<PAGE> 1
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
SCHEDULE 14D-1
TENDER OFFER STATEMENT PURSUANT TO SECTION 14(d)(1)
OF THE SECURITIES EXCHANGE ACT OF 1934
AND
SCHEDULE 13D
UNDER THE SECURITIES EXCHANGE ACT OF 1934
------------------------
GRAPHIC INDUSTRIES, INC.
(NAME OF SUBJECT COMPANY)
------------------------
GREENWICH ACQUISITION CORP.
A WHOLLY OWNED SUBSIDIARY OF
WALLACE COMPUTER SERVICES, INC.
(BIDDERS)
------------------------
COMMON STOCK, $0.10 PAR VALUE
(Title of Class of Securities)
------------------------
388678 10 4
(CUSIP Number of Class of Securities)
------------------------
MICHAEL J. HALLORAN
VICE PRESIDENT, CHIEF FINANCIAL
OFFICER AND ASSISTANT SECRETARY
WALLACE COMPUTER SERVICES, INC.
2275 CABOT DRIVE
LISLE, ILLINOIS 60532
(630) 588-5000
(NAME, ADDRESS AND TELEPHONE NUMBER OF PERSONS AUTHORIZED TO
RECEIVE NOTICES AND COMMUNICATIONS ON BEHALF OF BIDDERS)
------------------------
COPIES TO
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STEVEN L. CARSON SIDLEY & AUSTIN
GENERAL COUNSEL ONE FIRST NATIONAL PLAZA
WALLACE COMPUTER SERVICES, INC. CHICAGO, ILLINOIS 60603
2275 CABOT DRIVE (312) 853-7000
LISLE, ILLINOIS 60532 ATTENTION: FREDERICK C. LOWINGER AND
(630) 588-5000 STEVEN SUTHERLAND
</TABLE>
------------------------
SEPTEMBER 28, 1997
(DATE OF EVENT WHICH REQUIRES FILING STATEMENT ON SCHEDULE 13D)
------------------------
CALCULATION OF FILING FEE
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TRANSACTION AMOUNT OF
VALUATION* FILING FEE
- ----------------------------------------------------------------------------------------------
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$185,169,090 $37,034
==============================================================================================
</TABLE>
* For the purpose of calculating the fee only, this amount assumes the
purchase of 10,009,140 shares of Common Stock, par value $.10 per share
(the "Shares"), of Graphic Industries, Inc. (the "Company") at $18.50 per
share. Such number of shares includes all outstanding Shares as of
September 26, 1997, assumes the exercise of all options to purchase Shares
issued under the Company's stock option plans which are outstanding as of
such date and includes that number of Shares issuable upon the conversion
of the Company's 7% Convertible Subordinated Debentures due May 15, 2006
and the number of Shares issuable upon conversion of shares of Class B
Common Stock, par value $.10 per share, of the Company (the "Class B
Shares") that are not owned by the Selling Stockholder (as defined below).
[ ] Check box if any part of the fee is offset as provided by Rule 0-11(a)(2)
and identify the filing with which the offsetting fee was previously paid.
Identify the previous filing by registration statement number, or the Form
or Schedule and the date of its filing.
Amount Previously Paid: Filing Party:
---------------- ----------------
Form or Registration No.: Date Filed:
-------------- ------------------
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<PAGE> 2
CUSIP NO. 388678 10 4 14D-1 AND 13D PAGE 2 OF 8 PAGES
- ----------------------------------------------------------------------------
1. NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Greenwich Acquisition Corp.
- ----------------------------------------------------------------------------
2. CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
(SEE INSTRUCTIONS) (a) [ ]
(b) [ ]
- ----------------------------------------------------------------------------
3. SEC USE ONLY
- ----------------------------------------------------------------------------
4. SOURCES OF FUNDS (SEE INSTRUCTIONS)
AF
- ----------------------------------------------------------------------------
5. CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(e) OR 2(f). [ ]
- ----------------------------------------------------------------------------
6. CITIZENSHIP OR PLACE OF ORGANIZATION
Georgia
- ----------------------------------------------------------------------------
7. AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
2,671,135 Shares*
- ----------------------------------------------------------------------------
8. CHECK BOX IF THE AGGREGATE AMOUNT IN ROW 7 EXCLUDES CERTAIN
SHARES (SEE INSTRUCTIONS) [ ]
- ----------------------------------------------------------------------------
9. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW 7
Approximately 25.9% of the Shares as of September 26, 1997*
- ----------------------------------------------------------------------------
10. TYPE OF REPORTING PERSON (SEE INSTRUCTIONS)
CO
- ----------------------------------------------------------------------------
* See Footnote on Page 3.
2
<PAGE> 3
CUSIP NO. 388678 10 4 14D-1 AND 13D PAGE 3 OF 8 PAGES
- ----------------------------------------------------------------------------
1. NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Wallace Computer Services, Inc. (36-2515832)
- ----------------------------------------------------------------------------
2. CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
(SEE INSTRUCTIONS) (a) [ ]
(b) [ ]
- ----------------------------------------------------------------------------
3. SEC USE ONLY
- ----------------------------------------------------------------------------
4. SOURCES OF FUNDS
BK
- ----------------------------------------------------------------------------
5. CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(e) OR 2(f). [ ]
- ----------------------------------------------------------------------------
6. CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
- ----------------------------------------------------------------------------
7. AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
2,671,135 Shares*
- ----------------------------------------------------------------------------
8. CHECK BOX IF THE AGGREGATE AMOUNT IN ROW 7 EXCLUDES CERTAIN
SHARES (SEE INSTRUCTIONS) [ ]
- ----------------------------------------------------------------------------
9. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW 7
Approximately 25.9% of the Shares as of September 26, 1997*
- ----------------------------------------------------------------------------
10. TYPE OF REPORTING PERSON (SEE INSTRUCTIONS)
CO
- ----------------------------------------------------------------------------
* The Offeror and Parent (each as defined herein) have entered into a
Stockholder Agreement, dated as of September 28, 1997 (the "Stockholder
Agreement"), with Mark C. Pope III (the "Selling Stockholder"), pursuant to
which the Selling Stockholder has granted to the Offeror an irrevocable option
to purchase, and following the purchase of any Shares pursuant to the Offer
(as defined herein) the Offeror has agreed to purchase, 432,089 of the Shares
and 2,239,046 of the Class B Shares (collectively, the "Option Shares") owned
of record by the Selling Stockholder at a price per share of $18.50 in cash.
The Selling Stockholder has also agreed (i) so long as the Merger Agreement
(as defined herein) has not terminated, to tender pursuant to the Offer the
other 432,088 Shares owned by him and (ii) in the event the Offeror purchases
Shares pursuant to the Offer, to sell the other 2,239,046 Class B Shares owned
by him to the Offeror at the time of the sale to the Offeror of the Option
Shares. Pursuant to the Stockholder Agreement, the Selling Stockholder has
also agreed that, among other things, until September 28, 1998, the Selling
Stockholder will not transfer the Option Shares subject to the Stockholder
Agreement and will vote such Option Shares in favor of the transactions
contemplated by the Merger Agreement and against certain competing
transactions at any meeting of stockholders of the Company called to vote
thereon. The Class B Shares automatically convert into Shares on a one-for-one
basis following transfer of the Class B Shares to the Offeror pursuant to the
Stockholder Agreement. The Offeror and Parent disclaim beneficial ownership of
the Option Shares and the other Class B Shares owned by the Selling
Stockholder until the Offeror purchases such shares following the purchase of
Shares pursuant to the Offer.
3
<PAGE> 4
This Statement relates to a tender offer by Greenwich Acquisition Corp., a
Georgia corporation (the "Offeror") and a wholly owned subsidiary of Wallace
Computer Services, Inc., a Delaware corporation (the "Parent"), to purchase all
outstanding shares of Common Stock, par value $.10 per share (the "Shares"), of
Graphic Industries, Inc., a Georgia corporation (the "Company"), at a purchase
price of $18.50 per Share, net to the seller in cash, without interest, upon the
terms and subject to the conditions set forth in the Offer to Purchase, dated
October 3, 1997 (the "Offer to Purchase"), and in the related Letter of
Transmittal (which together constitute the "Offer"), copies of which are filed
as Exhibits (a)(1) and (a)(2) hereof, respectively, and which are incorporated
herein by reference. This Tender Offer Statement on Schedule 14D-1 also
constitutes a Statement on Schedule 13D with respect to the acquisition by the
Offeror and Parent of beneficial ownership of Shares and Class B Shares subject
to the Stockholder Agreement. The cover page above and item numbers and
responses thereto below are in accordance with the requirements of Schedule
14D-1.
ITEM 1. SECURITY AND SUBJECT COMPANY.
(a) The name of the subject company is Graphic Industries, Inc. The address
of the principal executive offices of the Company is set forth in Section 8
("Certain Information Concerning the Company") of the Offer to Purchase and is
incorporated herein by reference.
(b) The exact title of the class of equity securities being sought in the
Offer is the Common Stock, par value $.10 per share, of the Company. The
information set forth in the Introduction to the Offer to Purchase is
incorporated herein by reference.
(c) The information set forth in Section 6 ("Price Range of Shares;
Dividends") of the Offer to Purchase is incorporated herein by reference.
ITEM 2. IDENTITY AND BACKGROUND.
(a) through (d), (g): The information set forth in the Introduction and
Section 9 ("Certain Information Concerning the Parent and the Offeror") of the
Offer to Purchase, and in Annex I thereto, is incorporated herein by reference.
(e) and (f): Neither the Offeror nor the Parent nor, to the best of their
knowledge, any of the persons listed in Annex I of the Offer to Purchase, has
during the last five years (i) been convicted in a criminal proceeding
(excluding traffic violations or similar misdemeanors) or (ii) been a party to a
civil proceeding of a judicial or administrative body of competent jurisdiction
and as a result of such proceeding was or is subject to a judgment, decree or
final order enjoining future violations of, or prohibiting activities subject
to, federal or state securities laws or finding any violation of such laws.
ITEM 3. PAST CONTACTS, TRANSACTIONS OR NEGOTIATIONS WITH THE SUBJECT COMPANY.
(a) None.
(b) The information set forth in the Introduction and Section 11
("Background of the Offer; Past Contacts, Transactions or Negotiations with the
Company") of the Offer to Purchase is incorporated herein by reference.
ITEM 4. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION.
(a) and (b): The information set forth in Section 10 ("Source and Amount of
Funds") of the Offer to Purchase is incorporated herein by reference.
(c) Not applicable.
ITEM 5. PURPOSE OF THE TENDER OFFER AND PLANS OR PROPOSALS OF THE BIDDER.
(a) through (e): The information set forth in the Introduction, Section 11
("Background of the Offer; Past Contacts, Transactions or Negotiations with the
Company"), Section 12 ("Purpose of the Offer and the
4
<PAGE> 5
Merger; Plans for the Company") and Section 13 ("The Merger Agreement and the
Stockholder Agreement") of the Offer to Purchase is incorporated herein by
reference.
(f) and (g): The information set forth in Section 7 ("Certain Effects of
the Transaction") of the Offer to Purchase is incorporated herein by reference.
ITEM 6. INTEREST IN SECURITIES OF THE SUBJECT COMPANY.
(a) and (b): The information set forth in the Introduction, Section 9
("Certain Information Concerning the Parent and the Offeror") and Section 13
("The Merger Agreement and the Stockholder Agreement") of the Offer to Purchase
is incorporated herein by reference.
ITEM 7. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT TO
THE SUBJECT COMPANY'S SECURITIES.
The information set forth in the Introduction and Section 11 ("Background
of the Offer; Past Contacts, Transactions or Negotiations with the Company") and
Section 13 ("The Merger Agreement and the Stockholder Agreement") of the Offer
to Purchase is incorporated herein by reference.
ITEM 8. PERSONS RETAINED, EMPLOYED OR TO BE COMPENSATED.
The information set forth in the Introduction and in Section 17 ("Fees and
Expenses") of the Offer to Purchase is incorporated herein by reference.
ITEM 9. FINANCIAL STATEMENTS OF CERTAIN BIDDERS.
The information set forth in Section 9 ("Certain Information Concerning the
Parent and the Offeror") of the Offer to Purchase is incorporated herein by
reference.
The incorporation by reference herein of the above-mentioned financial
information does not constitute an admission that such information is material
to a decision by a security holder of the Company as whether to sell, tender or
hold Shares being sought in the Offer.
ITEM 10. ADDITIONAL INFORMATION.
(a) Not applicable.
(b) and (c) The information set forth in Section 16 ("Certain Legal
Matters") of the Offer to Purchase is incorporated herein by reference.
(d) The information set forth in Section 7 ("Certain Effects of the
Transaction") of the Offer to Purchase is incorporated herein by reference.
(e) None.
(f) The information set forth in the Offer to Purchase and the Letter of
Transmittal is incorporated herein by reference in its entirety.
ITEM 11. MATERIAL TO BE FILED AS EXHIBITS.
(a)(1) Offer to Purchase, dated October 3, 1997.
(a)(2) Letter of Transmittal.
(a)(3) Letter from Smith Barney Inc., as Dealer Manager, to Brokers,
Dealers, Commercial Banks, Trust Companies and Other Nominees.
(a)(4) Letter from Brokers, Dealers, Commercial Banks, Trust Companies and
Other Nominees to Clients.
(a)(5) Notice of Guaranteed Delivery.
5
<PAGE> 6
(a)(6) Guidelines for Certification of Taxpayer Identification Number on
Substitute Form W-9.
(a)(7) Summary Announcement, dated October 3, 1997.
(a)(8) Press Release issued by the Parent and the Company on September 28,
1997.
(a)(9) Press Release issued by the Parent on October 3, 1997.
(a)(10) Conversion and Tender Request for Class B Shares.
(b)(1) Commitment Letter, dated as of September 24, 1997, between Bank of
America NT & SA, as administrative agent, and Parent.
(c)(1) Agreement and Plan of Merger, dated as of September 28, 1997, among
Parent, the Offeror and the Company.
(c)(2) Stockholder Agreement, dated as of September 28, 1997, among Mark C.
Pope III, the Offeror and Parent.
(d) None.
(e) Not applicable.
(f) None.
6
<PAGE> 7
SIGNATURE
After due inquiry and to the best of my knowledge and belief, I certify
that the information set forth in this statement is true, complete and correct.
Dated: October 3, 1997
Wallace Computer Services, Inc.
By: /s/ ROBERT J. CRONIN
------------------------------------
Name: Robert J. Cronin
Title: President and Chief Executive
Officer
Greenwich Acquisition Corp.
By: /s/ ROBERT J. CRONIN
------------------------------------
Name: Robert J. Cronin
Title: Chief Executive Officer
7
<PAGE> 8
EXHIBIT INDEX
EXHIBIT
NO. EXHIBIT NAME
- ------- ------------
(a)(1) Offer to Purchase dated October 3, 1997.
(a)(2) Letter of Transmittal
(a)(3) Letter from Smith Barney Inc., as Dealer Manager, to
Brokers, Dealers, Commercial Banks, Trust Companies and
Other Nominees.
(a)(4) Letter from Brokers, Dealers, Commercial Banks, Trust
Companies and Other Nominees to Clients.
(a)(5) Notice of Guaranteed Delivery.
(a)(6) Guidelines for Certification of Taxpayer Identification
Number on Substitute Form W-9.
(a)(7) Summary Announcement, dated October 3, 1997.
(a)(8) Press Release issued by Parent and the Company on September
28, 1997.
(a)(9) Press Release issued by Parent on October 3, 1997.
(a)(10) Conversion and Tender Request for Class B Shares.
(b)(1) Commitment Letter, dated as of September 24, 1997, between
Bank of America NT & SA, as administrative agent, and
Parent.
(c)(1) Agreement and Plan of Merger, dated as of September 28,
1997, among Parent, the Offeror and the Company.
(c)(2) Stockholder Agreement, dated as of September 28, 1997, among
Mark C. Pope III, the Offeror and Parent.
8
<PAGE> 1
OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING SHARES OF COMMON STOCK
OF
GRAPHIC INDUSTRIES, INC.
AT
$18.50 NET PER SHARE
BY
GREENWICH ACQUISITION CORP.
A WHOLLY OWNED SUBSIDIARY OF
WALLACE COMPUTER SERVICES, INC.
- --------------------------------------------------------------------------------
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY
TIME, ON FRIDAY, OCTOBER 31, 1997, UNLESS THE OFFER IS EXTENDED.
- --------------------------------------------------------------------------------
THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, (I) THERE BEING VALIDLY
TENDERED AND NOT WITHDRAWN PRIOR TO THE EXPIRATION OF THE OFFER SUCH NUMBER OF
SHARES OF COMMON STOCK, $.10 PAR VALUE PER SHARE, OF THE COMPANY (THE "SHARES")
THAT, TOGETHER WITH THE SHARES AND CLASS B SHARES (AS DEFINED HEREIN) SUBJECT TO
THE OPTION (AS DEFINED HEREIN) CONTAINED IN THE STOCKHOLDER AGREEMENT (AS
DEFINED HEREIN), WOULD CONSTITUTE A MAJORITY OF THE SHARES AND CLASS B SHARES
THAT IN THE AGGREGATE ARE OUTSTANDING, DETERMINED ON A FULLY DILUTED BASIS FOR
ALL OUTSTANDING STOCK OPTIONS, THE CONVERTIBLE DEBENTURES (AS DEFINED HEREIN),
OTHER SECURITIES CONVERTIBLE INTO SHARES OR CLASS B SHARES AND ANY OTHER RIGHTS
TO ACQUIRE SHARES OR CLASS B SHARES, (II) ANY WAITING PERIOD UNDER THE HSR ACT
(AS DEFINED HEREIN) APPLICABLE TO THE PURCHASE OF SHARES PURSUANT TO THE OFFER
HAVING EXPIRED OR HAVING BEEN TERMINATED PRIOR TO THE EXPIRATION OF THE OFFER
AND (III) THE SATISFACTION OF CERTAIN OTHER TERMS AND CONDITIONS. SEE SECTION
15.
THIS OFFER (THE "OFFER") IS BEING MADE IN CONNECTION WITH THE AGREEMENT AND
PLAN OF MERGER, DATED AS OF SEPTEMBER 28, 1997 (THE "MERGER AGREEMENT"), AMONG
WALLACE COMPUTER SERVICES, INC., GREENWICH ACQUISITION CORP. AND GRAPHIC
INDUSTRIES, INC. (THE "COMPANY"). THE BOARD OF DIRECTORS OF THE COMPANY HAS
UNANIMOUSLY APPROVED AND ADOPTED THE MERGER AGREEMENT, APPROVED THE OFFER AND
THE MERGER (AS DEFINED HEREIN), HAS DETERMINED THAT THE TERMS OF THE OFFER AND
THE MERGER ARE FAIR TO, AND IN THE BEST INTERESTS OF, THE COMPANY'S STOCKHOLDERS
AND RECOMMENDS THAT HOLDERS OF THE SHARES ACCEPT THE OFFER AND TENDER THEIR
SHARES PURSUANT TO THE OFFER.
------------------------
IMPORTANT
Any stockholder desiring to tender Shares should either (i) complete and
sign the Letter of Transmittal or a facsimile thereof in accordance with the
instructions in the Letter of Transmittal and deliver the Letter of Transmittal
with the Shares and all other required documents to the Depositary (as defined
herein) or follow the procedure for book-entry transfer set forth in Section 3
or (ii) request such stockholder's broker, dealer, commercial bank, trust
company or other nominee effect the transaction for the stockholder.
Stockholders having Shares registered in the name of a broker, dealer,
commercial bank, trust company or other nominee must contact such person if they
desire to tender their Shares.
Any stockholder who desires to tender Shares and whose certificates
representing such Shares are not immediately available or who cannot comply with
the procedures for book-entry transfer on a timely basis or who cannot deliver
all required documents to the Depositary, in each case prior to the expiration
of the Offer, must tender such Shares pursuant to the guaranteed delivery
procedure set forth in Section 3.
Questions and requests for assistance or additional copies of this Offer to
Purchase or the Letter of Transmittal may be directed to the Information Agent
or the Dealer Manager at their respective addresses and telephone numbers set
forth on the back cover of this Offer to Purchase.
------------------------
The Dealer Manager for the Offer is:
SMITH BARNEY INC.
October 3, 1997
<PAGE> 2
TABLE OF CONTENTS
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PAGE
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Introduction................................................ 1
1. Terms of the Offer...................................... 3
2. Acceptance for Payment and Payment for Shares........... 4
3. Procedure for Tendering Shares.......................... 5
4. Withdrawal Rights....................................... 8
5. Certain Federal Income Tax Consequences................. 8
6. Price Range of Shares; Dividends........................ 9
7. Certain Effects of the Transaction...................... 10
8. Certain Information Concerning the Company.............. 11
9. Certain Information Concerning Parent and the Offeror... 13
10. Source and Amount of Funds.............................. 14
11. Background of the Offer; Past Contacts, Transactions or
Negotiations with the Company............................. 15
12. Purpose of the Offer and the Merger; Plans for the
Company................................................... 18
13. The Merger Agreement and the Stockholder Agreement...... 19
14. Dividends and Distributions............................. 27
15. Certain Conditions to the Offeror's Obligations......... 27
16. Certain Legal Matters................................... 29
17. Fees and Expenses....................................... 31
18. Miscellaneous........................................... 31
Annex I. Certain Information Concerning the Directors and
Executive Officers of Parent and the Offeror....... I-1
</TABLE>
i
<PAGE> 3
TO THE HOLDERS OF COMMON STOCK OF GRAPHIC INDUSTRIES, INC.:
INTRODUCTION
Greenwich Acquisition Corp., a Georgia corporation (the "Offeror") and a
wholly owned subsidiary of Wallace Computer Services, Inc., a Delaware
corporation ("Parent"), hereby offers to purchase all outstanding shares of
Common Stock, $.10 par value per share (the "Shares"), of Graphic Industries,
Inc., a Georgia corporation (the "Company"), at a purchase price of $18.50 per
Share, net to the seller in cash, without interest, upon the terms and subject
to the conditions set forth in this Offer to Purchase and in the related Letter
of Transmittal (which, together with any amendments or supplements hereto or
thereto, collectively constitute the "Offer"). Tendering holders of Shares will
not be obligated to pay brokerage fees or commissions or, except as set forth in
the Letter of Transmittal, stock transfer taxes on the purchase of Shares by the
Offeror pursuant to the Offer. The Offer is not being made for shares of Class B
Common Stock, par value $.10 per share (the "Class B Shares"), of the Company.
Holders of Class B Shares who wish to tender their Class B Shares in the Offer
must convert their Class B Shares into Shares pursuant to the terms of the
Company's Amended and Restated Articles of Incorporation prior to tendering such
shares. See Section 15. The Offeror will pay all charges and expenses of Smith
Barney Inc. (the "Dealer Manager" or "Smith Barney"), SunTrust Bank, Atlanta
(the "Depositary") and Morrow & Co., Inc. (the "Information Agent") in
connection with the Offer.
THE BOARD OF DIRECTORS OF THE COMPANY HAS UNANIMOUSLY APPROVED AND ADOPTED
THE MERGER AGREEMENT (AS DEFINED HEREIN), APPROVED THE OFFER AND THE MERGER (AS
DEFINED HEREIN), HAS DETERMINED THAT TERMS OF THE OFFER AND THE MERGER ARE FAIR
TO, AND IN THE BEST INTERESTS OF, THE COMPANY'S STOCKHOLDERS AND RECOMMENDS THAT
THE HOLDERS OF THE SHARES ACCEPT THE OFFER AND TENDER THEIR SHARES PURSUANT TO
THE OFFER.
The Company has advised the Offeror that Interstate/Johnson Lane
Corporation ("Interstate/Johnson Lane"), the Company's financial advisor, has
delivered to the Company's Board of Directors its written opinion that, as of
the date of the Merger, the consideration to be received by the Company's
stockholders pursuant to the Offer and the Merger is fair, from a financial
point of view, to the Company's stockholders. A copy of such opinion is
contained in the Company's Solicitation/Recommendation Statement on Schedule
14D-9 which is being distributed to the Company's stockholders.
THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, (I) THERE HAVING BEEN
VALIDLY TENDERED AND NOT WITHDRAWN PRIOR TO THE EXPIRATION OF THE OFFER SUCH
NUMBER OF SHARES THAT, TOGETHER WITH THE SHARES AND CLASS B SHARES SUBJECT TO
THE OPTION (AS DEFINED HEREIN) CONTAINED IN THE STOCKHOLDER AGREEMENT (AS
DEFINED HEREIN), WOULD CONSTITUTE A MAJORITY OF THE SHARES AND CLASS B SHARES
THAT IN THE AGGREGATE ARE OUTSTANDING, DETERMINED ON A FULLY DILUTED BASIS FOR
ALL OUTSTANDING STOCK OPTIONS, THE CONVERTIBLE DEBENTURES (AS DEFINED HEREIN),
OTHER SECURITIES CONVERTIBLE INTO SHARES OR CLASS B SHARES AND ANY OTHER RIGHTS
TO ACQUIRE SHARES OR CLASS B SHARES (THE "MINIMUM CONDITION"), (II) ANY WAITING
PERIOD UNDER THE HART-SCOTT-RODINO ANTITRUST IMPROVEMENTS ACT OF 1976, AS
AMENDED (THE "HSR ACT"), APPLICABLE TO THE PURCHASE OF SHARES PURSUANT TO THE
OFFER HAVING EXPIRED OR HAVING BEEN TERMINATED PRIOR TO THE EXPIRATION OF THE
OFFER AND (III) THE SATISFACTION OF CERTAIN OTHER TERMS AND CONDITIONS. SEE
SECTION 15.
The Offer is being made pursuant to the Agreement and Plan of Merger, dated
as of September 28, 1997 (the "Merger Agreement"), among Parent, the Offeror and
the Company. The Merger Agreement provides that, among other things, after the
purchase of Shares pursuant to the Offer and the satisfaction of the other
conditions set forth in the Merger Agreement and in accordance with the relevant
provisions of the Georgia Business Corporation Code, as amended (the "GBCC"),
the Offeror will be merged with and into the Company (the "Merger"). Following
consummation of the Merger, the Company will continue as the surviving
corporation (the "Surviving Corporation") and will be a wholly owned subsidiary
of Parent. At the effective time of the Merger (the "Effective Time"), each
Share and Class B Share that is issued and outstanding (other than Shares and
Class B Shares owned by the Company, any subsidiary of the Company, Parent, the
Offeror, any other subsidiary of Parent or by stockholders, if any, who are
entitled to and who
1
<PAGE> 4
properly exercise appraisal rights under the GBCC) will be converted into the
right to receive from the Surviving Corporation $18.50 (or any higher price that
may be paid for each Share pursuant to the Offer) in cash, without interest
thereon (the "Offer Price"). See Section 5 for a description of certain tax
consequences of the Offer and the Merger.
In connection with the execution of the Merger Agreement, the Offeror and
Parent entered into a Stockholder Agreement dated as of September 28, 1997 (the
"Stockholder Agreement"), with Mark C. Pope III (the "Selling Stockholder"),
pursuant to which such Selling Stockholder has granted to the Offeror an
irrevocable option to purchase (the "Option"), and following the purchase of any
Shares in the Offer the Offeror has agreed to purchase, 432,089 of the Shares
and 2,239,046 of the Class B Shares (collectively, the "Option Shares") owned of
record by the Selling Stockholder at a price per share equal to the Offer Price.
The Selling Stockholder has also agreed (i) so long as the Merger Agreement has
not terminated, to tender pursuant to the Offer the other 432,088 Shares owned
by him and (ii) in the event the Offeror purchases Shares pursuant to the Offer,
to sell the other 2,239,046 Class B Shares owned by him to the Offeror at the
time of the sale to the Offeror of the Option Shares. Pursuant to the
Stockholder Agreement, the Selling Stockholder has also agreed that, among other
things, until September 28, 1998, such Selling Stockholder will not transfer the
Option Shares and will vote the Option Shares in favor of the transactions
contemplated by the Merger Agreement and against certain competing transactions
at any meeting of stockholders of the Company called to vote thereon. The
Selling Stockholder owned 864,177 Shares and 4,478,092 Class B Shares,
representing approximately 10.7% and approximately 99.1% of the Shares and Class
B Shares, respectively, issued and outstanding as of September 26, 1997
(approximately 36.9% of the Shares on a fully diluted basis). Upon transfer of
Class B Shares by the Selling Stockholder to the Offeror pursuant to the
Stockholder Agreement, all Class B Shares will automatically convert to Shares.
The Merger Agreement and the Stockholder Agreement are more fully described
in Section 13.
The Merger Agreement provides that, promptly after the Offeror acquires a
majority of the combined voting power of the Shares and the Class B Shares, the
Offeror will be entitled to designate such number of directors on the Board of
Directors of the Company as will give the Offeror, subject to compliance with
Section 14(f) of the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), a majority of such directors and the Company shall, at such time, cause
the Offeror's designees to be so elected by its existing Board of Directors.
However, until the Effective Time the Board of Directors of the Company shall
have at least three directors who were directors on the date of the Merger
Agreement and who are not officers of the Company. The Company has agreed, at
the option of Parent, either to increase the size of the Board of Directors of
the Company and/or obtain the resignation of such number of directors as is
necessary to enable the Offeror's designees to be elected or appointed to the
Board. The Merger Agreement is more fully described in Section 13.
The Company has advised the Offeror that as of September 26, 1997, there
were (a) 8,086,951 Shares issued and outstanding, (b) outstanding stock options
to purchase not in excess of 690,510 Shares, (c) 1,190,954 Shares reserved for
issuance upon conversion of the Company's 7% Convertible Subordinated Debentures
due May 15, 2006 (the "Convertible Debentures") and (d) 4,518,817 Class B Shares
issued and outstanding. As of the date hereof, neither the Offeror nor Parent
beneficially owns any Shares. Accordingly, on a fully diluted basis the
aggregate amount of Shares and Class B Shares outstanding as of September 26,
1997 was 14,487,232. Because the Offeror has the right pursuant to the
Stockholder Agreement to purchase 2,671,135 Option Shares, the Minimum Condition
will be satisfied if at least 4,572,482 Shares, approximately 56.5% of the
outstanding Shares as of September 26, 1997 (approximately 31.6% of the Shares
on a fully diluted basis), are validly tendered and not withdrawn prior to the
Expiration Date (as defined herein). As noted above, pursuant to the Stockholder
Agreement, the Selling Stockholder has agreed to tender the 432,088 Shares not
constituting Option Shares owned by him, which represent approximately 5.3% of
the outstanding Shares as of September 26, 1997 (approximately 3.0% of the
Shares on a fully diluted basis).
THIS OFFER TO PURCHASE AND THE RELATED LETTER OF TRANSMITTAL CONTAIN
IMPORTANT INFORMATION WHICH SHOULD BE READ BEFORE ANY DECISION IS MADE WITH
RESPECT TO THE OFFER.
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1. TERMS OF THE OFFER.
Upon the terms and subject to the conditions of the Offer (including, if
the Offer is extended or amended, the terms and conditions of any extension or
amendment), the Offeror will accept for payment and pay for all Shares validly
tendered prior to the Expiration Date and not theretofore withdrawn in
accordance with Section 4. The term "Expiration Date" means 12:00 Midnight, New
York City time, on Friday, October 31, 1997, unless the Offeror shall have
extended the period of time for which the Offer is open, in which event the term
"Expiration Date" shall mean the latest time and date at which the Offer, as so
extended by the Offeror, shall expire.
If the Offeror shall decide, in its sole discretion, to increase the
consideration offered in the Offer to holders of Shares and if, at the time that
notice of such increase is first published, sent or given to holders of Shares
in the manner specified below, the Offer is scheduled to expire at any time
earlier than the expiration of a period ending on the tenth business day from,
and including, the date that such notice is first so published, sent or given,
then the Offer will be extended until the expiration of such period of 10
business days. For purposes of the Offer, a "business day" means any day other
than a Saturday, Sunday or a federal holiday and consists of the time period
from 12:01 a.m. through 12:00 Midnight, New York City time.
THE OFFER IS CONDITIONED UPON SATISFACTION OF THE MINIMUM CONDITION, ANY
WAITING PERIOD UNDER THE HSR ACT APPLICABLE TO THE PURCHASE OF SHARES PURSUANT
TO THE OFFER HAVING EXPIRED OR HAVING BEEN TERMINATED PRIOR TO THE EXPIRATION OF
THE OFFER AND CERTAIN OTHER TERMS AND CONDITIONS. SEE SECTION 15. THE MERGER
AGREEMENT AND THE OFFER MAY BE TERMINATED BY THE OFFEROR AND PARENT IF CERTAIN
EVENTS OCCUR. The Offeror reserves the right (but shall not be obligated), in
accordance with applicable rules and regulations of the United States Securities
and Exchange Commission (the "Commission"), subject to the limitations set forth
in the Merger Agreement and described below, to waive or reduce the Minimum
Condition or to waive any other condition to the Offer. If the Minimum Condition
or any condition set forth in Section 15 has not been satisfied by 12:00
Midnight, New York City time, on Friday, October 31, 1997 (or any other time
then set as the Expiration Date), the Offeror may, subject to the terms of the
Merger Agreement as described below, elect to (1) extend the Offer and, subject
to applicable withdrawal rights, retain all tendered Shares until the expiration
of the Offer, as extended, (2) subject to complying with applicable rules and
regulations of the Commission, accept for payment all Shares so tendered and not
extend the Offer or (3) terminate the Offer and not accept for payment any
Shares and return all tendered Shares to tendering stockholders.
