit of, the parties hereto and their respective
successors and assigns.
SECTION 8. GOVERNING LAW. THIS SECOND AMENDMENT SHALL BE GOVERNED BY, AND
-------------
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF GEORGIA.
SECTION 9. EFFECT. Except as expressly herein amended, the terms and
------
conditions of the Credit Agreement shall remain in full force and effect without
amendment or modification, express or implied.
SECTION 10. COUNTERPARTS. This Second Amendment may be executed in any
------------
number of counterparts, each of which shall be deemed to be an original and
shall be binding upon all parties, their successors and assigns.
SECTION 11. DEFINITIONS. All capitalized terms which are used herein and
-----------
not otherwise defined herein shall have the meanings given such terms as set
forth in the Credit Agreement.
[SIGNATURES CONTAINED ON FOLLOWING PAGE]
-4-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Second Amendment to
Credit Agreement to be executed under seal by their duly authorized officers as
of the date first above written.
THE BORROWER:
GRAPHIC INDUSTRIES, INC.
By:
---------------------------------------------------
Title:
---------------------------------------------
THE AGENT:
NATIONSBANK, N.A. (SOUTH), as Agent
By:
---------------------------------------------------
Title:
---------------------------------------------
[SIGNATURES CONTINUED ON NEXT PAGE]
-5-
<PAGE>
[SIGNATURE PAGE TO SECOND AMENDMENT TO CREDIT AGREEMENT DATED
AS OF NOVEMBER 18, 1996 WITH GRAPHIC INDUSTRIES, INC.]
THE LENDERS:
NATIONSBANK, N.A. (SOUTH)
By:
---------------------------------------------------
Title:
---------------------------------------------
SUNTRUST BANK, ATLANTA
By:
---------------------------------------------------
Title:
---------------------------------------------
By:
---------------------------------------------------
Title:
---------------------------------------------
TEXAS COMMERCE BANK, NATIONAL
ASSOCIATION
By:
---------------------------------------------------
Title:
---------------------------------------------
BANK OF AMERICA, F.S.B.
By:
---------------------------------------------------
Title:
---------------------------------------------
-6-
<PAGE>
[SIGNATURE PAGE TO SECOND AMENDMENT TO CREDIT AGREEMENT DATED
AS OF NOVEMBER 18, 1996 WITH GRAPHIC INDUSTRIES, INC.]
CORESTATES BANK, NATIONAL
ASSOCIATION
By:
---------------------------------------------------
Title:
---------------------------------------------
FLEET NATIONAL BANK
By:
---------------------------------------------------
Title:
---------------------------------------------
MARINE MIDLAND BANK, N.A.
By:
---------------------------------------------------
Title:
---------------------------------------------
PNC BANK, NATIONAL ASSOCIATION
By:
---------------------------------------------------
Title:
---------------------------------------------
-7-
<PAGE>
EXHIBIT A
ANNEX I
-------
LIST OF LENDERS, COMMITMENT AMOUNTS AND LENDING OFFICES
-------------------------------------------------------
Information Regarding Agent
NationsBank, N.A. (South)
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, N.A. (South)
ABA #061-000052 Attn: Corporate Credit Support
Account #: 13662101019970
Reference: Graphic Industries
AGENT COMMITMENT:
NATIONSBANK, N.A. (SOUTH) Initial Commitment Amount: $27,000,000
Commitment Percentage: 22.50%
Lending Office (All types):
- --------------
600 Peachtree Street
Atlanta, Georgia 30308
Attention: Douglas J. Wallace
CO-AGENT COMMITMENTS:
SUNTRUST BANK, ATLANTA Initial Commitment Amount: $19,000,000
Lending Office (All types): Commitment Percentage: 15.833333333%
- --------------
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
<PAGE>
TEXAS COMMERCE BANK, NATIONAL
ASSOCIATION Initial Commitment Amount: $19,000,000
Lending Office (All types): Commitment Percentage: 15.833333333%
- --------------
5177 Richmond Avenue
Houston, Texas 77056
Attention: Joel J. Landis
Telephone: 713/850-2467
Telecopy: 713/850-2459
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: $11,000,000
Lending Office (All types): Commitment Percentage: 9.166666667%
- --------------
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
A-2
<PAGE>
CORESTATES BANK, NATIONAL ASSOCIATION Initial Commitment Amount: $11,000,000
Lending Office (All types): Commitment Percentage: 9.166666667%
- --------------
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: Eileen Tieczwoc
Reference: Graphic Industries
A-3
<PAGE>
FLEET NATIONAL BANK Initial Commitment Amount: $11,000,000
Lending Office (All types): Commitment Percentage: 9.166666667%
- --------------
Fleet National Bank
One Federal Street, Mailcode MA OF DO41
Boston, Massachusetts 02110
Attention: Ann M. Dillon
Wiring Instructions:
Fleet National Bank
ABA #: 011-000-138
Acct.# 1510351
Attention: Ann M. Dillon
Reference: Graphic Industries
MARINE MIDLAND BANK, N.A. Initial Commitment Amount: $11,000,000
Lending Office (All types): Commitment Percentage: 9.166666667%
- --------------
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
A-4
<PAGE>
PNC BANK, NATIONAL ASSOCIATION Initial Commitment Amount: $11,000,000
Lending Office (All types): Commitment Percentage: 9.166666667%
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: $120,000,000
A-5
<PAGE>
THIRD AMENDMENT TO CREDIT AGREEMENT
THIS THIRD AMENDMENT TO CREDIT AGREEMENT dated as of January 31, 1997
by and among GRAPHIC INDUSTRIES, INC., a corporation organized under the laws of
the State of Georgia (the "Borrower"), the Lenders appearing on the signature
pages hereof (the "Lenders") and NATIONSBANK, N.A. (SOUTH), successor to
NationsBank of Georgia, National Association, as Agent (the "Agent").
WHEREAS, the Borrower, the Lenders and the Agent entered into that
certain Credit Agreement dated as of December 21, 1995, as amended by that
certain First Amendment to Credit Agreement dated as of June 27, 1996, and as
further amended by that certain Second Amendment to Credit Agreement dated as of
November 18, 1996 (as so amended, the "Credit Agreement") pursuant to which the
Lenders made certain financial accommodations available to the Borrower; and
WHEREAS, the parties desire to further amend the Credit Agreement in
certain respects on the terms herein contained.
NOW, THEREFORE, for other good and valuable consideration, the receipt
and sufficiency of which are hereby acknowledged by the parties, the parties
hereto consent and agree as follows:
(i) The Agent is hereby authorized to release the Lenders' Lien in the
general intangibles of the Borrower and/or Subsidiaries of the Borrower listed
on Exhibit B attached hereto (the "Released Collateral");
(ii) The Borrower and/or Subsidiaries of the Borrower are hereby
authorized to grant a Lien in the Released Collateral to secure Indebtedness
permitted under Section 10.2(g) of the Credit Agreement; and
(iii) The Agent is hereby authorized from time to time without the
consent of the Lenders to release collateral consisting of general intangibles
of the Borrower and/or Subsidiaries of the Borrower (including the types
included in the Released Collateral) relating solely to real property being
financed or refinanced pursuant to Section 10.2(g) of the Credit Agreement.
Except as expressly herein amended, the terms and conditions of the
Credit Agreement shall remain in full force and effect without amendment or
modification, express or implied.
This Third Amendment may be executed in any number of counterparts,
each of which shall be deemed to be an original and shall be binding upon all
parties, their successors and assigns.
All capitalized terms which are used herein and not otherwise defined
herein shall have the meanings given such terms as set forth in the Credit
Agreement.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Third
Amendment to Credit Agreement to be executed under seal by their duly authorized
officers as of the date first above written.
THE BORROWER:
GRAPHIC INDUSTRIES, INC.
By:
-----------------------------------
Title:
-----------------------------
THE AGENT:
NATIONSBANK, N.A. (SOUTH), as Agent
By:
-----------------------------------
Title:
-----------------------------
THE LENDERS:
NATIONSBANK, N.A. (SOUTH)
By:
-----------------------------------
Title:
-----------------------------
SUNTRUST BANK, ATLANTA
By:
-----------------------------------
Title:
-----------------------------
By:
-----------------------------------
Title:
-----------------------------
2
<PAGE>
[SIGNATURE PAGE TO THIRD AMENDMENT TO CREDIT AGREEMENT DATED AS OF JANUARY 31,
1997]
TEXAS COMMERCE BANK, NATIONAL
ASSOCIATION
By:
-----------------------------------
Title:
-----------------------------
BANK OF AMERICA, F.S.B.
By:
-----------------------------------
Title:
-----------------------------
CORESTATES BANK, NATIONAL
ASSOCIATION
By:
-----------------------------------
Title:
-----------------------------
FLEET NATIONAL BANK
By:
-----------------------------------
Title:
-----------------------------
MARINE MIDLAND BANK, N.A.
By:
-----------------------------------
Title:
-----------------------------
PNC BANK, NATIONAL ASSOCIATION
By:
-----------------------------------
Title:
-----------------------------
3
<PAGE>
EXHIBIT 10(XXX)
Loan No. 5922696-001
PROMISSORY NOTE
(201 Armour Drive, Atlanta, Georgia)
$502,500 January __, 1997
FOR VALUE RECEIVED, GRAPHIC INDUSTRIES, INC., a Georgia corporation
("BORROWER"), promises to pay to the order of MetLife Capital Financial
Corporation ("METLIFE") at METLIFE's office at 10900 N.E. 4th St., Suite 500,
Bellevue, Washington 98004, attention: Real Estate Department, or at such other
address as the holder hereof may from time to time designate in writing, the
principal sum of FIVE HUNDRED TWO THOUSAND FIVE HUNDRED DOLLARS ($502,500)
together with interest from the date the proceeds of the loan (the "Loan")
evidenced by this Promissory Note (this "Note") are initially disbursed until
maturity on the principal balance from time to time remaining unpaid hereon at
the rate of eight and seventy-five hundredths percent (8.75%) per annum
(computed on the basis of a 360-day year of twelve (12) consecutive thirty (30)-
day months) in installments as follows: (i) interest only in advance at the
rate of $122.14 per day shall be due and payable on the date the proceeds of the
Loan are initially disbursed to or for the benefit of BORROWER (including,
without limitation, disbursement into an escrow for the benefit of BORROWER) for
the period beginning on the date of such disbursement and ending on the last day
of the month during which such disbursement occurs; and (ii) one hundred
seventy-nine (179) installments of principal and interest in the amount of Five
Thousand Twenty-Two and twenty-three hundredths Dollars ($5,022.23) each shall
be payable commencing on the first day of the second month following the month
in which the proceeds of the loan evidenced by this Note are initially disbursed
and continuing on the first day of each and every succeeding month until the
first day of the one hundred eightieth (180th) month following the date the
proceeds of the Loan are initially disbursed at which time all then unpaid
principal and interest hereon shall be due and payable.
If any payment shall not be paid when due and shall remain unpaid for
ten (10) days, BORROWER shall pay an additional charge equal to five percent
(5.00%) of the delinquent payment or the highest additional charge permitted by
law, whichever is less.
Upon not less than thirty (30) days' advance written notice to METLIFE
at any time after the fifth (5th) anniversary of the due date of the first
monthly principal and interest payment due under this Note, and upon payment of
the Prepayment Premium, BORROWER shall have the right to prepay all, but not
less than all, of the outstanding balance of this Note on any regularly
scheduled principal and interest payment date. The Prepayment Premium shall be
determined by (i) calculating the decrease (expressed in basis points) in the
current weekly average yield of ten (10)-year U.S. Treasury Constant Maturities
(as published in Federal Reserve Statistical Release H.15 [519]) (the "Index")
----------------------------------------------
from November 8, 1996, to the Friday immediately preceding the week in which the
prepayment is made, (ii) dividing the decrease by 100, (iii) multiplying the
result by the following described applicable premium factor (the "Premium
Factor"), and (iv) multiplying the product by the principal balance to be
prepaid. If the Index is unchanged or has increased from November 8, 1996, to
the Friday immediately preceding the prepayment date, no Prepayment Premium
shall be due. The Premium Factor shall be the amount shown on the following
chart for the month in which prepayment occurs:
<TABLE>
<CAPTION>
No. Mos. Premium
Remaining (Years) Factor
--------- --------- -------
<S> <C> <C> <C>
180 - 169 (15) .073
168 - 157 (14) .069
156 - 145 (13) .064
144 - 133 (12) .059
132 - 121 (11) .054
120 - 109 (10) .049
108 - 97 ( 9) .044
96 - 85 ( 8) .039
84 - 73 ( 7) .035
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C> <C>
72 - 61 ( 6) .030
60 - 49 ( 5) .025
48 - 37 ( 4) .020
36 - 25 ( 3) .015
24 - 13 ( 2) .010
12 - 1 ( 1) .005
</TABLE>
If the Federal Reserve Board ceases to publish Statistical Release H.15 [519],
-------------------------------
then the decrease in the weekly average yield of ten (10)-year U.S. Treasury
Constant Maturities will be determined from another source designated by
METLIFE. Voluntary prepayment prior to the fifth (5th) anniversary of the due
date of the first monthly principal and interest payment due under this Note
will be permitted only in the event of a sale of the Property (as hereinafter
defined) to a bona-fide third party and only upon payment of the Prepayment
Premium set forth above.
If METLIFE at any time accelerates this Note after an Event of Default
(defined below), then BORROWER shall be obligated to pay the Prepayment Premium
in accordance with the foregoing schedule. The Prepayment Premium shall not be
payable with respect to condemnation awards or insurance proceeds from fire or
other casualty which METLIFE applies to prepayment, nor with respect to
BORROWER's prepayment of the Note in full during the last three (3) months of
the term of this Note unless an Event of Default has occurred. BORROWER
expressly acknowledges that such Prepayment Premium is not a penalty but is
intended solely to compensate METLIFE for the loss of its bargain and the
reimbursement of internal expenses and administrative fees and expenses incurred
by METLIFE.
BORROWER shall be liable on this Note and on all the representations,
warranties, indemnities and covenants in the Deed to Secure Debt, Security
Agreement, and Assignment of Leases and Rents ("Deed to Secure Debt") covering
the property (the "Property") securing this Note and all other documents
executed or delivered in connection herewith (the "Loan Documents").
Each of the following shall constitute an Event of Default ("Event of
Default") hereunder and under the Deed to Secure Debt executed contemporaneously
herewith:
(a) Failure of or refusal by BORROWER to make any payment of
principal, interest, or Prepayment Premium upon this Note when due, and such
failure or refusal shall continue for a period of ten (10) days after written
notice is given to BORROWER by METLIFE specifying such failure; or
(b) Failure of BORROWER within the time required by the Deed to Secure
Debt to make any payment for taxes, insurance or for reserves for such payments,
or any other payment necessary to prevent filing of or discharge of any lien,
and such failure shall continue for a period of ten (10) days after written
notice is given to BORROWER by METLIFE specifying such failure; or
(c) Failure by BORROWER to observe or perform any obligations of
BORROWER to METLIFE on or with respect to any transactions, debts, undertakings
or agreements other than the transaction evidenced by this Note following the
giving of any required notice and the expiration of any applicable period of
grace; or
(d) Failure of BORROWER to make any payment or perform any obligation
under any superior liens or encumbrances on the Property, within the time
required thereunder, or commencement of any suit or other action to foreclose
any superior liens or encumbrances; or
(e) Failure by BORROWER to observe or perform any of its obligations
under any of the lease agreements covering the Property; or
(f) The Property is transferred or any agreement to transfer any part
or interest in the Property in any manner whatsoever is made or entered into
without the prior written consent of METLIFE, except as specifically
2
<PAGE>
allowed under the Deed to Secure Debt, including without limitation creating or
allowing any liens on the Property or leasing any portion of the Property; or
(g) Filing by BORROWER or Southern Signatures, Inc. of a voluntary
petition in bankruptcy or filing by BORROWER or Southern Signatures, Inc. of any
petition or answer seeking or acquiescing in any reorganization, arrangement,
composition, readjustment, liquidation, or similar relief for itself under any
present or future federal, state or other statute, law or regulation relating to
bankruptcy, insolvency or other relief for debtors, or the seeking, consenting
to, or acquiescing by BORROWER or Southern Signatures, Inc. in the appointment
of any trustee, receiver, custodian, conservator or liquidator for BORROWER or
Southern Signatures, Inc., any part of the Property, or any of the income or
rents of the Property, or the making by BORROWER or Southern Signatures, Inc. of
any general assignment for the benefit of creditors, or the inability of or
failure by BORROWER or Southern Signatures, Inc. to pay its debts generally as
they become due, or the insolvency on a balance sheet basis or business failure
of BORROWER or Southern Signatures, Inc., or the making or suffering of a
preference within the meaning of federal bankruptcy law or the making of a
fraudulent transfer under applicable federal or state law, or concealment by
BORROWER or Southern Signatures, Inc. of any of its property in fraud of
creditors, or the imposition of a lien upon any of the property of BORROWER or
Southern Signatures, Inc. which is not discharged in the manner permitted by the
Deed to Secure Debt, or the giving of notice by BORROWER or Southern Signatures,
Inc. to any governmental body of insolvency or suspension of operations; or
(h) Filing of a petition against BORROWER or Southern Signatures, Inc.
seeking any reorganization, arrangement, composition, readjustment, liquidation,
or similar relief under any present or future federal, state or other law or
regulation relating to bankruptcy, insolvency or other relief for debts, or the
appointment of any trustee, receiver, custodian, conservator or liquidator of
BORROWER or Southern Signatures, Inc., of any part of the Property or of any of
the income or rents of the Property, unless such petition shall be dismissed
within sixty (60) days after such filing, but in any event prior to the entry of
an order, judgment or decree approving such petition; or
(i) The institution of any proceeding for the dissolution or
termination of BORROWER voluntarily, involuntarily, or by operation of law; or
(j) A material adverse change occurs in the assets, liabilities or net
worth of BORROWER or any of the guarantors of the indebtedness evidenced by this
Note from the assets, liabilities or net worth of BORROWER or any of the
guarantors of the indebtedness evidenced by this Note previously disclosed to
METLIFE; or
(k) Any warranty, representation or statement furnished to METLIFE by
or on behalf of BORROWER under this Note, the Deed to Secure Debt, or any of the
Loan Documents shall prove to have been false or misleading in any material
respect; or
(l) Failure of BORROWER to observe or perform any other covenant or
condition contained in this Note and such default shall continue for thirty (30)
days after notice is given to BORROWER specifying the nature of the failure. No
notice of default and no opportunity to cure shall be required if during the
prior twelve (12) months METLIFE has already sent a notice to BORROWER
concerning default in performance of the same obligation; or
(m) Failure of BORROWER to observe or perform any other obligation
under the Deed to Secure Debt or any other Loan Document when such observance or
performance is due, and such failure shall continue beyond the applicable cure
period set forth in such Loan Document, or if the default cannot be cured within
such applicable cure period, BORROWER fails within such time to commence and
pursue curative action with reasonable diligence or fails at any time after
3
<PAGE>
expiration of such applicable cure period to continue with reasonable diligence
all necessary curative actions. No notice of default and no opportunity to cure
shall be required if during the prior twelve (12) months METLIFE has already
sent a notice to BORROWER concerning default in performance of the same
obligation; or
(n) BORROWER's abandonment of the Property; or
(o) Any of the foregoing events occur with respect to any tenant of
the Property, with respect to any guarantor of any of BORROWER's obligations in
connection with the indebtedness evidenced by this Note or with respect to any
guarantor of any tenant's obligations relating to the Property, or such
guarantor dies or becomes incompetent; or
(p) The occurrence of any default under any of the documents
evidencing or securing (i) METLIFE Loan No. 5905292, (ii) METLIFE Loan No.
5905392, (iii) METLIFE Loan No. 5903393, (iv) METLIFE Loan No. 5904594 or (v)
METLIFE Loan No. 5909794, (vi METLIFE Loan No. 5922796, (vii) METLIFE Loan No.
5922896, or (viii) any other indebtedness with Borrower or any of the guarantors
of the Indebtedness which is now or hereafter owed to METLIFE.
Upon the occurrence of any of the foregoing events of default, METLIFE
shall have the option to declare the entire amount of principal and interest due
under this Note immediately due and payable without notice or demand, and
METLIFE may exercise any of its rights under this Note and any document executed
or delivered herewith. After acceleration or maturity, BORROWER shall pay
interest on the outstanding principal balance of this Note at the rate of five
percent (5.00%) per annum above Chase Manhattan Bank's prime interest rate in
effect from time to time, or fifteen percent (15.00%) per annum, whichever is
higher, provided that such interest rate shall not exceed the maximum interest
rate permitted by law.
All payments of the principal and interest on this Note shall be made
in coin or currency of the United States of America which at the time shall be
the legal tender for the payment of public and private debts.
If this Note is placed in the hands of an attorney for collection,
BORROWER agrees to pay reasonable attorneys' fees and costs incurred by METLIFE
in connection therewith, and in the event suit or action is instituted to
enforce or interpret this Note (including without limitation efforts to modify
or vacate any automatic stay or injunction), the prevailing party shall be
entitled to recover all expenses reasonably incurred at, before or after trial
and on appeal, whether or not taxable as costs, or in any bankruptcy proceeding,
or in connection with post-judgment collection efforts, including, without
limitation, attorneys' fees, witness fees (expert and otherwise), deposition
costs, copying charges and other expenses.
This Note shall be governed and construed in accordance with the laws
of the State of Georgia applicable to contracts made and to be performed therein
(excluding choice-of-law principles). BORROWER hereby irrevocably submits to
the jurisdiction of any state or federal court sitting in Georgia in any action
or proceeding brought to enforce or otherwise arising out of or relating to this
Note, and hereby waives any objection to venue in any such court and any claim
that such forum is an inconvenient forum.
This Note is given in a commercial transaction for business purposes.
This Note may be declared due prior to its expressed maturity date,
all in the events, on the terms, and in the manner provided for in the Deed to
Secure Debt.
BORROWER and all sureties, endorsers, guarantors and other parties now
or hereafter liable for the payment of this Note, in whole or in part, hereby
severally (i) waive demand, notice of demand, presentment for payment, notice of
nonpayment, notice of default, protest, notice of protest, notice of intent to
accelerate, notice of acceleration and all other notices, and further waive
diligence in collecting this Note or in enforcing any of the security for this
4
<PAGE>
Note; (ii) agree to any substitution, subordination, exchange or release of any
security for this Note or the release of any party primarily or secondarily
liable for the payment of this Note; (iii) agree that METLIFE shall not be
required to first institute suit or exhaust its remedies hereon against BORROWER
or others liable or to become liable for the payment of this Note or to enforce
its rights against any security for the payment of this Note; and (iv) consent
to any extension of time for the payment of this Note, or any installment
hereof, made by agreement by METLIFE with any person now or hereafter liable for
the payment of this Note, even if BORROWER is not a party to such agreement.
All agreements between BORROWER and METLIFE, whether now existing or
hereafter arising and whether written or oral, are hereby limited so that in no
contingency, whether by reason of demand or acceleration of the final maturity
of this Note or otherwise, shall the interest contracted for, charged, received,
paid or agreed to be paid to METLIFE exceed the maximum amount permissible under
the applicable law. If, from any circumstance whatsoever, interest would
otherwise be payable to METLIFE in excess of the maximum amount permissible
under applicable law, the interest payable to METLIFE shall be reduced to the
maximum amount permissible under applicable law; and if from any circumstance
METLIFE shall ever receive anything of value deemed interest by applicable law
in excess of the maximum amount permissible under applicable law, an amount
equal to the excessive interest or if such excessive amount of interest exceeds
the unpaid balance of principal hereof, such excess shall be refunded to
BORROWER. All interest paid or agreed to be paid to METLIFE shall, to the
extent permitted by applicable law, be amortized, prorated, allocated, and
spread throughout the full period (including any renewal or extension) until
payment in full of the principal so that the interest hereon for such full
period shall not exceed the maximum amount permissible under applicable law.
METLIFE expressly disavows any intent to contract for, charge or receive
interest in an amount which exceeds the maximum amount permissible under
applicable law. This paragraph shall control all agreements between BORROWER
and METLIFE.
IMPORTANT: READ BEFORE SIGNING. THE TERMS OF THIS AGREEMENT SHOULD
BE READ CAREFULLY BECAUSE ONLY THOSE TERMS IN WRITING ARE ENFORCEABLE.
NO OTHER TERMS OR ORAL PROMISES NOT CONTAINED IN THIS WRITTEN CONTRACT
MAY BE LEGALLY ENFORCED. YOU MAY CHANGE THE TERMS OF THIS AGREEMENT
ONLY BY ANOTHER WRITTEN AGREEMENT.
IN WITNESS WHEREOF, BORROWER has caused this Note to be executed by
its duly authorized officers as of the year and day first written above.
BORROWER:
GRAPHIC INDUSTRIES, INC.,
a Georgia corporation
By:____________________________________
Mark C. Pope, III, Chairman & CEO
Attest:_______________________________
Donald P. Hunnicutt, Secretary
[SEAL]
5
<PAGE>
Prepared by and after
recording return to:
Dorothea S. Costrini
Hunter, Maclean, Exley & Dunn, P.C.
200 East Saint Julian Street
Savannah, Georgia 31401
MetLife Capital Financial Corporation
Loan Number: 5922696-001
DEED TO SECURE DEBT, SECURITY AGREEMENT,
AND ASSIGNMENT OF LEASES AND RENTS,
(201 Armour Drive, Atlanta, Georgia)
THIS DEED TO SECURE DEBT, SECURITY AGREEMENT, AND ASSIGNMENT OF LEASES AND
RENTS (herein "Deed") is made as of January __, 1997, by the Grantor, GRAPHIC
INDUSTRIES, INC., a Georgia corporation, whose address is 2155 Monroe Drive,
Northeast, Atlanta, Georgia 30324 (herein "Borrower"), in favor of the Grantee,
METLIFE CAPITAL FINANCIAL CORPORATION, a Delaware corporation, whose address is
Real Estate Department, 10900 N.E. 4th Street, Suite 500, Bellevue, Washington
98004 (herein "METLIFE").
Borrower, in consideration of the indebtedness herein recited does hereby
bargain, sell, transfer, assign, grant, and convey to METLIFE and its successors
and assigns, WITH POWER OF SALE all of Borrower's right, title and interest, now
owned or hereafter acquired, including any reversion or remainder interest, in
the real property located in the City of Atlanta, County of Fulton, State of
Georgia, commonly known as 201 Armour Road, and more particularly described on
Exhibit A attached hereto and incorporated herein including all heretofore or
- ---------
hereafter vacated alleys and streets abutting the property, and all easements,
rights, appurtenances, tenements, hereditaments, rents, royalties, mineral, oil
and gas rights and profits, water, water rights, and water stock appurtenant to
the property (collectively "Premises");
TOGETHER with all of Borrower's estate, right, title and interest, now
owned or hereafter acquired, in:
(a) all buildings, structures, improvements, parking areas, landscaping,
fixtures and articles of property now or hereafter erected on, attached to,
or used or adapted for use in the operation of the Premises; including but
without being limited to, all heating, air conditioning and incinerating
apparatus and equipment; all boilers, engines, motors, dynamos, generating
equipment, piping and plumbing fixtures, water heaters, ranges, cooking
apparatus and mechanical kitchen equipment, refrigerators, freezers,
cooling, ventilating, sprinkling and vacuum cleaning systems, fire
extinguishing apparatus, gas and electric fixtures, carpeting, floor
coverings, underpadding, elevators, escalators, partitions, mantels, built-
in mirrors, window shades, blinds, draperies, screens, storm sash, awnings,
signs, furnishings of public spaces, halls and lobbies, and shrubbery and
plants, and including also all interest of any owner of the Premises in any
of such items hereafter at any time acquired under conditional sale
contract, chattel mortgage or other title retaining or security deed, all
of which property mentioned in this clause (a) shall be deemed part of the
realty covered by this Deed and not severable wholly or in part without
material injury to the freehold of the Premises (all of the foregoing
together with replacements and additions thereto are referred to herein as
"Improvements"); and
(b) all compensation, awards, damages, rights of action and proceeds,
including interest thereon and/or the proceeds of any policies of insurance
therefor, arising out of or relating to a (i) taking or damaging of the
Premises or Improvements thereon by reason of any public or private
<PAGE>
improvement, condemnation proceeding (including change of grade), sale or
transfer in lieu of condemnation, or fire, earthquake or other casualty, or
(ii) any injury to or decrease in the value of the Premises or the
Improvements for any reason whatsoever;
(c) return premiums or other payments upon any insurance any time provided
for the benefit of or naming METLIFE, and refunds or rebates of taxes or
assessments on the Premises;
(d) all written and oral leases and rental agreements (including
extensions, renewals and subleases and all usufructuary interest; all of
the foregoing shall be referred to collectively herein as the "Leases") now
or hereafter affecting the Premises including, without limitation, all
rents, issues, profits and other revenues and income therefrom and from the
renting, leasing or bailment of Improvements and equipment, all guaranties
of tenants' performance under the Leases, and all rights and claims of any
kind that Borrower may have against any tenant under the Leases or in
connection with the termination or rejection of the Leases in a bankruptcy
or insolvency proceeding;
(e) plans, specifications, contracts and agreements relating to the design
or construction of the Improvements; Borrower's rights under any payment,
performance, or other bond in connection with the design or construction of
the Improvements; all landscaping and construction materials, supplies, and
equipment used or to be used or consumed in connection with construction of
the Improvements, whether stored on the Premises or at some other location;
and contracts, agreements, and purchase orders with contractors,
subcontractors, suppliers, and materialmen incidental to the design or
construction of the Improvements;
(f) all contracts (excluding contracts relating to the printing operations
of Southern Signatures, Inc. ("Southern Signatures, Inc."), rights, claims
or causes of action pertaining to or affecting the Premises or the
Improvements, including, without limitation, all options or contracts to
acquire other property for use in connection with operation or development
of the Premises or Improvements, management contracts, service or supply
contracts, permits, licenses, franchises and certificates, and all
commitments or agreements, now or hereafter in existence, intended by the
obligor thereof to provide Borrower with proceeds to satisfy the loan
evidenced hereby or improve the Premises or Improvements, and the right to
receive all proceeds due under such commitments or agreements including
refundable deposits and fees;
(g) all books, records, surveys, reports and other documents related to the
Premises, the Improvements, the Leases, or other items of collateral
described herein; and
(h) all additions, accessions, replacements, substitutions, proceeds and
products of the real and personal property, tangible and intangible,
described herein.
(All of the foregoing described collateral is exclusive of any equipment,
furniture, furnishings or trade fixtures owned and supplied by Southern
Signatures, Inc. or tenants of the Premises. The Premises, the Improvements,
the Leases and all of the rest of the foregoing property are herein referred to
as the "Property.")
TO HAVE AND TO HOLD the Property and all parts, rights, members, and
apurtenances thereof to the use, benefit, and behoof of METLIFE and its
successors and assigns in fee simple forever. This instrument is a deed passing
title pursuant to the laws of the State of Georgia governing loan or security
deeds and is not a mortgage as "mortgage" is defined for purposes of real
property laws.
This conveyance is intended to constitute a security agreement as required
under the Uniform Commercial Code as enacted in the State of Georgia. Debtor's
and Secured Party's addresses and the location of the collateral are set forth
on Schedule 1 attached hereto.
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This Deed is made to secure METLIFE (a) the repayment of the indebtedness
evidenced by Borrower's promissory note (the "Note") dated of even date herewith
2
<PAGE>
in the principal sum of FIVE HUNDRED TWO THOUSAND FIVE HUNDRED DOLLARS
($502,500), with interest thereon at the rate of eight and seventy-five
hundredths percent (8.75%) per annum, having a maturity date of February 1,
2012, and all renewals, extensions and modifications thereof; (b) the repayment
of any future advances, with interest thereon, made by METLIFE to Borrower
pursuant to Section 28 hereof (herein "Future Advances"); (c) the payment of all
----------
other sums, with interest thereon, advanced in accordance herewith to protect
the security of this Deed or to fulfill any of Borrower's obligations hereunder
or under the other Loan Documents (as defined below); (d) the performance of the
covenants and agreements of Borrower contained herein or in the other Loan
Documents; and (e) the repayment of all sums now or hereafter owing to METLIFE
by Borrower pursuant to any instrument which recites that it is secured hereby.
The indebtedness and obligations described in clauses (a)-(e) above are
collectively referred to herein as the "Indebtedness." The Note, this Deed, and
all other documents evidencing, securing or guaranteeing the Indebtedness
(except any Certificate and Indemnity Agreement Regarding Hazardous Substances),
as the same may be modified or amended from time to time, are referred to herein
as the "Loan Documents." The terms of the Note secured hereby may provide that
the interest rate or payment terms or balance due may be indexed, adjusted,
renewed, or renegotiated from time to time, and this Deed shall continue to
secure the Note notwithstanding any such indexing, adjustment, renewal or
renegotiation.
Should the indebtedness be paid according to the tenor and effect thereof
where the same shall become due and payable, and should Borrower perform all
covenants herein contained in a timely manner, then this Deed is satisfied, and
METLIFE shall execute a proper cancellation at the expense of Borrower.
Borrower represents and warrants that Borrower has good, marketable and
insurable title to, and has the right to mortgage an indefeasible fee simple
estate in, the Premises, Improvements, rents, and leases (or, if this Deed is on
a leasehold, good, marketable and insurable title to, and the right to convey
the leasehold estate and that the ground lease is in full force and effect
without modification except as noted above and without default on the part of
either lessor or lessee thereunder), and the right to convey the other Property,
that the Property is unencumbered except as disclosed in writing to and approved
by METLIFE prior to the date hereof, and that Borrower will warrant and forever
defend the title to the Property against all claims and demands, subject only to
the permitted exceptions set forth in Schedule 2 attached hereto.
----------
Borrower represents, warrants, covenants and agrees for the benefit of
METLIFE as follows:
1. PAYMENT OF PRINCIPAL AND INTEREST. Borrower shall promptly pay when
---------------------------------
due the principal of and interest on the Indebtedness, any prepayment and other
charges provided in the Loan Documents and all other sums secured by this Deed.
2. FUNDS FOR TAXES, INSURANCE AND OTHER CHARGES. Upon the occurrence of
--------------------------------------------
an Event of Default (hereinafter defined), and at METLIFE's sole option at any
time thereafter, Borrower shall pay in addition to each monthly payment on the
Note, one-twelfth of the annual real estate taxes, insurance premiums,
assessments, water and sewer rates, ground rents and other charges (herein
"Impositions") payable with respect to the Property (as estimated by METLIFE in
its sole discretion), to be held by METLIFE without interest to Borrower, for
the payment of such obligations.
If the amount of such additional payments held by METLIFE ("Funds") at the
time of the annual accounting thereof shall exceed the amount deemed necessary
by METLIFE to provide for the payment of Impositions as they fall due, such
excess shall be at Borrower's option, either repaid to Borrower or credited to
Borrower on the next monthly installment or installments of Funds due. If at
any time the amount of the Funds held by METLIFE shall be less than the amount
deemed necessary by METLIFE to pay Impositions as they fall due, Borrower shall
pay to METLIFE any amount necessary to make up the deficiency within thirty (30)
days after notice from METLIFE to Borrower requesting payment thereof.
Upon Borrower's breach of any covenant or agreement of Borrower in this
Deed, METLIFE may apply, in any amount and in any order as METLIFE shall
3
<PAGE>
determine in METLIFE's sole discretion, any Funds held by METLIFE at the time of
application (i) to pay Impositions which are now or will hereafter become due,
or (ii) as a credit against sums secured by this Deed. Upon payment in full of
all sums secured by this Deed, METLIFE shall refund to Borrower any Funds held
by METLIFE.
3. APPLICATION OF PAYMENTS. Unless applicable law provides otherwise,
-----------------------
each complete installment payment received by METLIFE from Borrower under the
Note or this Deed shall be applied by METLIFE first in payment of amounts
payable to METLIFE by Borrower under Section 2 hereof, then to interest payable
---------
on the Note, then to principal of the Note, and then to interest and principal
on any Future Advances in such order as METLIFE, at METLIFE's sole discretion,
shall determine. Upon Borrower's breach of any covenant or agreement of Borrower
in this Deed, METLIFE may apply, in any amount and in any order as METLIFE shall
determine in METLIFE's sole discretion, any payments received by METLIFE under
the Note or this Deed. Any partial payment received by METLIFE shall, at
METLIFE's option, be held in a non-interest bearing account until METLIFE
receives funds sufficient to equal a complete installment payment.
4. CHARGES, LIENS. Borrower shall pay all Impositions attributable to the
--------------
Property in the manner provided under Section 2 hereof or, if not paid in such
---------
manner, by Borrower making payment, when due, directly to the payee thereof, or
in such other manner as METLIFE may designate in writing. If requested by
METLIFE, Borrower shall promptly furnish to METLIFE all notices of Impositions
which become due, and in the event Borrower shall make payment directly,
Borrower shall promptly furnish to METLIFE receipts evidencing such payments.
Borrower shall promptly discharge any lien which has, or may have, priority over
or equality with, the lien of this Deed, and Borrower shall pay, when due, the
claims of all persons supplying labor or materials to or in connection with the
Property. Without METLIFE's prior written permission, Borrower shall not allow
any lien inferior to this Deed to be perfected against the Property. If any
lien inferior to this Deed is filed against the Property without METLIFE's prior
written permission and without the consent of Borrower, Borrower shall, within
thirty (30) days after receiving notice of the filing of such lien, cause such
lien to be released of record and deliver evidence of such release to METLIFE.
5. INSURANCE. Borrower shall obtain and maintain the following types of
---------
insurance upon and relating to the Property:
(a) "All Risk" property and fire insurance (with extended coverage
endorsement including malicious mischief and vandalism) in an amount not less
than the lesser of the outstanding principal balance of the Note or the full
replacement value of the Property (with a deductible not to exceed $25,000),
naming METLIFE under a lender's loss payee endorsement (form 438BFU or
equivalent) and including agreed amount, inflation guard, replacement cost and
waiver of subrogation endorsements;
(b) Comprehensive general liability insurance in an amount not less than
$1,000,000 per occurrence and $2,000,000 in the aggregate insuring against
personal injury, death and property damage and naming METLIFE as additional
insured;
(c) Business interruption insurance covering loss of rental or other income
(including all expenses payable by tenants) for up to six (6) months; and
(d) Such other types of insurance or endorsements to existing insurance as
may be required from time to time by METLIFE.
Upon the request of METLIFE, Borrower shall increase the coverages under
any of the insurance policies required to be maintained hereunder or otherwise
modify such policies in accordance with METLIFE's request. All of the insurance
policies required hereunder shall be issued by corporate insurers licensed to do
business in the state in which the Property is located and rated A:X or better
4
<PAGE>
by A.M. Best Company, and shall be in form acceptable to METLIFE. If and to the
extent that the Property is located within an area that has been or is hereafter
designated or identified as an area having special flood hazards by the
Department of Housing and Urban Development or such other official as shall from
time to time be authorized by federal or state law to make such designation
pursuant to any national or state program of flood insurance, Borrower shall
carry flood insurance with respect to the Property in amounts not less than the
maximum limit of coverage then available with respect to the Property or the
amount of the Indebtedness, whichever is less. Certificates of all insurance
required to be maintained hereunder shall be delivered to METLIFE, along with
evidence of payment in full of all premiums required thereunder,
contemporaneously with Borrower's execution of this Deed. All such certificates
shall be in form acceptable to METLIFE and shall require the insurance company
to give to METLIFE at least thirty (30) days' prior written notice before
canceling the policy for any reason or materially amending it. Certificates
evidencing all renewal and substitute policies of insurance shall be delivered
to METLIFE, along with evidence of the payment in full of all premiums required
thereunder, at least fifteen (15) days before termination of the policies being
renewed or substituted. If any loss shall occur at any time when Borrower shall
be in default hereunder, METLIFE shall be entitled to the benefit of all
insurance policies held or maintained by Borrower, to the same extent as if same
had been made payable to METLIFE, and upon foreclosure hereunder, METLIFE shall
become the owner thereof. METLIFE shall have the right, but not the obligation,
to make premium payments, at Borrower's expense, to prevent any cancellation,
endorsement, alteration or reissuance of any policy of insurance maintained by
Borrower, and such payments shall be accepted by the insurer to prevent same.
If any act or occurrence of any kind or nature (including any casualty for
which insurance was not obtained or obtainable) shall result in damage to or
destruction of the Property (such event being called a "Loss"), Borrower will
give prompt written notice thereof to METLIFE. All insurance proceeds paid or
payable in connection with any Loss shall be paid to METLIFE. If (i) no Event
of Default has occurred and is continuing hereunder, (ii) Borrower provides
evidence satisfactory to METLIFE of its ability to pay all amounts becoming due
under the Note during the pendency of any restoration or repairs to or
replacement of the Property, (iii) the available insurance proceeds are, in
METLIFE's judgment, sufficient to fully and completely restore, repair or
replace the Property, and (iv) Borrower provides evidence satisfactory to
METLIFE that none of the tenants of the Property will terminate their lease
agreements as a result of either the Loss or the repairs to or replacement of
the Property, Borrower shall have the right to apply all insurance proceeds
received in connection with such Loss either (a) to restore, repair, replace and
rebuild the Property as nearly as possible to its value, condition and character
immediately prior to such Loss, or (b) to the payment of the Indebtedness in
such order as METLIFE may elect. If an Event of Default has occurred and is
continuing hereunder at the time of such Loss, if METLIFE determines that
Borrower will be unable to pay all amounts becoming due under the Note during
the pendency of any restoration or repairs to or replacement of the Property, if
the available insurance proceeds are insufficient, in METLIFE's judgment, to
fully and completely restore, repair or replace the Property or if METLIFE
believes that one or more tenants of the Property will terminate their lease
agreements as a result of either the Loss or the repairs to or replacement of
the Property, then all of the insurance proceeds payable with respect to such
Loss will be applied to the payment of the Indebtedness, or if so instructed by
METLIFE, Borrower will promptly, at Borrower's sole cost and expense and
regardless of whether sufficient insurance proceeds shall be available, commence
to restore, repair, replace and rebuild the Property as nearly as possible to
its value, condition, character immediately prior to such Loss. Borrower shall
diligently prosecute any restoration, repairs or replacement of the Property
undertaken by or on behalf of Borrower pursuant to this Section 5. All such
----------
work shall be conducted pursuant to written contracts approved by METLIFE in
writing. Notwithstanding anything contained herein to the contrary, in the
event the insurance proceeds received by METLIFE following any Loss are
insufficient in METLIFE's judgment to fully and completely restore, repair or
replace the Property, and if Borrower has complied with all of the other
conditions described in this Section 5, Borrower may elect to restore, repair or
---------
replace the Property if it first deposits with METLIFE such additional sums as
METLIFE determines are necessary in order to fully and completely restore,
repair or replace the Property. In the event any insurance proceeds remain
following the restoration, repair or replacement of the Property, such proceeds
shall be applied to the Indebtedness in such order as METLIFE may elect.
6. PRESERVATION AND MAINTENANCE OF PROPERTY. Borrower (a) shall not
----------------------------------------
commit waste or permit impairment or deterioration of the Property, (b) shall
not abandon the Property, (c) shall restore or repair promptly and in a good and
workmanlike manner all or any part of the Property to the equivalent of its
5
<PAGE>
original condition, or such other condition as METLIFE may approve in writing,
in the event of any damage, injury or loss thereto, whether or not insurance
proceeds are available to cover in whole or in part the costs of such
restoration or repair, (d) shall keep the Property, including all improvements,
fixtures, equipment, machinery and appliances thereon, in good repair and shall
replace fixtures, equipment, machinery and appliances on the Property when
necessary to keep such items in good repair, (e) shall comply with all laws,
ordinances, regulations and requirements of any governmental body applicable to
the Property, (f) if all or part of the Property is for rent or lease, then
METLIFE, at its option after the occurrence of an Event of Default, may require
Borrower to provide for professional management of the Property by a property
manager satisfactory to METLIFE pursuant to a contract approved by METLIFE in
writing, unless such requirement shall be waived by METLIFE in writing, (g)
shall generally operate and maintain the Property in a manner to ensure maximum
rentals, and (h) shall give notice in writing to METLIFE of and, unless
otherwise directed in writing by METLIFE, appear in and defend any action or
proceeding purporting to affect the Property, the security of this Deed or the
rights or powers of METLIFE hereunder. Neither Borrower nor any tenant or other
person, without the written approval of METLIFE, shall remove, demolish or alter
any improvement now existing or hereafter erected on the Property or any
fixture, equipment, machinery or appliance in or on the Property except when
incident to the replacement of fixtures, equipment, machinery and appliances
with items of like kind.
Borrower represents, warrants and covenants that the Property is and shall
be in compliance with the Americans with Disabilities Act of 1990 and all of the
regulations promulgated thereunder, as the same may be amended from time to
time.
7. USE OF PROPERTY. Unless required by applicable law or unless METLIFE
---------------
has otherwise agreed in writing, Borrower shall not allow changes in the use for
which all or any part of the Property was intended at the time this Deed was
executed. Borrower shall not, without METLIFE's prior written consent, (i)
initiate or acquiesce in a change in the zoning classification (including any
variance under any existing zoning ordinance applicable to the Property), (ii)
permit the use of the Property to become a non-conforming use under applicable
zoning ordinances, (iii) file any subdivision or parcel map affecting the
Property, or (iv) amend, modify or consent to any easement or covenants,
conditions and restrictions pertaining to the Property.
8. PROTECTION OF METLIFE'S SECURITY. If Borrower fails to perform any of
--------------------------------
the covenants and agreements contained in this Deed, or if any action or
proceeding is commenced which affects the Property or title thereto or the
interest of METLIFE therein, including, but not limited to, eminent domain,
insolvency, code enforcement, or arrangements or proceedings involving a
bankrupt or decedent, then METLIFE at METLIFE's option may make such
appearances, disburse such sums and take such action as METLIFE deems necessary,
in its sole discretion, to protect METLIFE's interest, including, but not
limited to, (i) disbursement of attorneys' fees, (ii) entry upon the Property to
make repairs, and (iii) procurement of satisfactory insurance as provided in
Section 5 hereof.
- ---------
Any amounts disbursed by METLIFE pursuant to this Section 8, with interest
---------
thereon, shall become additional Indebtedness of Borrower secured by this Deed.
Unless Borrower and METLIFE agree to other terms of payment, such amounts shall
be immediately due and payable and shall bear interest from the date of
disbursement at the highest rate which may be collected from Borrower under
applicable law or, at METLIFE's option, the rate stated in the Note. Borrower
hereby covenants and agrees that METLIFE shall be subrogated to the lien of any
mortgage or other lien discharged, in whole or in part, by the Indebtedness.
Nothing contained in this Section 8 shall require METLIFE to incur any expense
---------
or take any action hereunder.
9. INSPECTION. METLIFE may make or cause to be made reasonable entries
----------
upon the Property to inspect the interior and exterior thereof.
10. FINANCIAL DATA. Borrower will furnish to METLIFE within one hundred
--------------
twenty (120) days after the close of its fiscal year (i) current financial
statements of Borrower, including a balance sheet and profit and loss statements
prepared in accordance with generally accepted accounting principles and
practices consistently applied and, if METLIFE so requires, accompanied by the
6
<PAGE>
annual audit report of an independent certified public accountant reasonably
acceptable to METLIFE, (ii) if requested by METLIFE, an annual operating
statement, together with other supporting data reflecting all material
information with respect to the operation of the Property and Improvements
during the period covered thereby, and (iii) all other financial information and
reports that METLIFE may from time to time reasonably request.
