PLEDGE AND SECURITY AGREEMENT
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THIS PLEDGE AND SECURITY AGREEMENT ("Pledge Agreement"), dated May 12,
1999, is by Unidigital Inc., a Delaware corporation ("Pledgor"), with its chief
executive office at 000 X. 00xx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000 to and in favor
of Fleet Bank, N.A., a national banking association, as Administrative Agent,
for itself and ratably for the benefit of the Lender Parties and the Hedge Banks
(as such terms are defined in the Credit Agreement and collectively referred to
herein, as the "Lenders"), having an office at 0000 Xxxxxx xx xxx Xxxxxxxx, Xxx
Xxxx, Xxx Xxxx 00000 ("Pledgee").
W I T N E S S E T H:
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WHEREAS, Pledgor is now the direct and beneficial owner of all of the
issued and outstanding shares of capital stock of each of the corporations (the
"Issuers") as described on Exhibit A annexed hereto and made a part hereof (the
"Pledged Securities); and
WHEREAS, Pledgee, the Lenders and Pledgor have entered into or are about
to enter into financing arrangements pursuant to which the Lenders may make
loans and advances and provide other financial accommodations to Pledgor as set
forth in the Credit Agreement, of even date hereof, by and among Pledgee, the
Lenders and Pledgor (as the same now exists or may hereafter be amended,
modified, supplemented, extended, renewed, restated or replaced, the "Credit
Agreement") and other Loan Documents (as defined in the Credit Agreement); and
WHEREAS, in order to induce Pledgee and the Lenders to enter into the
Credit Agreement and the other Loan Documents and for the Lenders to make loans
and advances and provide other financial accommodations to Pledgor pursuant
thereto, Pledgor has agreed to secure the payment and performance of the
Obligations (as hereinafter defined) to Pledgee and to accomplish same by (i)
executing and delivering to Pledgee this Pledge Agreement, (ii) delivering to
Pledgee the Pledged Securities which are registered in the name of Pledgor,
together with appropriate powers duly executed in blank by Pledgor, and (iii)
delivering to Pledgee any and all other documents which Pledgee deems necessary
to protect Pledgee's interests hereunder.
NOW, THEREFORE, in consideration of the premises and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, Pledgor hereby agrees as follows:
1. GRANT OF SECURITY INTEREST
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As collateral security for the prompt performance, observance and
indefeasible payment in full of all of the Obligations (as hereinafter defined),
Pledgor hereby assigns, pledges, hypothecates, transfers and sets over to
Pledgee and grants to Pledgee a security interest in and lien upon (a) the
Pledged Securities, together with all cash dividends, stock dividends,
interests, profits, redemptions, warrants, subscription rights, stock,
securities options, substitutions, exchanges and other distributions now or
hereafter distributed by any of the Issuers or which may hereafter be delivered
to the possession of Pledgor or Pledgee with respect thereto, (b) Pledgor's
records with respect to the foregoing, and (c) the
proceeds of all of the foregoing (all of the foregoing being collectively
referred to herein as the "Pledged Property").
2. OBLIGATIONS SECURED
-------------------
The security interest, lien and other interests granted to Pledgee
pursuant to this Pledge Agreement shall secure the prompt performance and
payment in full of any and all obligations, liabilities and indebtedness of
every kind, nature and description owing by Pledgor to Pledgee, and/or any of
the Lenders and/or their respective affiliates, including principal, interest,
charges, fees, costs and expenses, however evidenced, whether as principal,
surety, endorser, guarantor or otherwise, whether arising under this Pledge
Agreement, the Credit Agreement, the other Loan Documents or otherwise, whether
now existing or hereafter arising, whether arising before, during or after the
initial or any renewal term of the Credit Agreement or after the commencement of
any case with respect to Pledgor under the United States Bankruptcy Code or any
similar statute (including, without limitation, the payment of interest and
other amounts which would accrue and become due but for the commencement of such
case), whether direct or indirect, absolute or contingent, joint or several, due
or not due, primary or secondary, liquidated or unliquidated, secured or
unsecured, and however acquired by Pledgee (all of the foregoing being
collectively referred to herein as the "Obligations").