Under the terms of the Merger Agreement, the Offeror may not (except as
described in the next sentence), without the consent of the Company, reduce the
number of Shares subject to the Offer, reduce the Offer Price, impose any other
conditions to the Offer other than the conditions set forth in Section 15 or
modify such conditions (other than to waive any such conditions to the extent
permitted by the Merger Agreement), extend the Offer or change the form of
consideration payable in the Offer. Notwithstanding the foregoing, the Offeror
may, without the consent of the Company, (i) extend the Offer, if at the
scheduled or extended expiration date of the Offer any of the conditions shall
not be satisfied or waived, until such time as such conditions are satisfied or
waived, (ii) extend the Offer for any period required by any rule, regulation,
interpretation or position of the Commission or the Commission staff applicable
to the Offer and (iii) extend the Offer for any reason on one or more occasions
for an aggregate period of not more than 15 business days beyond the latest
expiration date that would otherwise be permitted under clause (i) or (ii) of
this sentence, in each case subject to the right of Parent, the Offeror or the
Company to terminate the Merger Agreement pursuant to the terms thereof. In the
Merger Agreement, Parent and the Offeror have agreed that if at any scheduled
expiration date of the Offer, (i) the Minimum Condition shall not have been
satisfied or (ii) the waiting period under the HSR Act applicable to the
purchase of the Shares pursuant to the Offer shall not have expired or been
terminated, but all other conditions to acceptance for payment and payment for
Shares pursuant to the Offer shall then be satisfied (and the Company is not in
breach of the Merger Agreement), at the request of the Company (confirmed in
writing), the Offeror shall extend the Offer from time to time, subject to the
right of Parent, the Offeror or the Company to terminate the Merger Agreement
pursuant to the terms thereof.
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Subject to the limitations set forth in this Offer and the Merger
Agreement, the Offeror reserves the right (but will not be obligated), at any
time or from time to time in its sole discretion, to extend the period during
which the Offer is open by giving oral or written notice of such extension to
the Depositary and by making a public announcement of such extension. Except to
the extent required by the Merger Agreement, there can be no assurance that the
Offeror will exercise its right to extend the Offer.
Subject to the applicable rules and regulations of the Commission and
subject to the limitations set forth in the Merger Agreement, the Offeror
expressly reserves the right, at any time and from time to time, in its sole
discretion, (i) to delay payment for any Shares regardless of whether such
Shares were theretofore accepted for payment, or to terminate the Offer and not
to accept for payment or pay for any Shares not theretofore accepted for payment
or paid for, upon the occurrence of any of the conditions set forth in Section
15, by giving oral or written notice of such delay or termination to the
Depositary, and (ii) at any time or from time to time, to amend the Offer in any
respect. The Offeror's right to delay payment for any Shares or not to pay for
any Shares theretofore accepted for payment is subject to the applicable rules
and regulations of the Commission, including Rule 14e-1(c) under the Exchange
Act, relating to the Offeror's obligation to pay for or return tendered Shares
promptly after the termination or withdrawal of the Offer.
Any extension of the period during which the Offer is open, delay in
acceptance for payment or payment, termination or amendment of the Offer will be
followed, as promptly as practicable, by public announcement thereof, such
announcement in the case of an extension to be issued not later than 9:00 a.m.,
New York City time, on the next business day after the previously scheduled
Expiration Date in accordance with the public announcement requirements of Rules
14d-4(c) and 14e-1(d) under the Exchange Act. Without limiting the obligation of
the Offeror under such rule or the manner in which the Offeror may choose to
make any public announcement, the Offeror currently intends to make
announcements by issuing a press release to the Dow Jones News Service and
making any appropriate filing with the Commission.
If, subject to the terms of the Merger Agreement, the Offeror makes a
material change in the terms of the Offer or the information concerning the
Offer, or if it waives a material condition of the Offer (including, with the
consent of the Company, a waiver of the Minimum Condition), the Offeror will
disseminate additional tender offer materials and extend the Offer if and to the
extent required by Rules 14d-4(c), 14d-6(d) and 14e-1 under the Exchange Act or
otherwise. The minimum period during which a tender offer must remain open
following material changes in the terms of the offer or the information
concerning the offer, other than a change in price or a change in percentage of
securities sought, will depend upon the facts and circumstances, including the
relative materiality of the terms or information changes. With respect to a
change in price or a change in percentage of securities sought, a minimum 10
business day period is generally required to allow for adequate dissemination to
stockholders and investor response.
The Company has provided the Offeror with the Company's list of
stockholders and security position listings for the purpose of disseminating the
Offer to holders of Shares. This Offer to Purchase and the related Letter of
Transmittal will be mailed to record holders of Shares whose names appear on the
Company's stockholder list and will be furnished to brokers, dealers, commercial
banks, trust companies and similar persons whose names, or the names of whose
nominees, appear on the stockholder list or, if applicable, who are listed as
participants in a clearing agency's security position listing for subsequent
transmittal to beneficial owners of Shares.
2. ACCEPTANCE FOR PAYMENT AND PAYMENT FOR SHARES.
Upon the terms and subject to the conditions of the Offer (including, if
the Offer is extended or amended, the terms and conditions of any such extension
or amendment), the Offeror will accept for payment and will pay for all Shares
validly tendered prior to the Expiration Date and not theretofore withdrawn in
accordance with Section 4 promptly after the later to occur of (a) the
Expiration Date and (b) the satisfaction or waiver of the conditions set forth
in Section 15 related to regulatory matters. Subject to compliance with Rule
14e-1(c) under the Exchange Act, the Offeror expressly reserves the right to
delay payment for Shares in order to comply in whole or in part with any
applicable law. See Sections 1 and 16. In all cases, payment for Shares tendered
and accepted for payment pursuant to the Offer will be made only after timely
receipt by the
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Depositary of (i) certificates for such Shares or timely confirmation (a
"Book-Entry Confirmation") of a book-entry transfer of such Shares into the
Depositary's account at The Depository Trust Company or the Philadelphia
Depository Trust Company (collectively, the "Book-Entry Transfer Facilities"),
pursuant to the procedures set forth in Section 3, (ii) a properly completed and
duly executed Letter of Transmittal (or a manually signed facsimile thereof)
with all required signature guarantees or, in the case of a book-entry transfer,
an Agent's Message (as defined below) and (iii) any other documents required by
the Letter of Transmittal.
The term "Agent's Message" means a message transmitted by a Book-Entry
Transfer Facility to, and received by, the Depositary and forming a part of a
Book-Entry Confirmation, which states that such Book-Entry Transfer Facility has
received an express acknowledgment from the participant in such Book-Entry
Transfer Facility tendering the Shares that such participant has received and
agrees to be bound by the terms of the Letter of Transmittal and that the
Offeror may enforce such agreement against the participant.
For purposes of the Offer, the Offeror will be deemed to have accepted for
payment, and thereby purchased, Shares validly tendered and not withdrawn as, if
and when the Offeror gives oral or written notice to the Depositary of the
Offeror's acceptance of such Shares for payment pursuant to the Offer. In all
cases, payment for Shares purchased pursuant to the Offer will be made by
deposit of the purchase price with the Depositary, which will act as agent for
tendering stockholders for the purpose of receiving payment from the Offeror and
transmitting such payment to tendering stockholders. If, for any reason
whatsoever, acceptance for payment of any Shares tendered pursuant to the Offer
is delayed, or the Offeror is unable to accept for payment Shares tendered
pursuant to the Offer, then, without prejudice to the Offeror's rights under
Section 1, the Depositary may, nevertheless, on behalf of the Offeror, retain
tendered Shares, and such Shares may not be withdrawn, except to the extent that
the tendering stockholders are entitled to withdrawal rights as described in
Section 4 below and as otherwise required by Rule 14e-1(c) under the Exchange
Act. UNDER NO CIRCUMSTANCES WILL INTEREST BE PAID BY THE OFFEROR BECAUSE OF ANY
DELAY IN MAKING ANY PAYMENT.
If any tendered Shares are not accepted for payment pursuant to the terms
and conditions of the Offer for any reason, or if certificates are submitted for
more Shares than are tendered, certificates for such unpurchased or untendered
Shares will be returned, without expense to the tendering stockholder (or, in
the case of Shares delivered by book-entry transfer to a Book-Entry Transfer
Facility, such Shares will be credited to an account maintained within such
Book-Entry Transfer Facility), as promptly as practicable after the expiration,
termination or withdrawal of the Offer.
If, prior to the Expiration Date, the Offeror increases the price being
paid for Shares accepted for payment pursuant to the Offer, such increased
consideration will be paid to all stockholders whose Shares are purchased
pursuant to the Offer, whether or not such Shares were tendered prior to such
increase in consideration.
The Offeror reserves the right to transfer or assign, in whole or from time
to time in part, to one or more of its affiliates, the right to purchase Shares
tendered pursuant to the Offer, but any such transfer or assignment will not
relieve the Offeror of its obligations under the Offer or prejudice the rights
of tendering stockholders to receive payment for Shares validly tendered and
accepted for payment.
3. PROCEDURE FOR TENDERING SHARES.
Valid Tenders. For Shares to be validly tendered pursuant to the Offer,
either a properly completed and duly executed Letter of Transmittal (or a
manually signed facsimile thereof), with any required signature guarantees, or,
in the case of a book-entry transfer, an Agent's Message, and any other required
documents, must be received by the Depositary at one of its addresses set forth
on the back cover of this Offer to Purchase prior to the Expiration Date or the
tendering stockholder must comply with the guaranteed delivery procedure set
forth below. In addition, either (i) certificates representing such Shares must
be received by the Depositary along with the Letter of Transmittal or such
Shares must be tendered pursuant to the procedure for book-entry transfer set
forth below, and a Book-Entry Confirmation must be received by the Depositary,
in each case prior to the Expiration Date, or (ii) the guaranteed delivery
procedures set forth below must be complied with. No alternative, conditional or
contingent tenders will be accepted. DELIVERY OF DOCUMENTS TO A
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<PAGE> 8
BOOK-ENTRY TRANSFER FACILITY IN ACCORDANCE WITH SUCH BOOK-ENTRY TRANSFER
FACILITY'S PROCEDURES DOES NOT CONSTITUTE DELIVERY TO THE DEPOSITARY.
Book-Entry Transfer. The Depositary will make a request to establish an
account with respect to the Shares at each Book-Entry Transfer Facility for
purposes of the Offer within two business days after the date of this Offer to
Purchase. Any financial institution that is a participant in a Book-Entry
Transfer Facility's system may make book-entry delivery of Shares by causing a
Book-Entry Transfer Facility to transfer such Shares into the Depositary's
account at a Book-Entry Transfer Facility in accordance with such Book-Entry
Transfer Facility's procedures for transfer. Although delivery of Shares may be
effected through book-entry at a Book-Entry Transfer Facility prior to the
Expiration Date, (i) the Letter of Transmittal (or a manually signed facsimile
thereof), properly completed and duly executed, with any required signature
guarantees, or an Agent's Message in connection with a book-entry transfer, and
any other required documents, must, in any case, be transmitted to and received
by the Depositary at one of its addresses set forth on the back cover of this
Offer to Purchase or (ii) the guaranteed delivery procedures described below
must be complied with.
Signature Guarantee. Signatures on the Letter of Transmittal must be
guaranteed by a member in good standing of the Securities Transfer Agents
Medallion Program, the New York Stock Exchange Medallion Signature Guarantee
Program, the Stock Exchange Medallion Program, or by any other bank, broker,
dealer, credit union, savings association or other entity which is an "eligible
guarantor institution," as such term is defined in Rule 17Ad-15 under the
Exchange Act (each of the foregoing being referred to as an "Eligible
Institution" and, collectively, as "Eligible Institutions"), unless the Shares
tendered thereby are tendered (i) by a registered holder of Shares who has not
completed either the box labeled "Special Delivery Instructions" or the box
labeled "Special Payment Instructions" on the Letter of Transmittal or (ii) for
the account of any Eligible Institution. If the certificates evidencing Shares
are registered in the name of a person or persons other than the signer of the
Letter of Transmittal, or if payment is to be made, or delivered to, or
certificates for unpurchased Shares are to be issued or returned to, a person
other than the registered owner or owners, then the tendered certificates must
be endorsed or accompanied by duly executed stock powers, in either case signed
exactly as the name or names of the registered owner or owners appear on the
certificates, with the signatures on the certificates or stock powers guaranteed
by an Eligible Institution as provided in the Letter of Transmittal. See
Instructions 1 and 5 to the Letter of Transmittal.
Guaranteed Delivery. If a stockholder desires to tender Shares pursuant to
the Offer and such stockholder's certificates for Shares are not immediately
available or time will not permit all required documents to reach the Depositary
prior to the Expiration Date or the procedure for book-entry transfer cannot be
completed on a timely basis, such Shares may nevertheless be tendered if all of
the following guaranteed delivery procedures are duly complied with:
(i) the tender is made by or through an Eligible Institution;
(ii) a properly completed and duly executed Notice of Guaranteed
Delivery, substantially in the form made available by the Offeror, is
received by the Depositary, as provided below, prior to the Expiration
Date; and
(iii) the certificates for all tendered Shares, in proper form for
transfer (or a Book-Entry Confirmation), together with a properly completed
and duly executed Letter of Transmittal (or a manually signed facsimile
thereof), and any required signature guarantees, or, in the case of a
book-entry transfer, an Agent's Message, and any other documents required
by the Letter of Transmittal are received by the Depositary within three
trading days after the date of such Notice of Guaranteed Delivery. The term
"trading day" is any day on which the New York Stock Exchange ("NYSE") is
open for business.
The Notice of Guaranteed Delivery may be delivered by hand or transmitted
by facsimile transmission or mail to the Depositary and must include a guarantee
by an Eligible Institution in the form set forth in the Notice of Guaranteed
Delivery.
THE METHOD OF DELIVERY OF SHARES, THE LETTER OF TRANSMITTAL AND ALL OTHER
REQUIRED DOCUMENTS, INCLUDING DELIVERY THROUGH ANY BOOK-ENTRY TRANSFER FACILITY,
IS AT THE OPTION AND RISK OF THE TENDERING STOCKHOLDER. SHARES WILL BE DEEMED
DELIVERED ONLY WHEN ACTUALLY RECEIVED BY THE DEPOSITARY (INCLUDING, IN THE CASE
OF A
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BOOK-ENTRY TRANSFER, BY BOOK-ENTRY CONFIRMATION). IF DELIVERY IS BY MAIL,
REGISTERED MAIL WITH RETURN RECEIPT REQUESTED, PROPERLY INSURED, IS RECOMMENDED.
IN ALL CASES, SUFFICIENT TIME SHOULD BE ALLOWED TO ENSURE TIMELY DELIVERY.
Notwithstanding any other provision hereof, payment for Shares accepted for
payment pursuant to the Offer will in all cases be made only after timely
receipt by the Depositary of (i) certificates for such Shares or a Book-Entry
Confirmation, (ii) a properly completed and duly executed Letter of Transmittal
(or a manually signed facsimile thereof), with all required signature guarantees
or, in the case of a book-entry transfer, an Agent's Message, and (iii) any
other documents required by the Letter of Transmittal. Accordingly, tendering
stockholders may be paid at different times depending upon when certificates for
Shares or Book-Entry Confirmations with respect to Shares are actually received
by the Depositary. UNDER NO CIRCUMSTANCES WILL INTEREST BE PAID ON THE PURCHASE
PRICE OF THE SHARES TO BE PAID BY THE OFFEROR, REGARDLESS OF ANY EXTENSION OF
THE OFFER OR ANY DELAY IN MAKING ANY PAYMENT.
BACKUP FEDERAL INCOME TAX WITHHOLDING. TO PREVENT "BACKUP" FEDERAL INCOME
TAX WITHHOLDING WITH RESPECT TO PAYMENT OF THE PURCHASE PRICE OF SHARES
PURCHASED PURSUANT TO THE OFFER, EACH STOCKHOLDER MUST, SUBJECT TO CERTAIN
EXCEPTIONS, PROVIDE THE DEPOSITARY WITH SUCH STOCKHOLDER'S CORRECT TAXPAYER
IDENTIFICATION NUMBER ("TIN") AND CERTIFY THAT SUCH STOCKHOLDER IS NOT SUBJECT
TO BACKUP FEDERAL INCOME TAX WITHHOLDING BY COMPLETING THE SUBSTITUTE FORM W-9
INCLUDED IN THE LETTER OF TRANSMITTAL. FOREIGN HOLDERS MUST GENERALLY SUBMIT A
COMPLETED FORM W-8 TO AVOID 31% BACKUP WITHHOLDING. THIS FORM MAY BE OBTAINED
FROM THE DEPOSITARY. SEE INSTRUCTIONS 8 AND 9 SET FORTH IN THE LETTER OF
TRANSMITTAL.
Determination of Validity. All questions as to the form of documents and
the validity, eligibility (including time of receipt) and acceptance for payment
of any tender of Shares will be determined by the Offeror, in its sole
discretion, and its determination will be final and binding on all parties. The
Offeror reserves the absolute right to reject any or all tenders of any Shares
that are determined by it not to be in proper form or the acceptance of or
payment for which may, in the opinion of the Offeror, be unlawful. The Offeror
also reserves the absolute right to waive any of the conditions of the Offer,
subject to the limitations set forth in the Merger Agreement, or any defect or
irregularity in the tender of any Shares. The Offeror's interpretation of the
terms and conditions of the Offer (including the Letter of Transmittal and the
Instructions to the Letter of Transmittal) will be final and binding on all
parties. No tender of Shares will be deemed to have been validly made until all
defects and irregularities have been cured or waived. None of the Offeror,
Parent, the Dealer Manager, the Depositary, the Information Agent or any other
person will be under any duty to give notification of any defects or
irregularities in tenders or incur any liability for failure to give any such
notification.
Other Requirements. By executing the Letter of Transmittal as set forth
above (including through delivery of an Agent's Message), a tendering
stockholder irrevocably appoints designees of the Offeror as such stockholder's
attorneys-in-fact and proxies, each with full power of substitution, in the
manner set forth in the Letter of Transmittal, to the full extent of such
stockholder's right with respect to the Shares tendered by such stockholder and
accepted for payment by the Offeror (and any and all other Shares or other
securities issued or issuable in respect of such Shares). All such powers of
attorney and proxies shall be considered coupled with an interest in the
tendered Shares. This appointment is effective when, and only to the extent
that, the Offeror accepts for payment the Shares deposited with the Depositary.
Upon acceptance for payment, all prior powers of attorney and proxies given by
the stockholder with respect to such Shares or other securities or rights will,
without further action, be revoked and no subsequent proxies may be given or
written consent executed (and, if given or executed, will not be deemed
effective). The designees of the Offeror will, with respect to the Shares and
other securities or rights, be empowered to exercise all voting and other rights
of such stockholder as they in their sole judgment deem proper in respect of any
annual or special meeting of the Company's stockholders, or any adjournment or
postponement thereof, any actions by written consent in lieu of any such meeting
or otherwise. The Offeror reserves the right to require that, in order for
Shares to be deemed validly tendered, immediately upon the Offeror's payment for
such Shares, the Offeror must be able to exercise full voting and other rights
with respect to such Shares and the other securities or rights issued or
issuable in respect of such Shares, including voting at any meeting of
stockholders (whether annual or special or whether or not adjourned) in respect
of such Shares.
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A tender of Shares pursuant to any one of the procedures described above
will constitute the tendering stockholder's acceptance of the terms and
conditions of the Offer, as well as the tendering stockholder's representation
and warranty that (i) such stockholder has the full power and authority to
tender, sell, assign and transfer the tendered Shares (and any and all other
Shares or other securities issued or issuable in respect of such Shares), and
(ii) when the same are accepted for payment by the Offeror, the Offeror will
acquire good and unencumbered title thereto, free and clear of all liens,
restrictions, charges and encumbrances and not subject to any adverse claims.
The Offeror's acceptance for payment of Shares tendered pursuant to the Offer
will constitute a binding agreement between the tendering stockholder and the
Offeror upon the terms and subject to the conditions of the Offer.
4. WITHDRAWAL RIGHTS.
Except as otherwise provided in this Section 4, tenders of Shares made
pursuant to the Offer are irrevocable. Shares tendered pursuant to the Offer may
be withdrawn at any time prior to the Expiration Date and, unless theretofore
accepted for payment pursuant to the Offer, may also be withdrawn at any time
after December 1, 1997. If purchase of or payment for Shares is delayed for any
reason or if the Offeror is unable to purchase or pay for Shares for any reason,
then, without prejudice to the Offeror's rights under the Offer, tendered Shares
may be retained by the Depositary on behalf of the Offeror and may not be
withdrawn except to the extent that tendering stockholders are entitled to
withdrawal rights as set forth in this Section 4, subject to Rule 14e-1(c) under
the Exchange Act, which provides that no person who makes a tender offer shall
fail to pay the consideration offered or return the securities deposited by or
on behalf of security holders promptly after the termination or withdrawal of
the Offer.
For a withdrawal of Shares tendered pursuant to the Offer to be effective,
a written, telegraphic, telex or facsimile transmission notice of withdrawal
must be timely received by the Depositary at one of its addresses set forth on
the back cover of this Offer to Purchase. Any notice of withdrawal must specify
the name of the person who tendered the Shares to be withdrawn, the number of
Shares to be withdrawn and the name in which the certificates representing such
Shares are registered, if different from that of the person who tendered the
Shares. If certificates for Shares to be withdrawn have been delivered or
otherwise identified to the Depositary, then, prior to the physical release of
such certificates, the serial numbers shown on such certificates must be
submitted to the Depositary and, unless such Shares have been tendered by an
Eligible Institution, the signatures on the notice of withdrawal must be
guaranteed by an Eligible Institution. If Shares have been tendered pursuant to
the procedures for book-entry transfer set forth in Section 3, any notice of
withdrawal must also specify the name and number of the account at the
Book-Entry Transfer Facility to be credited with the withdrawn Shares and must
otherwise comply with such Book-Entry Transfer Facility's procedures. All
questions as to the form and validity (including time of receipt) of notices of
withdrawal will be determined by the Offeror, in its sole discretion, and its
determination will be final and binding on all parties. None of the Offeror,
Parent, the Dealer Manager, the Depositary, the Information Agent or any other
person will be under any duty to give notification of any defects or
irregularities in any notice of withdrawal or incur any liability for failure to
give any such notification.
Any Shares properly withdrawn will be deemed not validly tendered for
purposes of the Offer, but may be retendered at any subsequent time prior to the
Expiration Date by following any of the procedures described in Section 3.
5. CERTAIN FEDERAL INCOME TAX CONSEQUENCES.
The following is a summary of certain United States federal income tax
consequences of the Offer and the Merger to beneficial owners of Shares whose
Shares are purchased pursuant to the Offer or whose Shares are converted to cash
in the Merger. The discussion is for general information only and does not
purport to consider all aspects of federal income taxation that may be relevant
to beneficial owners of Shares. The discussion is based on current provisions of
the Internal Revenue Code of 1986, as amended (the "Code"), existing, proposed
and temporary regulations promulgated thereunder and administrative and judicial
interpretations thereof, all of which are subject to change. The discussion
applies only to beneficial owners of Shares in whose hands Shares are capital
assets within the meaning of Section 1221 of the Code, and may not
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apply to Shares received pursuant to the exercise of employee stock options or
otherwise as compensation, or to certain types of beneficial owners of Shares
(such as insurance companies, tax-exempt organizations and broker-dealers) who
may be subject to special rules. This discussion does not discuss the federal
income tax consequences to a beneficial owner of Shares who, for United States
federal income tax purposes, is a non-resident alien individual, a foreign
corporation, a foreign partnership or a foreign estate or trust, nor does it
consider the effect of any foreign, state or local tax laws.
BECAUSE INDIVIDUAL CIRCUMSTANCES MAY DIFFER, EACH BENEFICIAL OWNER OF
SHARES SHOULD CONSULT SUCH BENEFICIAL OWNER'S OWN TAX ADVISOR TO DETERMINE THE
APPLICABILITY OF THE RULES DISCUSSED BELOW TO SUCH BENEFICIAL OWNER AND THE
PARTICULAR TAX EFFECTS TO SUCH BENEFICIAL OWNER OF THE OFFER AND THE MERGER,
INCLUDING THE APPLICATION AND EFFECT OF STATE, LOCAL AND OTHER TAX LAWS.
The receipt of cash for Shares pursuant to the Offer or the Merger will be
a taxable transaction for federal income tax purposes. In general, for federal
income tax purposes, a beneficial owner of Shares will recognize gain or loss
equal to the difference between the beneficial owner's adjusted tax basis in the
Shares sold pursuant to the Offer or converted to cash in the Merger and the
amount of cash received therefor. Gain or loss must be determined separately for
each block of Shares (i.e., Shares acquired at the same cost in a single
transaction) sold pursuant to the Offer or converted to cash in the Merger. Such
gain or loss will be capital gain or loss and will be long-term capital gain or
loss if the beneficial owner held the Shares for more than one year as of the
date of sale (in the case of the Offer) or the Effective Time (in the case of
the Merger). Long-term capital gain of individuals currently is taxed at a
maximum rate of 20% for capital assets held more than eighteen months, and at a
maximum rate of 28% for capital assets held for eighteen months or less but for
more than twelve months. For capital assets held twelve months or less, capital
gain is taxed at the same rates as ordinary income.
Payments in connection with the Offer or the Merger may be subject to
"backup withholding" at a rate of 31%, unless a beneficial owner of Shares (a)
is a corporation or comes within certain exempt categories and, when required,
demonstrates this fact or (b) provides a correct TIN to the payor, certifies as
to no loss of exemption from backup withholding and otherwise complies with
applicable requirements of the backup withholding rules. A beneficial owner who
does not provide a correct TIN may be subject to penalties imposed by the
Internal Revenue Service. Any amount paid as backup withholding does not
constitute an additional tax and will be creditable against the beneficial
owner's federal income tax liability. Each beneficial owner of Shares should
consult with his or her own tax advisor as to his or her qualification for
exemption from backup withholding and the procedure for obtaining such
exemption. Those tendering their Shares in the Offer may prevent backup
withholding by completing the Substitute Form W-9 included in the Letter of
Transmittal. See Section 3. Similarly, those who convert their Shares into cash
in the Merger may prevent backup withholding by completing a Substitute Form W-9
and submitting it to the paying agent for the Merger.
Parent and the Offeror will be entitled to deduct and withhold from the
consideration otherwise payable pursuant to the Merger Agreement to any holder
of Shares such amounts as Parent or the Offeror is required to deduct and
withhold with respect to the making of such payment. To the extent that amounts
are so withheld by Parent or the Offeror, such withheld amounts shall be treated
for all purposes of the Merger Agreement as having been paid to the holder of
the Shares in respect of which such deduction and withholding was made by Parent
or the Offeror.
6. PRICE RANGE OF SHARES; DIVIDENDS.
The Shares are traded on the NYSE. The following table sets forth for the
periods indicated the high and low sales prices per Share on the NYSE (or on the
Nasdaq National Market for periods prior to June 24, 1997) as reported by the
Company in the Company's Annual Report on Form 10-K for the fiscal year ended
9
<PAGE> 12
January 31, 1997 (the "1996 10-K") with respect to the years ended January 31,
1997 and January 31, 1996, and as reported by published financial sources with
respect to periods after January 31, 1997.
<TABLE>
<CAPTION>
HIGH LOW
---- ---
<S> <C> <C>
Year Ended January 31, 1996:
First Quarter............................................ $ 10 1/2 $ 8 5/8
Second Quarter........................................... 11 1/2 9 1/2
Third Quarter............................................ 10 5/8 9 1/4
Fourth Quarter........................................... 13 3/8 9 5/8
Year Ended January 31, 1997:
First Quarter............................................ $ 12 $ 10
Second Quarter........................................... 11 1/2 8 1/4
Third Quarter............................................ 9 5/8 8 3/8
Fourth Quarter........................................... 10 1/8 6 1/4
Year Ended January 31, 1998:
First Quarter............................................ $ 11 3/4 $ 9
Second Quarter........................................... 13 5/8 9 3/8
Third Quarter (through October 2, 1997).................. 20 1/4 13 7/16
</TABLE>
On September 26, 1997, the last full day of trading prior to the public
announcement of the execution of the Merger Agreement, the closing price per
Share as reported on the NYSE was $20. On October 2, 1997, the last full day of
trading prior to the commencement of the Offer, the closing price per Share as
reported on the NYSE was $18 3/8. STOCKHOLDERS ARE URGED TO OBTAIN CURRENT
MARKET QUOTATIONS FOR THE SHARES.
The Company's Board of Directors declared a quarterly cash dividend of
$.0175 per Share and $.0125 per Class B Share payable on October 3, 1997.
Tendering stockholders who were stockholders of record on September 19, 1997,
will be able to receive and retain such regular quarterly dividend regardless of
when Shares are tendered or accepted for payment pursuant to the Offer.
7. CERTAIN EFFECTS OF THE TRANSACTION.
The purchase of the Shares by the Offeror pursuant to the Offer will reduce
the number of Shares that might otherwise trade publicly and will reduce the
number of holders of Shares, which will adversely affect the liquidity and
market value of the remaining Shares held by stockholders other than the
Offeror. The Company has advised the Offeror that, as of September 26, 1997,
there were approximately 500 holders of record and approximately 3,000
beneficial owners of the Shares.
Market for Shares. Depending upon the number of Shares purchased pursuant
to the Offer, the Shares may no longer meet the requirements of the NYSE for
continued listing on the NYSE. According to NYSE's published guidelines, NYSE
would consider delisting the Shares if, among other things, the number of record
holders of at least 100 Shares were to fall below 1,200, the number of publicly
held Shares (exclusive of holdings of officers, directors, their immediate
families and other concentrated holdings of 10% or more ("NYSE Excluded
Holdings")) should fall below 600,000 or the aggregate market value of publicly
held Shares (exclusive of NYSE Excluded Holdings) should fall below $5,000,000.
If as a result of the purchase of the Shares pursuant to the Offer or otherwise,
the Shares no longer meet the requirements of the NYSE for continued listing and
the Shares are no longer listed, the market for the Shares would be adversely
affected.
In the event that the Shares should no longer be listed or traded on the
NYSE, it is possible that such Shares would continue to trade in the
over-the-counter market and that price quotations would be reported by other
sources. The extent of the public market for such Shares and the availability of
such quotations would, however, depend upon the number of holders of such Shares
remaining at such time, the interest in maintaining a market in Shares on the
part of securities firms, the possible termination of registration of such
Shares under the Exchange Act, as described below, and other factors.
10
<PAGE> 13
Exchange Act Registration. The Shares are currently registered under the
Exchange Act. Such registration may be terminated upon application by the
Company to the Commission if there are fewer than 300 record holders of such
Shares. It is the intention of the Offeror to seek to cause an application for
such termination to be made as soon after consummation of the Offer as the
requirements for termination of registration of such Shares are met. If such
registration were terminated, the Company would no longer legally be required to
disclose publicly in proxy materials distributed to stockholders the information
which it now must provide under the Exchange Act or to make public disclosure of
financial and other information in annual, quarterly and other reports required
to be filed with the Commission under the Exchange Act; the Company would no
longer be subject to Rule 13e-3 under the Exchange Act relating to "going
private" transactions; and the officers, directors and 10% stockholders of the
Company would no longer be subject to the "short-swing" insider trading
reporting and profit recovery provisions of the Exchange Act. Furthermore, if
such registration were terminated, persons holding "restricted securities" of
the Company may be deprived of their ability to dispose of such securities under
Rule 144 or Rule 144A promulgated under the Securities Act of 1933, as amended
(the "Securities Act").
If registration of the Shares is not terminated prior to the Merger, then
the Shares will be delisted from all stock exchanges and the registration of the
Shares under the Exchange Act will be terminated following the consummation of
the Merger.
Margin Regulations. The Shares are currently "margin securities" under the
regulations of the Board of Governors of the Federal Reserve System (the
"Federal Reserve Board"), which has the effect, among other things, of allowing
brokers to extend credit on the collateral of such Shares. Depending upon
factors similar to those described above regarding listing and market
quotations, it is possible that, following the Offer, the Shares would no longer
constitute "margin securities" for the purposes of the margin regulations of the
Federal Reserve Board and therefore could no longer be used as collateral for
loans made by brokers. If registration of Shares under the Exchange Act were
terminated, such Shares would no longer be "margin securities."
8. CERTAIN INFORMATION CONCERNING THE COMPANY.
Except as otherwise set forth herein, the information concerning the
Company contained in this Offer to Purchase, including financial information,
has been furnished by the Company or has been taken from or based upon publicly
available documents and records on file with the Commission and other public
sources. Although neither the Offeror nor Parent has any knowledge that would
indicate that statements contained herein based upon such documents are untrue,
none of the Offeror, Parent and the Dealer Manager assume any responsibility for
the accuracy or completeness of the information concerning the Company or for
any failure by the Company to disclose events which may have occurred or may
affect the significance or accuracy of any such information but which are
unknown to the Offeror, Parent or the Dealer Manager.
