**EXHIBIT 10.1**

 

FORMOFLOAN AND SECURITY AGREEMENT

 

This Loan And SecurityAgreement (this “Agreement”), dated asof                        ,2002 is entered into by and between                          ,(“Borrower”) having its officesat                         and                         (“Lender”)having its offices                 .

 

Borrower desires to borrow from the Lender$                           ,as more particularly described below (the “Loan”), secured by a lien on all ofthe Borrower’s right, title and interest in and to certain Equipment (asdefined herein). As further inducement for Lender to enter into this Agreement,Borrower agrees to obtain the guaranty of its parent company (“Guarantor”) forthe full and prompt payment by Borrower of all obligations hereunder(“Guaranty”), such Guaranty to be substantially in the form of Exhibit Cattached hereto. In consideration of the mutual covenants hereinafter set forththe parties agree as follows:

 

# 1.             Assecurity for the prompt payment of all debt, principal, interest, and otheramounts owed to Lender by Borrower and the prompt performance of each of theBorrower’s covenants and duties hereunder and under one or more PromissoryNote(s) (the “Notes”) in the original principal amounts as set forth inExhibit A hereto and payable by the Borrower to the Lender or any otheragreement, whether absolute or contingent, due or to become due, including anyinterest that accrues after the commencement of an insolvency proceeding(“Indebtedness”), the Borrower hereby assigns to the Lender, and grants to theLender a security interest in all the Borrower’s right, title and interest inand to property (“Collateral”) consisting of the equipment (“Equipment”)described in Exhibit A hereto and any repairs and replacements thereof andsubsequent additions, modifications and accessions thereto, and all proceeds ofthe foregoing and of the insurance referred to in paragraph (3) hereof, exceptfor income or proceeds generated by the use of the Equipment including, withoutlimitation, income, accounts, or instruments. A form of Note is attached heretoas Exhibit B.

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# 2.             TheBorrower represents, warrants and agrees that (i) it has good title to theCollateral, free of all liens, claims and encumbrances, except for liens inferioror subordinate to the Lender’s interest existing on the date hereof to whichLender shall have consented to in writing; (ii) it is a corporation dulyexisting and in good standing under the laws of its state of incorporation andqualified and licensed to do business in the jurisdiction where the Equipmentis or will be located; (iii) the Note and this Agreement (the “CollateralDocuments”) are valid and are enforceable in accordance with their respectiveterms subject to applicable bankruptcy, insolvency, reorganization or othersimilar laws affecting 

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# theenforceability generally of the rights of creditors; (iv) the making andperformance by the Borrower of the Collateral Documents, and any relateddocuments and transactions contemplated hereby and thereby do not contraveneany provisions of law applicable to the Borrower and do not conflict with andwill not result in a breach of or constitute a default or require any consentunder, or result in the creation of any lien, charge or encumbrance upon theCollateral (other than the lien created hereunder) pursuant to the terms ofBorrower’s charter or bylaws or of any credit agreement, lease, guaranty, orother instrument to which the Borrower is a party or by which the Borrower maybe bound or to which its properties may be subject (v) there are no set-offs,counterclaims or defenses on the part of the Borrower with respect to itsobligations hereunder; (vi) the Equipment has been delivered to and accepted bythe Borrower and will be kept at the Borrower’s address set forth inExhibit A hereto unless such Equipment is disposed of  as provided under Section 5 hereof orthe Lender otherwise consents (which consent shall not be withheldunreasonably) or at the address of another subsidiary of Guarantor providedthat Borrower or Guarantor notifies Lender of such other address in advance;(vii) it will not assign its rights to, convey, sell, lease, or transfer anyCollateral, or create, incur, assume or allow any lien with respect to theCollateral, to any person other than the Lender, except for assignments andsecurity interests which are inferior or subordinate to the Lender’s interestand to which Lender has consented in writing in its sole discretion; (viii) itwill execute such financing statements in connection herewith as the Lender mayreasonably request; (ix) it will preserve its corporate existence and remainqualified to do business in the jurisdiction(s) where the Equipment is or willbe located; (x) its chief executive office is located at the address of theBorrower stated above, and it will promptly notify Lender of any change in suchaddress; and (xi) there is no pending or threatened litigation against theBorrower which could reasonably be expected to have a material adverse effecton the ability of the Borrower to perform its obligations under the CollateralDocuments. Borrower, at its own expense shall maintain the Equipment in goodrepair, appearance and conditions, other than normal wear and tear and shallobtain and keep in effect throughout the term of the applicable Note amaintenance agreement with the manufacturer or other manufacturer approvedservice provider for such Equipment. Notwithstanding the foregoing provisions, nothing contained herein shallprohibit the Borrower, the Guarantor, or any subsidiary thereto from enteringinto any transaction permitted by Section 6.6 of that certain CreditAgreement by and among Consolidated Graphics, Inc., as Borrower, and itsdomestic subsidiaries from time to time a party thereto as Guarantors, andWachovia Bank National Association (formerly First Union National Bank), andother lenders thereto dated December 11, 2000, as it currently exists today.