11. CONDEMNATION. If the Property, or any part thereof, shall be
------------
condemned for any reason, including without limitation fire or earthquake
damage, or otherwise taken for public or quasi-public use under the power of
eminent domain, or be transferred in lieu thereof, all damages or other amounts
awarded for the taking of, or injury to, the Property shall be paid to METLIFE
who shall have the right, in its sole and absolute discretion, to apply the
amounts so received against (a) the costs and expenses of METLIFE, including
reasonable attorneys' fees incurred in connection with collection of such
amounts, and (b) the balance against the Indebtedness; provided, however, that
if (i) no Event of Default shall have occurred and be continuing hereunder, (ii)
Borrower provides evidence satisfactory to METLIFE of its ability to pay all
amounts becoming due under the Note during the pendency of any restoration or
repairs to or replacement of the Property, (iii) METLIFE determines, in its sole
discretion, that the proceeds of such award are sufficient to restore, repair,
replace and rebuild the Property as nearly as possible to its value, condition
and character immediately prior to such taking (or, if the proceeds of such
award are insufficient for such purpose, if Borrower provides additional sums to
METLIFE's satisfaction so that the aggregate of such sums and the proceeds of
such award will be sufficient for such purpose), and (iv) Borrower provides
evidence satisfactory to METLIFE that none of the tenants of the Property will
terminate their lease agreements as a result of either the condemnation or
taking or the repairs to or replacement of the Property, the proceeds of such
award, together with additional sums provided by Borrower, shall be placed in a
separate account for the benefit of METLIFE and Borrower to be used to restore,
repair, replace and rebuild the Property as nearly as possible to its value,
condition and character immediately prior to such taking. All work to be
performed in connection therewith shall be pursuant to a written contract
therefor, which contract shall be subject to the prior approval of METLIFE. To
the extent that any funds remain after the Property has been so restored and
repaired, the same shall be applied against the Indebtedness in such order as
METLIFE may elect. To enforce its rights hereunder, METLIFE shall be entitled to
participate in and control any condemnation proceedings and to be represented
therein by counsel of its own choice, and Borrower will deliver, or cause to be
delivered to METLIFE such instruments as may be requested by it from time to
time to permit such participation. In the event METLIFE, as a result of any such
judgment, decree or award, believes that the payment or performance of any of
the Indebtedness is impaired, METLIFE may declare all of the Indebtedness
immediately due and payable.
12. BORROWER AND LIEN NOT RELEASED. From time to time, METLIFE may, at
------------------------------
METLIFE's option, without giving notice to or obtaining the consent of Borrower,
Borrower's successors or assigns or of any junior lienholder or guarantors,
without liability on METLIFE's part and notwithstanding Borrower's breach of any
covenant or agreement of Borrower in this Deed, extend the time for payment of
the Indebtedness or any part thereof, reduce the payments thereon, release
anyone liable on any of the Indebtedness, accept an extension or modification or
renewal note or notes therefor, modify the terms and time of payment of the
Indebtedness, release from the lien of this Deed any part of the Property, take
or release other or additional security, reconvey any part of the Property,
consent to any map or plan of the Property, consent to the granting of any
easement, join in any extension or subordination agreement, and agree in writing
with Borrower to modify the rate of interest or period of amortization of the
Note or change the amount of the monthly installments payable thereunder. Any
actions taken by METLIFE pursuant to the terms of this Section 12 shall not
----------
affect the obligation of Borrower or Borrower's successors or assigns to pay the
sums secured by this Deed and to observe the covenants of Borrower contained
herein, shall not affect the guaranty of any person, corporation, partnership or
other entity for payment of the Indebtedness, and shall not affect the lien or
priority of the lien hereof on the Property. Borrower shall pay METLIFE a
service charge, together with such title insurance premiums and attorneys' fees
as may be incurred at METLIFE's option, for any such action if taken at
Borrower's request.
13. FORBEARANCE BY METLIFE NOT A WAIVER. Any forbearance by METLIFE in
-----------------------------------
exercising any right or remedy hereunder, or otherwise afforded by applicable
law, shall not be a waiver of or preclude the exercise of any other right or
remedy. The acceptance by METLIFE of payment of any sum secured by this Deed
7
<PAGE>
after the due date of such payment shall not be a waiver of METLIFE's right to
either require prompt payment when due of all other sums so secured or to
declare a default for failure to make prompt payment. The procurement of
insurance or the payment of taxes or other liens or charges by METLIFE shall not
be a waiver of METLIFE's right to accelerate the maturity of the Indebtedness
secured by this Deed, nor shall METLIFE's receipt of any awards, proceeds or
damages under Sections 5 and 11 hereof operate to cure or waive Borrower's
-----------------
default in payment of sums secured by this Deed.
14. UNIFORM COMMERCIAL CODE SECURITY AGREEMENT. This Deed is intended to
------------------------------------------
be a security agreement pursuant to the Uniform Commercial Code for any of the
items specified above as part of the Property which, under applicable law, may
be subject to a security interest pursuant to the Uniform Commercial Code, and
Borrower hereby grants and conveys to METLIFE a first and prior security
interest in all of the Property that constitutes personalty, whether now owned
or hereafter acquired. Borrower agrees to execute and deliver to METLIFE, upon
METLIFE's request, any financing statements, as well as extensions, renewals and
amendments thereof, and reproductions of this Deed in such form as METLIFE may
require to perfect a security interest with respect to the foregoing items.
Borrower shall pay all costs of filing such financing statements and any
extensions, renewals, amendments and releases thereof, and shall pay all costs
and expenses of any record searches for financing statements METLIFE may
require. Without the prior written consent of METLIFE, Borrower shall not
create or suffer to be created pursuant to the Uniform Commercial Code any other
security interest in said items, including replacements and additions thereto.
Upon Borrower's breach of any covenant or agreement of Borrower contained in
this Deed, including the covenants to pay when due all sums secured by this
Deed, METLIFE shall have the remedies of a secured party under the Uniform
Commercial Code, and METLIFE may also invoke the remedies provided in Section 26
----------
of this Deed as to such items. In exercising any of said remedies METLIFE may
proceed against the items of Property separately or together and in any order
whatsoever, without in any way affecting the availability of METLIFE's remedies
under the Uniform Commercial Code or of the remedies provided in Section 26 of
----------
this Deed. Within ten (10) days following any request therefor by METLIFE,
Borrower shall prepare and deliver to METLIFE a written inventory specifically
listing all of the personal property covered by the security interest herein
granted, which inventory shall be certified by Borrower as being true, correct,
and complete.
15. LEASES OF THE PROPERTY. Borrower shall comply with and observe
----------------------
Borrower's obligations as landlord under all Leases of the Property or any part
thereof. All Leases now or hereafter entered into will be in form and substance
subject to the approval of METLIFE. All Leases of the Property shall
specifically provide that such Leases are subordinate to this Deed; that the
tenant attorns to METLIFE, such attornment to be effective upon METLIFE's
acquisition of title to the Property; that the tenant agrees to execute such
further evidences of attornment as METLIFE may from time to time request; that
the attornment of the tenant shall not be terminated by foreclosure; and that
METLIFE may, at METLIFE's option, accept or reject such attornments. Borrower
shall not, without METLIFE's written consent, request or consent to the
subordination of any Lease of all or any part of the Property to any lien
subordinate to this Deed. If Borrower becomes aware that any tenant proposes to
do, or is doing, any act or thing which may give rise to any right of set-off
against rent, Borrower shall (i) take such steps as shall be reasonably
calculated to prevent the accrual of any right to a set-off against rent, (ii)
immediately notify METLIFE thereof in writing and of the amount of said set-
offs, and (iii) within ten (10) days after such accrual, reimburse the tenant
who shall have acquired such right to set-off or take such other steps as shall
effectively discharge such setoff and as shall assure that rents thereafter due
shall continue to be payable without set-off or deduction. Upon METLIFE's
receipt of notice of the occurrence of any default or violation by Borrower of
any of its obligations under the Leases, METLIFE shall have the immediate right,
but not the duty or obligation, without prior written notice to Borrower or to
any third party, to enter upon the Property and to take such actions as METLIFE
may deem necessary to cure the default or violation by Borrower under the
Leases. The costs incurred by METLIFE in taking any such actions pursuant to
this paragraph shall become part of the Indebtedness, shall bear interest at the
rate provided in the Note, and shall be payable by Borrower to METLIFE on
demand. METLIFE shall have no liability to Borrower or to any third party for
any actions taken by METLIFE or not taken pursuant to this paragraph.
8
<PAGE>
16. REMEDIES CUMULATIVE. Each remedy provided in this Deed is distinct
-------------------
and cumulative to all other rights or remedies under this Deed or afforded by
law or equity, and may be exercised concurrently, independently, or
successively, in any order whatsoever.
17. TRANSFERS OF THE PROPERTY OR BENEFICIAL INTERESTS IN BORROWER;
--------------------------------------------------------------
ASSUMPTION. METLIFE may, at its option, declare all sums secured by this Deed
- ----------
to be immediately due and payable, and METLIFE may invoke any remedies permitted
by Section 26 of this Deed, if title to the Property is changed without the
----------
prior written consent of METLIFE, which consent shall be at METLIFE's sole
discretion. Any transfer of any interest in the Property or in the income
therefrom, by sale, lease (except for leases to tenants in the ordinary course
of managing income property which are approved by METLIFE pursuant to Section 15
----------
of this Deed and/or the use and occupation of the Property by Southern
Signatures, Inc.), contract, deed to secure debt, security deed, mortgage, deed
of trust, further encumbrance or otherwise (including any such transfers as
security for additional financing of the Property), and any change in the
ownership interests in Borrower (including any change in the ownership interests
of any legal entities which comprise or control Borrower), except transfers and
changes in ownership by devise or descent, shall be considered a change of
title. METLIFE shall have the right to condition its consent to any proposed
sale or transfer described in this Section 17 upon, among other things,
-----------
METLIFE's approval of the transferee's creditworthiness and management ability
and the transferee's execution, prior to the sale or transfer, of a written
assumption agreement containing such terms as METLIFE may require, including, if
required by METLIFE, the imposition of an assumption fee of one percent (1%) of
the then outstanding balance of the Indebtedness, except in the case of a
transfer to one of Borrower's direct or indirect subsidiaries, in which case
Borrower will be liable only for payment of all third-party costs, such as
METLIFE's attorneys' fees and recording costs. In addition to the foregoing,
Borrower shall have a one-time right to transfer the Property to a third party
approved by METLIFE, subject to Borrower's payment of all third-party costs,
such as METLIFE's attorneys' fees and recording costs. Consent by METLIFE to one
transfer of the Property shall not constitute consent to subsequent transfers or
waiver of the provisions of this Section 17. No transfer by Borrower shall
----------
relieve Borrower of liability for payment of the Indebtedness. METLIFE
acknowledges that Borrower is a publicly-held company and that purchases and
sales of its common stock from time to time on the NASDAQ market and in the
ordinary course of business shall not constitute a transfer of the Property or a
change in the ownership interests in Borrower pursuant to this Section 17.
----------
Further, offerings and sales of additional securities of Borrower, payment of
stock dividends, redemptions of stock, issuance of securities pursuant to stock
options, bonus or incentive plans or other common uses of publicly traded
securities shall not be considered to be changes in the ownership interests in
Borrower under this Section 17.
----------
18. NOTICE. Except for any notice required under applicable law to be
------
given in another manner, any and all notices, elections, demands, or requests
permitted or required to be made under this Deed or under the Note shall be in
writing, signed by the party giving such notice, election, demand or request,
and shall be delivered personally, by telegram, or sent by registered,
certified, or Express United States mail, postage prepaid, or by Federal Express
or similar service requiring a receipt, to the other party at the address stated
above, or to such other party and at such other address within the United States
of America as any party may designate in writing as provided herein. The date
of receipt of such notice, election, demand or request shall be the earliest of
(i) the date of actual receipt, (ii) three (3) days after the date of mailing by
registered or certified mail, (iii) one (1) day after the date of mailing by
Express Mail or the delivery (for redelivery) to Federal Express or another
similar service requiring a receipt, or (iv) the date of personal delivery (or
refusal upon presentation for delivery).
19. SUCCESSORS AND ASSIGNS BOUND; JOINT AND SEVERAL LIABILITY; AGENTS;
------------------------------------------------------------------
CAPTIONS. The covenants and agreements herein contained shall bind, and the
- --------
rights hereunder shall inure to, the respective heirs, successors and assigns of
METLIFE and Borrower, subject to the provisions of Section 17 hereof. If
----------
Borrower is comprised of more than one person or entity, whether as individuals,
partners, partnerships or corporations, each such person or entity shall be
jointly and severally liable for Borrower's obligations hereunder. In
exercising any rights hereunder or taking any actions provided for herein,
METLIFE may act through its employees, agents or independent contractors as
authorized by METLIFE. The captions and headings of the sections of this Deed
are for convenience only and are not to be used to interpret or define the
provisions hereof.
9
<PAGE>
20. WAIVER OF STATUTE OF LIMITATIONS. Borrower hereby waives the right to
--------------------------------
assert any statute of limitations as a bar to the enforcement of the lien of
this Deed or to any action brought to enforce the Note or any other obligation
secured by this Deed.
21. WAIVER OF MARSHALLING. Notwithstanding the existence of any other
---------------------
security interests in the Property held by METLIFE or by any other party,
METLIFE shall have the right to determine the order in which any or all of the
Property shall be subjected to the remedies provided herein. METLIFE shall have
the right to determine the order in which any or all portions of the
Indebtedness secured hereby are satisfied from the proceeds realized upon the
exercise of the remedies provided herein. Borrower, any party who consents to
this Deed and any party who now or hereafter acquires a security interest in the
Property and who has actual or constructive notice hereof hereby waives any and
all right to require the marshalling of assets in connection with the exercise
of any of the remedies permitted by applicable law or provided herein.
22. HAZARDOUS WASTE. Borrower has furnished to METLIFE a Phase I
---------------
Environmental Assessment dated December 13, 1996, prepared by Environmental
Technology Resources, Inc. (the "Engineer"), and an Environmental Questionnaire
dated December 17, 1996 (collectively, the "Report"). Except as disclosed to
METLIFE in the Report, Borrower has received no notification of any kind
suggesting that the Property or any adjacent property is or may be contaminated
with any hazardous waste or materials or is or may be required to be cleaned up
in accordance with any applicable law or regulation; and Borrower further
represents and warrants that, except as previously disclosed to METLIFE in
writing, to the best of its knowledge as of the date hereof after due and
diligent inquiry, there are no hazardous waste or materials located in, on or
under the Property or any adjacent property, or incorporated in any
Improvements, nor has the Property or any adjacent property ever been used as a
landfill or a waste disposal site, or a manufacturing, handling, storage,
distribution or disposal facility for hazardous waste or materials. As used
herein, the term "hazardous waste or materials" includes any substance or
material defined in or designated as hazardous or toxic wastes, hazardous or
toxic material, a hazardous, toxic or radioactive substance, or other similar
term, by any federal, state or local statute, regulation or ordinance now or
hereafter in effect. Borrower shall promptly comply with all statutes,
regulations and ordinances, and with all orders, decrees or judgments of
governmental authorities or courts having jurisdiction, relating to the use,
collection, treatment, disposal, storage, control, removal or cleanup of
hazardous waste or materials in, on or under the Property or any adjacent
property, or incorporated in any Improvements, at Borrower's expense. In the
event that METLIFE at any time believes that the Property is not free of all
hazardous waste or materials or that Borrower has violated any applicable
environmental law with respect to the Property, then immediately upon request by
METLIFE, Borrower shall obtain and furnish to METLIFE, at Borrower's sole cost
and expense, an environmental audit and inspection of the Property from an
expert satisfactory to METLIFE. In the event that Borrower fails to immediately
obtain such audit or inspection, METLIFE or its agents may perform or obtain
such audit or inspection at Borrower's sole cost and expense. METLIFE may, but
is not obligated to, enter upon the Property and take such actions and incur
such costs and expenses to effect such compliance as it deems advisable to
protect its interest in the Property; and whether or not Borrower has actual
knowledge of the existence of hazardous waste or materials on the Property or
any adjacent property as of the date hereof, Borrower shall reimburse METLIFE as
provided in Section 23 below for the full amount of all costs and expenses
----------
incurred by METLIFE prior to METLIFE acquiring title to the Property through
foreclosure or acceptance of a deed in lieu of foreclosure, in connection with
such compliance activities. Neither this provision nor any of the other Loan
Documents shall operate to put METLIFE in the position of an owner of the
Property prior to any acquisition of the Property by METLIFE. The rights granted
to METLIFE herein and in the other Loan Documents are granted solely for the
protection of METLIFE's lien and security interest covering the Property, and do
not grant to METLIFE the right to control Borrower's actions, decisions or
policies regarding hazardous waste or materials.
23. ADVANCES, COSTS AND EXPENSES. Borrower shall pay within ten (10) days
----------------------------
after written demand from METLIFE all sums advanced by METLIFE and all costs and
expenses incurred by METLIFE in taking any actions pursuant to the Loan
Documents including attorneys' fees and disbursements, accountants' fees,
appraisal and inspection fees and the costs for title reports and guaranties,
together with interest thereon at the rate applicable under the Note after an
Event of Default from the date such costs were advanced or incurred. All such
10
<PAGE>
costs and expenses incurred by METLIFE, and advances made, shall constitute
advances under this Deed to protect the Property and shall be secured by and
have the same priority as the lien of this Deed. If Borrower fails to pay any
such advances, costs and expenses and interest thereon, METLIFE may apply any
undisbursed loan proceeds to pay the same, and, without foreclosing the lien of
this Deed, may at its option commence an independent action against Borrower for
the recovery of the costs, expenses and/or advances, with interest, together
with costs of suit, costs of title reports and guaranty of title, disbursements
of counsel and reasonable attorneys' fees incurred therein or in any appeal
therefrom.
24. ASSIGNMENT OF LEASES AND RENTS. Borrower, for good and valuable
------------------------------
consideration, the receipt of which is hereby acknowledged, to secure the
Indebtedness, does hereby absolutely and unconditionally grant, bargain, sell,
transfer, assign, convey, set over and deliver unto METLIFE all right, title and
interest of Borrower in, to and under the Leases of the Property, whether now in
existence or hereafter entered into, and all guaranties, amendments, extensions
and renewals of said Leases and any of them, and all rents, income and profits
which may now or hereafter be or become due or owing under the Leases, and any
of them, or on account of the use of the Property.
Borrower represents, warrants, covenants and agrees with METLIFE as
follows:
(a) The sole ownership of the entire lessor's interest in the Leases is
vested in Borrower, and Borrower has not, and shall not, perform any acts or
execute any other instruments which might prevent METLIFE from fully exercising
its rights with respect to the Leases under any of the terms, covenants and
conditions of this Deed.
(b) The Leases are and shall be valid and enforceable in accordance with
their terms and have not been and shall not be altered, modified, amended,
terminated, canceled, renewed or surrendered except as approved in writing by
METLIFE. The terms and conditions of the Leases have not been and shall not be
waived in any manner whatsoever except as approved in writing by METLIFE.
(c) Borrower shall not materially alter the term or the amount of rent
payable under any Lease without prior written notice to METLIFE and METLIFE's
consent, which shall not be unreasonably withheld.
(d) To the best of Borrower's knowledge, there are no defaults now existing
under any of the Leases and there exists no state of facts which, with the
giving of notice or lapse of time or both, would constitute a default under any
of the Leases.
(e) Borrower shall give prompt written notice to METLIFE of any notice
received by Borrower claiming that a default has occurred under any of the
Leases on the part of Borrower, together with a complete copy of any such
notice.
(f) Each of the Leases shall remain in full force and effect irrespective
of any merger of the interest of lessor and any lessee under any of the leases.
(g) Borrower will not permit any Lease to become subordinate to any lien
other than the lien of this Deed.
This assignment is absolute, is effective immediately, and is irrevocable
by Borrower so long as the Indebtedness remains outstanding. Notwithstanding
the foregoing, until a Notice is sent to Borrower in writing that an Event of
Default has occurred (which notice is hereafter called a "Notice"), Borrower may
receive, collect and enjoy the rents, income and profits accruing from the
Property.
Upon the occurrence of an Event of Default hereunder, METLIFE may, at its
option, after service of a Notice, receive and collect all such rents, income
and profits from the Property as they become due. METLIFE shall thereafter
continue to receive and collect all such rents, income and profits, as long as
such default or defaults shall exist, and during the pendency of any foreclosure
proceedings.
11
<PAGE>
Borrower hereby irrevocably appoints METLIFE its true and lawful attorney
with power of substitution and with full power for METLIFE in its own name and
capacity or in the name and capacity of Borrower, from and after service of a
Notice, to demand, collect, receive and give complete acquittances for any and
all rents, income and profits accruing from the Property, either in its own name
or in the name of Borrower or otherwise, which METLIFE may deem necessary or
desirable in order to collect and enforce the payment of the rents, income and
profits of and from the Property. Lessees of the Property are hereby expressly
authorized and directed, following receipt of a Notice from METLIFE, to pay any
and all amounts due Borrower pursuant to the Leases to METLIFE or such nominee
as METLIFE may designate in a writing delivered to and received by such lessees,
and the lessees of the Property are expressly relieved of any and all duty,
liability or obligation to Borrower in respect of all payments so made.
Upon the occurrence of any Event of Default, from and after service of a
Notice, METLIFE is hereby vested with full power to use all measures, legal and
equitable, deemed by it to be necessary or proper to enforce this Section 24 and
----------
to collect the rents, income and profits assigned hereunder, including the right
of METLIFE or its designee, to enter upon the Property, or any part thereof, and
take possession of all or any part of the Property together with all personal
property, fixtures, documents, books, records, papers and accounts of Borrower
relating thereto, and METLIFE may exclude Borrower, its agents and servants,
wholly therefrom. Borrower hereby grants full power and authority to METLIFE to
exercise all rights, privileges and powers herein granted at any and all times
after service of a Notice, with full power to use and apply all of the rents and
other income herein assigned to the payment of the costs of managing and
operating the Property and of any indebtedness or liability of Borrower to
METLIFE, including but not limited to the payment of taxes, special assessments,
insurance premiums, damage claims, the costs of maintaining, repairing,
rebuilding and restoring the improvements on the Property or of making the same
rentable, reasonable attorneys' fees incurred in connection with the enforcement
of this Deed, and of principal and interest payments due from Borrower to
METLIFE on the Note and this Deed, all in such order as METLIFE may determine.
METLIFE shall be under no obligation to exercise or prosecute any of the rights
or claims assigned to it hereunder or to perform or carry out any of the
obligations of the lessor under any of the Leases and does not assume any of the
liabilities in connection with or arising or growing out of the covenants and
agreements of Borrower in the Leases. It is further understood that the
assignment set forth in this Section 24 shall not operate to place
----------
responsibility for the control, care, management or repair of the Property, or
parts thereof, upon METLIFE, nor shall it operate to make METLIFE liable for the
performance of any of the terms and conditions of any of the Leases, or for any
waste of the Property by any lessee under any of the Leases, or any other
person, or for any dangerous or defective condition of the Property or for any
negligence in the management, upkeep, repair or control of the Property
resulting in loss or injury or death to any lessee, licensee, employee or
stranger.
25. DEFAULT. The following shall each constitute an event of default
-------
("Event of Default"):
(a) Failure of or refusal by Borrower to pay any portion of the sums
secured by this Deed when due, and such failure or refusal shall continue for a
period of ten (10) days after written notice is given to Borrower by METLIFE
specifying such failure; or
(b) Failure of Borrower within the time required by this Deed to make any
payment for taxes, insurance or for reserves for such payments, or any other
payment necessary to prevent filing of or discharge of any lien, and such
failure shall continue for a period of ten (10) days after written notice is
given to Borrower by METLIFE specifying such failure; or
(c) Failure by Borrower to observe or perform any obligations of Borrower
to METLIFE on or with respect to any transactions, debts, undertakings or
agreements other than the transaction evidenced by the Note following the giving
of any required notice and the expiration of any applicable period of grace; or
12
<PAGE>
(d) Failure of Borrower to make any payment or perform any obligation under
any superior liens or encumbrances on the Property, within the time required
thereunder, or commencement of any suit or other action to foreclose any
superior liens or encumbrances; or
(e) Failure by Borrower to observe or perform any of its obligations under
any of the Leases following the giving of any required notice and the expiration
of any applicable cure period; or
(f) The Property is transferred or any agreement to transfer any part or
interest in the Property in any manner whatsoever is made or entered into
without the prior written consent of METLIFE, except as specifically allowed
under this Deed, including without limitation creating or allowing any liens on
the Property or leasing any portion of the Property; or
(g) Filing by Borrower or Southern Signatures, Inc. of a voluntary petition
in bankruptcy or filing by Borrower or Southern Signatures, Inc., of any
petition or answer seeking or acquiescing in any reorganization, arrangement,
composition, readjustment, liquidation, or similar relief for itself under any
present or future federal, state or other statute, law or regulation relating to
bankruptcy, insolvency or other relief for debtors, or the seeking, consenting
to, or acquiescing by Borrower or Southern Signatures, Inc., in the appointment
of any trustee, receiver, custodian, conservator or liquidator for Borrower or
Southern Signatures, Inc., any part of the Property, or any of the income or
rents of the Property, or the making by Borrower or Southern Signatures, Inc.,
of any general assignment for the benefit of creditors, or the inability of or
failure by Borrower or Southern Signatures, Inc., to pay its debts generally as
they become due, or the insolvency on a balance sheet basis or business failure
of Borrower or Southern Signatures, Inc., or the making or suffering of a
preference within the meaning of federal bankruptcy law or the making of a
fraudulent transfer under applicable federal or state law, or concealment by
Borrower or Southern Signatures, Inc., of any of its property in fraud of
creditors, or the imposition of a lien upon any of the property of Borrower or
Southern Signatures, Inc., which is not discharged in the manner permitted by
Section 4 of this Deed, or the giving of notice by Borrower or Southern
- ---------
Signatures, Inc., to any governmental body of insolvency or suspension of
operations; or
(h) Filing of a petition against Borrower or Southern Signatures, Inc.,
seeking any reorganization, arrangement, composition, readjustment, liquidation,
or similar relief under any present or future federal, state or other law or
regulation relating to bankruptcy, insolvency or other relief for debts, or the
appointment of any trustee, receiver, custodian, conservator or liquidator of
Borrower or Southern Signatures, Inc., of any part of the Property or of any of
the income or rents of the Property, unless such petition shall be dismissed
within sixty (60) days after such filing, but in any event prior to the entry of
an order, judgment or decree approving such petition; or
(i) The institution of any proceeding for the dissolution or termination of
Borrower voluntarily, involuntarily, or by operation of law; or
(j) A material adverse change occurs in the assets, liabilities or net
worth of Borrower or any of the guarantors of the indebtedness evidenced by the
Note from the assets, liabilities or net worth of Borrower or any of the
guarantors of the indebtedness evidenced by the Note previously disclosed to
METLIFE; or
(k) Any warranty, representation or statement furnished to METLIFE by or on
behalf of Borrower under the Note, this Deed, any of the other Loan Documents or
the Certificate and Indemnity Agreement Regarding Hazardous Substances, shall
prove to have been false or misleading in any material respect; or
(l) Failure of Borrower to observe or perform any other covenant or
condition contained in the Note and such default shall continue for thirty (30)
days after notice is given to Borrower specifying the nature of the failure. No
notice of default and no opportunity to cure shall be required if during the
prior twelve (12) months METLIFE has already sent a notice to Borrower
concerning default in performance of the same obligation; or
13
<PAGE>
(m) Failure of Borrower to observe or perform any other obligation under
this Deed, any other Loan Document or the Certificate and Indemnity Regarding
Hazardous Substances when such observance or performance is due, and such
failure shall continue beyond the applicable cure period set forth in such Loan
Document, or if the default cannot be cured within such applicable cure period,
Borrower fails within such time to commence and pursue curative action with
reasonable diligence or fails at any time after expiration of such applicable
cure period to continue with reasonable diligence all necessary curative
actions. No notice of default and no opportunity to cure shall be required if
during the prior twelve (12) months METLIFE has already sent a notice to
Borrower concerning default in performance of the same obligation; or
(n) Borrower's abandonment of the Property; or
(o) Any of the foregoing events occur with respect to any guarantor of any
of Borrower's obligations in connection with the Indebtedness, or such guarantor
dies or becomes incompetent; or
(p) The occurrence of any default under any of the documents evidencing or
securing (i) METLIFE Loan No. 5905292, (ii) METLIFE Loan No. 5905392, (iii)
METLIFE Loan No. 5906393, (iv) METLIFE Loan No. 5904594 (v) METLIFE Loan No.
5909794, (vi) METLIFE Loan No. 5922796, (vii) METLIFE Loan No. 5922896 or (viii)
any other indebtedness with Borrower or any of the guarantors of the
Indebtedness which is now or hereafter owed to METLIFE.
26. RIGHTS AND REMEDIES ON DEFAULT.
------------------------------
(a) Remedies. Upon the occurrence of any Event of Default and at any time
--------
thereafter, METLIFE may exercise any one or more of the following rights and
remedies:
(1) METLIFE may declare all sums secured by this Deed immediately due and
payable, including any prepayment premium which Borrower would be required to
pay.
(2) METLIFE shall have the right to foreclose this Deed in accordance with
applicable law.
(3) In the event of any foreclosure, to the extent permitted by applicable
law, METLIFE will be entitled to a judgment which will provide that if the
foreclosure sale proceeds are insufficient to satisfy the judgment, execution
may issue for any amount by which the unpaid balance of the obligations secured
by this Deed exceeds the net sale proceeds payable to METLIFE.
(4) With respect to all or any part of the Property that constitutes
personalty, METLIFE shall have all rights and remedies of secured party under
the Uniform Commercial Code.
(5) METLIFE shall have the right to have a receiver appointed to take
possession of any or all of the Property, with the power to protect and preserve
the Property, to operate the Property preceding foreclosure or sale, to collect
all the rents and revenues from the Property and apply the proceeds, over and
above cost of the receivership, against the sums due under this Deed, and to
exercise all of the rights with respect to the Property described in Section 24
----------
above. The receiver may serve without bond if permitted by law. METLIFE's
right to the appointment of a receiver shall exist whether or not apparent value
of the Property exceeds the sums due under this Deed by a substantial amount.
Employment by METLIFE shall not disqualify a person from serving as a receiver.
(6) In the event Borrower remains in possession of the Property after the
Property is sold as provided above or METLIFE otherwise becomes entitled to
possession of the Property upon default of Borrower, Borrower shall become a
tenant at will of METLIFE or the purchaser of the Property and shall pay a
reasonable rental for use of the Property while in Borrower's possession.
14
<PAGE>
(7) METLIFE shall have any other right or remedy provided in this Deed, the
Note, or any other Loan Document or deed delivered by Borrower in connection
therewith, or available at law, in equity or otherwise.
(8) METLIFE shall have all the rights and remedies set forth in Sections 23
-----------
and 24.
- ------
(b) Sale of the Property. If any Event of Default shall occur hereunder,
--------------------
METLIFE may enter and take possession of the Property, or any portion thereof,
and before or after such entry advertise the sale of the Property, or any
portion thereof, once each week for the four (4) weeks immediately preceding the
sale in the newspaper in which sheriff's advertisements are published in the
county where the real property, or the greatest portion thereof, is located,
giving notice of the time, place, and terms of the sale, and thereafter shall
sell the Property or any part of the Property at public sale or sales at public
outcry at the door of the Superior Courthouse for said county to the highest and
best bidder for cash, in order to pay the Indebtedness and accrued interest
thereon. METLIFE may bid and purchase at such sale. The aforesaid power of
sale is granted in addition to the other remedies provided by law for collection
of the Indebtedness and shall not be exhausted by one exercise thereof but may
be exercised until METLIFE has received full payment of the Indebtedness.
If at the time of the sale METLIFE shall deem it best for any reason to
postpone or continue said sale for one or more days, METLIFE may do so, in which
event notice of such postponement or continuance shall be made in such manner as
the METLIFE may deem sufficient under the laws of the State of Georgia. At any
such public sale, METLIFE may execute and deliver to the purchaser a conveyance
of the Property or any part of the Property in fee simple with full warranty
and, to this end, Borrower hereby constitutes and appoints METLIFE as the agent
and attorney-in-fact of Borrower to make such sale and conveyance, and thereby
to divest Borrower of all right, title or equity that Borrower may have in and
to the Property and to vest the same in the purchaser or purchasers at such sale
or sales. Said appointment is coupled with an interest and shall be
irrevocable. Any recitals contained in the conveyance as to the happening of
the default, and such recitals shall be presumptive evidence that all
preliminary acts prerequisite to said sale and deed were in all things duly
complied with, and said recitals shall be conclusive against Borrower.
(c) Application of the Proceeds of Sale. Upon any public sale pursuant to
-----------------------------------
the aforementioned power of sale and agency, the proceeds of said sale shall be
applied as provided by law. In the event that such proceeds are insufficient to
pay all costs and expenses of sale, METLIFE may advance such sums as it in its
sole and absolute discretion shall determine for the purpose of paying all or
any part of such costs and expenses, and all such sums shall be a part of the
Indebtedness, payable on demand with interest at the rate provided in the Note
as applicable upon default. Borrower shall remain liable for any deficiency
resulting if the proceeds of sale are inadequate to repay the Indebtedness.
(d) Notice of Sale. METLIFE shall give Borrower reasonable notice of the
--------------
time and place of any public sale of any personal property or of the time after
which any private sale or other intended disposition of the personal property is
to be made. Reasonable notice shall mean notice given in accordance with
applicable law, including notices given in the manner and at the times required
for notices in a nonjudicial foreclosure.
(e) Waiver; Election of Remedies. A waiver by either party of a breach of
----------------------------
a provision of this Deed shall not constitute a waiver of or prejudice the
party's right otherwise to demand strict compliance with that provision or any
other provision. Election by METLIFE to pursue any remedy shall not exclude
pursuit of any other remedy, and all remedies of METLIFE under this Deed are
cumulative and not exclusive. An election to make expenditures or take action
to perform an obligation of Borrower shall not affect METLIFE's right to declare
a default and exercise its remedies under this Deed.
27. SATISFACTION OF MORTGAGE. Upon payment of all sums secured by this
------------------------
Deed, METLIFE shall execute a satisfaction of this Deed and shall surrender this
Deed and all notes evidencing Indebtedness secured by this Deed to the person or
persons legally entitled thereto. Such person or persons shall pay METLIFE's
costs incurred in connection with satisfaction of this Deed.
15
<PAGE>
28. FUTURE ADVANCES. Upon request of Borrower, METLIFE, at METLIFE's
---------------
option so long as this Deed secures Indebtedness held by METLIFE, may make
Future Advances to Borrower. Such Future Advances, with interest thereon, shall
be secured by this Deed when evidenced by promissory notes stating that said
notes are secured hereby.
29. IMPOSITION OF TAX BY STATE.
--------------------------
(a) State Taxes Covered. The following constitute state taxes to which
-------------------
this Section applies:
(1) A specific tax upon mortgages or upon all or any part of the
indebtedness secured by a mortgage.
(2) A specific tax on a grantor which the taxpayer is authorized or
required to deduct from payments on the indebtedness secured by a mortgage.
(3) A tax on a mortgage chargeable against the grantee or the holder of the
note secured.
(4) A specific tax on all or any portion of the indebtedness or on payments
of principal and interest made by a grantor.
(b) Remedies. If any state tax to which this Section applies is enacted
--------
subsequent to the date of this Deed, this shall have the same effect as an Event
of Default, and METLIFE may exercise any or all of the remedies available to it
unless the following conditions are met:
(1) Borrower may lawfully pay the tax or charge imposed by state tax, and
(2) Borrower pays the tax or charge within thirty (30) days after notice
from METLIFE that the tax law has been enacted.
30. ATTORNEYS' FEES. In the event suit or action is instituted to enforce
---------------
or interpret any of the terms of this Deed (including without limitation efforts
to modify or vacate any automatic stay or injunction), the prevailing party
shall be entitled to recover all expenses reasonably incurred at, before and
after trial and on appeal whether or not taxable as costs, or in any bankruptcy
proceeding including, without limitation, attorneys' fees, witness fees (expert
and otherwise), deposition costs, copying charges and other expenses. Whether
or not any court action is involved, all reasonable expenses, including but not
limited to the costs of searching records, obtaining title reports, surveyor
reports, and title insurance, incurred by METLIFE that are necessary at any time
in METLIFE's opinion for the protection of its interest or enforcement of its
rights shall become a part of the Indebtedness payable on demand and shall bear
interest from the date of expenditure until repaid at the interest rate as
provided in the Note. The term "attorneys' fees" as used in the Loan Documents
shall be deemed to mean such fees as are reasonable and are actually incurred.
31. GOVERNING LAW; SEVERABILITY. This Deed shall be governed by the law
---------------------------
of the State of Georgia applicable to contracts made and to be performed therein
(excluding choice-of-law principles). In the event that any provision or clause
of this Deed or the Note conflicts with applicable law, such conflict shall not
affect other provisions of this Deed or the Note which can be given effect
without the conflicting provision, and to this end the provisions of this Deed
and the Note are declared to be severable.
32. TIME OF ESSENCE. Time is of the essence of this Deed.
---------------
16
<PAGE>
33. CHANGES IN WRITING. This Deed and any of its terms may only be
------------------
changed, waived, discharged or terminated by an deed in writing signed by the
party against which enforcement of the change, waiver, discharge or termination
is sought. Any agreement subsequently made by Borrower or METLIFE relating to
this Deed shall be superior to the rights of the holder of any intervening lien
or encumbrance.
34. NO OFFSET. Borrower's obligation to make payments and perform all
---------
obligations, covenants and warranties under this Deed and under the Note shall
be absolute and unconditional and shall not be affected by any circumstance,
including without limitation any setoff, counterclaim, abatement, suspension,
recoupment, deduction, defense or other right that Borrower or any guarantor may
have or claim against METLIFE or any entity participating in making the loan
secured hereby. The foregoing provisions of this section, however, do not
constitute a waiver of any claim or demand which Borrower or any guarantor may
have in damages or otherwise against METLIFE or any other person, or preclude
Borrower from maintaining a separate action thereon; provided, however, that
Borrower waives any right it may have at law or in equity to consolidate such
separate action with any action or proceeding brought by METLIFE.
35. AUTHORIZATION TO INSERT. [INTENTIONALLY DELETED.]
-----------------------
36. MAXIMUM INTEREST CHARGES. Notwithstanding anything contained herein
------------------------
or in any of the Loan Documents to the contrary, in no event shall METLIFE be
entitled to receive interest on the loan secured by this Deed (the "Loan") in
amounts which, when added to all of the other interest charged, paid to or
received by METLIFE on the Loan, causes the rate of interest on the Loan to
exceed the highest lawful rate. Borrower and METLIFE intend to comply with the
applicable law governing the highest lawful rate and the maximum amount of
interest payable on or in connection with the Loan. If the applicable law is
ever judicially interpreted so as to render usurious any amount called for under
the Loan Documents, or contracted for, charged, taken, reserved or received with
respect to the Loan, or if acceleration of the final maturity date of the Loan
or if any prepayment by Borrower results in Borrower having paid or demand
having been made on Borrower to pay, any interest in excess of the amount
permitted by applicable law, then all excess amounts theretofore collected by
METLIFE shall be credited on the principal balance of the Note (or, if the Note
has been or would thereby be paid in full, such excess amounts shall be refunded
to Borrower), and the provisions of the Note, this Deed and any demand on
Borrower shall immediately be deemed reformed and the amounts thereafter
collectible thereunder and hereunder shall be reduced, without the necessity of
the execution of any new document, so as to comply with the applicable law, but
so as to permit the recovery of the fullest amount otherwise called for
thereunder and hereunder. The right to accelerate the final maturity date of
the Loan does not include the right to accelerate any interest which has not
otherwise accrued on the date of such acceleration, and METLIFE does not intend
to collect any unearned interest in the event of acceleration. All sums paid or
agreed to be paid to METLIFE for the use, forbearance or detention of the Loan
shall, to the extent permitted by applicable law, be amortized, prorated,
allocated and spread through the full term of the Loan until payment in full so
that the rate or amount of interest on account of the Loan does not exceed the
applicable usury ceiling. By execution of this Deed, Borrower acknowledges that
it believes the Loan to be nonusurious and agrees that if, at any time, Borrower
should have reason to believe that the Loan is in fact usurious, it will give
METLIFE written notice of its belief and the reasons why Borrower believes the
Loan to be usurious, and Borrower agrees that METLIFE shall have ninety (90)
days following its receipt of such written notice in which to make appropriate
refund or other adjustment in order to correct such condition if it in fact
exists.
IMPORTANT: READ BEFORE SIGNING. THE TERMS OF THIS AGREEMENT SHOULD BE
READ CAREFULLY BECAUSE ONLY THOSE TERMS IN WRITING ARE ENFORCEABLE. NO
OTHER TERMS OR ORAL PROMISES NOT CONTAINED IN THIS WRITTEN CONTRACT MAY BE
LEGALLY ENFORCED. YOU MAY CHANGE THE TERMS OF THIS AGREEMENT ONLY BY
ANOTHER WRITTEN AGREEMENT.
17
<PAGE>
BY EXECUTION OF THIS DEED, BORROWER EXPRESSLY: ACKNOWLEDGES THE RIGHT TO
ACCELERATE THE INDEBTEDNESS EVIDENCED BY THE NOTE AND THE POWER GIVEN
HEREIN TO METLIFE TO SELL THE PROPERTY BY NONJUDICIAL FORECLOSURE UPON
DEFAULT BY BORROWER WITHOUT ANY JUDICIAL HEARING AND WITHOUT ANY NOTICE
OTHER THAN SUCH NOTICE AS IS SPECIFICALLY REQUIRED TO BE GIVEN UNDER THE
NOTE OR PROVISIONS OF THIS DEED OR BY LAW; ACKNOWLEDGES THAT THE
UNDERSIGNED HAS READ THIS DEED AND THAT ANY AND ALL QUESTIONS REGARDING THE
LEGAL EFFECT OF THIS DEED AND ITS PROVISIONS HAVE BEEN EXPLAINED FULLY TO
BORROWER. BORROWER HAS CONSULTED WITH ITS COUNSEL PRIOR TO EXECUTING THIS
DEED AND ACKNOWLEDGES THAT ALL WAIVERS OF THE AFORESAID RIGHTS OF BORROWER
HAVE BEEN MADE KNOWINGLY, INTENTIONALLY AND WILLINGLY BY THE UNDERSIGNED,
ON BEHALF OF BORROWER, AS PART OF A BARGAINED-FOR LOAN TRANSACTION AND THAT
THIS DEED IS VALID AND ENFORCEABLE BY METLIFE AGAINST BORROWER IN
ACCORDANCE WITH ALL THE TERMS AND CONDITIONS HEREOF.
IN WITNESS WHEREOF, Borrower has executed this Deed or has caused the
same to be executed by its representatives thereunto duly authorized.
BORROWER:
Signed, sealed, delivered, and notarized GRAPHIC INDUSTRIES, INC.,
this _____ day of January 1997 in the a Georgia corporation
presence of:
- ---------------------------------------
By:
- --------------------------------------- ------------------------------
Signataure of Unofficial Witness Mark C. Pope, III, Chairman
& CEO
- --------------------------------------
Signature of Notary Public
Attest:
-------------------------
Donald P. Hunnicutt,
Secretary
[SEAL]
[SEAL]
My commission expires: _________________
Exhibits:
- --------
Exhibit A - Description of Property
Schedule 1 - Description of Debtor and Secured Party
Schedule 2 - Permitted Exceptions
18
<PAGE>
Loan No: 5922696-001
EXHIBIT A
(201 Armour Drive, Atlanta, Georgia)
Legal Description:
- -----------------
<PAGE>
SCHEDULE 1
----------
Loan No. 5922696-001
Part 1
------
Description of "Debtor" and "Secured Party"
- -------------------------------------------
A. Debtor:
------
1. Name and Identity or Corporate Structure: Graphic Industries, Inc., a
Georgia corporation
2. Debtor has been using or operating under such name and identity or
corporate structure, without change, since: March 7, 1970.
3. The principal place of business and chief executive office of Debtor are
located at:
2155 Monroe Drive, N.E.
Atlanta, Georgia 30324
Attention: Mark C. Pope, III, Chairman & CEO
B. Secured Party: MetLife Capital Financial Corporation, a Delaware
--------------
corporation.
************************************************************************
Part 2
------
(Notice Mailing Addresses of "Debtor" and "Secured Party")
A. The mailing address of Debtor is:
2155 Monroe Drive, N.E.
Atlanta, Georgia 30324
Attention: Mark C. Pope, III, Chairman & CEO
B. The mailing address of Secured Party is:
MetLife Capital Financial Corporation
Real Estate Department
10900 N.E. 4th Street, Suite 500
Bellevue, Washington 98004
<PAGE>
Loan No: 5922696-001
SCHEDULE 2
----------
(201 Armour Drive, Atlanta, Georgia)
Permitted Exceptions:
- --------------------
1. Easement from Georgia Industrial Realty Company to City of Atlanta,
dated December 6, 1954, filed February 21, 1955, recorded in Deed Book 2969,
Page 259, Fulton County, Georgia Records.
2. Right-of-Way Easement from The Stanley Works to Georgia Power Company,
dated November 21, 1969, filed January 30, 1970, recorded in Deed Book 5181,
Page 419, aforesaid records.
<PAGE>
Loan No. 5922696-001
SECURITY AGREEMENT
(201 Armour Drive, Atlanta, Georgia)
Debtor:
Name: Graphic Industries, Inc., a Georgia corporation
Address: 2155 Monroe Drive, N.E.
Atlanta, Georgia 30324
Secured Party:
Name: MetLife Capital Financial Corporation,
a Delaware corporation
Address: Real Estate Department
10900 N.E. 4th Street, Suite 500
Bellevue, Washington 98004
Debtor, for valuable consideration, hereby grants to Secured Party a
security interest in the property listed on Exhibit B hereto, and any and all
---------
additions and substitutions thereto (the "Collateral") (i) to secure payment of
the indebtedness evidenced by that certain promissory note of even date
herewith, payable to the order of Secured Party, in the principal amount of Five
Hundred Two Thousand Five Hundred Dollars ($502,500) (the "Note") and (ii) to
secure all other obligations of Debtor arising under all documents securing or
executed in connection with the Note, except any Certificate and Indemnity
Agreement Regarding Hazardous Substances or Environmental Indemnity Agreement
(the "Loan Documents").
Debtor expressly warrants and covenants:
1. Except for the security interest granted hereby, Debtor is, or to the extent
that this Security Agreement states that the Collateral is to be acquired
after the date hereof, will be, the owner of the Collateral free from any
lien, security interest or encumbrance. Debtor shall defend the Collateral
against all claims and demands of all persons at any time claiming the same
or any interest therein.
2. The Collateral is used or bought primarily for use in the business of
Debtor.
3. Debtor's business address is as stated above. The Collateral is located at
or on or is used or owned for or in connection with the real estate situated
in Atlanta, Georgia, commonly known as 201 Armour Drive and more
particularly described on the attached Exhibit A herein incorporated by this
reference (the "Property").
4. Debtor shall notify Secured Party of any change in the location of the
Collateral or any change in Debtor's principal place of business.
5. Debtor shall pay all taxes and assessments of every nature which may be
levied or assessed against the Collateral.
6. Debtor shall not permit or allow any lien, security interest or encumbrance
whatsoever upon the Collateral and shall not permit the Collateral to be
attached or replevied.