3. REPRESENTATIONS, WARRANTIES AND COVENANTS
-----------------------------------------
Pledgor hereby represents, warrants and covenants with and to Pledgee the
following (all of such representations, warranties and covenants being
continuing so long as any of the Obligations are outstanding):
(a) The Pledged Securities are duly authorized, validly issued, fully paid
and non-assessable capital stock of each Issuer and constitute Pledgor's entire
interest in each Issuer and are not registered, nor has Pledgor authorized the
registration thereof, in the name of any person or entity other than Pledgor or
Pledgee.
(b) The Pledged Property is directly, legally and beneficially owned by
Pledgor, free and clear of all claims, liens, pledges and encumbrances of any
kind, nature or description, except for the pledge and security interest in
favor of Pledgee and the pledges and security interests permitted under the
Credit Agreement.
(c) The Pledged Property is not subject to any restrictions relative to
the transfer thereof and Pledgor has the right to transfer and hypothecate the
Pledged Property free and clear of any liens, encumbrances or restrictions.
(d) The Pledged Property is duly and validly pledged to Pledgee and no
consent or approval of any governmental or regulatory authority or of any
securities exchange or the like, nor any consent or approval of any other third
party, was or is necessary to the validity and enforceability of this Pledge
Agreement, except for compliance with federal and state securities laws in the
event of the sale of the Pledged Securities pursuant to Section 5 hereof.
(e) Pledgor authorizes Pledgee to: (i) store, deposit and safeguard the
Pledged Property, (ii) perform any and all other acts which Pledgee in good
xxxxx xxxxx reasonable and/or necessary for the protection and preservation of
the Pledged Property or its value or Pledgee's security interest therein,
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including, without limitation, transferring, registering or arranging for the
transfer or registration of the Pledged Property to or in Pledgee's own name and
receiving the income therefrom as additional security for the Obligations and
(iii) pay any charges or expenses which Pledgee deems necessary for the
foregoing purpose, but without any obligation to do so. Any obligation of
Pledgee for reasonable care for the Pledged Property in Pledgee's possession
shall be limited to the same degree of care which Pledgee uses for similar
property pledged to Pledgee by other persons.
(f) If Pledgor shall become entitled to receive or acquire, or shall
receive any stock certificate, or option or right with respect to any stock of
any Issuer (including without limitation, any certificate representing a
dividend or a distribution or exchange of or in connection with reclassification
of the Pledged Securities) whether as an addition to, in substitution of, or in
exchange for any of the Pledged Property or otherwise, Pledgor agrees to accept
same as Pledgee's agent, to hold same in trust for Pledgee and to deliver same
forthwith to Pledgee or Pledgee's agent or bailee in the form received, with the
endorsement(s) of Pledgor where necessary and/or appropriate powers and/or
assignments duly executed to be held by Pledgee or Pledgee's agent or bailee
subject to the terms hereof, as further security for the Obligations.
(g) Pledgor shall not, without the prior consent of Pledgee, directly or
indirectly, sell, assign, transfer, or otherwise dispose of, or grant any option
with respect to the Pledged Property, nor shall Pledgor create, incur or permit
any further pledge, hypothecation, encumbrance, lien, mortgage or security
interest with respect to the Pledged Property.
(h) So long as no Event of Default (as hereinafter defined) has occurred
and is continuing, Pledgor shall have the right to vote and exercise all
corporate rights with respect to the Pledged Securities, except as expressly
prohibited herein, and to receive any cash dividends payable in respect of the
Pledged Securities.
(i) Pledgor shall not permit any Issuer, directly or indirectly, to issue,
sell, grant, assign, transfer or otherwise dispose of, any additional shares of
capital stock of such Issuer or any option or warrant with respect to, or other
right or security convertible into, any additional shares of capital stock of
such Issuer, now or hereafter authorized, unless all such additional shares,
options, warrants, rights or other such securities are made and shall remain
part of the Pledged Property subject to the pledge and security interest granted
herein.