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# 3.             Riskof loss or, damage to or destruction of the Equipment shall be borne by theBorrower and the Borrower shall insure the Equipment against such risks to beborne by it in each case in an amount not less than the aggregate amount of theIndebtedness 

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# outstandingfrom time to time with such companies and insuring against such risks as isheld by the Borrower and Guarantor and approved by Lender as of the date ofexecution.  The insurance coverage ofthe Guarantor and the Company as of the date of execution hereof is outlined asto carrier, policy number, expiration date, type, and amount on Exhibit D,attached hereto.  Lender acknowledgesand agrees that said insurance shall be satisfactory for all purposeshereunder.  All policies for suchinsurance shall contain loss payable clauses in favor of the Borrower and theLender as their respective interest may appear, and shall not be subject totermination or cancellation without thirty (30) days’ prior written notice tothe Lender.  Certificates of insuranceor other reasonable evidence thereof shall be deposited with the Lender as theLender may request from time to time. The Borrower hereby assigns and sets over unto the Lender all monieswhich may become payable on account of any such insurance and directs theinsurers to pay the Lender any amounts so due, unless the Borrower elects toreplace the equipment damaged with equipment of similar use and valuereasonably acceptable to Lender. Guarantor may self-insure the Equipment onbehalf of the Company, provided that at all times during such self-insuranceGuarantor maintains a credit rating of investment grade for its long term debt.

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# 4.             If(i) the Borrower defaults in the payment of any principal or interest payableunder any Note governed by this Agreement for more than five (5) days after datedue; (ii) the Borrower defaults in the payment of or performance of any otherobligation of the Borrower hereunder or under any Note hereunder for more thanthirty (30) days after either the Lender has given notice of such default tothe Borrower and the Guarantor; (iii) any other representation or warranty madeby the Borrower in any of the Collateral Documents shall prove to be false ormisleading in any material respect; (iv) there is a material adverse change inthe financial condition of Guarantor, or a change of ownership or control ofBorrower; (v) the Guarantor fails to make any payment payable under theGuaranty or any other guaranty made by Guarantor for the purpose of securing aloan, or (vi) either the Borrower or Guarantor becomes insolvent or admits inwriting its inability to pay its debts as they mature or applies for, consentsto or acquiesces in the appointment of a trustee or receiver for it or any ofits property, or any bankruptcy, reorganization, debt arrangement or otherproceeding, shall be instituted by or against the Borrower or Guarantor, and ifinstituted against it shall be consented to or acquiesced in by it or shall notbe dismissed within a period of sixty (60) days, or any material portion of the Collateral is attached, seized,subjected to a writ or distress warrant or is levied upon and the same is notremoved, discharged or rescinded within a period of thirty (30) days, then theoccurrence of any event described in any one or more of clauses (i) through(vi) above shall be an “Event of Default” and the Lender may at its optiondeclare all Notes governed under this Agreement to be due and payable,whereupon the unpaid principal of and accrued interest on all Notes shallbecome immediately due and payable and the Lender may exercise all rights andremedies, with respect to 

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# allCollateral, available to it under applicable law; provided, however, that inthe event of the occurrence of an Event of Default under (vi) above, all Notesunder this Agreement shall become immediately due and payable automatically,with no further action by the Lender. In connection with any sale or disposition of Collateral the requirementof reasonable notice shall be met if such notice is mailed postage prepaid toBorrower at least ten (10) days before such sale or disposition. Lender shallbe entitled to obtain reimbursement for all reasonable costs, attorney’s feesand legal expenses incurred by it on exercising such rights and remedies againstthe Borrower with respect to the Collateral. The Lender agrees to pay forthwith to the Borrower any surplus remainingfrom the Collateral after payment of all Indebtedness.