<PAGE>
7. The Collateral is in good condition and Debtor shall keep the Collateral in
good condition and from time to time, forthwith, replace and repair all such
parts of the Collateral as may be broken, worn out, or damaged without
allowing any lien to be created upon the Collateral on account of such
replacement or repairs. Secured Party may examine and inspect the Collateral
at any time, wherever located.
8. Debtor will not use the Collateral in violation of any applicable statutes,
regulations or ordinances.
9. Notwithstanding anything else contained herein to the contrary, Secured
Party has been advised that certain personal property will be leased to
Debtor, and Secured Party's interest therein shall be subordinate to
lessor's interest therein.
Until default Debtor may have possession of the Collateral and use it in
any lawful manner, and upon default Secured Party shall have the immediate right
to the possession of the Collateral.
Debtor shall be in default under this Security Agreement upon the happening
of any of the following events (an "Event of Default"):
(a) default in the payment or performance of any obligation, covenant or
liability contained or referred to in this Security Agreement and such
default shall continue for a period of thirty (30) days after written
notice is given to Debtor by Secured Party specifying such default; or
(b) the occurrence of an Event of Default as defined under the Note, any
instrument securing the Note, including the Deed to Secure Debt, Security
Agreement, and Assignment of Leases and Rents or securing the Note (the
"Deed to Secure Debt"), any other Loan Document, or the Certificate and
Indemnity Agreement Regarding Hazardous Substances or the Environmental
Indemnity Agreement; or
(c) loss, theft, damage or destruction to or of any of the Collateral which
shall materially and substantially diminish the aggregate value of the
Collateral, the sale or encumbrance of any of the Collateral, or the making
of any levy, seizure or attachment on or to the Collateral.
Upon an Event of Default and at any time thereafter, Secured Party may
declare the Note immediately due and payable and shall have the remedies of a
secured party under the Articles of the Georgia Uniform Commercial Code.
Secured Party may require Debtor to assemble the Collateral and deliver or make
it available to Secured Party at a place to be designated by Secured Party which
is reasonably convenient to both parties.
Secured Party may require that the Collateral be sold at a public sale at
the same time and place as the sale of the Property, or Secured Party may sell
the Collateral at one or more other public or private sales in accordance with
the Georgia Uniform Commercial Code. The Collateral shall not be required to be
exhibited, presented or displayed at any sale. In the event that the Collateral
is sold under the Deed to Secure Debt, Secured Party hereby assigns its security
interest in the Collateral to the trustee or Sheriff selling the Property under
the Deed to Secure Debt. Debtor agrees that a sale of the Collateral under the
Deed to Secure Debt and the notices required under the laws of Georgia for the
sale of real property are commercially reasonable and adequate under the Georgia
Uniform Commercial Code.
Debtor agrees to pay to Secured Party in addition to the indebtedness
secured hereby, all expenses of retaking, holding, preparing for sale and
2
<PAGE>
selling incurred by Secured Party in connection with realization on the
Collateral including reasonable attorneys' fees and costs. In addition, in the
event suit or action is instituted to enforce or interpret this Agreement
(including without limitation efforts to modify or vacate any automatic stay or
injunction), the prevailing party shall be entitled to recover all expenses
reasonably incurred at, before or after trial and on appeal whether or not
taxable as costs, or in any bankruptcy proceeding, including, without
limitation, attorneys' fees, witness fees (expert and otherwise), deposition
costs, copying charges and other expenses.
No waiver by Secured Party of an Event of Default shall operate as a waiver
of any other default or of the same default on a future occasion. The taking of
this Security Agreement shall not waive or impair any other security said
Secured Party may have or hereafter acquire for the payment of the Note nor
shall the taking of any such additional security waive or impair this Security
Agreement. Secured Party may resort to any security it may have in the order it
may deem proper.
All rights of Secured Party hereunder shall inure to the benefit of its
successors and assigns. All promises and duties of Debtor shall bind its
successors and assigns.
Any and all notices, elections, demands, or requests permitted or required
to be made under this Security Agreement shall be in writing, signed by the
party giving such notice, election, demand or request, and shall be delivered
personally, by telegram, or sent by registered, certified, or Express United
States mail, postage prepaid, or by Federal Express or similar service requiring
a receipt, to the other party at the address set forth above or to such other
party and at such other address within the United States of America as any party
may designate as provided herein. The date of receipt of such notice, election,
demand or request shall be the earliest of (i) the date of actual receipt, (ii)
three (3) days after the date of mailing by registered or certified mail, (iii)
one (1) day after the date of mailing by Express Mail, or the delivery (for
redelivery) to Federal Express or another similar service requiring a receipt,
or (iv) the date of personal delivery (or refusal upon presentation for
delivery).
This Security Agreement shall be governed and construed in accordance with
the laws of the State of Georgia.
IN WITNESS WHEREOF, Debtor has executed this Security Agreement as of
January , 1997.
--
DEBTOR:
GRAPHIC INDUSTRIES, INC.,
a Georgia corporation
By:
-----------------------------------
Mark C. Pope, III, Chairman & CEO
Attest:
-------------------------------
Donald P. Hunnicutt, Secretary
[SEAL]
Exhibits:
- --------
Exhibit A - Legal Description
Exhibit B - Personal Property
3
<PAGE>
Loan No: 5922696-001
EXHIBIT A
(201 Armour Drive, Atlanta, Georgia)
Legal Description:
- -----------------
<PAGE>
EXHIBIT B
(201 Armour Drive, Atlanta, Georgia)
Secured Party: MetLife Capital Financial Corporation
-----
Debtor: Graphic Industries, Inc.
- ------
Loan No.: 5922696-001
- ---- ---
All right, title, and interest of Debtor in:
1. All buildings, structures, improvements, parking areas, landscaping,
fixtures and articles of property now or hereafter attached to, or used or
adapted for use in the operation of the real estate (herein the "Premises")
described in Exhibit "A" attached to the financing statement or security
agreement with respect to which this Exhibit "B" is attached, including but
without being limited to, all heating, air conditioning, and incinerating
apparatus and equipment; all boilers, engines, motors, dynamos, generating
equipment, piping and plumbing fixtures, water heaters, ranges, cooking
apparatus and mechanical kitchen equipment, refrigerators, freezers, cooling,
ventilating, sprinkling and vacuum cleaning systems, fire extinguishing
apparatus, gas and electric fixtures, carpeting, floor coverings, underpadding,
elevators, escalators, partitions, mantels, built-in mirrors, window shades,
blinds, draperies, screens, storm sash, awnings, signs, furnishings of public
spaces, halls and lobbies, and shrubbery and plants, and including also all
interest of any owner of the Premises in any of such items hereafter at any time
acquired under conditional sale contract, chattel mortgage or other title
retaining or security instrument, all of which property mentioned in this
paragraph 1 shall be referred to as the "Improvements" and shall be deemed part
of the realty and not severable wholly or in part without material injury to the
freehold of the Premises.
2. All compensation, awards, damages, rights of action and proceeds,
including interest thereon and/or the proceeds of any policies of insurance
therefor, arising out of or relating to a (a) taking or damaging of the Premises
or Improvements thereon by reason of any public or private improvement,
condemnation proceeding (including change of grade), sale or transfer in lieu of
condemnation, or fire, earthquake or other casualty, or (b) any injury to or
decrease in the value of the Premises or the Improvements for any reason
whatsoever.
3. Return premiums or other payments upon any insurance any time provided
for the benefit of or naming Secured Party, and refunds or rebates of taxes or
assessments on the Premises.
4. All the right, title and interest of Debtor in and under all written
and oral leases and rental agreements (including extensions, renewals and
subleases; all of the foregoing shall be referred to collectively herein as the
"Leases") now or hereafter affecting the Premises including, without limitation,
all rents, issues, profits and other revenues and income therefrom and from the
renting, leasing or bailment of Improvements and equipment, all guaranties of
tenants' performance under the Leases, and all rights and claims of any kind
that Debtor may have against any tenant under the Leases or in connection with
the termination or rejection of the Leases in a bankruptcy or insolvency
proceeding.
5. Plans, specifications, contracts and agreements relating to the design
or construction of the Improvements; Debtor's rights under any payment,
performance, or other bond in connection with the design or construction of the
Improvements; all landscaping and construction materials, supplies, and
equipment used or to be used or consumed in connection with construction of the
Improvements, whether stored on the Premises or at some other location; and
contracts, agreements, and purchase orders with contractors, subcontractors,
suppliers, and materialmen incidental to the design or construction of the
Improvements.
<PAGE>
6. All contracts (excluding contracts relating to the printing operations
of Southern Signatures, Inc.), rights, claims or causes of action pertaining to
or affecting the Premises or the Improvements, including, without limitation,
all options or contracts to acquire other property for use in connection with
operation or development of the Premises or Improvements, management contracts,
service or supply contracts, permits, licenses, franchises and certificates, and
all commitments or agreements, now or hereafter in existence, intended by the
obligor thereof to provide Debtor with proceeds to satisfy the loan evidenced
hereby or improve the Premises or Improvements, and the right to receive all
proceeds due under such commitments or agreements including refundable deposits
and fees.
7. All books, records, surveys, reports and other documents related to the
Premises, the Improvements, the Leases, or other items of collateral described
herein.
8. All additions, accessions, replacements, substitutions, proceeds and
products of the real and personal property, tangible and intangible, described
herein.
All of the foregoing described collateral is exclusive of any equipment,
furniture, furnishings or trade fixtures owned and supplied by Southern
Signatures, Inc., or by any tenant of the Premises.
<PAGE>
EXHIBIT 10(YYY)
Loan No. 5922796-001
PROMISSORY NOTE
(12201 Old Columbia Pike, Calverton, Maryland)
$2,475,000 January __, 1997
FOR VALUE RECEIVED, GRAPHIC INDUSTRIES, INC., a Georgia corporation
("BORROWER"), promises to pay to the order of MetLife Capital Financial
Corporation ("METLIFE") at METLIFE's office at 10900 N.E. 4th St., Suite 500,
Bellevue, Washington 98004, attention: Real Estate Department, or at such other
address as the holder hereof may from time to time designate in writing, the
principal sum of TWO MILLION FOUR HUNDRED SEVENTY-FIVE THOUSAND DOLLARS
($2,475,000) together with interest from the date the proceeds of the loan (the
"Loan") evidenced by this Promissory Note (this "Note") are initially disbursed
until maturity on the principal balance from time to time remaining unpaid
hereon at the rate of eight and seventy-five hundredths percent (8.75%) per
annum (computed on the basis of a 360-day year of twelve (12) consecutive thirty
(30)-day months) in installments as follows: (i) interest only in advance at
the rate of $601.56 per day shall be due and payable on the date the proceeds of
the Loan are initially disbursed to or for the benefit of BORROWER (including,
without limitation, disbursement into an escrow for the benefit of BORROWER) for
the period beginning on the date of such disbursement and ending on the last day
of the month during which such disbursement occurs; and (ii) one hundred
seventy-nine (179) installments of principal and interest in the amount of
Twenty-Four Thousand Seven Hundred Thirty-Six and thirty-five hundredths Dollars
($24,736.35) each shall be payable commencing on the first day of the second
month following the month in which the proceeds of the loan evidenced by this
Note are initially disbursed and continuing on the first day of each and every
succeeding month until the first day of the one hundred eightieth (180th) month
following the date the proceeds of the Loan are initially disbursed at which
time all then unpaid principal and interest hereon shall be due and payable.
If any payment shall not be paid when due and shall remain unpaid for
ten (10) days, BORROWER shall pay an additional charge equal to five percent
(5.00%) of the delinquent payment or the highest additional charge permitted by
law, whichever is less.
Upon not less than thirty (30) days' advance written notice to METLIFE
at any time after the fifth (5th) anniversary of the due date of the first
monthly principal and interest payment due under this Note, and upon payment of
the Prepayment Premium, BORROWER shall have the right to prepay all, but not
less than all, of the outstanding balance of this Note on any regularly
scheduled principal and interest payment date. The Prepayment Premium shall be
determined by (i) calculating the decrease (expressed in basis points) in the
current weekly average yield of ten (10)-year U.S. Treasury Constant Maturities
(as published in Federal Reserve Statistical Release H.15 [519]) (the "Index")
----------------------------------------------
from November 8, 1996, to the Friday immediately preceding the week in which the
prepayment is made, (ii) dividing the decrease by 100, (iii) multiplying the
result by the following described applicable premium factor (the "Premium
Factor"), and (iv) multiplying the product by the principal balance to be
prepaid. If the Index is unchanged or has increased from November 8, 1996, to
the Friday immediately preceding the prepayment date, no Prepayment Premium
shall be due. The Premium Factor shall be the amount shown on the following
chart for the month in which prepayment occurs:
<TABLE>
<CAPTION>
No. Mos. Premium
Remaining (Years) Factor
--------- --------- -------
<S> <C> <C>
180 - 169 (15) .073
168 - 157 (14) .069
156 - 145 (13) .064
144 - 133 (12) .059
132 - 121 (11) .054
120 - 109 (10) .049
108 - 97 ( 9) .044
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
No. Mos. Premium
Remaining (Years) Factor
--------- --------- -------
<S> <C> <C>
96 - 85 ( 8) .039
84 - 73 ( 7) .035
72 - 61 ( 6) .030
60 - 49 ( 5) .025
48 - 37 ( 4) .020
36 - 25 ( 3) .015
24 - 13 ( 2) .010
12 - 1 ( 1) .005
</TABLE>
If the Federal Reserve Board ceases to publish Statistical Release H.15 [519],
------------------------------
then the decrease in the weekly average yield of ten (10)-year U.S. Treasury
Constant Maturities will be determined from another source designated by
METLIFE. Voluntary prepayment prior to the fifth (5th) anniversary of the due
date of the first monthly principal and interest payment due under this Note
will be permitted only in the event of a sale of the Property (as hereinafter
defined) to a bona-fide third party and only upon payment of the Prepayment
Premium set forth above
If METLIFE at any time accelerates this Note after an Event of Default
(defined below), then BORROWER shall be obligated to pay the Prepayment Premium
in accordance with the foregoing schedule. The Prepayment Premium shall not be
payable with respect to condemnation awards or insurance proceeds from fire or
other casualty which METLIFE applies to prepayment, nor with respect to
BORROWER's prepayment of the Note in full during the last three (3) months of
the term of this Note unless an Event of Default has occurred. BORROWER
expressly acknowledges that such Prepayment Premium is not a penalty but is
intended solely to compensate METLIFE for the loss of its bargain and the
reimbursement of internal expenses and administrative fees and expenses incurred
by METLIFE.
This Note has been guaranteed by Presstar Printing Corporation, a
Maryland corporation ("Guarantor") pursuant to a Guaranty Agreement
("Guaranty")of even date herewith, which is secured by a certain Indemnity Deed
of Trust, Security Agreement, Assignment of Leases and Rents and Fixture Filing
("Deed of Trust") of even date herewith from Guarantor to METLIFE covering
certain real property in Montgomery County, Maryland, described therein (the
"Property"). (The Guaranty, this Note, the Deed of Trust, and all other
documents executed or delivered by BORROWER or Guarantor in connection herewith
are hereinafter referred to herein as the "Loan Documents"). BORROWER shall be
liable on this Note and on all the representations, warranties, indemnities and
covenants in the Loan Documents.
Each of the following shall constitute an Event of Default ("Event of
Default") hereunder and under the Deed of Trust executed contemporaneously
herewith:
(a) Failure of or refusal by BORROWER to make any payment of
principal, interest, or Prepayment Premium upon this Note when due, and such
failure or refusal shall continue for a period of ten (10) days after written
notice is given to BORROWER by METLIFE specifying such failure; or
(b) Failure of Guarantor within the time required by the Deed of Trust
to make any payment for taxes, insurance or for reserves for such payments, or
any other payment necessary to prevent filing of or discharge of any lien, and
such failure shall continue for a period of ten (10) days after written notice
is given to BORROWER by METLIFE specifying such failure; or
(c) Failure by BORROWER or Guarantor to observe or perform any
obligations of BORROWER to METLIFE on or with respect to any transactions,
debts, undertakings or agreements other than the transaction evidenced by this
Note following the giving of any required notice and the expiration of any
applicable period of grace; or
2
<PAGE>
(d) Failure of BORROWER or Guarantor to make any payment or perform
any obligation under any superior liens or encumbrances on the Property, within
the time required thereunder, or commencement of any suit or other action to
foreclose any superior liens or encumbrances; or
(e) Failure by BORROWER to observe or perform any of its obligations
under any of the lease agreements covering the Property; or
(f) The Property is transferred or any agreement to transfer any part
or interest in the Property in any manner whatsoever is made or entered into
without the prior written consent of METLIFE, except as specifically allowed
under the Deed of Trust, including without limitation creating or allowing any
liens on the Property or leasing any portion of the Property; or
(g) Filing by BORROWER or Guarantor of a voluntary petition in
bankruptcy or filing by BORROWER or Guarantor of any petition or answer seeking
or acquiescing in any reorganization, arrangement, composition, readjustment,
liquidation, or similar relief for itself under any present or future federal,
state or other statute, law or regulation relating to bankruptcy, insolvency or
other relief for debtors, or the seeking, consenting to, or acquiescing by
BORROWER or Guarantor in the appointment of any trustee, receiver, custodian,
conservator or liquidator for BORROWER or Guarantor, any part of the Property,
or any of the income or rents of the Property, or the making by BORROWER or
Guarantor of any general assignment for the benefit of creditors, or the
inability of or failure by BORROWER or Guarantor to pay its debts generally as
they become due, or the insolvency on a balance sheet basis or business failure
of BORROWER or Guarantor, or the making or suffering of a preference within the
meaning of federal bankruptcy law or the making of a fraudulent transfer under
applicable federal or state law, or concealment by BORROWER or Guarantor of any
of its property in fraud of creditors, or the imposition of a lien upon any of
the property of BORROWER or Guarantor which is not discharged in the manner
permitted by the Deed of Trust, or the giving of notice by BORROWER or Guarantor
to any governmental body of insolvency or suspension of operations; or
(h) Filing of a petition against BORROWER or Guarantor seeking any
reorganization, arrangement, composition, readjustment, liquidation, or similar
relief under any present or future federal, state or other law or regulation
relating to bankruptcy, insolvency or other relief for debts, or the appointment
of any trustee, receiver, custodian, conservator or liquidator of BORROWER or
Guarantor, of any part of the Property or of any of the income or rents of the
Property, unless such petition shall be dismissed within sixty (60) days after
such filing, but in any event prior to the entry of an order, judgment or decree
approving such petition; or
(i) The institution of any proceeding for the dissolution or
termination of BORROWER voluntarily, involuntarily, or by operation of law; or
(j) A material adverse change occurs in the assets, liabilities or net
worth of BORROWER or Guarantor from the assets, liabilities or net worth of
BORROWER or Guarantor previously disclosed to METLIFE; or
(k) Any warranty, representation or statement furnished to METLIFE by
or on behalf of BORROWER or Guarantor under this Note, the Deed of Trust, or any
of the Loan Documents shall prove to have been false or misleading in any
material respect; or
(l) Failure of BORROWER to observe or perform any other covenant or
condition contained in this Note and such default shall continue for thirty (30)
days after notice is given to BORROWER specifying the nature of the failure. No
notice of default and no opportunity to cure shall be required if during the
prior twelve (12) months METLIFE has already sent a notice to BORROWER
concerning default in performance of the same obligation; or
3
<PAGE>
(m) Failure of BORROWER to observe or perform any other obligation
under the Deed of Trust or any other Loan Document when such observance or
performance is due, and such failure shall continue beyond the applicable cure
period set forth in such Loan Document, or if the default cannot be cured within
such applicable cure period, BORROWER fails within such time to commence and
pursue curative action with reasonable diligence or fails at any time after
expiration of such applicable cure period to continue with reasonable diligence
all necessary curative actions. No notice of default and no opportunity to cure
shall be required if during the prior twelve (12) months METLIFE has already
sent a notice to BORROWER concerning default in performance of the same
obligation; or
(n) Guarantor's abandonment of the Property; or
(o) Any of the foregoing events occur with respect to any tenant of
the Property, with respect to Guarantor or with respect to any guarantor of any
tenant's obligations relating to the Property, or such guarantor dies or becomes
incompetent; or
(p) The occurrence of any default under any of the documents
evidencing or securing (i) METLIFE Loan No. 5905292, (ii) METLIFE Loan No.
5905392, (iii) METLIFE Loan No. 5903393, (iv) METLIFE Loan No. 5904594, (v)
METLIFE Loan No. 5909794, (vi) METLIFE Loan No. 5922696, (vii) METLIFE Loan No.
5922896, or (viii) any other indebtedness with Borrower or Guarantor which is
now or hereafter owed to METLIFE.
Upon the occurrence of any of the foregoing events of default, METLIFE
shall have the option to declare the entire amount of principal and interest due
under this Note immediately due and payable without notice or demand, and
METLIFE may exercise any of its rights under this Note and any document executed
or delivered herewith. After acceleration or maturity, BORROWER shall pay
interest on the outstanding principal balance of this Note at the rate of five
percent (5.00%) per annum above Chase Manhattan Bank's prime interest rate in
effect from time to time, or fifteen percent (15.00%) per annum, whichever is
higher, provided that such interest rate shall not exceed the maximum interest
rate permitted by law.
All payments of the principal and interest on this Note shall be made
in coin or currency of the United States of America which at the time shall be
the legal tender for the payment of public and private debts.
If this Note is placed in the hands of an attorney for collection,
BORROWER agrees to pay reasonable attorneys' fees and costs incurred by METLIFE
in connection therewith, and in the event suit or action is instituted to
enforce or interpret this Note (including without limitation efforts to modify
or vacate any automatic stay or injunction), the prevailing party shall be
entitled to recover all expenses reasonably incurred at, before or after trial
and on appeal, whether or not taxable as costs, or in any bankruptcy proceeding,
or in connection with post-judgment collection efforts, including, without
limitation, attorneys' fees, witness fees (expert and otherwise), deposition
costs, copying charges and other expenses.
This Note shall be governed and construed in accordance with the laws
of the State of Maryland applicable to contracts made and to be performed
therein (excluding choice-of-law principles). BORROWER hereby irrevocably
submits to the jurisdiction of any state or federal court sitting in Maryland in
any action or proceeding brought to enforce or otherwise arising out of or
relating to this Note, and hereby waives any objection to venue in any such
court and any claim that such forum is an inconvenient forum.
This Note is given in a commercial transaction for business purposes.
This Note may be declared due prior to its expressed maturity date,
all in the events, on the terms, and in the manner provided for in the Deed of
Trust.
BORROWER, Guarantor, and all sureties, endorsers, guarantors and
other parties now or hereafter liable for the payment of this Note, in whole or
in part, hereby severally (i) waive demand, notice of demand,
4
<PAGE>
presentment for payment, notice of nonpayment, notice of default, protest,
notice of protest, notice of intent to accelerate, notice of acceleration and
all other notices, and further waive diligence in collecting this Note or in
enforcing any of the security for this Note; (ii) agree to any substitution,
subordination, exchange or release of any security for this Note or the release
of any party primarily or secondarily liable for the payment of this Note;
(iii) agree that METLIFE shall not be required to first institute suit or
exhaust its remedies hereon against BORROWER or others liable or to become
liable for the payment of this Note or to enforce its rights against any
security for the payment of this Note; and (iv) consent to any extension of time
for the payment of this Note, or any installment hereof, made by agreement by
METLIFE with any person now or hereafter liable for the payment of this Note,
even if BORROWER is not a party to such agreement.
All agreements between BORROWER and METLIFE, whether now existing or
hereafter arising and whether written or oral, are hereby limited so that in no
contingency, whether by reason of demand or acceleration of the final maturity
of this Note or otherwise, shall the interest contracted for, charged, received,
paid or agreed to be paid to METLIFE exceed the maximum amount permissible under
the applicable law. If, from any circumstance whatsoever, interest would
otherwise be payable to METLIFE in excess of the maximum amount permissible
under applicable law, the interest payable to METLIFE shall be reduced to the
maximum amount permissible under applicable law; and if from any circumstance
METLIFE shall ever receive anything of value deemed interest by applicable law
in excess of the maximum amount permissible under applicable law, an amount
equal to the excessive interest or if such excessive amount of interest exceeds
the unpaid balance of principal hereof, such excess shall be refunded to
BORROWER. All interest paid or agreed to be paid to METLIFE shall, to the
extent permitted by applicable law, be amortized, prorated, allocated, and
spread throughout the full period (including any renewal or extension) until
payment in full of the principal so that the interest hereon for such full
period shall not exceed the maximum amount permissible under applicable law.
METLIFE expressly disavows any intent to contract for, charge or receive
interest in an amount which exceeds the maximum amount permissible under
applicable law. This paragraph shall control all agreements between BORROWER
and METLIFE.
IMPORTANT: READ BEFORE SIGNING. THE TERMS OF THIS AGREEMENT SHOULD
BE READ CAREFULLY BECAUSE ONLY THOSE TERMS IN WRITING ARE ENFORCEABLE.
NO OTHER TERMS OR ORAL PROMISES NOT CONTAINED IN THIS WRITTEN CONTRACT
MAY BE LEGALLY ENFORCED. YOU MAY CHANGE THE TERMS OF THIS AGREEMENT
ONLY BY ANOTHER WRITTEN AGREEMENT.
IN WITNESS WHEREOF, BORROWER has caused this Note to be executed by
its duly authorized officers as of the year and day first written above.
BORROWER:
GRAPHIC INDUSTRIES, INC.,
a Georgia corporation
By:____________________________________
Mark C. Pope, III, Chairman & CEO
Attest:_______________________________
Donald P. Hunnicutt, Secretary
[SEAL]
5
<PAGE>
INDEMNITY DEED OF TRUST, SECURITY AGREEMENT,
ASSIGNMENT OF LEASES AND RENTS,
AND FIXTURE FILING
Grantor's Name & Address: PRESSTAR PRINTING CORPORATION,
formerly known as Presstar Acquisition Corporation
12201 Old Columbia Pike
Silver Spring, Maryland 20904
Trustees: DOROTHEA S. COSTRINI
Hunter, Maclean, Exley & Dunn, P.C.
200 East Saint Julian Street
Savannah, Georgia 31401
and
DOROTHEA W. DICKERMAN
1701 Pennsylvania Avenue, N.W.
Suite 200
Washington, D.C. 20006
Noteholder: METLIFE CAPITAL FINANCIAL CORPORATION
10900 Northeast Fourth Street
Suite 500
Bellevue, Washington 98004
January __, 1997
THIS INSTRUMENT IS ALSO TO BE INDEXED IN THE INDEX OF FINANCING STATEMENTS.
THIS DEED OF TRUST, SECURITY AGREEMENT, ASSIGNMENT OF LEASES AND RENTS, AND
FIXTURE FILING DEED COVERS GOODS WHICH ARE OR ARE TO BECOME FIXTURES ON THE REAL
PROPERTY DESCRIBED HEREIN. THE GUARANTOR/DEBTOR HEREUNDER IS THE RECORD OWNER
OF THE REAL PROPERTY.
THE NAMES OF THE "DEBTOR" AND THE "SECURED PARTY", THE MAILING ADDRESS OF THE
"SECURED PARTY" FROM WHICH INFORMATION CONCERNING THE SECURITY INTEREST MAY BE
OBTAINED, THE MAILING ADDRESSES OF THE "DEBTOR" AND A STATEMENT INDICATING THE
TYPES, OR DESCRIBING THE ITEMS, OF COLLATERAL ARE AS DESCRIBED IN ARTICLE III
BELOW, IN COMPLIANCE WITH THE REQUIREMENTS OF ARTICLE 9, SECTION 402 OF THE
UNIFORM COMMERCIAL CODE.
NOTICE: THE DEBT SECURED HEREBY IS SUBJECT TO CALL IN FULL OR THE TERMS THEREOF
BEING MODIFIED IN THE EVENT OF SALE OR CONVEYANCE OF THE PROPERTY HEREIN
CONVEYED.
Parcel Identifier: 258836
County Tax Account Number: 258836
Prepared by, recording requested by,
Street and when recorded, return to:
Address: 12201 Old Columbia Pike
Calverton, Maryland
MetLife Capital Financial Corporation
Title 10900 Northeast Fourth Street, Suite 500
Insurer: Industrial Valley Bellevue, Washington 98004
Title Insurance Company Loan Number: 5922796-001
<PAGE>
THIS INDEMNITY DEED OF TRUST, SECURITY AGREEMENT, ASSIGNMENT OF LEASES
AND RENTS, AND FIXTURE FILING (herein "Deed of Trust") is made as of January __,
1997, by the Trustor, PRESSTAR PRINTING CORPORATION, a Maryland corporation
-----------------------------
formerly known as Presstar Acquisition Corporation, whose address is 12201 Old
Columbia Pike, Silver Spring, Maryland 20904 (herein "Guarantor"), in favor of
DOROTHEA S. COSTRINI, whose address is 200 East Saint Julian Street, Savannah,
--------
Georgia 31401, and DOROTHEA W. DICKERMAN, whose address is 1701 Pennsylvania
---------
Avenue, N.W., Suite 200, Washington, D.C. 20006, as Trustees, individually and
collectively ("Trustee"), for the benefit of the Beneficiary, METLIFE CAPITAL
---------------
FINANCIAL CORPORATION, a Delaware corporation, whose address is Real Estate
- ---------------------
Department, 10900 N.E. 4th Street, Suite 500, Bellevue, Washington 98004
(herein "METLIFE"), with reference to the recitals hereinafter set forth.
R E C I T A L S :
- - - - - - - -
A. Guarantor is the owner and occupant of the "Premises" (as defined
below). Guarantor is also a wholly-owned subsidiary of Graphic Industries,
Inc., a Georgia corporation ("Borrower").
B. METLIFE has made to Borrower a certain loan evidenced by a
Promissory Note of even date herewith, in the principal sum of Two Million Four
Hundred Seventy-Five Thousand ($2,475,000).
Guarantor, in consideration of the indebtedness herein recited does
hereby bargain, sell, transfer, assign, grant, and convey toTrustee, for the
benefit of METLIFE and its successors and assigns, WITH POWER OF SALE all of
Guarantor's right, title and interest, now owned or hereafter acquired,
including any reversion or remainder interest, in the real property located in
Calverton, Montgomery County, Maryland, commonly known as 12201 Old Columbia
Pike, and more particularly described on Exhibit A attached hereto and
---------
incorporated herein including all heretofore or hereafter vacated alleys and
streets abutting the property, and all easements, rights, appurtenances,
tenements, hereditaments, rents, royalties, mineral, oil and gas rights and
profits, water, water rights, and water stock appurtenant to the property
(collectively "Premises");
TOGETHER with all of Guarantor's estate, right, title and interest,
now owned or hereafter acquired, in:
(a) all buildings, structures, improvements, parking areas,
landscaping, fixtures and articles of property now or hereafter erected on,
attached to, or used or adapted for use in the operation of the Premises;
including but without being limited to, all heating, air conditioning and
incinerating apparatus and equipment; all boilers, engines, motors, dynamos,
generating equipment, piping and plumbing fixtures, water heaters, ranges,
cooking apparatus and mechanical kitchen equipment, refrigerators, freezers,
cooling, ventilating, sprinkling and vacuum cleaning systems, fire extinguishing
apparatus, gas and electric fixtures, carpeting, floor coverings, underpadding,
elevators, escalators, partitions, mantels, built-in mirrors, window shades,
blinds, draperies, screens, storm sash, awnings, signs, furnishings of public
spaces, halls and lobbies, and shrubbery and plants, and including also all
interest of any owner of the Premises in any of such items hereafter at any time
acquired under conditional sale contract, chattel mortgage or other title
retaining or security deed, all of which property mentioned in this clause (a)
shall be deemed part of the realty covered by this Deed of Trust and not
severable wholly or in part without material injury to the freehold of the
Premises (all of the foregoing together with replacements and additions thereto
are referred to herein as "Improvements"); and
(b) all compensation, awards, damages, rights of action and proceeds,
including interest thereon and/or the proceeds of any policies of insurance
therefor, arising out of or relating to a (i) taking or damaging of the Premises
or Improvements thereon by reason of any public or private improvement,
condemnation proceeding (including change of grade), sale or transfer in lieu of
condemnation, or fire, earthquake or other casualty, or (ii) any injury to or
decrease in the value of the Premises or the Improvements for any reason
whatsoever;
<PAGE>
(c) return premiums or other payments upon any insurance any time
provided for the benefit of or naming METLIFE, and refunds or rebates of taxes
or assessments on the Premises;
(d) all written and oral leases and rental agreements (including
extensions, renewals and subleases and all usufructuary interest; all of the
foregoing shall be referred to collectively herein as the "Leases") now or
hereafter affecting the Premises including, without limitation, all rents,
issues, profits and other revenues and income therefrom and from the renting,
leasing or bailment of Improvements and equipment, all guaranties of tenants'
performance under the Leases, and all rights and claims of any kind that
Guarantor may have against any tenant under the Leases or in connection with the
termination or rejection of the Leases in a bankruptcy or insolvency proceeding;
(e) plans, specifications, contracts and agreements relating to the
design or construction of the Improvements; Guarantor's rights under any
payment, performance, or other bond in connection with the design or
construction of the Improvements; all landscaping and construction materials,
supplies, and equipment used or to be used or consumed in connection with
construction of the Improvements, whether stored on the Premises or at some
other location; and contracts, agreements, and purchase orders with contractors,
subcontractors, suppliers, and materialmen incidental to the design or
construction of the Improvements;
(f) all contracts (excluding contracts relating to the printing
operations of Guarantor, rights, claims or causes of action pertaining to or
affecting the Premises or the Improvements, including, without limitation, all
options or contracts to acquire other property for use in connection with
operation or development of the Premises or Improvements, management contracts,
service or supply contracts, permits, licenses, franchises and certificates, and
all commitments or agreements, now or hereafter in existence, intended by the
obligor thereof to provide Guarantor with proceeds to satisfy the loan evidenced
hereby or improve the Premises or Improvements, and the right to receive all
proceeds due under such commitments or agreements including refundable deposits
and fees;
(g) all books, records, surveys, reports and other documents related
to the Premises, the Improvements, the Leases, or other items of collateral
described herein; and
(h) all additions, accessions, replacements, substitutions, proceeds
and products of the real and personal property, tangible and intangible,
described herein.
(All of the foregoing described collateral is exclusive of any equipment,
furniture, furnishings or trade fixtures owned and supplied by Guarantor or
tenants of the Premises. The Premises, the Improvements, the Leases and all of
the rest of the foregoing property are herein referred to as the "Property.")
TO HAVE AND TO HOLD the Property and all parts, rights, members, and
apurtenances thereof to the use, benefit, and behoof of Trustee for the benefit
of METLIFE and its successors and assigns in fee simple forever.
BUT THIS IS A TRUST DEED.
This Deed of Trust is made to secure METLIFE (a) the repayment of the
indebtedness evidenced by Borrower's Promissory Note (the "Note") dated of even
date herewith in the principal sum of TWO MILLION FOUR HUNDRED SEVENTY-FIVE
HUNDRED THOUSAND DOLLARS ($2,475,000), with interest thereon at the rate of
eight and seventy-five hundred hundredths percent (8.75%) per annum, having a
maturity date of March 1, 2012, and all renewals, extensions and modifications
thereof; (b) the repayment of any future advances, with interest thereon, made
by METLIFE to Guarantor pursuant to Section 28 hereof (herein "Future
----------
Advances"); (c) the payment of all other sums, with interest thereon, advanced
in accordance herewith to protect the security of this Deed of Trust or to
fulfill any of Guarantor's obligations hereunder or under the other Loan
Documents (as defined below);
2
<PAGE>
(d) the performance of the covenants and agreements of Guarantor contained
herein or in the other Loan Documents; and (e) the repayment of all sums now or
hereafter owing to METLIFE by Guarantor pursuant to any instrument which recites
that it is secured hereby. The indebtedness and obligations described in clauses
(a)-(e) above are collectively referred to herein as the "Indebtedness." The
Note, this Deed of Trust, and all other documents evidencing, securing or
guaranteeing the Indebtedness (except any Certificate and Indemnity Agreement
Regarding Hazardous Substances), as the same may be modified or amended from
time to time, are referred to herein as the "Loan Documents." The terms of the
Note secured hereby may provide that the interest rate or payment terms or
balance due may be indexed, adjusted, renewed, or renegotiated from time to
time, and this Deed of Trust shall continue to secure the Note notwithstanding
any such indexing, adjustment, renewal or renegotiation.
Should the indebtedness be paid according to the tenor and effect
thereof where the same shall become due and payable, and should Guarantor
perform all covenants herein contained in a timely manner, then this Deed of
Trust is satisfied, and METLIFE shall execute a proper cancellation at the
expense of Guarantor.
This conveyance is intended to constitute a security agreement as
required under the Uniform Commercial Code as enacted in the State of Maryland.
Debtor's and Secured Party's addresses and the location of the collateral are
set forth on Schedule 1 attached hereto.
----------
Guarantor represents and warrants that Guarantor has good, marketable
and insurable title to, and has the right to mortgage an indefeasible fee simple
estate in, the Premises, Improvements, rents, and leases and the right to convey
the other Property, that the Property is unencumbered except as disclosed in
writing to and approved by METLIFE prior to the date hereof, and that Guarantor
will warrant and forever defend the title to the Property against all claims and
demands, subject only to the permitted exceptions set forth in Schedule 2
----------
attached hereto.
Guarantor represents, warrants, covenants and agrees for the benefit
of METLIFE as follows:
1. PAYMENT OF PRINCIPAL AND INTEREST. Guarantor shall promptly pay
---------------------------------
when due all sums due under the Guaranty and all other sums secured by this Deed
of Trust.
2. FUNDS FOR TAXES, INSURANCE AND OTHER CHARGES. Upon the occurrence
--------------------------------------------
of an Event of Default (hereinafter defined), and at METLIFE's sole option at
any time thereafter, Guarantor shall pay in addition to each monthly payment on
the Note, one-twelfth of the annual real estate taxes, insurance premiums,
assessments, water and sewer rates, ground rents and other charges (herein
"Impositions") payable with respect to the Property (as estimated by METLIFE in
its sole discretion), to be held by METLIFE without interest to Guarantor, for
the payment of such obligations.
If the amount of such additional payments held by METLIFE ("Funds") at
the time of the annual accounting thereof shall exceed the amount deemed
necessary by METLIFE to provide for the payment of Impositions as they fall due,
such excess shall be at Guarantor's option, either repaid to Guarantor or
credited to Guarantor on the next monthly installment or installments of Funds
due. If at any time the amount of the Funds held by METLIFE shall be less than
the amount deemed necessary by METLIFE to pay Impositions as they fall due,
Guarantor shall pay to METLIFE any amount necessary to make up the deficiency
within thirty (30) days after notice from METLIFE to Guarantor requesting
payment thereof.
Upon the occurrence of an Event of Default, METLIFE may apply, in any
amount and in any order as METLIFE shall determine in METLIFE's sole discretion,
any Funds held by METLIFE at the time of application (i) to pay Impositions
which are now or will hereafter become due, or (ii) as a credit against sums
secured by this Deed of Trust. Upon payment in full of all sums secured by this
Deed of Trust, METLIFE shall refund to Guarantor any Funds held by METLIFE.
3. APPLICATION OF PAYMENTS. Unless applicable law provides
-----------------------
otherwise, each complete installment payment received by METLIFE under the Note
or this Deed of Trust shall be applied by
3
<PAGE>
METLIFE first in payment of amounts payable to METLIFE by Guarantor under
Section 2 hereof, then to interest payable on the Note, then to principal of the
- ---------
Note, and then to interest and principal on any Future Advances in such order as
METLIFE, at METLIFE's sole discretion, shall determine. Upon the occurrence of
an Event of Default, METLIFE may apply, in any amount and in any order as
METLIFE shall determine in METLIFE's sole discretion, any payments received by
METLIFE under the Note or this Deed of Trust. Any partial payment received by
METLIFE shall, at METLIFE's option, be held in a non-interest bearing account
until METLIFE receives funds sufficient to equal a complete installment payment.
4. CHARGES, LIENS. Guarantor shall pay all Impositions attributable
--------------
to the Property in the manner provided under Section 2 hereof or, if not paid in
---------
such manner, by Guarantor making payment, when due, directly to the payee
thereof, or in such other manner as METLIFE may designate in writing. If
requested by METLIFE, Guarantor shall promptly furnish to METLIFE all notices of
Impositions which become due, and in the event Guarantor shall make payment
directly, Guarantor shall promptly furnish to METLIFE receipts evidencing such
payments. Guarantor shall promptly discharge any lien which has, or may have,
priority over or equality with, the lien of this Deed of Trust, and Guarantor
shall pay, when due, the claims of all persons supplying labor or materials to
or in connection with the Property. Without METLIFE's prior written permission,
Guarantor shall not allow any lien inferior to this Deed of Trust to be
perfected against the Property. If any lien inferior to this Deed of Trust is
filed against the Property without METLIFE's prior written permission and
without the consent of Guarantor, Guarantor shall, within thirty (30) days after
receiving notice of the filing of such lien, cause such lien to be released of
record and deliver evidence of such release to METLIFE.
5. INSURANCE. Guarantor shall obtain and maintain the following
---------
types of insurance upon and relating to the Property:
(a) "All Risk" property and fire insurance (with extended coverage
endorsement including malicious mischief and vandalism) in an amount not less
than the lesser of the outstanding principal balance of the Note or the full
replacement value of the Property (with a deductible not to exceed $25,000 and
with co-insurance limited to a maximum of 10% of the amount of the policy),
naming METLIFE under a lender's loss payee endorsement (form 438BFU or
equivalent) and including agreed amount, inflation guard, replacement cost and
waiver of subrogation endorsements;
(b) Comprehensive general liability insurance in an amount not less
than $1,000,000 per occurrence and $2,000,000 in the aggregate insuring against
personal injury, death and property damage and naming METLIFE as additional
insured;
(c) Business interruption insurance covering loss of rental or other
income (including all expenses payable by tenants) for up to six (6) months; and
(d) Such other types of insurance or endorsements to existing
insurance as may be required from time to time by METLIFE.
Upon the request of METLIFE, Guarantor shall increase the coverages
under any of the insurance policies required to be maintained hereunder or
otherwise modify such policies in accordance with METLIFE's request. All of the
insurance policies required hereunder shall be issued by corporate insurers
licensed to do business in the state in which the Property is located and rated
A:X or better by A.M. Best Company, and shall be in form acceptable to METLIFE.
If and to the extent that the Property is located within an area that has been
or is hereafter designated or identified as an area having special flood hazards
by the Department of Housing and Urban Development or such other official as
shall from time to time be authorized by federal or state law to make such
designation pursuant to any national or state program of flood insurance,
Guarantor shall carry flood insurance with respect to the Property in amounts
not less than the maximum limit of coverage then available with respect to the
Property or the amount of the Indebtedness, whichever is less. Certificates of
all insurance required to be maintained hereunder shall be delivered to METLIFE,
along with evidence of payment in full of all premiums required
4
<PAGE>
thereunder, contemporaneously with Guarantor's execution of this Deed of Trust.
All such certificates shall be in form acceptable to METLIFE and shall require
the insurance company to give to METLIFE at least thirty (30) days' prior
written notice before canceling the policy for any reason or materially amending
it. Certificates evidencing all renewal and substitute policies of insurance
shall be delivered to METLIFE, along with evidence of the payment in full of all
premiums required thereunder, at least fifteen (15) days before termination of
the policies being renewed or substituted. If any loss shall occur at any time
when Guarantor shall be in default hereunder, METLIFE shall be entitled to the
benefit of all insurance policies held or maintained by Guarantor, to the same
extent as if same had been made payable to METLIFE, and upon foreclosure
hereunder, METLIFE shall become the owner thereof. METLIFE shall have the right,
but not the obligation, to make premium payments, at Guarantor's expense, to
prevent any cancellation, endorsement, alteration or reissuance of any policy of
insurance maintained by Guarantor, and such payments shall be accepted by the
insurer to prevent same.
If any act or occurrence of any kind or nature (including any casualty
for which insurance was not obtained or obtainable) shall result in damage to or
destruction of the Property (such event being called a "Loss"), Guarantor will
give prompt written notice thereof to METLIFE. All insurance proceeds paid or
payable in connection with any Loss shall be paid to METLIFE. If (i) no Event
of Default has occurred and is continuing hereunder, (ii) Guarantor provides
evidence satisfactory to METLIFE of its ability to pay all amounts becoming due
under the Note during the pendency of any restoration or repairs to or
replacement of the Property, (iii) the available insurance proceeds are, in
METLIFE's judgment, sufficient to fully and completely restore, repair or
replace the Property, and (iv) Guarantor provides evidence satisfactory to
METLIFE that none of the tenants of the Property will terminate their lease
agreements as a result of either the Loss or the repairs to or replacement of
the Property, Guarantor shall have the right to apply all insurance proceeds
received in connection with such Loss either (a) to restore, repair, replace and
rebuild the Property as nearly as possible to its value, condition and character
immediately prior to such Loss, or (b) to the payment of the Indebtedness in
such order as METLIFE may elect. If an Event of Default has occurred and is
continuing hereunder at the time of such Loss, if METLIFE determines that
Guarantor will be unable to pay all amounts becoming due under the Note during
the pendency of any restoration or repairs to or replacement of the Property, if
the available insurance proceeds are insufficient, in METLIFE's judgment, to
fully and completely restore, repair or replace the Property or if METLIFE
believes that one or more tenants of the Property will terminate their lease
agreements as a result of either the Loss or the repairs to or replacement of
the Property, then all of the insurance proceeds payable with respect to such
Loss will be applied to the payment of the Indebtedness, or if so instructed by
METLIFE, Guarantor will promptly, at Guarantor's sole cost and expense and
regardless of whether sufficient insurance proceeds shall be available, commence
to restore, repair, replace and rebuild the Property as nearly as possible to
its value, condition, character immediately prior to such Loss. Guarantor shall
diligently prosecute any restoration, repairs or replacement of the Property
undertaken by or on behalf of Guarantor pursuant to this Section 5. All such
----------
work shall be conducted pursuant to written contracts approved by METLIFE in
writing. Notwithstanding anything contained herein to the contrary, in the
event the insurance proceeds received by METLIFE following any Loss are
insufficient in METLIFE's judgment to fully and completely restore, repair or
replace the Property, and if Guarantor has complied with all of the other
conditions described in this Section 5, Guarantor may elect to restore, repair
---------
or replace the Property if it first deposits with METLIFE such additional sums
as METLIFE determines are necessary in order to fully and completely restore,
repair or replace the Property. In the event any insurance proceeds remain
following the restoration, repair or replacement of the Property, such proceeds
shall be applied to the Indebtedness in such order as METLIFE may elect.
6. PRESERVATION AND MAINTENANCE OF PROPERTY. Guarantor (a) shall not
----------------------------------------
commit waste or permit impairment or deterioration of the Property, (b) shall
not abandon the Property, (c) shall restore or repair promptly and in a good and
workmanlike manner all or any part of the Property to the equivalent of its
original condition, or such other condition as METLIFE may approve in writing,
in the event of any damage, injury or loss thereto, whether or not insurance
proceeds are available to cover in whole or in part the costs of such
restoration or repair, (d) shall keep the Property, including all improvements,
fixtures, equipment, machinery and appliances thereon, in good repair and shall
replace fixtures, equipment, machinery and appliances on the Property when
necessary to keep such items in good repair, (e) shall comply with all laws,
ordinances, regulations and requirements of any governmental body applicable to
the Property, (f) if all or part of the Property is for rent or
5
<PAGE>
lease, then METLIFE, at its option after the occurrence of an Event of Default,
may require Guarantor to provide for professional management of the Property by
a property manager satisfactory to METLIFE pursuant to a contract approved by
METLIFE in writing, unless such requirement shall be waived by METLIFE in
writing, (g) shall generally operate and maintain the Property in a manner to
ensure maximum rentals, and (h) shall give notice in writing to METLIFE of and,
unless otherwise directed in writing by METLIFE, appear in and defend any action
or proceeding purporting to affect the Property, the security of this Deed of
Trust or the rights or powers of METLIFE hereunder. Neither Guarantor nor any
tenant or other person, without the written approval of METLIFE, shall remove,
demolish or alter any improvement now existing or hereafter erected on the
Property or any fixture, equipment, machinery or appliance in or on the Property
except when incident to the replacement of fixtures, equipment, machinery and
appliances with items of like kind.