The Company is a Georgia corporation with its principal executive offices
located at 2155 Monroe Drive, N.E., Atlanta, Georgia 30324. The Company is
engaged in all aspects of financial and corporate printing, commercial printing,
direct mail printing and other graphic communications.
Set forth below is certain summary consolidated financial data with respect
to the Company excerpted or derived from financial information contained in the
1996 10-K and the Company's Quarterly Reports on Form 10-Q for the quarters
ended April 30, 1997 and July 31, 1997. More comprehensive financial information
is included in such reports and other documents filed by the Company with the
Commission, and the following summary is qualified in its entirety by reference
to such reports and such other documents and all the financial information
(including any related notes) contained therein. Such reports and other
11
<PAGE> 14
documents should be available for inspection and copies thereof should be
obtainable in the manner set forth below.
GRAPHIC INDUSTRIES, INC.
SELECTED CONSOLIDATED FINANCIAL INFORMATION
<TABLE>
<CAPTION>
SIX MONTHS ENDED JULY 31, YEAR ENDED JANUARY 31,
---------------------------- --------------------------------------------
1997 1996 1997 1996 1995
---- ---- ---- ---- ----
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA:
Net sales............... $225,570,076 $215,030,091 $437,107,260 $417,261,697 $348,130,390
Net income (loss)....... 6,825,511 (22,819) 7,280,667(1) 10,630,276 8,405,734
Net income per share
(fully diluted)....... .55 -- .62 .95 .79
Net income per share
(primary)............. .58 -- .62 .98 .80
</TABLE>
- -------------------------
(1) Reflects a $9 million restructuring charge related to the sale of the
Company's direct-mail subsidiary, Graphic Direct, Inc., and the closing of a
commercial printing subsidiary, The Stein Printing Company, Inc. The
after-tax effect of the charge was $6,026,500, or $0.52 per share. Without
the charge, net income would have been $13,307,167 and primary earnings per
share, $1.14.
<TABLE>
<CAPTION>
JULY 31, JANUARY 31,
------------ ------------------------------------------
1997 1997 1996 1995
---- ---- ---- ----
(UNAUDITED)
<S> <C> <C> <C> <C>
BALANCE SHEET DATA:
Total current assets.................. $154,520,362 $144,850,361 $142,475,950 $119,181,058
Total assets.......................... 322,883,904 299,476,296 286,502,712 253,166,270
Total current liabilities............. 59,161,626 60,831,036 58,405,751 73,389,719
Total shareholders' equity............ 114,252,202 102,560,981 93,615,164 74,901,850
</TABLE>
The Company is subject to the informational requirements of the Exchange
Act and in accordance therewith files periodic reports, proxy statements and
other information with the Commission relating to its business, financial
condition and other matters. The Company is required to disclose in such proxy
statements certain information, as of particular dates, concerning the Company's
directors and officers, their remuneration, stock options granted to them, the
principal holders of the Company's securities and any material interests of such
persons in transactions with the Company. Such reports, proxy statements and
other information may be inspected at the public reference facilities maintained
by the Commission at Room 1024, 450 Fifth Street, N.W., Washington, D.C. 20549,
and at the regional offices of the Commission located at Seven World Trade
Center, 13th Floor, New York, New York 10048 and Citicorp Center, 500 West
Madison Street, Suite 1400, Chicago, Illinois 60661. Copies of such material may
also be obtained at prescribed rates from the Public Reference Section of the
Commission, 450 Fifth Street, N.W., Washington, D.C. 20549. The Commission also
maintains a World Wide Web site on the internet at http://www.sec.gov that
contains reports and other information regarding registrants that file
electronically with the Commission. Such material may also be inspected at the
offices of the NYSE, 20 Broad Street, New York, New York 10005.
Certain Company Projections. To the knowledge of Parent and the Offeror,
the Company does not as a matter of course make public forecasts as to its
future financial performance. However, in connection with the preliminary
discussions concerning the feasibility of the Offer and the Merger, the Company
prepared and furnished Parent with certain financial projections. This
information included projections for the fiscal year ending January 31, 1998 of
(i) revenues of $464,832,000, (ii) net income of $15,808,000 and (iii) earnings
per share of $1.28 per share (collectively, the "Projections"). The Projections
have not been adjusted to reflect the effects of the Offer or the Merger or the
anticipated changes in the debt structure of the Company. The Projections should
be read together with the other information contained in this Section 8.
THE PROJECTIONS WERE NOT PREPARED WITH A VIEW TO PUBLIC DISCLOSURE OR
COMPLIANCE WITH THE PUBLISHED GUIDELINES OF THE COMMISSION OR THE GUIDELINES
ESTABLISHED BY THE AMERICAN INSTITUTE OF CERTIFIED PUBLIC ACCOUNTANTS REGARDING
PROJECTIONS OR FORECASTS AND ARE INCLUDED HEREIN ONLY BECAUSE SUCH INFORMATION
WAS
12
<PAGE> 15
PROVIDED TO PARENT. THESE FORWARD-LOOKING STATEMENTS ARE SUBJECT TO CERTAIN
RISKS AND UNCERTAINTIES THAT COULD CAUSE ACTUAL RESULTS TO DIFFER MATERIALLY
FROM THE PROJECTIONS. THE PROJECTIONS REFLECT NUMEROUS ASSUMPTIONS, ALL MADE BY
MANAGEMENT OF THE COMPANY, WITH RESPECT TO INDUSTRY PERFORMANCE, GENERAL
BUSINESS, ECONOMIC, MARKET AND FINANCIAL CONDITIONS AND OTHER MATTERS INCLUDING
ASSUMED INTEREST EXPENSE AND EFFECTIVE TAX RATES CONSISTENT WITH HISTORICAL
LEVELS FOR THE COMPANY, ALL OF WHICH ARE DIFFICULT TO PREDICT, MANY OF WHICH ARE
BEYOND THE COMPANY'S CONTROL AND NONE OF WHICH WERE SUBJECT TO APPROVAL BY
PARENT OR THE OFFEROR. ACCORDINGLY, THERE CAN BE NO ASSURANCE THAT THE
ASSUMPTIONS MADE IN PREPARING THE PROJECTIONS WILL PROVE ACCURATE, AND ACTUAL
RESULTS MAY BE MATERIALLY DIFFERENT FROM THOSE CONTAINED IN THE PROJECTIONS. THE
INCLUSION OF THE PROJECTIONS HEREIN SHOULD NOT BE REGARDED AS AN INDICATION THAT
ANY OF PARENT, THE OFFEROR, THE COMPANY OR THEIR RESPECTIVE FINANCIAL ADVISORS
CONSIDERED OR CONSIDER THE PROJECTIONS TO BE A RELIABLE PREDICTION OF FUTURE
EVENTS, AND THE PROJECTIONS SHOULD NOT BE RELIED UPON AS SUCH. NONE OF PARENT,
THE OFFEROR, THE COMPANY AND THEIR RESPECTIVE FINANCIAL ADVISORS ASSUMES ANY
RESPONSIBILITY FOR THE VALIDITY, REASONABLENESS, ACCURACY OR COMPLETENESS OF THE
PROJECTIONS. NONE OF PARENT, THE OFFEROR, THE COMPANY AND ANY OF THEIR FINANCIAL
ADVISORS HAS MADE, OR MAKES, ANY REPRESENTATION TO ANY PERSON REGARDING THE
INFORMATION CONTAINED IN THE PROJECTIONS AND NONE OF THEM INTENDS TO UPDATE OR
OTHERWISE REVISE THE PROJECTIONS TO REFLECT CIRCUMSTANCES EXISTING AFTER THE
DATE WHEN MADE OR TO REFLECT THE OCCURRENCE OF FUTURE EVENTS EVEN IN THE EVENT
THAT ANY OR ALL OF THE ASSUMPTIONS UNDERLYING THE PROJECTIONS ARE SHOWN TO BE IN
ERROR.
9. CERTAIN INFORMATION CONCERNING PARENT AND THE OFFEROR.
The Offeror is a newly incorporated Georgia corporation. To date, the
Offeror has not conducted any business other than that incident to its
formation, the execution and delivery of the Merger Agreement and the
Stockholder Agreement and the commencement of the Offer. Accordingly, no
meaningful financial information with respect to the Offeror is available. The
Offeror is a wholly owned subsidiary of Parent. The principal executive office
of the Offeror is located at 2275 Cabot Drive, Lisle, Illinois 60532.
Parent, a Delaware corporation, has its principal executive office at 2275
Cabot Drive, Lisle, Illinois 60532. Parent is engaged predominantly in the
computer services and supply industry and sells a broad line of products and
services, including business forms, commercial and promotional graphics
printing, computer labels, machine ribbons, computer hardware and software,
computer accessories, office products and electronic forms.
Set forth below is certain summary consolidated financial data with respect
to Parent excerpted or derived from financial information contained in Parent's
Annual Report on Form 10-K for the year ended July 31, 1996 and Parent's
Quarterly Reports on Form 10-Q for the quarters ended October 31, 1996, January
31, 1997 and April 30, 1997. More comprehensive financial information is
included in such reports and other documents filed by Parent with the
Commission, and the following summary is qualified in its entirety by reference
to such reports and such other documents and all the financial information
(including any related notes) contained therein.
WALLACE COMPUTER SERVICES, INC.
SELECTED CONSOLIDATED FINANCIAL INFORMATION
<TABLE>
<CAPTION>
NINE MONTHS ENDED
APRIL 30, YEAR ENDED JULY 31,
------------------- ------------------------------
1997 1996 1996 1995 1994
---- ---- ---- ---- ----
(UNAUDITED)
(IN THOUSANDS OF DOLLARS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA:
Net sales................................. $672,038 $647,745 $862,287 $712,838 $588,773
Net income................................ 62,002 53,799 72,999 55,297 47,931(1)
Net income per share...................... 1.43 1.18 1.60 1.23 1.08(1)
Net dividends per share................... .42 .3225 .43 .37 .32
</TABLE>
- -------------------------
(1) After cumulative effect of accounting changes for adoption of Financial
Accounting Standards Board Nos. 106 and 109.
13
<PAGE> 16
<TABLE>
<CAPTION>
APRIL 30, JULY 31,
--------- ------------------------------
1997 1996 1995 1994
---- ---- ---- ----
(UNAUDITED)
(IN THOUSANDS OF DOLLARS)
<S> <C> <C> <C> <C>
BALANCE SHEET DATA:
Total current assets...................... $271,625 $304,108 $258,872 $248,226
Total assets.............................. 676,148 695,850 592,702 538,592
Total current liabilities................. 114,629 97,870 65,722 64,794
Long-term debt............................ 23,500 30,600 25,600 23,500
Total stockholders' equity................ 478,283 510,443 456,118 410,139
</TABLE>
Parent is subject to the informational requirements of the Exchange Act and
in accordance therewith files periodic reports and other information with the
Commission relating to its business, financial condition and other matters. Such
reports and other information are available for inspection and copying at the
offices of the Commission in the same manner as set forth with respect to the
Company in Section 8. Such material may also be inspected at the offices of the
NYSE, 20 Broad Street, New York, New York 10005.
The name, citizenship, business address, present principal occupation and
material positions held during the past five years of each of the directors and
executive officers of Parent and the Offeror are set forth in Annex I to this
Offer to Purchase.
Except as described in this Offer to Purchase, none of the Offeror, Parent,
or to the best knowledge of the Offeror or Parent, any of the persons listed in
Annex I hereto, owns or has any right to acquire any Shares or Class B Shares
and none of them has effected any transaction in the Shares or Class B Shares
during the past 60 days.
Except as set forth in this Offer to Purchase, none of the Offeror, Parent
or, to the best knowledge of the Offeror or Parent, any of the persons listed in
Annex I hereto, has any contract, arrangement, understanding or relationship
with any other person with respect to any securities of the Company, including,
but not limited to, any contract, arrangement, understanding or relationship
concerning the transfer or the voting of any such securities, joint ventures,
loan or option arrangements, puts or calls, guaranties of loans, guaranties
against loss or the giving or withholding of proxies. Except as set forth in
this Offer to Purchase, there have been no contacts, negotiations or
transactions between the Offeror or Parent, or, to the best of their knowledge,
any of the persons listed in Annex I hereto, on the one hand, and the Company or
its affiliates, on the other hand, concerning a merger, consolidation or
acquisition, a tender offer or other acquisition of securities, an election of
directors or a sale or other transfer of a material amount of assets. Except as
described in this Offer to Purchase, none of the Offeror, Parent or, to the best
knowledge of Parent or the Offeror, any of the persons listed in Annex I hereto,
has had any transaction with the Company or any of its executive officers,
directors or affiliates that would require disclosure under the rules and
regulations of the Commission applicable to the Offer.
10. SOURCE AND AMOUNT OF FUNDS.
The Offeror estimates that the total amount of funds required to acquire
the Shares and Class B Shares pursuant to the Offer, the Merger and the
Stockholder Agreement (exclusive of related fees and expenses) will be
approximately $268,000,000 (assuming the exercise of all outstanding options and
the conversion of the Convertible Debentures into Shares).
Parent has received a written financing commitment (the "Commitment
Letter") from Bank of America NT&SA ("BofA") for an unsecured credit facility in
the aggregate principal amount of $500,000,000 (the "Credit Facility"). Although
BofA has committed to provide the entire Credit Facility, BofA expects to
assemble a syndicate of financial institutions (the "Lenders") prior to or
promptly after the initial funding under the Credit Facility. The terms of the
definitive agreement providing for the Credit Facility (the "Loan Agreement")
have not yet been finalized. The following is a summary of the anticipated
principal terms of the Credit Facility based upon the Commitment Letter. This
summary is subject to finalizing of the Loan Agreement and is qualified in its
entirety by reference to the Commitment Letter, which is filed as an exhibit to
the Schedule 14D-1 of which this Offer to Purchase is an exhibit.
14
<PAGE> 17
The Credit Facility will consist of a revolving loan facility under which
loans may be borrowed, repaid and reborrowed by Parent from time to time for the
purpose of providing funds to consummate the Offer and the Merger, to refinance
certain indebtedness, to pay certain fees and expenses incurred in connection
with the Offer and the Merger and to provide working capital and for other
general corporate purposes. The Credit Facility will mature in five years and
will have no scheduled amortization.
Borrowings under the Credit Facility will bear interest at a floating rate
based upon, at Parent's option (i) the higher of BofA's reference rate or the
Federal Funds rate plus 0.50% per annum, or (ii) the London Interbank Offered
Rate ("LIBOR") plus .175% to .30% per annum, depending on the Parent's ratio of
total funded indebtedness to EBITDA. In addition, Parent will have a competitive
advance option under the Credit Facility which will allow it to request
uncommitted advances from the Lenders at competitive rates on an auction basis.
A facility fee will accrue on the total Credit Facility regardless of usage at a
rate ranging from 0.075% to 0.15% per annum, depending upon Parent's ratio of
total funded indebtedness to EBITDA. Parent will also pay BofA underwriting and
administration fees, reimburse certain expenses and provide certain indemnities,
all of which Parent believes to be customary for commitments of this type.
The Loan Agreement will contain conditions precedent, representations and
warranties, covenants (including financial covenants), events of default and
other provisions customary for such financings.
BofA's commitment to provide the Credit Facility is conditioned on, among
other things: the signing of the Loan Agreement on or before November 14, 1997;
the absence of a material adverse change in the operations, business, properties
or condition (financial or otherwise) or prospects of Parent and any of its
subsidiaries, taken as a whole; the absence of any material change in loan
syndication conditions which would affect BofA's syndication efforts in respect
of the Credit Facility; the absence of any competing offering, placement or
arrangement of any debt securities or bank financing by or on behalf of Parent;
and other conditions customary for such financings.
It is anticipated that the indebtedness incurred through borrowings under
the Credit Facility will be repaid from funds generated internally by Parent and
its subsidiaries, including the Company and its subsidiaries, and from other
sources that may include the proceeds of the private or public sale of debt or
equity securities. No final decisions have been made concerning the method
Parent will employ to repay such indebtedness. Such decisions when made will be
based on Parent's review from time to time of the advisability of particular
actions, as well as on prevailing interest rates and financial and other
economic conditions.
11. BACKGROUND OF THE OFFER; PAST CONTACTS, TRANSACTIONS OR NEGOTIATIONS WITH
THE COMPANY.
In November 1996, Mark C. Pope III (the "Selling Stockholder" or "Mr.
Pope"), the Company's largest stockholder, received a letter from another
publicly-owned printing company proposing that the Company and such other
printing company enter into discussions regarding an acquisition of the Company.
Such letter was accompanied by a financial analysis prepared by such other
company's financial advisor reflecting several possible business combinations
with the Company, involving consideration consisting of stock of such other
company or various combinations of cash and such stock. Mr. Pope had several
discussions with such other company, but no formal offer materialized and the
discussions were terminated on April 16, 1997.
On January 14, 1997, Mr. Pope met with Ronald J. Wareham, of R.J. Wareham &
Company, Incorporated (the "Wareham Company"), concerning the possible
engagement of the Wareham Company by the Company as its financial advisor. On
January 21, 1997, a meeting was held between Mr. Pope, Mr. Wareham and Carter D.
Pope concerning the possible purchase by Carter D. Pope of Atlanta Blue Print
Co. and Imaging Technologies Services, Inc., wholly-owned subsidiaries of the
Company (collectively "ITS"). Carter D. Pope is President of ITS and a member of
the Board of Directors of the Company. No further action was taken with respect
to that possible purchase of such companies until September 1997.
On January 15, 1997, a Financial Advisory Agreement with the Wareham
Company was entered into by the Company pursuant to which the Wareham Company
was engaged as financial advisor to the Company.
15
<PAGE> 18
Included among the services to be provided by the Wareham Company was its
agreement to contact possible purchasers of the Company to determine the nature
and extent of any interest that they might have in acquiring the Company.
Subsequent meetings between Mr. Pope and Mr. Wareham were held on February 5 and
February 18, 1997 to identify possible purchasers of the Company. As agreed upon
between Mr. Pope and Mr. Wareham, the Wareham Company contacted a number of
companies by letter and/or telephone to determine whether any of such companies
would be interested in pursuing discussions with the Company concerning an
acquisition of the Company. A total of six companies in the printing or related
industries and eight financial buyers were contacted on behalf of the Company by
or through the Wareham Company between February 13, 1997 and May 21, 1997.
Except for the financial buyer referred to below, the companies or firms
contacted by the Wareham Company expressed a lack of interest in pursuing
discussions with the Company. In addition, Mr. Wareham contacted a major
investment banking firm about a possible leveraged recapitalization of the
Company. Mr. Wareham, Mr. Pope and Carter D. Pope met with such firm on May 21,
1997, but such transaction was not pursued further because, among other things,
Mr. Pope would have been required to leave a substantial amount of equity in the
Company and to manage a highly-leveraged company.
The Wareham Company initially contacted Parent by letter dated May 5, 1997
to Robert J. Cronin, Chief Executive Officer of Parent, inquiring if Parent
would be interested in discussing a possible business combination with the
Company. On or about May 12, 1997, Michael T. Leatherman, Senior Vice President
and Chief Information Officer of Parent, telephoned Mr. Wareham to express
preliminary interest in a transaction with the Company and to schedule a meeting
with Mr. Wareham and Mr. Pope.
The initial meeting between the Company and Parent occurred on June 5,
1997, at which time Mr. Pope and Mr. Wareham met with Mr. Cronin and Mr.
Leatherman. During that meeting the persons present discussed the Company's
operations and Parent's current strategy for expanding its commercial printing
operations through acquisitions. On June 12, 1997, Mr. Leatherman provided to
Mr. Wareham a preliminary list of information that Parent desired in connection
with its review of the Company. A Confidentiality Agreement was entered into
between the Company and Parent on July 3, 1997, and an information package
concerning the Company was provided to Parent in mid-July.
On June 27, July 28 and July 31, 1997, the Company held a series of
meetings with a potential financial buyer of the Company, and a proposal to
acquire control of the Company in a leveraged buy-out was received from such
financial buyer by the Company on July 31, 1997. However, after consultation
with Mr. Wareham and others, such proposal was deemed unacceptable by Mr. Pope
because, among other things, the price was deemed inadequate and the proposal
was highly conditional. Such proposal was not pursued further by Mr. Pope and
Mr. Wareham.
A meeting with Mr. Leatherman, Mr. Pope, John R. Pope, President of one of
the Company's subsidiaries and a member of the Board of Directors of the
Company, and Mr. Wareham was held in Atlanta on August 12, 1997. At this
meeting, the parties discussed the structure of a possible transaction, the
recent movement in the price for the Shares, and the general operations of the
Company. Mr. Pope indicated that, as noted above, a financial buyer had
expressed possible interest in acquiring the Company for a price in the range of
$15 to $16 per Share. Mr. Pope indicated that he believed a higher price was
more appropriate. The parties took note of the recent increases in market prices
for the Shares, and Mr. Leatherman indicated that Parent would consider a price
at or near $17.50 per Share. At the conclusion of this meeting, Mr. Leatherman
requested additional information concerning the Company.
A further meeting between the Company and Parent occurred on August 19,
1997 among Mr. Cronin, Mr. Leatherman, Mr. Pope, John R. Pope and Carter D.
Pope, at which time further discussions were held, although no specific proposal
was made or price agreed upon. This meeting was held at Parent's headquarters
and included visits to certain of Parent's operations in the Chicago area.
On August 21, 1997, telephone discussions concerning the increase in market
price for the Shares and announcement of recent acquisitions by the Company were
held among Mr. Pope, Mr. Benatar, Mr. Cronin
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and Mr. Leatherman, and on August 25, 1997, the Company sent Parent additional
information concerning recent acquisitions made by the Company.
On August 28, 1997, a meeting was held at Parent's headquarters among Mr.
Cronin, Mr. Leatherman, other representatives of Parent, representatives of
Smith Barney, financial advisor to Parent, Mr. Pope, John R. Pope, Mr. Benatar
and Mr. Wareham. At this meeting, the parties discussed the possibility of a
cash tender offer for the Company by Parent, and a price of $18.50 per Share was
mentioned as a price which Parent might be willing to pay for the Company,
assuming satisfactory completion of due diligence and negotiation of a
satisfactory Merger Agreement and an agreement with Mr. Pope covering a portion
of his Shares and Class B Shares. At this meeting the parties did not agree on
the number of Shares or Class B Shares of Mr. Pope to be covered by the
agreement with Mr. Pope. On September 4, 1997, Mr. Leatherman met with certain
members of the Company's management in Atlanta, at which time he was given the
opportunity to learn more about the Company's operations and how they might be
integrated with Parent's operations.
On August 29, 1997, the Company engaged Interstate/Johnson Lane for
purposes of rendering an opinion with respect to the fairness, from a financial
point of view, of the consideration to be received by the stockholders of the
Company, in a possible acquisition transaction with Parent.
During the week of September 9, 1997, Mr. Leatherman, various other members
of Parent's management, and representatives of Smith Barney held additional
meetings with the Company's management in Atlanta and members of Parent's
management also visited the Company's plants in Houston, Philadelphia and
Boston. Mr. Benatar and Mr. Leatherman also met on September 9 and 11, 1997
during Mr. Leatherman's visit to Atlanta and discussed various matters regarding
the Company, its fit with Parent and conditions in the printing industry
generally. In addition, management of Parent, representatives of Smith Barney,
Sidley & Austin, legal counsel to Parent and Arthur Andersen LLP, the
independent accountants of Parent, reviewed certain information provided by the
Company in a data room in the Atlanta offices of Powell, Goldstein, Frazer &
Murphy LLP, legal counsel to the Company, and at a data room in the Atlanta
offices of Ernst & Young LLP, independent accountants of the Company.
On September 12, 1997, Sidley & Austin provided drafts of a Merger
Agreement and Stockholder Agreement to the Company and to Powell, Goldstein,
Frazer & Murphy LLP, counsel for the Company and Mr. Pope. On September 18 and
19, 1997, representatives of Sidley & Austin and Powell, Goldstein, Frazer &
Murphy LLP conducted telephonic discussions concerning the terms of the proposed
Merger Agreement and Stockholder Agreement. On September 20, 1997, Sidley &
Austin delivered revised drafts of the Merger Agreement and Stockholder
Agreement to the Company, Mr. Pope and their legal counsel.
On September 19, 1997, Mr. Benatar and Mr. Leatherman and legal counsel to
the Company and Parent had telephone conversations concerning the sale of ITS to
Carter D. Pope and the proposed terms of such sale. Mr. Leatherman advised that
the businesses conducted by ITS are not consistent with the long term strategic
objectives of Parent as they relate to its acquisition of the Company and stated
that Parent had no objection to the sale of ITS as proposed.
On September 24, 1997, at the regular quarterly meeting of the Board of
Directors of the Company, Mr. Pope advised the members of the Board of the
discussions to date with Parent and the possible terms of an acquisition of the
Company by Parent. Representatives of Interstate/Johnson Lane delivered their
verbal opinion as to the fairness, from a financial point of view, to the
holders of Shares of the consideration proposed to be paid to them. Carter D.
Pope also expressed his continuing interest in acquiring ITS from the Company,
conditioned upon the acquisition of the Company by Parent, and offered to enter
into a contract to that effect. After consultation with its financial and legal
advisors, the Board determined that it was in the best interests of the
stockholders for discussions to continue with Parent and agreed to meet again on
September 28, 1997.
On September 25, 1997, Croft & Bender LLC was engaged by the Company to
render a fairness opinion with respect to the fairness, from a financial point
of view, to the Company of the consideration to be received by the Company from
the sale of ITS. Representatives of Croft & Bender LLC met on September 25 and
26, 1997,with Carter D. Pope and other representatives of ITS and with
representatives of the Company to obtain
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information necessary for them to render their opinion, which was delivered to
the Company on September 28, 1997. Croft & Bender LLC stated in their opinion
that the consideration to be received by the Company from the sale of ITS is
fair, from a financial point of view, to the Company.
On September 25, 1997, members of Parent's management conducted additional
visits to certain of the Company's plants.
On September 26 and 27, 1997, members of management of the Company,
including presidents of the Company's operating subsidiaries, met with members
of management of Parent in Chicago to discuss how the operations of each of the
Company and Parent might be integrated. Final terms of the Merger Agreement and
the Stockholder Agreement were negotiated between legal counsel for the Company
and Parent. On September 27, 1997, Parent conveyed a written offer to the
Company, offering to enter into the proposed Merger Agreement and Stockholder
Agreement.
On September 28, 1997, the Board of Directors of the Company met and, with
the advice of legal counsel, considered the written offer from Parent to acquire
the Company pursuant to the Offer and the Merger. The Board also received and
considered the written opinion of Interstate/Johnson Lane with respect to the
Offer and the Merger and the written opinion of Croft & Bender LLC with respect
to the sale of ITS. Mr. Pope advised the Board of the final terms of the
Stockholder Agreement. The terms of the Merger Agreement, the Stockholder
Agreement and the Stock Purchase Agreement between the Company and Carter D.
Pope (the "Stock Purchase Agreement") providing for the sale of ITS were
reviewed with the Board by legal counsel to the Company. Following a number of
questions from, and discussions among, the directors, the Board of Directors of
the Company (i) approved and adopted the Merger Agreement and determined that
the Offer and the Merger considered as a whole are fair to and in the best
interests of the Company and its stockholders, (ii) recommended that the
Company's stockholders tender their Shares in the Offer and approve and adopt
the Merger Agreement and the Merger, and (iii) approved the Stock Purchase
Agreement (as defined below) providing for the sale of ITS.
On September 28, 1997, immediately following the meeting of the Board of
Directors, the Merger Agreement and the Stockholder Agreement were executed and
delivered by the parties thereto. The Stock Purchase Agreement was also executed
and delivered. An announcement concerning the Offer and the Merger was made on
September 28, 1997. The terms of the Merger Agreement and the Stockholder
Agreement are described more fully in Section 13.
12. PURPOSE OF THE OFFER AND THE MERGER; PLANS FOR THE COMPANY.
The purpose of the Offer, the Merger, the Merger Agreement and the other
transactions contemplated thereby is to enable Parent to acquire control of, and
the entire equity interest in, the Company.
In order to effect the Merger, the GBCC and the Amended and Restated
Articles of Incorporation of the Company (the "Charter") require the holders of
a majority of the Shares to approve the Merger Agreement, (following the
adoption of the Merger Agreement by the Board of Directors of the Company, which
the Board of Directors effected by unanimous resolution on September 28, 1997).
If the Offeror acquires, through the Offer, the Stockholder Agreement or
otherwise, a majority of the outstanding Shares and Class B Shares (which would
be the case if the Offeror were to accept for payment Shares tendered pursuant
to the Offer and the Offeror were to purchase the Shares and Class B Shares so
contemplated by the Stockholder Agreement), it would have sufficient voting
power to effect the Merger without the vote of any other stockholder of the
Company.
Pursuant to the Merger Agreement, the Company has agreed that, as soon as
practicable following the expiration of the Offer, it will call and hold a
meeting of stockholders for the purpose of obtaining the stockholder approval of
the Merger Agreement. Parent has agreed that all Shares owned by the Offeror or
any other subsidiary of Parent will be voted in favor of approval of the Merger
Agreement. The meeting of stockholders shall be held as soon as practicable
following the purchase of Shares pursuant to the Offer.
Appraisal Rights. No appraisal rights are available in connection with the
Offer. However, if the Merger is consummated, stockholders of the Company will
have certain rights under the GBCC to dissent and
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demand appraisal of, and to receive payment in cash for the fair value of, their
Shares. Such rights to dissent, if the statutory procedures are complied with,
could lead to a judicial determination of the fair value of the Shares
(excluding any appreciation or depreciation in anticipation of the Merger)
required to be paid in cash to such dissenting holders of their Shares. In
addition, such dissenting stockholders may be entitled to receive payment of a
fair rate of interest from the date of consummation of the Merger on the amount
determined to be the fair value of their Shares. In determining the fair value
of the Shares, a Georgia court could take into account all relevant factors.
Accordingly, such determination could be based upon considerations other than,
or in addition to, the market value of the Shares, including, among other
things, asset values and earning capacity.
Rule 13e-3. The Commission has adopted Rule 13e-3 under the Exchange Act
which is applicable to certain "going private" transactions and which may, under
certain circumstances, be applicable to the Merger or another business
combination in which the Offeror seeks to acquire the remaining Shares not held
by it following the purchase of Shares pursuant to the Offer. The Offeror
believes, however, that Rule 13e-3 will not be applicable to the Merger if the
Merger is consummated within one year after the termination of the Offer at the
Offer Price. If applicable, Rule 13e-3 requires, among other things, that
certain financial information concerning the Company and certain information
relating to the fairness of the proposed transaction and the consideration
offered to minority stockholders in such transaction be filed with the
Commission and disclosed to stockholders prior to consummation of the
transaction.
Plans for the Company. Parent will continue to evaluate the business and
operations of the Company during the pendency of the Offer and after the
consummation of the Offer and the Merger. Parent intends to seek additional
information about the Company during this period. Thereafter, Parent intends to
review such information as part of a comprehensive review of the Company's
business, operations, capitalization and management with a view to optimizing
the Company's potential contribution to Parent's business.
Except as indicated in this Offer to Purchase, Parent does not have any
current plans or proposals which relate to or would result in any of the
following: an extraordinary corporate transaction, such as a merger,
reorganization or liquidation involving the Company or any of its subsidiaries;
a sale or transfer of a material amount of assets of the Company or any of its
subsidiaries; any change in the present Board of Directors or management of the
Company; any material change in the Company's present capitalization or dividend
policy; or any other material change in the Company's corporate structure or
business. Notwithstanding the foregoing, promptly after the Offeror acquires a
majority of the combined voting power of the Shares and the Class B Shares, the
Offeror will be entitled to designate such number of directors on the Board of
Directors of the Company as will give the Offeror a majority of such directors.
In addition, assuming the designation of directors as aforesaid and so long as
there are holders of Shares other than Parent or any of its subsidiaries, Parent
expects that the Board of Directors would not declare dividends on the Shares.
13. THE MERGER AGREEMENT AND THE STOCKHOLDER AGREEMENT.
The following summary of certain provisions of the Merger Agreement and the
Stockholder Agreement, copies of which are filed as exhibits to the Schedule
14D-1, is qualified in its entirety by reference to the text of the Merger
Agreement and the Stockholder Agreement.
The Merger Agreement
The Offer. The Offeror commenced the Offer in accordance with the terms of
the Merger Agreement. Each of the Company, Parent and the Offeror have agreed to
use its reasonable best efforts to take, or cause to be taken, all actions
necessary to comply promptly with all legal requirements that may be imposed on
itself with respect to the Offer and the Merger and shall promptly cooperate
with and furnish information to each other in connection with any such
requirements imposed upon any of them in connection with the Offer and the
Merger. Each of the Company, Parent and the Offeror shall, and shall cause its
subsidiaries to, use its reasonable best efforts to take all reasonable actions
necessary to obtain (and shall cooperate with each other in obtaining) any
consent, authorization, order or approval of, or any exemption by, any
governmental entity or other public or private third party required to be
obtained or made by Parent, the Offeror or the Company or
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any of their subsidiaries in connection with the Offer and the Merger or the
taking of any action contemplated thereby or by the Merger Agreement, except
that no party need waive any substantial rights or agree to any substantial
limitation on its operations or to dispose of any assets.