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# 5.             Borrowermay prepay the Indebtedness in whole or in part upon at least thirty (30) daysprior written notice to Lender, upon payment of principal (and interest due onsaid principal at the time of such prepayment) plus the Make-Whole Premium(defined herein).  The term “Make-WholePremium” shall mean an amount equal to the sum of (a) the positive difference,if any, of (x) the present value of the remaining principal paymentsoutstanding discounted at a per annum rate of interest equal to the five-yearU.S. Treasury Constant Maturities (as reported in the most recently publishedFederal Reserve Statistical Release H.15 prior to the prepayment date) plus 296basis points; minus (y) the present value of the remaining principal paymentsoutstanding at the applicable Note rate; plus (b) any reasonable fees or costsincurred by the Lender resulting from Borrower’s election to prepay.

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# 6.             TheAgreement and the Notes shall be contracts made under and governed by the lawsof New York, excluding its conflicts of law principles.  Whenever possible, each provision of theAgreement shall be interpreted in such manner as to be effective and validunder applicable law, but if any provision of this Agreement shall beprohibited by or invalid under such law, such provision shall be ineffectiveonly to the extent and duration of such prohibition or invalidity, withoutinvalidating the remainder of such provision or the remaining provisions of theAgreement. LENDER AND BORROWER WAIVE ALL RIGHTS TO TRIAL BY JURY IN ANYLITIGATION RELATING TO THIS AGREEMENT, THE NOTE, AND THE TRANSACTIONSCONTEMPLATED HEREBY AND THEREBY.

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# 7.             Noticesshall be deemed given when deposited in the U.S. mails, with postage prepaidfor certified or registered services, return receipt requested, addressed tothe parties at the addresses indicated on the first page of this Agreement, orto such other addresses as the parties shall provide by notice. All noticesrequired to be given to the Borrower hereunder or under any document executedin connection herewith shall also be given to the Guarantor at the addressprovided in this paragraph 7.  Inaddition, all notices to the Guarantor hereunder or under any document executedin connection herewith shall be given to the Guarantor at the followingaddress:

 

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Consolidated Graphics, Inc.5858 Westheimer Road, Suite 200Houston, Texas  77057Attention:  Chief Financial Officer

 

# 8.             ThisAgreement shall be binding upon, and shall inure to the benefit of, thesuccessors and assigns of the Borrower and the Lender. This Agreement, theNotes and the documents executed in connection herewith or as security for theNotes may be assigned, transferred, pledged, or participated to any otherperson or entity only upon prior written notice to Borrower of at least five(5) business days. The Lender agrees that, in the event of any transfer by itof the Note, it will endorse thereon a notation as to the portion of theprincipal of the Note which shall have been paid at the time of such transferand as to the date to which interest shall have been paid thereon.

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# 9.             Theobligations of the Borrower under this Agreement shall cease and terminate whenall principal, interest and other amounts payable or due hereunder have beenindefeasibly paid in full, whether at maturity of the Note, by acceleration, byprepayment or otherwise.  Upontermination of this Agreement Lender shall, at Borrower’s request, execute anddeliver to Borrower the documents or instruments necessary to evidence thetermination of its security interest under this Agreement.

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# 10.           Thisagreement may be executed by the Borrower and the Lender in counterparts, eachof which when so executed shall be deemed to be an original, and all suchcounterparts together shall constitute but one agreement.

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# 11.           Borrowerand Lender acknowledge that revised Article 9 of the Uniform Commercial Code,(“Revised Article 9”), has been adopted by the applicablejurisdiction(s)governing the Equipment and this transaction. Lender may at anytime and from time to time file financing statements, continuation statementsand amendments thereto that describe the Collateral and which contain any otherinformation required by Part 5 of Revised Article 9 for the sufficiency orfiling office acceptance of any financing statement, continuation statement oramendment, including whether Borrower is an organization, the type oforganization and any organization identification number issued to suchBorrower, if Borrower fails to execute and return to Lender or object to anydocument reasonably requested in writing by the Lender within five (5) businessdays from such request. Borrower agrees to furnish any such information toLender promptly upon request. Any such financing statements, continuationstatements or amendments may be signed by Lender on behalf of Borrower and maybe filed at any time in any jurisdiction whether or not Revised Article 9 isthen in effect in that jurisdiction.