Guarantor represents, warrants and covenants that the Property is and
shall be in compliance with the Americans with Disabilities Act of 1990 and all
of the regulations promulgated thereunder, as the same may be amended from time
to time.
7. USE OF PROPERTY. Unless required by applicable law or unless
---------------
METLIFE has otherwise agreed in writing, Guarantor shall not allow changes in
the use for which all or any part of the Property was intended at the time this
Deed of Trust was executed. Guarantor shall not, without METLIFE's prior
written consent, (i) initiate or acquiesce in a change in the zoning
classification (including any variance under any existing zoning ordinance
applicable to the Property), (ii) permit the use of the Property to become a
non-conforming use under applicable zoning ordinances, (iii) file any
subdivision or parcel map affecting the Property, or (iv) amend, modify or
consent to any easement or covenants, conditions and restrictions pertaining to
the Property.
8. PROTECTION OF METLIFE'S SECURITY. If Guarantor fails to perform
--------------------------------
any of the covenants and agreements contained in this Deed of Trust, or if any
action or proceeding is commenced which affects the Property or title thereto or
the interest of METLIFE therein, including, but not limited to, eminent domain,
insolvency, code enforcement, or arrangements or proceedings involving a
bankrupt or decedent, then METLIFE at METLIFE's option may make such
appearances, disburse such sums and take such action as METLIFE deems necessary,
in its sole discretion, to protect METLIFE's interest, including, but not
limited to, (i) disbursement of attorneys' fees, (ii) entry upon the Property to
make repairs, and (iii) procurement of satisfactory insurance as provided in
Section 5 hereof.
- ---------
Any amounts disbursed by METLIFE pursuant to this Section 8, with
---------
interest thereon, shall become additional Indebtedness of Guarantor secured by
this Deed of Trust. Unless Guarantor and METLIFE agree to other terms of
payment, such amounts shall be immediately due and payable and shall bear
interest from the date of disbursement at the highest rate which may be
collected from Guarantor under applicable law or, at METLIFE's option, the rate
stated in the Note. Guarantor hereby covenants and agrees that METLIFE shall be
subrogated to the lien of any mortgage or other lien discharged, in whole or in
part, by the Indebtedness. Nothing contained in this Section 8 shall require
---------
METLIFE to incur any expense or take any action hereunder.
9. INSPECTION. METLIFE may make or cause to be made reasonable
----------
entries upon the Property to inspect the interior and exterior thereof.
10. FINANCIAL DATA. Guarantor will furnish to METLIFE within one
--------------
hundred twenty (120) days after the close of its fiscal year (i) current
financial statements of Borrower, including a balance sheet and profit and loss
statements prepared in accordance with generally accepted accounting principles
and practices consistently applied and, if METLIFE so requires, accompanied by
the annual audit report of an independent certified public accountant reasonably
acceptable to METLIFE, (ii) if requested by METLIFE, an annual operating
statement, together with other supporting data reflecting all material
information with respect to the operation of the Property and Improvements
during the period covered thereby, and (iii) all other financial information and
reports that METLIFE may from time to time reasonably request.
6
<PAGE>
11. CONDEMNATION. If the Property, or any part thereof, shall be
------------
condemned for any reason, including without limitation fire or earthquake
damage, or otherwise taken for public or quasi-public use under the power of
eminent domain, or be transferred in lieu thereof, all damages or other amounts
awarded for the taking of, or injury to, the Property shall be paid to METLIFE
who shall have the right, in its sole and absolute discretion, to apply the
amounts so received against (a) the costs and expenses of METLIFE, including
reasonable attorneys' fees incurred in connection with collection of such
amounts, and (b) the balance against the Indebtedness; provided, however, that
if (i) no Event of Default shall have occurred and be continuing hereunder,
(ii) Guarantor provides evidence satisfactory to METLIFE of its ability to pay
all amounts becoming due under the Note during the pendency of any restoration
or repairs to or replacement of the Property, (iii) METLIFE determines, in its
sole discretion, that the proceeds of such award are sufficient to restore,
repair, replace and rebuild the Property as nearly as possible to its value,
condition and character immediately prior to such taking (or, if the proceeds of
such award are insufficient for such purpose, if Guarantor provides additional
sums to METLIFE's satisfaction so that the aggregate of such sums and the
proceeds of such award will be sufficient for such purpose), and (iv) Guarantor
provides evidence satisfactory to METLIFE that none of the tenants of the
Property will terminate their lease agreements as a result of either the
condemnation or taking or the repairs to or replacement of the Property, the
proceeds of such award, together with additional sums provided by Guarantor,
shall be placed in a separate account for the benefit of METLIFE and Guarantor
to be used to restore, repair, replace and rebuild the Property as nearly as
possible to its value, condition and character immediately prior to such taking.
All work to be performed in connection therewith shall be pursuant to a written
contract therefor, which contract shall be subject to the prior approval of
METLIFE. To the extent that any funds remain after the Property has been so
restored and repaired, the same shall be applied against the Indebtedness in
such order as METLIFE may elect. To enforce its rights hereunder, METLIFE shall
be entitled to participate in and control any condemnation proceedings and to be
represented therein by counsel of its own choice, and Guarantor will deliver, or
cause to be delivered to METLIFE such instruments as may be requested by it from
time to time to permit such participation. In the event METLIFE, as a result of
any such judgment, decree or award, believes that the payment or performance of
any of the Indebtedness is impaired, METLIFE may declare all of the Indebtedness
immediately due and payable.
12. GUARANTOR AND LIEN NOT RELEASED. From time to time, METLIFE may,
-------------------------------
at METLIFE's option, without giving notice to or obtaining the consent of
Guarantor, Guarantor's successors or assigns or of any junior lienholder or
guarantors, without liability on METLIFE's part and notwithstanding Guarantor's
breach of any covenant or agreement of Guarantor in this Deed of Trust, extend
the time for payment of the Indebtedness or any part thereof, reduce the
payments thereon, release anyone liable on any of the Indebtedness, accept an
extension or modification or renewal note or notes therefor, modify the terms
and time of payment of the Indebtedness, release from the lien of this Deed of
Trust any part of the Property, take or release other or additional security,
reconvey any part of the Property, consent to any map or plan of the Property,
consent to the granting of any easement, join in any extension or subordination
agreement, and agree in writing with Guarantor to modify the rate of interest or
period of amortization of the Note or change the amount of the monthly
installments payable thereunder. Any actions taken by METLIFE pursuant to the
terms of this Section 12 shall not affect the obligation of Guarantor or
----------
Guarantor's successors or assigns to pay the sums secured by this Deed of Trust
and to observe the covenants of Guarantor contained herein, shall not affect the
guaranty of any person, corporation, partnership or other entity for payment of
the Indebtedness, and shall not affect the lien or priority of the lien hereof
on the Property. Guarantor shall pay METLIFE a service charge, together with
such title insurance premiums and attorneys' fees as may be incurred at
METLIFE's option, for any such action if taken at Guarantor's request.
13. FORBEARANCE BY METLIFE NOT A WAIVER. Any forbearance by METLIFE
-----------------------------------
in exercising any right or remedy hereunder, or otherwise afforded by applicable
law, shall not be a waiver of or preclude the exercise of any other right or
remedy. The acceptance by METLIFE of payment of any sum secured by this Deed of
Trust after the due date of such payment shall not be a waiver of METLIFE's
right to either require prompt payment when due of all other sums so secured or
to declare a default for failure to make prompt payment. The procurement of
insurance or the payment of taxes or other liens or charges by METLIFE shall not
be a waiver of METLIFE's right to accelerate the maturity of the Indebtedness
secured by this Deed of Trust, nor shall
7
<PAGE>
METLIFE's receipt of any awards, proceeds or damages under Sections 5 and 11
-----------------
hereof operate to cure or waive Guarantor's default in payment of sums secured
by this Deed of Trust.
14. UNIFORM COMMERCIAL CODE SECURITY AGREEMENT. This Deed of Trust
------------------------------------------
is intended to be a security agreement pursuant to the Uniform Commercial Code
for any of the items specified above as part of the Property which, under
applicable law, may be subject to a security interest pursuant to the Uniform
Commercial Code, and Guarantor hereby grants and conveys to METLIFE a first and
prior security interest in all of the Property that constitutes personalty,
whether now owned or hereafter acquired. Guarantor agrees that METLIFE may file
this Deed of Trust, or a reproduction thereof, in the real estate records or
other appropriate index, as a financing statement for any of the items specified
above as part of the Property. Any reproduction of this Deed of Trust or of any
other security agreement or financing statement shall be sufficient as a
financing statement. In addition, Guarantor agrees to execute and deliver to
METLIFE, upon METLIFE's request, any financing statements, as well as
extensions, renewals and amendments thereof, and reproductions of this Deed of
Trust in such form as METLIFE may require to perfect a security interest with
respect to the foregoing items. Guarantor shall pay all costs of filing such
financing statements and any extensions, renewals, amendments and releases
thereof, and shall pay all costs and expenses of any record searches for
financing statements METLIFE may require. Without the prior written consent of
METLIFE, Guarantor shall not create or suffer to be created pursuant to the
Uniform Commercial Code any other security interest in said items, including
replacements and additions thereto. Upon Guarantor's breach of any covenant or
agreement of Guarantor contained in this Deed of Trust, including the covenants
to pay when due all sums secured by this Deed of Trust, METLIFE shall have the
remedies of a secured party under the Uniform Commercial Code, and METLIFE may
also invoke the remedies provided in Section 26 of this Deed of Trust as to such
----------
items. In exercising any of said remedies METLIFE may proceed against the items
of Property separately or together and in any order whatsoever, without in any
way affecting the availability of METLIFE's remedies under the Uniform
Commercial Code or of the remedies provided in Section 26 of this Deed of Trust.
----------
Within ten (10) days following any request therefor by METLIFE, Guarantor shall
prepare and deliver to METLIFE a written inventory specifically listing all of
the personal property covered by the security interest herein granted, which
inventory shall be certified by Guarantor as being true, correct, and complete.
15. LEASES OF THE PROPERTY. Guarantor shall comply with and observe
----------------------
Guarantor's obligations as landlord under all Leases of the Property or any part
thereof. All Leases now or hereafter entered into will be in form and substance
subject to the approval of METLIFE. All Leases of the Property shall
specifically provide that such Leases are subordinate to this Deed of Trust;
that the tenant attorns to METLIFE, such attornment to be effective upon
METLIFE's acquisition of title to the Property; that the tenant agrees to
execute such further evidences of attornment as METLIFE may from time to time
request; that the attornment of the tenant shall not be terminated by
foreclosure; and that METLIFE may, at METLIFE's option, accept or reject such
attornments. Guarantor shall not, without METLIFE's written consent, request or
consent to the subordination of any Lease of all or any part of the Property to
any lien subordinate to this Deed of Trust. If Guarantor becomes aware that any
tenant proposes to do, or is doing, any act or thing which may give rise to any
right of set-off against rent, Guarantor shall (i) take such steps as shall be
reasonably calculated to prevent the accrual of any right to a set-off against
rent, (ii) immediately notify METLIFE thereof in writing and of the amount of
said set-offs, and (iii) within ten (10) days after such accrual, reimburse the
tenant who shall have acquired such right to set-off or take such other steps as
shall effectively discharge such setoff and as shall assure that rents
thereafter due shall continue to be payable without set-off or deduction. Upon
METLIFE's receipt of notice of the occurrence of any default or violation by
Guarantor of any of its obligations under the Leases, METLIFE shall have the
immediate right, but not the duty or obligation, without prior written notice to
Guarantor or to any third party, to enter upon the Property and to take such
actions as METLIFE may deem necessary to cure the default or violation by
Guarantor under the Leases. The costs incurred by METLIFE in taking any such
actions pursuant to this paragraph shall become part of the Indebtedness, shall
bear interest at the rate provided in the Note, and shall be payable by
Guarantor to METLIFE on demand. METLIFE shall have no liability to Guarantor or
to any third party for any actions taken by METLIFE or not taken pursuant to
this paragraph.
8
<PAGE>
16. REMEDIES CUMULATIVE. Each remedy provided in this Deed of Trust
-------------------
is distinct and cumulative to all other rights or remedies under this Deed of
Trust or afforded by law or equity, and may be exercised concurrently,
independently, or successively, in any order whatsoever.
17. TRANSFERS OF THE PROPERTY OR BENEFICIAL INTERESTS IN Guarantor;
---------------------------------------------------------------
ASSUMPTION. METLIFE may, at its option, declare all sums secured by this Deed
- ----------
of Trust to be immediately due and payable, and METLIFE may invoke any remedies
permitted by Section 26 of this Deed of Trust, if title to the Property is
----------
changed without the prior written consent of METLIFE, which consent shall be at
METLIFE's sole discretion. Any transfer of any interest in the Property or in
the income therefrom, by sale, lease (except for leases to tenants in the
ordinary course of managing income property which are approved by METLIFE
pursuant to Section 15 of this Deed of Trust), contract, Deed of Trust, security
----------
deed, mortgage, deed of trust, further encumbrance or otherwise (including any
such transfers as security for additional financing of the Property), and any
change in the ownership interests in Guarantor (including any change in the
ownership interests of any legal entities which comprise or control Guarantor),
except transfers and changes in ownership by devise or descent, shall be
considered a change of title. METLIFE shall have the right to condition its
consent to any proposed sale or transfer described in this Section 17 upon,
-----------
among other things, METLIFE's approval of the transferee's creditworthiness and
management ability and the transferee's execution, prior to the sale or
transfer, of a written assumption agreement containing such terms as METLIFE may
require, including, if required by METLIFE, the imposition of an assumption fee
of one percent (1%) of the then outstanding balance of the Indebtedness, except
in the case of a transfer to one of Guarantor's direct or indirect subsidiaries,
in which case Guarantor will be liable only for payment of all third-party
costs, such as METLIFE's attorneys' fees and recording costs. In addition to the
foregoing, Guarantor shall have a one-time right to transfer the Property to a
third party approved by METLIFE, subject to Guarantor's payment of all third-
party costs, such as METLIFE's attorneys' fees and recording costs. Consent by
METLIFE to one transfer of the Property shall not constitute consent to
subsequent transfers or waiver of the provisions of this Section 17. No transfer
----------
by Guarantor shall relieve Guarantor of liability for payment of the
Indebtedness. METLIFE acknowledges that Borrower is a publicly-held company and
that purchases and sales of its common stock from time to time on the NASDAQ
market and in the ordinary course of business shall not constitute a transfer of
the Property or a change in the ownership interests in Borrower pursuant to this
Section 17. Further, offerings and sales of additional securities of Borrower,
- ----------
payment of stock dividends, redemptions of stock, issuance of securities
pursuant to stock options, bonus or incentive plans or other common uses of
publicly traded securities shall not be considered to be changes in the
ownership interests in Guarantor under this Section 17.
----------
18. NOTICE. Except for any notice required under applicable law to
------
be given in another manner, any and all notices, elections, demands, or requests
permitted or required to be made under this Deed of Trust or under the Note
shall be in writing, signed by the party giving such notice, election, demand or
request, and shall be delivered personally, by telegram, or sent by registered,
certified, or Express United States mail, postage prepaid, or by Federal Express
or similar service requiring a receipt, to the other party at the address stated
above, or to such other party and at such other address within the United States
of America as any party may designate in writing as provided herein. The date
of receipt of such notice, election, demand or request shall be the earliest of
(i) the date of actual receipt, (ii) three (3) days after the date of mailing by
registered or certified mail, (iii) one (1) day after the date of mailing by
Express Mail or the delivery (for redelivery) to Federal Express or another
similar service requiring a receipt, or (iv) the date of personal delivery (or
refusal upon presentation for delivery).
19. SUCCESSORS AND ASSIGNS BOUND; JOINT AND SEVERAL LIABILITY;
----------------------------------------------------------
AGENTS; CAPTIONS. The covenants and agreements herein contained shall bind, and
- ----------------
the rights hereunder shall inure to, the respective heirs, successors and
assigns of METLIFE and Guarantor, subject to the provisions of Section 17
----------
hereof. If Guarantor is comprised of more than one person or entity, whether as
individuals, partners, partnerships or corporations, each such person or entity
shall be jointly and severally liable for Guarantor's obligations hereunder. In
exercising any rights hereunder or taking any actions provided for herein,
METLIFE may act through its employees, agents or independent contractors as
authorized by METLIFE. The captions and headings of the sections of this Deed
of Trust are for convenience only and are not to be used to interpret or define
the provisions hereof.
9
<PAGE>
20. WAIVER OF STATUTE OF LIMITATIONS. Guarantor hereby waives the
--------------------------------
right to assert any statute of limitations as a bar to the enforcement of the
lien of this Deed of Trust or to any action brought to enforce the Note or any
other obligation secured by this Deed of Trust.
21. WAIVER OF MARSHALLING. Notwithstanding the existence of any
---------------------
other security interests in the Property held by METLIFE or by any other party,
METLIFE shall have the right to determine the order in which any or all of the
Property shall be subjected to the remedies provided herein. METLIFE shall have
the right to determine the order in which any or all portions of the
Indebtedness secured hereby are satisfied from the proceeds realized upon the
exercise of the remedies provided herein. Guarantor, any party who consents to
this Deed of Trust and any party who now or hereafter acquires a security
interest in the Property and who has actual or constructive notice hereof hereby
waives any and all right to require the marshalling of assets in connection with
the exercise of any of the remedies permitted by applicable law or provided
herein.
22. HAZARDOUS WASTE. Guarantor has furnished to METLIFE a Phase I
---------------
Environmental Assessment dated September 23, 1996, Job No. 1007, prepared by
Atlanta Testing & Engineering (the "Engineer"), and related Asbestos Survey
dated September 23, 1996, and an Environmental Questionnaire dated December 17,
1996 (collectively, the "Report"). Except as disclosed to METLIFE in the
Report, Guarantor has received no notification of any kind suggesting that the
Property or any adjacent property is or may be contaminated with any hazardous
waste or materials or is or may be required to be cleaned up in accordance with
any applicable law or regulation; and Guarantor further represents and warrants
that, except as previously disclosed to METLIFE in writing, to the best of its
knowledge as of the date hereof after due and diligent inquiry, there are no
hazardous waste or materials located in, on or under the Property or any
adjacent property, or incorporated in any Improvements, nor has the Property or
any adjacent property ever been used as a landfill or a waste disposal site, or
a manufacturing, handling, storage, distribution or disposal facility for
hazardous waste or materials. As used herein, the term "hazardous waste or
materials" includes any substance or material defined in or designated as
hazardous or toxic wastes, hazardous or toxic material, a hazardous, toxic or
radioactive substance, or other similar term, by any federal, state or local
statute, regulation or ordinance now or hereafter in effect. Guarantor shall
promptly comply with all statutes, regulations and ordinances, and with all
orders, decrees or judgments of governmental authorities or courts having
jurisdiction, relating to the use, collection, treatment, disposal, storage,
control, removal or cleanup of hazardous waste or materials in, on or under the
Property or any adjacent property, or incorporated in any Improvements, at
Guarantor's expense. In the event that METLIFE at any time believes that the
Property is not free of all hazardous waste or materials or that Guarantor has
violated any applicable environmental law with respect to the Property, then
immediately upon request by METLIFE, Guarantor shall obtain and furnish to
METLIFE, at Guarantor's sole cost and expense, an environmental audit and
inspection of the Property from an expert satisfactory to METLIFE. In the event
that Guarantor fails to immediately obtain such audit or inspection, METLIFE or
its agents may perform or obtain such audit or inspection at Guarantor's sole
cost and expense. METLIFE may, but is not obligated to, enter upon the Property
and take such actions and incur such costs and expenses to effect such
compliance as it deems advisable to protect its interest in the Property; and
whether or not Guarantor has actual knowledge of the existence of hazardous
waste or materials on the Property or any adjacent property as of the date
hereof, Guarantor shall reimburse METLIFE as provided in Section 23 below for
----------
the full amount of all costs and expenses incurred by METLIFE prior to METLIFE
acquiring title to the Property through foreclosure or acceptance of a deed in
lieu of foreclosure, in connection with such compliance activities. Neither this
provision nor any of the other Loan Documents shall operate to put METLIFE in
the position of an owner of the Property prior to any acquisition of the
Property by METLIFE. The rights granted to METLIFE herein and in the other Loan
Documents are granted solely for the protection of METLIFE's lien and security
interest covering the Property, and do not grant to METLIFE the right to control
Guarantor's actions, decisions or policies regarding hazardous waste or
materials.
23. ADVANCES, COSTS AND EXPENSES. Guarantor shall pay within ten
----------------------------
(10) days after written demand from METLIFE all sums advanced by METLIFE and all
costs and expenses incurred by METLIFE in taking any actions pursuant to the
Loan Documents including attorneys' fees and disbursements, accountants' fees,
appraisal and inspection fees and the costs for title reports and guaranties,
together with interest thereon at the rate applicable under the Note after an
Event of Default from the date such costs were advanced or incurred. All such
10
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costs and expenses incurred by METLIFE, and advances made, shall constitute
advances under this Deed of Trust to protect the Property and shall be secured
by and have the same priority as the lien of this Deed of Trust. If Guarantor
fails to pay any such advances, costs and expenses and interest thereon, METLIFE
may apply any undisbursed loan proceeds to pay the same, and, without
foreclosing the lien of this Deed of Trust, may at its option commence an
independent action against Guarantor for the recovery of the costs, expenses
and/or advances, with interest, together with costs of suit, costs of title
reports and guaranty of title, disbursements of counsel and reasonable
attorneys' fees incurred therein or in any appeal therefrom.
24. ASSIGNMENT OF LEASES AND RENTS. Guarantor, for good and valuable
------------------------------
consideration, the receipt of which is hereby acknowledged, to secure the
Indebtedness, does hereby absolutely and unconditionally grant, bargain, sell,
transfer, assign, convey, set over and deliver unto METLIFE all right, title and
interest of Guarantor in, to and under the Leases of the Property, whether now
in existence or hereafter entered into, and all guaranties, amendments,
extensions and renewals of said Leases and any of them, and all rents, income
and profits which may now or hereafter be or become due or owing under the
Leases, and any of them, or on account of the use of the Property.
Guarantor represents, warrants, covenants and agrees with METLIFE as
follows:
(a) The sole ownership of the entire lessor's interest in the Leases
is vested in Guarantor, and Guarantor has not, and shall not, perform any acts
or execute any other instruments which might prevent METLIFE from fully
exercising its rights with respect to the Leases under any of the terms,
covenants and conditions of this Deed of Trust.
(b) The Leases are and shall be valid and enforceable in accordance
with their terms and have not been and shall not be altered, modified, amended,
terminated, canceled, renewed or surrendered except as approved in writing by
METLIFE. The terms and conditions of the Leases have not been and shall not be
waived in any manner whatsoever except as approved in writing by METLIFE.
(c) Guarantor shall not materially alter the term or the amount of
rent payable under any Lease without prior written notice to METLIFE and
METLIFE's consent, which shall not be unreasonably withheld.
(d) To the best of Guarantor's knowledge, there are no defaults now
existing under any of the Leases and there exists no state of facts which, with
the giving of notice or lapse of time or both, would constitute a default under
any of the Leases.
(e) Guarantor shall give prompt written notice to METLIFE of any
notice received by Guarantor claiming that a default has occurred under any of
the Leases on the part of Guarantor, together with a complete copy of any such
notice.
(f) Each of the Leases shall remain in full force and effect
irrespective of any merger of the interest of lessor and any lessee under any of
the leases.
(g) Guarantor will not permit any Lease to become subordinate to any
lien other than the lien of this Deed of Trust.
This assignment is absolute, is effective immediately, and is
irrevocable by Guarantor so long as the Indebtedness remains outstanding.
Notwithstanding the foregoing, until a Notice is sent to Guarantor in writing
that an Event of Default has occurred (which notice is hereafter called a
"Notice"), Guarantor may receive, collect and enjoy the rents, income and
profits accruing from the Property.
Upon the occurrence of an Event of Default hereunder, METLIFE may, at
its option, after service of a Notice, receive and collect all such rents,
income and profits from the Property as they become due. METLIFE shall
thereafter continue to receive and collect all such rents, income and profits,
as long as such default or defaults shall exist, and during the pendency of any
foreclosure proceedings.
11
<PAGE>
Guarantor hereby irrevocably appoints METLIFE its true and lawful
attorney with power of substitution and with full power for METLIFE in its own
name and capacity or in the name and capacity of Guarantor, from and after
service of a Notice, to demand, collect, receive and give complete acquittances
for any and all rents, income and profits accruing from the Property, either in
its own name or in the name of Guarantor or otherwise, which METLIFE may deem
necessary or desirable in order to collect and enforce the payment of the rents,
income and profits of and from the Property. Lessees of the Property are hereby
expressly authorized and directed, following receipt of a Notice from METLIFE,
to pay any and all amounts due Guarantor pursuant to the Leases to METLIFE or
such nominee as METLIFE may designate in a writing delivered to and received by
such lessees, and the lessees of the Property are expressly relieved of any and
all duty, liability or obligation to Guarantor in respect of all payments so
made.
Upon the occurrence of any Event of Default, from and after service of
a Notice, METLIFE is hereby vested with full power to use all measures, legal
and equitable, deemed by it to be necessary or proper to enforce this Section 24
----------
and to collect the rents, income and profits assigned hereunder, including the
right of METLIFE or its designee, to enter upon the Property, or any part
thereof, and take possession of all or any part of the Property together with
all personal property, fixtures, documents, books, records, papers and accounts
of Guarantor relating thereto, and METLIFE may exclude Guarantor, its agents and
servants, wholly therefrom. Guarantor hereby grants full power and authority to
METLIFE to exercise all rights, privileges and powers herein granted at any and
all times after service of a Notice, with full power to use and apply all of the
rents and other income herein assigned to the payment of the costs of managing
and operating the Property and of any indebtedness or liability of Guarantor to
METLIFE, including but not limited to the payment of taxes, special assessments,
insurance premiums, damage claims, the costs of maintaining, repairing,
rebuilding and restoring the improvements on the Property or of making the same
rentable, reasonable attorneys' fees incurred in connection with the enforcement
of this Deed of Trust, and of principal and interest payments due from Guarantor
to METLIFE on the Note and this Deed of Trust, all in such order as METLIFE may
determine. METLIFE shall be under no obligation to exercise or prosecute any of
the rights or claims assigned to it hereunder or to perform or carry out any of
the obligations of the lessor under any of the Leases and does not assume any of
the liabilities in connection with or arising or growing out of the covenants
and agreements of Guarantor in the Leases. It is further understood that the
assignment set forth in this Section 24 shall not operate to place
----------
responsibility for the control, care, management or repair of the Property, or
parts thereof, upon METLIFE, nor shall it operate to make METLIFE liable for the
performance of any of the terms and conditions of any of the Leases, or for any
waste of the Property by any lessee under any of the Leases, or any other
person, or for any dangerous or defective condition of the Property or for any
negligence in the management, upkeep, repair or control of the Property
resulting in loss or injury or death to any lessee, licensee, employee or
stranger.
25. DEFAULT. The following shall each constitute an event of default
-------
("Event of Default"):
(a) Failure of or refusal by Guarantor to pay any portion of the sums
secured by this Deed of Trust when due, and such failure or refusal shall
continue for a period of ten (10) days after written notice is given to
Guarantor by METLIFE specifying such failure; or
(b) Failure of Guarantor within the time required by this Deed of
Trust to make any payment for taxes, insurance or for reserves for such
payments, or any other payment necessary to prevent filing of or discharge of
any lien, and such failure shall continue for a period of ten (10) days after
written notice is given to Guarantor by METLIFE specifying such failure; or
(c) Failure by Guarantor to observe or perform any obligations of
Guarantor to METLIFE on or with respect to any transactions, debts, undertakings
or agreements other than the transaction evidenced by the Note following the
giving of any required notice and the expiration of any applicable period of
grace; or
12
<PAGE>
(d) Failure of Guarantor to make any payment or perform any obligation
under any superior liens or encumbrances on the Property, within the time
required thereunder, or commencement of any suit or other action to foreclose
any superior liens or encumbrances; or
(e) Failure by Guarantor to observe or perform any of its obligations
under any of the Leases following the giving of any required notice and the
expiration of any applicable cure period; or
(f) The Property is transferred or any agreement to transfer any part
or interest in the Property in any manner whatsoever is made or entered into
without the prior written consent of METLIFE, except as specifically allowed
under this Deed of Trust, including without limitation creating or allowing any
liens on the Property or leasing any portion of the Property; or
(g) Filing by Guarantor or Borrower of a voluntary petition in
bankruptcy or filing by Guarantor or Borrower of any petition or answer seeking
or acquiescing in any reorganization, arrangement, composition, readjustment,
liquidation, or similar relief for itself under any present or future federal,
state or other statute, law or regulation relating to bankruptcy, insolvency or
other relief for debtors, or the seeking, consenting to, or acquiescing by
Guarantor or Borrower in the appointment of any trustee, receiver, custodian,
conservator or liquidator for Guarantor or Borrower, any part of the Property,
or any of the income or rents of the Property, or the making by Guarantor or
Borrower of any general assignment for the benefit of creditors, or the
inability of or failure by Guarantor or Borrower to pay its debts generally as
they become due, or the insolvency on a balance sheet basis or business failure
of Guarantor or Borrower, or the making or suffering of a preference within the
meaning of federal bankruptcy law or the making of a fraudulent transfer under
applicable federal or state law, or concealment by Guarantor or Borrower of any
of its property in fraud of creditors, or the imposition of a lien upon any of
the property of Guarantor or Borrower which is not discharged in the manner
permitted by Section 4 of this Deed of Trust, or the giving of notice by
---------
Guarantor or Borrower to any governmental body of insolvency or suspension of
operations; or
(h) Filing of a petition against Guarantor or Borrower seeking any
reorganization, arrangement, composition, readjustment, liquidation, or similar
relief under any present or future federal, state or other law or regulation
relating to bankruptcy, insolvency or other relief for debts, or the appointment
of any trustee, receiver, custodian, conservator or liquidator of Guarantor or
Borrower, of any part of the Property or of any of the income or rents of the
Property, unless such petition shall be dismissed within sixty (60) days after
such filing, but in any event prior to the entry of an order, judgment or decree
approving such petition; or
(i) The institution of any proceeding for the dissolution or
termination of Guarantor or Borrower voluntarily, involuntarily, or by
operation of law; or
(j) A material adverse change occurs in the assets, liabilities or net
worth of Guarantor or any of the guarantors of the indebtedness evidenced by the
Note from the assets, liabilities or net worth of Guarantor or any of the
guarantors of the indebtedness evidenced by the Note previously disclosed to
METLIFE; or
(k) Any warranty, representation or statement furnished to METLIFE by
or on behalf of Guarantor under the Note, this Deed of Trust, any of the other
Loan Documents or the Certificate and Indemnity Agreement Regarding Hazardous
Substances, shall prove to have been false or misleading in any material
respect; or
(l) Failure of Guarantor to observe or perform any other covenant or
condition contained in the Note and such default shall continue for thirty (30)
days after notice is given to Guarantor specifying the nature of the failure.
No notice of default and no opportunity to cure shall be required if during the
prior twelve (12) months METLIFE has already sent a notice to Guarantor
concerning default in performance of the same obligation; or
13
<PAGE>
(m) Failure of Guarantor to observe or perform any other obligation
under this Deed of Trust, any other Loan Document or the Certificate and
Indemnity Regarding Hazardous Substances when such observance or performance is
due, and such failure shall continue beyond the applicable cure period set forth
in such Loan Document, or if the default cannot be cured within such applicable
cure period, Guarantor fails within such time to commence and pursue curative
action with reasonable diligence or fails at any time after expiration of such
applicable cure period to continue with reasonable diligence all necessary
curative actions. No notice of default and no opportunity to cure shall be
required if during the prior twelve (12) months METLIFE has already sent a
notice to Guarantor concerning default in performance of the same obligation; or
(n) Guarantor's abandonment of the Property; or
(o) Any of the foregoing events occur with respect to Borrower; or
(p) The occurrence of any default under any of the documents
evidencing or securing (i) METLIFE Loan No. 5905292, (ii) METLIFE Loan No.
5905392, (iii) METLIFE Loan No. 5903393, (iv) METLIFE Loan No. 5904594, (v)
METLIFE Loan No. 5909794, (vi) METLIFE Loan No. 5922696, (vii) METLIFE Loan No.
5922896, or (viii) any other indebtedness with Guarantor or any of the
guarantors of the Indebtedness which is now or hereafter owed to METLIFE.
26. RIGHTS AND REMEDIES ON DEFAULT.
------------------------------
26.1 Remedies. Upon the occurrence of any Event of Default and at
--------
any time thereafter, METLIFE may exercise any one or more of the following
rights and remedies:
(a) METLIFE may declare all sums secured by this Deed of Trust
immediately due and payable, including any prepayment premium which Guarantor
would be required to pay.
(b) The Trustee shall have the right to foreclose by notice and sale,
or METLIFE shall have the right to foreclose by judicial foreclosure, in either
case in accordance with applicable law.
(c) In the event of any foreclosure, to the extent permitted by
applicable law, METLIFE will be entitled to a judgment which will provide that
if the foreclosure sale proceeds are insufficient to satisfy the judgment,
execution may issue for any amount by which the unpaid balance of the
obligations secured by this Deed of Trust exceeds the net sale proceeds payable
to METLIFE.
(d) With respect to all or any part of the Property that constitutes
personalty, METLIFE shall have all rights and remedies of secured party under
the Uniform Commercial Code.
(e) METLIFE shall have the right to have a receiver appointed to take
possession of any or all of the Property, with the power to protect and preserve
the Property, to operate the Property preceding foreclosure or sale, to collect
all the rents and revenues from the Property and apply the proceeds, over and
above cost of the receivership, against the sums due under this Deed of Trust,
and to exercise all of the rights with respect to the Property described in
Section 24 above. The receiver may serve without bond if permitted by law.
- ----------
METLIFE's right to the appointment of a receiver shall exist whether or not
apparent value of the Property exceeds the sums due under this Deed of Trust by
a substantial amount. Employment by METLIFE shall not disqualify a person from
serving as a receiver.
(f) In the event Guarantor remains in possession of the Property after
the Property is sold as provided above or METLIFE otherwise becomes entitled to
possession of the Property upon default of Guarantor, Guarantor shall become a
tenant at will of METLIFE or the purchaser of the Property and shall pay a
reasonable rental for use of the Property while in Guarantor's possession.
14
<PAGE>
(g) METLIFE shall have any other right or remedy provided in this Deed
of Trust, the Note, or any other Loan Document or deed delivered by Guarantor in
connection therewith, or available at law, in equity or otherwise.
(h) METLIFE may confess judgment against Borrower as provided herein.
For the purpose of obtaining possession of the Property upon the occurrence of
any Event of Default hereunder, Borrower hereby authorizes and empowers the
clerk of any court of record in the State of Maryland, including but not limited
to the Clerk of the Circuit Court for Montgomery County, to enter judgment by
confession against Borrower in favor of Lender for the full amount of the
Indebtedness, expressly waiving summons and other process, and does hereby
consent to the immediate execution of such judgment, expressly waiving the
benefit of all exemption or homestead laws. Borrower hereby constitutes and
appoints David Sislowski, Esq., Barbara D. Geer, or any attorney acting on
behalf of METLIFE in any federal court or any state court of record in the
United States of America, as attorney-in-fact for Borrower and all persons
claiming through or under Borrower, to sign an agreement for entering in any
competent court an amicable action in ejectment for possession of the Property
and to appear for and confess judgment against Borrower, and all persons
claiming under or through Borrower, in favor of METLIFE, for recovery by Lender
of possession thereof, for which this Instrument, or a copy thereof verified by
affidavit, shall be sufficient warrant; whereupon a writ of possession may
immediately issue for possession of the Property, without any prior writ or
proceeding whatsoever and without any stay of execution. METLIFE may bring an
amicable action in ejectment and confess judgment therein either before or after
the institution of proceedings to foreclose this Instrument or to enforce the
Note or after entry of judgment therein or on the Note, or after a public sale
of the Property in which METLIFE is the successful bidder. The foregoing
authorization to pursue proceedings for obtaining possession of the Property and
confessing judgment therein is an essential part of METLIFE's remedies for
enforcement of this Instrument and the Note and shall survive any foreclosure
sale by or to METLIFE.
(i) METLIFE shall have all the rights and remedies set forth in
Sections 23 and 24.
- ------------------
26.2 Foreclosure.
-----------
(a) Upon the happening of any and every such Event of Default,
Borrower (i) declares its assent to the passing of a decree for the sale of any
or all of the Property or any estate or interest therein by any equity court
having jurisdiction over the sale of the Property, and (ii) authorizes and
empowers the Trustee to take possession of any or all of the Property to sell
any or all of it or any estate or interest therein in accordance with the
provisions of Rule W of the Maryland Rules of Procedure, of Title 7 of the Real
Property Article of the Annotated Code of Maryland, as amended, an/or of any
other public or local law relating to or affecting deeds of trust or security
agreements, including any amendments thereof or additions thereto. Neither the
foregoing assent to decree nor the foregoing power of sale shall be exhausted if
such proceeding or sale is dismissed or canceled before the indebtedness is paid
in full.
(b) If any or all of the Property or any estate or interest therein is
to be sold under the provisions of this Instrument, by virtue of a judicial sale
or otherwise, it may be sold at public auction, as in entirety or in one or more
parcels, by one sale or by several sales held at one time or at different times,
with such postponement of any such sale as the Trustee may deem appropriate and
without regard to any right of Borrower or any other person to the marshalling
of assets. The Trustee shall hold such sale or sales at such time or times and
at such place or places, and shall make sales upon such terms and conditions and
after such previous public notice as required by law and as the Trustee may deem
appropriate. METLIFE may bid and become the purchaser at any such sale, and
shall, upon presentation of the Note or a true copy thereof at such sale, be
credited for the unpaid balance due under the Note and any interest accrued and
unpaid thereon, or such portion of such unpaid balance or interest as METLIFE
may specify, against any price bid by METLIFE thereat. The terms of sale being
complied with, the Trustee shall convey to and at the cost of the purchaser at
such sale Borrower's interest in so much of the Property as is so sold, free of
and discharged from all estate, right, title or interest of Borrower at law or
in equity, such purchaser being hereby discharged from all liability to see to
the application of the purchase money.
15
<PAGE>
(c) Upon any sale of Borrower's interest in any or all of the
Property, whether under the assent to a decree or power of sale herein granted,
or by other foreclosure or judicial proceedings, the Trustee shall apply the
proceeds of such sale, together with any other sum then held as security
hereunder or due under any of the provisions hereof as part of the Property
(after paying all expenses of sale, including attorneys' fees and a commission
to the party marking the sale equal to the commission allowed to trustees for
making sales of property under orders or decrees of a court having competent
jurisdiction, and all taxes and assessments which the Trustee or the METLIFE
deem it advisable or expedient to pay and all sums advanced, with interest
thereon at the default rate set forth in the Note; as herein provided) to the
payment of the aggregate indebtedness then secured hereby and interest thereon
to the date of payment and any other amounts secured hereunder, paying over the
surplus, if any, less the expense, if any, of obtaining possession, to the
Borrower or any person entitled thereto upon the surrender and delivery to the
purchaser of possession of the Property.
(d) Immediately upon the first insertion of any advertisement or
notice of any such sale, there shall become due and owing by Borrower all
expenses incident to such advertisement or notice, all court costs and all
expenses incident to any foreclosure proceedings brought under this Instrument
or otherwise in connection with such sale, and a commission on the total amount
of the principal indebtedness; then secured hereby equaling one-half of the
commission allowed to trustees for making sales of property under orders or
decrees of a court having competent jurisdiction, and no party shall be required
to receive the principal, interest and prepayment fee only of said indebtedness
in satisfaction thereof unless it is accompanied by a tender of payment of such
expenses, costs and commissions.
(e) Notwithstanding the relationship of parties constituting Borrower,
and as an express inducement to METLIFE to make the loan or loans secured
hereby, and for other good and valuable consideration to Borrower in hand paid,
receipt whereof is hereby acknowledged, Borrower does hereby waive for itself
(as well as all of its partners), its successors and assigns, in the event of
foreclosure of this Instrument, an equitable right, otherwise available to it,
in respect to marshalling of assets hereunder.
(f) In the event of a sale of part of, or interest in, the Property in
satisfaction of part of the debt secured by this Instrument, this Instrument
shall, as to the remaining part of, or interest in, the Property, continue as a
lien for the remainder of the debt.
(g) Any sale of the Property or any part thereof or any interest
therein, whether pursuant to foreclosure or power of sale or otherwise
hereunder, shall forever be a perpetual bar against Borrower.
26.3 Foreclosure of Personalty. Upon the happening of any and every
-------------------------
such Event of Default, should METLIFE elect to cause any of the Property to be
disposed of as personal property because the same is personal property under the
applicable laws of the State of Maryland, METLIFE may dispose of all or any part
thereof in any manner now or hereafter permitted by the Uniform Commercial Code
of the State of Maryland or in accordance with any other remedy provided in law
or in equity. Any such disposition may be conducted by an employee or agent of
METLIFE or Trustee. Both Borrower and METLIFE shall be eligible to purchase any
part or all of such property at such disposition. Any such disposition may be
either public or private as METLIFE may so elect, in its sole discretion,
subject to the provisions of the Uniform Commercial Code of the State of
Maryland. METLIFE shall have all of the rights and remedies of a secured party
under the Uniform Commercial Code of the State of Maryland. Expenses of
retaking, holding, preparing for sale, selling or the like shall include
METLIFE's attorney's fees and legal expenses, and upon the occurrence of any
Event of Default, Borrower, upon demand of METLIFE, shall assemble such personal
property and make it available to METLIFE at the Property, a place which is
deemed to be reasonably convenient to both METLIFE and Borrower. METLIFE shall
give Borrower at least five (5) days' prior written notice (or a longer period
if then required in accordance with the laws of the State of Maryland) of the
time and place of any public sale or other disposition of such property or of
the time at or after which any private sale or any other intended disposition is
to be made, and if such notice is sent to Borrower, as the same is provided for
the mailing of notices herein, it shall constitute reasonable notice to
Borrower.
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26.4 Waiver; Election of Remedies. A waiver by either party of a
----------------------------
breach of a provision of this Instrument shall not constitute a waiver of or
prejudice the party's right otherwise to demand strict compliance with that
provision or any other provision. Election by METLIFE to pursue any remedy
shall not exclude pursuit of any other remedy, and all remedies of METLIFE under
this Instrument are cumulative and not exclusive. An election to make
expenditures or take action to perform an obligation of Borrower shall not
affect METLIFE's right to declare a default and exercise its remedies under this
Instrument.
27. RECONVEYANCE. Upon payment of all sums secured by this
------------
Instrument, METLIFE shall request Trustee to reconvey the Property and shall
surrender this Instrument and all notes evidencing Indebtedness secured by this
Instrument to Trustee. Trustee shall reconvey the Property without warranty to
the person or persons legally entitled thereto. Such person or persons shall
pay Trustee's costs incurred in so reconveying the Property.
28. FUTURE ADVANCES. Upon request of Guarantor and Borrower,
---------------
METLIFE, at METLIFE's option so long as this Deed of Trust secures Indebtedness
held by METLIFE, may make Future Advances to Guarantor or Borrower. Such Future
Advances, with interest thereon, shall be secured by this Deed of Trust when
evidenced by promissory notes stating that said notes are secured hereby.
29. IMPOSITION OF TAX BY STATE.
--------------------------
(a) State Taxes Covered. The following constitute state taxes to
-------------------
which this Section applies:
(1) A specific tax upon mortgages or upon all or any part of the
indebtedness secured by a mortgage.
(2) A specific tax on a grantor which the taxpayer is authorized or
required to deduct from payments on the indebtedness secured by a mortgage.
(3) A tax on a mortgage chargeable against the grantee or the holder
of the note secured.
(4) A specific tax on all or any portion of the indebtedness or on
payments of principal and interest made by a grantor.
(b) Remedies. If any state tax to which this Section applies is
--------
enacted subsequent to the date of this Deed of Trust, this shall have the same
effect as an Event of Default, and METLIFE may exercise any or all of the
remedies available to it unless the following conditions are met:
(1) Guarantor may lawfully pay the tax or charge imposed by state tax,
and
(2) Guarantor pays the tax or charge within thirty (30) days after
notice from METLIFE that the tax law has been enacted.
30. ATTORNEYS' FEES. In the event suit or action is instituted to
---------------
enforce or interpret any of the terms of this Deed of Trust (including without
limitation efforts to modify or vacate any automatic stay or injunction), the
prevailing party shall be entitled to recover all expenses reasonably incurred
at, before and after trial and on appeal whether or not taxable as costs, or in
any bankruptcy proceeding including, without limitation, attorneys' fees,
witness fees (expert and otherwise), deposition costs, copying charges and other
expenses. Whether or not any court action is involved, all reasonable expenses,
including but not limited to the costs of searching records, obtaining title
reports, surveyor reports, and title insurance, incurred by METLIFE that are
necessary at any time in METLIFE's opinion for the protection of its interest or
enforcement of its rights shall become a part of the Indebtedness payable on
demand and shall bear interest from the date of expenditure until repaid at the
interest rate
17
<PAGE>
as provided in the Note. The term "attorneys' fees" as used in the Loan
Documents shall be deemed to mean such fees as are reasonable and are actually
incurred.
31. GOVERNING LAW; SEVERABILITY. This Deed of Trust shall be
---------------------------
governed by the law of the State of Maryland applicable to contracts made and to
be performed therein (excluding choice-of-law principles). In the event that any
provision or clause of this Deed of Trust or the Note conflicts with applicable
law, such conflict shall not affect other provisions of this Deed of Trust or
the Note which can be given effect without the conflicting provision, and to
this end the provisions of this Deed of Trust and the Note are declared to be
severable.
32. TIME OF ESSENCE. Time is of the essence of this Deed of Trust.
---------------
33. CHANGES IN WRITING. This Deed of Trust and any of its terms may
------------------
only be changed, waived, discharged or terminated by an instrument in writing
signed by the party against which enforcement of the change, waiver, discharge
or termination is sought. Any agreement subsequently made by Guarantor or
METLIFE relating to this Deed of Trust shall be superior to the rights of the
holder of any intervening lien or encumbrance.
34. NO OFFSET. Guarantor's obligation to make payments and perform
---------
all obligations, covenants and warranties under this Deed of Trust and under the
Note shall be absolute and unconditional and shall not be affected by any
circumstance, including without limitation any setoff, counterclaim, abatement,
suspension, recoupment, deduction, defense or other right that Guarantor or any
guarantor may have or claim against METLIFE or any entity participating in
making the loan secured hereby. The foregoing provisions of this section,
however, do not constitute a waiver of any claim or demand which Guarantor or
any guarantor may have in damages or otherwise against METLIFE or any other
person, or preclude Guarantor from maintaining a separate action thereon;
provided, however, that Guarantor waives any right it may have at law or in
equity to consolidate such separate action with any action or proceeding brought
by METLIFE.