(j) Pledgor shall pay all charges and assessments of any nature against
the Pledged Property or with respect thereto prior to said charges and/or
assessments being delinquent.
(k) Pledgor shall promptly reimburse Pledgee on demand, together with
interest at the rate then applicable to the Obligations set forth in the Credit
Agreement, for any charges, assessments or expenses paid or incurred by Pledgee
in its discretion for the protection, preservation and maintenance of the
Pledged Property and the enforcement of Pledgee's rights hereunder, including,
without limitation, reasonable attorneys' fees and legal expenses incurred by
Pledgee in seeking to protect, collect or enforce its rights in the Pledged
Property or otherwise hereunder.
(l) Pledgor shall furnish, or cause to be furnished, to Pledgee such
information concerning the Issuers and the Pledged Property as Pledgee may from
time to time reasonably request in good faith, including, without limitation,
current financial statements.
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(m) Pledgee may notify the Issuers or the appropriate transfer agent of
the Pledged Securities to register the security interest and pledge granted
herein and honor the rights of Pledgee with respect thereto.
(n) Pledgor waives: (i) all rights to require Pledgee to proceed against
any other person, entity or collateral or to exercise any remedy, (ii) to the
extent permissible, the defense of the statute of limitations in any action upon
any of the Obligations, (iii) any right of subrogation or interest in the
Obligations or Pledged Property until all Obligations have been paid in full,
(iv) any rights to notice of any kind or nature whatsoever, unless specifically
required in this Pledge Agreement or non-waivable under any applicable law, and
(v) to the extent permissible, its rights under Section 9-112 and 9-207 of the
Uniform Commercial Code. Pledgor agrees that the Pledged Property, other
collateral, or any other guarantor or endorser may be released, substituted or
added with respect to the Obligations, in whole or in part, without releasing or
otherwise affecting the liability of Pledgor, the pledge and security interests
granted hereunder, or this Pledge Agreement. Pledgee is entitled to all of the
benefits of a secured party set forth in Section 9-207 of the New York Uniform
Commercial Code.
4. EVENTS OF DEFAULT
-----------------
All Obligations shall become immediately due and payable, without notice
or demand, at the option of Pledgee, upon the occurrence of any Event of
Default, as such term is defined in the Credit Agreement (each an "Event of
Default" hereunder).
5. RIGHTS AND REMEDIES
-------------------
At any time an Event of Default exists or has occurred and is continuing,
in addition to all other rights and remedies of Pledgee, whether provided under
this Pledge Agreement, the Credit Agreement, the other Loan Documents,
applicable law or otherwise, Pledgee shall have the following rights and
remedies which may be exercised without notice to, or consent by, Pledgor except
as such notice or consent is expressly provided for hereunder:
(a) Pledgee, at its option, shall be empowered to exercise its continuing
right to instruct the Issuers or any Issuer (or the appropriate transfer agent
of any of the Pledged Securities) to register any or all of the Pledged
Securities in the name of Pledgee or in the name of Pledgee's nominee and
Pledgee may complete, in any manner Pledgee may deem expedient, any and all
stock powers, assignments or other documents heretofore or hereafter executed in
blank by Pledgor and delivered to Pledgee. After said instruction, and without
further notice, Pledgee shall have the exclusive right to exercise all voting
and corporate rights with respect to the Pledged Securities and other Pledged
Property, and exercise any and all rights of conversion, redemption, exchange,
subscription or any other rights, privileges, or options pertaining to any
shares of the Pledged Securities or other Pledged Property as if Pledgee were
the absolute owner thereof, including, without limitation, the right to
exchange, in its discretion, any and all of the Pledged Securities and other
Pledged Property upon any merger, consolidation, reorganization,
recapitalization or other readjustment with respect thereto. Upon the exercise
of any such rights, privileges or options by Pledgee, Pledgee shall have the
right to deposit and deliver any and all of the Pledged Securities and other
Pledged Property to any committee, depository, transfer agent, registrar or
other designated agency upon such terms and conditions as Pledgee may determine,
all without liability, except to account for property actually received by
Pledgee. However, Pledgee shall have no duty to exercise any of the aforesaid
rights, privileges or options (all of which are exercisable in the sole
discretion of Pledgee) and shall not be responsible for any failure to do so or
delay in doing so.