 

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# 12.           TheLender agrees that it will not disclose without the prior consent of theBorrower and the Guarantor (other than to its employees, affiliates, auditors,counsel, or other lenders hereunder) any information with respect to theBorrower and/or Guarantor which is furnished pursuant to this Agreement, anyother documents contemplated by or referred to herein or therein and which isdesignated by the Borrower and/or Guarantor to the Lender in writing asconfidential or as to which it is otherwise reasonably clear such informationis not public except that Lender may disclose any such information (a) as hasbecome generally available to the public other than by a breach of thisSection 12; (b) as may be required or appropriate in any report,statement, or testimony submitted to any municipal, state or federal regulatorybody having or claiming to have jurisdiction over Lender or to the NationalAssociation of Insurance Commissioners, the Federal Reserve Board, the FederalDeposit Insurance Corporation, the OCC or any similar regulatory organizations(whether in the United States or elsewhere) or their successors; (c) as may berequired or appropriate in response to any summons or subpoena or any law,order, regulation or ruling application to Lender; (d) to any prospectiveparticipant or assignee in connection with any contemplated transfer pursuantto Section 8 provided that such prospective transferee shall have beenmade aware of this Section 12 and shall have agreed in writing to be boundby its provisions as if it were a party to this Agreement; or (e) to Lender’srepresentatives (which shall include, without limitation, any other bank andcompany affiliated with Lender or the parent of Lender), it being expresslyunderstood and agreed that such representatives shall be informed of theconfidential nature of the information, shall be required by such Lender totreat the information as confidential in accordance with the terms andconditions hereof and such representative shall have agreed in writing to bebound by this provision as if it were a party to this Agreement.

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# 13.           Borrowerhereby covenants and agrees that, during the term of this Agreement, in theevent that Guarantor ceases to be a publicly traded company or Guarantor failsto file any public consolidated reports, for any reason, Borrower shall causeGuarantor to furnish to Lender (i) as soon as available, but in any eventwithin one hundred twenty (120) days after the end of each fiscal year, a copyof the consolidated balance sheet of Guarantor and its consolidatedsubsidiaries as at the end of such fiscal year and the related consolidatedstatements of income and retained earnings and of cash flows of the Guarantorand its consolidated subsidiaries for such year, which consolidated statementsshall be audited by a firm of independent certified public accountants ofnationally recognized standing; and (ii) as soon as available, and in any eventwithin sixty (60) days after the end of each of the first three fiscal quartersof the Guarantor, a company-prepared consolidated balance sheet of theGuarantor and its consolidated subsidiaries as at the end of such period andrelated company-prepared consolidated statements of income and retainedearnings and of cash flows for the Guarantor and its consolidated subsidiariesfor such quarterly period and for the portion of the fiscal year ending withsuch period, in each case 

 

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# settingforth in comparative form consolidated figures for the corresponding period orperiods of the preceding fiscal year (subject to normal year-end auditadjustments).

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# 14.           Asstated in Section 6, the parties hereto have chosen New York law to applyto this Agreement and the Notes.  It isexpressly stipulated and agreed to be the intent of Borrower and Lender at alltimes to comply strictly with the applicable laws including, withoutlimitation, the laws of the State of New York (and any other State law, if forany reason a court should follow such law (including without limitation Texas)notwithstanding the parties express intention to follow New York law),governing the maximum rate or amount of interest payable on the Notes or theRelated Indebtedness (or applicable United States federal law to the extentthat it permits Lender to contract for, charge, take, reserve or receive agreater amount of interest than under any applicable state law).  If the applicable law is ever judiciallyinterpreted so as to render usurious any amount (i) contracted for, charged,taken, reserved or received pursuant to any of the Notes, any of the otherdocuments executed in connection therewith or as security therefore includingthe Guaranty and this Agreement (the “Loan Documents”), or any othercommunication or writing by or between Borrower and Lender related to thetransaction or transactions that are the subject matter of the Loan Documents,(ii) contracted for, charged or received by reason of Lender’s exercise of theoption to accelerate the maturity of any of the Notes and/or the RelatedIndebtedness, or (iii) Borrower will have paid or Lender will have received byreason of any voluntary prepayment by Borrower of any of the Notes and/or theRelated Indebtedness, then it is Borrower’s and Lender’s express intent thatall amounts charged in excess of the Maximum Lawful Rate shall be automaticallycancelled, ab initio, and all amounts in excess of the Maximum Lawful Ratetheretofore collected by Lender shall be credited on the principal balance ofany of the Notes and/or the Related Indebtedness (or, if the Notes and allRelated Indebtedness have been or would thereby be paid in full, refunded to Borrower),and the provisions of the Notes and the other Loan Documents immediately bedeemed reformed and the amounts thereafter collectible hereunder and thereunderreduced, without the necessity of the execution of any new document, so as tocomply with the applicable law, but so as to permit the recovery of the fullestamount otherwise called for hereunder and thereunder; provided, however, if anyof the Notes have been paid in full before the end of the stated term of any ofthe applicable Notes, then Borrower and Lender agree that Lender shall, withreasonable promptness after Lender discovers or is advised by Borrower thatinterest was received in an amount in excess of the Maximum Lawful Rate, eitherrefund such excess interest to Borrower and/or credit such excess interestagainst the Notes and/or any Related Indebtedness then owing by Borrower toLender.  Borrower hereby agrees that asa condition precedent to any claim seeking usury penalties against Lender, Borrowerwill provide written notice to Lender, advising Lender in reasonable detail ofthe nature and amount of the violation, and Lender shall have sixty (60) daysafter receipt of such notice in 