35. PROVISIONS REGARDING TRUSTEE. Trustee shall not be liable for
----------------------------
any error of judgment or act done by Trustee, or be otherwise responsible or
accountable under any circumstances whatsoever. Trustee shall not be personally
liable in case of entry by it or anyone acting by virtue of the powers herein
granted it upon the Property for debts contracted or liability or damages
incurred in the management or operation of the Property. All monies received by
Trustee shall, until used or applied as herein provided, be held in trust for
the purposes for which they were received, but need not be segregated in any
manner from any other monies (except to the extent required by law) and Trustee
shall be under no liability for interest on any monies received by it hereunder.
In accordance with applicable law, METLIFE may from time to time
appoint a successor trustee to any Trustee appointed hereunder. Without
conveyance of the Property, the successor trustee shall succeed to all the
title, power and duties conferred upon the Trustee herein and by applicable law.
Trustee may resign by giving of notice of such resignation in writing to
METLIFE. If Trustee shall die, resign or become disqualified from acting, or
shall fail or refuse to exercise its powers hereunder when requested by METLIFE
so to do, or if for any reason and without cause METLIFE shall prefer to appoint
a substitute trustee to act instead of the original Trustee named herein, or any
prior successor or substitute trustee, METLIFE shall have full power to appoint
a substitute trustee and, if preferred, several substitute trustees in
succession who shall succeed to all the estate, rights, powers and duties of the
aforenamed Trustee. Upon appointment by METLIFE, any new Trustee appointed
pursuant to any of the provisions hereof shall, without any further act, deed or
conveyance, become vested with all the estates, properties, rights, powers and
trusts of its predecessor in the rights hereunder with the same effect as if
originally named as Trustee herein.
36. MAXIMUM INTEREST CHARGES. Notwithstanding anything contained
------------------------
herein or in any of the Loan Documents to the contrary, in no event shall
METLIFE be entitled to receive interest on the loan secured by this Deed of
Trust (the "Loan") in amounts which, when added to all of the other interest
charged, paid
18
<PAGE>
to or received by METLIFE on the Loan, causes the rate of interest on the Loan
to exceed the highest lawful rate. Guarantor and METLIFE intend to comply with
the applicable law governing the highest lawful rate and the maximum amount of
interest payable on or in connection with the Loan. If the applicable law is
ever judicially interpreted so as to render usurious any amount called for under
the Loan Documents, or contracted for, charged, taken, reserved or received with
respect to the Loan, or if acceleration of the final maturity date of the Loan
or if any prepayment by Guarantor results in Guarantor having paid or demand
having been made on Guarantor to pay, any interest in excess of the amount
permitted by applicable law, then all excess amounts theretofore collected by
METLIFE shall be credited on the principal balance of the Note (or, if the Note
has been or would thereby be paid in full, such excess amounts shall be refunded
to Guarantor), and the provisions of the Note, this Deed of Trust and any demand
on Guarantor shall immediately be deemed reformed and the amounts thereafter
collectible thereunder and hereunder shall be reduced, without the necessity of
the execution of any new document, so as to comply with the applicable law, but
so as to permit the recovery of the fullest amount otherwise called for
thereunder and hereunder. The right to accelerate the final maturity date of the
Loan does not include the right to accelerate any interest which has not
otherwise accrued on the date of such acceleration, and METLIFE does not intend
to collect any unearned interest in the event of acceleration. All sums paid or
agreed to be paid to METLIFE for the use, forbearance or detention of the Loan
shall, to the extent permitted by applicable law, be amortized, prorated,
allocated and spread through the full term of the Loan until payment in full so
that the rate or amount of interest on account of the Loan does not exceed the
applicable usury ceiling. By execution of this Deed of Trust, Guarantor
acknowledges that it believes the Loan to be nonusurious and agrees that if, at
any time, Guarantor should have reason to believe that the Loan is in fact
usurious, it will give METLIFE written notice of its belief and the reasons why
Guarantor believes the Loan to be usurious, and Guarantor agrees that METLIFE
shall have ninety (90) days following its receipt of such written notice in
which to make appropriate refund or other adjustment in order to correct such
condition if it in fact exists.
IMPORTANT: READ BEFORE SIGNING. THE TERMS OF THIS AGREEMENT SHOULD BE
READ CAREFULLY BECAUSE ONLY THOSE TERMS IN WRITING ARE ENFORCEABLE. NO
OTHER TERMS OR ORAL PROMISES NOT CONTAINED IN THIS WRITTEN CONTRACT MAY BE
LEGALLY ENFORCED. YOU MAY CHANGE THE TERMS OF THIS AGREEMENT ONLY BY
ANOTHER WRITTEN AGREEMENT.
BY EXECUTION OF THIS DEED OF TRUST, GUARANTOR EXPRESSLY: ACKNOWLEDGES THE
RIGHT TO ACCELERATE THE INDEBTEDNESS EVIDENCED BY THE NOTE AND THE POWER
GIVEN HEREIN TO METLIFE TO SELL THE PROPERTY BY NONJUDICIAL FORECLOSURE
UPON DEFAULT BY GUARANTOR WITHOUT ANY JUDICIAL HEARING AND WITHOUT ANY
NOTICE OTHER THAN SUCH NOTICE AS IS SPECIFICALLY REQUIRED TO BE GIVEN UNDER
THE NOTE OR PROVISIONS OF THIS DEED OF TRUST OR BY LAW; ACKNOWLEDGES THAT
THE UNDERSIGNED HAS READ THIS DEED OF TRUST AND THAT ANY AND ALL QUESTIONS
REGARDING THE LEGAL EFFECT OF THIS DEED OF TRUST AND ITS PROVISIONS HAVE
BEEN EXPLAINED FULLY TO GUARANTOR. GUARANTOR HAS CONSULTED WITH ITS
COUNSEL PRIOR TO EXECUTING THIS DEED OF TRUST AND ACKNOWLEDGES THAT ALL
WAIVERS OF THE AFORESAID RIGHTS OF GUARANTOR HAVE BEEN MADE KNOWINGLY,
INTENTIONALLY AND WILLINGLY BY THE UNDERSIGNED, ON BEHALF OF GUARANTOR, AS
PART OF A BARGAINED-FOR LOAN TRANSACTION AND THAT THIS DEED OF TRUST IS
VALID AND ENFORCEABLE BY METLIFE AGAINST GUARANTOR IN ACCORDANCE WITH ALL
THE TERMS AND CONDITIONS HEREOF.
19
<PAGE>
IN WITNESS WHEREOF, Guarantor has executed this Deed of Trust or has
caused the same to be executed by its representatives thereunto duly authorized.
Guarantor:
PRESSTAR PRINTING CORPORATION,
a Maryland corporation
By:_________________________________________
_______________________ [Vice] President
Attest:_____________________________________
____________________, Secretary
[SEAL]]
20
<PAGE>
This instrument was prepared by or on behalf of MetLife Capital
Financial Corporation, the party secured by the within Deed of Trust.
METLIFE CAPITAL FINANCIAL CORPORATION,
a Delaware corporation
By:________________________________________
Jacquelyn Ron, Real Estate Loan Closer
Exhibits:
- --------
Exhibit A - Description of Property
Schedule 1 - Description of Debtor and Secured Party
Schedule 2 - Permitted Exceptions
21
<PAGE>
STATE OF ___________________ )
) ss.
COUNTY OF __________________ )
ACKNOWLEDGMENT
--------------
PERSONALLY before me, the undersigned, a Notary Public in and for said
State, appeared _____________________ and _____________________, to me well-
known and known by me [or proven upon the basis of credible evidence] to be the
______________________ [Vice] President, and the Secretary, respectively, of
Presstar Printing Corporation, a Maryland corporation, the corporation that
executed the within instrument, and known to me to be the persons whose
signatures appear on the within instrument on behalf of such corporation therein
named, and acknowledged to me that they executed such instrument as their own
free act and deed and that such corporation executed the within instrument as
its own free act and deed, pursuant to its by-laws or a resolution of its board
of directors for the uses and purposes set forth therein.
WITNESS my hand and official seal this ____ day of _________ 1997.
__________________________________________
Notary Public
My commission expires:________________
[SEAL]
22
<PAGE>
Loan No: 5922796-001
EXHIBIT A
(12201 Old Columbia Pike, Calverton, Maryland)
Legal Description:
- -----------------
All of Lot numbered One (1) in the subdivision known as and called
"MONTGOMERY INDUSTRIAL PARK" Colesville District, as per plat recorded
in Plat Book 61 at Plat 5166 among the Land Records of Montgomery
County, Maryland.
<PAGE>
SCHEDULE 1
----------
Loan No. 5922796-001
Part 1
------
Description of "Debtor" and "Secured Party"
- -------------------------------------------
A. Debtor:
------
1. Name and Identity or Corporate Structure: PRESSTAR PRINTING CORPORATION, a
Maryland corporation formerly known as Presstar Acquisition Corporation
2. Debtor has been using or operating under such name and identity or
corporate structure, without change, since: November 2, 1996.
3. The principal place of business and chief executive office of Debtor are
located at:
Presstar Printing Corporation
12201 Old Columbia Pike
Calverton, Maryland
B. Secured Party: MetLife Capital Financial Corporation, a Delaware
--------------
corporation.
************************************************************************
Part 2
------
(Notice Mailing Addresses of "Debtor" and "Secured Party")
A. The mailing address of Debtor is:
Presstar Printing Corporation
12201 Old Columbia Pike
Silver Spring, Maryland 20904
B. The mailing address of Secured Party is:
MetLife Capital Financial Corporation
Real Estate Department
10900 N.E. 4th Street, Suite 500
Bellevue, Washington 98004
<PAGE>
Loan No: 5922796-001
SCHEDULE 2
----------
(12201 Old Columbia Pike, Calverton, Maryland)
Permitted Exceptions:
- --------------------
1. Waiver of Covenants recorded at Liber 7324, Folio 606.
2. Declaration of Covenants recorded at Liber 7666, Folio 25.
3. Building restriction lines per recorded plat.
4. Right-of-Way to Chesapeake and Potomac Telephone Company of Baltimore
City recorded at Liber 282, Folio 464.
5. Easement and Right-of-Way recorded at Liber 7666 in Folio 22.
<PAGE>
Loan No. 5922796-001
SECURITY AGREEMENT
(12201 Old Columbia Pike, Calverton, Maryland)
Debtor:
Name: Presstar Printing Corporation, a Maryland corporation
formerly known as Presstar Acquisition Corporation
Address: 12201 Old Columbia Pike
Silver Spring, Maryland 20904
Secured Party:
Name: MetLife Capital Financial Corporation,
a Delaware corporation
Address: Real Estate Department
10900 N.E. 4th Street, Suite 500
Bellevue, Washington 98004
Debtor, for valuable consideration, hereby grants to Secured Party a
security interest in the property listed on Exhibit B hereto, and any and all
---------
additions and substitutions thereto (the "Collateral") (i) to secure Debtor's
Guaranty Agreement ("Guaranty") of even date herewith, guaranteeing payment of
the indebtedness evidenced by that certain promissory note of even date
herewith, made by Graphic Industries, Inc., a Georgia corporation ("Borrower"),
payable to the order of Secured Party, in the principal amount of Two Million
Four Hundred Seventy-Five Thousand Dollars ($2,475,000) (the "Note") and (ii) to
secure all other obligations of Debtor or Borrower arising under all documents
securing or executed in connection with the Note, except any Certificate and
Indemnity Agreement Regarding Hazardous Substances or Environmental Indemnity
Agreement (the "Loan Documents").
Debtor expressly warrants and covenants:
1. Except for the security interest granted hereby, Debtor is, or to the extent
that this Security Agreement states that the Collateral is to be acquired after
the date hereof, will be, the owner of the Collateral free from any lien,
security interest or encumbrance. Debtor shall defend the Collateral against
all claims and demands of all persons at any time claiming the same or any
interest therein.
2. The Collateral is used or bought primarily for use in the business of
Debtor.
3. Debtor's business address is as stated above. The Collateral is located at
or on or is used or owned for or in connection with the real estate situated in
Calverton. Montgomery County, Maryland, commonly known as 12201 Old Columbia
Pike and more particularly described on the attached Exhibit A herein
---------
incorporated by this reference (the "Property").
4. Debtor shall notify Secured Party of any change in the location of the
Collateral or any change in Debtor's principal place of business.
5. Debtor shall pay all taxes and assessments of every nature which may be
levied or assessed against the Collateral.
32
<PAGE>
6. Debtor shall not permit or allow any lien, security interest or encumbrance
whatsoever upon the Collateral and shall not permit the Collateral to be
attached or replevied.
7. The Collateral is in good condition and Debtor shall keep the Collateral in
good condition and from time to time, forthwith, replace and repair all such
parts of the Collateral as may be broken, worn out, or damaged without allowing
any lien to be created upon the Collateral on account of such replacement or
repairs. Secured Party may examine and inspect the Collateral at any time,
wherever located.
8. Debtor will not use the Collateral in violation of any applicable statutes,
regulations or ordinances.
9. Notwithstanding anything else contained herein to the contrary, Secured
Party has been advised that certain personal property will be leased to Debtor,
and Secured Party's interest therein shall be subordinate to lessor's interest
therein.
Until default Debtor may have possession of the Collateral and use it in
any lawful manner, and upon default Secured Party shall have the immediate right
to the possession of the Collateral.
Debtor shall be in default under this Security Agreement upon the happening
of any of the following events (an "Event of Default"):
(a) default in the payment or performance of any obligation, covenant or
liability contained or referred to in this Security Agreement and such
default shall continue for a period of thirty (30) days after written
notice is given to Debtor by Secured Party specifying such default; or
(b) the occurrence of an "Event of Default" as defined under the Note, the
Guaranty, any instrument securing the Guaranty, including the Indemnity
Deed of Trust, Security Agreement, Assignment of Leases and Rents and
Fixture Filing or securing the Note (the "Trust Deed"), any other Loan
Document, or the Certificate and Indemnity Agreement Regarding Hazardous
Substances from Borrower and Debtor to Secured Party of even date herewith;
or
(c) loss, theft, damage or destruction to or of any of the Collateral which
shall materially and substantially diminish the aggregate value of the
Collateral, the sale or encumbrance of any of the Collateral, or the making
of any levy, seizure or attachment on or to the Collateral.
Upon an Event of Default and at any time thereafter, Secured Party may
declare the Note immediately due and payable and shall have the remedies of a
secured party under the Articles of the Maryland Uniform Commercial Code.
Secured Party may require Debtor to assemble the Collateral and deliver or make
it available to Secured Party at a place to be designated by Secured Party which
is reasonably convenient to both parties.
Secured Party may require that the Collateral be sold at a public sale at
the same time and place as the sale of the Property, or Secured Party may sell
the Collateral at one or more other public or private sales in accordance with
the Maryland Uniform Commercial Code. The Collateral shall not be required to
be exhibited, presented or displayed at any sale. In the event that the
Collateral is sold under the Trust Deed, Secured Party hereby assigns its
security interest in the Collateral to the trustee or Sheriff selling the
Property under the Trust Deed. Debtor agrees that a sale of the Collateral
under the Trust Deed and the notices required under the laws of Maryland
33
<PAGE>
for the sale of real property are commercially reasonable and adequate under the
Maryland Uniform Commercial Code.
Debtor agrees to pay to Secured Party in addition to the indebtedness
secured hereby, all expenses of retaking, holding, preparing for sale and
selling incurred by Secured Party in connection with realization on the
Collateral including reasonable attorneys' fees and costs. In addition, in the
event suit or action is instituted to enforce or interpret this Agreement
(including without limitation efforts to modify or vacate any automatic stay or
injunction), the prevailing party shall be entitled to recover all expenses
reasonably incurred at, before or after trial and on appeal whether or not
taxable as costs, or in any bankruptcy proceeding, including, without
limitation, attorneys' fees, witness fees (expert and otherwise), deposition
costs, copying charges and other expenses.
No waiver by Secured Party of an Event of Default shall operate as a waiver
of any other default or of the same default on a future occasion. The taking of
this Security Agreement shall not waive or impair any other security said
Secured Party may have or hereafter acquire for the payment of the Note nor
shall the taking of any such additional security waive or impair this Security
Agreement. Secured Party may resort to any security it may have in the order it
may deem proper.
All rights of Secured Party hereunder shall inure to the benefit of its
successors and assigns. All promises and duties of Debtor shall bind its
successors and assigns.
Any and all notices, elections, demands, or requests permitted or required
to be made under this Security Agreement shall be in writing, signed by the
party giving such notice, election, demand or request, and shall be delivered
personally, by telegram, or sent by registered, certified, or Express United
States mail, postage prepaid, or by Federal Express or similar service requiring
a receipt, to the other party at the address set forth above or to such other
party and at such other address within the United States of America as any party
may designate as provided herein. The date of receipt of such notice, election,
demand or request shall be the earliest of (i) the date of actual receipt, (ii)
three (3) days after the date of mailing by registered or certified mail, (iii)
one (1) day after the date of mailing by Express Mail, or the delivery (for
redelivery) to Federal Express or another similar service requiring a receipt,
or (iv) the date of personal delivery (or refusal upon presentation for
delivery).
This Security Agreement shall be governed and construed in accordance with
the laws of the State of Maryland.
IN WITNESS WHEREOF, Debtor has executed this Security Agreement as of
January __, 1997.
DEBTOR:
PRESSTAR PRINTING CORPORATION,
a Maryland corporation
By:___________________________________
____________________, [Vice] President
Attest:_______________________________
____________________, Secretary
[SEAL]
Exhibits:
- --------
Exhibit A - Legal Description
34
<PAGE>
Exhibit B - Personal Property
35
<PAGE>
Loan No: 5922796-001
EXHIBIT A
(12201 Old Columbia Pike, Calverton, Maryland)
Legal Description:
- -----------------
36
<PAGE>
EXHIBIT B
(12201 Old Columbia Pike, Calverton, Maryland)
Secured Party: MetLife Capital Financial Corporation
-----
Debtor: Presstar Printing Corporation, formerly known as
- ------
Presstar Acquisition Corporation
Loan No.: 5922796-001
- ---- ---
All right, title, and interest of Debtor in:
1. All buildings, structures, improvements, parking areas,
landscaping, fixtures and articles of property now or hereafter attached to, or
used or adapted for use in the operation of the real estate (herein the
"Premises") described in Exhibit "A" attached to the financing statement or
security agreement with respect to which this Exhibit "B" is attached, including
but without being limited to, all heating, air conditioning, and incinerating
apparatus and equipment; all boilers, engines, motors, dynamos, generating
equipment, piping and plumbing fixtures, water heaters, ranges, cooking
apparatus and mechanical kitchen equipment, refrigerators, freezers, cooling,
ventilating, sprinkling and vacuum cleaning systems, fire extinguishing
apparatus, gas and electric fixtures, carpeting, floor coverings, underpadding,
elevators, escalators, partitions, mantels, built-in mirrors, window shades,
blinds, draperies, screens, storm sash, awnings, signs, furnishings of public
spaces, halls and lobbies, and shrubbery and plants, and including also all
interest of any owner of the Premises in any of such items hereafter at any time
acquired under conditional sale contract, chattel mortgage or other title
retaining or security instrument, all of which property mentioned in this
paragraph 1 shall be referred to as the "Improvements" and shall be deemed part
of the realty and not severable wholly or in part without material injury to the
freehold of the Premises.
2. All compensation, awards, damages, rights of action and proceeds,
including interest thereon and/or the proceeds of any policies of insurance
therefor, arising out of or relating to a (a) taking or damaging of the Premises
or Improvements thereon by reason of any public or private improvement,
condemnation proceeding (including change of grade), sale or transfer in lieu of
condemnation, or fire, earthquake or other casualty, or (b) any injury to or
decrease in the value of the Premises or the Improvements for any reason
whatsoever.
3. Return premiums or other payments upon any insurance any time
provided for the benefit of or naming Secured Party, and refunds or rebates of
taxes or assessments on the Premises.
4. All the right, title and interest of Debtor in and under all
written and oral leases and rental agreements (including extensions, renewals
and subleases; all of the foregoing shall be referred to collectively herein as
the "Leases") now or hereafter affecting the Premises including, without
limitation, all rents, issues, profits and other revenues and income therefrom
and from the renting, leasing or bailment of Improvements and equipment, all
guaranties of tenants' performance under the Leases, and all rights and claims
of any kind that Debtor may have against any tenant under the Leases or in
connection with the termination or rejection of the Leases in a bankruptcy or
insolvency proceeding.
5. Plans, specifications, contracts and agreements relating to the
design or construction of the Improvements; Debtor's rights under any payment,
performance, or other bond in connection with the design or construction of the
Improvements; all landscaping and construction materials, supplies, and
equipment used or to be used or consumed in connection with construction of the
Improvements, whether stored on the Premises or at some other location; and
contracts, agreements, and purchase orders with contractors, subcontractors,
suppliers, and materialmen incidental to the design or construction of the
Improvements.
37
<PAGE>
6. All contracts (excluding contracts relating to the printing
operations of Debtor), rights, claims or causes of action pertaining to or
affecting the Premises or the Improvements, including, without limitation, all
options or contracts to acquire other property for use in connection with
operation or development of the Premises or Improvements, management contracts,
service or supply contracts, permits, licenses, franchises and certificates, and
all commitments or agreements, now or hereafter in existence, intended by the
obligor thereof to provide Debtor with proceeds to satisfy the loan evidenced
hereby or improve the Premises or Improvements, and the right to receive all
proceeds due under such commitments or agreements including refundable deposits
and fees.
7. All books, records, surveys, reports and other documents related
to the Premises, the Improvements, the Leases, or other items of collateral
described herein.
8. All additions, accessions, replacements, substitutions, proceeds
and products of the real and personal property, tangible and intangible,
described herein.
All of the foregoing described collateral is exclusive of any
equipment, furniture, furnishings or trade fixtures owned and supplied by Debtor
or by any tenant of the Premises.
38
<PAGE>
EXHIBIT 10(ZZZ)
ASSET PURCHASE AGREEMENT
------------------------
THIS ASSET PURCHASE AGREEMENT (the "Agreement"), made and entered into
---------
this 23rd day of October, 1996 by and among Graphic Industries, Inc., a Georgia
corporation ("Graphic"), Presstar Acquisition Corp., a Maryland corporation and
-------
a wholly owned subsidiary of Graphic ("Purchaser") and Ex-Speed-ite Service,
---------
Inc., a corporation formed under the laws of the District of Columbia (the
"Corporation"), Robert T. Kaufman, Joel F. Kaufman and the 12201 Industrial
- ------------
Parkway Joint Venture (the "Joint Venture"), a Maryland partnership existing
-------------
under that certain joint venture agreement dated January 30, 1981 among Robert
T. Kaufman, Libby Kaufman, Richard H. Stewart, Jr., Susan Stewart, Robert
Ostrosky, and Joan Ostrosky (collectively, the "Venturers").
---------
WITNESSETH:
----------
WHEREAS, the Venturers desires to sell and Purchaser desires to
purchase substantially all of the assets of the Joint Venture; and
WHEREAS, the Corporation desires to sell and the Purchaser desires to
purchase substantially all of the assets of the Corporation (collectively, the
"Transaction").
- ------------
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 The "AAA" shall have the meaning set forth in
-----
Section 8.5.
Section 1.2 The "Act" shall mean the Securities Act of 1933, as
-----
amended.
Section 1.3 "Acquired Assets" shall mean all of the assets of the
---------------
Business and all of the assets of the Corporation and the Joint Venture,
including, without limitation:
(a) all Real Property and the fixtures, improvements, licenses or
easements appertaining thereto;
(b) all tangible personal property of the Business, including without
limitation, all machinery, equipment, furniture, and leasehold improvements
(the "Personal Property");
-----------------
(c) all written or oral contracts, leases, warranties, commitments,
agreements, licenses, purchase and sales orders, rights to any telephone
numbers, registrations, permits,
<PAGE>
approvals or other executory commitments of the Business, including but not
limited to all Contracts, all Real Property Leases and all Personal
Property Leases;
(d) all books and records of the Business (other than minute books),
including without limitation, data, data bases, business plans and
projections, records of sales, files, advertising materials and other
similar documents;
(e) all supplies and inventories;
(f) all Intellectual Property;
(g) all prepaid items, unbilled costs and fees, accounts, notes and
other receivables; and
(h) all assets and properties reflected on the Audited Schedule of Net
Assets;
provided, however, that the Acquired Assets shall not include the Excluded
Assets.
Section 1.4 "Acquisition Proposal" shall have the meaning set forth in
--------------------
Section 5.2.
Section 1.5 "Agreement" shall have the meaning set forth in the preamble.
---------
Section 1.6 "Area" shall mean the District of Columbia, Maryland and
----
Virginia.
Section 1.7 "Assumed Liabilities" shall mean only those liabilities of the
-------------------
Business identified as such on the Audited Schedule of Net Assets which shall
include $40,365.01 as of November 1, 1996 to Richard H. Stewart, Jr. under the
Company's deferred compensation plan and certain expenses pursuant to Section
11.7 hereof; provided, however, that Assumed Liabilities shall not include any
Excluded Liabilities.
Section 1.8 "Audited Net Asset Value" shall mean the net book value of the
-----------------------
Net Assets as of the Closing Date, as determined pursuant to Section 2.5 hereto.
Section 1.9 "Audited Schedule of Net Assets" shall have the meaning set
------------------------------
forth in Section 2.5(b).
Section 1.10 "Business" shall mean desktop publishing and prepress
--------
services, multicolor conventional sheet fed offset printing, multicolor half web
heat set offset printing, bindery services including cutting, folding, and
saddle stitching, addressing and mailing services, internet web page design and
maintenance, acting as an internet site provider and all other forms of graphic
communications currently operated by the Corporation using the Acquired Assets
under the tradename "Presstar Printing Corporation."
Section 1.11 "Claim" shall have the meaning set forth in Section 8.3(a).
-----
-2-
<PAGE>
Section 1.12 "Claim Notice" shall have the meaning set forth in Section
------------
8.3(a).
Section 1.13 "Closing" shall have the meaning set forth in Section 2.7.
-------
Section 1.14 "Closing Date" shall mean the date upon which the Closing (as
------------
defined herein) shall occur.
Section 1.15 "Closing Net Asset Value" shall mean the net book value of
-----------------------
the Net Assets as of the Closing Date, as determined by Sellers pursuant to
Section 2.5(a) hereto.
Section 1.16 "Closing Schedule of Net Assets" shall have the meaning set
------------------------------
forth in Section 2.5(a) hereto.
Section 1.17 "Code" shall mean the Internal Revenue Code of 1986, as
----
amended.
Section 1.18 "Commission" shall mean the Securities and Exchange
----------
Commission, or any other federal agency at the time administering the Act.
Section 1.19 "Competing Business" shall mean desktop publishing and
------------------
prepress services, multicolor conventional sheet fed offset printing, multicolor
half web heat set offset printing, bindery services including cutting, folding
and saddle stitching, addressing and mailing services, internet web page design
and maintenance, acting as an internet site provider and all other forms of
graphic communications currently operated by the Corporation.
Section 1.20 "Consulting Agreement" shall mean that certain consulting and
--------------------
non-competition agreement between Robert T. Kaufman and Purchaser, substantially
in the form of Exhibit A hereto.
---------
Section 1.21 "Contracts" shall have the meaning set forth in Section 3.20.
---------
Section 1.22 "Corporation" shall have the meaning set forth in the
-----------
preamble.
Section 1.23 "Damages" means claims, damages, losses, judgments,
-------
settlement, and expenses, including, without limitation, all reasonable fees and
disbursements of counsel incident to the investigation or defense of any claim
or proceeding or threatened claim or proceeding, less the amount of any actual
tax or insurance benefits then available to or received by the Indemnified Party
with respect thereto.
Section 1.24 "Effective Period" shall have the meaning set forth in
----------------
Section 7.4(a).
Section 1.25 "Employment Agreement" shall mean that certain employment and
--------------------
non-competition agreement between Joel F. Kaufman and Purchaser substantially in
the form of Exhibit B hereto.
---------
Section 1.26 "Environmental Laws" shall have the meaning set forth in
------------------
Section 3.14(a).
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<PAGE>
Section 1.27 "Environmental Permits" shall have the meaning set forth in
---------------------
Section 3.14(c).
Section 1.28 "ERISA" shall mean the Employee Retirement Income Security
-----
Act of 1974, as amended.
Section 1.29 "Escrow Agent" shall mean the party identified as the escrow
------------
agent in the Escrow Agreement, including its successors and assigns.
Section 1.30 "Escrow Agreement" shall mean that certain Escrow Agreement
----------------
to be entered into by and among Graphic, Purchaser, Robert T. Kaufman and the
Escrow Agent, substantially in the form of Exhibit C hereto, pursuant to which
---------
Robert T. Kaufman shall deliver the Escrow Stock Consideration, which shall be
comprised of Graphic Common Stock having a value of no less than $350,000, which
shall be issued to Robert T. Kaufman pursuant to Section 5.9 hereof as payment
of his loan to the Corporation, to be held in escrow for the Escrow Period.
Section 1.31 "Escrow Period" shall mean the period beginning on the
-------------
Closing Date, and ending one year thereafter.
Section 1.32 "Escrow Stock Consideration" shall mean that number of shares
--------------------------
of Graphic Common Stock equal to the greater of: ((a) $350,000 or (b) twenty
percent (20%) of the Purchase Price) divided by the Stock Price, and rounded to
the nearest whole number.
Section 1.33 "Excluded Assets" shall mean
---------------
(a) any accounts receivable listed on Schedule 1.33(a), which shall
----------------
include that of Science Weekly;
(b) all uncollected service or late fees on any accounts receivable;
(c) any accounts receivable of the Corporation or the Joint Venture
due from either Shareholders or Venturers, or any of their affiliates;
(d) any claims the Sellers may have against the law firm Sanders,
Schnabel, Brandenburg & Zimmerman, P.C., David Kaufman or Mitch Dingwall;
(e) all cash or cash equivalents in transit, in hand or in bank
accounts;
(f) capitalized loan costs;
(g) any life insurance policies on Robert T. Kaufman and any amounts
relating thereto;
(h) all Plans;
-4-
<PAGE>
(i) American Automobile Association 1929 lithostone, pictures, desk
appointments, water pitcher, refrigerator and file cabinet currently in
Robert T. Kaufman's office;
(j) all gold coins which are identified as precious metals on the
Financial Statements; and
(k) all real estate and other tax refunds for periods ending prior to
the Closing Date.
Section 1.34 "Excluded Liabilities" shall mean:
--------------------
(a) any Tax and Payroll Liabilities; and
(b) any liability or obligation to the law firm Sanders, Schnabel,
Brandenburg & Zimmerman, P.C.
Section 1.35 "Financial Statements" shall mean the financial statements of
--------------------
the Corporation and the Joint Venture for the years ended December 31, 1993,
December 31, 1994, December 31, 1995, and the period ended July 31, 1996, all of
which are attached hereto as Schedule 3.6.
------------
Section 1.36 "Graphic" shall have the meaning set forth in the preamble.
-------
Section 1.37 "Graphic Common Stock" shall mean shares of Common Stock,
--------------------
$0.10 par value, of Graphic.
Section 1.38 "Indemnified Party" shall mean the party seeking
-----------------
indemnification under Article 8 hereof.
Section 1.39 "Indemnifying Party" shall mean the party against whom
------------------
indemnification is being sought pursuant to Article 8 hereof.
Section 1.40 "Intellectual Property" shall mean all trade names
---------------------
(including, without limitation, the trade name "Presstar Printing Corporation"),
trademarks, trade styles, service marks, patents, patent applications,
copyrights, copyright applications, trademark registrations and trademark
applications owned by, licensed by or registered in the name of any Seller for
use by the Business.
Section 1.41 "Interim Net Asset Value" shall mean a deficit of $458,947,
-----------------------
which is the net book value of the Net Assets as of July 31, 1996 as reflected
on the Interim Schedule of Net Assets attached hereto as Schedule 1.41.
-------------
Section 1.42 "Joint Venture" shall have the meaning set forth in the
-------------
preamble.
Section 1.43 "Joint Venture Agreement" shall mean the 12201 Industrial
-----------------------
Parkway Joint Venture Agreement dated January 30, 1981, by and among the
Venturers.
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<PAGE>
Section 1.44 "Knowledge" shall mean all information, data, materials or
---------
knowledge actually known by a person or which should have been known by such
person after reasonable inquiry or investigation.
Section 1.45 "Net Assets" shall mean all of the Acquired Assets less the
----------
Assumed Liabilities. In determining Net Assets, Excluded Assets and Excluded
Liabilities shall be excluded.
Section 1.46 "Non Third Party Claim" shall have the meaning set forth in
---------------------
Section 8.3(a).
Section 1.47 "Personal Property" shall have the meaning set forth in
-----------------
Section 1.3(b).
Section 1.48 "Personal Property Leases" shall have the meaning set forth
------------------------
in Section 3.8(b).
Section 1.49 "Plans" shall have the meaning set forth in Section 3.18.
-----
Section 1.50 "Proprietary Information" shall mean information related to
-----------------------
the Business (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, information concerning the financial affairs, processes,
services, 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 Business.
Proprietary Information will not include any information or data which before
being divulged by any Seller, Shareholder or Venturer (i) has become generally
known to the public through no wrongful act of such party; (ii) has been
rightfully received by such party from another party without restriction on
disclosure and without breach of an obligation of confidentiality running either
directly or indirectly to Purchaser or Graphic; (iii) has been approved for
release and released to the general public by written authorization of Purchaser
or Graphic; (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 such party must first have given written notice of such
required disclosure to Purchaser, and taken reasonable steps to allow Purchaser
to seek to protect the confidentiality of the information required to be
disclosed including, without limitation, to allow Purchaser 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 such party without use, directly or indirectly, of Proprietary
Information and does not relate to the Business.
Section 1.51 "Purchase Price" shall have the meaning set forth in Section
--------------
2.3.
Section 1.52 "Purchaser" shall have the meaning set forth in the preamble.
---------
Section 1.53 "Qualified Plans" shall have the meaning set forth in Section
---------------
5.15(d).
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<PAGE>
Section 1.54 "Real Property" shall have the meaning set forth in Section
-------------
3.9(a).
Section 1.55 "Real Property Leases" shall have the meaning set forth in
--------------------
Section 3.9(b).
Section 1.56 "Recipient" shall mean any party receiving Transaction Stock
---------
pursuant to the terms of this Agreement.
Section 1.57 "Release" shall mean that certain Release to be entered into
-------
by the Corporation, the Shareholders and the Venturers, substantially in the
form of Exhibit D hereto.
---------
Section 1.58 "Response Notice Period" shall have the meaning set forth in
----------------------
Section 8.3(a).
Section 1.59 "Restricted Period" shall mean the period commencing with the
-----------------
Closing Date and ending on the third anniversary thereof.
Section 1.60 "Sellers" shall mean, collectively, the Corporation and the
-------
Joint Venture provided, however, that the term "Sellers" shall not include the
Venturers in their individual capacities.
Section 1.61 "Shareholders" shall mean Robert T. Kaufman and Joel F.
------------
Kaufman.
Section 1.62 "Stock Consideration" shall mean that number of shares of
-------------------
Graphic Common Stock determined by dividing the Purchase Price by the Stock
Price, rounded up to the nearest whole number.
Section 1.63 "Stock Price" shall mean the average closing price per share
-----------
of Graphic Common Stock as reported in The Wall Street Journal for the twenty
-----------------------
(20) trading day period ending with the close of the fourth (4th) trading day
prior to the Closing.
Section 1.64 "Tax" shall mean all Federal, state and local sales, use,
---
income, payroll, social security, occupation, gross receipts, ad valorem,
transfer, franchise, withholding, employment, excise, property, or other tax,
charge, duty or other assessment, together with any interest, fines or penalties
in connection therewith.
Section 1.65 "Tax and Payroll Liabilities" shall mean all Tax and payroll
---------------------------
related liabilities of the Business, Corporation or Joint Venture existing on or
before the Closing Date.
Section 1.66 "Third Party Claim" shall have the meaning set forth in
-----------------
Section 8.3(a).
Section 1.67 "Transaction" shall have the meaning set forth in the
-----------
preamble.
Section 1.68 "Transaction Stock" shall mean the Stock Consideration and
-----------------
all Graphic Common Stock delivered pursuant to Section 5.9 hereof.
-----------
Section 1.69 "Venturers" shall have the meaning set forth in the preamble.
---------
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<PAGE>
Section 1.70 "WARN" shall mean the Worker Adjustment and Retraining
----
Notification Act.
ARTICLE 2
PURCHASE AND SALE OF ASSETS
Section 2.1 Purchase and Sale of Assets. At the Closing, subject to the
---------------------------
terms and conditions set forth herein, Sellers shall sell to Purchaser and
Purchaser shall purchase from Sellers the Business as a going concern and the
Acquired Assets.
Section 2.2 Assumption of Liabilities. At the Closing, subject to the
-------------------------
terms and conditions set forth herein, Purchaser shall assume and agree to pay,
discharge or perform, as appropriate, the Assumed Liabilities to the extent
reflected on the Audited Schedule of Net Assets.
Section 2.3 Purchase Price. The purchase price (the "Purchase Price") for
-------------- --------------
the Business as a going concern and the Acquired Assets shall be an amount equal
to $733,125 plus or minus the Interim Net Asset Value, subject to adjustment as
provided in Section 2.5 hereof, to be paid as set forth in Section 2.4 hereof.
----------- -----------
Section 2.4 Payment of Purchase Price. At the Closing Purchaser shall
-------------------------
deliver, for and in consideration of the Business as a going concern and the
Acquired Assets, the Stock Consideration, which shall be allocated among and
delivered to the Sellers or their designees as set forth in Section 2.6 hereof.
-----------
Section 2.5 Purchase Price Adjustment.
-------------------------
(a) Within 30 days following the Closing Date, Sellers shall cause to
be prepared and delivered to Purchaser a schedule (the "Closing Schedule of
-------------------
Net Assets"), substantially in the form of the Interim Schedule of Net
----------
Assets which is attached hereto as Schedule 1.41, reflecting the Closing
-------------
Net Asset Value, and setting forth any proposed adjustment to the Purchase
Price based upon the difference between the Closing Net Asset Value and the
Interim Net Asset Value. Such Closing Schedule of Net Assets shall be
prepared in accordance with Generally Accepted Accounting Principles
consistently applied, except that it shall omit the statements of income,
cash flows, retained earnings and all footnotes. Purchaser shall provide
Sellers, and any representative of Sellers, full access to the books and
records of the Business for purposes of preparing the Closing Schedule of
Net Assets. All outside services utilized to create the Closing Schedule
of Net Assets shall be at the sole cost and expense of Sellers.
(b) Upon receipt of the Closing Schedule of Net Assets, Graphic shall,
at its expense, cause its Certified Public Accountants, Kanes Benator &
Company, L.L.C., to conduct a balance sheet audit of the Closing Schedule
of Net Assets (the "Audited Schedule of Net Assets") reflecting the Audited
------------------------------
Net Asset Value as of the Closing Date and setting forth any proposed
adjustment to the Purchase Price based on the difference between the
Interim Net Asset Value and the Audited Net Asset Value. The audit of the
Closing
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<PAGE>
Schedule of Net Assets shall be completed and the Audited Schedule of Net
Assets shall be delivered to Sellers within sixty (60) days following
receipt of the Closing Schedule of Net Assets and the audit shall be
conducted in accordance with Generally Accepted Auditing Standards as
promulgated by the American Institute of Certified Public Accountants and
the Audited Schedule of Net Assets shall be prepared in Accordance with
Generally Accepted Accounting Principles consistently applied, except that
it shall omit the statements of income, cash flows, retained earnings and
all footnotes.
(c) Sellers shall have fifteen (15) days following receipt of the
Audited Schedule of Net Assets to agree or disagree with the calculation of
the Audited Net Asset Value as set forth therein. If Sellers agree within
such fifteen (15) day period, payment of any difference between the Interim
Net Asset Value and the Audited Net Asset Value shall be made as provided
in Section 2.5(e) hereof. Failure of Sellers to notify Purchaser of a
--------------
disagreement, together with a reason or reasons therefor, shall be deemed
agreement with the calculation of Purchase Price in the Audited Schedule of
Net Assets. If the parties do not agree, notice of the same shall be
delivered to Purchaser within such fifteen (15) day period, which notice
shall specify the item or items of disagreement and the reasons therefor.
Such dispute shall be resolved by arbitration, as set forth in Section 8.5
-----------
hereof.
(d) The Purchase Price to be paid to the Sellers shall be adjusted,
dollar for dollar, in the aggregate, as follows: (i) upward or downward,
by the amount by which the Audited Net Asset Value as shown on the final
Audited Schedule of Net Assets, as agreed upon by the parties as set forth
in Section 2.5(c) hereof, is more or less than (whichever is the case) the
Interim Net Asset Value; (ii) downward, by the face value of any accounts
or notes receivable in favor of the Joint Venture or the Corporation which
are (A) included in the Audited Schedule of Net Assets, (B) in excess of
any bad debt reserve provided for on the Audited Schedule of Net Assets,
and (C) remain uncollected one hundred twenty (120) days after the date of
the Audited Schedule of Net Assets; (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
Purchaser as a result of the breach of any representation, warranty or
covenant of the Sellers contained herein or in the schedules attached
hereto; and (iv) upward by the amount of accounts or notes receivable in
favor of the Joint Venture or the Corporation which are actually collected
within one hundred twenty (120) days after the date of the Audited Schedule
of Net Assets which exceed the face value of such accounts or notes
receivable included in the Audited Schedule of Net Assets net of any bad
debt reserve reflected therein.
(e) If the adjustment set forth in Section 2.5(d) hereof results in an
upward adjustment in the Purchase Price, Purchaser shall pay the amount of
such adjustment to Sellers in Graphic Common Stock valued at the Stock
Price and allocated among the Sellers as provided in Section 2.6 hereof.
If the adjustment set forth in Section 2.5(d) hereof results in a downward
adjustment in the Purchase Price, Sellers jointly and severally shall pay
Purchaser the amount of such adjustment in Graphic Common Stock valued at
the Stock Price. In the event there is a reduction in the Purchase Price
pursuant to this Section 2.5, the amount of such reduction shall first be
sought by Purchaser from the Escrow Stock
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<PAGE>
Consideration in accordance with the Escrow Agreement, and if the available
Escrow Stock Consideration is not sufficient to pay such deficiency, the
Sellers shall remain jointly and severally liable therefor; provided,
however, that payment from the Escrow Stock Consideration shall not be
Purchaser's exclusive source for payment of such reduction. Any payment in
Graphic Common Stock under this Section 2.5(e) shall be made by rounding
the number of shares to the nearest whole number and no fractional shares
shall be paid or payable. Any payments due under this Section 2.5(e) shall
be made within ten (10) business days following the final determination and
agreement by the parties of the Purchase Price adjustment under Section
2.5(d) hereof. If there is a disagreement regarding the total amount of
the adjustment, any undisputed amounts shall be paid within ten (10) days
of the notice of dispute.
(f) Any accounts receivable which remain uncollected one hundred
twenty (120) days after the date of the Audited Schedule of Net Assets and
which result in a downward adjustment in the Purchase Price pursuant to
Section 2.5(d)(ii) hereof shall be transferred back to the Sellers upon
final settlement of the Purchase Price.
Section 2.6 Allocation of Purchase Price and Assumed Liabilities. In
----------------------------------------------------
addition to Purchaser's assumption of the Assumed Liabilities from the
Corporation and the Joint Venture, respectively, in the amounts reflected on the
Audited Schedule of Net Assets, the Purchase Price shall be allocated between
the Sellers in accordance with the following: shares of Graphic Common Stock
representing $25,000 of the Purchase Price shall be allocated to the Joint
Venture and the Joint Venture hereby instructs that such shares be issued and
delivered directly to Richard H. Stewart, Jr. and Susan Stewart, and the
Corporation shall receive the remainder of the Purchase Price.
Section 2.7 Closing. The closing of the Transaction (the "Closing") will
------- -------
be held on November 1, 1996 at the offices of Galland, Kharasch, Morse &
Garfinkle, P.C., Canal Square, 1054 Thirty-First Street, N.W., Washington, D.C.
20007-4492, or such other time and place as the parties may agree; provided,
however, that in no event shall the Closing be held later than December 31,
1996.
Section 2.8 Tax Consequences. It is intended that with respect to the
----------------
Corporation, the Transaction shall constitute a reorganization within the
meaning of Code Section 368(a)(1)(C) and that this Agreement shall constitute a
"plan of reorganization" for purposes of Code Section 368.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF SELLERS AND VENTURERS
Sellers and Venturers represent and warrant to Purchaser and Graphic as
follows:
Section 3.1 Organization; Power; Qualification:
----------------------------------
(a) The Corporation is a corporation duly organized, validly
existing and in good standing under the laws of the District of Columbia.
The Corporation has no
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<PAGE>
subsidiaries and is not a party to any joint venture nor a partner of any
partnership. The Corporation 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 Virginia and Maryland, which
constitutes each jurisdiction in which the character of its properties or
the nature of its business requires such qualification or authorization,
except where the failure to be so qualified, in good standing or authorized
will not have a material adverse effect. As of the Closing Date, all of
the issued and outstanding capital stock of the Corporation will be owned
by Robert T. Kaufman and Joel F. Kaufman.
(b) The Joint Venture is a partnership duly organized and validly
existing under the laws of the State of Maryland. The Joint Venture has
all requisite 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 in each
jurisdiction in which the character of its properties or the nature of its
business requires such qualification or authorization, except where the
failure to be so qualified, in good standing or authorized will not have a
material adverse effect. The Venturers constitute all of the partners of
the Joint Venture.
Section 3.2 Authority. The execution and delivery of this Agreement, the
---------
Escrow Agreement and the Release by the Corporation and the performance of its
obligations hereunder and thereunder, have been duly authorized by the
Corporation's board of directors and shareholders, in accordance with applicable
law. Each Venturer has the requisite power and authority to enter into this
Agreement, the Escrow Agreement and the Release on behalf of the Joint Venture
and to perform its obligations hereunder and thereunder. The execution and
delivery of this Agreement, the Escrow Agreement and the Release by Sellers
constitute valid and legally binding obligations of each Seller, enforceable
against them in accordance with their respective terms.
Section 3.3 Title to Assets. Except as set forth on Schedule 3.3, Sellers
--------------- ------------
have good, valid and marketable title to all of the Acquired Assets, free and
clear of all mortgages, liens, pledges, security interests, charges, claims,
restrictions and other encumbrances and defects of title of any nature
whatsoever, and Sellers have complete and unrestricted power and the unqualified
right to sell, convey, assign, transfer and deliver the Acquired Assets to
Purchaser and to vest in Purchaser good title to the Acquired Assets.
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 of the
Business' assets, properties, or rights included in the Acquired Assets or any
interest therein, except for those contracts entered into in the normal course
of business consistent with past practice for the sale of inventory of the
Business.
Section 3.5 Compliance with Laws and Validity of Contemplated
-------------------------------------------------
Transactions. The execution, delivery and performance of this Agreement by
Sellers 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
Sellers or the Business; (b) conflict with, result in a breach of, or constitute
a
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<PAGE>
default under the current Articles of Incorporation or By-Laws of the
Corporation, the Joint Venture Agreement or under any indenture, agreement, or
other instrument to which Sellers or the Business are 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 Sellers or the Business.
Section 3.6 Financial Statements.