The Merger. The Merger Agreement provides that, upon the terms and subject
to the conditions of the Merger Agreement, and in accordance with the GBCC, the
Offeror shall be merged with and into the Company at the Effective Time.
Following the Merger, the separate corporate existence of the Offeror shall
cease and the Company shall continue as the Surviving Corporation and shall
succeed to and assume all the rights and obligations of the Offeror and the
Company in accordance with the GBCC. At the Effective Time, the Charter of the
Company and the By-laws of the Offeror shall be the Charter and By-Laws of the
Surviving Corporation, respectively. The directors of the Offeror shall become
the directors of the Surviving Corporation and the officers of the Company shall
become the officers of the Surviving Corporation. At the option of Parent, at
any time prior to the Effective Time, the Parent may require that the Merger
Agreement be amended to provide for a merger of the Company with and into the
Offeror.
Conversion of Securities. As of the Effective Time, by virtue of the Merger
and without any action on the part of the Offeror, the Company or the holders of
any securities of the Offeror or the Company, each Share (other than Shares
owned by the Company, any subsidiary of the Company, Parent, the Offeror, any
other subsidiary of Parent or by stockholders, if any, who are entitled to and
who properly exercise appraisal rights under the GBCC) shall be converted into
the right to receive from the Surviving Corporation, in cash, without interest,
the Offer Price. Each share of stock of the Offeror issued and outstanding
immediately prior to the Effective Time shall, at the Effective Time, by virtue
of the Merger and without any action on the part of the holder of any shares of
stock of the Offeror, be converted into and become one fully paid and
nonassessable shares of common stock, $.10 par value, of the Surviving
Corporation.
Representations and Warranties. In the Merger Agreement, the Company has
made customary representations and warranties to Parent and the Offeror. The
representations and warranties of the Company relate, among other things, to:
its organization and qualification; subsidiaries; capital structure; authority
to enter into the Merger Agreement and to consummate the transactions
contemplated thereby; required consents and approvals; filings made by the
Company with the Commission under the Securities Act or the Exchange Act
(including financial statements included in the documents filed by the Company
under these acts); absence of any material adverse change; compliance with laws;
tax matters; liabilities; benefit plans and employees and employment practices;
litigation; environmental matters; state takeover statutes; and intellectual
property related matters.
The Offeror and Parent have also made customary representations and
warranties to the Company. Representations and warranties of the Offeror and
Parent relate, among other things, to their organization and authority to enter
into the Merger Agreement and to consummate the transactions contemplated
thereby and required consents and approvals.
Covenants Relating to the Conduct of Business. During the period from the
date of the Merger Agreement to such time as Parent's designees shall constitute
a majority of the Board of Directors of the Company, the Company has agreed as
to itself and its subsidiaries that, except as otherwise expressly contemplated
or permitted by the Merger Agreement or except to the extent Parent shall
otherwise consent in writing:
(a) the Company shall, and shall cause its subsidiaries to, carry on
their respective businesses in the usual, regular and ordinary course in
substantially the same manner as theretofore conducted and shall use all
reasonable best efforts to preserve intact their present business
organizations, keep available the services of their present officers and
employees and preserve their relationships with customers, suppliers and
others having business dealings with the Company and its subsidiaries;
(b) the Company shall not, and shall not permit its subsidiaries to,
(x) declare or pay any dividends on or make any other distributions in
respect of its capital stock (other than regular quarterly cash dividends
not in excess of $.07 per Share or $.05 per Class B Share with usual record
and payment dates and in accordance with the Company's present dividend
policy) except for dividends by a direct or
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indirect wholly owned subsidiary of the Company to its parent, (y) split,
combine or reclassify any of its capital stock or issue or authorize or
propose the issuance of any other securities in respect of, in lieu of or
in substitution for shares of its capital stock, or (z) repurchase, redeem
or otherwise acquire any shares of its capital stock or those of any
subsidiary or any other securities thereof or any rights, warrants or
options to acquire any such shares or other securities;
(c) the Company shall not, and shall not permit its subsidiaries to,
issue, deliver, sell, pledge, or encumber, or authorize or propose the
issuance, delivery, sale, pledge or encumbrance of, any shares of its
capital stock or any securities convertible into, or any rights, warrants,
calls, subscriptions or options to acquire, any such shares or convertible
securities, or any other ownership interest (including stock appreciation
rights or phantom stock) other than (i) the issuance of Shares upon the
exercise of stock options pursuant to Stock-Based Compensation Plans (as
defined herein) outstanding on the date of the Merger Agreement and in
accordance with the terms of such stock options, (ii) the issuance of
Shares upon the conversion of Class B Shares, and (iii) the issuance of
Shares upon the conversion of the Convertible Debentures;
(d) the Company shall not, and shall not permit any of its
subsidiaries to, amend or propose to amend its charter or by-laws or other
similar organizational documents;
(e) except as disclosed by the Company to Parent on the date of the
Merger Agreement, the Company shall not, and shall not permit any of its
subsidiaries to, acquire or agree to acquire (i) by merging or
consolidating with, or by purchasing a substantial equity interest in or
substantial portion of the assets of, or by any other manner, any business
or any corporation, partnership, joint venture, limited liability company,
association or other business organization or division thereof or (ii) any
assets having a purchase price in excess of $1,000,000, individually, or
$5,000,000, in the aggregate, except purchases of inventory in the ordinary
course of business consistent with past practice and expenditures
consistent with the Company's current capital budget previously furnished
to Parent;
(f) except as disclosed by the Company to Parent as of the date of the
Merger Agreement and other than sales of its products to customers and
immaterial dispositions of personal property, in each case in the ordinary
course of business consistent with past practice, the Company shall not,
and shall not permit any of its subsidiaries to, sell, lease, license,
encumber or otherwise dispose of, or agree to sell, lease, encumber or
otherwise dispose of, any of its assets;
(g) the Company shall not, and shall not permit any of its
subsidiaries to, incur any indebtedness for borrowed money or guarantee any
such indebtedness or issue or sell any debt securities or warrants or
rights to acquire any debt securities of the Company or any of its
subsidiaries, guarantee any debt securities of others, enter into any
"keep-well" or other agreement to maintain any financial statement
condition of another person or enter into any arrangement having the
economic effect of any of the foregoing, except for working capital
borrowings incurred in the ordinary course of business consistent with past
practice, or make any loans, advances or capital contributions to, or other
investments in, any other person, other than to the Company or any wholly
owned subsidiary of the Company, except for travel expenses made in the
ordinary course of business;
(h) the Company shall confer on a regular basis with Parent with
respect to operational matters and promptly advise Parent orally and in
writing of any material adverse change with respect to the Company. The
Company shall promptly provide to Parent (or its counsel) copies of all
filings made by the Company with any governmental entity in connection with
the Merger Agreement and the transactions contemplated thereby;
(i) the Company shall not make any tax election that would have a
material effect on the tax liability of the Company or any of its
subsidiaries or settle or compromise any tax liability of the Company or
any of its subsidiaries that would materially affect the tax liability of
the Company or any of its subsidiaries. The Company shall, before filing or
causing to be filed any material tax return of the Company or any of its
subsidiaries or settling any tax liability not described in the preceding
sentence,
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consult with Parent and its advisors as to the positions and elections that
may be taken or made with respect to such return or with respect to such
settlement;
(j) neither the Company nor any of its subsidiaries shall make or
agree to make any new capital expenditure or expenditures other than
expenditures consistent with the Company's current capital budget;
(k) the Company shall not, and shall not permit any of its
subsidiaries to, pay, discharge, settle or satisfy any claims, liabilities
or obligations (absolute, accrued, asserted or unasserted, contingent or
otherwise), other than the payment, discharge, settlement or satisfaction,
(i) in the ordinary course of business consistent with past practice or in
accordance with their terms, of claims, liabilities or obligations
recognized or disclosed in the most recent consolidated financial
statements (or the notes thereto) of the Company filed with the Commission
or incurred since the date of such financial statements in the ordinary
course of business consistent with past practice or (ii) of claims,
liabilities or obligations to the extent they are less than $50,000 and
unrelated to the Company's stockholders or the transactions contemplated by
the Merger Agreement and the Stockholder Agreement, or waive the benefits
of, or agree to modify in any manner, any confidentiality, standstill or
similar agreement to which the Company or any of its subsidiaries is a
party;
(l) except as disclosed by the Company to Parent on the date of the
Merger Agreement, neither the Company nor any of its subsidiaries shall
enter into or accept, or amend any existing, severance plan, agreement or
arrangement or enter into or amend any benefit plan or employment or
consulting agreement, other than as required by law;
(m) neither the Company nor any of its subsidiaries shall increase the
compensation payable or to become payable to its directors, officers or
employees, except for increases required under employment agreements
existing on the date of the Merger Agreement, and increases for employees
in the ordinary course of business consistent with past practice that, in
any event, do not increase such employee's aggregate compensation by more
than 5% over such employee's aggregate compensation in effect on the date
of the Merger Agreement, or grant any severance or termination pay to, or
enter into any employment or severance payment, or establish, adopt, enter
into, or amend in any material respect or take action to enhance in any
material respect or accelerate any rights or benefits under, any collective
bargaining, bonus, profit sharing, thrift, compensation, employment,
termination, severance or other plan, agreement, trust, fund, policy or
arrangement for the benefit of any director, officer or employee, except,
in each case, as may be required to comply with applicable law or
regulation;
(n) except in the ordinary course of business, neither the Company nor
any of its subsidiaries shall (i) modify, amend or terminate any material
contract or agreement to which the Company or such subsidiary is a party or
(ii) waive, release or assign any material rights or claims; and
(o) the Company shall not, and shall not permit any of its
subsidiaries to, authorize any of, or commit or agree to take any of, the
foregoing actions otherwise prohibited by the Merger Agreement.
No Solicitation. The Merger Agreement provides that the Company shall not,
nor shall it permit any of its subsidiaries to, nor shall it authorize or permit
any of its officers, directors or employees or any investment banker, financial
advisor, attorney, accountant or other representative retained by it or any of
its subsidiaries to, directly or indirectly, (1) solicit, initiate or knowingly
encourage (including by way of furnishing information), or take any other action
designed or reasonably likely to facilitate, any inquiries or the making of any
proposal which constitutes, or may reasonably be expected to lead to, any
Takeover Proposal or (2) participate in any discussions or negotiations
regarding any Takeover Proposal; provided, however, that if, at any time prior
to the acceptance for payment of Shares pursuant to the Offer, the Board of
Directors of the Company determines in good faith, after consultation with
outside counsel, that it is necessary to do so in order to comply with its
fiduciary duties to the Company's stockholders under applicable law, the Company
may, in response to a Takeover Proposal which was not solicited subsequent to
the date of the Merger Agreement, and subject to compliance with the
notification provisions discussed below, (i) furnish information with respect to
the Company to any person pursuant to customary confidentiality agreement (as
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determined by the Company after consultation with its outside counsel) and (ii)
participate in negotiations regarding such Takeover Proposal. The Merger
Agreement defines "Takeover Proposal" as any inquiry, proposal or offer from any
person relating to any direct or indirect acquisition or purchase of 20% or more
of the assets of the Company and its subsidiaries or 20% or more of any class of
equity securities of the Company or any of its subsidiaries, any tender offer or
exchange offer that if consummated would result in any person beneficially
owning 20% or more of any class of equity securities of the Company or any of
its subsidiaries, any merger, consolidation, business combination,
recapitalization, liquidation, dissolution or similar transaction involving the
Company or any of its subsidiaries other than the transactions contemplated by
the Merger Agreement, or any other transaction the consummation of which could
reasonably be expected to impede, interfere with, prevent or materially delay
the Offer and/or the Merger or which would reasonably be expected to dilute
materially the benefits to Parent of transactions contemplated by the Merger
Agreement and the Stockholder Agreement.
The Merger Agreement provides further that, except as described below,
neither the Board of Directors of the Company nor any committee thereof shall
(i) withdraw or modify, or propose publicly to withdraw or modify, in a manner
adverse to Parent, the approval or recommendation by such Board of Directors or
such committee of the Offer, the Merger or the Merger Agreement, (ii) approve or
recommend, or propose publicly to approve or recommend, any Takeover Proposal or
(iii) cause the Company to enter into any letter of intent, agreement in
principle, acquisition agreement or other similar agreement (each, an
"Acquisition Agreement") related to any Takeover Proposal. Notwithstanding the
foregoing, in the event that prior to the acceptance for payment of Shares
pursuant to the Offer the Board of Directors of the Company determines in good
faith, after consultation with outside counsel, that it is necessary to do so in
order to comply with its fiduciary duties to the Company's stockholders under
applicable law, such Board of Directors may (subject to the other provisions
regarding Takeover Proposals described herein) withdraw or modify its approval
or recommendation of the Offer, the Merger and the Merger Agreement or approve
or recommend a Superior Proposal (as defined below) or terminate the Merger
Agreement (and concurrently with or after such termination, if it so chooses,
cause the Company to enter into an Acquisition Agreement with respect to a
Superior Proposal), but in each case, only at a time after the fifth business
day following Parent's receipt of written notice (a "Notice of Superior
Proposal") advising Parent that the Board of Directors of the Company has
received a Superior Proposal and the actions the Board of Directors of the
Company intends to take with respect to such Superior Proposal, specifying the
material terms and conditions of such Superior Proposal and identifying the
person making such Superior Proposal. For purposes of the Merger Agreement, a
"Superior Proposal" means any bona fide proposal made by a third party to
acquire, directly or indirectly, for consideration consisting of cash and/or
securities, more than 50% of the combined voting power of the Shares and the
Class B Shares then outstanding or all or substantially all the assets of the
Company and otherwise on terms which the Board of Directors of the Company
determines in its good faith judgment (based on advice of a financial advisor of
nationally recognized reputation) to be more favorable to the Company's
stockholders than the Offer and the Merger and for which financing to the extent
required is then committed.
In addition to the obligations of the Company described in the preceding
two paragraphs, the Merger Agreement provides that the Company shall promptly
advise Parent orally and in writing of any request for information or of any
Takeover Proposal, the material terms and conditions of such request or Takeover
Proposal and the identity of the person making any such request or Takeover
Proposal. The Company is further required under the terms of the Merger
Agreement to keep Parent fully informed of the status and details (including
amendments or proposed amendments) of any such request or Takeover Proposal.
The Merger Agreement provides that nothing contained therein shall prohibit
the Company from taking and disclosing to its stockholders a position
contemplated by the Exchange Act or from making any disclosure to the Company's
stockholders if, in the good faith judgment of the Board of Directors of the
Company, after consultation with outside counsel, such disclosure is required by
applicable state or federal securities laws or is necessary in order to comply
with its fiduciary duties to the Company's stockholders under applicable law.
Neither the Company nor its Board of Directors nor any committee thereof shall,
except as permitted by the Merger Agreement, withdraw or modify, or propose
publicly to withdraw or modify, its position with respect to
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the Offer, the Merger Agreement or the Merger or approve or recommend, or
propose publicly to approve or recommend, a Takeover Proposal.
Third Party Standstill Agreements. During the period from the date of the
Merger Agreement through the Effective Time, the Company has agreed not to
terminate, amend, modify or waive any provision of any confidentiality or
standstill agreement to which the Company or any of its subsidiaries is a party
(other than any involving Parent) unless the Company's Board of Directors shall
have determined in good faith, after consultation with outside counsel, that it
is necessary to do so in order to comply with its fiduciary duties to the
Company's stockholders under applicable law.
Stock Based Compensation. Prior to purchase of Shares pursuant to the
Offer, the Company shall terminate each stock option plan, stock appreciation
right plan, limited stock appreciation right plan, restricted stock plan,
employee stock purchase plan, or any other plan or arrangement providing for
compensation wholly or partially in the form of Shares (excluding any plan which
is intended to be qualified under section 401(a) of the Internal Revenue Code of
1986, as amended) (collectively, the "Stock-Based Compensation Plans"), and
shall grant no additional options or awards under such plans. Immediately upon
the purchase of Shares pursuant to the Offer, all outstanding options or awards
under the Stock-Based Compensation Plans, whether vested or unvested, shall
cease to be exercisable, shall be cancelled by the Company, and shall thereafter
represent only a right to receive, upon its surrender to the Company, a cash
payment from the Company in an amount (if any) equal to the number of Shares
subject to each such surrendered option or award multiplied by the difference
(if positive) between the exercise price per Share (if any) covered by the
option or award and the highest per Share price paid to stockholders of the
Company in the Offer.
Indemnification. Pursuant to the Merger Agreement, Parent and the Offeror
agreed that all rights to indemnification for acts or omissions occurring at or
prior to the Effective Time now existing in favor of current or former
directors, officers, employees and agents of the Company and its subsidiaries as
provided in their respective articles of incorporation or by-laws (or similar
organizational documents) shall survive the Merger and shall continue in full
force and effect in accordance with their terms. For six years from the date the
Offeror first purchases Shares pursuant to the Offer, Parent shall maintain in
effect the Company's current directors' and officers' liability insurance
covering those persons who are currently covered by the Company's directors' and
officers' liability insurance policy; provided, that in no event shall Parent be
required to pay a premium in any one year in an amount in excess of 150 percent
of the last per annum amount of premiums paid by the Company prior to the date
of the Merger Agreement; and provided, further, that if the annual premiums of
such insurance coverage exceed such amount, Parent shall be obligated to obtain
a policy with the greatest coverage available for a cost not exceeding such
amount.
Board Representation. The Merger Agreement provides that promptly after
such time as the Offeror acquires a majority of the combined voting power of the
Shares and Class B Shares, the Offeror shall be entitled to designate at its
option up to that number of directors of the Company's Board of Directors,
subject to compliance with Section 14(f) of the Exchange Act, as will give the
Offeror a majority of such directors and the Company shall, at such time, cause
the Offeror's designees to be so elected by its existing Board of Directors.
However, in the event that the Offeror's designees are elected to the Board of
Directors of the Company, until the Effective Time, such Board of Directors
shall have at least three directors who are directors on the date of the Merger
Agreement and who are not officers of the Company (the "Independent Directors").
If the number of Independent Directors shall be reduced below three for any
reason whatsoever, the remaining Independent Directors shall designate a person
to fill such vacancy who shall be deemed to be an Independent Director for
purposes of the Merger Agreement or, if no Independent Directors then remain,
the other directors of the Company as of the date of the Merger Agreement shall
designate three persons to fill such vacancies who shall not be officers or
affiliates of the Company or any of its subsidiaries, or officers or affiliates
of Parent or any of its subsidiaries, and such persons shall be deemed to be
Independent Directors for purposes of the Merger Agreement. In connection with
the foregoing, the Company will promptly, at the option of Parent, either
increase the size of the Company's Board of Directors and/or obtain the
resignation of such number of its current directors as is necessary to enable
the Offeror's designees to be elected or appointed to the Company's Board of
Directors as provided above.
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Conditions Precedent. The respective obligations of each party to effect
the Merger shall be subject to the satisfaction (or waiver by each party) prior
to the Closing Date (as defined in the Merger Agreement) of the following
conditions: (a) if required by applicable law, the stockholders of the Company
shall have approved the Merger Agreement; (b) no statute, rule, regulation,
executive order, decree, temporary restraining order, preliminary or permanent
injunction or other order issued by any court of competent jurisdiction or other
governmental entity preventing the consummation of the Merger shall be in effect
(provided that each of the parties shall have used its reasonable best efforts
to prevent the entry of any such injunction or other order and to appeal as
promptly as possible any injunction or other order that may be entered); and (c)
the Offeror shall have previously accepted for payment and paid for Shares
pursuant to the Offer.
Termination. The Merger Agreement provides that it may be terminated at any
time prior to the Effective Time, whether before or after the approval of the
terms of the Merger Agreement by the stockholders of the Company: (a) by mutual
written consent of Parent and the Company; (b) by either Parent or the Company:
(i) if (x) as a result of the failure of any of the conditions to the Offer as
set forth in this Offer to Purchase (see Section 15) the Offer shall have
terminated or expired in accordance with its terms without the Offeror having
accepted for payment any Shares pursuant to the Offer or (y) the Offeror shall
not have accepted for payment any Shares pursuant to the Offer prior to January
31, 1998 (provided that the right to terminate the Merger Agreement pursuant to
this clause (b)(i) shall not be available to any party whose failure to perform
any of its obligations under the Merger Agreement results in the failure of any
such condition to the Offer or if the failure of such condition results from
facts or circumstances that constitute a breach of any representation or
warranty under the Merger Agreement by such party) or (ii) if any governmental
entity shall have issued an order, decree or ruling or taken any other action
permanently enjoining, restraining or otherwise prohibiting the acceptance for
payment of, or payment for, Shares pursuant to the Offer or Shares or Class B
Shares pursuant to the Merger and such order, decree or ruling or other action
shall have become final and nonappealable; (c) by Parent or the Offeror prior to
the purchase of Shares pursuant to the Offer in the event of a breach by the
Company of any representation, warranty, covenant or other agreement contained
in the Merger Agreement which (i) would give rise to the failure of condition
(e) or (f) described below in Section 15 and (ii) cannot be or has not been
cured within 20 days after the giving of written notice to the Company; (d) by
Parent or the Offeror if either Parent or the Offeror is entitled to terminate
the Offer as a result of the occurrence of any event set forth in paragraph (d)
described below in Section 15; (e) by the Company if the Board of Directors of
the Company reasonably determines that a Takeover Proposal constitutes a
Superior Proposal and the Board of Directors of the Company determines in good
faith, after consultation with outside counsel, that termination of the Merger
Agreement is necessary in order to comply with its fiduciary duties under
applicable law; provided, that it has complied with the notice provisions
therein and it complies with requirements of the Merger Agreement relating to
payment of Expenses and the Termination Fee (each as defined below under "Fees
and Expenses"); (f) by the Company, if the Offeror or Parent shall have breached
in any material respect any of their respective representations, warranties,
covenants or other agreements contained in the Merger Agreement, which breach or
failure to perform is incapable of being cured or has not been cured within 20
days after the giving of written notice to Parent or the Offeror, as applicable;
or (g) by the Company, if the Offer has not been timely commenced. In the event
of a termination of the Merger Agreement by either the Company or Parent, the
Merger Agreement shall forthwith become void (except for certain specified
provisions, including those pertaining to the payment of certain expenses and
fees and except for certain confidentiality obligations of the parties) and
there shall be no liability or obligation on the part of Parent, the Offeror or
the Company or their respective officers or directors, other than for liability
for any breach of the Merger Agreement.
Fees and Expenses. Except as otherwise provided in the Merger Agreement,
whether or not the Merger is consummated, all fees and expenses incurred in
connection with the Offer, the Merger and the Merger Agreement and the
transactions contemplated thereby shall be paid by the party incurring such fees
and expenses whether or not the Offer or the Merger is consummated.
The Merger Agreement provides that the Company will pay, or cause to be
paid, in same day funds to Parent (a) the Expenses in an amount of up to but not
to exceed $500,000 and (b) $5,500,000 (the
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"Termination Fee") under the circumstances and at the times set forth as
follows: (i) if Parent or the Offeror terminates the Merger Agreement in
accordance with the provisions described in clause (d) under "Termination"
above, the Company shall pay the Expenses and the Termination Fee upon demand;
(ii) if the Company terminates the Merger Agreement in accordance with the
provision described in clause (e) under "Termination" above, the Company shall
pay the Expenses and the Termination Fee concurrently therewith; and (iii) if,
at the time of any other termination of this Agreement, a Takeover Proposal
shall have been made (other than a Takeover Proposal made prior to the date of
the Merger Agreement), the Company shall pay the Expenses, if terminated by the
Company, concurrently therewith or, if terminated by Parent, upon demand; in
addition, if within 18 months of such termination, the Company shall enter into
an Acquisition Agreement providing for a Takeover Proposal or a Takeover
Proposal shall be consummated, the Company shall pay the Termination Fee
concurrently with the earlier of the entering into of such Acquisition Agreement
or the consummation of such Takeover Proposal. For purposes of the Merger
Agreement, "Expenses" means documented and reasonable out-of-pocket fees and
expenses incurred or paid by or on behalf of Parent in connection with the
Offer, the Merger or the consummation of any of the transactions contemplated by
the Merger Agreement, including all fees and expenses of law firms, commercial
banks, investment banking firms, accountants, experts and consultants to Parent.
Procedure for Termination, Amendment, Extension or Waiver. The Merger
Agreement provides that in the event the Purchaser's designees are appointed or
elected to the Board of Directors of the Company as described above under "Board
of Directors", after the acceptance for payment of Shares pursuant to the Offer
and prior to the Effective Time, the affirmative vote of a majority of the
Independent Directors is required for the Company to amend or terminate the
Merger Agreement, exercise or waive any of its rights or remedies under the
Merger Agreement, extend the time for performance of Parent's and the Offeror's
respective obligations under the Merger Agreement or take any action to amend or
waive any term or condition of the Company's Charter or By-laws.
The Stockholder Agreement
Pursuant to the terms and conditions of the Stockholder Agreement, the
Selling Stockholder has granted to the Offeror the Option to purchase 432,089 of
the Shares and 2,239,046 of the Class B Shares owned by such Selling Stockholder
at a price per share equal to the Offer Price (the "Option Purchase Price"). As
of September 26, 1997, the Selling Stockholder owned 864,177 Shares and
4,478,092 Class B Shares.
The Option may be exercised at any time on or prior to September 28, 1998
(the "Option Expiration Date"), in the event that (i) a Specified Event (as
defined below) shall have occurred on or prior to the Option Expiration Date and
(ii) the waiting period under the HSR Act with respect to the exercise of the
Option shall have expired or been terminated. For purposes of the Stockholder
Agreement, the term "Specified Event" means any of the following events: (i)
Parent or Offeror shall have terminated the Merger Agreement in accordance with
the provisions described in clause (d) under "The Merger Agreement --
Termination" above, (ii) the Company shall have terminated the Merger Agreement
in accordance with the provisions described in clause (e) under "The Merger
Agreement -- Termination" above, (iii) prior to termination of the Merger
Agreement, a Takeover Proposal 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) the Offeror shall have
accepted for payment, and paid for, Shares in the Offer. Under the Stockholder
Agreement, the Offeror has agreed to exercise the Option in the event that the
Offeror accepts for payment, and pays for, any Shares pursuant to the Offer. The
Selling Stockholder has also agreed to tender pursuant to the Offer, and not
withdraw, the Shares owned by the Selling Stockholder which are not Option
Shares. In the event that the Offeror shall have accepted for payment Shares
pursuant to the Offer, at the Closing Time (as defined in the Stockholder
Agreement) the Selling Stockholder shall also sell to the Offeror, and the
Offeror shall purchase from the Selling Stockholder at the Option Purchase Price
the Class B Shares owned by the Selling Stockholder that are not Option Shares
and which have not theretofore been converted into Shares and tendered pursuant
to the Offer.
In the Stockholder Agreement, the Selling Stockholder has further agreed
that, until the Option Expiration Date, (a) the Selling Stockholder shall vote
the Option Shares in favor of the Merger and the
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Merger Agreement, provided the terms of the Merger Agreement have not been
amended to adversely affect the Selling Stockholder; (b) such Selling
Stockholder shall vote the Option Shares against (i) any other merger agreement
or 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 Charter 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; and (c) the Selling Stockholder shall not (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
Option Shares to any person other than the Offeror or the Offeror's designee,
(ii) enter into any voting arrangement, whether by proxy, voting agreement or
otherwise, in connection, directly or indirectly, with any Takeover Proposal or
(iii) convert the Option Shares which are Class B Shares into Shares.
In addition, the Selling Stockholder has agreed that, until the Merger is
consummated or the Merger Agreement is terminated, such Selling Stockholder
shall not, and shall not permit any investment banker, attorney or other adviser
or representative of the Selling 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. So
long as the Merger Agreement has not been terminated, subject to certain
limitations the Selling Stockholder 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 Shares owned by the Selling
Stockholder that are not Option Shares to any person other than the Offeror or
the Offeror's designee.
14. DIVIDENDS AND DISTRIBUTIONS.
The Merger Agreement provides that neither the Company nor any of its
subsidiaries will, among other things, from the date of the Merger Agreement
until the time Parent's designees shall constitute a majority of the Board of
Directors of the Company, (x) declare or pay any dividends on, or make any other
distributions in respect of any of its capital stock (other than regular
quarterly cash dividends not in excess of $.07 per Share or $.05 per Class B
Share with usual record and payment dates and in accordance with the Company's
present dividend policy), except for dividends by a direct or indirect wholly
owned subsidiary of the Company to its parent, (y) split, combine or reclassify
any of its capital stock or issue or authorize the issuance of any other
securities in respect of, in lieu of or in substitution for shares of its
capital stock, or (z) repurchase, redeem or otherwise acquire any shares of its
capital stock or those of any subsidiary or any other securities thereof or any
rights, warrants or options to acquire any such shares or other securities.
15. CERTAIN CONDITIONS TO THE OFFEROR'S OBLIGATIONS.
Notwithstanding any other term of the Offer or the Merger Agreement,
Offeror shall not be required to accept for payment or, subject to any
applicable rules and regulations of the Commission, including Rule 14e-1(c)
under the Exchange Act (relating to the Offeror's obligation to pay for or
return tendered Shares after the termination or withdrawal of the Offer), to pay
for any Shares tendered pursuant to the Offer unless (i) there shall have been
validly tendered and not withdrawn prior to the expiration of the Offer such
number of Shares that, together with the Shares and Class B Shares subject to
the Option contained in the Stockholder Agreement, would constitute a majority
of the Shares and Class B Shares that in the aggregate are outstanding,
determined on a fully diluted basis for all outstanding stock options, the
Convertible Debentures, other securities convertible into Shares or Class B
Shares and any other rights to acquire Shares or Class B Shares and (ii) any
waiting period under the HSR Act applicable to the purchase of Shares pursuant
to the Offer shall have expired or been terminated. Furthermore, notwithstanding
any other term of the Offer or the Merger Agreement, the Offeror shall not be
required to accept for payment or, subject as aforesaid, to pay for any Shares
not theretofore accepted for payment or paid for, and may terminate the Offer
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if, at any time on or after the date of the Merger Agreement and before the
Expiration Date (or, in the case of conditions related to regulatory matters,
before the acceptance of such Shares for payment or the payment therefor), any
of the following conditions exists (other than as a result of any action or
inaction of Parent or any of its subsidiaries that constitutes a breach of the
Merger Agreement):
(a) there shall be threatened or pending by any governmental entity
any suit, action or proceeding (i) challenging the acquisition by Parent or
the Offeror of any Shares under the Offer or pursuant to the Stockholder
Agreement, seeking to restrain or prohibit the making or consummation of
the Offer or the Merger or the performance of any of the other transactions
contemplated by the Merger Agreement or the Stockholder Agreement
(including the voting provisions thereunder), or seeking to obtain from the
Company, Parent or the Offeror any damages that are material in relation to
the Company and its subsidiaries taken as a whole, (ii) seeking to prohibit
or materially limit the ownership or operation by the Company, Parent or
any of their respective subsidiaries of a material portion of the business
or assets of the Company and its subsidiaries, taken as a whole, or Parent
and its subsidiaries, taken as a whole, or to compel the Company or Parent
to dispose of or hold separate any material portion of the business or
assets of the Company and its subsidiaries, taken as a whole, or Parent and
its subsidiaries, taken as a whole, as a result of the Offer or any of the
other transactions contemplated by the Merger Agreement or the Stockholder
Agreement, (iii) seeking to impose material limitations on the ability of
Parent or the Offeror to acquire or hold, or exercise full rights of
ownership of, any Shares to be accepted for payment pursuant to the Offer
or purchased under the Stockholder Agreement including, without limitation,
the right to vote such Shares on all matters properly presented to the
stockholders of the Company, (iv) seeking to prohibit Parent or any of its
subsidiaries from effectively controlling in any material respect any
material portion of the business or operations of the Company or its
subsidiaries or (v) which otherwise is reasonably likely to have a material
adverse effect on the business, properties, assets, financial condition,
results of operations or prospects of the Company and its subsidiaries
taken as a whole; or there shall be pending by any other person any suit,
action or proceeding which is reasonably likely to have a material adverse
effect on the business, properties, assets, financial condition, results of
operations or prospects of the Company and its subsidiaries taken as a
whole.