 

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# whichto correct such usury violation, if any, by either refunding such excessinterest to Borrower or crediting such excess interest against the Notes and/orthe Related Indebtedness then owing by Borrower to Lender.  All sums contracted for, charged or receivedby Lender for the use, forbearance or detention of any debt evidenced by any ofthe Notes and/or the Related Indebtedness shall, to the extent permitted byapplicable law, be amortized or spread, using the actuarial method, throughoutthe stated term of the applicable Note and/or the Related Indebtedness(including any and all renewal and extension periods) until payment in full sothat the rate or amount of interest on account of any of the Notes and/or theRelated Indebtedness does not exceed the Maximum Lawful Rate from time to timein effect and applicable to the Note and/or the Related Indebtedness for solong as debt is outstanding.  In noevent shall the provisions of Chapter 346 of the Texas Finance Code (whichregulates certain revolving credit loan accounts and revolving triparty accounts)apply to any of the Notes and/or the Related Indebtedness.  Notwithstanding anything to the contrarycontained herein or in any of the other Loan Documents, it is not the intentionof Lender to accelerate the maturity of any interest that has not accrued atthe time of such acceleration or to collect unearned interest at the time ofsuch acceleration.

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As used herein, the term “Maximum Lawful Rate” shallmean the maximum lawful rate of interest which may be contracted for, charged,taken, received or reserved by Lender in accordance with the applicable laws ofthe State of New York (and the law of any other State, if for any reason acourt should follow such law (including without limitation Texas law)notwithstanding the parties express intention to follow New York law, orapplicable United States federal law to the extent that it permits Lender tocontract for, charge, take, receive or reserve a greater amount of interestthan under applicable state law), taking into account all Charges (as hereindefined) made in connection with the transaction evidenced by the Notes and theother Loan Documents.  As used herein,the term “Charges” shall mean all fees, charges and/or any other things ofvalue, if any, contracted for, charged, received, taken or reserved by Lenderin connection with the transactions relating to any of the Notes and the otherLoan Documents, which are treated as interest under applicable law.  As used herein, the term “RelatedIndebtedness” shall mean any and all debt paid or payable by Borrower to Lenderpursuant to the Loan Documents or any other communication or writing by orbetween Borrower and Lender related to the transaction or transactions that arethe subject matter of the Loan Documents, except such debt which has been paidor is payable by Borrower to Lender under the Notes.

 

If for any reason any other State law (includingwithout limitation Texas) should be deemed to apply (notwithstanding theparties’ express intention to follow New York law):  (i) to the extent that Lender is relying on Chapter 303 of theTexas Finance Code (collectively “Chapter 303”), to determine the MaximumLawful Rate 

 

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payable on the Note and/or the Related Indebtedness, Lender willutilize the weekly ceiling from time to time in effect as provided in suchChapter 303, as amended; (ii) to the extent United States federal law permitsLender to contract for, charge, take, receive or reserve a greater amount ofinterest than under the applicable law, Lender will rely on United Statesfederal law instead of such Chapter 303 for the purpose of determining theMaximum Lawful Rate; and (iii) to the extent permitted by applicable law now orhereafter in effect, Lender may, at its option and from time to time, utilizeany other method of establishing the Maximum Lawful Rate under such Chapter 303or under other applicable law by giving notice, if required, to Borrower asprovided by applicable law now or hereafter in effect.

 

IN WITNESS WHEREOF, the Borrower and the Lender haveduly executed and delivered this Agreement as of the day and year first abovewritten.

 

 
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EXHIBIT A

 

to the Loan and Security Agreementdated             ,2002between            , asBorrower and            , asLender

 
| Promissory Note No.            | Name of Borrower: |
|-----------------------------------------------------------------------------|-------------------|
| Equipment:                                                                  | Amount: $         |
| Location:                                                                   | Date:             |
|                                                                        | Maturity:         |

 

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EXHIBIT B

 

$                               Date:                       ,2002Final Due Date:                           ,2007

 

PROMISSORY  NOTE NO.    

 

For value received,**                          **(the“Borrower”) promises to pay to the order of**                          **(togetherwith its successors and assigns, the “Lender”), at the Lender’s office at**                          **(orsuch other address as Lender may designate in writing) the principal amountof  $**                          **withinterest at the rate of**                **%per annum from the date hereof to maturity, such principal and interest to bepaid each month in installments of $**                    **plusinterest each (except that the last such installment shall be in a balloonpayment amount equal to all unpaid principal and interest on this Note),commencing**                          **,200   and on the last date of each month thereafter to and including**                          **,2007, such installments to be applied first to accrued and unpaid interest andthe balance to unpaid principal, pursuant to the attached amortizationschedule.  Interest shall be computed inarrears on the basis of a 360-day year consisting of twelve months of thirtydays each.  If any payment due hereunderis not made within 3 days of the due date, the Borrower shall pay the Lender alate fee equal to the lesser of (i) five percent (5%) of the amount of suchunpaid amount or (ii) the maximum amount permitted to be charged underapplicable law. All amounts due hereunder shall bear interest, from and afterthe occurrence and during the continuance of an Event of Default (as defined inthe Security Agreement), at a rate equal to the lesser of (y) five (5)percentage points above the interest rate applicable immediately prior to theoccurrence of the Event of Default or (z) the maximum amount permitted to becharged under applicable law.

 

This Note is governed by and incorporates by referencethat certain Loan and Security Agreement of even date herewith (the “SecurityAgreement”), between the Borrower and Lender, to which Security Agreementreference is made as to the nature and extent of the security (“Collateral”)for this Note, the rights of the Lender, the Borrower and any holder of thisNote with respect to the Collateral, the personal liability of the Borrower,interest on late installments and the acceleration of the maturity of the Note.In the event of a casualty loss of the Collateral, the Borrower may prepay thisNote, in whole or in part, provided that any such prepayment shall be appliedto installments of principal hereof in the inverse order of the maturity ofsuch installments, and any prepayments of the full amount of this Note shallinclude accrued interest thereon, and provided that prepayment of this Note isfurther governed by the prepayment terms of Section 5 of the SecurityAgreement.

 

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Except as provided in the Security Agreement, theBorrower waives presentment and demand for payment, notification of dishonor,protest and notice of protest of the Note, and shall pay all reasonable costsof collection when incurred, including reasonable attorneys’ fees.

 

This Note is a negotiable instrument and the rights ofthe holders hereof shall be governed by New York law, excluding its conflictsof law principles.

 
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EXHIBIT C

 

GUARANTY

 

For value received, and in order to induce                        (“Holder”)to enter into certain Loan and Security Agreements and Promissory Notes(collectively, the “Loan Agreement”) as set forth in Exhibit A hereto andincorporated herein by reference with                              (the“Borrower”) for financing of certain equipment (the “Equipment”), theundersigned (the “Guarantor”), does hereby unconditionally guaranty to Holderthe full and prompt payment by Borrower of all obligations which said Borrowerpresently or hereafter may have to Holder under the Loan Agreement and underany other agreement related thereto, and agree to indemnify Holder against anylosses Holder may sustain and expenses it may incur in its collection efforts,including but not limited to any reasonable administrative or legal costs, fees(including reasonable attorneys’ fees) or expenses, as a result of any defaultby Borrower under any Loan Agreement hereunder and/or as a result of theenforcement or attempted enforcement by Holder of any of its rights againstGuarantor hereunder, except those losses arising from the gross negligence orwillful misconduct of the Holder. Guarantor hereby expressly waives thefollowing defenses which might constitute a legal or equitable discharge of asurety or guarantor, and agrees that this Guaranty shall be valid andunconditionally binding upon Guarantor regardless of (i) the reorganization,merger, or consolidation of Borrower into or with another entity, corporate orotherwise, or the dissolution of Borrower, or the sale or other disposition ofall or substantially all of the capital stock, business, or assets of Borrowerto any other person or party, or (ii) the voluntary or involuntary bankruptcy(including a reorganization in bankruptcy) of Borrower, or (iii) the grantingby Holder of any indulgences to Borrower, or (iv) the assertion by Holderagainst Borrower of any of Holder’s rights and remedies provided for under anyLoan Agreement or existing in its favor in law, equity or bankruptcy, or (v)the release of Borrower from any of its obligations under any Loan Agreementhereunder by Holder or by operation of law or otherwise, or (vi) anyinvalidity, irregularity, or defect, of any provision of any Loan Agreement, or(vii) any defect in Holder’s title or right to use any of the Equipment, or(viii) the dissolution of Guarantor. As an accommodation to Guarantor, and notas a condition of Guarantor’s liability to make payment when due, Guarantorshall have five (5) days’ notice and opportunity to cure any payment defaultsby the Borrower and thirty (30) days’ notice and opportunity to cure any otherdefaults, if curable within thirty (30) days, by the Borrower under the LoanAgreement, or any document executed in connection therewith or as securitytherefor; notwithstanding the foregoing, in no event will any failure to givesuch notice result in a discharge of Guarantor’s obligations hereunder. Exceptas provided herein, Guarantor hereby waives notice of any consents to thefinancing of all Equipment under the Loan Agreement, and to any amendment (butnot increases) thereof, and to any actions taken thereunder, and to theexecution by any 