--------------------
(a) The Financial Statements, the Interim Schedule of Net Assets and
the Closing Schedule of Net Assets (i) are in accordance with the books and
records of the Business; (ii) are complete and correct and present fairly
the financial condition of the Business as of the respective dates
indicated and the results of operations for the respective periods
indicated; (iii) reflect adequate reserves for all known liabilities and
reasonably anticipated losses; and (iv) reflect proper accruals for run-off
in connection with any potential termination of the Corporation's self-
insured group plan.
(b) The Financial Statements, the Interim Schedule of Net Assets and
the Closing Schedule of Net Assets have been prepared in accordance with
Generally Accepted Accounting Principles, consistently applied, except that
(i) with respect to the July 31, 1996 Financial Statements the statements
of cash flows, retained earnings and accompanying footnotes have been
omitted; and (ii) with respect to the Interim Schedule of Net Assets and
the Closing Schedule of Net Assets, the statements of income, cash flows,
retained earnings and accompanying footnotes have been omitted.
(c) The accounts receivable shown on Financial Statements or acquired
by the Business after the date thereof but prior to the Closing Date
(excluding those constituting Excluded Assets) have been and 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 3.3, all accounts receivable shown on the Financial
------------
Statements or acquired after the date thereof and prior to the Closing Date
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. To Sellers' Knowledge, 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,
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. The Business 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 Business' accounts
receivable in an amount in excess of such bad debt reserve.
(d) All inventories reflected on the Financial Statements or acquired
or to be acquired by the Business 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
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<PAGE>
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 Business, (iii) are now and will on the Closing
Date be owned by Sellers free of any liens, claims, charges, encumbrances,
security interests or other rights to or against such in favor of others,
except as set forth on Schedule 3.3 hereto, (iv) have been or will be
------------
acquired by Sellers only in bona fide transactions entered into in the
ordinary course of business, and (v) are valued at the lesser of cost or
market value. None of such inventory is now, or on the Closing Date will
be, held by Sellers on consignment. All work in process is being prepared
for sale in the ordinary course of business, and, all amounts due to the
Business with respect to such work in process will be paid in full within
120 days of delivery of such completed work.
(e) The books and records of the Business have been maintained in all
material respects in accordance with sound business practices.
Section 3.7 Taxes. All federal, state and other Tax returns of the
-----
Business required by law to be filed have been duly filed, such returns are and
will be true, correct and complete in all material respects, and all federal,
state, and other taxes, assessments, and other governmental charges or levies
upon Sellers and any of their properties, income, profits, and assets that are
due and payable have been paid.
Section 3.8 Personal Property.
-----------------
(a) Schedule 3.8(a) contains an accurate and complete list of all
---------------
Personal Property, and Sellers have good title to all of the Personal
Property. All items of Personal Property are in good operating condition
and in a state of reasonable maintenance and repair, and, to the best of
Sellers' Knowledge, conform to all applicable laws, ordinances, codes,
rules and regulations relating to their use or operation. No items of
personal property other than the Personal Property are used or are
necessary for the operation of the Business, other than leased items set
forth on Schedule 3.8(b).
---------------
(b) Schedule 3.8(b) contains an accurate and complete list of all
---------------
leases for machinery, vehicles, equipment or other items of personal
property leased with respect to the Business (the "Personal Property
-----------------
Leases"). Each of the Personal Property Leases 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 personal property subject to Personal Property
Leases are in good operating condition and in a state of reasonable
maintenance and repair. The Personal Property Leases shall be transferred
to Purchaser as of the Closing Date, and the continuation, validity and
effectiveness of the Personal Property Leases will in no way be affected by
such transfer or the transactions contemplated by this Agreement, except as
set forth on Schedule 3.8(b) hereto.
---------------
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<PAGE>
Section 3.9 Real Property.
-------------
(a) Schedule 3.9(a) contains an accurate and complete description of
---------------
all real property owned by the Sellers, including the location and size of
such real property (the "Real Property"). Except as set forth on Schedule
------------- --------
3.9(a), Sellers have good and marketable title to the Real Property.
------
(b) Schedule 3.9(b) contains an accurate and complete list of all real
---------------
property leases with respect to the Business (the "Real Property Leases").
--------------------
The Real Property Leases are, and on the Closing Date will be, 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. The Real Property Leases are free and clear of any
mortgages or liens, and not subject to any deeds of trust, assignments,
subleases, or rights of any third parties other than the lessor thereof.
The Real Property Leases shall be terminated as of the Closing Date.
Section 3.10 Intellectual Property. Schedule 3.10 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 included within the
Intellectual Property which are used or useful in the Businesses and that are
owned by or registered in the name of Sellers or to which Sellers have any
rights as licensees or otherwise, giving in each case a brief description of the
terms of such license or other arrangement. Sellers have not received notice of
any claimed infringement or unlawful use of any such Intellectual Property and,
to the best of Sellers' Knowledge, Sellers have not infringed or made any
unlawful use of the Intellectual Property. Sellers have not received notice
that the manufacture, use or sale by the Business of its products, or any
component or part thereof, nor any manufacturing operation or machinery employed
by the Business, violates or infringes upon any claims of any United States or
foreign patent or patent application owned or held by any third party. Sellers
own (or possess adequate and enforceable rights to use without payment of
royalties) all Intellectual Property necessary for the conduct of, or use in,
the Business as the same is presently being conducted.
Section 3.11 Insurance. Schedule 3.11 contains a list and brief
--------- -------------
description of the policies of fire, liability and other forms of insurance
owned or held by Sellers for the Business, or in which either the Corporation or
the Joint Venture is a named insured. The properties and Business of Sellers of
an insurable nature are insured to the extent and against such risks customarily
insured against by corporations or partnerships of similar size and in similar
businesses. All policies listed on Schedule 3.11 will be outstanding and duly
-------------
in force on the Closing Date. All premiums due under such policies have been
paid and there are no outstanding claims under any such policies.
Section 3.12 Litigation. Except as set forth on Schedule 3.12, there is
---------- --------------
no litigation, arbitration or other similar proceeding pending or, to the
Knowledge of Sellers, threatened against or affecting the Business or the
Acquired Assets. There are no judgments, decrees, injunctions, rules or orders
of any governmental entity or arbitrator outstanding against Sellers, the
Business or the Acquired Assets which involve the likelihood of any adverse
judgment or liability which can
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<PAGE>
reasonably be expected to result in any liability of Purchaser with respect to
its business or assets or any adverse change in the operations or conditions of
the Business.
Section 3.13 Compliance with Laws. Neither Sellers nor the Business are
--------------------
subject to, or in default under, any order of any court, governmental authority
or arbitration board or tribunal. Neither Sellers nor the Business are in
violation of any laws, ordinances, governmental rules or regulations to which it
or they are subject. Sellers have obtained all licenses, permits, franchises or
other governmental authorizations necessary to the ownership of its properties
or the conduct of its business, and no consent, authorization or approval of or
filing with any governmental agency is required in connection with the execution
and delivery by Sellers of this Agreement or the consummation by Sellers of the
Transactions contemplated hereby.
Section 3.14 Environmental Matters.
---------------------
(a) Except as set forth on Schedule 3.14(a), operations of the
----------------
Business 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) Sellers have not been notified and are not aware of any violation
of any Environmental Laws; no Seller is otherwise aware that the Business
may be potentially responsible or otherwise liable under the Environmental
Laws; and no Seller has received any requests for information, notices,
pleadings or other documents (including, without limitation, consent
orders, consent decrees, judgments, orders, complaints or injunctions)
relating to (i) the Environmental Laws, (ii) environmental protection or
health or safety matters, or (iii) any statutory or common law theory of
liability involving environmental or health or safety matters.
(c) The Business 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.
-15-
<PAGE>
(d) Except in the ordinary course of business in material compliance
with all Environmental Laws and Environmental Permits, 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 Business; 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 Sellers.
(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 Business.
(f) No Seller 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 that is listed or nominated for listing on the National Priorities
List, Comprehensive Environmental Response, Compensation and Liability
Information System or State equivalents of either or to any place or
location that may give rise to a material liability of Sellers.
(g) To the best of Sellers' Knowledge, 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 Business based on or related to any Environmental Laws or
Environmental Permits.
(h) No lien exists, and to the best of Sellers' Knowledge, 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 Business.
Section 3.15 Absence of Changes. Except as set forth on Schedule 3.15,
------------------ -------------
since December 31, 1995 there has not been any transaction or occurrence in
which either the Corporation or the Joint Venture has: (a) adopted or amended
any collective bargaining agreement or any joint venture interest; (b) borrowed
any amount or incurred any liabilities (absolute or contingent), except in the
ordinary course of business; (c) 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; (d) sold, assigned or transferred any of its
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; (e) sold,
assigned or transferred any patents, trademarks, trade names, copyrights, or
other Intellectual Property; (f) suffered any material adverse change in its
business or financial position; (g) made any change in its accounting policies
or practices; (h) made any change in employee compensation or declared any
bonuses, except as
-16-
<PAGE>
described on Schedule 3.15; (i) made or declared any dividend or distribution to
-------------
the Shareholders or Venturers; (j) experience a change in customer relations,
including, without limitation, any termination or notice of termination of
services by any customer; 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 Business 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 or the Closing Schedule of Net Assets 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 December 31, 1995.
Section 3.17 Employees. Schedule 3.17 contains a true and complete list
--------- -------------
of all employees of the Business; their salaries or wage rates and their
location of employment as of September 12, 1996, and a description of all group
insurance programs in effect for employees of the Business. Sellers are not in
default with respect to any of its obligations relating to salaries, wages or
group insurance programs in respect of employees of the Business.
Section 3.18 Employee Benefit Plans.
----------------------
(a) Sellers 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 plan, program, or arrangement, whether written or
unwritten, now or previously within the last four years maintained or
contributed to by the Corporation or the Joint Venture with respect to the
Business (the "Plans") and a brief description of each such Plan now
-----
maintained or contributed to is set forth on Schedule 3.18 hereto;
-------------
(b) Sellers 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;
(c) Sellers have 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.
-17-
<PAGE>
Section 3.19 Labor Matters. Schedule 3.19 contains a complete and
------------- -------------
accurate list of all claims brought by employees against the Business in the
past three (3) years, including, without limitation, (i) workers compensation
claims; (ii) claims brought by employees of the Corporation 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 Business by the Occupational Safety and
Health Administration or complaints filed against the Business 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 3.20 Contracts and Commitments.
-------------------------
(a) Schedule 3.20 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 Business;
(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 $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 Sellers are or the
Business 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;
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<PAGE>
(viii) 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); or
(ix) Any other contract upon which the Business or Acquired
Assets depend or is materially affected.
The contracts listed on Schedule 3.20 are referred to herein as the
-------------
"Contracts"
----------
(b) Each of the Contracts listed in Schedule 3.20 is in full force and
-------------
effect and, except as disclosed on Schedule 3.20, 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. None of the
Contracts, in the reasonable opinion of Sellers, contains any provision
with which there is a reasonable likelihood the Sellers, the Business, or
any party thereto will be unable to comply. The Contracts shall be
transferred to Purchaser as of the Closing Date and, except as reflected on
such Schedule 3.20, the continuation, validity and effectiveness of such
-------------
Contracts, and all other material terms thereof, will in no way be affected
by such transfer or the transactions contemplated by this Agreement.
(c) Except as set forth on Schedule 3.20(c) hereto, there exists no
----------------
actual or threatened termination, cancellation or limitation of, or any
modification or change in, (i) the business relationship of the Business
with any customer or group of customers of the Business whose purchases
individually or in the aggregate are material to the operations and
financial condition of the Business, (ii) the business relationship of the
Business with any material supplier to the Business, or (iii) the
relationship of the Business with any of its employees including the
resignation of any of its employees.
Section 3.21 Transactions with Affiliates. Except as set forth on
----------------------------
Schedule 3.21, neither Sellers nor any officer, director or employee of any
- -------------
Seller, 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 Business.
Section 3.22 Broker's or Finder's Fees. No Seller, Shareholder, or
-------------------------
directors or employees of the Corporation or Joint Venture 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 3.23 Securities Representations.
--------------------------
(a) Each Recipient either alone or with his or its purchaser
representative has such knowledge and experience in financial and business
matters that he or it is capable of evaluating the merits and risks of
obtaining the Transaction Stock and making an investment in Graphic. No
assurances have been made as to the future income or success of Graphic.
Each Recipient has had an opportunity to ask questions and receive
satisfactory answers from
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<PAGE>
the officers and directors of Graphic concerning Graphic and the terms and
conditions of his or its investment in capital stock of Graphic.
(b) No Recipient has received any representations or warranties, other
than those set forth in this Agreement, from the officers, directors,
affiliates, agents or representatives of Graphic in making his or its
decision to enter into this Transaction, and each Recipient is relying
solely on the information contained in this Agreement, in any prospectus
delivered to him or it, and personal investigation.
(c) Each Recipient has made other investments of this type and, by
reason of his or its business and financial experience and of the business
and financial experience of those persons he or it has retained to advise
him or it with respect to his or its disposition of the Business, he or it
has obtained the capacity to protect his or its own interest in investments
of this nature. In reaching the conclusion that he or it desires to
acquire the Transaction Stock, each Recipient has carefully evaluated his
or its financial resources and investment position and the risks associated
with his or its investment in Graphic and acknowledges that he or it is
familiar with and able to bear any economic risk of such investment.
(d) Each Recipient understands and agrees that the Transaction Stock
is to be issued to him or it without registration under any state or
federal law relating to the registration of securities and will be issued
to him or it in reliance on exemptions from registration under appropriate
state and federal laws and that reliance by Graphic on such exemptions is
predicated in part on the representations set forth in this Section 3.23.
------------
Each Recipient is acquiring the Transaction Stock for his or its own
account, to hold for investment, and with no present intention of dividing
his or its participation with others or reselling or otherwise
participating, directly or indirectly, in the distribution of the
Transaction Stock and shall not make any transfer, sale, or other
disposition of the Transaction Stock: (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) with respect to the
Corporation, in a manner so that the disposition of such Transaction Stock
does not cause the transactions contemplated by this Agreement to fail to
qualify as a reorganization under Section 368 of the Code.
(e) No Recipient has received any public solicitation or advertisement
concerning an offer to sell the Transaction Stock. Each Recipient 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, 1996, all Quarterly Reports on Form 10-Q currently filed for
fiscal year ending January 31, 1997, and Graphic's Proxy Statement for the
1996 Annual Meeting of Shareholders.
Section 3.24 Correctness of Representations. No representation or
------------------------------
warranty of any Seller or Venturer in this Agreement or in any statement,
certificate or Schedule furnished by Sellers or Venturers 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
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<PAGE>
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 Purchaser
pursuant to this Agreement have been delivered to or have been made available to
or will be made available for inspection by Purchaser and Purchaser's attorneys
and accountants.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF PURCHASER AND GRAPHIC
Purchaser and Graphic represent and warrant to the Sellers, the Venturers
and the Shareholders as follows:
Section 4.1 Organization; Power; Qualification. Each of Purchaser and
----------------------------------
Graphic is a corporation duly organized, validly existing and in good standing
under the laws of its state of incorporation. Each of Purchaser 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.
---------
(a) Purchaser has the corporate power and has taken all necessary
corporate action to authorize it to execute, deliver and perform this
Agreement, the Escrow Agreement, the Employment Agreement and the
Consulting Agreement, and to consummate the transactions contemplated
hereby and thereby. The execution and delivery of this Agreement, the
Escrow Agreement, the Employment Agreement and the Consulting Agreement by
Purchaser constitute valid and legally binding obligations of Purchaser,
enforceable against Purchaser in accordance with their respective terms.
(b) Graphic has the corporate power and has taken all necessary
corporate action to authorize it to execute, deliver and perform this
Agreement and the Escrow Agreement and to consummate the transactions
contemplated hereby and thereby. The execution and delivery of this
Agreement and the Escrow Agreement by Graphic constitute valid and legally
binding obligations of Graphic, enforceable against Graphic 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 and Graphic 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
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<PAGE>
Articles of Incorporation or By-Laws of Purchaser or Graphic or under any
indenture, agreement or other instrument to which Purchaser or Graphic 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 Purchaser or Graphic.
Section 4.4 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 Graphic is a party which relate to or affect the transfer of
the Transaction Stock.
Section 4.5 Broker's or Finder's Fees. Except for the services of Garland
-------------------------
McPherson & Associates, Inc., for which Graphic is responsible to pay all fees
with respect to the Transaction, neither Graphic nor Purchaser nor any director
or employee of Graphic or Purchaser 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 4.6 Graphic Reports. Graphic has delivered to Robert T. Kaufman
---------------
for distribution to each of the Recipients copies of Graphic's Annual Report on
Form 10-K (including the Annual Report to Shareholders) for the fiscal year
ended January 31, 1996, all Quarterly Reports currently filed on Form 10-Q for
fiscal year ending January 31, 1997, and Graphic's Proxy Statement for the 1996
Annual Meeting of Shareholders. As of their respective dates, none of the
above-mentioned reports contained any untrue statement of material fact or
omitted to state a material fact required to be stated therein or necessary to
make the statements made therein, in light of the circumstances in which they
were made, not misleading.
Section 4.7 Eligibility to File Form S-3. Graphic meets all eligibility
----------------------------
requirements under the Act for filing a Registration Statement on Form S-3 with
respect to the Transaction Stock.
Section 4.8 Correctness of Representations. No representation or warranty
------------------------------
of Purchaser or Graphic in this Agreement or in any statement, certificate or
Schedule furnished by Purchaser or Graphic 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.
ARTICLE 5
OBLIGATIONS AND COVENANTS
Section 5.1 Conduct of the 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 Sellers shall:
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<PAGE>
(a) operate the Business as presently operated and only in the
ordinary course, and use its commercially reasonable 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 properties of the Business in good order and
condition, reasonable wear and use excepted;
(c) take all steps reasonably necessary to maintain the Intellectual
Property including any pending applications therefor;
(d) pay accounts payable, other obligations and liabilities and
collect accounts receivable of the Business in accordance with the Sellers'
past business practices;
(e) comply and cause the Business to comply with all laws applicable
to the conduct of the Business;
(f) not enter into any settlement regarding any claim, dispute or
other cause of action brought against Sellers or the Business by any third
party except for settlements of customer disputes in the ordinary course of
business;
(g) not sell, or otherwise dispose of, any of the Acquired Assets,
other than in the ordinary course of business;
(h) submit all contracts to which Sellers or the Business is to become
a party between the date hereof and the Closing Date for approval by
Purchaser, other than contracts entered into in the ordinary course of
business; and
(i) not take any action that would constitute a breach of Section 3.15
------------
hereof.
Section 5.2 No Solicitation. Sellers shall not, nor shall they permit any
---------------
of their 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 the Business or its properties or assets
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 Business. Sellers 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, Sellers 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 Business and to furnish such persons
with all information (including financial and operating data) concerning its
affairs as they reasonably may request, including copies and extracts of
pertinent records, documents and
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<PAGE>
contracts. The Business and its employees shall assist Purchaser, its counsel,
accountants and representatives, in their examination of the Business' books and
records. To the extent that the Sellers shall have control over same, the
accountants of the Business 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, Sellers shall promptly notify Purchaser in writing of any material
change in the financial condition of the Business and the method of conducting
its operations, any material damage to or loss of any property used in the
Business, or the institution of or the threat of institution of legal
proceedings against the Business.
Section 5.5 No Default. Sellers 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 Taxes. All Tax returns of the Business required to be filed
-----
by the Closing Date, taking into account any extensions of the filing deadlines
granted to the Business, that have not yet been filed prior to the date hereof
(including those relating to periods after the Closing Date) shall be prepared
and filed by Sellers. Sellers shall use their best efforts to obtain all
extensions of time from governmental authorities necessary to effect this
provision. All Tax and Payroll Liabilities shall be retained by Sellers and
paid by Sellers when due.
Section 5.7 Compliance with Laws. At all times after the date hereof and
--------------------
through the Closing Date, Sellers 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 any Seller is a party or by which
the Acquired Assets are bound or otherwise, or under any governmental law or
regulation, Sellers shall use their commercially reasonable efforts to obtain
any such consent or approval prior to the Closing Date.
Section 5.9 Payment of Assumed Liabilities and Deferred Compensation. Any
--------------------------------------------------------
Assumed Liabilities for loans advanced by any Shareholder or Venturer or any of
their affiliates, or any interest accrued thereon, including, without
limitation, the Corporation's payment obligations under that certain Stock
Redemption and Employment Agreement dated May 12, 1988 between the Corporation
and Richard H. Stewart, Jr. and all deferred compensation owed to Richard H.
Stewart, Jr. by the Corporation to the extent reflected on the Audited Schedule
of Net Assets shall be paid at Closing by delivery to such individual of an
appropriate number of shares of Graphic Common Stock, valued at the Stock Price;
provided, however, that the Corporation's payment obligation for interest of
$35,545 as accrued on the Interim Schedule of Net Assets and the Audited
Schedule of
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<PAGE>
Net Assets as being due to Robert Ostrosky shall be paid by Purchaser by
delivery of such amount in cash at the Closing.
Section 5.10 Accounts Receivable.
-------------------
(a) Sellers jointly and severally hereby guaranty the collectibility
of all accounts receivable, net of any reserves, reflected on the Audited
Schedule of Net Assets, satisfaction of such guaranty shall first be sought
by the Purchaser from the Escrow Stock Consideration and if the available
Escrow Stock Consideration is not sufficient to cover the guaranteed
amount, the Sellers shall remain jointly and severally liable therefor;
provided, however, that payment from the Escrow Stock Consideration shall
not be Purchaser's exclusive source of payment under the guaranty.
(b) Purchaser shall use commercially reasonable efforts, following the
Closing Date, to collect in the ordinary course of business all of the
accounts receivable of the Business reflected on the Audited Schedule of
Net Assets.
Section 5.11 Mercantile Debt. Purchaser shall pay-off or assume at
---------------
Closing all amounts owed by the Business to Mercantile Safe Deposit and Trust
Company and, in the event of an assumption, Purchaser shall secure all necessary
third party consents to such assumption.
Section 5.12 Release of Personal Guaranties. Purchaser shall cause any
------------------------------
personal guaranties of any Seller, Shareholder or Venturer with respect to any
Assumed Liability of the Business to be released on or prior to the Closing. If
such release cannot be obtained, Graphic shall unconditionally guaranty the
performance of Purchaser with respect to such guaranteed liability.
Section 5.13 Post-Closing Sale of Real Estate. In the event that the real
--------------------------------
property located at 12201 Industrial Parkway, Silver Spring, Maryland, and the
building located thereon is sold by Purchaser or any of its affiliates
(including, but not limited to, Graphic) within the five (5) year period
beginning on the Closing Date, the net proceeds of the sale to Purchaser in
excess of $3.3 million before income tax shall be divided 50% to the Purchaser
and 50% to the Venturers in accordance with their respective ownership interest
in the Joint Venture set forth on Schedule 5.13.
-------------
Section 5.14 Confidentiality. Each of Graphic, Purchaser, the Sellers,
---------------
the Shareholders and the Venturers shall agree to keep confidential and not use
for its or their own benefit or the benefit of any other persons, or divulge to
any other person, any confidential or Proprietary Information which such party
learns during the course of the Transaction and which relates to the other
parties hereto or their affiliates. Each of the parties hereto shall use its
best efforts not to disclose, or to allow any of its officers, directors,
stockholders, agents or employees to disclose, the existence of this Agreement
or the Transaction contemplated hereby, except as required by applicable law or
legal process, without the prior written consent of the other parties hereto.
The parties agree that if the Transaction is not consummated for any reason,
each shall return or destroy all confidential materials received from any other
party hereto.
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Section 5.15 Employee Benefits Plans.
-----------------------
(a) Purchaser shall not adopt, maintain, or assume sponsorship of any
of the Plans.
(b) Sellers shall retain liability for and shall pay when due all
benefits under any of the Plans providing medical or dental benefits
attributable to covered services rendered and expenses incurred on or prior
to the Closing Date and all medical and dental benefits attributable to
covered services rendered and expenses incurred after the Closing Date with
respect to employees of the Business and their eligible dependents who are
confined to hospitals or nursing institutions on the Closing Date, or
receiving home health care following a hospital confinement if the illness
or injury for which such confinement is necessary commenced on or prior to
the Closing Date.
(c) Sellers shall retain all liability for the continuation coverage
requirements of Sellers under Section 4980B of the Code and Section 601 and
608 of ERISA, with respect to each Sellers' employee who terminates or
terminated employment on or before the Closing Date and Purchaser shall
have no liability with respect thereto.
(d) After the Closing Date, as to all of Sellers' benefit plans that
are exempt from federal income taxation under Section 501(a) of the Code
(the "Qualified Plans"), Sellers shall (i) terminate all Qualified Plans,
(ii) submit a completed Form 5310 to the Internal Revenue Service regarding
the continued qualification of each qualified Plan to be terminated and
(iii) following the receipt of a favorable determination letter from the
Internal Revenue Service, make final distributions to participants of their
account balances in any Qualified Plans.
Section 5.16 Treatment of Transaction as Reorganization. Graphic and
------------------------------------------
Purchaser shall use commercially reasonable efforts to assist Sellers in filing
all tax returns related to the Transaction in a manner consistent with
characterizing the Transaction as a tax-free reorganization within the meaning
of Code Section 368(a)(1)(C). After the Closing Date, Graphic and Purchaser
shall make commercially reasonable efforts to cooperate with Sellers and to make
available to Sellers, as reasonably requested, all information, records and
documents relating to liabilities or potential liabilities for taxes of, or
related to, the Sellers, for periods ending on or before the Closing Date.
Section 5.17 WARN Act Liability. After the Closing Date, Purchaser shall
------------------
assume responsibility and liability for any mass layoffs or plant closings that
trigger the notice requirement of WARN.
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ARTICLE 6
CONDITIONS TO CONSUMMATION OF TRANSACTION
Section 6.1 Conditions to Obligations of Purchaser. The obligation
--------------------------------------
of Purchaser to consummate the Transaction is subject to the satisfaction at or
prior to the Closing of each of the following conditions:
(a) Purchaser shall have satisfactorily completed its due diligence
inquiry into the business affairs and financial condition of the Business,
and shall have received satisfactory assurances that it will enjoy
continued customer and employee relationships with existing customers and
employees of the Business.
(b) Each of the representations and warranties of Sellers and
Venturers shall be true and correct in all material respects as of, and
shall not have been violated in any material respect at, the Closing as
though made on and as of the Closing; Sellers and Venturers 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 Sellers and Venturers shall have
delivered to Purchaser a certificate dated as of the date of the Closing to
the foregoing effect.
(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 Transaction or which would have a material
adverse effect on Purchaser's ability to conduct the Business as presently
conducted or which claims material damages from Purchaser, Sellers,
Venturers or the Business with respect to the Transaction.
(d) The Corporation shall have delivered to Purchaser a certificate of
its Secretary certifying as to the requisite corporate or other action
authorizing the Transaction and incumbency of its officers.
(e) Sellers shall have obtained all necessary third party consents to
the Transaction from the parties set forth on Schedule 6.1(e) hereto.
---------------
(f) Purchaser shall have received any regulatory approvals required by
applicable laws.
(g) Purchaser shall have received a fully executed copy of the Release
substantially in the form of Exhibit D hereto.
---------
(h) Robert T. Kaufman shall have entered into the Consulting Agreement
substantially in the form of Exhibit A hereto.
---------
(i) Joel F. Kaufman shall have entered into the Employment Agreement
substantially in the form of Exhibit B hereto.
---------
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(j) Robert T. Kaufman shall have executed and delivered to Purchaser
the Escrow Agreement substantially in the form of Exhibit C hereto.
---------
(k) Purchaser shall have entered into satisfactory employment
arrangements with Willie Brennan, Andrea Krupinski and Tony Sarro.
(l) Purchaser and Graphic shall be satisfied, in their sole
discretion, that there exists no actual or threatened claims, disputes or
allegations against them, the Business or the Acquired Assets arising out
of the Transaction by any Seller, Shareholder, Venturer or third party,
other than those arising out of this Agreement or transactions contemplated
hereby; including without limitation settlement of all disputes with former
employees of the Corporation.
(m) Purchaser shall have received the opinion of Galland, Kharasch,
Morse & Garfinkle, P.C., counsel to Sellers, in form and substance
satisfactory to Purchaser.
(n) Since the date hereof, there shall have been no material adverse
change in the Business or event or circumstance which would reasonably be
expected to result in a material adverse change in the Business, except in
each case matters related to the economic conditions of the Business'
industry as a whole.
Section 6.2 Conditions to Obligations of Sellers. The obligation of
------------------------------------
Sellers to consummate the Transaction 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 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 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 Purchaser and Graphic shall have delivered to
Sellers 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 Transaction or which would have a material
adverse effect on the right of Sellers to consummate the Transaction or
which claims material damages from Sellers with respect to the Transaction.
(c) Purchaser shall have delivered to Sellers a certificate of its
Secretary certifying as to the requisite corporate and other action
authorizing the Transaction, and the incumbency of its officers.
(d) Purchaser shall have entered into the Employment Agreement,
substantially in the form of Exhibit B hereto.
---------
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(e) Purchaser shall have entered into the Consulting Agreement,
substantially in the form of Exhibit A hereto.
---------
(f) Purchaser and Graphic shall have executed and delivered to Sellers
the Escrow Agreement, substantially in the form of Exhibit C hereto.
---------
(g) Sellers shall have received the opinion of Powell, Goldstein,
Frazer & Murphy, counsel to Purchaser and Graphic, in form and substance
satisfactory to Sellers.
(h) Purchaser shall have satisfied or assumed all amounts owed by the
Sellers to Mercantile Safe Deposit and Trust Company and, in the event of
an assumption, Purchaser shall have secured all necessary third party
consents to such assumption.
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 as soon as practicable after the
Closing, but in no event later than 90 days, a Registration Statement on Form S-
3, pursuant to which Graphic shall request that the Transaction Stock be
registered for resale by the Recipients, and shall use its best efforts to have
such registration become effective. Recipients shall receive a copy of the
Registration Statement prior to filing for review, and Recipients shall
represent and warrant that the information contained in the Registration
Statement concerning them and the intended method of distribution of such
securities is true, complete, and correct. If at any time during the Effective
Period Graphic is unable to maintain such Registration Statement on Form S-3,
Graphic shall use a Form S-1 or such other registration form as Graphic deems
appropriate in order to fulfill its obligations under this Article 7.
Section 7.2 Furnishing Information. Recipients shall furnish to Graphic
----------------------
such information regarding themselves 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. Recipients hereby covenant with
-----------------------
Graphic that they will promptly advise Graphic of any changes in the information
concerning Recipients contained in the Registration Statement and that
Recipients will not make any sale of the Transaction Stock pursuant to the
Registration Statement without complying with the prospectus delivery
requirements of the Act. Recipients acknowledge that occasionally there may be
times when Graphic must temporarily suspend the use of the prospectus forming a
part of the Registration Statement until such time as an amendment to the
Registration Statement has been filed by Graphic and declared effective by the
Commission, the relevant prospectus has been supplemented by Graphic or until
such time as Graphic has filed an appropriate report with the Commission
pursuant to the Securities Exchange Act of 1934, as amended. During any such
period in which sales are suspended and upon reasonable prior notice of such
suspension from Graphic, Recipients agree not to sell any shares of Transaction
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Stock pursuant to any such prospectus. Recipients covenant that they will not
sell any shares pursuant to any such prospectus during the period commencing at
the time at which Graphic gives Recipients notice of the suspension of the use
of said prospectus and ending at the time Graphic gives notice that such
Recipients 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 Recipients 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, (i) to comply in all material respects with the
applicable requirements of the Act and the rules and regulations
promulgated by the Commission thereunder, and (ii) 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 Recipients 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 Recipients 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 to,
as soon as reasonably practicable:
(i) furnish to Recipients 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 Recipients may reasonably request;
(ii) notify Recipients promptly of any request by the Commission
for the amending or supplementing of the Registration Statement or
prospectus forming a part thereof;
(iii) advise Recipients 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 Transaction
Stock under such other securities or blue sky laws of such
jurisdictions within the United States and Puerto Rico as Recipients
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 Recipients to
consummate the disposition in such jurisdiction of such securities;
and
(v) notify Recipients, 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 Recipients
from and against all loss, damages, liabilities, expenses, costs, fees and
disbursements of counsel (including the reasonable fees and expenses of
legal counsel to Recipients), 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 therein a material fact required to
be stated therein or necessary to make the statements in any thereof not
misleading, and will reimburse Recipients 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 Recipients pursuant to Section 7.2 or based upon
-----------
information furnished to Graphic in writing by or on behalf of such
Recipient expressly for use therein.
(b) Recipients 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 or alleged untrue statement of a material fact contained in any
final prospectus contained in the Registration Statement (or any amendment
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<PAGE>
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 statement in any thereof not misleading,
to the extent that such untrue statement or omission is contained in the
information confirmed by Recipients pursuant to Section 7.2 or is made in
-----------
reliance upon or in conformity with information furnished in writing by or
on behalf of Recipient expressly for inclusion in the Registration
Statement or prospectus contained therein (or any amendment or supplement
thereto), and (ii) the failure by Recipient 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 Recipients; provided, however, that Graphic shall pay the
fees and expenses of one counsel for Recipients in connection with its
registration obligations hereunder, not to exceed $2,500.
ARTICLE 8
INDEMNIFICATION
Section 8.1 Indemnification of Purchaser and Graphic by Sellers.
---------------------------------------------------
(a) On the terms set forth in this Agreement, Sellers shall, from and
after the Closing Date, jointly and severally 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 Sellers in this Agreement and
for any and all liability (including undisclosed and contingent
liabilities) incurred or suffered by Purchaser or Graphic as a result of
the Transaction other than Assumed Liabilities; including, without
limitation, any Damages incurred by any of them arising from or in
connection with any Excluded Assets or Excluded Liabilities.
(b) The Sellers' representations, warranties and covenants set forth
in this Agreement shall, for purposes of this Section 8.1, 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, 3.7 and 3.14 or which relate to any liability other
------------ --- --- --- ----
than the Assumed Liabilities, which shall survive for a period of seven (7)
years following the Closing Date.
(c) Notwithstanding anything to the contrary contained in this Section
8.1, no Damages shall be recoverable hereunder unless the aggregate amount
of all Damages shall exceed $25,000, and the full amount of Damages shall
be recovered once this threshold is
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<PAGE>
met without regard to such threshold; provided, however that this threshold
shall not apply to any adjustment in Purchase Price pursuant to Article 2
hereof.
(d) Notwithstanding anything to the contrary contained in this
Agreement, including but not limited to this Section 8.1, the aggregate
liability of the Sellers, Shareholders and Venturers to Graphic and
Purchaser under this Agreement shall be limited to the total value of all
of the Transaction Stock delivered under this Agreement, including the
Escrow Stock Consideration delivered from escrow to Robert T. Kaufman,
valued at the Stock Price.
Section 8.2 Indemnification of Sellers by Purchaser and Graphic.
---------------------------------------------------
(a) On the terms set forth in this Agreement, Graphic and Purchaser
shall, from and after the Closing Date, jointly and severally indemnify,
defend and hold Sellers 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 Graphic or
Purchaser in this Agreement and for any liability incurred or suffered by
any Seller as a result of the Assumed Liabilities or any liability which
arises after the Closing Date and which liability relates solely to the
actions or inactions of Purchaser with respect to such Acquired Assets
following the Closing Date.
(b) The representations, warranties and covenants of Graphic and
Purchaser set forth in this Agreement, for purposes of this Section 8.2,
shall be deemed to have survived for a period of two (2) years.
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") 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") (Third Party Claim and Non Third Party Claim shall be referred to
-----
collectively as 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, (i) whether or not it disputes its liability to the Indemnified
Party hereunder with respect to such Claim and (ii) 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
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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 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 reasonable 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 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
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<PAGE>
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.
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. The Indemnifying Party shall not have the right to set-off any amount
owed to the Indemnified Party under this Article 8 against any amounts owed by
the Indemnified Party to the Indemnifying Party. 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, Section 2.4
----------- --------- -----------
or Section 2.5 shall be settled by arbitration in New York, New York, 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. Unless otherwise designated by the arbitrator as a result of fault,
each party shall pay its own expenses of arbitration and the expenses of the
arbitrator shall be equally shared.
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ARTICLE 9
COVENANT NOT TO COMPETE
Section 9.1 Agreement Not to Compete. Unless otherwise consented to
------------------------
in writing by Purchaser, the Sellers 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. The Shareholders acknowledge that the agreements not
to compete contained in the Consulting Agreement and the Employment Agreement
are being entered into in connection with the sale of the Business, as well as
in connection with the consulting and employment relationships between the
Shareholders and Purchaser.
Section 9.2 Agreement Not to Solicit Employees. The Sellers agree
----------------------------------
that during the Restricted Period, they will not, without the prior written
consent of Purchaser, 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 Purchaser or Graphic, any
person employed by Purchaser or Graphic. The Shareholders acknowledge that the
agreements not to solicit employees contained in the Consulting Agreement and
Employment Agreement are being entered into in connection with the sale of the
Business, as well as in connection with the consulting and employment
relationships between the Shareholders and Purchaser.
Section 9.3 Agreement Not to Solicit Customers. The Sellers 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 Business
during the immediately preceding one-year period (as shown on the books and
records of the Business). The Shareholders acknowledge that the agreements not
to solicit customers contained in the Consulting Agreement and Employment
Agreement are being entered into in connection with the sale of the Business, as
well as in connection with the consulting and employment relationships between
the Shareholders and Purchaser.
Section 9.4 Confidentiality.
---------------
(a) After the Closing, Sellers, Shareholders and Venturers (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 Seller, Shareholder or
Venturer determines that he or it is required by law to disclose any
Proprietary Information, he or it will not make such disclosure unless (and
then only to the extent that) he or it 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.
-36-
<PAGE>
(b) Any and all reproductions of the Proprietary Information in the
custody or control of the Sellers, Shareholders or Venturers will
prominently display a confidentiality legend.
(c) Sellers, Shareholders and Venturers covenant and agree that on or
before the Closing Date, they will destroy or will deliver to Purchaser all
tangible copies and embodiments of the Proprietary Information in their
possession or control.
Section 9.5 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 Sellers;
(b) by Purchaser or Sellers if, without a material breach of the
terminating party, the Closing shall not have occurred on or before
December 31, 1996, 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 Sellers or Venturers in
their representations, warranties, covenants or agreements set forth
herein; or
(d) by Sellers if there has been a misrepresentation, breach of
warranty or breach of covenant or agreement by Purchaser or Graphic 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.
-37-
<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; provided,
however, that Purchaser and Sellers acknowledge that this Agreement is being
executed in part under that certain power of attorney contained in Section 18 of
the Letter of Intent by and among the parties hereto dated July 24, 1996 and
nothing contained in this Agreement supersedes such Section 18 of the Letter of
Intent (notwithstanding the foregoing), and Sellers represent and warrant that
such Letter of Intent was duly executed by all parties thereto other than
Graphic and that such power of attorney is in full force and effect and has not
been rescinded, revoked, modified or amended, in whole or in part, 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 or Graphic, to it at:
Graphic Industries, Inc.
2155 Monroe Drive, N.E.
Atlanta, GA 30324
Telecopy: (404) 874-7589
Attention: Mark C. Pope, III
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.
-38-
<PAGE>
If to the Sellers, to them at:
12201 Old Columbia Pike
Silver Spring, Maryland 20904
Attn: Robert T. Kaufman
with a copy to:
Galland, Kharasch, Morse & Garfinkle, P.C.
Canal Square
1054 Thirty-First Street, N.W.
Washington, D.C. 20007-4492
Telecopy: (202) 342-5219
Attn: Joseph B. Hoffman, 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 Maryland,
regardless of the laws that might otherwise govern under applicable principles
of conflicts of laws thereof.
Section 11.5 Descriptive Headings. Except as contained in Article 1
--------------------
hereto, 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 Transaction shall be paid by the party incurring such expenses; provided,
however, any legal or accounting expenses incurred by the Sellers in connection
with the Transaction contemplated herein shall be accrued in full on the Closing
Schedule of Net Assets of Sellers as an Assumed Liability as of the Closing Date
and any balance due as of the Closing Date shall be included in the Audited
Schedule of Net Assets, and shall be paid in full by Purchaser within 30 days
after the Audited Schedule of Net Assets is agreed upon pursuant to Section
2.5(c) hereof.
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.
-39-
<PAGE>
IN WITNESS WHEREOF, each of the parties has caused this Agreement to be
executed as of the day and year first above written.
PRESSTAR ACQUISITION CORP.
By: /s/ Mark C. Pope, III
---------------------
Name: Mark C. Pope, III
--------------------
Title: President
------------------
GRAPHIC INDUSTRIES, INC.
By: /s/ Mark C. Pope, III
---------------------
Name: Mark C. Pope, III
--------------------
Title: Chairman
----------------
EX-SPEED-ITE SERVICE, INC.
By: /s/ Robert T. Kaufman
----------------------
Robert T. Kaufman
President
/s/ Robert T. Kaufman
---------------------
Robert T. Kaufman, Shareholder
/s/ Joel F. Kaufman
-------------------
Joel F. Kaufman, Shareholder
-40-
<PAGE>
12201 INDUSTRIAL PARKWAY JOINT VENTURE
/s/ Robert T. Kaufman
---------------------
Robert T. Kaufman, Managing Venturer
/s/ Libby Kaufman
-----------------
Libby Kaufman, Venturer
/s/ Richard H. Stewart, Jr.
---------------------------
Richard H. Stewart, Jr., Venturer
by Robert T. Kaufman under Power of Attorney
/s/ Susan Stewart
-----------------
Susan Stewart, Venturer
by Robert T. Kaufman under Power of Attorney
/s/ Robert Ostrosky
-------------------
Robert Ostrosky, Venturer
by Robert T. Kaufman under Power of Attorney
/s/ Joan Ostrosky
-----------------
Joan Ostrosky, Venturer
by Robert T. Kaufman under Power of Attorney
-41-
<PAGE>
EXHIBIT 10(aaaa)
Loan No. 5922696-001
PROMISSORY NOTE
(140 South Road, Bedford, Massachusetts)
$2,025,000 January 29, 1997
FOR VALUE RECEIVED, W.E. ANDREWS CO., INC., a Georgia corporation
("BORROWER"), promises to pay to the order of MetLife Capital Financial
Corporation ("METLIFE") at METLIFE's office at 10900 N.E. 4th St., Suite 500,
Bellevue, Washington 98004, attention: Real Estate Department, or at such other
address as the holder hereof may from time to time designate in writing, the
principal sum of TWO MILLION TWENTY-FIVE THOUSAND DOLLARS ($2,025,000) together
with interest from the date the proceeds of the loan (the "Loan") evidenced by
this Promissory Note (this "Note") are initially disbursed until maturity on the
principal balance from time to time remaining unpaid hereon at the rate of eight
and seventy-five hundredths percent (8.75%) per annum (computed on the basis of
a 360-day year of twelve (12) consecutive thirty (30)-day months) in
installments as follows: (i) interest only in advance at the rate of $492.19
per day shall be due and payable on the date the proceeds of the Loan are
initially disbursed to or for the benefit of BORROWER (including, without
limitation, disbursement into an escrow for the benefit of BORROWER) for the
period beginning on the date of such disbursement and ending on the last day of
the month during which such disbursement occurs; and (ii) one hundred seventy-
nine (179) installments of principal and interest in the amount of Twenty
Thousand Two Hundred Thirty-Eight and eighty-four hundredths Dollars
($20,238.84) each shall be payable commencing on the first day of the second
month following the month in which the proceeds of the loan evidenced by this
Note are initially disbursed and continuing on the first day of each and every
succeeding month until the first day of the one hundred eightieth (180th) month
following the date the proceeds of the Loan are initially disbursed at which
time all then unpaid principal and interest hereon shall be due and payable.
If any payment shall not be paid when due and shall remain unpaid for
ten (10) days, BORROWER shall pay an additional charge equal to five percent
(5.00%) of the delinquent payment or the highest additional charge permitted by
law, whichever is less.
Upon not less than thirty (30) days' advance written notice to METLIFE
at any time after the fifth (5th) anniversary of the due date of the first
monthly principal and interest payment due under this Note, and upon payment of
the Prepayment Premium, BORROWER shall have the right to prepay all, but not
less than all, of the outstanding balance of this Note on any regularly
scheduled principal and interest payment date. The Prepayment Premium shall be
determined by (i) calculating the decrease (expressed in basis points) in the
current weekly average yield of ten (10)-year U.S. Treasury Constant Maturities
(as published in Federal Reserve Statistical Release H.15 [519]) (the "Index")
----------------------------------------------
from November 8, 1996, to the Friday immediately preceding the week in which the
prepayment is made, (ii) dividing the decrease by 100, (iii) multiplying the
result by the following described applicable premium factor (the "Premium
Factor"), and (iv) multiplying the product by the principal balance to be
prepaid. If the Index is unchanged or has increased from November 8, 1996, to
the Friday immediately preceding the prepayment date, no Prepayment Premium
shall be due. The Premium Factor shall be the amount shown on the following
chart for the month in which prepayment occurs:
<TABLE>
<CAPTION>
No. Mos. Premium
Remaining (Years) Factor
--------- ------- -------
<S> <C> <C>
180 - 169 (15) .073
168 - 157 (14) .069
156 - 145 (13) .064
144 - 133 (12) .059
132 - 121 (11) .054
120 - 109 (10) .049
108 - 97 ( 9) .044
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C>
96 - 85 ( 8) .039
84 - 73 ( 7) .035
72 - 61 ( 6) .030
60 - 49 ( 5) .025
48 - 37 ( 4) .020
36 - 25 ( 3) .015
24 - 13 ( 2) .010
12 - 1 ( 1) .005
</TABLE>
If the Federal Reserve Board ceases to publish Statistical Release H.15 [519],
-----------------------------
then the decrease in the weekly average yield of ten (10)-year U.S. Treasury
Notes will be determined from another source designated by METLIFE. Voluntary
prepayment prior to the fifth (5th) anniversary of the due date of the first
monthly principal and interest payment due under this Note will be permitted
only in the event of a sale of the Property (as hereinafter defined) to a bona-
fide third party and only upon payment of the Prepayment Premium set forth above
If METLIFE at any time accelerates this Note after an Event of Default
(defined below), then BORROWER shall be obligated to pay the Prepayment Premium
in accordance with the foregoing schedule. The Prepayment Premium shall not be
payable with respect to condemnation awards or insurance proceeds from fire or
other casualty which METLIFE applies to prepayment, nor with respect to
BORROWER's prepayment of the Note in full during the last twelve (12) months of
the term of this Note unless an Event of Default has occurred. BORROWER
expressly acknowledges that such Prepayment Premium is not a penalty but is
intended solely to compensate METLIFE for the loss of its bargain and the
reimbursement of internal expenses and administrative fees and expenses incurred
by METLIFE.
BORROWER shall be liable on this Note and on all the representations,
warranties, indemnities and covenants in the Mortgage, Security Agreement,
Assignment of Leases and Rents and Fixture Filing ("Mortgage") covering the
property (the "Property") securing this Note and all other documents executed or
delivered in connection herewith (the "Loan Documents").