(b) there shall be enacted, entered, enforced, promulgated or deemed
applicable to the Offer or the Merger by any governmental entity any
statute, rule, regulation, judgment, order or injunction, other than the
application to the Offer or the Merger of applicable waiting periods under
the HSR Act, that is reasonably likely to result, directly or indirectly,
in any of the consequences referred to in clauses (i) through (v) of
paragraph (a) above;
(c) there shall have occurred any material adverse change with respect
to the Company;
(d) (i) the Board of Directors of the Company or any committee thereof
shall have withdrawn or modified in a manner adverse to Parent or the
Offeror its approval or recommendation of the Offer, the Merger or the
Merger Agreement, or approved or recommended any Takeover Proposal or (ii)
the Board of Directors of the Company or any committee thereof shall have
resolved to take any of the foregoing actions;
(e) any of the representations and warranties of the Company set forth
in the Merger Agreement that are qualified as to materiality shall not be
true and correct or any such representations and warranties that are not so
qualified shall not be true and correct in any material respect, in each
case at the date of the Merger Agreement and at the scheduled or extended
expiration of the Offer;
(f) the Company shall have failed to perform in any material respect
any material obligation or to comply in any material respect with any
material agreement or covenant of the Company to be performed or complied
with by it under the Merger Agreement;
(g) there shall have occurred and continued to exist for not less than
three business days (i) any general suspension of trading in, or limitation
on prices for, securities on a national securities exchange in the United
States (excluding any coordinated trading halt triggered solely as a result
of a specified decrease in a market index), (ii) a declaration of a banking
moratorium or any suspension of payments in
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respect of banks in the United States, (iii) any limitation (whether or not
mandatory) by any governmental entity on, or other event that materially
adversely affects, the extension of credit by banks or other lending
institutions, (iv) a commencement of a war or armed hostilities or other
national or international calamity directly or indirectly involving the
United States which in any case is reasonably expected to have a material
adverse effect on the Company or to materially adversely affect Parent's or
the Offeror's ability to complete the Offer and/or the Merger or materially
delay the consummation of the Offer and/or the Merger;
(h) the Stockholder Agreement shall not be in full force and effect or
the Selling Stockholder shall be in material breach thereof or have
indicated its intention not to perform its obligations thereunder; or
(i) the Merger Agreement shall have been terminated in accordance with
its terms.
The foregoing conditions are for the sole benefit of Parent and the Offeror
and may, subject to the terms of the Merger Agreement, be waived by Parent and
the Offeror in whole or in part at any time and from time to time in their sole
discretion. The failure by Parent or the Offeror at any time to exercise any of
the foregoing rights shall not be deemed a waiver of any such right, the waiver
of any such right with respect to particular facts and circumstances shall not
be deemed a waiver with respect to any other facts and circumstances and each
such right shall be deemed an ongoing right that may be asserted at any time and
from time to time.
16. CERTAIN LEGAL MATTERS.
Except as set forth in this Section, the Offeror is not aware of any
approval or other action by any governmental or administrative agency which
would be required for the acquisition or ownership of Shares by the Offeror as
contemplated herein. Should any such approval or other action be required, it
will be sought, but the Offeror has no current intention to delay the purchase
of Shares tendered pursuant to the Offer pending the outcome of any such matter,
subject, however, to the Offeror's right to decline to purchase Shares if any of
the conditions specified in Section 15 shall have occurred. There can be no
assurance that any such approval or other action, if needed, would be obtained
or would be obtained without substantial conditions, or that adverse
consequences might not result to the Company's business or that certain parts of
the Company's business might not have to be disposed of if any such approvals
were not obtained or other action taken.
U.S. Antitrust. Under the provisions of the HSR Act applicable to the
Offer, the acquisition of Shares under the Offer may be consummated following
the expiration of a 15-day waiting period following the filing of a Premerger
Notification and Report Form with respect to the Offer, unless Parent receives a
request for additional information or documentary material from the Department
of Justice, Antitrust Division (the "Antitrust Division") or the Federal Trade
Commission ("FTC") or unless early termination of the waiting period is granted.
Parent expects to make such filing in the near future. If, within the initial
15-day waiting period, either the Antitrust Division or the FTC requests
additional information or documentary material concerning the Offer, the waiting
period will be extended through the tenth day after the date of substantial
compliance by all parties receiving such requests. Complying with a request for
additional information or documentary material can take a significant amount of
time.
The provisions of the HSR Act would similarly apply to any purchase of the
Shares or the Class B Shares subject to the Stockholder Agreement, except that
the initial waiting period for any purchase of such Shares would expire 30
calendar days following the filing of HSR Act Notification and Report Forms with
respect to such purchase by Parent and the Company (unless earlier termination
is granted). Parent and the Company intend to make such filings in connection
with the filings described in the preceding paragraph. A request for additional
information or material from Parent or the Company during the initial 30-day
waiting period would extend the waiting period until 11:59 p.m., New York City
time, on the 20th calendar day after the date of substantial compliance by
Parent and the Company with such request.
The Antitrust Division and the FTC frequently scrutinize the legality under
the antitrust laws of transactions such as the Offeror's proposed acquisition of
the Company. At any time before or after the Offeror's acquisition of Shares
pursuant to the Offer, the Antitrust Division or the FTC could take such action
under the antitrust laws as either deems necessary or desirable in the public
interest, including seeking to
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enjoin the purchase of Shares pursuant to the Offer, the purchase of Shares or
Class B Shares pursuant to the Stockholder Agreement or the consummation of the
Merger, or seeking the divestiture of Shares or Class B Shares acquired by the
Offeror or the divestiture of substantial assets of the Company or its
subsidiaries or Parent or its subsidiaries. Private parties may also bring legal
action under the antitrust laws under certain circumstances. There can be no
assurance that a challenge to the Offer, the consummation of the Merger or the
sale of the Shares and Class B Shares pursuant to the Stockholder Agreement on
antitrust grounds will not be made, or, if such a challenge is made, of the
result thereof.
If any applicable waiting period under the HSR Act applicable to the Offer
has not expired or been terminated prior to the Expiration Date, the Offeror
will not be obligated to proceed with the Offer or the purchase of any Shares
not theretofore purchased pursuant to the Offer. See Section 15.
State Takeover Laws. The Company is incorporated under the laws of the
State of Georgia. In general, Section 14-2-1132 of the GBCC ("Section
14-2-1132") prevents an "interested stockholder" (including a person who owns or
has the right to acquire 10% or more of the voting power of the outstanding
voting shares of a corporation from engaging in a "business combination"
(defined to include mergers and certain other actions) with a Georgia
corporation for a period of five years following the date such person became an
interested stockholder unless (i) such interested stockholder, prior to becoming
an interested stockholder, obtained the approval of the Board of Directors of
either the business combination or the transaction that resulted in such person
becoming an interested stockholder, (ii) such interested stockholder became the
beneficial owner of at least 90% of the outstanding shares of voting stock of
the corporation (excluding shares owned by persons who are directors, officers,
their affiliates or associates and by subsidiaries of the corporation and
certain employee stock plans) in the same transaction in which the interested
stockholder became an interested stockholder or (iii) on or subsequent to the
date the interested stockholder became an interested stockholder, the interested
stockholder becomes the beneficial owner of at least 90% of the outstanding
voting stock of the corporation (excluding shares owned by persons who are
directors or officers, their affiliates or associates and by subsidiaries of the
corporation and certain employee stock plans) and the business combination is
approved by holders of a majority of the voting stock entitled to vote,
excluding voting stock beneficially owned by the interested stockholder or by
persons who are directors or officers and by subsidiaries of the corporation and
certain employee stock plans. The Company's Board of Directors has approved the
Offer and the Merger, the Stockholder Agreement and the Offeror's acquisition of
Shares and Class B Shares pursuant to the Offer, the Merger and the Stockholder
Agreement. Accordingly, Section 14-2-1132 is inapplicable to the Merger.
A number of other states have adopted laws and regulations applicable to
attempts to acquire securities of corporations which are incorporated, or have
substantial assets, stockholders, principal executive offices or principal
places of business or whose business operations otherwise have substantial
economic effects in such states. In Edgar v. MITE Corp., in 1982, the Supreme
Court of the United States (the "U.S. Supreme Court") invalidated on
constitutional grounds the Illinois Business Takeover statute, which, as a
matter of state securities law, made takeovers of corporations meeting certain
requirements more difficult. However in 1987, in CTS Corp. v. Dynamics Corp. of
America, the U.S. Supreme Court held that the State of Indiana may, as a matter
of corporate law and, in particular, with respect to those aspects of corporate
law concerning corporate governance, constitutionally disqualify a potential
acquiror from voting on the affairs of a target corporation without the prior
approval of the remaining stockholders. The state law before the U.S. Supreme
Court was by its terms applicable only to corporations that had a substantial
number of stockholders in the state and were incorporated there.
The Company, directly or through subsidiaries, conducts business in a
number of states throughout the United States, some of which have enacted
takeover laws. The Offeror does not know whether any of these laws will, by
their terms, apply to the Offer or the Merger and has not complied with any such
laws. Should any person seek to apply any state takeover law, the Offeror will
take such action as then appears desirable, which may include challenging the
validity or applicability of any such statute in appropriate court proceedings.
In the event it is asserted that one or more state takeover laws is applicable
to the Offer or the Merger, and an appropriate court does not determine that it
is inapplicable or invalid as applied to the Offer, the Offeror might be
required to file certain information with, or receive approvals from, the
relevant state
30
<PAGE> 33
authorities. In addition, if enjoined, the Offeror might be unable to accept for
payment any Shares tendered pursuant to the Offer, or be delayed in continuing
or consummating the Offer and the Merger. In such event, the Offeror may not be
obligated to accept for payment any Shares tendered. See Section 15.
Certain Charter Provisions. Article VII of the Company's Charter provides
that the approval or authorization of any merger or consolidation of the Company
with or into any other corporation shall require the affirmative vote of the
holders of not less than 66 2/3% of the votes of the issued and outstanding
Shares and Class B Shares having the right to vote thereon and voting together
as a single class. The 66 2/3% vote requirement is not applicable, however, if
the Board of Directors of the Company, by resolution approved and adopted by not
less than 66 2/3% of the members of the Board of Directors of the Company, shall
have approved the transaction which is the subject of such vote. Upon such
approval by the Board of Directors of the Company, the affirmative vote of the
holders of a majority of the votes of the issued and outstanding Shares and
Class B Shares having the right to vote thereon and voting together as a single
class shall be required for the approval or authorization of such transaction.
The Offer, the Merger and the other transactions contemplated by the Merger
Agreement have been unanimously approved by the Board of Directors of the
Company. Accordingly, stockholder approval of the Merger Agreement for purposes
of effecting the Merger will only require the approval of the holders of a
majority of the votes of the issued and outstanding Shares and Class B Shares
having the right to vote thereon and voting together as a single class.
Following the purchase by the Offeror of Class B Shares pursuant to the
Stockholder Agreement, all outstanding Class B Shares will automatically convert
to Shares.
17. FEES AND EXPENSES.
Neither the Offeror nor Parent, nor any officer, director, stockholder,
agent or other representative of the Offeror or Parent will pay any fees or
commissions to any broker, dealer or other person (other than the Dealer
Manager, the Information Agent and the Depositary) for soliciting tenders of
Shares pursuant to the Offer. Brokers, dealers, commercial banks and trust
companies and other nominees will, upon request, be reimbursed by the Offeror
for customary mailing and handling expenses incurred by them in forwarding
materials to their customers.
Smith Barney is acting as Dealer Manager for the Offer and as financial
advisor to Parent in connection with its acquisition of the Company, for which
services Smith Barney will receive customary compensation. Parent also has
agreed to reimburse Smith Barney for reasonable travel and other out-of-pocket
expenses, including reasonable legal fees and expenses, and to indemnify Smith
Barney and certain related parties against certain liabilities, including
liabilities under the federal securities laws, arising out of Smith Barney's
engagement. In the ordinary course of business, Smith Barney and its affiliates
may actively trade or hold the securities of Parent and the Company for their
own account or for the account of customers and, accordingly, may at any time
hold a long or short position in such securities.
The Offeror has retained Morrow & Co., Inc. as Information Agent and
SunTrust Bank, Atlanta as Depositary in connection with the Offer. The
Information Agent and the Depositary will receive reasonable and customary
compensation for their services hereunder and reimbursement for their reasonable
out-of-pocket expenses. The Depositary will also be indemnified by the Offeror
against certain liabilities in connection with the Offer. The Information Agent
may contact holders of Shares by mail, telex, telegraph and personal interviews
and may request brokers, dealers and other nominee stockholders to forward
materials relating to the Offer to beneficial owners of Shares.
18. MISCELLANEOUS.
The Offer is not being made to, nor will tenders be accepted from or on
behalf of, holders of Shares residing in any jurisdiction in which the making or
acceptance thereof would not be in compliance with the securities, blue sky or
other laws of such jurisdiction. In any jurisdiction where the securities, blue
sky or other laws require the Offer to be made by a licensed broker or dealer,
the Offer shall be deemed to be made on behalf of the Offeror by the Dealer
Manager or one or more registered brokers or dealers licensed under the laws of
such jurisdiction.
31
<PAGE> 34
No person has been authorized to give any information or make any
representation on behalf of the Offeror other than as contained in this Offer to
Purchase or in the Letter of Transmittal and, if any such information or
representation is given or made, it should not be relied upon as having been
authorized by the Offeror or Parent.
The Offeror and Parent have filed with the Commission the Schedule 14D-1,
pursuant to Section 14(d)(1) of the Exchange Act and Rule 14d-3 promulgated
thereunder, furnishing certain information with respect to the Offer. The
Schedule 14D-1 and any amendments thereto, including exhibits, may be examined
and copies may be obtained at the same places and in the same manner as set
forth with respect to the Company in Section 8 (except that they will not be
available at the regional offices of the Commission).
GREENWICH ACQUISITION CORP.
October 3, 1997
32
<PAGE> 35
ANNEX I
CERTAIN INFORMATION CONCERNING THE DIRECTORS
AND EXECUTIVE OFFICERS OF THE PARENT AND THE OFFEROR
DIRECTORS AND EXECUTIVE OFFICERS OF PARENT. Set forth below are the name,
current business address, present principal occupation or employment and
employment history (covering a period of not less than five years) of each
executive officer and director of Parent. Unless otherwise indicated, each such
person's business address is 2275 Cabot Drive, Lisle, Illinois 60532. All
persons listed below are citizens of the United States of America.
<TABLE>
<CAPTION>
NAME PRESENT PRINCIPAL OCCUPATION OR EMPLOYMENT AND FIVE YEAR EMPLOYMENT HISTORY
---- ---------------------------------------------------------------------------
<S> <C>
Robert J. Cronin..................... President and Chief Executive Officer of Parent and Director since November
11, 1992. President and Chief Operating Officer of Parent from June 1, 1992
until November 11, 1992. Also director of Landauer Corporation.
Theodore Dimitriou................... Chairman of the Board of Parent. Chief Executive Officer of Parent until
November 11, 1992 and President of Parent until April 3, 1990. Director of
Parent since November 1, 1972. Also director of General Binding
Corporation.
Richard A. Doyle..................... Director of Parent since October 26, 1971. Retired Senior Vice
President-Finance and Administration of Texas Oil & Gas Corp., a developer
of oil and gas interests.
Albert W. Isenman, III............... Director of Parent since January 5, 1996. Professor of Management at the
Kellogg Graduate School of Kellogg Graduate School of Management at Northwestern University since
Management 1988.
Northwestern University
2001 Sheridan Road
Evanston, IL 60208
William N. Lane III.................. Director of Parent since January 17, 1990. Chairman, President and Chief
Lane Industries, Inc. Executive Officer of Lane Industries, Inc., a holding company with
One Lane Center operations in office machines, hotels, ranching and radio broadcasting.
1200 Shermer Road Also director of General Binding Corporation.
Northbrook, IL 60062
John C. Pope......................... Director of Parent since July 8, 1996. Chairman of MotivePower Industries,
810 South Ridge Road Inc., a manufacturer of locomotives and locomotive components. From January
Lake Forest, IL 60045 1988 to July 1994, Mr. Pope held various positions with UAL Inc. and its
subsidiary, United Airlines, most recently as President, Chief Operating
Officer and Director. Also director of Federal-Mogul Corp., MotivePower
Industries, Inc., Medaphis Corporation and Lamalie Associates, Inc.
Robert P. Rittereiser................ Director of Parent since January 5, 1996. Chairman and Chief Executive
Gruntal Financial Corp. Officer of Gruntal Financial Corp., a national full-service securities
14 Wall Street brokerage firm, since 1995. Chairman of Yorkville Associates Corp., a
New York, NY 10005 private investment and financial advisory concern formed in April 1989.
Trustee of The DBL Liquidating Trust from April 1992 until April 1996.
Chairman since 1992, a Director since 1990 and President and Chief
Executive Officer from March 1993 until February 1995 of Nationar, Inc., a
banking services corporation. Also director of Ferrofluidics Corporation,
Interchange Financial Services, Corp. and CUC International Inc.
</TABLE>
I-1
<PAGE> 36
<TABLE>
<CAPTION>
NAME PRESENT PRINCIPAL OCCUPATION OR EMPLOYMENT AND FIVE YEAR EMPLOYMENT HISTORY
---- ---------------------------------------------------------------------------
<S> <C>
Neele E. Stearns, Jr................. Director of Parent since November 6, 1996. Former President and Chief
260 Chestnut Street Executive Officer of CC Industries, Inc., a holding company with operations
Winnetka, IL 60093 in envelope manufacturing, home furnishings and casual furniture and real
estate development and management. Director of Parent from 1990 to 1995.
Also director of Maytag Corporation.
Michael O. Duffield.................. Senior Vice President/Operations of Parent since 1992.
Michael J. Halloran.................. Vice President/Chief Financial Officer/Assistant Secretary of Parent since
1995. Vice President/Chief Financial Officer/Secretary of Parent from 1987
to 1995.
Michael T. Leatherman................ Senior Vice President/Chief Information Officer of Parent since 1995. Vice
President/Information Services of Parent from 1990 to 1995.
Bruce D'Angelo....................... Vice President/Sales of Parent since 1992.
Michael T. Laudizio.................. Divisional Vice President of Parent since November 1995. Secretary of
Parent since November 1994. Assistant Secretary of Parent November 1993 to
November 1994. Director of Taxation of Parent since 1989.
Wayne E. Richter..................... Vice President/General Manager -- Label Division of Parent since 1992.
Donald J. Hoffman.................... Vice President/Engineering and Research of Parent since 1985.
Michael M. Mulcahy................... Vice President/General Manager -- Colorforms Division of Parent since 1992.
Thomas G. Brooker.................... Vice President/General Manager -- Office Products Division of Parent since
1995. Vice President and General Manager of TOPS Division of Parent from
1993 to 1995. National Sales Manager of Parent from 1991 to 1993.
Sandra K. Brandt..................... Vice President and Treasurer of Parent since April 1997. Assistant
Treasurer, Cash Management at GATX Corporation 1991 through April 1997.
</TABLE>
I-2
<PAGE> 37
DIRECTORS AND EXECUTIVE OFFICERS OF OFFEROR. Set forth below are the name,
current business address, present principal occupation or employment and
employment history (covering a period of not less than five years) of each
executive officer and director of the Offeror. Unless otherwise indicated, each
such person's business address is 2275 Cabot Drive, Lisle, Illinois 60532. All
persons listed below are citizens of the United States of America.
<TABLE>
<CAPTION>
PRESENT PRINCIPAL OCCUPATION OR EMPLOYMENT AND
NAME FIVE YEAR EMPLOYMENT HISTORY
---- ----------------------------------------------
<S> <C>
Robert J. Cronin..................... Chief Executive Officer and Director of the Offeror.
President and Chief Executive Officer of Parent and Director
since November 11, 1992. President and Chief Operating
Officer of Parent from June 1, 1992 until November 11, 1992.
Also a director of Landauer Corporation.
Michael T. Leatherman................ President and Director of the Offeror. Senior Vice
President/Chief Information Officer of Parent since 1992.
Michael J. Halloran.................. Vice President, Chief Financial Officer and Director of the
Offeror. Vice President/Chief Financial Officer/Assistant
Secretary of Parent since 1995. Vice President/Chief
Financial Officer/Secretary of Parent from 1990 to 1995.
Sandra K. Brandt..................... Treasurer of the Offeror. Vice President and Treasurer of
Parent since April 1997. Assistant Treasurer, Cash
Management at GATX Corporation 1991 through April 1997.
Michael T. Laudizio.................. Secretary of the Offeror. Divisional Vice President of
Parent since November 1995. Secretary of Parent since
November 1994. Assistant Secretary of Parent November 1993
to November 1994. Director of Taxation of Parent since 1989.
Steven L. Carson..................... Assistant Secretary of the Offeror. General Counsel of
Parent since March 1995. Employed as an attorney with
Katten, Muchin & Zavis from December 1994 until March 1995
and with Chapman and Cutler from 1989 to July 1994.
</TABLE>
I-3
<PAGE> 38
Facsimile copies of the Letter of Transmittal will be accepted. The Letter
of Transmittal and certificates for Shares and any other required documents
should be sent or delivered by each stockholder of the Company or his broker,
dealer, commercial bank, trust company or other nominee to the Depositary at one
of the addresses set forth below:
The Depositary for the Offer is:
SUNTRUST BANK, ATLANTA
By Overnight Courier:
SunTrust Bank, Atlanta
58 Edgewood Avenue
Room 225
Atlanta, Georgia 30303
By Mail:
SunTrust Bank, Atlanta
P.O. Box 4625
Atlanta, Georgia 30302
By Hand Delivery:
Continental Stock Transfer
& Trust Company
19th Floor
2 Broadway
New York, New York
Facsimile Transmission:
(For Eligible Institutions Only)
(404) 332-3875
For Information, please call
1-800-568-3476
Any questions or requests for assistance or additional copies of the Offer
to Purchase and the Letter of Transmittal and Notice of Guaranteed Delivery may
be directed to the Information Agent or the Dealer Manager at their respective
telephone numbers and locations listed below. Stockholders may also contact
their broker, dealer, commercial bank, trust company or other nominee for
assistance concerning the Offer.
The Information Agent for the Offer is:
MORROW & CO., INC. LOGO
909 Third Avenue
20th Floor
New York, New York 10022
(212) 754-8000
Toll Free: (800) 566-9061
Banks and Brokerage Firms please call:
(800) 662-5200
The Dealer Manager for the Offer is:
SMITH BARNEY INC.
388 Greenwich Street
New York, New York 10013
(212) 816-2592
<PAGE> 1
LETTER OF TRANSMITTAL
to Tender Shares of Common Stock
of
GRAPHIC INDUSTRIES, INC.
Pursuant to the Offer to Purchase
dated October 3, 1997
by
GREENWICH ACQUISITION CORP.
a wholly owned subsidiary of
WALLACE COMPUTER SERVICES, INC.
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK
CITY TIME, ON FRIDAY, OCTOBER 31, 1997, UNLESS THE OFFER IS EXTENDED.
The Depositary for the Offer is:
SUNTRUST BANK, ATLANTA
<TABLE>
<C> <C> <C>
By Overnight Courier: By Mail: By Hand Delivery:
- ------------------------------------- ------------------------------------- -------------------------------------
SunTrust Bank, Atlanta SunTrust Bank, Atlanta Continental Stock Transfer
58 Edgewood Avenue P.O. Box 4625 & Trust Company
Room 225 Atlanta, Georgia 30302 19th Floor
Atlanta, Georgia 30303 2 Broadway
New York, New York
</TABLE>
Facsimile Transmission:
(For Eligible Institutions Only)
(404) 332-3875
For Information, please call
1-800-568-3476
------------------------
DELIVERY OF THIS LETTER OF TRANSMITTAL TO AN ADDRESS, OR TRANSMISSION OF
INSTRUCTIONS VIA A FACSIMILE OTHER THAN AS SET FORTH ABOVE, DOES NOT CONSTITUTE
A VALID DELIVERY TO THE DEPOSITARY. YOU MUST SIGN THIS LETTER OF TRANSMITTAL IN
THE APPROPRIATE SPACE THEREFOR PROVIDED BELOW AND COMPLETE THE SUBSTITUTE FORM
W-9 SET FORTH BELOW.
THE INSTRUCTIONS ACCOMPANYING THIS LETTER OF TRANSMITTAL SHOULD BE READ
CAREFULLY BEFORE THIS LETTER OF TRANSMITTAL IS COMPLETED.
This Letter of Transmittal is to be completed by stockholders of Graphic
Industries, Inc., a Georgia corporation (the "Company"), if certificates are to
be forwarded herewith or, unless an Agent's Message (as defined in the Offer to
Purchase) is utilized, if delivery of Shares (as defined below) is to be made by
book-entry transfer to the Depositary's account at The Depository Trust Company
or the Philadelphia Depository Trust Company (hereinafter collectively referred
to as the "Book-Entry Transfer Facilities") pursuant to the procedures set forth
in Section 3 of the Offer to Purchase (as defined below). DELIVERY OF DOCUMENTS
TO A BOOK-ENTRY TRANSFER-FACILITY DOES NOT CONSTITUTE DELIVERY TO THE
DEPOSITORY.
Stockholders whose certificates for Shares are not immediately available or
who cannot deliver their Shares and all other documents required hereby to the
Depositary by the Expiration Date (as defined in the Offer to Purchase), or who
cannot comply with the book-entry transfer procedures on a timely basis, may
nevertheless tender their Shares pursuant to the guaranteed delivery procedures
set forth in Section 3 of the Offer to Purchase. See Instruction 2.
<PAGE> 2
<TABLE>
<S> <C> <C> <C>
- -----------------------------------------------------------
DESCRIPTION OF SHARES TENDERED
- -----------------------------------------------------------
NAME(S) AND ADDRESS(ES) OF REGISTERED HOLDER(S) SHARES TENDERED
(PLEASE FILL IN, IF BLANK) (ATTACH ADDITIONAL LIST IF NECESSARY)
- --------------------------------------------------------------------------------------------------------------------
NUMBER OF
SHARES
REPRESENTED
SHARE CERTIFICATE BY NUMBER OF SHARES
NUMBER(S)* CERTIFICATE(S)* TENDERED**
--------------------------------------------------------
--------------------------------------------------------
--------------------------------------------------------
========================================================
TOTAL SHARES.........................
- -----------------------------------------------------------
* Need not be completed by stockholders tendering by book-entry transfer.
** Unless otherwise indicated, it will be assumed that all Shares represented by any certificates delivered to the
Depositary are being tendered. See Instruction 4.
- -----------------------------------------------------------
</TABLE>
[ ] CHECK HERE IF TENDERED SHARES ARE BEING DELIVERED BY BOOK-ENTRY TRANSFER TO
THE DEPOSITARY'S ACCOUNT AT ONE OF THE BOOK-ENTRY TRANSFER FACILITIES AND
COMPLETE THE FOLLOWING:
Name of Tendering Institution
Account No. at
[ ] The Depository Trust Company
[ ] Philadelphia Depository Trust Company
Transaction Code No.
[ ]CHECK HERE IF TENDERED SHARES ARE BEING DELIVERED PURSUANT TO A NOTICE OF
GUARANTEED DELIVERY PREVIOUSLY SENT TO THE DEPOSITARY AND COMPLETE THE
FOLLOWING:
Name(s) of Tendering Stockholder(s)
Date of Execution of Notice of Guaranteed Delivery
Window Ticket Number (if any)
Name of Institution which Guaranteed Delivery
If delivery is by book-entry transfer
Name of Tendering Institution
Account No. at
[ ] The Depository Trust Company
[ ] Philadelphia Depository Trust Company
Transaction Code No.
NOTE: SIGNATURES MUST BE PROVIDED BELOW
PLEASE READ THE ACCOMPANYING INSTRUCTIONS CAREFULLY
-----------------------------------
<PAGE> 3
Ladies and Gentlemen:
The undersigned hereby tenders to Greenwich Acquisition Corp. (the
"Offeror"), a Georgia corporation and a wholly owned subsidiary of Wallace
Computer Services, Inc., a Delaware corporation ("Parent"), the above-described
shares of Common Stock, $.10 par value per share (the "Shares"), of Graphic
Industries, Inc., a Georgia corporation (the "Company"), pursuant to the
Offeror's offer to purchase all of the outstanding Shares at a purchase price of
$18.50 per Share, net to the seller in cash, without interest, upon the terms
and subject to the conditions set forth in the Offer to Purchase, dated October
3, 1997 (the "Offer to Purchase"), receipt of which is hereby acknowledged, and
in this Letter of Transmittal (which, together with the Offer to Purchase, and
any amendments or supplements hereto or thereto, collectively constitute the
"Offer"). The Offer is being made in connection with the Agreement and Plan of
Merger, dated as of September 28, 1997 (the "Merger Agreement"), among Parent,
the Offeror and the Company.
Subject to and effective upon acceptance for payment of and payment for the
Shares tendered herewith, the undersigned hereby sells, assigns and transfers to
or upon the order of the Offeror all right, title and interest in and to all the
Shares that are being tendered hereby (and any and all other Shares or other
securities issued or issuable in respect thereof) and appoints the Depositary
the true and lawful agent and attorney-in-fact of the undersigned with respect
to such Shares (and all such other Shares or securities), with full power of
substitution (such power of attorney being deemed to be an irrevocable power
coupled with an interest), to (a) deliver certificates for such Shares (and all
such other Shares or securities), or transfer ownership of such Shares (and all
such other Shares or securities) on the account books maintained by any of the
Book-Entry Transfer Facilities, together, in any such case, with all
accompanying evidence of transfer and authenticity, to or upon the order of the
Offeror, (b) present such Shares (and all such other Shares or securities) for
transfer on the books of the Company and (c) receive all benefits and otherwise
exercise all rights of beneficial ownership of such Shares (and all such other
Shares or securities), all in accordance with the terms of the Offer.
The undersigned hereby irrevocably appoints each designee of the Offeror as
the attorney-in-fact and proxy of the undersigned, each with full power of
substitution, to exercise all voting and other rights of the undersigned in such
manner as each such attorney and proxy or his substitute shall in his sole
judgment deem proper, with respect to all of the Shares tendered hereby which
have been accepted for payment by the Offeror prior to the time of any vote or
other action (and any and all other Shares or other securities or rights issued
or issuable in respect of such Shares) at any meeting of stockholders of the
Company (whether annual or special and whether or not an adjourned meeting), any
actions by written consent in lieu of any such meeting or otherwise. This proxy
is irrevocable and is granted in consideration of, and is effective upon, the
acceptance for payment of such Shares by the Offeror in accordance with the
terms of the Offer. Such acceptance for payment shall revoke any other proxy or
written consent granted by the undersigned at any time with respect to such
Shares (and all such other Shares or other securities or rights), and no
subsequent proxies will be given or written consents will be executed by the
undersigned (and if given or executed, will not be deemed effective).
The undersigned hereby represents and warrants that the undersigned has
full power and authority to tender, sell, assign and transfer the Shares
tendered hereby (and any and all other Shares or other securities or rights
issued or issuable in respect of such Shares) and that when the same are
accepted for payment by the Offeror, the Offeror will acquire good and
unencumbered title thereto, free and clear of all liens, restrictions, charges
and encumbrances and not subject to any adverse claims. The undersigned, upon
request, will execute and deliver any additional documents deemed by the
Depositary or the Offeror to be necessary or desirable to complete the sale,
assignment and transfer of the Shares tendered hereby (and all such other Shares
or other securities or rights).
All authority herein conferred or agreed to be conferred shall survive the
death or incapacity of the undersigned, and any obligation of the undersigned
hereunder shall be binding upon the heirs, personal representatives, successors
and assigns of the undersigned. Except as stated in the Offer, this tender is
irrevocable.
<PAGE> 4
The undersigned understands that tenders of Shares pursuant to any one of
the procedures described in Section 3 of the Offer to Purchase and in the
instructions hereto will constitute an agreement between the undersigned and the
Offeror upon the terms and subject to the conditions of the Offer.
Unless otherwise indicated under "Special Payment Instructions," please
issue the check for the purchase price of any Shares purchased, and return any
Shares not tendered or not purchased, in the name(s) of the undersigned.
Similarly, unless otherwise indicated under "Special Delivery Instructions,"
please mail the check for the purchase price of any Shares purchased and return
any certificates for Shares not tendered or not purchased (and accompanying
documents, as appropriate) to the undersigned at the address shown below the
undersigned's signature(s). In the event that both "Special Payment
Instructions" and "Special Delivery Instructions" are completed, please issue
the check for the purchase price of any Shares purchased and return any Shares
not tendered or not purchased in the name(s) of, and mail said check and any
certificates to, the person(s) so indicated. The undersigned recognizes that the
Offeror has no obligation, pursuant to the "Special Payment Instructions," to
transfer any Shares from the name of the registered holder(s) thereof if the
Offeror does not accept for payment any of the Shares so tendered.
SPECIAL PAYMENT INSTRUCTIONS
(SEE INSTRUCTIONS 1, 5, 6 AND 7)
To be completed ONLY if the check for the purchase price of Shares purchased or
certificates for Shares not tendered or not purchased are to be issued in the
name of someone other than the undersigned or if Shares tendered hereby and
delivered by book-entry transfer which are not accepted for payment are to be
returned by credit to an account at one of the Book-Entry Transfer Facilities
other than designated above.
Issue: [ ] Check [ ] Certificate to:
Name:
(Please Print)
Address:
- -------------------------------------------------------
(Zip Code)
- -------------------------------------------------------
(Taxpayer Identification or Social Security No.)
(See Substitute Form W-9)
[ ] Credit Shares delivered by book-entry transfer and not purchased to the
account set forth below
Check appropriate box.
[ ] The Depository Trust Company
[ ] Philadelphia Depository Trust Company
SPECIAL DELIVERY INSTRUCTIONS
(SEE INSTRUCTIONS 5 AND 7)
To be completed ONLY if the check for the purchase price of Shares purchased or
certificates for Shares not tendered or not purchased are to be mailed to
someone other than the undersigned or to the undersigned at an address other
than that shown below the undersigned's signature(s).
Mail check and/or certificates to:
Name:
(Please Print)
Address:
- -------------------------------------------------------
(Zip Code)
- -------------------------------------------------------
(Taxpayer Identification or Social Security No.)
(See Substitute Form W-9)
<PAGE> 5
INSTRUCTIONS
FORMING PART OF THE TERMS AND CONDITIONS OF THE OFFER
1. Guarantee of Signatures. Except as otherwise provided below, signatures
on all Letters of Transmittal must be guaranteed by a firm that is a bank,
broker, dealer, credit union, savings association or other entity which is a
member in good standing of the Securities Transfer Agents Medallion Program, the
New York Stock Exchange Medallion Signature Guarantee Program, the Stock
Exchange Medallion Program, or by any other bank, broker, dealer, credit union,
savings association or other entity which is an "eligible guarantor
institution," as such term is defined in Rule 17Ad-15 under the Securities
Exchange Act of 1934, as amended (each of the foregoing constituting an
"Eligible Institution"), unless the Shares tendered thereby are tendered (i) by
a registered holder of Shares who has not completed either the box labeled
"Special Payment Instructions" or the box labeled "Special Delivery
Instructions" on the Letter of Transmittal or (ii) for the account of an
Eligible Institution. See Instruction 5. If the certificates are registered in
the name of a person or persons other than the signer of this Letter of
Transmittal, or if payment is to be made or delivered to, or certificates
evidencing unpurchased Shares are to be issued or returned to, a person other
than the registered owner or owners, then the tendered certificates must be
endorsed or accompanied by duly executed stock powers, in either case signed
exactly as the name or names of the registered owner or owners appear on the
certificates or stock powers, with the signatures on the certificates or stock
powers guaranteed by an Eligible Institution as provided herein. See Instruction
5.
2. Delivery of Letter of Transmittal and Shares. This Letter of Transmittal
is to be used either if certificates are to be forwarded herewith or, unless an
Agent's Message (as defined in the Offer to Purchase) is utilized, if the
delivery of Shares is to be made by book-entry transfer pursuant to the
procedures set forth in Section 3 of the Offer to Purchase. Certificates for all
physically delivered Shares, or a confirmation of a book-entry transfer into the
Depositary's account at one of the Book-Entry Transfer Facilities of all Shares
delivered electronically, as well as a properly completed and duly executed
Letter of Transmittal (or a manually signed facsimile thereof) and any other
documents required by this Letter of Transmittal, or an Agent's Message in the
case of a book-entry delivery, must be received by the Depositary at one of its
addresses set forth on the front page of this Letter of Transmittal by the
Expiration Date. Stockholders who cannot deliver their Shares and all other
required documents to the Depositary by the Expiration Date must tender their
Shares pursuant to the guaranteed delivery procedures set forth in Section 3 of
the Offer to Purchase. Pursuant to such procedures: (a) such tender must be made
by or through an Eligible Institution; (b) a properly completed and duly
executed Notice of Guaranteed Delivery, substantially in the form provided by
the Offeror, must be received by the Depositary prior to the Expiration Date;
and (c) the certificates for all tendered Shares, in proper form for tender, or
a confirmation of a book-entry transfer into the Depositary's account at one of
the Book-Entry Transfer Facilities of all Shares delivered electronically, as
well as a properly completed and duly executed Letter of Transmittal (or a
manually signed facsimile thereof), and any other documents required by this
Letter of Transmittal must be received by the Depositary within three trading
days after the date of execution of such Notice of Guaranteed Delivery, all as
provided in Section 3 of the Offer to Purchase. The term "trading day" is any
day on which the New York Stock Exchange is open for business.
The method of delivery of Shares, the Letter of Transmittal and all other
required documents, including delivery through a Book-Entry Transfer Facility,
is at the option and risk of the tendering stockholder. Shares will be deemed
delivered only when actually received by the Depositary (including, in the case
of a book-entry transfer, by a confirmation of a book-entry transfer). If
delivery is by mail, registered mail with return receipt requested, properly
insured, is recommended. In all cases, sufficient time should be allowed to
ensure timely delivery.
No alternative, conditional or contingent tenders will be accepted, and no
fractional Shares will be purchased. By executing this Letter of Transmittal (or
a manually signed facsimile thereof), the tendering stockholder waives any right
to receive any notice of the acceptance for payment of the Shares.
3. Inadequate Space. If the space provided herein is inadequate, the
certificate numbers and/or the number of Shares should be listed on a separate
schedule attached hereto.
<PAGE> 6
4. Partial Tenders (not applicable to stockholders who tender by book-entry
transfer). If fewer than all the Shares represented by any certificate delivered
to the Depositary are to be tendered, fill in the number of Shares which are to
be tendered in the box entitled "Number of Shares Tendered." In such case, a new
certificate for the remainder of the Shares represented by the old certificate
will be sent to the person(s) signing this Letter of Transmittal unless
otherwise provided in the appropriate box on this Letter of Transmittal, as
promptly as practicable following the expiration or termination of the Offer.
All Shares represented by certificates delivered to the Depositary will be
deemed to have been tendered unless otherwise indicated.
5. Signatures on Letter of Transmittal; Stock Powers and Endorsements. If
this Letter of Transmittal is signed by the registered holder(s) of the Shares
tendered hereby, the signature(s) must correspond with the name(s) as written on
the face of the certificates without alteration, enlargement or any change
whatsoever.
If any of the Shares tendered hereby are held of record by two or more
persons, all such persons must sign this Letter of Transmittal.
If any of the Shares tendered hereby are registered in different names on
different certificates, it will be necessary to complete, sign and submit as
many separate Letters of Transmittal as there are different registrations of
certificates.
If this Letter of Transmittal is signed by the registered holder(s) of the
Shares tendered hereby, no endorsements of certificates or separate stock powers
are required unless payment of the purchase price is to be made, or Shares not
tendered or not purchased are to be returned, in the name of any person other
than the registered holder(s), in which case the certificate(s) for such Shares
tendered hereby must be endorsed, or accompanied by, appropriate stock powers,
in either case signed exactly as the name(s) of the registered holder(s)
appear(s) on the certificate for such Shares. Signatures on any such
certificates or stock powers must be guaranteed by an Eligible Institution.
If this Letter of Transmittal is signed by a person other than the
registered holder(s) of the Shares tendered hereby, the certificate must be
endorsed or accompanied by appropriate stock powers, in either case signed
exactly as the name(s) of the registered holder(s) appear(s) on the certificates
for such Shares. Signature(s) on any such certificates or stock powers must be
guaranteed by an Eligible Institution.
If this Letter of Transmittal or any certificate or stock power is signed
by a trustee, executor, administrator, guardian, attorney-in-fact, officer of a
corporation or other person acting in a fiduciary or representative capacity,
such person should so indicate when signing, and proper evidence satisfactory to
the Offeror of the authority of such person so to act must be submitted.
6. Stock Transfer Taxes. The Offeror will pay any stock transfer taxes with
respect to the sale and transfer of any Shares to it or its order pursuant to
the Offer. If, however, payment of the purchase price is to be made to, or
Shares not tendered or not purchased are to be returned in the name of, any
person other than the registered holder(s), then the amount of any stock
transfer taxes (whether imposed on the registered holder(s), such other person
or otherwise) payable on account of the transfer to such person will be deducted
from the purchase price unless satisfactory evidence of the payment of such
taxes, or exemption therefrom, is submitted.
Except as provided in this Instruction 6, it will not be necessary for
transfer tax stamps to be affixed to the certificates listed in this Letter of
Transmittal.
7. Special Payment and Delivery Instruction. If the check for the purchase
price of any Shares purchased is to be issued, or any Shares not tendered or not
purchased are to be returned, in the name of a person other than the person(s)
signing this Letter of Transmittal or if the check or any certificates for
Shares not tendered or not purchased are to be mailed to someone other than the
person(s) signing this Letter of Transmittal or to the person(s) signing this
Letter of Transmittal at an address other than that shown above, the appropriate
boxes on this Letter of Transmittal should be completed. Stockholders tendering
Shares by book-entry transfer may request that Shares not purchased be credited
to such account at any of the Book-Entry Transfer Facilities as such stockholder
may designate under "Special Payment Instructions." If no such
<PAGE> 7
instructions are given, any such Shares not purchased will be returned by
crediting the account at the Book-Entry Transfer Facilities designated above.
8. Substitute Form W-9. The tendering stockholder is required to provide
the Depositary with such stockholder's correct TIN on Substitute Form W-9, which
is provided below, unless an exemption applies. Failure to provide the
information on the Substitute Form W-9 may subject the tendering stockholder to
a $50 penalty and to 31% federal income tax backup withholding on the payment of
the purchase price for the Shares.
9. Foreign Holders. Foreign holders must submit a completed IRS Form W-8 to
avoid 31% backup withholding. IRS Form W-8 may be obtained by contacting the
Depositary at one of the addresses on the face of this Letter of Transmittal.
10. Requests for Assistance or Additional Copies. Requests for assistance
or additional copies of the Offer to Purchase and this Letter of Transmittal may
be obtained from the Information Agent or the Dealer Manager at their respective
addresses or telephone numbers set forth below.
11. Waiver of Conditions. The conditions of the Offer may be waived by the
Offeror (subject to certain limitations in the Merger Agreement), in whole or in
part, at any time or from time to time, in the Offeror's sole discretion.
IMPORTANT: THIS LETTER OF TRANSMITTAL OR A MANUALLY SIGNED FACSIMILE COPY
HEREOF (TOGETHER WITH CERTIFICATES OR CONFIRMATION OF BOOK-ENTRY TRANSFER AND
ALL OTHER REQUIRED DOCUMENTS) OR A NOTICE OF GUARANTEED DELIVERY MUST BE
RECEIVED BY THE DEPOSITARY ON OR PRIOR TO THE EXPIRATION DATE (AS DEFINED IN THE
OFFER TO PURCHASE).
IMPORTANT TAX INFORMATION
Under federal income tax law, a stockholder whose tendered Shares are
accepted for payment is required to provide the Depositary with such
stockholder's correct TIN on the Substitute Form W-9. If such stockholder is an
individual, the TIN is such stockholder's Social Security Number. If the
Depositary is not provided with the correct TIN, the stockholder may be subject
to a $50 penalty imposed by the Internal Revenue Service. In addition, payments
that are made to such stockholder with respect to Shares purchased pursuant to
the Offer may be subject to backup withholding.
Certain stockholders (including, among others, all corporations and certain
foreign individuals) are not subject to these backup withholding and reporting
requirements. In order for a foreign individual to qualify as an exempt
recipient, that stockholder must submit a statement, signed under penalties of
perjury, attesting to that individual's exempt status. Such statements may be
obtained from the Depositary. All exempt recipients (including foreign persons
wishing to qualify as exempt recipients) should see the enclosed Guidelines for
Certification of Taxpayer Identification Number on Substitute Form W-9 for
additional instructions.
If backup withholding applies, the Depositary is required to withhold 31%
of any payments made to the stockholder. Backup withholding is not an additional
tax. Rather, the tax liability of persons subject to backup withholding will be
reduced by the amount of tax withheld. If backup withholding results in an
overpayment of taxes, a refund may be obtained.
PURPOSE OF SUBSTITUTE FORM W-9
To prevent backup federal income tax withholding on payments that are made
to a stockholder with respect to Shares purchased pursuant to the Offer, the
stockholder is required to notify the Depositary of such stockholder's correct
TIN by completing the form certifying that the TIN provided on the Substitute
Form W-9 is correct.
<PAGE> 8
WHAT NUMBER TO GIVE THE DEPOSITARY
The stockholder is required to give the Depositary the Social Security
Number or Employer Identification Number of the record owner of the Shares. If
the Shares are in more than one name or are not in the name of the actual owner,
consult the enclosed Guidelines for Certification of Taxpayer Identification
Number on Substitute Form W-9 for additional guidelines on which number to
report.
<PAGE> 9
SIGN HERE
(Complete Substitute Form W-9 below)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Signature(s) of Owner(s)
- --------------------------------------------------------------------------------
Name(s)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Capacity (full title)
- --------------------------------------------------------------------------------
Address
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(Include Zip Code)
- --------------------------------------------------------------------------------
Area Code and Telephone Number
- ---------------------------------------------------------------------------
Taxpayer Identification or Social Security Number
- -----------------------------------------------------------
(See Substitute Form W-9)
Dated:
- -------------------------------------------------------------------------------,
1997
(Must be signed by registered holder(s) exactly as name(s) appear(s) on
stock certificate(s) or on a security position listing or by the person(s)
authorized to become registered holder(s) by certificates and documents
transmitted herewith. If signature is by a trustee, executor, administrator,
guardian, attorney-in-fact, agent, officer of a corporation or other person
acting in a fiduciary or representative capacity, please set forth full title
and see Instruction 5.)
GUARANTEE OF SIGNATURE(S)
(SEE INSTRUCTIONS 1 AND 5)
FOR USE BY FINANCIAL INSTITUTIONS ONLY. PLACE MEDALLION GUARANTEE IN SPACE
BELOW.
Authorized signature(s)
- --------------------------------------------------------------------------------
Name
- --------------------------------------------------------------------------------
Name of Firm
- --------------------------------------------------------------------------------
Address
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(Include Zip Code)
Area Code and Telephone Number
- ---------------------------------------------------------------------------
Dated:
- -------------------------------------------------------------------------------,
1997
- --------------------------------------------------------------------------------
<PAGE> 10
<TABLE>
<S> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------
PAYOR'S NAME: SUNTRUST BANK, ATLANTA
- ------------------------------------------------------------------------------------------------------------------------
SUBSTITUTE PART I--PLEASE PROVIDE YOUR TIN IN THE BOX AT THE RIGHT
FORMW-9 AND CERTIFY BY SIGNING AND DATING BELOW. TIN:
Social Security Number
or Employer
Identification Number
-------------------------------------------------------------------------------------------
Department of the PART II--For Payees exempt from backup withholding, see the enclosed Guidelines for
Treasury, Internal Certification of Taxpayer Identification Number on Substitute Form W-9 and complete as
Revenue Service instructed therein.
PAYOR'S REQUEST FOR -----------------------------------------------------------------------------------------
TAXPAYER IDENTIFICATION Certification--Under penalties of perjury, I certify that:
NUMBER ("TIN") AND
CERTIFICATION (1) The number shown on this form is my correct TIN (or I am waiting for a number
to be issued to me); and
(2) I am not subject to backup withholding because (a) I am exempt from backup
withholding, or (b) I have not been notified by the Internal Revenue Service
("IRS") that I am subject to backup withholding as a result of a failure to report
all interest or dividend, or (c) the IRS has notified me that I am no longer
subject
to backup withholding.
-----------------------------------------------------------------------------------------
SIGNATURE DATE: ________________
- ------------------------------------------------------------------------------------------------------------------------
</TABLE>
CERTIFICATION INSTRUCTIONS--You must cross out item (2) above if you have been
notified by the IRS that you are currently subject to backup withholding because
of underreporting interest or dividends on your tax return. However, if after
being notified by the IRS that you were subject to backup withholding, you
received another notification from the IRS that you were no longer subject to
backup withholding, do not cross out item (2). (Also see the instructions in the
enclosed Guidelines.)
NOTE: FAILURE TO COMPLETE AND RETURN THIS SUBSTITUTE FORM W-9 MAY RESULT IN
BACKUP WITHHOLDING OF 31% OF ANY PAYMENTS MADE TO YOU PURSUANT TO THE
OFFER. PLEASE REVIEW THE ENCLOSED GUIDELINES FOR CERTIFICATION OF TAXPAYER
IDENTIFICATION NUMBER ON SUBSTITUTE FORM W-9 FOR ADDITIONAL DETAILS.
YOU MUST COMPLETE THE FOLLOWING CERTIFICATE IF YOU ARE AWAITING YOUR TIN.
<TABLE>
<S> <C>
- --------------------------------------------------------------------------------------------------
CERTIFICATE OF AWAITING TAXPAYER IDENTIFICATION NUMBER
I certify under penalties of perjury that a TIN has not been issued to me, and either (1) I have
mailed or delivered an application to receive a TIN to the appropriate IRS Center or Social
Security Administration Officer or (2) I intend to mail or deliver an application in the near
future. I understand that if I do not provide a TIN by the time of payment, 31% of all payments
pursuant to the Offer made to me thereafter will be withheld until I provide a number.
Signature: _ Date:
- --------------------------------------------------------------------------------------------------
</TABLE>
<PAGE> 11
The Information Agent for the Offer is:
MORROW & CO., INC. LOGO
909 Third Avenue
20th Floor
New York, New York 10022
(212) 754-8000
Toll Free: (800) 566-9061
Banks and Brokerage Firms please call:
(800) 662-5200
The Dealer Manager for the Offer is:
SMITH BARNEY INC.
388 Greenwich Street
New York, New York 10013
(212) 816-2592
<PAGE> 1
OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING SHARES OF COMMON STOCK
OF
GRAPHIC INDUSTRIES, INC.
AT
$18.50 NET PER SHARE
BY
GREENWICH ACQUISITION CORP.
A WHOLLY-OWNED SUBSIDIARY OF
WALLACE COMPUTER SERVICES, INC.
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY
TIME, ON FRIDAY, OCTOBER 31, 1997, UNLESS THE OFFER IS EXTENDED.
October 3, 1997
To Brokers, Dealers, Commercial Banks,
Trust Companies and Other Nominees:
We have been appointed by Greenwich Acquisition Corp., a Georgia
corporation (the "Offeror") and a wholly owned subsidiary of Wallace Computer
Services, Inc., a Delaware corporation ("Parent"), to act as Dealer Manager in
connection with the Offeror's offer to purchase all outstanding shares of common
stock, $.10 par value per share (the "Shares"), of Graphic Industries, Inc., a
Georgia corporation (the "Company"), at a purchase price of $18.50 per Share,
net to the seller in cash, without interest, upon the terms and subject to the
conditions set forth in the Offer to Purchase, dated October 3, 1997 (the "Offer
to Purchase"), and in the related Letter of Transmittal (which, together with
any amendments or supplements thereto, collectively constitute the "Offer")
enclosed herewith. The Offer is being made in connection with the Agreement and
Plan of Merger, dated as of September 28, 1997, among Parent, the Offeror and
the Company (the "Merger Agreement"). Holders of Shares whose certificates for
such Shares (the "Certificates") are not immediately available or who cannot
deliver their Certificates and all other required documents to the Depositary or
complete the procedures for book-entry transfer prior to the Expiration Date (as
defined in Section 1 of the Offer to Purchase) must tender their Shares
according to the guaranteed delivery procedures set forth in Section 3 of the
Offer to Purchase.
Please furnish copies of the enclosed materials to those of your clients
for whose accounts you hold Shares in your name or in the name of your nominee.
Enclosed herewith for your information and forwarding to your clients are
copies of the following documents:
1. The Offer to Purchase, dated October 3, 1997.
2. The Letter of Transmittal to tender Shares for your use and for the
information of your clients. Facsimile copies of the Letter of Transmittal
(with manual signatures) may be used to tender Shares.
3. A letter to stockholders of the Company from Mark C. Pope III, the
Chairman, President and Chief Executive Officer of the Company, together
with a Solicitation/Recommendation Statement on Schedule 14D-9 filed with
the Securities and Exchange Commission by the Company and mailed to the
stockholders of the Company, recommending that the Company's stockholders
accept the Offer and tender their Shares pursuant to the Offer.
4. The Notice of Guaranteed Delivery for Shares to be used to accept
the Offer if neither of the two procedures for tendering Shares set forth
in the Offer to Purchase can be completed on a timely basis.
<PAGE> 2
5. A printed form of letter which may be sent to your clients for
whose accounts you hold Shares registered in your name or in the name of
your nominee, with space provided for obtaining such clients' instructions
with regard to the Offer.
6. Guidelines of the Internal Revenue Service for Certification of
Taxpayer Identification Number on Substitute Form W-9.
7. A return envelope addressed to SunTrust Bank, Atlanta, as the
Depositary.
YOUR PROMPT ACTION IS REQUESTED. WE URGE YOU TO CONTACT YOUR CLIENTS AS
PROMPTLY AS POSSIBLE. PLEASE NOTE THAT THE OFFER AND WITHDRAWAL RIGHTS WILL
EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY TIME, ON FRIDAY, OCTOBER 31, 1997,
UNLESS THE OFFER IS EXTENDED.
Please note the following:
1. The tender price is $18.50 per Share, net to the seller in cash
without interest.
2. The Offer is being made for all of the outstanding Shares.
3. The Offer and withdrawal rights will expire at 12:00 Midnight, New
York City time, on Friday, October 31, 1997, unless the Offer is extended.
4. The Offer is conditioned upon, among other things, there being
validly tendered and not withdrawn prior to the expiration of the Offer
such number of Shares that, together with the Shares and Class B Shares (as
defined in the Offer to Purchase) subject to the Option (as defined in the
Offer to Purchase) contained in the Stockholder Agreement (as defined in
the Offer to Purchase), would constitute a majority of the Shares and Class
B Shares that in the aggregate are outstanding, determined on a fully
diluted basis for all outstanding stock options, the Convertible Debentures
(as defined in the Offer to Purchase), other securities convertible into
Shares or Class B Shares and any other rights to acquire Shares or Class B
Shares. The Offer is also subject to the other terms and conditions
contained in the Offer to Purchase.
5. Tendering stockholders will not be obligated to pay brokerage fees
or commissions imposed by Parent or the Offeror or, except as set forth in
Instruction 6 of the Letter of Transmittal, stock transfer taxes on the
transfer of Shares pursuant to the Offer.
In order to take advantage of the Offer, (i) a duly executed and properly
completed Letter of Transmittal (or a manually signed facsimile thereof) and any
required signature guarantees or, in the case of a book-entry transfer, an
Agent's Message (as defined in the Offer to Purchase) or other required
documents should be sent to the Depositary and (ii) Certificates representing
the tendered Shares on a timely Book-Entry Confirmation (as defined in the Offer
to Purchase) should be delivered to the Depositary in accordance with the
instructions set forth in the Offer.
If holders of Shares wish to tender, but it is impracticable for them to
forward their Certificates or other required documents or complete the
procedures for book-entry transfer prior to the Expiration Date, a tender must
be effected by following the guaranteed delivery procedures specified in Section
3 of the Offer to Purchase.
None of the Offeror, Parent nor any officer, director, stockholder, agent
or other representative of the Offeror or Parent will pay any fees or
commissions to any broker, dealer or other person (other than the Dealer
Manager, the Depositary and the Information Agent as described in the Offer to
Purchase) for soliciting tenders of Shares pursuant to the Offer. The Offeror
will, however, upon request, reimburse you for customary mailing and handling
expenses incurred by you in forwarding any of the enclosed materials to your
clients. The Offeror will pay or cause to be paid any transfer taxes payable on
the transfer of Shares to it, except as otherwise provided in Instruction 6 of
the Letter of Transmittal.
Any inquiries you may have with respect to the Offer should be addressed to
Morrow & Co., Inc., the Information Agent for the Offer, 909 Third Avenue, 20th
Floor, New York, New York 10022,
2
<PAGE> 3
(212) 754-8000, or Smith Barney Inc., the Dealer Manager for the Offer, at 388
Greenwich Street, New York, New York 10013, (212) 816-2592.
Requests for copies of the enclosed materials may be directed to the
Information Agent at the above address and telephone number.
Very truly yours,
SMITH BARNEY INC.
NOTHING CONTAINED HEREIN OR IN THE ENCLOSED DOCUMENTS SHALL CONSTITUTE YOU
OR ANY OTHER PERSON THE AGENT OF PARENT, THE OFFEROR, THE DEPOSITARY, THE
INFORMATION AGENT, THE DEALER MANAGER OR ANY AFFILIATE OF ANY OF THE FOREGOING,
OR AUTHORIZE YOU OR ANY OTHER PERSON TO MAKE ANY STATEMENT OR USE ANY DOCUMENT
ON BEHALF OF ANY OF THEM IN CONNECTION WITH THE OFFER OTHER THAN THE ENCLOSED
DOCUMENTS AND THE STATEMENTS CONTAINED THEREIN.
3
<PAGE> 1
OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING SHARES OF COMMON STOCK
OF
GRAPHIC INDUSTRIES, INC.
AT
$18.50 NET PER SHARE
BY
GREENWICH ACQUISITION CORP.
A WHOLLY OWNED SUBSIDIARY OF
WALLACE COMPUTER SERVICES, INC.
- --------------------------------------------------------------------------------
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY
TIME, ON FRIDAY, OCTOBER 31, 1997, UNLESS THE OFFER IS EXTENDED.
- --------------------------------------------------------------------------------
October 3, 1997
To Our Clients:
Enclosed for your consideration are the Offer to Purchase, dated October 3,
1997 (the "Offer to Purchase"), and the related Letter of Transmittal (which,
together with any amendments or supplements thereto, collectively constitute the
"Offer") relating to an offer by Greenwich Acquisition Corp., a Georgia
corporation (the "Offeror") and a wholly owned subsidiary of Wallace Computer
Services, Inc., a Delaware corporation (the "Parent"), to purchase all
outstanding shares of common stock, par value $.10 per share (the "Shares"), of
Graphic Industries, Inc., a Georgia corporation (the "Company"), at a purchase
price of $18.50 per Share, net to the seller in cash, without interest, upon the
terms and subject to the conditions set forth in the Offer. The Offer is being
made in connection with the Agreement and Plan of Merger, dated as of September
28, 1997, among Parent, the Offeror and the Company (the "Merger Agreement").
This material is being forwarded to you as the beneficial owner of Shares
carried by us in your account but not registered in your name.
A TENDER OF SUCH SHARES CAN BE MADE ONLY BY US AS THE HOLDER OF RECORD AND
PURSUANT TO YOUR INSTRUCTIONS. THE LETTER OF TRANSMITTAL IS FURNISHED TO YOU FOR
YOUR INFORMATION ONLY AND CANNOT BE USED BY YOU TO TENDER SHARES HELD BY US FOR
YOUR ACCOUNT.
Accordingly, we request instructions as to whether you wish to tender any
or all of the Shares held by us for your account, upon the terms and conditions
set forth in the Offer.
Please note the following:
1. The tender price is $18.50 per Share, net to you in cash without
interest.
2. The Offer is being made for all of the outstanding Shares.
3. The Offer and withdrawal rights will expire at 12:00 Midnight, New
York City time, on Friday, October 31, 1997, unless the Offer is extended.
4. The Offer is conditioned upon, among other things, there being
validly tendered and not withdrawn prior to the expiration of the Offer
such number of Shares that, together with the Shares and Class B Shares (as
defined in the Offer to Purchase) subject to the Option (as defined in the
Offer to Purchase) contained in the Stockholder Agreement (as defined in
the Offer to Purchase), would constitute a majority of the Shares and Class
B Shares that in the aggregate are outstanding, determined on a fully
diluted basis for all outstanding stock options, the Convertible Debentures
(as defined in the Offer to Purchase), other securities convertible into
Shares or Class B Shares and any other rights to
<PAGE> 2
acquire Shares or Class B Shares. The Offer is also subject to the other
terms and conditions contained in the Offer to Purchase.
5. Tendering stockholders will not be obligated to pay brokerage fees
or commissions imposed by Parent or the Offeror or, except as set forth in
Instruction 6 of the Letter of Transmittal, stock transfer taxes on the
transfer of Shares pursuant to the Offer.
If you wish to have us tender any or all of the Shares, please so instruct
us by completing, executing, detaching and returning to us the instruction form
contained in this letter. An envelope to return your instruction to us is
enclosed. If you authorize tender of your Shares, all such Shares will be
tendered unless otherwise indicated in such instruction form. PLEASE FORWARD
YOUR INSTRUCTIONS TO US AS SOON AS POSSIBLE TO ALLOW US AMPLE TIME TO TENDER
YOUR SHARES ON YOUR BEHALF PRIOR TO THE EXPIRATION OF THE OFFER.
The Offer is made solely by the Offer to Purchase and the related Letter of
Transmittal and any supplements or amendments thereto. The Offer is not being
made to, nor will tenders be accepted from or on behalf of, holders of Shares
residing in any jurisdiction in which the making of the Offer or acceptance
thereof would not be in compliance with the securities laws of such
jurisdiction. In any jurisdiction where the securities, blue sky or other laws
require the Offer to be made by a licensed broker or dealer, the Offer will be
deemed to be made on behalf of the Offeror by Smith Barney Inc. or by one or
more registered brokers or dealers licensed under the laws of such jurisdiction.
2
<PAGE> 3
INSTRUCTIONS WITH RESPECT TO
THE OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING SHARES OF COMMON STOCK
OF
GRAPHIC INDUSTRIES, INC.
BY
GREENWICH ACQUISITION CORP.
The undersigned acknowledge(s) receipt of your letter and the enclosed
Offer to Purchase dated October 3, 1997 (the "Offer to Purchase"), and the
related Letter of Transmittal (which, together with any amendments or
supplements thereto, collectively constitute the "Offer") in connection with the
offer by Greenwich Acquisition Corp., a Georgia corporation (the "Offeror") and
a wholly owned subsidiary of Wallace Computer Services, Inc., a Delaware
corporation, to purchase all outstanding shares of common stock, par value $.10
per share (the "Shares"), of Graphic Industries, Inc., a Georgia corporation
(the "Company").
This will instruct you to tender to the Offeror the number of Shares
indicated below (or if no number is indicated below, all Shares) which are held
by you for the account of the undersigned, upon the terms and subject to the
conditions set forth in the Offer.
Number of Shares to be Tendered:* ______
<TABLE>
<CAPTION>
<S> <C>
SIGN HERE
========================================================
Signature(s)
========================================================
Account Number: ____________ (Print Name(s))
Date: ________, 1997 --------------------------------------------------------
--------------------------------------------------------
(Print Address(es))
--------------------------------------------------------
(Area Code and Telephone Number(s))
--------------------------------------------------------
(Taxpayer Identification or
Social Security Number(s))
</TABLE>
- -------------------------
* Unless otherwise indicated, it will be assumed that all Shares held by us for
your account are to be tendered.
3
<PAGE> 1
NOTICE OF GUARANTEED DELIVERY
FOR
TENDER OF SHARES OF COMMON STOCK
OF
GRAPHIC INDUSTRIES, INC.
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE
AT 12:00 MIDNIGHT, NEW YORK CITY TIME, ON FRIDAY, OCTOBER 31, 1997
UNLESS THE OFFER IS EXTENDED.
This form, or one substantially equivalent hereto, must be used to accept
the Offer (as defined below) if certificates for shares of common stock, $.10
par value per share (the "Shares"), of Graphic Industries, Inc., a Georgia
corporation (the "Company"), are not immediately available or if the procedure
for book-entry transfer cannot be completed on a timely basis or time will not
permit all required documents to reach the Depositary on or prior to the
Expiration Date (as defined in the Offer to Purchase). Such form may be
delivered by hand, facsimile transmission, or mail to the Depositary. See
Section 3 of the Offer to Purchase, dated October 3, 1997 (the "Offer to
Purchase").
The Depositary for the Offer is:
SUNTRUST BANK, ATLANTA
<TABLE>
<S> <C> <C>
By Overnight Courier: By Mail: By Hand Delivery:
SunTrust Bank, Atlanta SunTrust Bank, Atlanta Continental Stock Transfer
58 Edgewood Avenue P.O. Box 4625 & Trust Company
Room 225 Atlanta, Georgia 30302 19th Floor
Atlanta, Georgia 30303 2 Broadway
New York, New York
</TABLE>
Facsimile Transmission:
(For Eligible Institutions Only)
(404) 332-3875
For Information, please call
1-800-568-3476
DELIVERY OF THIS NOTICE OF GUARANTEED DELIVERY TO AN ADDRESS, OR
TRANSMISSION OF INSTRUMENTS VIA A FACSIMILE, OTHER THAN AS SET FORTH ABOVE, DOES
NOT CONSTITUTE A VALID DELIVERY TO THE DEPOSITARY.
This Notice of Guaranteed Delivery is not to be used to guarantee
signatures. If a signature on a Letter of Transmittal is required to be
guaranteed by an "Eligible Institution" (as defined in the Offer to Purchase)
under the instructions thereto, such signature guarantee must appear in the
applicable space provided in the signature box on the Letter of Transmittal.
The Eligible Institution that completes this form must communicate the
guarantee to the Depositary and must deliver the Letter of Transmittal or an
Agent's Message and certificates for Shares to the Depositary within the time
period shown herein. Failure to do so could result in a financial loss to such
Eligible Institution.
THE GUARANTEE ON THE REVERSE SIDE MUST BE COMPLETED.
<PAGE> 2
Ladies and Gentlemen:
The undersigned hereby tenders to Greenwich Acquisition Corp., a Georgia
corporation, upon the terms and subject to the conditions set forth in the Offer
to Purchase, and the related Letter of Transmittal, receipt of which are hereby
acknowledged, Shares of the Company, pursuant to the guaranteed delivery
procedure set forth in Section 3 of the Offer to Purchase.
Number of Shares:
--------------------------------
Certificate No(s) (if available):
-----------------------------------------------------
-----------------------------------------------------
If Securities will be tendered by
book-entry transfer:
--------------------------------
Name of Tendering Institution:
-----------------------------------------------------
Account No.:
----------------------------------- at
[ ] The Depository Trust Company
[ ] Philadelphia Depository Trust Company
Dated:
---------------------------------------------
SIGN HERE
Name(s) of Record Holder(s):
- -----------------------------------------------------
- -----------------------------------------------------
(Please Print)
Address(es):
- ---------------------------------------
- -----------------------------------------------------
(Zip Code)
Area Code and Telephone No(s):
- -----------------------------------------------------
Signature(s):
- --------------------------------------
- -----------------------------------------------------
GUARANTEE
(NOT TO BE USED FOR SIGNATURE GUARANTEE)
The undersigned, a bank, broker, dealer, credit union, savings
association or other entity which is a member in good standing of the
Securities Transfer Agents Medallion Program, the New York Stock Exchange
Medallion Signature Guarantee Program, the Stock Exchange Medallion Program,
or a bank, broker, dealer, credit union, savings association or other entity
which is an "eligible guarantor institution," as such term is defined in Rule
17Ad-15 under the Securities Exchange Act of 1934, as amended, guarantees the
delivery to the Depositary of the Shares tendered hereby, together with a
properly completed and duly executed Letter of Transmittal (or manually signed
facsimile(s) thereof) and any other required documents, or an Agent's Message
(as defined in the Offer to Purchase) in the case of a book-entry delivery of
Shares, all within three trading days of the date hereof. A "trading day" is
any day on which the New York Stock Exchange is open for business.
Name of Firm:
------------------------------------
-----------------------------------------------------
(Authorized Signature)
Address:
-------------------------------------------
-----------------------------------------------------
(Zip Code)
Title:
- -----------------------------------------------
Name:
- ---------------------------------------------
(Please Print or Type)
Area Code and Telephone No.:
- -------------------
Dated:
- ---------------------------------------------
DO NOT SEND CERTIFICATES FOR SHARES WITH THIS FORM -- CERTIFICATES SHOULD BE
SENT WITH LETTER OF TRANSMITTAL
<PAGE> 1
GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9
GUIDELINES FOR DETERMINING THE PROPER IDENTIFICATION NUMBER TO GIVE THE
PAYER--Social Security numbers have nine digits separated by two hyphens: i.e.,
000-00-0000. Employer identification numbers have nine digits separated by only
one hyphen: i.e., 00-0000000. The table below will help determine the number to
give the Payer.
============================================================
<TABLE>
<CAPTION>
GIVE THE NAME AND
FOR THIS TYPE OF ACCOUNT: GIVE THE NAME AND FOR THIS TYPE OF ACCOUNT: EMPLOYER
SOCIAL SECURITY IDENTIFICATION
NUMBER OF-- NUMBER OF--
- ------------------------------------------------------------
------------------------------------------------------------
<S> <C> <C> <C>
1. Individual The individual
2. Two or more The actual owner of the
individuals account or, if combined
(joint account) funds, the first
individual on the
account(1)
3. Custodian account of The minor(2)
a minor (Uniform Gift
to Minors Act)
4. a. The usual The grantor-trustee(1)
revocable savings
trust (grantor is
also trustee)
b. So-called trust The actual owner(1)
account that is
not a legal or
valid trust under
State law
5. Sole proprietorship The owner(3)
6. Sole proprietorship The owner(3)
account
7. A valid trust, estate, The legal entity (Do
or pension trust not furnish the
identifying number of
the personal
representative or
trustee unless the
legal entity itself is
not designated in the
account title.)(4)
8. Corporate The corporation
9. Association, club, The organization
religious,
charitable,
educational, or other
tax-exempt
organization
10. Partnership The partnership
11. A broker or The broker or nominee
registered nominee
12. Account with the The public entity
Department of
Agriculture in the
name of a public
entity (such as a
State or local
government, school
district, or prison)
that receives
agricultural program
payments.
</TABLE>
============================================================
(1) List first and circle the name of the person whose number you furnish. If
only one person on a joint account has a SSN, that person's number must be
furnished.
(2) Circle the minor's name and furnish the minor's social security number.
(3) You must show your individual name, but you may also enter your business or
"doing business as" name. You may use either your social security number or
employment identification number (if you have one).
(4) List first and circle the name of the legal trust, estate or pension trust.
NOTE: If no name is circled when there is more than one name, the number will be
considered to be that of the first name listed.
<PAGE> 2
GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9
PAGE 2
OBTAINING A NUMBER
If you don't have a taxpayer identification number or you don't know your
number, obtain Form SS-5, Application for a Social Security Card, or Form SS-4,
Application for Employer Identification Number (for businesses and all other
entities), or Form W-7 for Individual Taxpayer Identification Number (for alien
individuals required to file U.S. tax returns), at an office of the Social
Security Administration or the Internal Revenue Service.
PAYEES EXEMPT FROM BACKUP WITHHOLDING
Payees specifically exempted from backup withholding on ALL payments include the
following:
- - An organization exempt from tax under section 501(a), or an individual
retirement plan, or a custodial account under Section 403(b)(7), if the
account satisfies the requirements of Section 401(f)(2).
- - The United States or any agency or instrumentality thereof.
- - A State, the District of Columbia, a possession of the United States, or any
political subdivision or instrumentality thereof.
- - A foreign government, a political subdivision of a foreign government, or any
agency or instrumentality thereof.
- - An international organization or any agency or instrumentality thereof.
Payees that may be exempt from backup withholding, including, among others:
- - A corporation.
- - A registered dealer in securities or commodities registered in the U.S. or a
possession of the U.S.
- - A real estate investment trust.
- - A common trust fund operated by a bank under section 584(a).
- - An entity registered at all times during the tax year under the Investment
Company Act of 1940.
- - A foreign central bank of issue.
- - A financial institution.
Payments of dividends and patronage dividends not generally subject to
backup withholding include the following:
- - Payments to nonresident aliens subject to withholding under section 1441.
- - Payments to partnerships not engaged in a trade or business in the U.S. and
which have at least one nonresident alien partner.
- - Payments of patronage dividends where the amount received is not paid in
money.
- - Payments made by certain foreign organizations.
Payments of interest not generally subject to backup withholding include
the following:
- - Payments of interest on obligations issued by individuals.
NOTE: You may be subject to backup withholding if this interest is $600 or more
and is paid in the course of the payer's trade or business and you have not
provided your correct taxpayer identification number to the payer.
- - Payments of tax-exempt interest (including exempt-interest dividends under
section 852).
- - Payments described in section 6049(b)(5) to nonresident aliens.
- - Payments on tax-free covenant bonds under section 1451.
- - Payments made by certain foreign organizations.
- - Mortgage interest paid to you.
Exempt payees described above should file a Substitute Form W-9 to avoid
possible erroneous backup withholding. FILE THIS FORM WITH THE PAYER, FURNISH
YOUR TAXPAYER IDENTIFICATION NUMBER, WRITE "EXEMPT" ON THE FACE OF THE FORM, AND
RETURN IT TO THE PAYER. IF THE PAYMENTS ARE INTEREST, DIVIDENDS OR PATRONAGE
DIVIDENDS, ALSO SIGN AND DATE THE FORM.
Certain payments other than interest, dividends and patronage dividends
that are not subject to information reporting are also not subject to backup
withholding. For details, see sections 6041, 6041A(a), 6042, 6044, 6045, 6049,
6050A, and 6050N, and their regulations.
PRIVACY ACT NOTICE.--Section 6109 requires most recipients of dividend, interest
or other payments to give taxpayer identification numbers to payers who must
report the payments to the IRS. The IRS uses the numbers for identification
purposes and to help verify the accuracy of your tax return. Payers must be
given the numbers whether or not recipients are required to file tax returns.
Payers must generally withhold 31% of taxable interest, dividend and certain
other payments to a payee who does not furnish a taxpayer identification number
to a payer. Certain penalties may also apply.
PENALTIES
(1) PENALTY FOR FAILURE TO FURNISH TAXPAYER IDENTIFICATION NUMBER.--If you fail
to furnish your correct taxpayer identification number to a payer, you are
subject to a penalty of $50 for each such failure unless your failure is due to
reasonable cause and not to willful neglect.
(2) CIVIL PENALTY FOR FALSE INFORMATION WITH RESPECT TO WITHHOLDING.--If you
make a false statement with no reasonable basis which results in no imposition
of backup withholding, you are subject to a penalty of $500.
(3) CRIMINAL PENALTY FOR FALSIFYING INFORMATION.--Falsifying certifications or
affirmations may subject you to criminal penalties including fines and/or
imprisonment.
FOR ADDITIONAL INFORMATION CONTACT YOUR TAX CONSULTANT OR THE INTERNAL REVENUE
SERVICE.
<PAGE> 1
EXHIBIT (A)(7)
This announcement is neither an offer to purchase nor a solicitation of an
offer to sell Shares. The Offer is made only by the Offer to Purchase and the
related Letter of Transmittal and is being made to all holders of the Shares.
The Offer is not being made to (nor will tenders be accepted from) holders of
Shares in any jurisdiction in which the Offer or the acceptance thereof would
not be in compliance with the securities laws of such jurisdiction. Neither the
Offeror nor Parent is aware of any jurisdiction in which the making of the Offer
or the acceptance thereof would not be in compliance with the laws of such
jurisdiction. To the extent that the Offeror or Parent becomes aware of any
state law that would limit the class of offerees in the Offer, the Offeror will
amend the Offer and, depending on the timing of such amendment, if any, will
extend the Offer to provide adequate dissemination of such information to such
holders of Shares prior to the expiration of the Offer. In those jurisdictions
where the securities laws require the Offer to be made by a licensed broker or
dealer, the Offer shall be deemed to be made on behalf of the Offeror by Smith
Barney Inc. or one or more registered brokers or dealers licensed under the laws
of such jurisdiction.
NOTICE OF OFFER TO PURCHASE FOR CASH
All Outstanding Shares of Common Stock
of
GRAPHIC INDUSTRIES, INC.
at $18.50 per Share
by
GREENWICH ACQUISITION CORP.
a wholly owned subsidiary of
WALLACE COMPUTER SERVICES, INC.
Greenwich Acquisition Corp., a Georgia corporation (the "Offeror") and a
wholly owned subsidiary of Wallace Computer Services, Inc., a Delaware
corporation (the "Parent"), hereby offers to purchase all of the shares of
common stock, par value $.10 per share (the "Shares"), of Graphic Industries,
Inc., a Georgia corporation (the "Company"), for $18.50 per Share, net to the
seller in cash without interest, upon the terms and subject to the conditions
set forth in the Offer to Purchase, dated October 3, 1997 (the "Offer to
Purchase"), and in the related Letter of Transmittal (which, together with any
amendments or supplements thereto, collectively constitute the "Offer").
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK
CITY TIME, ON FRIDAY, OCTOBER 31, 1997, UNLESS THE OFFER IS EXTENDED.
The Offer is conditioned upon, among other things, (i) there being validly
tendered and not withdrawn prior to the expiration of the Offer such number of
Shares that, together with the Shares and Class B Shares (as defined in the
Offer to Purchase) subject to the Option (as defined in the Offer to Purchase)
contained in the Stockholder Agreement (as defined below), would constitute a
majority of the Shares and Class B Shares that in the aggregate are outstanding,
determined on a fully diluted basis for all outstanding stock options, the
Convertible Debentures (as defined in the Offer to Purchase), other securities
convertible into the Shares or Class B Shares and any other rights to acquire
Shares or Class B Shares, (ii) any waiting period under the HSR Act (as defined
in the Offer to Purchase) applicable to the purchase of Shares pursuant to the
Offer having expired or having been terminated prior to the expiration of the
Offer, and (iii) the satisfaction of certain other terms and conditions.
The Offer is being made pursuant to an Agreement and Plan of Merger, dated
as of September 28, 1997 (the "Merger Agreement"), among Parent, the Offeror and
the Company. The Merger Agreement provides that, among other things, as soon as
practicable after the purchase of Shares pursuant to the Offer and the
<PAGE> 2
satisfaction of the other conditions set forth in the Merger Agreement and in
accordance with relevant provisions of the Georgia Business Corporation Code, as
amended (the "GBCC"), the Offeror will be merged with and into the Company (the
"Merger"). At the effective time of the Merger (the "Effective Time"), each
Share issued and outstanding immediately prior to the Effective Time (other than
Shares held in the treasury of the Company, Shares held by Parent, the Offeror
or any other wholly owned subsidiary of Parent, or Shares which are held by
stockholders, if any, who properly exercise their appraisal rights under the
GBCC) will be cancelled and converted into the right to receive $18.50 in cash,
or any higher price that is paid in the Offer, without interest.
THE BOARD OF DIRECTORS OF THE COMPANY HAS UNANIMOUSLY APPROVED AND ADOPTED
THE MERGER AGREEMENT, APPROVED THE OFFER AND THE MERGER, HAS DETERMINED THAT THE
TERMS OF THE OFFER AND THE MERGER ARE FAIR TO, AND IN THE BEST INTERESTS OF, THE
COMPANY'S STOCKHOLDERS, AND RECOMMENDS THAT THE COMPANY'S STOCKHOLDERS ACCEPT
THE OFFER AND TENDER ALL THEIR SHARES PURSUANT TO THE OFFER.
In connection with the execution of the Merger Agreement, Parent and the
Offeror have also entered into a Stockholder Agreement, dated as of September
28, 1997 (the "Stockholder Agreement"), with a holder of Shares and Class B
Shares (the "Selling Stockholder") pursuant to which the Selling Stockholder has
granted to the Offeror an irrevocable option to purchase, and following the
purchase of any Shares in the Offer the Offeror has agreed to purchase, 432,089
of the Shares and 2,239,046 of the Class B Shares owned of record by the Selling
Stockholder (the "Option Shares"). The Selling Stockholder has also agreed (i)
so long as the Merger Agreement has not terminated, to tender pursuant to the
Offer the other 432,088 Shares owned by the Selling Stockholder and (ii) in the
event the Offeror purchases Shares pursuant to the Offer, to sell the other
2,239,046 Class B Shares owned by the Selling Stockholder to the Offeror at the
time of the sale to the Offeror of the Option Shares. In addition, the Selling
Stockholder has agreed, until September 28, 1998, to vote the Option Shares in
favor of the transactions contemplated by the Merger Agreement and against
certain competing transactions.
For purposes of the Offer, the Offeror will be deemed to have accepted for
payment, and thereby purchased, Shares validly tendered and not withdrawn, if
and when the Offeror gives oral or written notice to SunTrust Bank, Atlanta (the
"Depositary") of the Offeror's acceptance of such Shares for payment. In all
cases, payment for Shares purchased pursuant to the Offer will be made by
deposit of the purchase price with the Depositary, which shall act as agent for
tendering stockholders for the purpose of receiving payment from the Offeror and
transmitting payment to the tendering stockholders. Payment for Shares accepted
for payment pursuant to the Offer will be made only after timely receipt by the
Depositary of (i) certificates for such Shares or timely confirmation of a
book-entry transfer of such Shares into the Depositary's account at the
Book-Entry Transfer Facilities (as defined in the Offer to Purchase) pursuant to
the procedures set forth in the Offer to Purchase, (ii) a properly completed and
duly executed Letter of Transmittal (or manually signed facsimile thereof), with
any required signature guarantees, or, in the case of a book-entry transfer, an
Agent's Message (as defined in the Offer to Purchase) and (iii) any other
documents required by the Letter of Transmittal.
If any of the conditions set forth in the Offer to Purchase that relate to
the Offeror's obligations to purchase the Shares are not satisfied by 12:00
Midnight, New York City time, on Friday, October 31, 1997 (or any other time
then set as the Expiration Date), the Offeror may, subject to the terms of the
Merger Agreement, (i) extend the Offer and, subject to applicable withdrawal
rights, retain all tendered Shares until the expiration of the Offer as so
extended, (ii) subject to complying with applicable rules and regulations of the
Securities and Exchange Commission, accept for payment all Shares so tendered
and not extend the Offer, or (iii) terminate the Offer and not accept for
payment any Shares and return all tendered Shares to tendering stockholders. The
term "Expiration Date" shall mean 12:00 Midnight, New York City time, on Friday,
October 31, 1997, unless the Offeror shall have extended the period of time for
which the Offer is open, in which event the term "Expiration Date" shall mean
the latest time and date at which the Offer, as so extended by the Offeror,
shall expire.
2
<PAGE> 3
Subject to the limitations set forth in the Offer and the Merger Agreement,
the Offeror reserves the right (but will not be obligated), at any time or from
time to time in its sole discretion, to extend the period during which the Offer
is open by giving oral or written notice of such extension to the Depositary and
by making a public announcement of such extension. There can be no assurance
that the Offeror will exercise its right to extend the Offer. Any extension of
the period during which the Offer is open will be followed, as promptly as
practicable, by public announcement thereof, such announcement to be issued not
later than 9:00 a.m., New York City Time, on the next business day after the
previously scheduled Expiration Date. During any such extension, all Shares
previously tendered and not withdrawn will remain subject to the Offer, subject
to the rights of a tendering stockholder to withdraw such stockholder's Shares.
Except as otherwise provided in Section 4 of the Offer to Purchase, tenders
of Shares made pursuant to the Offer are irrevocable, except that Shares
tendered pursuant to the Offer may be withdrawn at any time prior to the
Expiration Date, and, unless theretofore accepted for payment, may also be
withdrawn at any time after December 1, 1997. For a withdrawal to be effective,
a written, telegraphic, telex or facsimile transmission notice of withdrawal
must be timely received by the Depositary at one of its addresses set forth on
the back cover of the Offer to Purchase. Any such notice of withdrawal must
specify the name of the person who tendered the Shares to be withdrawn, the
number of Shares to be withdrawn and the name of the registered holder if
different from the name of the person who tendered the Shares. If certificates
for Shares to be withdrawn have been delivered or otherwise identified to the
Depositary, then prior to the physical release of such certificates, the serial
numbers shown on such certificates must be submitted to the Depositary and,
unless such Shares have been tendered for the account of an Eligible Institution
(as defined in the Offer to Purchase), the signature on the notice of withdrawal
must be guaranteed by an Eligible Institution. If Shares have been delivered
pursuant to the procedure for book-entry transfer as set forth in Section 3 of
the Offer to Purchase, any notice of withdrawal must also specify the name and
number of the account at the appropriate Book-Entry Transfer Facility to be
credited with the withdrawn Shares and otherwise comply with such Book-Entry
Transfer Facility's procedures. All questions as to the form and validity
(including time of receipt) of a notice of withdrawal will be determined by the
Offeror, in its sole discretion, and its determination shall be final and
binding on all parties.
The information required to be disclosed by Paragraph (e)(1)(vii) of Rule
14d-6 of the General Rules and Regulations under the Securities Exchange Act of
1934, as amended, is contained in the Offer to Purchase and is incorporated
herein by reference.
The Company has provided to the Offeror its lists of stockholders and
security position listings for the purpose of disseminating the Offer to holders
of Shares. The Offer to Purchase, the related Letter of Transmittal and other
related materials are being mailed to record holders of Shares and will be
mailed to brokers, dealers, commercial banks, trust companies and similar
persons whose names, or the names of whose nominees, appear on the stockholder
lists or, if applicable, who are listed as participants in a clearing agency's
security position listing, for subsequent transmittal to beneficial owners of
Shares.
THE OFFER TO PURCHASE AND THE RELATED LETTER OF TRANSMITTAL CONTAIN
IMPORTANT INFORMATION THAT SHOULD BE READ BEFORE ANY DECISION IS MADE WITH
RESPECT TO THE OFFER.
Any questions or requests for assistance or for copies of the Offer to
Purchase and the related Letter of Transmittal and other tender offer materials
may be directed to the Information Agent or the Dealer Manager as set forth
below, and copies will be furnished promptly at the Offeror's expense. No fees
or commissions will
3
<PAGE> 4
be payable to brokers, dealers or other persons other than the Information
Agent, the Dealer Manager and the Depositary for soliciting tenders of Shares
pursuant to the Offer.
The Information Agent for the Offer is:
MORROW & CO., INC. LOGO
909 Third Avenue
20th Floor
New York, New York 10022
(212) 754-8000
Toll Free: (800) 566-9061
Banks and Brokerage Firms please call:
(800) 662-5200
The Dealer Manager for the Offer is:
SMITH BARNEY INC.
388 Greenwich Street
New York, New York 10013
(212) 816-2592
October 3, 1997
4
<PAGE> 1
EXHIBIT (a)(8)
2275 CABOT DRIVE Contacts: Brad Samson
LISLE, IL 60532-3630 Wallace 630/588-5395
T 630.588.5000 F 630.588.5115
Roy Wiley
Hill & Knowlton 312/255-3035
[WALLACE LOGO] WALLACE NEWS RELEASE
FOR IMMEDIATE RELEASE
WALLACE ANNOUNCES ACQUISITION OF GRAPHIC INDUSTRIES, INC.,
LARGEST U.S. SHEET-FED COMMERCIAL PRINTING NETWORK
Lisle, Ill., Sunday, September 28, 1997 -- Wallace Computer Services, Inc.,
(NYSE:WCS) and Graphic Industries, Inc. (NYSE:GII) today announced that they
have entered into an agreement for the acquisition of Graphic Industries by
Wallace. In the transaction, Graphic Industries' shareholders will receive
$18.50 in cash per share of Graphic Industries common stock. The total
consideration to Graphic Industries holders will be approximately $260 million.
The agreement was approved unanimously by both boards. Wallace anticipates
that even before synergies are achieved, it will be accretive in the current
fiscal year.
Graphic Industries is a national network of 20 companies providing
full service printing and graphic communications services. Located in 17 key
markets across the U.S., these operations comprise the nation's largest network
of short-to-medium run, high-quality, full-color commercial printing companies.
Graphic Industries' operations offer advanced graphic supply-chain solutions to
its clients including multimedia, internet design, fulfillment, on-demand
printing and creative design services. Graphic Industries ranked in the top 10
among commercial printing companies in the U.S. in 1996. The company reported
fiscal 1997 sales of $437.1 million.
- more -
INFORMATION MANAGEMENT Products. Services. Solutions.
<PAGE> 2
Wallace Acquires Graphic Industries -- page 2
"High-color commercial printing is an important component of Wallace's
strategy to become a fully integrated supply manager by furnishing and managing
all the supplies used in large organizations' offices," said Bob Cronin,
Wallace's president and CEO. "Graphic Industries will be a valuable partner in
implementing this strategy and expanding our customer offering. They provide
critical mass and wide geographic coverage, as well as a like focus on quality
and customer service. We plan to continue supporting the network's established
customer base, as well as to offer these companies' capabilities to Wallace's
large, national customers."
"During the past 27 years, Graphic Industries has successfully served
our customers in a changing environment," said Mark Pope III, chairman and CEO
of Graphic Industries. "Distribution, inventory management and advanced print
management services are becoming increasingly important to Graphic Industries'
national and regional customers, and Wallace is well recognized for those
strengths. I believe that joining with Wallace at this time offers our
shareholders a fair return and represents broader opportunities for our
customers and associates. Together, we can offer all of our customers a wider
range of products and enhanced service."
The commercial print opportunity
Over the last four years, Wallace has built a strong reputation by
helping many large organizations outsource the supply and management of all
their business forms. More recently, the company is successfully leveraging
that expertise to additional product categories such as office supplies.
Wallace has recognized that these same supply management services can generate
as much, and in some cases much more, cost savings when applied to an
organization's high-quality commercial printing purchases such as marketing
brochures and point-of-sale materials.
- more -
<PAGE> 3
Wallace Acquires Graphic Industries -- page 3
"Large companies face the same kinds of organizational challenges with
their marketing materials that they've had with their forms," said Doug
Fitzgerald, Wallace's vice president of marketing. "In most cases, the
purchasing and marketing managers have few tools that help them measure the
effectiveness of brochures and collateral materials. Using our W.I.N.(TM) (the
Wallace Information Network(TM) system, Wallace will give those marketing
managers new tools to better forecast usage, track inventories, evaluate the
marketing mix and reduce costs, all without compromising any of the creative or
design work."
The company recently introduced a new version of W.I.N. (3.0) which
addresses the special needs of commercial printing products. With these
enhancements, W.I.N. is now the only tool companies need to manage all of their
custom and stock business supplies including business forms, catalogs,
directories, brochures, promotional point-of-sale materials, kits, custom and
stock office supplies, labels, envelopes, as well as other special
customer-defined items.
Terms of the agreement
Under the agreement, a wholly-owned subsidiary of Wallace will
promptly commence a tender offer for all outstanding shares of Graphic
Industries for $18.50 per share in cash. Mark Pope III, the holder of
4,478,000 shares of Class B Common Stock (representing approximately 99% of the
outstanding shares of Class B Common Stock) and 864,000 shares of Common Stock,
has separately granted to Wallace an option to purchase one-half of his shares
of Class B Common Stock and one-half of his shares of Common Stock, and has
agreed to vote such shares against any other transaction. The tender offer
will be conditioned upon, among other things, the tender of an amount of shares
that, together with the shares subject to such option, represents a majority of
all outstanding shares of Common Stock and Class B Common Stock (on a fully
diluted basis).
- more -
<PAGE> 4
Wallace Acquires Graphic Industries -- page 4
Following the completion of the tender offer, Wallace will purchase
all shares held by Mark Pope III that are not purchased pursuant to the tender
offer. Thereafter, Wallace's wholly-owned subsidiary will merge with Graphic
Industries, and any shares of Graphic Industries not previously purchased will
be converted in the merger into the right to receive $18.50 per share in cash
(or, in the case of dissenting shares, the amount determined pursuant to the
applicable appraisal process).
Wallace is recognized as the leader in forms and consumable supplies
management services, and is one of the nation's largest manufacturers and
distributors of information management products. The company is headquartered
in Lisle, Illinois, with 29 manufacturing and distribution locations, and sales
facilities throughout the United States.
This press release includes forward-looking statements covered by the
Safe Harbor Provisions of the Private Securities Litigation Reform Act of 1995.
These statements involve uncertainties and risks and there can be no assurance
that actual results will not differ from the company's expectations. Factors
which could cause materially different results include, among others, customer
acceptance of new product categories and service offerings, timing of the
completion of acquisitions, the frequency and magnitude of paper price changes,
the pace of new customer sales ramp-ups, changes in software and communications
technologies, general economic and business conditions, competitive actions,
and other risks described in the company's filings with the Securities and
Exchange Commission.
#####
<PAGE> 1
EXHIBIT (a)(9)
2275 CABOT DRIVE CONTACT: BRAD SAMSON
LISLE, IL 60532-3630 WALLACE 630/588-5396
T 630.588.5000
F 630.588.5115
WALLACE NEWS RELEASE
FOR IMMEDIATE RELEASE
WALLACE COMMENCES TENDER OFFER FOR GRAPHIC INDUSTRIES
Lisle, Ill., October 3, 1997 - Wallace Computer Services, Inc. (WCS:NYSE) today
announced that a wholly-owned subsidiary of Wallace has commenced its
previously announced tender offer for all shares of common stock of Graphic
Industries, Inc., at $18.50 per share.
The tender offer is being made pursuant to an agreement and plan of
merger dated September 28, 1997. The tender offer is scheduled to expire at
midnight, New York City time, on Friday, October 31, 1997.
SunTrust Bank is the depositary for the tender offer; the dealer
manager is Smith Barney Inc. For additional information regarding the tender
and delivery procedures and conditions of the offer, interested parties should
refer to the Offer to Purchase and related transmittal documents, copies of
which can be obtained from Morrow & Co., Inc., the information agent for the
offer, at 800/662-5200.
Wallace is recognized as the leader in consumable supplies management
services, and is one of the nation's largest manufacturers and distributors of
information management products. The company is headquartered in Lisle,
Illinois, with manufacturing, distribution and sales facilities throughout the
U.S.
#####
INFORMATION MANAGEMENT Products, Services, Solutions.
<PAGE> 1
CONVERSION AND TENDER REQUEST
THIS CONVERSION AND TENDER REQUEST AND ALL REQUIRED SHARE CERTIFICATES AND
DOCUMENTS MUST BE RECEIVED BY SUNTRUST BANK, ATLANTA, AS DEPOSITARY, ON OR
BEFORE OCTOBER 31, 1997 (UNLESS EXTENDED) (THE "EXPIRATION DATE").
The address of the Depositary is:
SUNTRUST BANK, ATLANTA
<TABLE>
<S> <C>
By Overnight Courier: By Mail:
- -------------------------------------------- --------------------------------------------
SunTrust Bank, Atlanta
58 Edgewood Avenue SunTrust Bank, Atlanta
Room 225 P.O. Box 4625
Atlanta, Georgia 30303 Atlanta, Georgia 30302
</TABLE>
Facsimile Transmission:
(For Eligible Institutions Only)
(404) 332-3875
For Information, please call
1-800-568-3476
------------------------
TO: GRAPHIC INDUSTRIES, INC. (the "Company")
SUNTRUST BANK, ATLANTA (the "Depositary")
The undersigned holder of the Class B Common Stock, par value $.10 per
share, of the Company described below ("Class B Shares") hereby (i) requests
conversion of such Class B Shares pursuant to the Amended and Restated Articles
of Incorporation of the Company into an equal number of shares of Common Stock,
par value $.10 per share ("Common Shares"), of the Company, and (ii) tenders the
Common Shares received upon such conversion pursuant to the Offer (as defined
below), in each case on the terms and conditions set forth below:
1. The undersigned hereby requests conversion of the Class B Shares
described below, and requests that such conversion be effected on the date
(the "Conversion Date") Greenwich Acquisition Corp., a Georgia corporation
(the "Offeror") and a wholly owned subsidiary of Wallace Computer Services,
Inc., a Delaware corporation, first accepts for payment Common Shares
pursuant to the Offeror's offer to purchase all of the outstanding Common
Shares at a purchase price of $18.50 per Common Share, net to seller in
cash, upon the terms and subject to the conditions set forth in the Offer
to Purchase, dated October 3, 1997 (the "Offer to Purchase"), receipt of
which is hereby acknowledged, and the related Letter of Transmittal (which
together with the Offer to Purchase constitute the "Offer"), and
contemporaneously therewith, provided, however, that if the Conversion Date
does not occur prior to 12:00 midnight (New York time) on January 31, 1998,
such Class B Shares shall be returned to the undersigned. The undersigned
may withdraw this Conversion and Tender Request prior to the purchase of
the Common Shares by contacting the Company c/o SunTrust Bank, Atlanta.
2. The undersigned hereby tenders to the Offeror pursuant to the Offer
all Common Shares received upon the conversion of the Class B Shares
tendered hereby. The undersigned is entitled to the withdrawal rights
described in the Offer to Purchase.
3. Subject to and effective upon conversion of the Class B Shares
tendered hereby, the undersigned hereby appoints the Depositary the true
and lawful agent and attorney-in-fact of the undersigned with respect to
the Common Shares received upon such conversion so that such Common Shares
may be tendered under the Offer. Such power of attorney is coupled with an
interest and is irrevocable.
4. Subject to and effective upon acceptance for payment of and payment
for the Common Shares tendered herewith, the undersigned hereby sells,
assigns and transfers to or upon the order of the Offeror all right, title
and interest in and to all the Common Shares that are being tendered hereby
(and any and all other Common Shares or other securities issued or issuable
in respect thereof) and appoints the
1
<PAGE> 2
Depositary the true and lawful agent and attorney-in-fact of the
undersigned with respect to such Common Shares (and all such other Common
Shares or securities), with full power of substitution (such power of
attorney being deemed to be an irrevocable power coupled with an interest),
to (a) deliver certificates for such Common Shares (and all such other
Common Shares or securities), or transfer ownership of such Common Shares
(and all such other Common Shares or securities) on the account books
maintained by any of the Book-Entry Transfer Facilities, together, in any
such case, with all accompanying evidences of transfer and authenticity, to
or upon the order of the Offeror, (b) present such Common Shares (and all
such other Common Shares or securities) for transfer on the books of the
Company and (c) receive all benefits and otherwise exercise all rights of
beneficial ownership of such Common Shares (and all such other Common
Shares or securities), all in accordance with the terms of the Offer.
5. The undersigned hereby irrevocably appoints each designee of the
Offeror as the attorney-in-fact and proxy of the undersigned, each with
full power of substitution, to exercise all voting and other rights of the
undersigned in such manner as each such attorney and proxy or his
substitute shall in his sole judgment deem proper, with respect to all of
the Common Shares tendered hereby which have been accepted for payment by
the Offeror prior to the time of any vote or other action (and any and all
other Common Shares or other securities or rights issued or issuable in
respect of such Common Shares) at any meeting of stockholders of the
Company (whether annual or special and whether or not an adjourned
meeting), any actions by written consent in lieu of any such meeting or
otherwise. This proxy is irrevocable and is granted in consideration of,
and is effective upon, the acceptance for payment of such Common Shares by
the Offeror in accordance with the terms of the Offer. Such acceptance for
payment shall revoke any other proxy or written consent granted by the
undersigned at any time with respect to such Common Shares (and all such
other Common Shares or other securities or rights), and no subsequent
proxies will be given or written consents will be executed by the
undersigned (and if given or executed, will not be deemed effective).
6. The undersigned hereby represents and warrants that (i) the
undersigned has full power and authority to request the conversion of the
Class B Shares tendered hereby and to tender, sell, assign and transfer the
Common Shares received upon such conversion and tendered hereby (and any
and all other Common Shares or other securities or rights issued or
issuable in respect of such Common Shares), (ii) the Class B Shares
tendered hereby for conversion are free and clear of all liens,
restrictions, charges and encumbrances and are not subject to any adverse
claim and (iii) when the Common Shares received upon conversion and
tendered hereby are accepted for payment by the Offeror, the Offeror will
acquire good and unencumbered title thereto, free and clear of all liens,
restrictions, charges and encumbrances and not subject to any adverse
claims. The undersigned, upon request, will execute and deliver any
additional documents deemed by the Depositary, the Company or the Offeror
to be necessary or desirable to complete the conversion of the Class B
Shares and the sale, assignment and transfer of the Common Shares tendered
hereby (and all such other Common Shares or other securities or rights).
7. All authority herein conferred or agreed to be conferred shall
survive the death or incapacity of the undersigned, and any obligation of
the undersigned hereunder shall be binding upon the heirs, personal
representatives, successors and assigns of the undersigned. Except as
stated in the Offer, the tender of the Common Shares is irrevocable.
The undersigned understands that tenders of the Class B Shares for
conversion and of the Common Shares received upon conversion of the Class B
Shares, pursuant to any one of the procedures described in this Conversion and
Tender Request and in the instructions hereto will constitute an agreement
between the undersigned and the Company with respect to the conversion of the
Class B Shares and between the undersigned and the Offeror with respect to the
tender of the Common Shares upon the terms and subject to the conditions of the
Offer.
2
<PAGE> 3
Please issue the check for the purchase price of the Common Shares
purchased, and return any Class B Shares which are not converted, in the name(s)
of the undersigned. Please mail the check for the purchase price of any Common
Shares purchased and return any certificates for Class B Shares not converted
(and accompanying documents, as appropriate) to the undersigned at the address
shown below the undersigned's signature(s).
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------
DESCRIPTION OF CLASS B SHARES REQUESTED TO BE CONVERTED*
- --------------------------------------------------------------------------------------------------------------
NAME(S) AND ADDRESS(ES) OF REGISTERED HOLDER(S) SHARES REQUESTED TO BE CONVERTED
(PLEASE FILL IN, IF BLANK) (ATTACH ADDITIONAL LIST, IF NECESSARY)
- --------------------------------------------------------------------------------------------------------------
NUMBER OF NUMBER OF
SHARE SHARES SHARES
CERTIFICATE REPRESENTED BY REQUESTED TO BE
NUMBER(S) CERTIFICATE(S) CONVERTED**
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
- --------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------
TOTAL SHARES
- --------------------------------------------------------------------------------------------------------------
* All Common Shares issued upon conversion pursuant to this Conversion and Tender Request will be tendered
pursuant to the Offer.
** Unless otherwise indicated, it will be assumed that all Class B Shares represented by any certificates
delivered to the Company c/o the Depositary are being requested to be converted. See Instruction 4.
- --------------------------------------------------------------------------------------------------------------
</TABLE>
3
<PAGE> 4
SIGN HERE
(Complete Substitute Form W-9 below)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Signature(s) of Owner(s)
- --------------------------------------------------------------------------------
Name(s)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Capacity (full title)
- --------------------------------------------------------------------------------
Address
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(Include Zip Code)
- --------------------------------------------------------------------------------
Area Code and Telephone Number
- ---------------------------------------------------------------------------
Taxpayer Identification or Social Security Number
- -----------------------------------------------------------
(See Substitute Form W-9)
Dated:
- -------------------------------------------------------------------------------,
1997
(Must be signed by registered holder(s) exactly as name(s) appear(s) on
stock certificate(s) or on a security position listing or by the person(s)
authorized to become registered holder(s) by certificates and documents
transmitted herewith. If signature is by a trustee, executor, administrator,
guardian, attorney-in-fact, agent, officer of a corporation or other person
acting in a fiduciary or representative capacity, please set forth full title
and see Instruction 5.)
GUARANTEE OF SIGNATURE(S)
(SEE INSTRUCTIONS 1 AND 5)
FOR USE BY FINANCIAL INSTITUTIONS ONLY. PLACE MEDALLION GUARANTEE IN SPACE
BELOW.
Authorized signature(s)
- --------------------------------------------------------------------------------
Name
- --------------------------------------------------------------------------------
Name of Firm
- --------------------------------------------------------------------------------
Address
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(Include Zip Code)
Area Code and Telephone Number
- ---------------------------------------------------------------------------
Dated:
- -------------------------------------------------------------------------------,
1997
- --------------------------------------------------------------------------------
4
<PAGE> 5
<TABLE>
- ------------------------------------------------------------------------------------------------------------------------
PAYOR'S NAME: SUNTRUST BANK ATLANTA
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
SUBSTITUTE PART I--PLEASE PROVIDE YOUR TIN IN THE BOX AT THE RIGHT
FORMW-9 AND CERTIFY BY SIGNING AND DATING BELOW. TIN:
Social Security Number
or Employer
Identification Number
-----------------------------------------------------------------------------------------
Department of the PART II--For Payees exempt from backup withholding, see the enclosed Guidelines for
Treasury, Internal Certification of Taxpayer Identification Number on Substitute Form W-9 and complete as
Revenue Service instructed therein.
PAYOR'S REQUEST FOR -----------------------------------------------------------------------------------------
TAXPAYER IDENTIFICATION Certification--Under penalties of perjury, I certify that:
NUMBER ("TIN") AND
CERTIFICATION (1) The number shown on this form is my correct TIN (or I am waiting for a number
to be issued to me); and
(2) I am not subject to backup withholding because (a) I am exempt from backup
withholding or (b) I have not been notified by the Internal Revenue Service
("IRS") that I am subject to backup withholding as a result of a failure to report
all interest or dividend, or (c) the IRS has notified me that I am no longer
subject to backup withholding.
-----------------------------------------------------------------------------------------
SIGNATURE _______________________________________________ DATE: _____________________
- ------------------------------------------------------------------------------------------------------------------------
</TABLE>
CERTIFICATION INSTRUCTIONS--You must cross out item (2) above if you have been
notified by the IRS that you are subject to backup withholding because of
underreporting interest or dividends on your tax return. However, if after being
notified by the IRS that you were subject to backup withholding, you received
another notification from the IRS that you were no longer subject to backup
withholding, do not cross out item (2). (Also see the instructions in the
enclosed Guidelines.)
NOTE: FAILURE TO COMPLETE AND RETURN THIS SUBSTITUTE FORM W-9 MAY RESULT IN
BACKUP WITHHOLDING OF 31% OF ANY PAYMENTS MADE TO YOU PURSUANT TO THE
OFFER. PLEASE REVIEW THE ENCLOSED GUIDELINES FOR CERTIFICATION OF TAXPAYER
IDENTIFICATION NUMBER ON SUBSTITUTE FORM W-9 FOR ADDITIONAL DETAILS.
YOU MUST COMPLETE THE FOLLOWING CERTIFICATE IF YOU ARE AWAITING YOUR TIN.
<TABLE>
- --------------------------------------------------------------------------------------------------
CERTIFICATE OF AWAITING TAXPAYER IDENTIFICATION NUMBER
<S><C>
I certify under penalties of perjury that a TIN has not been issued to me, and either (1) I have
mailed or delivered an application to receive a TIN to the appropriate IRS Center or Social
Security Administration Officer or (2) I intend to mail or deliver an application in the near
future. I understand that if I do not provide a TIN by the time of payment, 31% of all payments
pursuant to the Offer made to me thereafter will be withheld until I provide a number.
Signature: ________________________________________________ Date: _______________________
- --------------------------------------------------------------------------------------------------
</TABLE>
5
<PAGE> 6
INSTRUCTIONS
FORMING PART OF THE CONVERSION AND TENDER REQUEST
1. Guarantee of Signatures. Except as otherwise provided below, signatures
on a Conversion and Tender Request (the "Request") must be guaranteed by a firm
that is a bank, broker, dealer, credit union, savings association or other
entity which is a member in good standing of the Securities Transfer Agents
Medallion Program, the New York Stock Exchange Medallion Signature Guarantee
Program, the Stock Exchange Medallion Program, or by any other bank, broker,
dealer, credit union, savings association or other entity which is an "eligible
guarantor institution," as such term is defined in Rule 17Ad-15 under the
Securities Exchange Act of 1934, as amended (each of the foregoing constituting
an "Eligible Institution"), unless the Class B Shares tendered thereby are
tendered (i) by a registered holder of the Class B Shares or (ii) for the
account of an Eligible Institution. See Instruction 5. If the certificates are
registered in the name of a person or persons other than the signer of this
Request, then the tendered certificates must be endorsed or accompanied by duly
executed stock powers, in either case signed exactly as the name or names of the
registered owner or owners appear on the certificates or stock powers, with the
signatures on the certificates or stock powers guaranteed by an Eligible
Institution as provided herein. See Instruction 5.
2. Delivery of Request and Class B Shares. Certificates for all Class B
Shares, as well as a properly completed and duly executed Request (or a manually
signed facsimile thereof), and any other documents required by this Request,
must be received by the Depositary at one of its addresses set forth on the
front page of this Request by the Expiration Date.
THE METHOD OF DELIVERY OF CLASS B SHARES, THE REQUEST AND ALL OTHER
REQUIRED DOCUMENTS IS AT THE OPTION AND RISK OF THE TENDERING STOCKHOLDER.
SHARES WILL BE DEEMED DELIVERED ONLY WHEN ACTUALLY RECEIVED BY THE DEPOSITARY.
IF DELIVERY IS BY MAIL, REGISTERED MAIL WITH RETURN RECEIPT REQUESTED, PROPERLY
INSURED, IS RECOMMENDED. IN ALL CASES, SUFFICIENT TIME SHOULD BE ALLOWED TO
ENSURE TIMELY DELIVERY.
No alternative, conditional or contingent tenders will be accepted. By
executing this Request (or a manually signed facsimile thereof), the tendering
stockholder waives any right to receive any notice of the acceptance for payment
of the Common Shares.
3. Inadequate Space. If the space provided herein is inadequate, the
certificate numbers and/or the number of Class B Shares should be listed on a
separate schedule attached hereto.
4. Partial Tenders. If fewer than all the Class B Shares represented by any
certificate delivered to the Depositary are to be converted, fill in the number
of Class B Shares which are to be converted in the box entitled "Number of
Shares Requested to be Converted." In such case, a new certificate for the
remainder of the Class B Shares represented by the old certificate will be sent
to the person(s) signing this Request as promptly as practicable following the
expiration or termination of the Offer. All Class B Shares represented by
certificates delivered to the Depositary will be deemed to have been tendered
for conversion unless otherwise indicated.
5. Signatures on Request; Stock Powers and Endorsements. If this Request is
signed by the registered holder(s) of the Class B Shares tendered hereby, the
signature(s) must correspond with the name(s) as written on the face of the
certificates without alteration, enlargement or any change whatsoever.
If any of the Class B Shares tendered hereby are held of record by two or
more persons, all such persons must sign this Request.
If any of the Class B Shares tendered hereby are registered in different
names on different certificates, it will be necessary to complete, sign and
submit as many separate Requests as there are different registrations of
certificates.
If this Request is signed by the registered holder(s) of the Class B Shares
tendered hereby, no endorsements of certificates or separate stock powers are
required.
6
<PAGE> 7
If this Request is signed by a person other than the registered holder(s)
of the Class B Shares tendered hereby, the certificate must be endorsed or
accompanied by appropriate stock powers, in either case signed exactly as the
name(s) of the registered holder(s) appear(s) on the certificates for such Class
B Shares. Signature(s) on any such certificates or stock powers must be
guaranteed by an Eligible Institution.
If this Request or any certificate or stock power is signed by a trustee,
executor, administrator, guardian, attorney-in-fact, officer of a corporation or
other person acting in a fiduciary or representative capacity, such person
should so indicate when signing, and proper evidence satisfactory to the Offeror
of the authority of such person so to act must be submitted.
6. Stock Transfer Taxes. The Offeror will pay any stock transfer taxes with
respect to the sale and transfer of any Common Shares to it or its order
pursuant to the Offer.
It will not be necessary for transfer tax stamps to be affixed to the
certificates listed in this Request.
7. Substitute Form W-9. The tendering stockholder is required to provide
the Depositary with such stockholder's correct TIN on Substitute Form W-9, which
is provided herewith, unless an exemption applies. Failure to provide the
information on the Substitute Form W-9 may subject the tendering stockholder to
a $50 penalty and to 31% federal income tax backup withholding on the payment of
the purchase price for the Common Shares.
8. Foreign Holders. Foreign holders must submit a completed IRS Form W-8 to
avoid 31% backup withholding. IRS Form W-8 may be obtained by contacting the
Depositary at one of the addresses on the face of this Request.
9. Requests for Assistance or Additional Copies. Requests for assistance or
additional copies of the Offer to Purchase and this Request may be obtained from
the Information Agent or the Dealer Manager at their respective addresses or
telephone numbers set forth below.
10. Waiver of Conditions. The conditions of the Offer may be waived by the
Offeror (subject to certain limitations in the Merger Agreement), in whole or in
part, at any time or from time to time, in the Offeror's sole discretion.
IMPORTANT: THIS REQUEST OR A MANUALLY SIGNED FACSIMILE COPY HEREOF
(TOGETHER WITH THE CLASS B SHARES AND ALL OTHER REQUIRED DOCUMENTS) MUST BE
RECEIVED BY THE DEPOSITARY ON OR PRIOR TO THE EXPIRATION DATE (AS DEFINED IN THE
OFFER TO PURCHASE).
IMPORTANT TAX INFORMATION
Under federal income tax law, a stockholder whose tendered Common Shares
are accepted for payment is required to provide the Depositary with such
stockholder's correct TIN on the Substitute Form W-9. If such stockholder is an
individual, the TIN is such stockholder's Social Security Number. If the
Depositary is not provided with the correct TIN, the stockholder may be subject
to a $50 penalty imposed by the Internal Revenue Service. In addition, payments
that are made to such stockholder with respect to Common Shares purchased
pursuant to the Offer may be subject to backup withholding.
Certain stockholders (including, among others, all corporations and certain
foreign individuals) are not subject to these backup withholding and reporting
requirements. In order for a foreign individual to qualify as an exempt
recipient, that stockholder must submit a statement, signed under penalties of
perjury, attesting to that individual's exempt status. Such statements may be
obtained from the Depositary. All exempt recipients (including foreign persons
wishing to qualify as exempt recipients) should see the enclosed Guidelines for
Certification of Taxpayer Identification Number on Substitute Form W-9 for
additional instructions.
If backup withholding applies, the Depositary is required to withhold 31%
of any payments made to the stockholder. Backup withholding is not an additional
tax. Rather, the tax liability of persons subject to backup withholding will be
reduced by the amount of tax withheld. If backup withholding results in an
overpayment of taxes, a refund may be obtained.
7
<PAGE> 8
PURPOSE OF SUBSTITUTE FORM W-9
To prevent backup federal income tax withholding on payments that are made
to a stockholder with respect to Common Shares purchased pursuant to the Offer,
the stockholder is required to notify the Depositary of such stockholder's
correct TIN by completing the form certifying that the TIN provided on the
Substitute Form W-9 is correct.
WHAT NUMBER TO GIVE THE DEPOSITARY
The stockholder is required to give the Depositary the Social Security
Number or Employer Identification Number of the record owner of the Common
Shares to be received upon conversion of the Class B Shares. If the Common
Shares are in more than one name or are not in the name of the actual owner,
consult the enclosed Guidelines for Certification of Taxpayer Identification
Number on Substitute Form W-9 for additional guidelines on which number to
report.
8
<PAGE> 1
EXHIBIT (b)(1)
[BANKAMERICA LOGO]
CONFIDENTIAL
September 23, 1997
Wallace Computer Services, Inc.
2275 Cabot Drive
Lisle, Illinois 60532
ATTN: Mr. Michael J. Halloran
Vice President and Chief Financial Officer
Ms. Sandra K. Brandt
Vice President and Treasurer
Ladies and Gentlemen:
Bank of America NT&SA ("BofA") is pleased to advise you that it is willing,
subject to the terms and conditions contained in this letter, the Fee Letter
and in the attached Summary of Terms and Conditions (the "Term Sheet"), to
commit up to $500,000,000 toward a $500,000,000 senior credit facility (the
"Facility") for Wallace Computer Services, Inc. (the "Company" or "Wallace").
This commitment is predicated on a closing no earlier than October 8, 1997
unless fees are adjusted to the satisfaction of BASI and Wallace. Upon your
acceptance of this commitment, BancAmerica Securities, Inc. ("BASI") will, as
arranger (the "Arranger"), assemble a syndicate of lenders (together with BofA,
the "Lenders"), to participate in the Facility. BofA will serve as
administrative agent for the Facility (the "Administrative Agent").
BASI is a wholly-owned, direct subsidiary of BankAmerica Corporation, the
parent company of BofA, and is a registered broker-dealer. Please refer to the
attached "Disclosure Statement" for important additional information on this
relationship.
The fees payable to the Arranger and the Administrative Agent in connection
with the Facility are set forth in a separate letter of even date herewith (the
"Fee Letter").
It is agreed that BofA will act as the sole and exclusive Administrative Agent
for the Facility, and that BASI will act as the sole and exclusive Arranger for
the Facility. You agree that no other agents, co-agents or arrangers will be
appointed, and no other titles will be awarded other than Syndication Agent and
Documentation Agent. Additionally, no compensation (other than that expressly
contemplated by the Term Sheet and the Fee Letter) will be paid in connection
with the Facility unless you and we shall so agree.
<PAGE> 2
WALLACE COMPUTER SERVICES, INC.
September 23, 1997
Page 2
You hereby authorize BASI to commence syndication efforts immediately and agree
actively to assist BASI in achieving a syndication that is satisfactory to
BASI, BofA and the Company. To assist BASI in its syndication efforts, (i) you
agree to promptly prepare and provide to BASI and BofA all information which we
may reasonably request, including all financial information and projections,
(ii) you understand that in arranging and syndicating the Facility we may use
and rely upon the information and projections without independent verification
thereof, (iii) you agree to use commercially reasonable efforts to ensure that
the syndications efforts benefit materially from your existing lending
relationships, (iv) you agree to host with BASI one or more meetings with
prospective Lenders and you agree to make senior management available for these
meetings, and (v) you agree to assist in the preparation of a Confidential
Information Memorandum and other marketing materials to be used in connection
with the syndication. BASI, as Arranger, will manage all aspects of the
syndication and reserves the right to allocate the commitments from and fees
offered to the Lenders (such Lenders subject to your approval, not to be
unreasonably withheld).
In addition to the conditions to funding or closing set forth in the Term
Sheet, BofA's commitment to provide financing hereunder is subject to, among
other conditions, (i) the negotiation and execution of a definitive credit
agreement and other related documentation satisfactory to BofA, (ii) there
being no material adverse change in the reasonable opinion of BASI and BofA in
the financial condition, business, operations, properties or prospects of the
Company or the Company and its consolidated subsidiaries from the date of the
audited financial statements most recently provided prior to the date hereof,
(iii) the non-occurrence of any material adverse change in loan syndication
conditions after the date of this letter, generally, which would affect our
syndication efforts in respect of any portion of the Facility, and until the
notification by BASI of the completion of the syndication of the Facility,
there being no competing offering, placement, or arrangement of any debt
securities or bank financing by or on behalf of the Company.
Whether or not the transactions contemplated hereby are consummated, the
Company hereby agrees to indemnify and hold harmless each of BofA and BASI, and
their respective directors, officers, employees and affiliates (each, an
"indemnified person") from and against any and all losses, claims, damages,
liabilities (or actions or other proceedings commenced or threatened in respect
thereof) and reasonable expenses that arise out of, result from this commitment
letter, or the providing or syndication of the Facility (subject, in the case
of those costs and expenses of the type covered by the immediately following
paragraph, to the limitations stated therein and without duplication of amounts
required to be paid thereby) and to reimburse each indemnified person, upon its
demand, for any legal or other expenses (including the allocated cost of
in-house counsel) reasonably incurred in connection with investigating,
defending or participating in any such loss, claim, damage, liability or action
or other proceeding (whether or not such indemnified person is a party to any
action or proceeding out of which any such expenses arise), other than any of
the foregoing claimed by any indemnified person to the extent incurred by
reason of the gross
<PAGE> 3
WALLACE COMPUTER SERVICES, INC.
September 23, 1997
Page 3
negligence, willful misconduct or violation of law of or by BofA, BASI or their
respective direct officers, employees and affiliates; provided, however that,
notwithstanding the foregoing, the Company shall not be obligated to indemnify
any such parties for any loss, claim, damage, liability or expense arising from
a claim by BofA against the Company or by the Company against BofA in
connection with this commitment letter that is found in a final, non-appealable
judgment in favor of the Company (it being understood and agreed that this
proviso shall not affect or limit any amount the Company may owe to BofA as a
result of any such claim under the expense reimbursement provisions of this
letter). Neither BofA, nor BASI, nor any of their affiliates, shall be
responsible or liable to the Company or any other person for any consequential
damages which may be alleged. The obligation contained in this paragraph, to
the extent related to the syndication of the Facility, will survive the closing
of the Facility. To the extent related to this commitment letter, the
obligation contained in this paragraph will be superseded by the indemnity
provided in the credit documents following the closing of the Facility. Any
indemnified person will promptly notify the Company of any claim or demand
against such person as a result of which such person believes it has the right
to claim indemnification from the Company; provided, however, that failure to
give or delay in giving such notice will not relieve the Company from its
obligations thereunder except to the extent the Company is actually prejudiced
by such failure or delay.
In addition, the Company hereby agrees to reimburse BofA and BASI from time to
time upon demand for their reasonable out-of-pocket costs and expenses
(including the allocated cost of in-house counsel) incurred by BofA and/or BASI
in connection with the Facility, regardless of whether the credit agreement is
executed or the Facility closes.
The terms contained in this letter and the Term Sheet are confidential and,
except for disclosure to your board of directors, officers and employees, to
professional advisors retained by you in connection with this transaction, and
to the board of directors of, and attorneys and professional advisors retained
by, in connection with this transaction, Graphic Industries, Inc., or as may be
required by law, may not be disclosed in whole or in part to any other person
or entity without our prior written consent.
Upon your delivery to us of a signed copy of this letter and the Fee Letter,
this letter agreement shall become a binding agreement under Illinois law as of
the date so accepted. BofA's commitment hereunder shall remain in effect until
6:00 p.m. Chicago time, on September 30, 1997 when, if not so accepted, BofA's
commitment hereunder will terminate. This commitment will expire on November
14, 1997 if the Facility has not closed on or before that date.
<PAGE> 4
WALLACE COMPUTER SERVICES, INC.
September 23, 1997
Page 4
We are pleased to have the opportunity to work with you on this important
financing.
Very truly yours,
BANK OF AMERICA NT&SA
By:
---------------------------------
Title: Vice President
--------------------------------
BANCAMERICA SECURITIES, INC.
By:
---------------------------------
Title: Managing Director
--------------------------------
ACCEPTED AND AGREED TO:
this 27th day of September, 1997
WALLACE COMPUTER SERVICES, INC.
By: Michael J. Halloran
---------------------------------
Title: Vice President
--------------------------------
<PAGE> 5
BANCAMERICA SECURITIES, INC.
DISCLOSURE STATEMENT
BancAmerica Securities, Inc. ("BASI") is a wholly-owned, direct subsidiary of
BankAmerica Corporation, the parent company of Bank of America NT&SA ("BofA").
BASI is a broker-dealer registered with the Securities and Exchange Commission,
and is a member of the National Association of Securities Dealers, Inc. and the
Securities Investor Protection Corporation.
BASI is not a bank. The securities and financial instruments sold, offered or
recommended by BASI are not bank deposits, are not guaranteed by, and are not
otherwise obligations of, any bank, thrift or other subsidiary of BankAmerica
Corporation, and are not insured by the Federal Deposit Insurance Corporation
or any other governmental agency.
From time to time, BofA's affiliates may lend to one or more issuers whose
securities are underwritten, dealt in, or placed by BASI. You are referred to
the relevant prospectus, offering statement or other disclosure document for
material information relating to any such lending relationship, and whether the
proceeds of an issue will be used to repay any such loans. Furthermore, the
obligations of BASI are not those of any affiliated bank or thrift, and no such
affiliated bank or thrift is responsible for securities underwritten, dealt in,
or placed by BASI.
In order for BofA to better serve you, it intends to share credit and other
information about you with BASI. BASI also may share credit and other
information regarding you with BofA. You will be deemed to consent to such
sharing of information unless you object in writing.
BASI also may participate from time to time in a primary or secondary
distribution of securities offered or sold to you by it. Further, BASI may act
as an investment adviser to issuers whose securities may be offered or sold to
you by it.
<PAGE> 1
EXHIBIT (c)(1)
AGREEMENT AND PLAN OF MERGER
AMONG
WALLACE COMPUTER SERVICES, INC.,
GREENWICH ACQUISITION CORP.,
AND
GRAPHIC INDUSTRIES, INC.
DATED AS OF SEPTEMBER 28, 1997
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
ARTICLE I
The Offer
<S> <C>
SECTION 1.01. The Offer........................................................2
SECTION 1.02. Company Actions..................................................3
ARTICLE II
The Merger
SECTION 2.01. The Merger.......................................................5
SECTION 2.02. Closing..........................................................5
SECTION 2.03. Effective Time...................................................6
SECTION 2.04. Effects of the Merger............................................6
SECTION 2.05. Articles of Incorporation and By-laws............................6
SECTION 2.06. Directors........................................................6
SECTION 2.07. Officers.........................................................6
ARTICLE III
Effect of the Merger on the Capital Stock of the
Constituent Corporations; Exchange of Certificates
SECTION 3.01. Effect on Capital Stock..........................................7
(a) Capital Stock of Sub........................................7
(b) Cancellation of Treasury Stock and Parent Owned Stock.......7
(c) Conversion of Shares and Class B Shares.....................7
(d) Shares of Dissenting Stockholders...........................7
SECTION 3.02. Exchange of Certificates.........................................8
(a) Paying Agent................................................8
(b) Exchange Procedure..........................................8
(c) No Further Ownership Rights in Shares
or Class B Shares...........................................9
(d) Termination of Payment Fund.................................9
(e) No Liability................................................9
ARTICLE IV
Representations and Warranties of the Company
SECTION 4.01. Organization.....................................................10
SECTION 4.02. Subsidiaries.....................................................10
</TABLE>
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<TABLE>
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SECTION 4.03. Capitalization...................................................11
SECTION 4.04. Authority........................................................11
SECTION 4.05. Consents and Approvals; No Violations............................12
SECTION 4.06. SEC Reports and Financial Statements.............................13
SECTION 4.07. Absence of Certain Changes or Events.............................13
SECTION 4.08. No Undisclosed Liabilities.......................................14
SECTION 4.09. Information Supplied.............................................14
SECTION 4.10. Benefit Plans; Employees and Employment Practices................15
SECTION 4.11. Contracts; Indebtedness..........................................18
SECTION 4.12. Litigation.......................................................19
SECTION 4.13. Compliance with Applicable Law...................................19
SECTION 4.14. Tax Matters......................................................19
SECTION 4.15. State Takeover Statutes; Charter Provisions......................21
SECTION 4.16. Environmental Matters............................................22
SECTION 4.17. Intellectual Property............................................23
SECTION 4.18. Brokers; Schedule of Fees and Expenses...........................23
SECTION 4.19. Opinion of Financial Advisor.....................................24
ARTICLE V
Representations and Warranties of Parent and Sub
SECTION 5.01. Organization.....................................................24
SECTION 5.02. Authority........................................................24
SECTION 5.03. Consents and Approvals; No Violations............................24
SECTION 5.04. Information Supplied.............................................25
SECTION 5.05. Interim Operations of Sub........................................25
SECTION 5.06. Brokers..........................................................26
ARTICLE VI
Covenants
SECTION 6.01. Covenants of the Company.........................................26
(a) Ordinary Course.............................................26
(b) Dividends; Changes in Stock.................................26
(c) Issuance of Securities......................................26
(d) Governing Documents.........................................27
(e) No Acquisitions.............................................27
(f) No Dispositions.............................................27
(g) Indebtedness................................................27
(h) Advice of Changes; Filings..................................28
(i) Tax Matters.................................................28
(j) Capital Expenditures........................................28
(k) Discharge of Liabilities....................................28
(l) Benefit Plans...............................................28
(m) Compensation................................................29
(n) Material Contracts..........................................29
(o) General.....................................................29
SECTION 6.02. No Solicitation..................................................29
</TABLE>
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<TABLE>
<S> <C>
SECTION 6.03. Third Party Standstill Agreements................................31
SECTION 6.04. Other Actions....................................................32
SECTION 6.05. Certain Waivers and Consents.....................................32
SECTION 6.06. Information Relating to Certain Benefit Plans....................32
SECTION 6.07. Certain Deliveries...............................................32
ARTICLE VII
Additional Agreements
SECTION 7.01. Stockholder Approval; Preparation of Proxy Statement.............33
SECTION 7.02. Access to Information............................................34
SECTION 7.03. Reasonable Best Efforts..........................................35
SECTION 7.04. Directors........................................................34
SECTION 7.05. Fees and Expenses................................................35
SECTION 7.06. Indemnification; Insurance.......................................36
SECTION 7.07. Certain Litigation...............................................37
SECTION 7.08. Stock-Based Compensation.........................................37
SECTION 7.09. Allocation of Shares Under Qualified Plans.......................38
ARTICLE VIII
Conditions
SECTION 8.01. Conditions to Each Party's Obligation To
Effect the Merger................................................38
(a) Company Stockholder Approval................................38
(b) No Injunctions or Restraints................................38
(c) Purchase of Shares..........................................38
ARTICLE IX
Termination and Amendment
SECTION 9.01. Termination......................................................39
SECTION 9.02. Effect of Termination............................................40
SECTION 9.03. Amendment........................................................40
SECTION 9.04. Extension; Waiver................................................40
ARTICLE X
Miscellaneous
SECTION 10.01. Nonsurvival of Representations, Warranties
and Agreements..................................................41
SECTION 10.02. Notices.........................................................41
SECTION 10.03. Interpretation..................................................42
</TABLE>
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<TABLE>
<S> <C>
SECTION 10.04. Counterparts....................................................42
SECTION 10.05. Entire Agreement; No Third Party
Beneficiaries...................................................43
SECTION 10.06. Governing Law...................................................43
SECTION 10.07. Publicity.......................................................43
SECTION 10.08. Assignment......................................................43
SECTION 10.09. Merger of the Company into Sub..................................43
SECTION 10.10. Enforcement.....................................................43
</TABLE>
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<PAGE> 6
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER dated as of September 28, 1997, among
WALLACE COMPUTER SERVICES, INC., a Delaware corporation ("Parent"), GREENWICH
ACQUISITION CORP., a Georgia corporation and a wholly owned subsidiary of Parent
("Sub"), and GRAPHIC INDUSTRIES, INC., a Georgia corporation (the "Company").
W I T N E S S E T H:
WHEREAS, the respective Boards of Directors of Parent, Sub and
the Company have approved the acquisition of the Company by Parent on the terms
and subject to the conditions set forth in this Agreement;
WHEREAS, in furtherance of such acquisition, Parent proposes
to cause Sub to make a tender offer (as it may be amended from time to time as
permitted under this Agreement, the "Offer") to purchase the shares of Common
Stock, par value $.10 per share, of the Company (the "Company Common Stock"; the
shares of Company Common Stock being hereinafter referred to as the "Shares") at
a purchase price of $18.50 per share (the "Offer Price"), net to the seller in
cash, without interest thereon, upon the terms and subject to the conditions set
forth in this Agreement; and the Board of Directors of the Company has adopted
resolutions approving the Offer and the Merger (as defined below) and
recommending that holders of Shares accept the Offer and that the Company's
stockholders approve and adopt this Agreement;
WHEREAS, the respective Boards of Directors of Parent, Sub and
the Company have each approved the merger of Sub into the Company (the
"Merger"), upon the terms and subject to the conditions set forth in this
Agreement, whereby each of the Shares and each share of Class B Common Stock,
par value $.10 per share, of the Company (the "Class B Common Stock"; the shares
of Class B Common Stock being hereinafter referred to as the "Class B Shares"),
other than the Shares and Class B Shares owned directly or indirectly by Parent
or the Company and Dissenting Shares (as defined in Section 3.01(d)), will be
converted into the right to receive the price per share paid in the Offer;
WHEREAS, the Board of Directors of the Company has approved
the terms of the Stockholder Agreement (the "Stockholder Agreement") to be
entered into by Parent, Sub and Mark C. