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EXHIBIT 3
STOCKHOLDER AGREEMENT
STOCKHOLDER AGREEMENT, dated as of September 28, 1997, among
XXXXXXX COMPUTER SERVICES, INC., a Delaware corporation ("Parent"), GREENWICH
ACQUISITION CORP., a Georgia corporation and a wholly owned subsidiary of Parent
("Sub"), and Xxxx X. Xxxx III (the "Stockholder").
WHEREAS, Parent, Sub and Graphic Industries, Inc., a Georgia
corporation (the "Company"), propose to enter into an Agreement and Plan of
Merger dated as of even date herewith (as the same may be amended or
supplemented, the "Merger Agreement") providing for the making of a cash tender
offer (as such offer may be amended from time to time, the "Offer") by Sub for
any and all shares of Common Stock, par value $.10 per share, of the Company
(the "Common Stock") and the merger of the Company and Sub (the "Merger"); and
WHEREAS, the Stockholder owns (i) 864,177 shares (the "Owned
Common Shares") of Common Stock and (ii) 4,478,092 shares (the "Owned Class B
Shares" and, together with the Owned Common Shares, the "Owned Shares") of Class
B Common Stock, par value $.10 per share, of the Company; and
WHEREAS, as a condition to their willingness to enter into the
Merger Agreement, Parent and Sub have requested that the Stockholder enter into
this Agreement;
NOW, THEREFORE, to induce Parent and Sub to enter into, and in
consideration of their entering into, the Merger Agreement, and in consideration
of the premises and the representations, warranties and agreements contained
herein, the parties agree as follows:
1. PURCHASE OF SHARES.
(a) The Stockholder hereby grants Sub an irrevocable option
(the "Option") to purchase 2,239,046 of the Owned Class B Shares and
432,089 of the Owned Common Shares for a purchase price per share (the
"Per Share Purchase Price") equal to the Offer Price (as defined in the
Merger Agreement) (such Owned Class B Shares and Owned Common Shares,
as they may be adjusted by any stock dividend, stock split,
recapitalization, combination or exchange of shares, merger,
consolidation, reorganization or other change or transaction of or by
the Company or as the Owned Class B Shares may be adjusted by
conversion into shares of Common Stock, other than the payment of
regular cash dividends consistent with past practice being referred to
herein as the "Subject Shares"). The Option may be exercised in whole
(but not in part) at any time after the date hereof and on or prior to
the first anniversary of the date hereof (such
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first anniversary, the "Option Expiration Date") in the event that (i)
a Specified Event (as defined in Section 1(b) below) shall have
occurred on or prior to the Option Expiration Date and (ii) the waiting
period under the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 0000
(xxx "XXX Xxx") with respect to the exercise of the Option shall have
expired or been terminated.
(b) The term "Specified Event" shall mean (i) Parent or Sub
shall have terminated the Merger Agreement under Section 9.01(d)
thereof, (ii) the Company shall have terminated the Merger Agreement
under Section 9.01(e) thereof, (iii) prior to termination of the Merger
Agreement, a Takeover Proposal (as defined in the Merger Agreement)
shall have been commenced or the Company shall have entered into an
agreement with respect to, approved or recommended or taken any action
to facilitate, a Takeover Proposal or (iv) Sub shall have accepted for
payment, and paid for, shares of Common Stock in the Offer.
(c) In the event that Sub wishes to exercise the Option, Sub
may do so by giving written notice (the date of such notice being
herein called the "Notice Date") to the Stockholder specifying that all
the Subject Shares are to be purchased and specifying the place, time
and date (not earlier than two trading days, nor later than 10 trading
days, from the Notice Date) for the closing of the purchase by Sub
pursuant to such exercise (such date and time being herein called the
"Closing Time"). In the event that any share of Common Stock is
accepted for payment, and paid for, by Sub pursuant to the Offer, Sub
shall be obligated to exercise the Option no later than two trading
days following the date of such payment and close the purchase of and
pay for such Subject Shares within two trading days following the date
of such exercise. A "trading day" shall mean any date on which the New
York Stock Exchange shall be open for business.
(d) In the event that Sub shall have accepted for payment
shares of Common Stock pursuant to the Offer, then at the Closing Time
the Stockholder shall also sell to Sub and Sub shall purchase from the
Stockholder, at the Per Share Exercise Price, the Owned Class B Shares
which are not Subject Shares and which have not theretofore been
converted to shares of Common Stock and tendered pursuant to the Offer.