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(b) In addition to all the rights and remedies of a secured party under
the Uniform Commercial Code or other applicable law, Pledgee shall have the
right, at any time and without demand of performance or other demand,
advertisement or notice of any kind (except the notice specified below of time
and place of public or private sale) to or upon Pledgor or any other person (all
and each of which demands, advertisements and/or notices are hereby expressly
waived to the extent permitted by applicable law), to proceed forthwith to
collect, redeem, recover, receive, appropriate, realize, sell, or otherwise
dispose of and deliver said Pledged Property or any part thereof in one or more
lots at public or private sale or sales at any exchange, broker's board or at
any of Pledgee's offices or elsewhere at such prices and on such terms as
Pledgee may deem best. The foregoing disposition(s) may be for cash or on credit
or for future delivery without assumption of any credit risk, with Pledgee
having the right to purchase all or any part of said Pledged Property so sold at
any such sale or sales, public or private, free of any right or equity of
redemption in Pledgor, which right or equity is hereby expressly waived or
released by Pledgor. The proceeds of any such collection, redemption, recovery,
receipt, appropriation, realization, sale or other disposition, after deducting
all costs and expenses of every kind incurred relative thereto or incidental to
the care, safekeeping or otherwise of any and all Pledged Property or in any way
relating to the rights of Pledgee hereunder, including attorneys' fees and legal
expenses, shall be applied first to the satisfaction of the Obligations (in such
order as Pledgee may elect and whether or not due) and then to the payment of
any other amounts required by applicable law, including Section 9-504(1)(c) of
the Uniform Commercial Code, with Pledgor to be and remain liable for any
deficiency. Pledgor shall be liable to Pledgee for the payment on demand of all
such costs and expenses, together with interest at the then applicable rate set
forth in the Credit Agreement, and any reasonable attorneys' fees and legal
expenses. Pledgor agrees that five (5) days prior written notice by Pledgee
designating the place and time of any public sale or of the time after which any
private sale or other intended disposition of any or all of the Pledged Property
is to be made, is reasonable notification of such matters.
(c) Pledgor recognizes that Pledgee may be unable to effect a public sale
of all or part of the Pledged Property by reason of certain prohibitions
contained in the Securities Act of 1933, as amended, as now or hereafter in
effect or in applicable Blue Sky or other state securities law, as now or
hereafter in effect, but may be compelled to resort to one or more private sales
to a restricted group of purchasers who will be obliged to agree, among other
things, to acquire such Pledged Property for their own account for investment
and not with a view to the distribution or resale thereof. If at the time of any
sale of the Pledged Property or any part thereof, the same shall not, for any
reason whatsoever, be effectively registered (if required) under the Securities
Act of 1933 (or other applicable state securities law), as then in effect,
Pledgee in its sole and absolute discretion is authorized to sell such Pledged
Property or such part thereof by private sale in such manner and under such
circumstances as Pledgee and its counsel may deem necessary or advisable in
order that such sale may legally be effected without registration. Pledgor
agrees that private sales so made may be at prices and other terms less
favorable to the seller than if such Pledged Property were sold at public sale,
and that Pledgee has no obligation to delay the sale of any such Pledged
Property for the period of time necessary to permit Issuer, even if Issuer would
agree, to register such Pledged Property for public sale under such applicable
securities laws. Pledgor agrees that any private sales made under the foregoing
circumstances shall be deemed to have been in a commercially reasonable manner.
(d) All of the Pledgee's rights and remedies, including, but not limited
to, the foregoing and those otherwise arising under this Pledge Agreement, the
Credit Agreement and the other Loan Documents, the instruments comprising the
Pledged Property, applicable law or otherwise, shall be cumulative and not
exclusive and shall be enforceable alternatively, successively or concurrently
as Pledgee may deem expedient. No failure or delay on the part of Pledgee in
exercising any of its options,
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powers or rights or partial or single exercise thereof, shall constitute a
waiver of such option, power or right.