 

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Borrower of the foregoing documents and of any Guaranty, of any defaultand nonpayment and/or nonperformance any Borrower under any Loan Agreementhereunder, of presentment, protest, and demand, and of all other matters towhich Guarantor might otherwise be entitled. Guarantor further agrees that thisGuaranty shall remain and continue in full force and effect notwithstanding anyrenewal, modification, or extension of any Loan Agreement (but not increasesthereof). Guarantor hereby expressly waives all notice of and consents to anysuch renewal, modification, or extension, and to the execution by any Borrowerof any document pertaining to any such renewal, modification, orextension.  Guarantor further agreesthat its liability under this Guaranty shall be absolute, primary, and direct,joint and several, and that Holder shall not be required to pursue any right orremedy it may have against any Borrower under any Loan Agreement or otherwise(and shall not be required to first commence any action or obtain any judgmentagainst Borrower) before enforcing this Guaranty against Guarantor, and theGuarantor will, upon demand, pay Holder all amounts and all other sums, due andowing under any Loan Agreements in default hereunder, and will, upon demand,perform all other obligations of the Borrower, the performance of which is indefault under any Loan Agreement hereunder.

 

Guarantor knowingly and voluntarily waives, releases,and relinquishes Guarantor’s rights of indemnification, subrogation,contribution and reimbursement from the Borrower in respect of demands underthis guaranty, except those arising out of the gross negligence or willfulmisconduct of the Holder, until such time as the Borrower’s obligations underthe Loan Agreement have been fully satisfied. Any obligation of Borrower, now or hereafter held by or owing, toGuarantor is hereby subordinated to obligations of Borrower to Holder, and,upon an Event of Default, as defined in the Loan Agreement, any indebtednessshall be collected, enforced and received by Guarantor as trustee for Holderand paid over to Holder. Notwithstanding the foregoing, and provided thatBorrower has not failed to make any payment when due hereunder, Guarantor shallbe entitled to collect and keep any indebtedness or other obligations(including, without limitation, management fees), of Borrower to Guarantor.Guarantor hereby agrees that the failure of Holder to insist in any one or moreinstances upon a strict performance or observance of any of the terms,provisions, or covenants of any Loan Agreement or any other agreements, or toexercise any of its rights thereunder, shall not be construed or deemed to be awaiver or relinquishment for the future of any such terms, provisions,covenants, or rights, but such terms, provisions, covenants, and rights shallcontinue and remain in full force and effect. Receipt by Holder of any payment or other sums payable under any LoanAgreement with knowledge that Borrower has breached any of the terms,provisions or covenants or the Loan Agreement shall not be deemed to be awaiver by Holder of such breach.

 

No assignment or other transfer by Holder or Borrowerof any interest, rights, or obligation under any Loan Agreement, or assumptionby any third party of the obligations of Borrower under any 

 

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Loan Agreement, shall extinguish or diminish the unconditional,absolute, primary, and direct liability of Guarantor under this Guaranty, ifdone in accordance with all the Loan Agreements. Guarantor hereby consents toand waives all notice of any such assignment, transfer, or assumption.