Each of the following shall constitute an Event of Default ("Event of
Default") hereunder and under the Mortgage executed contemporaneously herewith:
(a) Failure of or refusal by BORROWER to make any payment of
principal, interest, or Prepayment Premium upon this Note when due, and such
failure or refusal shall continue for a period of ten (10) days after written
notice is given to BORROWER by METLIFE specifying such failure; or
(b) Failure of BORROWER within the time required by the Mortgage to
make any payment for taxes, insurance or for reserves for such payments, or any
other payment necessary to prevent filing of or discharge of any lien, and such
failure shall continue for a period of ten (10) days after written notice is
given to BORROWER by METLIFE specifying such failure; or
(c) Failure by BORROWER or Graphic Industries, Inc., a Georgia
corporation ("Guarantor"), to observe or perform any obligations of BORROWER or
Guarantor to METLIFE on or with respect to any transactions, debts, undertakings
or agreements other than the transaction evidenced by this Note following the
giving of any required notice and the expiration of any applicable period of
grace; or
(d) Failure of BORROWER to make any payment or perform any obligation
under any superior liens or encumbrances on the Property, within the time
required thereunder, or commencement of any suit or other action to foreclose
any superior liens or encumbrances; or
(e) Failure by BORROWER to observe or perform any of its obligations
under any of the lease agreements covering the Property; or
2
<PAGE>
(f) The Property is transferred or any agreement to transfer any part
or interest in the Property in any manner whatsoever is made or entered into
without the prior written consent of METLIFE, except as specifically allowed
under the Mortgage, including without limitation creating or allowing any liens
on the Property or leasing any portion of the Property; or
(g) Filing by BORROWER or Guarantor of a voluntary petition in
bankruptcy or filing by BORROWER or Guarantor of any petition or answer seeking
or acquiescing in any reorganization, arrangement, composition, readjustment,
liquidation, or similar relief for itself under any present or future federal,
state or other statute, law or regulation relating to bankruptcy, insolvency or
other relief for debtors, or the seeking, consenting to, or acquiescing by
BORROWER or Guarantor in the appointment of any trustee, receiver, custodian,
conservator or liquidator for BORROWER or Guarantor , any part of the Property,
or any of the income or rents of the Property, or the making by BORROWER or
Guarantor of any general assignment for the benefit of creditors, or the
inability of or failure by BORROWER or Guarantor to pay its debts generally as
they become due, or the insolvency on a balance sheet basis or business failure
of BORROWER or Guarantor , or the making or suffering of a preference within the
meaning of federal bankruptcy law or the making of a fraudulent transfer under
applicable federal or state law, or concealment by BORROWER or Guarantor of any
of its property in fraud of creditors, or the imposition of a lien upon any of
the property of BORROWER or Guarantor which is not discharged in the manner
permitted by the Mortgage, or the giving of notice by BORROWER or Guarantor to
any governmental body of insolvency or suspension of operations; or
(h) Filing of a petition against BORROWER or Guarantor seeking any
reorganization, arrangement, composition, readjustment, liquidation, or similar
relief under any present or future federal, state or other law or regulation
relating to bankruptcy, insolvency or other relief for debts, or the appointment
of any trustee, receiver, custodian, conservator or liquidator of BORROWER or
Guarantor, of any part of the Property or of any of the income or rents of the
Property, unless such petition shall be dismissed within sixty (60) days after
such filing, but in any event prior to the entry of an order, judgment or decree
approving such petition; or
(i) The institution of any proceeding for the dissolution or
termination of BORROWER voluntarily, involuntarily, or by operation of law; or
(j) A material adverse change occurs in the assets, liabilities or net
worth of BORROWER or Guarantor from the assets, liabilities or net worth of
BORROWER or Guarantor previously disclosed to METLIFE; or
(k) Any warranty, representation or statement furnished to METLIFE by
or on behalf of BORROWER under this Note, the Mortgage, or any of the Loan
Documents shall prove to have been false or misleading in any material respect;
or
(l) Failure of BORROWER to observe or perform any other covenant or
condition contained in this Note and such default shall continue for thirty (30)
days after notice is given to BORROWER specifying the nature of the failure. No
notice of default and no opportunity to cure shall be required if during the
prior twelve (12) months METLIFE has already sent a notice to BORROWER
concerning default in performance of the same obligation; or
(m) Failure of BORROWER to observe or perform any other obligation
under the Mortgage or any other Loan Document when such observance or
performance is due, and such failure shall continue beyond the applicable cure
period set forth in such Loan Document, or if the default cannot be cured within
such applicable cure period, BORROWER fails within such time to commence and
pursue curative action with reasonable diligence or fails at any time after
expiration of such applicable cure period to continue with reasonable diligence
all necessary curative actions. No notice of default and no opportunity to cure
shall be required if during the prior twelve (12) months METLIFE has already
sent a notice to BORROWER concerning default in performance of the same
obligation; or
3
<PAGE>
(n) BORROWER's abandonment of the Property; or
(o) Any of the foregoing events occur with respect to any tenant of
the Property, with respect to Guarantor or with respect to any guarantor of any
tenant's obligations relating to the Property, or such guarantor dies or becomes
incompetent; or
(p) The occurrence of any default under any of the documents
evidencing or securing (i) METLIFE Loan No. 5905292, (ii) METLIFE Loan No.
5905392, (iii) METLIFE Loan No. 5905393, (iv) METLIFE Loan No. 5904594 (v)
METLIFE Loan No. 59009791, (vi) METLIFE Loan No. 5922796, (vii) METLIFE Loan No.
5922696, or (viii) any other indebtedness with Borrower or any of the guarantors
of the Indebtedness which is now or hereafter owed to METLIFE.
Upon the occurrence of any of the foregoing events of default, METLIFE
shall have the option to declare the entire amount of principal and interest due
under this Note immediately due and payable without notice or demand, and
METLIFE may exercise any of its rights under this Note and any document executed
or delivered herewith. After acceleration or maturity, BORROWER shall pay
interest on the outstanding principal balance of this Note at the rate of five
percent (5.00%) per annum above Chase Manhattan Bank's prime interest rate in
effect from time to time, or fifteen percent (15.00%) per annum, whichever is
higher, provided that such interest rate shall not exceed the maximum interest
rate permitted by law.
All payments of the principal and interest on this Note shall be made
in coin or currency of the United States of America which at the time shall be
the legal tender for the payment of public and private debts.
If this Note is placed in the hands of an attorney for collection,
BORROWER agrees to pay reasonable attorneys' fees and costs incurred by METLIFE
in connection therewith, and in the event suit or action is instituted to
enforce or interpret this Note (including without limitation efforts to modify
or vacate any automatic stay or injunction), the prevailing party shall be
entitled to recover all expenses reasonably incurred at, before or after trial
and on appeal, whether or not taxable as costs, or in any bankruptcy proceeding,
or in connection with post-judgment collection efforts, including, without
limitation, attorneys' fees, witness fees (expert and otherwise), deposition
costs, copying charges and other expenses.
This Note shall be governed and construed in accordance with the laws
of the Commonwealth of Massachusetts applicable to contracts made and to be
performed therein (excluding choice-of-law principles). BORROWER hereby
irrevocably submits to the jurisdiction of any state or federal court sitting in
Massachusetts in any action or proceeding brought to enforce or otherwise
arising out of or relating to this Note, and hereby waives any objection to
venue in any such court and any claim that such forum is an inconvenient forum.
This Note is given in a commercial transaction for business purposes.
This Note may be declared due prior to its expressed maturity date,
all in the events, on the terms, and in the manner provided for in the Mortgage.
BORROWER and all sureties, endorsers, guarantors and other parties now
or hereafter liable for the payment of this Note, in whole or in part, hereby
severally (i) waive demand, notice of demand, presentment for payment, notice of
nonpayment, notice of default, protest, notice of protest, notice of intent to
accelerate, notice of acceleration and all other notices, and further waive
diligence in collecting this Note or in enforcing any of the security for this
Note; (ii) agree to any substitution, subordination, exchange or release of any
security for this Note or the release of any party primarily or secondarily
liable for the payment of this Note; (iii) agree that METLIFE shall not be
required to first institute suit or exhaust its remedies hereon against BORROWER
or others liable or to become liable for the payment of this Note or to enforce
its rights against any security for the payment of this Note; and (iv) consent
to any extension of time for the payment of this Note, or any installment
hereof, made by agreement
4
<PAGE>
by METLIFE with any person now or hereafter liable for the payment of this Note,
even if BORROWER is not a party to such agreement.
All agreements between BORROWER and METLIFE, whether now existing or
hereafter arising and whether written or oral, are hereby limited so that in no
contingency, whether by reason of demand or acceleration of the final maturity
of this Note or otherwise, shall the interest contracted for, charged, received,
paid or agreed to be paid to METLIFE exceed the maximum amount permissible under
the applicable law. If, from any circumstance whatsoever, interest would
otherwise be payable to METLIFE in excess of the maximum amount permissible
under applicable law, the interest payable to METLIFE shall be reduced to the
maximum amount permissible under applicable law; and if from any circumstance
METLIFE shall ever receive anything of value deemed interest by applicable law
in excess of the maximum amount permissible under applicable law, an amount
equal to the excessive interest or if such excessive amount of interest exceeds
the unpaid balance of principal hereof, such excess shall be refunded to
BORROWER. All interest paid or agreed to be paid to METLIFE shall, to the extent
permitted by applicable law, be amortized, prorated, allocated, and spread
throughout the full period (including any renewal or extension) until payment in
full of the principal so that the interest hereon for such full period shall not
exceed the maximum amount permissible under applicable law. METLIFE expressly
disavows any intent to contract for, charge or receive interest in an amount
which exceeds the maximum amount permissible under applicable law. This
paragraph shall control all agreements between BORROWER and METLIFE.
IMPORTANT: READ BEFORE SIGNING. THE TERMS OF THIS
AGREEMENT SHOULD BE READ CAREFULLY BECAUSE ONLY THOSE
TERMS IN WRITING ARE ENFORCEABLE. NO OTHER TERMS OR
ORAL PROMISES NOT CONTAINED IN THIS WRITTEN CONTRACT
MAY BE LEGALLY ENFORCED. YOU MAY CHANGE THE TERMS OF
THIS AGREEMENT ONLY BY ANOTHER WRITTEN AGREEMENT.
IN WITNESS WHEREOF, BORROWER has caused this Note to be executed by
its duly authorized officers as of the year and day first written above.
BORROWER:
W.E. ANDREWS CO., INC.,
a Georgia corporation
By:________________________________________
Name: _____________________________________,
[Vice] President
By:________________________________________
Name:_____________________________________,
Vice President/Treasurer
[SEAL]
5
<PAGE>
Prepared by and after
recording return to:
Dorothea S. Costrini
Hunter, Maclean, Exley & Dunn, P.C.
200 East Saint Julian Street
Savannah, Georgia 31401
MetLife Capital Financial Corporation
Loan No.: 5022696-001
MORTGAGE, SECURITY AGREEMENT,
ASSIGNMENT OF LEASES AND RENTS,
AND FIXTURE FILING
(140 South Road, Bedford, Massachusetts)
THIS INSTRUMENT IS ALSO TO BE INDEXED IN THE INDEX OF FINANCING STATEMENTS.
THIS MORTGAGE, SECURITY AGREEMENT, ASSIGNMENT OF LEASES AND RENTS, AND FIXTURE
FILING COVERS GOODS WHICH ARE OR ARE TO BECOME FIXTURES ON THE REAL PROPERTY
DESCRIBED HEREIN. THE BORROWER/DEBTOR HEREUNDER IS THE RECORD OWNER OF THE REAL
PROPERTY.
THE NAMES OF THE "DEBTOR" AND THE "SECURED PARTY", THE MAILING ADDRESS OF THE
"SECURED PARTY" FROM WHICH INFORMATION CONCERNING THE SECURITY INTEREST MAY BE
OBTAINED, THE MAILING ADDRESSES OF THE "DEBTOR" AND A STATEMENT INDICATING THE
TYPES, OR DESCRIBING THE ITEMS, OF COLLATERAL ARE AS DESCRIBED BELOW, IN
COMPLIANCE WITH THE REQUIREMENTS OF ARTICLE 9, SECTION 402 OF THE UNIFORM
COMMERCIAL CODE.
THIS MORTGAGE, SECURITY AGREEMENT, ASSIGNMENT OF LEASES AND RENTS, AND
FIXTURE FILING (herein "Mortgage"), made as of January 29, 1997, by the Grantor,
W.E. ANDREWS CO., INC., a Georgia corporation, whose business address is 120
South Road, Bedford, Massachusetts 01730 (herein "Borrower"), in favor of the
Grantee, METLIFE CAPITAL FINANCIAL CORPORATION, a Delaware corporation, whose
address is Real Estate Department, 10900 N.E. 4th Street, Suite 500, Bellevue,
Washington 98004 (herein "METLIFE"),
W I T N E S S E T H :
THAT, WHEREAS, Borrower is justly indebted to METLIFE in the sum of Two
Million Twenty-Five Thousand and no hundredths Dollars ($2,025,000), as
evidenced by a certain Note (as hereinafter );
NOW, THEREFORE, in consideration of the indebtedness herein recited,
Borrower irrevocably gives, grants, sells, transfers, assigns, conveys,
warrants, and confirms unto METLIFE and its successors and assigns, WITH
MORTGAGE COVENANTS, UPON THE STATUTORY CONDITIONS all of Borrower's right, title
and interest, now owned or hereafter acquired, including any reversion or
remainder interest, in the real property located in the City of Bedford, County
of Middlesex, Commonwealth of Massachusetts, commonly known as 140 South Road,
and more particularly described in Exhibit A attached hereto and incorporated
---------
herein, including all heretofore or hereafter vacated alleys and streets
abutting the property, and all easements, rights, appurtenances, tenements,
hereditaments, rents, royalties, mineral, oil and gas rights and profits, water,
water rights, and water stock appurtenant to the property (collectively
"Premises");
TOGETHER with all of Borrower's estate, right, title and interest, now
owned or hereafter acquired, in:
(a) all buildings, structures, improvements, parking areas, landscaping,
fixtures and articles of property now or hereafter erected on, attached to,
or used or adapted for use in the operation of the Premises;
<PAGE>
including but without being limited to, all heating, air conditioning and
incinerating apparatus and equipment; all boilers, engines, motors,
dynamos, generating equipment, piping and plumbing fixtures, water heaters,
ranges, cooking apparatus and mechanical kitchen equipment, refrigerators,
freezers, cooling, ventilating, sprinkling and vacuum cleaning systems,
fire extinguishing apparatus, gas and electric fixtures, carpeting, floor
coverings, underpadding, elevators, escalators, partitions, mantels, built-
in mirrors, window shades, blinds, draperies, screens, storm sash, awnings,
signs, furnishings of public spaces, halls and lobbies, and shrubbery and
plants, and including also all interest of any owner of the Premises in any
of such items hereafter at any time acquired under conditional sale
contract, chattel mortgage or other title retaining or security deed, all
of which property mentioned in this clause (a) shall be deemed part of the
realty covered by this Mortgage and not severable wholly or in part without
material injury to the freehold of the Premises (all of the foregoing
together with replacements and additions thereto are referred to herein as
"Improvements"); and
(b) all compensation, awards, damages, rights of action and proceeds, including
interest thereon and/or the proceeds of any policies of insurance therefor,
arising out of or relating to a (i) taking or damaging of the Premises or
Improvements thereon by reason of any public or private improvement,
condemnation proceeding (including change of grade), sale or transfer in
lieu of condemnation, or fire, earthquake or other casualty, or (ii) any
injury to or decrease in the value of the Premises or the Improvements for
any reason whatsoever;
(c) return premiums or other payments upon any insurance any time provided for
the benefit of or naming METLIFE, and refunds or rebates of taxes or
assessments on the Premises;
(d) all written and oral leases and rental agreements (including extensions,
renewals and subleases and all usufructuary interest; all of the foregoing
shall be referred to collectively herein as the "Leases") now or hereafter
affecting the Premises including, without limitation, all rents, issues,
profits and other revenues and income therefrom and from the renting,
leasing or bailment of Improvements and equipment, all guaranties of
tenants' performance under the Leases, and all rights and claims of any
kind that Borrower may have against any tenant under the Leases or in
connection with the termination or rejection of the Leases in a bankruptcy
or insolvency proceeding;
(e) plans, specifications, contracts and agreements relating to the design or
construction of the Improvements; Borrower's rights under any payment,
performance, or other bond in connection with the design or construction of
the Improvements; all landscaping and construction materials, supplies, and
equipment used or to be used or consumed in connection with construction of
the Improvements, whether stored on the Premises or at some other location;
and contracts, agreements, and purchase orders with contractors,
subcontractors, suppliers, and materialmen incidental to the design or
construction of the Improvements;
(f) all contracts (excluding contracts relating to the printing operations of
Borrower), rights, claims or causes of action pertaining to or affecting
the Premises or the Improvements, including, without limitation, all
options or contracts to acquire other property for use in connection with
operation or development of the Premises or Improvements, management
contracts, service or supply contracts, permits, licenses, franchises and
certificates, and all commitments or agreements, now or hereafter in
existence, intended by the obligor thereof to provide Borrower with
proceeds to satisfy the loan evidenced hereby or improve the Premises or
Improvements, and the right to receive all proceeds due under such
commitments or agreements including refundable deposits and fees;
(g) all books, records, surveys, reports and other documents related to the
Premises, the Improvements, the Leases, or other items of collateral
described herein; and
2
<PAGE>
(h) all additions, accessions, replacements, substitutions, proceeds and
products of the real and personal property, tangible and intangible,
described herein.
(All of the foregoing described collateral is exclusive of any equipment,
furniture, furnishings or trade fixtures owned and supplied by Borrower or
tenants of the Premises. The Premises, the Improvements, the Leases and all of
the rest of the foregoing property are herein referred to as the "Property.")
THIS MORTGAGE IS MADE UPON THE STATUTORY CONDITIONS, FOR ANY BREACH OF
WHICH METLIFE SHALL HAVE THE STATUTORY POWER OF SALE.
TO HAVE AND TO HOLD the Property and all parts, rights, members and
appurtenances thereof to the use, benefit and behoof of METLIFE and its
successors and assigns in fee simple forever.
This conveyance is intended to constitute a security agreement as required
under the Uniform Commercial Code as enacted in the Commonwealth of
Massachusetts. Debtor's and Secured Party's addresses and the location of the
collateral are set forth on Schedule 1 attached hereto.
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This Mortgage is made to secure METLIFE (a) the repayment of the
indebtedness evidenced by Borrower's promissory note (the "Note") dated of even
date herewith in the principal sum of TWO MILLION TWENTY-FIVE THOUSAND Dollars
($2,025,000), with interest thereon at the rate of eight and seventy-five
hundredths percent (8.75%) per annum, having a maturity date of February 1,
2012, and all renewals, extensions and modifications thereof; (b) the repayment
of any future advances, with interest thereon, made by METLIFE to Borrower
pursuant to Section 28 hereof (herein "Future Advances"); (c) the payment of all
----------
other sums, with interest thereon, advanced in accordance herewith to protect
the security of this Mortgage or to fulfill any of Borrower's obligations
hereunder or under the other Loan Documents (as defined below); (d) the
performance of the covenants and agreements of Borrower contained herein or in
the other Loan Documents; and (e) the repayment of all sums now or hereafter
owing to METLIFE by Borrower pursuant to any instrument which recites that it is
secured hereby. The indebtedness and obligations described in clauses (a)-(e)
above are collectively referred to herein as the "Indebtedness." The Note, this
Mortgage, and all other documents evidencing, securing or guaranteeing the
Indebtedness (except any Certificate and Indemnity Agreement Regarding Hazardous
Substances), as the same may be modified or amended from time to time, are
referred to herein as the "Loan Documents." The terms of the Note secured
hereby may provide that the interest rate or payment terms or balance due may be
indexed, adjusted, renewed, or renegotiated from time to time, and this Mortgage
shall continue to secure the Note notwithstanding any such indexing, adjustment,
renewal or renegotiation.
Should the indebtedness be paid according to the tenor and effect thereof
where the same shall become due and payable, and should Borrower perform all
covenants herein contained in a timely manner, then this Mortgage is satisfied,
and METLIFE shall execute a proper cancellation at the expense of Borrower.
Borrower represents and warrants that Borrower has good, marketable and
insurable title to, and has the right to mortgage an indefeasible fee simple
estate in, the Premises, Improvements, rents, and leases (or, if this Mortgage
is on a leasehold, good, marketable and insurable title to, and the right to
convey the leasehold estate and that the ground lease is in full force and
effect without modification except as noted above and without default on the
part of either lessor or lessee thereunder), and the right to convey the other
Property, that the Property is unencumbered except as disclosed in writing to
and approved by METLIFE prior to the date hereof, and that Borrower will warrant
and forever defend the title to the Property against all claims and demands,
subject only to the permitted exceptions set forth in Schedule 2 attached
----------
hereto.
Borrower represents, warrants, covenants and agrees for the benefit of
METLIFE as follows:
3
<PAGE>
1. PAYMENT OF PRINCIPAL AND INTEREST. Borrower shall promptly pay when
---------------------------------
due the principal of and interest on the Indebtedness, any prepayment and other
charges provided in the Loan Documents and all other sums secured by this
Mortgage.
2. FUNDS FOR TAXES, INSURANCE AND OTHER CHARGES. Upon the occurrence of
--------------------------------------------
an Event of Default (hereinafter defined), and at METLIFE's sole option at any
time thereafter, Borrower shall pay in addition to each monthly payment on the
Note, one-twelfth of the annual real estate taxes, insurance premiums,
assessments, water and sewer rates, ground rents and other charges (herein
"Impositions") payable with respect to the Property (as estimated by METLIFE in
its sole discretion), to be held by METLIFE without interest to Borrower, for
the payment of such obligations.
If the amount of such additional payments held by METLIFE ("Funds") at the
time of the annual accounting thereof shall exceed the amount deemed necessary
by METLIFE to provide for the payment of Impositions as they fall due, such
excess shall be at Borrower's option, either repaid to Borrower or credited to
Borrower on the next monthly installment or installments of Funds due. If at
any time the amount of the Funds held by METLIFE shall be less than the amount
deemed necessary by METLIFE to pay Impositions as they fall due, Borrower shall
pay to METLIFE any amount necessary to make up the deficiency within thirty (30)
days after notice from METLIFE to Borrower requesting payment thereof.
Upon Borrower's breach of any covenant or agreement of Borrower in this
Mortgage, METLIFE may apply, in any amount and in any order as METLIFE shall
determine in METLIFE's sole discretion, any Funds held by METLIFE at the time of
application (i) to pay Impositions which are now or will hereafter become due,
or (ii) as a credit against sums secured by this Mortgage. Upon payment in full
of all sums secured by this Mortgage, METLIFE shall refund to Borrower any Funds
held by METLIFE.
3. APPLICATION OF PAYMENTS. Unless applicable law provides otherwise,
-----------------------
each complete installment payment received by METLIFE from Borrower under the
Note or this Mortgage shall be applied by METLIFE first in payment of amounts
payable to METLIFE by Borrower under Section 2 hereof, then to interest payable
---------
on the Note, then to principal of the Note, and then to interest and principal
on any Future Advances in such order as METLIFE, at METLIFE's sole discretion,
shall determine. Upon Borrower's breach of any covenant or agreement of
Borrower in this Mortgage, METLIFE may apply, in any amount and in any order as
METLIFE shall determine in METLIFE's sole discretion, any payments received by
METLIFE under the Note or this Mortgage. Any partial payment received by
METLIFE shall, at METLIFE's option, be held in a non-interest bearing account
until METLIFE receives funds sufficient to equal a complete installment payment.
4. CHARGES, LIENS. Borrower shall pay all Impositions attributable to the
--------------
Property in the manner provided under Section 2 hereof or, if not paid in such
---------
manner, by Borrower making payment, when due, directly to the payee thereof, or
in such other manner as METLIFE may designate in writing. If requested by
METLIFE, Borrower shall promptly furnish to METLIFE all notices of Impositions
which become due, and in the event Borrower shall make payment directly,
Borrower shall promptly furnish to METLIFE receipts evidencing such payments.
Borrower shall promptly discharge any lien which has, or may have, priority over
or equality with, the lien of this Mortgage, and Borrower shall pay, when due,
the claims of all persons supplying labor or materials to or in connection with
the Property. Without METLIFE's prior written permission, Borrower shall not
allow any lien inferior to this Mortgage to be perfected against the Property.
If any lien inferior to this Mortgage is filed against the Property without
METLIFE's prior written permission and without the consent of Borrower, Borrower
shall, within thirty (30) days after receiving notice of the filing of such
lien, cause such lien to be released of record and deliver evidence of such
release to METLIFE.
5. INSURANCE. Borrower shall obtain and maintain the following types of
---------
insurance upon and relating to the Property:
4
<PAGE>
(a) "All Risk" property and fire insurance (with extended coverage
endorsement including malicious mischief and vandalism) in an amount not less
than the lesser of the outstanding principal balance of the Note or the full
replacement value of the Property (with a deductible not to exceed $25,000 and
with co-insurance limited to a maximum of 10% of the amount of the policy),
naming METLIFE under a lender's loss payee endorsement (form 438BFU or
equivalent) and including agreed amount, inflation guard, replacement cost and
waiver of subrogation endorsements;
(b) Comprehensive general liability insurance in an amount not less than
$1,000,000 per occurrence and $2,000,000 in the aggregate insuring against
personal injury, death and property damage and naming METLIFE as additional
insured;
(c) Business interruption insurance covering loss of rental or other income
(including all expenses payable by tenants) for up to six (6) months; and
(d) Such other types of insurance or endorsements to existing insurance as
may be required from time to time by METLIFE.
Upon the request of METLIFE, Borrower shall increase the coverages under
any of the insurance policies required to be maintained hereunder or otherwise
modify such policies in accordance with METLIFE's request. All of the insurance
policies required hereunder shall be issued by corporate insurers licensed to do
business in the state in which the Property is located and rated A:X or better
by A.M. Best Company, and shall be in form acceptable to METLIFE. If and to the
extent that the Property is located within an area that has been or is hereafter
designated or identified as an area having special flood hazards by the
Department of Housing and Urban Development or such other official as shall from
time to time be authorized by federal or state law to make such designation
pursuant to any national or state program of flood insurance, Borrower shall
carry flood insurance with respect to the Property in amounts not less than the
maximum limit of coverage then available with respect to the Property or the
amount of the Indebtedness, whichever is less. Certificates of all insurance
required to be maintained hereunder shall be delivered to METLIFE, along with
evidence of payment in full of all premiums required thereunder,
contemporaneously with Borrower's execution of this Mortgage. All such
certificates shall be in form acceptable to METLIFE and shall require the
insurance company to give to METLIFE at least thirty (30) days' prior written
notice before canceling the policy for any reason or materially amending it.
Certificates evidencing all renewal and substitute policies of insurance shall
be delivered to METLIFE, along with evidence of the payment in full of all
premiums required thereunder, at least fifteen (15) days before termination of
the policies being renewed or substituted. If any loss shall occur at any time
when Borrower shall be in default hereunder, METLIFE shall be entitled to the
benefit of all insurance policies held or maintained by Borrower, to the same
extent as if same had been made payable to METLIFE, and upon foreclosure
hereunder, METLIFE shall become the owner thereof. METLIFE shall have the
right, but not the obligation, to make premium payments, at Borrower's expense,
to prevent any cancellation, endorsement, alteration or reissuance of any policy
of insurance maintained by Borrower, and such payments shall be accepted by the
insurer to prevent same.
If any act or occurrence of any kind or nature (including any casualty for
which insurance was not obtained or obtainable) shall result in damage to or
destruction of the Property (such event being called a "Loss"), Borrower will
give prompt written notice thereof to METLIFE. All insurance proceeds paid or
payable in connection with any Loss shall be paid to METLIFE. If (i) no Event
of Default has occurred and is continuing hereunder, (ii) Borrower provides
evidence satisfactory to METLIFE of its ability to pay all amounts becoming due
under the Note during the pendency of any restoration or repairs to or
replacement of the Property, (iii) the available insurance proceeds are, in
METLIFE's judgment, sufficient to fully and completely restore, repair or
replace the Property, and (iv) Borrower provides evidence satisfactory to
METLIFE that none of the tenants of the Property will terminate their lease
agreements as a result of either the Loss or the repairs to or replacement of
the Property, Borrower shall have the right to apply all insurance proceeds
received in connection with such Loss either (a) to restore, repair, replace and
rebuild the Property as nearly as possible to its value, condition and character
immediately prior to such Loss, or (b) to the payment of the Indebtedness in
such order as METLIFE may elect. If an Event of Default has occurred
5
<PAGE>
and is continuing hereunder at the time of such Loss, if METLIFE determines that
Borrower will be unable to pay all amounts becoming due under the Note during
the pendency of any restoration or repairs to or replacement of the Property, if
the available insurance proceeds are insufficient, in METLIFE's judgment, to
fully and completely restore, repair or replace the Property or if METLIFE
believes that one or more tenants of the Property will terminate their lease
agreements as a result of either the Loss or the repairs to or replacement of
the Property, then all of the insurance proceeds payable with respect to such
Loss will be applied to the payment of the Indebtedness, or if so instructed by
METLIFE, Borrower will promptly, at Borrower's sole cost and expense and
regardless of whether sufficient insurance proceeds shall be available, commence
to restore, repair, replace and rebuild the Property as nearly as possible to
its value, condition, character immediately prior to such Loss. Borrower shall
diligently prosecute any restoration, repairs or replacement of the Property
undertaken by or on behalf of Borrower pursuant to this Section 5. All such
----------
work shall be conducted pursuant to written contracts approved by METLIFE in
writing. Notwithstanding anything contained herein to the contrary, in the
event the insurance proceeds received by METLIFE following any Loss are
insufficient in METLIFE's judgment to fully and completely restore, repair or
replace the Property, and if Borrower has complied with all of the other
conditions described in this Section 5, Borrower may elect to restore, repair or
---------
replace the Property if it first deposits with METLIFE such additional sums as
METLIFE determines are necessary in order to fully and completely restore,
repair or replace the Property. In the event any insurance proceeds remain
following the restoration, repair or replacement of the Property, such proceeds
shall be applied to the Indebtedness in such order as METLIFE may elect.
6. PRESERVATION AND MAINTENANCE OF PROPERTY. Borrower (a) shall not
----------------------------------------
commit waste or permit impairment or deterioration of the Property, (b) shall
not abandon the Property, (c) shall restore or repair promptly and in a good and
workmanlike manner all or any part of the Property to the equivalent of its
original condition, or such other condition as METLIFE may approve in writing,
in the event of any damage, injury or loss thereto, whether or not insurance
proceeds are available to cover in whole or in part the costs of such
restoration or repair, (d) shall keep the Property, including all improvements,
fixtures, equipment, machinery and appliances thereon, in good repair and shall
replace fixtures, equipment, machinery and appliances on the Property when
necessary to keep such items in good repair, (e) shall comply with all laws,
ordinances, regulations and requirements of any governmental body applicable to
the Property, (f) if all or part of the Property is for rent or lease, then
METLIFE, at its option after the occurrence of an Event of Default, may require
Borrower to provide for professional management of the Property by a property
manager satisfactory to METLIFE pursuant to a contract approved by METLIFE in
writing, unless such requirement shall be waived by METLIFE in writing, (g)
shall generally operate and maintain the Property in a manner to ensure maximum
rentals, and (h) shall give notice in writing to METLIFE of and, unless
otherwise directed in writing by METLIFE, appear in and defend any action or
proceeding purporting to affect the Property, the security of this Mortgage or
the rights or powers of METLIFE hereunder. Neither Borrower nor any tenant or
other person, without the written approval of METLIFE, shall remove, demolish or
alter any improvement now existing or hereafter erected on the Property or any
fixture, equipment, machinery or appliance in or on the Property except when
incident to the replacement of fixtures, equipment, machinery and appliances
with items of like kind.
Borrower represents, warrants and covenants that the Property is and shall
be in compliance with the Americans with Disabilities Act of 1990 and all of the
regulations promulgated thereunder, as the same may be amended from time to
time.
7. USE OF PROPERTY. Unless required by applicable law or unless METLIFE
---------------
has otherwise agreed in writing, Borrower shall not allow changes in the use for
which all or any part of the Property was intended at the time this Mortgage was
executed. Borrower shall not, without METLIFE's prior written consent, (i)
initiate or acquiesce in a change in the zoning classification (including any
variance under any existing zoning ordinance applicable to the Property), (ii)
permit the use of the Property to become a non-conforming use under applicable
zoning ordinances, (iii) file any subdivision or parcel map affecting the
Property, or (iv) amend, modify or consent to any easement or covenants,
conditions and restrictions pertaining to the Property.
6
<PAGE>
8. PROTECTION OF METLIFE'S SECURITY. If Borrower fails to perform any of
--------------------------------
the covenants and agreements contained in this Mortgage, or if any action or
proceeding is commenced which affects the Property or title thereto or the
interest of METLIFE therein, including, but not limited to, eminent domain,
insolvency, code enforcement, or arrangements or proceedings involving a
bankrupt or decedent, then METLIFE at METLIFE's option may make such
appearances, disburse such sums and take such action as METLIFE deems necessary,
in its sole discretion, to protect METLIFE's interest, including, but not
limited to, (i) disbursement of attorneys' fees, (ii) entry upon the Property to
make repairs, (iii) procurement of satisfactory insurance as provided in Section
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5 hereof, and (iv) if this Mortgage is on a leasehold, exercise of any option to
- -
renew or extend the ground lease on behalf of Borrower and the curing of any
default of Borrower in the terms and conditions of the ground lease.
Any amounts disbursed by METLIFE pursuant to this Section 8, with interest
---------
thereon, shall become additional Indebtedness of Borrower secured by this
Mortgage. Unless Borrower and METLIFE agree to other terms of payment, such
amounts shall be immediately due and payable and shall bear interest from the
date of disbursement at the highest rate which may be collected from Borrower
under applicable law or, at METLIFE's option, the rate stated in the Note.
Borrower hereby covenants and agrees that METLIFE shall be subrogated to the
lien of any mortgage or other lien discharged, in whole or in part, by the
Indebtedness. Nothing contained in this Section 8 shall require METLIFE to
---------
incur any expense or take any action hereunder.
9. INSPECTION. METLIFE may make or cause to be made reasonable entries
----------
upon the Property to inspect the interior and exterior thereof.
10. FINANCIAL DATA. Borrower will furnish to METLIFE within one hundred
--------------
twenty (120) days after the close of its fiscal year (i) current financial
statements of Borrower's parent corporation, Graphic Industries, Inc., a Georgia
corporation ("Guarantor"), including a balance sheet and profit and loss
statements prepared in accordance with generally accepted accounting principles
and practices consistently applied and, if METLIFE so requires, accompanied by
the annual audit report of an independent certified public accountant reasonably
acceptable to METLIFE, (ii) if requested by METLIFE, an annual operating
statement, together with other supporting data reflecting all material
information with respect to the operation of the Property and Improvements
during the period covered thereby, and (iii) all other financial information and
reports that METLIFE may from time to time reasonably request.
11. CONDEMNATION. If the Property, or any part thereof, shall be
------------
condemned for any reason, including without limitation fire or earthquake
damage, or otherwise taken for public or quasi-public use under the power of
eminent domain, or be transferred in lieu thereof, all damages or other amounts
awarded for the taking of, or injury to, the Property shall be paid to METLIFE
who shall have the right, in its sole and absolute discretion, to apply the
amounts so received against (a) the costs and expenses of METLIFE, including
reasonable attorneys' fees incurred in connection with collection of such
amounts, and (b) the balance against the Indebtedness; provided, however, that
if (i) no Event of Default shall have occurred and be continuing hereunder, (ii)
Borrower provides evidence satisfactory to METLIFE of its ability to pay all
amounts becoming due under the Note during the pendency of any restoration or
repairs to or replacement of the Property, (iii) METLIFE determines, in its sole
discretion, that the proceeds of such award are sufficient to restore, repair,
replace and rebuild the Property as nearly as possible to its value, condition
and character immediately prior to such taking (or, if the proceeds of such
award are insufficient for such purpose, if Borrower provides additional sums to
METLIFE's satisfaction so that the aggregate of such sums and the proceeds of
such award will be sufficient for such purpose), and (iv) Borrower provides
evidence satisfactory to METLIFE that none of the tenants of the Property will
terminate their lease agreements as a result of either the condemnation or
taking or the repairs to or replacement of the Property, the proceeds of such
award, together with additional sums provided by Borrower, shall be placed in a
separate account for the benefit of METLIFE and Borrower to be used to restore,
repair, replace and rebuild the Property as nearly as possible to its value,
condition and character immediately prior to such taking. All work to be
performed in connection therewith shall be pursuant to a written contract
therefor, which contract shall be subject to the prior approval of METLIFE. To
the extent that any funds remain after the Property has been so restored and
repaired,
7
<PAGE>
the same shall be applied against the Indebtedness in such order as METLIFE may
elect. To enforce its rights hereunder, METLIFE shall be entitled to participate
in and control any condemnation proceedings and to be represented therein by
counsel of its own choice, and Borrower will deliver, or cause to be delivered
to METLIFE such instruments as may be requested by it from time to time to
permit such participation. In the event METLIFE, as a result of any such
judgment, decree or award, believes that the payment or performance of any of
the Indebtedness is impaired, METLIFE may declare all of the Indebtedness
immediately due and payable.
12. BORROWER AND LIEN NOT RELEASED. From time to time, METLIFE may, at
------------------------------
METLIFE's option, without giving notice to or obtaining the consent of Borrower,
Borrower's successors or assigns or of any junior lienholder or guarantors,
without liability on METLIFE's part and notwithstanding Borrower's breach of any
covenant or agreement of Borrower in this Mortgage, extend the time for payment
of the Indebtedness or any part thereof, reduce the payments thereon, release
anyone liable on any of the Indebtedness, accept an extension or modification or
renewal note or notes therefor, modify the terms and time of payment of the
Indebtedness, release from the lien of this Mortgage any part of the Property,
take or release other or additional security, reconvey any part of the Property,
consent to any map or plan of the Property, consent to the granting of any
easement, join in any extension or subordination agreement, and agree in writing
with Borrower to modify the rate of interest or period of amortization of the
Note or change the amount of the monthly installments payable thereunder. Any
actions taken by METLIFE pursuant to the terms of this Section 12 shall not
----------
affect the obligation of Borrower or Borrower's successors or assigns to pay the
sums secured by this Mortgage and to observe the covenants of Borrower contained
herein, shall not affect the guaranty of any person, corporation, partnership or
other entity for payment of the Indebtedness, and shall not affect the lien or
priority of the lien hereof on the Property. Borrower shall pay METLIFE a
service charge, together with such title insurance premiums and attorneys' fees
as may be incurred at METLIFE's option, for any such action if taken at
Borrower's request.
13. FORBEARANCE BY METLIFE NOT A WAIVER. Any forbearance by METLIFE in
-----------------------------------
exercising any right or remedy hereunder, or otherwise afforded by applicable
law, shall not be a waiver of or preclude the exercise of any other right or
remedy. The acceptance by METLIFE of payment of any sum secured by this
Mortgage after the due date of such payment shall not be a waiver of METLIFE's
right to either require prompt payment when due of all other sums so secured or
to declare a default for failure to make prompt payment. The procurement of
insurance or the payment of taxes or other liens or charges by METLIFE shall not
be a waiver of METLIFE's right to accelerate the maturity of the Indebtedness
secured by this Mortgage, nor shall METLIFE's receipt of any awards, proceeds or
damages under Sections 5 and 11 hereof operate to cure or waive Borrower's
-----------------
default in payment of sums secured by this Mortgage.
14. UNIFORM COMMERCIAL CODE SECURITY AGREEMENT. This Mortgage is intended
------------------------------------------
to be a security agreement pursuant to the Uniform Commercial Code for any of
the items specified above as part of the Property which, under applicable law,
may be subject to a security interest pursuant to the Uniform Commercial Code,
and Borrower hereby grants and conveys to METLIFE a first and prior security
interest in all of the Property that constitutes personalty, whether now owned
or hereafter acquired. Borrower agrees that METLIFE may file this Mortgage, or
a reproduction thereof, in the real estate records or other appropriate index,
as a financing statement for any of the items specified above as part of the
Property. Any reproduction of this Mortgage or of any other security agreement
or financing statement shall be sufficient as a financing statement. In
addition, Borrower agrees to execute and deliver to METLIFE, upon METLIFE's
request, any financing statements, as well as extensions, renewals and
amendments thereof, and reproductions of this Mortgage in such form as METLIFE
may require to perfect a security interest with respect to the foregoing items.
Borrower shall pay all costs of filing such financing statements and any
extensions, renewals, amendments and releases thereof, and shall pay all costs
and expenses of any record searches for financing statements METLIFE may
require. Without the prior written consent of METLIFE, Borrower shall not
create or suffer to be created pursuant to the Uniform Commercial Code any other
security interest in said items, including replacements and additions thereto.
Upon Borrower's breach of any covenant or agreement of Borrower contained in
this Mortgage, including the covenants to pay when due all sums secured by this
Mortgage, METLIFE shall have the remedies of a secured party under the Uniform
Commercial Code, and METLIFE may also invoke the remedies provided in Section 26
----------
of this Mortgage as to such items. In
8
<PAGE>
exercising any of said remedies METLIFE may proceed against the items of
Property separately or together and in any order whatsoever, without in any way
affecting the availability of METLIFE's remedies under the Uniform Commercial
Code or of the remedies provided in Section 26 of this Mortgage. Within ten (10)
----------
days following any request therefor by METLIFE, Borrower shall prepare and
deliver to METLIFE a written inventory specifically listing all of the personal
property covered by the security interest herein granted, which inventory shall
be certified by Borrower as being true, correct, and complete.
15. LEASES OF THE PROPERTY. Borrower shall comply with and observe
----------------------
Borrower's obligations as landlord under all Leases of the Property or any part
thereof. All Leases now or hereafter entered into will be in form and substance
subject to the approval of METLIFE. All Leases of the Property shall
specifically provide that such Leases are subordinate to this Mortgage; that the
tenant attorns to METLIFE, such attornment to be effective upon METLIFE's
acquisition of title to the Property; that the tenant agrees to execute such
further evidences of attornment as METLIFE may from time to time request; that
the attornment of the tenant shall not be terminated by foreclosure; and that
METLIFE may, at METLIFE's option, accept or reject such attornments. Borrower
shall not, without METLIFE's written consent, request or consent to the
subordination of any Lease of all or any part of the Property to any lien
subordinate to this Mortgage. If Borrower becomes aware that any tenant
proposes to do, or is doing, any act or thing which may give rise to any right
of set-off against rent, Borrower shall (i) take such steps as shall be
reasonably calculated to prevent the accrual of any right to a set-off against
rent, (ii) immediately notify METLIFE thereof in writing and of the amount of
said set-offs, and (iii) within ten (10) days after such accrual, reimburse the
tenant who shall have acquired such right to set-off or take such other steps as
shall effectively discharge such setoff and as shall assure that rents
thereafter due shall continue to be payable without set-off or deduction. Upon
METLIFE's receipt of notice of the occurrence of any default or violation by
Borrower of any of its obligations under the Leases, METLIFE shall have the
immediate right, but not the duty or obligation, without prior written notice to
Borrower or to any third party, to enter upon the Property and to take such
actions as METLIFE may deem necessary to cure the default or violation by
Borrower under the Leases. The costs incurred by METLIFE in taking any such
actions pursuant to this paragraph shall become part of the Indebtedness, shall
bear interest at the rate provided in the Note, and shall be payable by Borrower
to METLIFE on demand. METLIFE shall have no liability to Borrower or to any
third party for any actions taken by METLIFE or not taken pursuant to this
paragraph.
16. REMEDIES CUMULATIVE. Each remedy provided in this Mortgage is
-------------------
distinct and cumulative to all other rights or remedies under this Mortgage or
afforded by law or equity, and may be exercised concurrently, independently, or
successively, in any order whatsoever.
17. TRANSFERS OF THE PROPERTY OR BENEFICIAL INTERESTS IN BORROWER;
--------------------------------------------------------------
ASSUMPTION. METLIFE may, at its option, declare all sums secured by this
- ----------
Mortgage to be immediately due and payable, and METLIFE may invoke any remedies
permitted by Section 26 of this Mortgage, if title to the Property is changed
----------
without the prior written consent of METLIFE, which consent shall be at
METLIFE's sole discretion. Any transfer of any interest in the Property or in
the income therefrom, by sale, lease (except for leases to tenants in the
ordinary course of managing income property which are approved by METLIFE
pursuant to Section 15 of this Mortgage), contract, Mortgage, security deed,
----------
mortgage, deed of trust, further encumbrance or otherwise (including any such
transfers as security for additional financing of the Property), and any change
in the ownership interests in Borrower (including any change in the ownership
interests of any legal entities which comprise or control Borrower), except
transfers and changes in ownership by devise or descent, shall be considered a
change of title. METLIFE shall have the right to condition its consent to any
proposed sale or transfer described in this Section 17 upon, among other things,
-----------
METLIFE's approval of the transferee's creditworthiness and management ability
and the transferee's execution, prior to the sale or transfer, of a written
assumption agreement containing such terms as METLIFE may require, including, if
required by METLIFE, the imposition of an assumption fee of one percent (1%) of
the then outstanding balance of the Indebtedness, except in the case of a
transfer to one of Borrower's direct or indirect subsidiaries, in which case
Borrower will be liable only for payment of all third-party costs, such as
METLIFE's attorneys' fees and recording costs. In addition to the foregoing,
Borrower shall have a one-time right to transfer the Property to a third party
approved by METLIFE, subject to Borrower's payment of
9
<PAGE>
all third-party costs, such as METLIFE's attorneys' fees and recording costs.
Consent by METLIFE to one transfer of the Property shall not constitute consent
to subsequent transfers or waiver of the provisions of this Section 17. No
----------
transfer by Borrower shall relieve Borrower of liability for payment of the
Indebtedness. METLIFE acknowledges that is a publicly-held company and that
purchases and sales of its common stock from time to time on the NASDAQ market
and in the ordinary course of business shall not constitute a transfer of the
Property or a change in the ownership interests in Guarantor pursuant to this
Section 17. Further, offerings and sales of additional securities of Guarantor,
- ----------
payment of stock dividends, redemptions of stock, issuance of securities
pursuant to stock options, bonus or incentive plans or other common uses of
publicly traded securities shall not be considered to be changes in the
ownership interests in Borrower under this Section 17.
----------
18. NOTICE. Except for any notice required under applicable law to be
------
given in another manner, any and all notices, elections, demands, or requests
permitted or required to be made under this Mortgage or under the Note shall be
in writing, signed by the party giving such notice, election, demand or request,
and shall be delivered personally, by telegram, or sent by registered,
certified, or Express United States mail, postage prepaid, or by Federal Express
or similar service requiring a receipt, to the other party at the address stated
above, or to such other party and at such other address within the United States
of America as any party may designate in writing as provided herein. The date
of receipt of such notice, election, demand or request shall be the earliest of
(i) the date of actual receipt, (ii) three (3) days after the date of mailing by
registered or certified mail, (iii) one (1) day after the date of mailing by
Express Mail or the delivery (for redelivery) to Federal Express or another
similar service requiring a receipt, or (iv) the date of personal delivery (or
refusal upon presentation for delivery).
19. SUCCESSORS AND ASSIGNS BOUND; JOINT AND SEVERAL LIABILITY; AGENTS;
------------------------------------------------------------------
CAPTIONS. The covenants and agreements herein contained shall bind, and the
- --------
rights hereunder shall inure to, the respective heirs, successors and assigns of
METLIFE and Borrower, subject to the provisions of Section 17 hereof. If
----------
Borrower is comprised of more than one person or entity, whether as individuals,
partners, partnerships or corporations, each such person or entity shall be
jointly and severally liable for Borrower's obligations hereunder. In
exercising any rights hereunder or taking any actions provided for herein,
METLIFE may act through its employees, agents or independent contractors as
authorized by METLIFE. The captions and headings of the sections of this
Mortgage are for convenience only and are not to be used to interpret or define
the provisions hereof.