(e) In the event the Option becomes exercisable and the
Specified Event causing such exercisability is an event referred to in
clause (i), (ii) or (iii) of Section 1(b), then, at the option of Sub
and in lieu of any exercise of the Option, Sub may require the
Stockholder to sell the
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Subject Shares pursuant to any Takeover Proposal (as defined in the
Merger Agreement) then pending and to remit to Sub all proceeds
received from such sale. If Sub exercises its rights pursuant to this
Section 1(e), then upon such remittance the Option shall terminate.
2. REPRESENTATIONS AND WARRANTIES OF THE STOCKHOLDER.
The Stockholder hereby represents and warrants to Parent and Sub
as follows:
(a) Authority. The Stockholder has all requisite power and
authority to enter into this Agreement and to consummate the
transactions contemplated hereby. This Agreement has been duly
authorized, executed and delivered by the Stockholder and constitutes a
valid and binding obligation of the Stockholder enforceable in
accordance with its terms. The execution and delivery of this Agreement
does not, and the consummation of the transactions contemplated hereby
and compliance with the terms hereof will not, conflict with, or result
in any violation of, or default (with or without notice or lapse of
time or both) under any provision of, any trust agreement, loan or
credit agreement, note, bond, mortgage, indenture, lease or other
agreement, instrument, permit, concession, franchise, license,
judgment, order, notice, decree, statute, law, ordinance, rule or
regulation applicable to the Stockholder or to the Stockholder's
property or assets. Except for the expiration or termination of the
waiting period under the HSR Act and informational filings with the
SEC, no consent, approval, order or authorization of, or registration,
declaration or filing with, any court, administrative agency or
commission or other governmental authority or instrumentality,
domestic, foreign or supranational, is required by or with respect to
the Stockholder in connection with the execution and delivery of this
Agreement or the consummation by the Stockholder of the transactions
contemplated hereby.
(b) The Shares. The Stockholder has good and marketable title
to the Owned Class B Shares, free and clear of any claims, liens,
encumbrances and security interests whatsoever. The Stockholder owns no
shares of Common Stock or Class B Common Stock, other than the Owned
Shares.
3. REPRESENTATIONS AND WARRANTIES OF PARENT AND SUB.
(a) Parent and Sub hereby represent and warrant to the
Stockholder that each of Parent and Sub has all requisite corporate
power and authority to enter into this Agreement and to consummate the
transactions contemplated hereby. The execution and delivery of this
Agreement by Parent and Sub, and the consummation of the transactions
contemplated
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hereby, have been duly authorized by all necessary corporate action on
the part of Parent and Sub. This Agreement has been duly executed and
delivered by Parent and Sub and constitutes a valid and binding
obligation of Parent and Sub enforceable in accordance with its terms.
(b) Securities Act. The Subject Shares will be
acquired in compliance with, and Sub will not offer to sell or
otherwise dispose of any Subject Shares so acquired by it in violation
of any of, the registration requirements of the Securities Act of 1933,
as amended.
4. COVENANTS OF THE STOCKHOLDER. Up to and including
the Option Expiration Date, the Stockholder agrees as follows:
(a) At any meeting of stockholders of the Company called to
vote upon the Merger and the Merger Agreement or at any adjournment
thereof or in any other circumstances upon which a vote, consent or
other approval with respect to the Merger and the Merger Agreement is
sought, the Stockholder shall vote (or cause to be voted) the Subject
Shares in favor of the Merger, the approval of the Merger Agreement and
the approval of the terms thereof and each of the other transactions
contemplated by the Merger Agreement, provided that the terms of the
Merger Agreement shall not have been amended to adversely affect the
Stockholder.
(b) At any meeting of stockholders of the Company or at any
adjournment thereof or in any other circumstances upon which the
Stockholder's vote, consent or other approval is sought, the
Stockholder shall vote (or cause to be voted) the Subject Shares
against (i) any merger agreement or merger (other than the Merger
Agreement and the Merger), consolidation, combination, sale of
substantial assets, reorganization, recapitalization, dissolution,
liquidation or winding up of or by the Company or any other Takeover
Proposal or (ii) any amendment of the Company's articles of
incorporation or by-laws or other proposal or transaction involving the
Company or any of its subsidiaries, which amendment or other proposal
or transaction would in any manner impede, frustrate, prevent or
nullify the Merger, the Merger Agreement or any of the other
transactions contemplated by the Merger Agreement.
(c) The Stockholder agrees not to (i) sell, transfer, pledge,
assign or otherwise dispose of, or enter into any contract, option or
other arrangement (including any profit sharing arrangement) with
respect to the sale, transfer, pledge, assignment or other disposition
of, the Subject Shares to any person other than Sub or Sub's designee,
(ii) enter into any voting arrangement, whether by proxy, voting
agreement or otherwise, in connection, directly or
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indirectly, with any Takeover Proposal or (iii) convert the Subject
Shares which are Owned Class B Shares into Common Stock (except as
required to effect the transaction contemplated by Section 1 of this
Agreement).
(d) Until the Merger is consummated or the Merger Agreement is
terminated, the Stockholder shall not, nor shall he permit any
investment banker, attorney or other adviser or representative of the
Stockholder to, (i) directly or indirectly solicit, initiate or
encourage the submission of, any Takeover Proposal or (ii) directly or
indirectly participate in any discussions or negotiations regarding, or
furnish to any person any information with respect to, or take any
other action to facilitate any inquiries or the making of any proposal
that constitutes, or may reasonably be expected to lead to, any
Takeover Proposal.
(e) So long as the Merger Agreement has not been terminated,
the Stockholder (i) shall not sell, transfer, pledge, assign or
otherwise dispose of, or enter into any contract, option or other
arrangement (including any profit sharing arrangement) with respect to
the sale, transfer, pledge, assignment or other disposition of, the
Owned Common Shares to any person other than Sub or Sub's designee and
(ii) shall tender pursuant to the Offer, and not withdraw, all Owned
Common Shares which are not Subject Shares; provided, however, that the
Stockholder may transfer to a Permitted Transferee (as defined in the
Amended and Restated Articles of Incorporation of the Company) Owned
Class B Shares that do not constitute Subject Shares if such Permitted
Transferee agrees in writing (x) to perform the obligations of the
Stockholder under Section 1(d) hereof with respect to such transferred
Owned Class B Shares (as though no such transfer had occurred) and (y)
so long as the Merger Agreement has not been terminated, to not convert
such transferred Owned Class B Shares into Common Stock and to not
otherwise take any of the actions referred to in clause (i), it being
understood and agreed that any breach of the foregoing by such
Permitted Transferee shall constitute a breach by the Stockholder of
this Agreement.
5. FURTHER ASSURANCES. The Stockholder will, from time to
time, execute and deliver, or cause to be executed and delivered, such
additional or further transfers, assignments, endorsements, consents and other
instruments as Parent or Sub may reasonably request for the purpose of
effectively carrying out the transactions contemplated by this Agreement.
6. ASSIGNMENT. Neither this Agreement nor any of the
rights, interests or obligations hereunder shall be assigned by
any of the parties without the prior written consent of the other
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parties, except that Sub may assign, in its sole discretion, any or all of its
rights, interests and obligations hereunder to Parent or to any direct or
indirect wholly owned subsidiary of Parent. Subject to the preceding sentence,
this Agreement will be binding upon, inure to the benefit of and be enforceable
by the parties and their respective successors and assigns and, in the case of
the Stockholder, the heirs, executors and administrators of the Stockholder.
7. TERMINATION. Except as provided otherwise herein, this
Agreement shall terminate upon the earliest of (i) the Option Expiration Date,
(ii) the Effective Time (as defined in the Merger Agreement) or (iii) a valid
termination of the Merger Agreement by the Company pursuant to Section 9.01(f)
or 9.01(g) thereof.
8. GENERAL PROVISIONS.
(a) Payments. All payments required to be made to Stockholder
pursuant to this Agreement shall be made by wire transfer of
immediately available funds to an account designated by Stockholder
within one trading day prior to such payment.
(b) Specific Performance. The parties hereto acknowledge that
damages would be an inadequate remedy for any breach of the provisions
of this Agreement and agree that the obligations of the parties
hereunder shall be specifically enforceable.
(c) Expenses. Except as set forth in Section 1 of this
Agreement, all costs and expenses incurred in connection with this
Agreement and the transactions contemplated hereby shall be paid by the
party incurring such expense.