 

Guarantor hereby warrants and represents to Holderthat the execution and delivery of this Guaranty is not in contravention ofGuarantor’s charter, certificate of incorporation, by-laws, and applicable law,and that the execution and delivery of this Guaranty, and the performance thereofhas been duly authorized by Guarantor’s Board of Directors or an authorizedCommittee thereof, and will not result in a breach of or constitute a defaultunder, or result in the creation of any security interest lien, charge, orencumbrance upon any property or assets of Guarantor pursuant to any loanagreement, indenture, or contract to which Guarantor is a party or by or underwhich it is bound. This Guaranty is assignable by Holder, if done in accordancewith all the Loan Agreements but may not be assigned by Guarantor. Any Assigneeof Holder shall have all of the rights of Holder hereunder and may enforce thisGuaranty against Guarantor with the same force and effect as if this Guarantywere given to such Assignee in the first instance. This Guaranty shall inure tothe benefit of Holder, and it successors and assigns, and shall be binding uponGuarantor and its heirs, executors, administrators, personal representatives,successors and assigns.  No term or conditionof this Guaranty may be waived or modified except by the prior written consentof an authorized representative of Holder.

 

This Guaranty shall be governed by and construed inall respects in accordance with the internal laws and decisions (except anyconflict of laws provisions) of the State of New York, including all matters ofconstruction, validity, enforceability, and performance. THE UNDERSIGNED i)CONSENT(S), AT HOLDER’S ELECTION AND WITHOUT LIMITING HOLDER’S RIGHT TOCOMMENCE AN ACTION IN ANY OTHER JURISDICTION, TO THE NON-EXCLUSIVE JURISDICTIONAND VENUE OF ANY COURTS (FEDERAL, STATE, OR LOCAL) SITUATED IN THE COUNTY OFNEW YORK, STATE OF NEW YORK; AND ii) WAIVE(S) ANY OBJECTION TO IMPROPER VENUEAND FORUM NON CONVENIENS. GUARANTOR AND HOLDER HEREBY WAIVE TRIAL BY JURY.

 

IN WITNESS WHEREOF, the undersigned have executed thisGuaranty this          dayof                        ,2002.

 
|   | Consolidated Graphics Inc.  5858 Westheimer Road, Suite 200  Houston, TX 77057  Attn: Chief Financial Officer |
|--------|---------------------------------------------------------------------------------------------------------------|
|   |                                                                                                          |
|   | By:                                                                                                           |   |   |
|   | Name:                                                                                                         |   |   |
|   | Title:                                                                                                        |   |   |
|        |                                                                                                               |  |  |  |  |  |

 

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EXHIBIT A

 

to the Loan and SecurityAgreementDated             ,2002between                ,as Borrower and                 ,as Lender

 
| Promissory Note No. | Name of Borrower: |
|---------------------|-------------------|
| Equipment:          | Amount: $         |
| Location:           | Date:             |
|                | Maturity:         |

 

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SCHEDULEOFTERM EQUIPMENT NOTES WITH VARIOUS LENDERS

 

Various subsidiaries of Consolidated Graphics, Inc. executed the formof Loan and Security Agreement and Promissory Note included in this Exhibit10.1 in connection with the refinancing of certain term equipment notes. Theprincipal loan amounts borrowed by each of these subsidiaries and theapplicable interest rates charged thereon differed in each transaction.Consolidated Graphics, Inc. guaranteed each of the borrowed amounts byexecution of a separate Guaranty Agreement in the form included in this Exhibit10.1.

 

The schedule below sets forth the aggregate principal amounts borrowedfrom various lenders by these subsidiaries, the interest rates charged thereonand the closing dates of the transactions.

 
| **Lenders **                |   | **Aggregate  Principal  Loan Amount ** |          | **Interest  Rate** |   | **Closing  Date** |     |
|----------------------------------|--------|---------------------------------------------|---------------|--------------------|--------|-------------------|----------|
| SouthTrust Bank                  |   | $                                           | 19,582,515.22 |               | 5.92   |              | 10/31/02 |   |
|                             |   |                                        |          |               |   |              |     |   |
| LaSalle National  Leasing Corp.  |   | $                                           | 10,131,004.32 |               | 5.92   |              | 10/31/02 |   |
|                             |   |                                        |          |               |   |              |     |   |
| Information  Leasing Corporation |   | $                                           | 4,910,367.65  |               | 5.92   |              | 10/31/02 |   |
|                             |   |                                        |          |               |   |              |     |   |
| Allpoints  Capital Corp.         |   | $                                           | 3,848,318.87  |               | 5.83   |              | 12/27/02 |   |
|                             |   |                                        |          |               |   |              |     |   |
| Total                            |   | $                                           | 38,472,206.06 |               |   |              |     |   |

 

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