20. WAIVER OF STATUTE OF LIMITATIONS. Borrower hereby waives the right to
--------------------------------
assert any statute of limitations as a bar to the enforcement of the lien of
this Mortgage or to any action brought to enforce the Note or any other
obligation secured by this Mortgage.
21. WAIVER OF MARSHALLING. Notwithstanding the existence of any other
---------------------
security interests in the Property held by METLIFE or by any other party,
METLIFE shall have the right to determine the order in which any or all of the
Property shall be subjected to the remedies provided herein. METLIFE shall have
the right to determine the order in which any or all portions of the
Indebtedness secured hereby are satisfied from the proceeds realized upon the
exercise of the remedies provided herein. Borrower, any party who consents to
this Mortgage and any party who now or hereafter acquires a security interest in
the Property and who has actual or constructive notice hereof hereby waives any
and all right to require the marshalling of assets in connection with the
exercise of any of the remedies permitted by applicable law or provided herein.
22. HAZARDOUS WASTE. Borrower and Guarantor (collectively "Indemnitors")
---------------
have furnished to METLIFE a Phase I Environmental Site Assessment Report dated
December 6, 1996, prepared by Environmental Technology Resources, Inc. (the
"Engineer"), related letters from the Engineer to Borrower dated January 23,
1997, and an Environmental Questionnaire dated December 17, 1996 (collectively,
the "Report"). Except as disclosed to METLIFE in the Report, Borrower has
received no notification of any kind suggesting that the Property or any
adjacent property is or may be contaminated with any hazardous waste or
materials or is or may be required to be cleaned up in accordance with any
applicable law or regulation; and Borrower further represents and warrants that,
except as previously disclosed to METLIFE in writing, to the best of its
knowledge as of the date hereof after due and diligent inquiry, there are no
hazardous waste or materials located in, on or under the Property
10
<PAGE>
or any adjacent property, or incorporated in any Improvements, nor has the
Property or any adjacent property ever been used as a landfill or a waste
disposal site, or a manufacturing, handling, storage, distribution or disposal
facility for hazardous waste or materials. As used herein, the term "hazardous
waste or materials" includes any substance or material defined in or designated
as hazardous or toxic wastes, hazardous or toxic material, a hazardous, toxic or
radioactive substance, or other similar term, by any federal, state or local
statute, regulation or ordinance now or hereafter in effect. Borrower shall
promptly comply with all statutes, regulations and ordinances, and with all
orders, decrees or judgments of governmental authorities or courts having
jurisdiction, relating to the use, collection, treatment, disposal, storage,
control, removal or cleanup of hazardous waste or materials in, on or under the
Property or any adjacent property, or incorporated in any Improvements, at
Borrower's expense. In the event that METLIFE at any time believes that the
Property is not free of all hazardous waste or materials or that Borrower has
violated any applicable environmental law with respect to the Property, then
immediately upon request by METLIFE, Borrower shall obtain and furnish to
METLIFE, at Borrower's sole cost and expense, an environmental audit and
inspection of the Property from an expert satisfactory to METLIFE. In the event
that Borrower fails to immediately obtain such audit or inspection, METLIFE or
its agents may perform or obtain such audit or inspection at Borrower's sole
cost and expense. METLIFE may, but is not obligated to, enter upon the Property
and take such actions and incur such costs and expenses to effect such
compliance as it deems advisable to protect its interest in the Property; and
whether or not Borrower has actual knowledge of the existence of hazardous waste
or materials on the Property or any adjacent property as of the date hereof,
Borrower shall reimburse METLIFE as provided in Section 23 below for the full
----------
amount of all costs and expenses incurred by METLIFE prior to METLIFE acquiring
title to the Property through foreclosure or acceptance of a deed in lieu of
foreclosure, in connection with such compliance activities. Neither this
provision nor any of the other Loan Documents shall operate to put METLIFE in
the position of an owner of the Property prior to any acquisition of the
Property by METLIFE. The rights granted to METLIFE herein and in the other Loan
Documents are granted solely for the protection of METLIFE's lien and security
interest covering the Property, and do not grant to METLIFE the right to control
Borrower's actions, decisions or policies regarding hazardous waste or
materials.
23. ADVANCES, COSTS AND EXPENSES. Borrower shall pay within ten (10) days
----------------------------
after written demand from METLIFE all sums advanced by METLIFE and all costs and
expenses incurred by METLIFE in taking any actions pursuant to the Loan
Documents including attorneys' fees and disbursements, accountants' fees,
appraisal and inspection fees and the costs for title reports and guaranties,
together with interest thereon at the rate applicable under the Note after an
Event of Default from the date such costs were advanced or incurred. All such
costs and expenses incurred by METLIFE, and advances made, shall constitute
advances under this Mortgage to protect the Property and shall be secured by and
have the same priority as the lien of this Mortgage. If Borrower fails to pay
any such advances, costs and expenses and interest thereon, METLIFE may apply
any undisbursed loan proceeds to pay the same, and, without foreclosing the lien
of this Mortgage, may at its option commence an independent action against
Borrower for the recovery of the costs, expenses and/or advances, with interest,
together with costs of suit, costs of title reports and guaranty of title,
disbursements of counsel and reasonable attorneys' fees incurred therein or in
any appeal therefrom.
24. ASSIGNMENT OF LEASES AND RENTS. Borrower, for good and valuable
------------------------------
consideration, the receipt of which is hereby acknowledged, to secure the
Indebtedness, does hereby absolutely and unconditionally grant, bargain, sell,
transfer, assign, convey, set over and deliver unto METLIFE all right, title and
interest of Borrower in, to and under the Leases of the Property, whether now in
existence or hereafter entered into, and all guaranties, amendments, extensions
and renewals of said Leases and any of them, and all rents, income and profits
which may now or hereafter be or become due or owing under the Leases, and any
of them, or on account of the use of the Property.
Borrower represents, warrants, covenants and agrees with METLIFE as
follows:
(a) The sole ownership of the entire lessor's interest in the Leases is
vested in Borrower, and Borrower has not, and shall not, perform any acts or
execute any other instruments which might prevent METLIFE
11
<PAGE>
from fully exercising its rights with respect to the Leases under any of the
terms, covenants and conditions of this Mortgage.
(b) The Leases are and shall be valid and enforceable in accordance with
their terms and have not been and shall not be altered, modified, amended,
terminated, canceled, renewed or surrendered except as approved in writing by
METLIFE. The terms and conditions of the Leases have not been and shall not be
waived in any manner whatsoever except as approved in writing by METLIFE.
(c) Borrower shall not materially alter the term or the amount of rent
payable under any Lease without prior written notice to METLIFE and METLIFE's
consent, which shall not be unreasonably withheld.
(d) To the best of Borrower's knowledge, there are no defaults now existing
under any of the Leases and there exists no state of facts which, with the
giving of notice or lapse of time or both, would constitute a default under any
of the Leases.
(e) Borrower shall give prompt written notice to METLIFE of any notice
received by Borrower claiming that a default has occurred under any of the
Leases on the part of Borrower, together with a complete copy of any such
notice.
(f) Each of the Leases shall remain in full force and effect irrespective
of any merger of the interest of lessor and any lessee under any of the leases.
(g) Borrower will not permit any Lease to become subordinate to any lien
other than the lien of this Mortgage.
This assignment is absolute, is effective immediately, and is irrevocable
by Borrower so long as the Indebtedness remains outstanding. Notwithstanding
the foregoing, until a Notice is sent to Borrower in writing that an Event of
Default has occurred (which notice is hereafter called a "Notice"), Borrower may
receive, collect and enjoy the rents, income and profits accruing from the
Property.
Upon the occurrence of an Event of Default hereunder, METLIFE may, at its
option, after service of a Notice, receive and collect all such rents, income
and profits from the Property as they become due. METLIFE shall thereafter
continue to receive and collect all such rents, income and profits, as long as
such default or defaults shall exist, and during the pendency of any foreclosure
proceedings.
Borrower hereby irrevocably appoints METLIFE its true and lawful attorney
with power of substitution and with full power for METLIFE in its own name and
capacity or in the name and capacity of Borrower, from and after service of a
Notice, to demand, collect, receive and give complete acquittances for any and
all rents, income and profits accruing from the Property, either in its own name
or in the name of Borrower or otherwise, which METLIFE may deem necessary or
desirable in order to collect and enforce the payment of the rents, income and
profits of and from the Property. Lessees of the Property are hereby expressly
authorized and directed, following receipt of a Notice from METLIFE, to pay any
and all amounts due Borrower pursuant to the Leases to METLIFE or such nominee
as METLIFE may designate in a writing delivered to and received by such lessees,
and the lessees of the Property are expressly relieved of any and all duty,
liability or obligation to Borrower in respect of all payments so made.
Upon the occurrence of any Event of Default, from and after service of a
Notice, METLIFE is hereby vested with full power to use all measures, legal and
equitable, deemed by it to be necessary or proper to enforce this Section 24 and
----------
to collect the rents, income and profits assigned hereunder, including the right
of METLIFE or its designee, to enter upon the Property, or any part thereof, and
take possession of all or any part of the Property together with all personal
property, fixtures, documents, books, records, papers and accounts of Borrower
relating thereto, and METLIFE may exclude Borrower, its agents and servants,
wholly therefrom. Borrower hereby grants full power and authority to METLIFE to
exercise all rights, privileges and powers herein granted at any and all times
after service of a Notice, with full power to use and apply all of the rents and
other
12
<PAGE>
income herein assigned to the payment of the costs of managing and operating the
Property and of any indebtedness or liability of Borrower to METLIFE, including
but not limited to the payment of taxes, special assessments, insurance
premiums, damage claims, the costs of maintaining, repairing, rebuilding and
restoring the improvements on the Property or of making the same rentable,
reasonable attorneys' fees incurred in connection with the enforcement of this
Mortgage, and of principal and interest payments due from Borrower to METLIFE on
the Note and this Mortgage, all in such order as METLIFE may determine. METLIFE
shall be under no obligation to exercise or prosecute any of the rights or
claims assigned to it hereunder or to perform or carry out any of the
obligations of the lessor under any of the Leases and does not assume any of the
liabilities in connection with or arising or growing out of the covenants and
agreements of Borrower in the Leases. It is further understood that the
assignment set forth in this Section 24 shall not operate to place
----------
responsibility for the control, care, management or repair of the Property, or
parts thereof, upon METLIFE, nor shall it operate to make METLIFE liable for the
performance of any of the terms and conditions of any of the Leases, or for any
waste of the Property by any lessee under any of the Leases, or any other
person, or for any dangerous or defective condition of the Property or for any
negligence in the management, upkeep, repair or control of the Property
resulting in loss or injury or death to any lessee, licensee, employee or
stranger.
25. DEFAULT. The following shall each constitute an event of default
-------
("Event of Default"):
(a) Failure of or refusal by Borrower to pay any portion of the sums
secured by this Mortgage when due, and such failure or refusal shall continue
for a period of ten (10) days after written notice is given to Borrower by
METLIFE specifying such failure; or
(b) Failure of Borrower within the time required by this Mortgage to make
any payment for taxes, insurance or for reserves for such payments, or any other
payment necessary to prevent filing of or discharge of any lien, and such
failure shall continue for a period of ten (10) days after written notice is
given to Borrower by METLIFE specifying such failure; or
(c) Failure by Borrower or Guarantor to observe or perform any obligations
of Borrower or Guarantor to METLIFE on or with respect to any transactions,
debts, undertakings or agreements other than the transaction evidenced by the
Note following the giving of any required notice and the expiration of any
applicable period of grace; or
(d) Failure of Borrower to make any payment or perform any obligation under
any superior liens or encumbrances on the Property, within the time required
thereunder, or commencement of any suit or other action to foreclose any
superior liens or encumbrances; or
(e) Failure by Borrower to observe or perform any of its obligations under
any of the Leases following the giving of any required notice and the expiration
of any applicable cure period; or
(f) The Property is transferred or any agreement to transfer any part or
interest in the Property in any manner whatsoever is made or entered into
without the prior written consent of METLIFE, except as specifically allowed
under this Mortgage, including without limitation creating or allowing any liens
on the Property or leasing any portion of the Property; or
(g) Filing by Borrower or Guarantor of a voluntary petition in bankruptcy
or filing by Borrower or Guarantor of any petition or answer seeking or
acquiescing in any reorganization, arrangement, composition, readjustment,
liquidation, or similar relief for itself under any present or future federal,
state or other statute, law or regulation relating to bankruptcy, insolvency or
other relief for debtors, or the seeking, consenting to, or acquiescing by
Borrower or Guarantor in the appointment of any trustee, receiver, custodian,
conservator or liquidator for Borrower or Guarantor, any part of the Property,
or any of the income or rents of the Property, or the making by Borrower or
Guarantor of any general assignment for the benefit of creditors, or the
inability of or failure by Borrower or Guarantor to pay its debts generally as
they become due, or the insolvency on a balance sheet basis
13
<PAGE>
or business failure of Borrower or Guarantor, or the making or suffering of a
preference within the meaning of federal bankruptcy law or the making of a
fraudulent transfer under applicable federal or state law, or concealment by
Borrower or Guarantor of any of its property in fraud of creditors, or the
imposition of a lien upon any of the property of Borrower or Guarantor which is
not discharged in the manner permitted by Section 4 of this Mortgage, or the
---------
giving of notice by Borrower or Guarantor to any governmental body of insolvency
or suspension of operations; or
(h) Filing of a petition against Borrower or Guarantor seeking any
reorganization, arrangement, composition, readjustment, liquidation, or similar
relief under any present or future federal, state or other law or regulation
relating to bankruptcy, insolvency or other relief for debts, or the appointment
of any trustee, receiver, custodian, conservator or liquidator of Borrower or
Guarantor, of any part of the Property or of any of the income or rents of the
Property, unless such petition shall be dismissed within sixty (60) days after
such filing, but in any event prior to the entry of an order, judgment or decree
approving such petition; or
(i) The institution of any proceeding for the dissolution or termination of
Borrower voluntarily, involuntarily, or by operation of law; or
(j) A material adverse change occurs in the assets, liabilities or net
worth of Borrower or any of the guarantors of the indebtedness evidenced by the
Note from the assets, liabilities or net worth of Borrower or any of the
guarantors of the indebtedness evidenced by the Note previously disclosed to
METLIFE; or
(k) Any warranty, representation or statement furnished to METLIFE by or on
behalf of Borrower under the Note, this Mortgage, any of the other Loan
Documents or the Certificate and Indemnity Agreement Regarding Hazardous
Substances, shall prove to have been false or misleading in any material
respect; or
(l) Failure of Borrower to observe or perform any other covenant or
condition contained in the Note and such default shall continue for thirty (30)
days after notice is given to Borrower specifying the nature of the failure. No
notice of default and no opportunity to cure shall be required if during the
prior twelve (12) months METLIFE has already sent a notice to Borrower
concerning default in performance of the same obligation; or
(m) Failure of Borrower to observe or perform any other obligation under
this Mortgage, any other Loan Document or the Certificate and Indemnity
Regarding Hazardous Substances when such observance or performance is due, and
such failure shall continue beyond the applicable cure period set forth in such
Loan Document, or if the default cannot be cured within such applicable cure
period, Borrower fails within such time to commence and pursue curative action
with reasonable diligence or fails at any time after expiration of such
applicable cure period to continue with reasonable diligence all necessary
curative actions. No notice of default and no opportunity to cure shall be
required if during the prior twelve (12) months METLIFE has already sent a
notice to Borrower concerning default in performance of the same obligation; or
(n) Borrower's abandonment of the Property; or
(o) Any of the foregoing events occur with respect to Guarantor; or
(p) The occurrence of any default under any of the documents evidencing or
securing (i) METLIFE Loan No. 5905292, (ii) METLIFE Loan No. 5905392, (iii)
METLIFE Loan No. 5905393, (iv) METLIFE Loan No. 5904594 (v) METLIFE Loan No.
59009791, (vi) METLIFE Loan No. 5922796, (vii) METLIFE Loan No. 5922696, or
(viii) any other indebtedness with Borrower or any of the guarantors of the
Indebtedness which is now or hereafter owed to METLIFE.
26. RIGHTS AND REMEDIES ON DEFAULT.
------------------------------
14
<PAGE>
26.1 Remedies. Upon the occurrence of any Event of Default and at any
--------
time thereafter, METLIFE may exercise any one or more of the following rights
and remedies:
(a) METLIFE may declare all sums secured by this Mortgage immediately due
and payable, including any prepayment premium which Borrower would be required
to pay.
(b) METLIFE shall have the right to foreclose this Mortgage in accordance
with applicable law.
(c) In the event of any foreclosure, to the extent permitted by applicable
law, METLIFE will be entitled to a judgment which will provide that if the
foreclosure sale proceeds are insufficient to satisfy the judgment, execution
may issue for any amount by which the unpaid balance of the obligations secured
by this Mortgage exceeds the net sale proceeds payable to METLIFE.
(d) With respect to all or any part of the Property that constitutes
personalty, METLIFE shall have all rights and remedies of secured party under
the Uniform Commercial Code.
(e) METLIFE shall have the right to have a receiver appointed to take
possession of any or all of the Property, with the power to protect and preserve
the Property, to operate the Property preceding foreclosure or sale, to collect
all the rents and revenues from the Property and apply the proceeds, over and
above cost of the receivership, against the sums due under this Mortgage, and to
exercise all of the rights with respect to the Property described in Section 24
----------
above. The receiver may serve without bond if permitted by law. METLIFE's
right to the appointment of a receiver shall exist whether or not apparent value
of the Property exceeds the sums due under this Mortgage by a substantial
amount. Employment by METLIFE shall not disqualify a person from serving as a
receiver.
(f) In the event Borrower remains in possession of the Property after the
Property is sold as provided above or METLIFE otherwise becomes entitled to
possession of the Property upon default of Borrower, Borrower shall become a
tenant at will of METLIFE or the purchaser of the Property and shall pay a
reasonable rental for use of the Property while in Borrower's possession.
(g) METLIFE shall have any other right or remedy provided in this Mortgage,
the Note, or any other Loan Document or deed delivered by Borrower in connection
therewith, or available at law, in equity or otherwise.
(h) METLIFE shall have all the rights and remedies set forth in Sections 23
-----------
and 24.
- ------
26.2 Sale of the Property. In exercising its rights and remedies,
--------------------
including, without limitation, the STATUTORY POWER OF SALE, METLIFE may, at
METLIFE's sole discretion, cause all or any part of the Property to be sold as a
whole or in parcels, and certain portions of the Property may be sold without
selling other portions. METLIFE may bid at any public sale on all or any portion
of the Property.
26.3 Notice of Sale. METLIFE shall give Borrower reasonable notice of the
--------------
time and place of any public sale of any personal property or of the time after
which any private sale or other intended disposition of the personal property is
to be made. Reasonable notice shall mean notice given in accordance with
applicable law, including notices given in the manner and at the times required
for notices in a nonjudicial foreclosure.
26.4 Waiver; Election of Remedies. A waiver by either party of a breach
----------------------------
of a provision of this Instrument shall not constitute a waiver of or prejudice
the party's right otherwise to demand strict compliance with that provision or
any other provision. Election by METLIFE to pursue any remedy shall not exclude
pursuit of any other remedy, and all remedies of METLIFE under this Instrument
are cumulative and not exclusive. An election
15
<PAGE>
to make expenditures or take action to perform an obligation of Borrower shall
not affect METLIFE's right to declare a default and exercise its remedies under
this Instrument.
27. SATISFACTION OF MORTGAGE. Upon payment of all sums secured by this
------------------------
Mortgage, METLIFE shall execute a satisfaction of this Mortgage and shall
surrender this Mortgage and all notes evidencing Indebtedness secured by this
Mortgage to the person or persons legally entitled thereto. Such person or
persons shall pay METLIFE's costs incurred in connection with satisfaction of
this Mortgage.
28. FUTURE ADVANCES. Upon request of Borrower, METLIFE, at METLIFE's
---------------
option so long as this Mortgage secures Indebtedness held by METLIFE, may make
Future Advances to Borrower. Such Future Advances, with interest thereon, shall
be secured by this Mortgage when evidenced by promissory notes stating that said
notes are secured hereby.
29. IMPOSITION OF TAX BY STATE.
--------------------------
(a) State Taxes Covered. The following constitute state taxes to which
-------------------
this Section applies:
(1) A specific tax upon mortgages or upon all or any part of the
indebtedness secured by a mortgage.
(2) A specific tax on a grantor which the taxpayer is authorized or
required to deduct from payments on the indebtedness secured by a mortgage.
(3) A tax on a mortgage chargeable against the grantee or the holder of the
note secured.
(4) A specific tax on all or any portion of the indebtedness or on payments
of principal and interest made by a grantor.
(b) Remedies. If any state tax to which this Section applies is enacted
--------
subsequent to the date of this Mortgage, this shall have the same effect as an
Event of Default, and METLIFE may exercise any or all of the remedies available
to it unless the following conditions are met:
(1) Borrower may lawfully pay the tax or charge imposed by state tax, and
(2) Borrower pays the tax or charge within thirty (30) days after notice
from METLIFE that the tax law has been enacted.
30. ATTORNEYS' FEES. In the event suit or action is instituted to enforce
---------------
or interpret any of the terms of this Mortgage (including without limitation
efforts to modify or vacate any automatic stay or injunction), the prevailing
party shall be entitled to recover all expenses reasonably incurred at, before
and after trial and on appeal whether or not taxable as costs, or in any
bankruptcy proceeding including, without limitation, attorneys' fees, witness
fees (expert and otherwise), deposition costs, copying charges and other
expenses. Whether or not any court action is involved, all reasonable expenses,
including but not limited to the costs of searching records, obtaining title
reports, surveyor reports, and title insurance, incurred by METLIFE that are
necessary at any time in METLIFE's opinion for the protection of its interest or
enforcement of its rights shall become a part of the Indebtedness payable on
demand and shall bear interest from the date of expenditure until repaid at the
interest rate as provided in the Note. The term "attorneys' fees" as used in the
Loan Documents shall be deemed to mean such fees as are reasonable and are
actually incurred.
31. GOVERNING LAW; SEVERABILITY. This Mortgage shall be governed by the
---------------------------
law of the Commonwealth of Massachusetts applicable to contracts made and to be
performed therein (excluding choice-of-law principles). In the event that any
provision or clause of this Mortgage or the Note conflicts with applicable law,
16
<PAGE>
such conflict shall not affect other provisions of this Mortgage or the Note
which can be given effect without the conflicting provision, and to this end the
provisions of this Mortgage and the Note are declared to be severable.
32. TIME OF ESSENCE. Time is of the essence of this Mortgage.
---------------
33. CHANGES IN WRITING. This Mortgage and any of its terms may only be
------------------
changed, waived, discharged or terminated by an deed in writing signed by the
party against which enforcement of the change, waiver, discharge or termination
is sought. Any agreement subsequently made by Borrower or METLIFE relating to
this Mortgage shall be superior to the rights of the holder of any intervening
lien or encumbrance.
34. NO OFFSET. Borrower's obligation to make payments and perform all
---------
obligations, covenants and warranties under this Mortgage and under the Note
shall be absolute and unconditional and shall not be affected by any
circumstance, including without limitation any setoff, counterclaim, abatement,
suspension, recoupment, deduction, defense or other right that Borrower or any
guarantor may have or claim against METLIFE or any entity participating in
making the loan secured hereby. The foregoing provisions of this section,
however, do not constitute a waiver of any claim or demand which Borrower or any
guarantor may have in damages or otherwise against METLIFE or any other person,
or preclude Borrower from maintaining a separate action thereon; provided,
however, that Borrower waives any right it may have at law or in equity to
consolidate such separate action with any action or proceeding brought by
METLIFE.
35. AUTHORIZATION TO INSERT. [INTENTIONALLY DELETED.]
-----------------------
36. MAXIMUM INTEREST CHARGES. Notwithstanding anything contained herein
------------------------
or in any of the Loan Documents to the contrary, in no event shall METLIFE be
entitled to receive interest on the loan secured by this Mortgage (the "Loan")
in amounts which, when added to all of the other interest charged, paid to or
received by METLIFE on the Loan, causes the rate of interest on the Loan to
exceed the highest lawful rate. Borrower and METLIFE intend to comply with the
applicable law governing the highest lawful rate and the maximum amount of
interest payable on or in connection with the Loan. If the applicable law is
ever judicially interpreted so as to render usurious any amount called for under
the Loan Documents, or contracted for, charged, taken, reserved or received with
respect to the Loan, or if acceleration of the final maturity date of the Loan
or if any prepayment by Borrower results in Borrower having paid or demand
having been made on Borrower to pay, any interest in excess of the amount
permitted by applicable law, then all excess amounts theretofore collected by
METLIFE shall be credited on the principal balance of the Note (or, if the Note
has been or would thereby be paid in full, such excess amounts shall be refunded
to Borrower), and the provisions of the Note, this Mortgage and any demand on
Borrower shall immediately be deemed reformed and the amounts thereafter
collectible thereunder and hereunder shall be reduced, without the necessity of
the execution of any new document, so as to comply with the applicable law, but
so as to permit the recovery of the fullest amount otherwise called for
thereunder and hereunder. The right to accelerate the final maturity date of
the Loan does not include the right to accelerate any interest which has not
otherwise accrued on the date of such acceleration, and METLIFE does not intend
to collect any unearned interest in the event of acceleration. All sums paid or
agreed to be paid to METLIFE for the use, forbearance or detention of the Loan
shall, to the extent permitted by applicable law, be amortized, prorated,
allocated and spread through the full term of the Loan until payment in full so
that the rate or amount of interest on account of the Loan does not exceed the
applicable usury ceiling. By execution of this Mortgage, Borrower acknowledges
that it believes the Loan to be nonusurious and agrees that if, at any time,
Borrower should have reason to believe that the Loan is in fact usurious, it
will give METLIFE written notice of its belief and the reasons why Borrower
believes the Loan to be usurious, and Borrower agrees that METLIFE shall have
ninety (90) days following its receipt of such written notice in which to make
appropriate refund or other adjustment in order to correct such condition if it
in fact exists.
IMPORTANT: READ BEFORE SIGNING. THE TERMS OF THIS AGREEMENT SHOULD BE
READ CAREFULLY BECAUSE ONLY THOSE TERMS IN WRITING ARE ENFORCEABLE. NO
OTHER TERMS OR ORAL PROMISES NOT CONTAINED IN
17
<PAGE>
THIS WRITTEN CONTRACT MAY BE LEGALLY ENFORCED. YOU MAY CHANGE THE TERMS OF
THIS AGREEMENT ONLY BY ANOTHER WRITTEN AGREEMENT.
BY EXECUTION OF THIS MORTGAGE, BORROWER EXPRESSLY: ACKNOWLEDGES THE RIGHT
TO ACCELERATE THE INDEBTEDNESS EVIDENCED BY THE NOTE AND THE POWER GIVEN
HEREIN TO METLIFE TO SELL THE PROPERTY BY NONJUDICIAL FORECLOSURE UPON
DEFAULT BY BORROWER WITHOUT ANY JUDICIAL HEARING AND WITHOUT ANY NOTICE
OTHER THAN SUCH NOTICE AS IS SPECIFICALLY REQUIRED TO BE GIVEN UNDER THE
NOTE OR PROVISIONS OF THIS MORTGAGE OR BY LAW; ACKNOWLEDGES THAT THE
UNDERSIGNED HAS READ THIS MORTGAGE AND THAT ANY AND ALL QUESTIONS REGARDING
THE LEGAL EFFECT OF THIS MORTGAGE AND ITS PROVISIONS HAVE BEEN EXPLAINED
FULLY TO BORROWER. BORROWER HAS CONSULTED WITH ITS COUNSEL PRIOR TO
EXECUTING THIS MORTGAGE AND ACKNOWLEDGES THAT ALL WAIVERS OF THE AFORESAID
RIGHTS OF BORROWER HAVE BEEN MADE KNOWINGLY, INTENTIONALLY AND WILLINGLY BY
THE UNDERSIGNED, ON BEHALF OF BORROWER, AS PART OF A BARGAINED-FOR LOAN
TRANSACTION AND THAT THIS MORTGAGE IS VALID AND ENFORCEABLE BY METLIFE
AGAINST BORROWER IN ACCORDANCE WITH ALL THE TERMS AND CONDITIONS HEREOF.
IN WITNESS WHEREOF, Borrower has executed this Mortgage or has caused
the same to be executed by its representatives thereunto duly authorized.
BORROWER:
W.E. ANDREWS CO., INC.,
a Georgia corporation
By:_________________________________________
Name:____________________________________________
[Vice] President
By:_______________________________________________
Name:____________________________________________
Vice President/ Treasurer
[SEAL]
Exhibits:
- --------
Exhibit A - Description of Property
Schedule 1 - Description of Debtor and Secured Party
Schedule 2 - Permitted Exceptions
18
<PAGE>
STATE OF GEORGIA )
) ss.
COUNTY OF FULTON )
ACKNOWLEDGEMENT
---------------
On this _____ day of January 1997, before me, a Notary Public in and
for the State of Georgia, personally appeared ________________________________
and ___________________________________, personally known to me (or proved to me
on the basis of satisfactory evidence) to be the persons who executed this
instrument, on oath stated that they were authorized to execute the instrument,
and acknowledged it as the [Vice] President and Vice President/Treasurer,
respectively, of W.E. Andrews Co., Inc., to be the free and voluntary act and
deed of said corporation for the uses and purposes mentioned in the instrument.
IN WITNESS WHEREOF, I have hereunto set my hand and official seal the
day and year first above written.
______________________________________
NOTARY PUBLIC in and for the
State of_______________,
residing at __________________________
My appointment expires________________
19
<PAGE>
Loan No: 5922696-001
EXHIBIT A
(140 South Road, Bedford, Massachusetts)
Legal Description:
- -----------------
All that certain parcel of land with the buildings thereon situated at 140-
144 South Road, Bedford, Middlesex County, Massachusetts, all more
particularly described in Exhibit "A" attached hereto and made a part
hereof.
<PAGE>
SCHEDULE 1
----------
Loan No. 5922696-001
Part 1
------
Description of "Debtor" and "Secured Party"
-------------------------------------------
A. Debtor:
------
1. Name and Identity or Corporate Structure: W.E. Andrews Co., Inc., a Georgia
corporation
2. Debtor has been using or operating under such name and identity or
corporate structure, without change, since:
3. The principal place of business and chief executive office of Debtor are
located at:
2155 Monroe Drive, N.E.
Atlanta, Georgia 30324
Attention: Mark C. Pope, III, President
B. Secured Party: MetLife Capital Financial Corporation, a Delaware
--------------
corporation.
************************************************************************
Part 2
------
(Notice Mailing Addresses of "Debtor" and "Secured Party")
A. The mailing address of Debtor is:
2155 Monroe Drive, N.E.
Atlanta, Georgia 30324
Attention: Mark C. Pope, III, President
B. The mailing address of Secured Party is:
MetLife Capital Financial Corporation
Real Estate Department
10900 N.E. 4th Street, Suite 500
Bellevue, Washington 98004
<PAGE>
Loan No: Loan No.: 5922696-001
SCHEDULE 2
----------
(140 South Road, Bedford, Massachusetts)
Permitted Exceptions:
- --------------------
1. Title to and rights of the public and others entitled thereto in and
to those portions of the insured premises lying within the bounds of South Road
and adjacent streets and ways.
2. Taking by the Town of Bedford for South Road (relocated and declared a
public highway) as noted on a document recorded at the Middlesex South District
Registry of Deeds in Book 7006, Page 5.
3. Rights and easements granted by Roger W. Brown to the Town of Bedford
dated October 29, 1952, and recorded with said Deeds in Book 7994, Page 302.
4. Easement by the Town of Bedford for sewer assessment on South Road as
noted on a document recorded at said Registry on May 22, 1959, in Book 9379,
Page 391.
5. Rights, easements, restrictions and covenants contained in Deed from
Boston and Main Railroad to William J. Griffith and James E. Griffith as Trustee
of The Griffith Realty Trust dated November 1, 1962, and recorded with Middlesex
South District Registry of Deeds in Book 10158, Page 106.
6. Rights of upper and lower riparian owners in and to the waters of the
Elm Brook and the natural flow thereof.
7. Taking by the County Commissioners for the County of Middlesex for the
relocation of Lincoln and South Streets dated September 20, 1946, and recorded
with said Deeds in Book 7006, Page 5.
8. Order of Conditions from the Bedford Conservation Commission to W.E.
Andrews, Inc., dated June 6, 1990, and recorded at the Middlesex South District
Registry of Deeds in Book 20656, Page 335. Revised by Reissued Order of
Conditions dated January 2, 1990, and recorded at said Registry in Book 20975,
Page 513.
9. Order of Conditions from The Bedford Conservation Commission to W.E.
Andrews Co., Inc., dated January 4, 1995, and recorded at the Middlesex South
District Registry of Deeds in Book 25128, Page 346.
<PAGE>
Loan No. 5922696-001
SECURITY AGREEMENT
(140 South Road, Bedford, Massachusetts)
Debtor:
Name: W.E. Andrews Co., Inc., a Georgia corporation
Address: 120 South Road
Bedford, Massachusetts 01730
Secured Party:
Name: MetLife Capital Financial Corporation,
a Delaware corporation
Address: Real Estate Department
10900 N.E. 4th Street, Suite 500
Bellevue, Washington 98004
Debtor, for valuable consideration, hereby grants to Secured Party a
security interest in the property listed on Exhibit B hereto, and any and all
---------
additions and substitutions thereto (the "Collateral") (i) to secure payment of
the indebtedness evidenced by that certain promissory note of even date
herewith, payable to the order of Secured Party, in the principal amount of Two
Million Twenty-Five Thousand Dollars ($2,025,000) (the "Note") and (ii) to
secure all other obligations of Debtor arising under all documents securing or
executed in connection with the Note, except any Certificate and Indemnity
Agreement Regarding Hazardous Substances or Environmental Indemnity Agreement
(the "Loan Documents").
Debtor expressly warrants and covenants:
1. Except for the security interest granted hereby, Debtor is, or to the extent
that this Security Agreement states that the Collateral is to be acquired after
the date hereof, will be, the owner of the Collateral free from any lien,
security interest or encumbrance. Debtor shall defend the Collateral against
all claims and demands of all persons at any time claiming the same or any
interest therein.
2. The Collateral is used or bought primarily for use in the business of
Debtor.
3. Debtor's business address is as stated above. The Collateral is located at
or on or is used or owned for or in connection with the real estate situated in
Bedford, Middlesex County, Massachusetts, commonly known as 140 South Road and
more particularly described on the attached Exhibit A herein incorporated by
---------
this reference (the "Property").
4. Debtor shall notify Secured Party of any change in the location of the
Collateral or any change in Debtor's principal place of business.
5. Debtor shall pay all taxes and assessments of every nature which may be
levied or assessed against the Collateral.
6. Debtor shall not permit or allow any lien, security interest or encumbrance
whatsoever upon the Collateral and shall not permit the Collateral to be
attached or replevied.
<PAGE>
7. The Collateral is in good condition and Debtor shall keep the in good
condition and from time to time, forthwith, replace and repair all such parts of
the Collateral as may be broken, worn out, or damaged without allowing any lien
to be created upon the Collateral on account of such replacement or repairs.
Secured Party may examine and inspect the Collateral at any time, wherever
located.
8. Debtor will not use the Collateral in violation of any applicable statutes,
regulations or ordinances.
9. Notwithstanding anything else contained herein to the contrary, Secured
Party has been advised that certain personal property will be leased to Debtor,
and Secured Party's interest therein shall be subordinate to lessor's interest
therein.
Until default Debtor may have possession of the Collateral and use it in
any lawful manner, and upon default Secured Party shall have the immediate right
to the possession of the Collateral.
Debtor shall be in default under this Security Agreement upon the happening
of any of the following events (an "Event of Default"):
(a) default in the payment or performance of any obligation, covenant or
liability contained or referred to in this Security Agreement and such
default shall continue for a period of thirty (30) days after written
notice is given to Debtor by Secured Party specifying such default; or
(b) the occurrence of an Event of Default as defined under the Note, any
instrument securing the Note, including the Mortgage, Security Agreement,
Assignment of Leases and Rents and Fixture Filing or securing the Note (the
"Mortgage"), any other Loan Document, or the Certificate and Indemnity
Agreement Regarding Hazardous Substances or the Environmental Indemnity
Agreement; or
(c) loss, theft, damage or destruction to or of any of the Collateral which
shall materially and substantially diminish the aggregate value of the
Collateral, the sale or encumbrance of any of the Collateral, or the making
of any levy, seizure or attachment on or to the Collateral.
Upon an Event of Default and at any time thereafter, Secured Party may
declare the Note immediately due and payable and shall have the remedies of a
secured party under the Articles of the Massachusetts Uniform Commercial Code.
Secured Party may require Debtor to assemble the Collateral and deliver or make
it available to Secured Party at a place to be designated by Secured Party which
is reasonably convenient to both parties.
Secured Party may require that the Collateral be sold at a public sale at
the same time and place as the sale of the Property, or Secured Party may sell
the Collateral at one or more other public or private sales in accordance with
the Massachusetts Uniform Commercial Code. The Collateral shall not be required
to be exhibited, presented or displayed at any sale. In the event that the
Collateral is sold under the Mortgage, Secured Party hereby assigns its security
interest in the Collateral to the trustee or Sheriff selling the Property under
the Mortgage. Debtor agrees that a sale of the Collateral under the Mortgage
and the notices required under the laws of Massachusetts for the sale of real
property are commercially reasonable and adequate under the Massachusetts
Uniform Commercial Code.
Debtor agrees to pay to Secured Party in addition to the indebtedness
secured hereby, all expenses of retaking, holding, preparing for sale and
selling incurred by Secured Party in connection with realization on the
2
<PAGE>
Collateral including reasonable attorneys' fees and costs. In addition, in the
event suit or action is instituted to enforce or interpret this Agreement
(including without limitation efforts to modify or vacate any automatic stay or
injunction), the prevailing party shall be entitled to recover all expenses
reasonably incurred at, before or after trial and on appeal whether or not
taxable as costs, or in any bankruptcy proceeding, including, without
limitation, attorneys' fees, witness fees (expert and otherwise), deposition
costs, copying charges and other expenses.
No waiver by Secured Party of an Event of Default shall operate as a waiver
of any other default or of the same default on a future occasion. The taking of
this Security Agreement shall not waive or impair any other security said
Secured Party may have or hereafter acquire for the payment of the Note nor
shall the taking of any such additional security waive or impair this Security
Agreement. Secured Party may resort to any security it may have in the order it
may deem proper.
All rights of Secured Party hereunder shall inure to the benefit of its
successors and assigns. All promises and duties of Debtor shall bind its
successors and assigns.
Any and all notices, elections, demands, or requests permitted or required
to be made under this Security Agreement shall be in writing, signed by the
party giving such notice, election, demand or request, and shall be delivered
personally, by telegram, or sent by registered, certified, or Express United
States mail, postage prepaid, or by Federal Express or similar service requiring
a receipt, to the other party at the address set forth above or to such other
party and at such other address within the United States of America as any party
may designate as provided herein. The date of receipt of such notice, election,
demand or request shall be the earliest of (i) the date of actual receipt, (ii)
three (3) days after the date of mailing by registered or certified mail, (iii)
one (1) day after the date of mailing by Express Mail, or the delivery (for
redelivery) to Federal Express or another similar service requiring a receipt,
or (iv) the date of personal delivery (or refusal upon presentation for
delivery).
This Security Agreement shall be governed and construed in accordance with
the laws of the Commonwealth of Massachusetts.
IN WITNESS WHEREOF, Debtor has executed this Security Agreement as of
January 29, 1997.
DEBTOR:
W.E. ANDREWS CO., INC.,
a Georgia corporation
By:________________________________________
Name: ____________________________________,
[Vice] President
By:________________________________________
Name: _____________________________________,
Vice President/Treasurer
[SEAL]
Exhibits:
- --------
Exhibit A - Legal Description
Exhibit B - Personal Property
3
<PAGE>
Loan No: 5922696-001
EXHIBIT A
(140 South Road, Bedford, Massachusetts)
Legal Description:
- -----------------
All that certain parcel of land with the buildings thereon situated at 140-
144 South Road, Bedford, Middlesex County, Massachusetts, all more
particularly described in Exhibit "A" attached hereto and made a part
hereof.
<PAGE>
EXHIBIT B
(140 South Road, Bedford, Massachusetts)
Secured Party: MetLife Capital Financial Corporation
-----
Debtor: W.E. Andrews Co., Inc.
- ------
Loan No.: 5922696-001
- ---- ---
All right, title, and interest of Debtor in:
1. All buildings, structures, improvements, parking areas,
landscaping, fixtures and articles of property now or hereafter attached to, or
used or adapted for use in the operation of the real estate (herein the
"Premises") described in Exhibit "A" attached to the financing statement or
security agreement with respect to which this Exhibit "B" is attached, including
but without being limited to, all heating, air conditioning, and incinerating
apparatus and equipment; all boilers, engines, motors, dynamos, generating
equipment, piping and plumbing fixtures, water heaters, ranges, cooking
apparatus and mechanical kitchen equipment, refrigerators, freezers, cooling,
ventilating, sprinkling and vacuum cleaning systems, fire extinguishing
apparatus, gas and electric fixtures, carpeting, floor coverings, underpadding,
elevators, escalators, partitions, mantels, built-in mirrors, window shades,
blinds, draperies, screens, storm sash, awnings, signs, furnishings of public
spaces, halls and lobbies, and shrubbery and plants, and including also all
interest of any owner of the Premises in any of such items hereafter at any time
acquired under conditional sale contract, chattel mortgage or other title
retaining or security instrument, all of which property mentioned in this
paragraph 1 shall be referred to as the "Improvements" and shall be deemed part
of the realty and not severable wholly or in part without material injury to the
freehold of the Premises.
2. All compensation, awards, damages, rights of action and proceeds,
including interest thereon and/or the proceeds of any policies of insurance
therefor, arising out of or relating to a (a) taking or damaging of the Premises
or Improvements thereon by reason of any public or private improvement,
condemnation proceeding (including change of grade), sale or transfer in lieu of
condemnation, or fire, earthquake or other casualty, or (b) any injury to or
decrease in the value of the Premises or the Improvements for any reason
whatsoever.
3. Return premiums or other payments upon any insurance any time
provided for the benefit of or naming Secured Party, and refunds or rebates of
taxes or assessments on the Premises.
4. All the right, title and interest of Debtor in and under all
written and oral leases and rental agreements (including extensions, renewals
and subleases; all of the foregoing shall be referred to collectively herein as
the "Leases") now or hereafter affecting the Premises including, without
limitation, all rents, issues, profits and other revenues and income therefrom
and from the renting, leasing or bailment of Improvements and equipment, all
guaranties of tenants' performance under the Leases, and all rights and claims
of any kind that Debtor may have against any tenant under the Leases or in
connection with the termination or rejection of the Leases in a bankruptcy or
insolvency proceeding.
5. Plans, specifications, contracts and agreements relating to the
design or construction of the Improvements; Debtor's rights under any payment,
performance, or other bond in connection with the design or construction of the
Improvements; all landscaping and construction materials, supplies, and
equipment used or to be used or consumed in connection with construction of the
Improvements, whether stored on the Premises or at some other location; and
contracts, agreements, and purchase orders with contractors, subcontractors,
suppliers, and materialmen incidental to the design or construction of the
Improvements.
<PAGE>
6. All contracts (excluding contracts relating to the printing
operations of Debtor), rights, claims or causes of action pertaining to or
affecting the Premises or the Improvements, including, without limitation, all
options or contracts to acquire other property for use in connection with
operation or development of the Premises or Improvements, management contracts,
service or supply contracts, permits, licenses, franchises and certificates, and
all commitments or agreements, now or hereafter in existence, intended by the
obligor thereof to provide Debtor with proceeds to satisfy the loan evidenced
hereby or improve the Premises or Improvements, and the right to receive all
proceeds due under such commitments or agreements including refundable deposits
and fees.
7. All books, records, surveys, reports and other documents related
to the Premises, the Improvements, the Leases, or other items of collateral
described herein.
8. All additions, accessions, replacements, substitutions, proceeds
and products of the real and personal property, tangible and intangible,
described herein.
All of the foregoing described collateral is exclusive of any
equipment, furniture, furnishings or trade fixtures owned and supplied by Debtor
or any tenant of the Premises.
<PAGE>
Exhibit 11
Graphic Industries, Inc.
Computation of Earnings Per Share
<TABLE>
<CAPTION>
YEAR ENDED JANUARY 31
-----------------------------------------
1997 1996 1995
-----------------------------------------
<S> <C> <C> <C>
COMPUTATION FOR STATEMENT OF INCOME
Weighted average common shares
outstanding (1) 11,663,751 10,894,319 10,556,833
==========================================
Net income $ 7,280,667 $10,630,276 $ 8,405,734
==========================================
Net income per common share $ .62 $ .98 $ .80
==========================================
</TABLE>
<PAGE>
Exhibit 11
Graphic Industries, Inc.
Computation of Earnings Per Share (continued)
<TABLE>
<CAPTION>
YEAR ENDED JANUARY 31
-----------------------------------------
1997 1996 1995
-----------------------------------------
<S> <C> <C> <C>
COMPUTATION FOR STATEMENT OF INCOME
Fully diluted computation:
Net income $ 7,280,667 $10,630,276 $ 8,405,734
Add interest on 7% convertible
subordinated debentures (2) 887,605 897,791 897,791
=========================================
$ 8,168,272 $11,528,067 $ 9,303,525
=========================================
Weighted average number of
shares outstanding 11,663,751 10,894,319 10,556,833
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) 12,942,951 12,173,519 11,836,033
=========================================
Fully diluted net income
per common share $ .62 $ .95 $ .79
=========================================
</TABLE>
<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>
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, 1997:
Accounts receivable allowance $1,250,000 $2,596,000 $235,000(2) $2,096,000 $1,985,000
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
</TABLE>
(1) Uncollectible accounts written off, net of recoveries.
(2) Accounts receivable allowance of acquired subsidiary.
<PAGE>
Exhibit 21
EXHIBIT 22
SUBSIDIARIES* OF GRAPHIC INDUSTRIES, INC.
- -----------------------------------------
NAME STATE OF INCORPORATION
- ----------------------------------------- ----------------------
ATLANTA BLUE PRINT CO.
d/b/a/ Atlanta Blue Print &
Graphics Co.
Subsidiaries: Executive Courier, Inc. Georgia
Divisions: A&E Reprographics
and Supply Company
Atlantic Reprographics
Carolina Reprographics
Arco Blueprinter
Cobb Reprographics
and Office Supply
Imaging Technologies
Services
International Express
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
INTEGRATED GRAPHIC SERVICE Georgia
IPD PRINTING & DISTRIBUTING, INC. Georgia
MERCURY PRINTING COMPANY, INC. Tennessee
DIVISIONS:
Davidson & Chandler Advertising
The Wimmer Companies
MONROE LITHO, INC. New York
PRESSTAR PRINTING CORPORATION Maryland
QUADRAS, INC. Georgia
SOUTHERN SIGNATURES, INC. Georgia
STATE PRINTING COMPANY, INC. South Carolina
THE STEIN PRINTING COMPANY, INC.** 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 Service, Inc. 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, 1997,
included in the 1997 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 333-17989, 333-10991, 333-03021, 33-00557, 33-65223, 33-63989 and 333-
79374) pertaining to acquisitions of Graphic Industries, Inc. and in each
related Prospectus of our reports dated March 12, 1997, 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, 1997.
April 25, 1997
Atlanta, Georgia
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