6. JURY TRIAL WAIVER; OTHER WAIVERS
AND CONSENTS; GOVERNING LAW
--------------------------------
(a) The validity, interpretation and enforcement of this Pledge Agreement
and the other Loan Documents and any dispute arising out of the relationship
between the parties hereto, whether in contract, tort, equity or otherwise,
shall be governed by the internal laws of the State of New York.
(b) Pledgor irrevocably consents and submits to the non-exclusive
jurisdiction of State of New York and the United States District Court for the
Southern District of New York and waives any objection based on venue or forum
-----
non conveniens with respect to any action instituted therein arising under this
--- ----------
Pledge Agreement or any of the other Loan Documents or in any way connected with
or related or incidental to the dealings of the parties hereto in respect of
this Pledge Agreement or any of the other Loan Documents or the transactions
related hereto or thereto, in each case whether now existing or hereafter
arising, and whether in contract, tort, equity or otherwise, and agrees that any
dispute with respect to any such matters shall be heard only in the courts
described above (except that Pledgee shall have the right to bring any action or
proceeding against Pledgor or its property in the courts of any other
jurisdiction which Pledgee deems necessary or appropriate in order to realize on
the Pledged Property or to otherwise enforce its rights against Pledgor or its
property).
(c) Pledgor hereby waives personal service of any and all process upon it
and consents that all such service of process may be made by certified mail
(return receipt requested) directed to its address set forth herein and service
so made shall be deemed to be completed five (5) days after the same shall have
been so deposited in the U.S. mails, or, at Pledgee's option, by service upon
Pledgor in any other manner provided under the rules of any such courts. Within
thirty (30) days after such service, Pledgor shall appear in answer to such
process, failing which Pledgor shall be deemed in default and judgment may be
entered by Pledgee against Pledgor for the amount of the claim and other relief
requested.
(d) PLEDGOR AND PLEDGEE MUTUALLY HEREBY KNOWINGLY, VOLUNTARILY AND
INTENTIONALLY WAIVE THE RIGHT TO A TRIAL BY JURY IN RESPECT OF ANY CLAIM BASED
HEREON, ARISING OUT OF OR, UNDER OR IN CONNECTION WITH THIS AGREEMENT OR ANY
OTHER LOAN DOCUMENTS CONTEMPLATED TO BE EXECUTED IN CONNECTION HEREWITH OR ANY
COURSE OF CONDUCT, COURSE OF DEALINGS STATEMENTS (WHETHER VERBAL OR WRITTEN) OR
ACTIONS OF ANY PARTY. THIS WAIVER CONSTITUTES A MATERIAL INDUCEMENT FOR PLEDGEE
AND THE LENDERS TO ACCEPT THIS PLEDGE AGREEMENT AND TO MAKE LOANS PURSUANT TO
THE TERMS OF THE CREDIT AGREEMENT.
(e) Pledgee shall not have any liability to Pledgor (whether in tort,
contract, equity or otherwise) for losses suffered by Pledgor in connection
with, arising out of, or in any way related to the transactions or relationships
contemplated by this Pledge Agreement, or any act, omission or event occurring
in connection herewith, unless it is determined by a final and non-appealable
judgment or court order binding on Pledgee, that the losses were the result of
acts or omissions constituting gross negligence or willful misconduct. In any
such litigation, Pledgee shall be entitled to the benefit of the rebuttable
presumption that it acted in good faith and with the exercise of ordinary care
in the performance by it of the terms of this Pledge Agreement.
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7. MISCELLANEOUS
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(a) Pledgor agrees that at any time and from time to time upon the written
request of Pledgee, Pledgor shall execute and deliver such further documents,
including, but not limited to, irrevocable proxies or stock powers, in form
satisfactory to counsel for Pledgee, and will take or cause to be taken such
further acts as Pledgee may request in order to effect the purposes of this
Pledge Agreement and perfect or continue the perfection of the security interest
in the Pledged Property granted to Pledgee hereunder.