(d) Amendments. This Agreement may not be amended
except by an instrument in writing signed by each of the
parties hereto.
(e) Notice. All notices and other communications hereunder
shall be in writing and shall be deemed given if delivered personally
or sent by overnight courier (providing proof of delivery) to the
parties at the following addresses (or at such other address for a
party as shall be specified by like notice):
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(i) if to Parent, to:
Xxxxxxx Computer Services, Inc.
0000 Xxxxx Xxxxx
Xxxxx, Xxxxxxxx 00000
Attention: President
Facsimile: (000) 000-0000
with a copy to:
Sidley & Austin
Xxx Xxxxx Xxxxxxxx Xxxxx
Xxxxxxx, Xxxxxxxx 00000
Attention: Xxxxxxxxx X.
Xxxxxxxx and Xxxxxx Xxxxxxxxxx
Facsimile: (000) 000-0000
if to the Stockholder, to:
Xxxx X. Xxxx III
c/o Graphic Industries, Inc.
0000 Xxxxxx Xxxxx, X.X.
Xxxxxxx, Xxxxxxx 00000
Facsimile: (000) 000-0000
with a copy to:
Powell, Goldstein, Xxxxxx
& Xxxxxx, LLP
000 Xxxxxxxxx Xxxxxx, X.X.
Xxxxxxxxx Xxxxx
Xxxxxxx, Xxxxxxx 00000
Attention: G. Xxxxxxx Xxxxx
Facsimile: (000) 000-0000
(e) Interpretation. When a reference is made in this Agreement
to Sections, such reference shall be to a Section to this Agreement
unless otherwise indicated. The headings contained in this Agreement
are for reference purposes only and shall not affect in any way the
meaning or interpretation of this Agreement. Wherever the words
"include", "includes" or "including" are used in this Agreement, they
shall be deemed to be followed by the words "without limitation".
(f) Counterparts. This Agreement may be executed in
one or more counterparts, all of which shall be considered
one and the same agreement, and shall become effective when
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one or more of the counter parties have been signed by each of the
parties and delivered to the other party, it being understood that each
party need not sign the same counterpart.
(g) Entire Agreement; No Third-Party Beneficiaries. This
Agreement (including the documents and instruments referred to herein)
(i) constitutes the entire agreement and supersedes all prior
agreements and understandings, both written and oral, among the parties
with respect to the subject matter hereof and (ii) is not intended to
confer upon any person other than the parties hereto any rights or
remedies hereunder.
(h) Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of Georgia without
regard to any applicable conflicts of law.
9. STOCKHOLDER CAPACITY. The Stockholder does not make any
agreement or understanding in his capacity as a director or officer of the
Company. The Stockholder signs solely in his capacity as the record holder and
beneficial owner of his Subject Shares and nothing herein shall limit or affect
any actions taken by the Stockholder in his capacity as an officer or director
of the Company to the extent specifically permitted by the Merger Agreement.
10. PERFORMANCE BY SUB. Parent covenants and agrees
for the benefit of the Stockholder that it shall cause Sub to
perform in full each obligation of Sub set forth in this
Agreement.
11. ENFORCEMENT. The parties agree that irreparable damage
would occur in the event that any of the provisions of this Agreement were not
performed in accordance with their specific terms or were otherwise breached. It
is accordingly agreed that the parties shall be entitled to an injunction or
injunctions to prevent breaches of this Agreement and to enforce specifically
the terms and provisions of this Agreement in any court of the United States,
this being in addition to any other remedy to which they are entitled at law or
in equity.
IN WITNESS WHEREOF, each of Parent and Sub has caused this
Agreement to be signed by its officer thereunto duly
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authorized and the Stockholder has signed this Agreement, all as
of the date first written above.
XXXXXXX COMPUTER SERVICES, INC.
By: /s/ Xxxxxx X. Xxxxxx
--------------------------
Name: Xxxxxx X. Xxxxxx
Title: President
GREENWICH ACQUISITION CORP.
By: /s/ Xxxxxxx X. Xxxxxxxxxx
--------------------------
Name: Xxxxxxx X. Xxxxxxxxxx
Title: President
/s/ Xxxx X. Xxxx III
--------------------------
Xxxx X. Xxxx III
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