(b) Beyond the exercise of reasonable care to assure the safe custody of
the Pledged Property (whether such custody is exercised by Pledgee, or Pledgee's
nominee, agent or bailee) Pledgee or Pledgee's nominee agent or bailee shall
have no duty or liability to protect or preserve any rights pertaining thereto
and shall be relieved of all responsibility for the Pledged Property upon
surrendering it to Pledgor or foreclosure with respect thereto.
(c) All notices, requests and demands to or upon the respective parties
hereto shall be in writing and shall be deemed to have been duly given or made:
if delivered in person, immediately upon delivery; if by telex, telegram or
facsimile transmission, immediately upon sending and upon confirmation of
receipt; if by nationally recognized overnight courier service with instructions
to deliver the next business day, one (1) business day after sending; and if by
registered or certified mail, return receipt requested, five (5) days after
mailing. All notices, requests and demands upon the parties are to be given to
the following addresses (or to such other address as any party may designate by
notice in accordance with this Section):
If to Pledgor: Unidigital Inc.
000 X. 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xx. Xxxxxxx X. Xxx, Chief Executive Officer
If to Pledgee: Fleet Bank, N.A., as Administrative Agent
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xx. Xxxx Xxxxxxx, Vice President
(d) All references to the plural herein shall also mean the singular and
to the singular shall also mean the plural. All references to Pledgor, Pledgee
and Issuer pursuant to the definitions set forth in the recitals hereto, or to
any other person herein, shall include their respective successors and assigns.
The words "hereof," "herein," "hereunder," "this Pledge Agreement" and words of
similar import when used in this Pledge Agreement shall refer to this Pledge
Agreement as a whole and not any particular provision of this Pledge Agreement
and as this Pledge Agreement now exists or may hereafter be amended, modified,
supplemented, extended, renewed, restated or replaced. An Event of Default shall
exist or continue or be continuing until such Event of Default is waived in
accordance with Section 7(g) hereof.
(e) This Pledge Agreement, the other Loan Documents and any other document
referred to herein or therein shall be binding upon Pledgor and its successors
and assigns and inure to the benefit of and be enforceable by Pledgee and its
successors and assigns.
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(f) If any provision of this Pledge Agreement is held to be invalid or
unenforceable, such invalidity or unenforceability shall not invalidate this
Pledge Agreement as a whole, but this Pledge Agreement shall be construed as
though it did not contain the particular provision held to be invalid or
unenforceable and the rights and obligations of the parties shall be construed
and enforced only to such extent as shall be permitted by applicable law.
(g) Neither this Pledge Agreement nor any provision hereof shall be
amended, modified, waived or discharged orally or by course of conduct, but only
by a written agreement signed by an authorized officer of Pledgee. Pledgee shall
not, by any act, delay, omission or otherwise be deemed to have expressly or
impliedly waived any of its rights, powers and/or remedies unless such waiver
shall be in writing and signed by an authorized officer of Pledgee. Any such
waiver shall be enforceable only to the extent specifically set forth therein. A
waiver by Pledgee of any right, power and/or remedy on any one occasion shall
not be construed as a bar to or waiver of any such right, power and/or remedy
which Pledgee would otherwise have on any future occasion, whether similar in
kind or otherwise.
IN WITNESS WHEREOF, Pledgor has executed this Pledge Agreement as of the
day and year first above written.
UNIDIGITAL INC.
By: /s/ Xxxxxxx X. Xxx
---------------------------------
Name: Xxxxxxx X. Xxx
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Title: Chief Executive Officer
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EXHIBIT A
TO
PLEDGE AND SECURITY AGREEMENT
-----------------------------
Issuers Certificate No. Shares
------- --------------- ------
Unidigital Elements (NY), Inc. 1 20
Unison (NY), Inc. 1 100
Unison (MA), Inc. 1 100
Unidigital Elements (SF), Inc. 1 3
Mega Art Corp. 1 5
Mega Art Corp. 2 89
Mega Art Corp. 3 6
SuperGraphics Holding Company, Inc. C22 500,000
Elements (UK) Limited 00 000
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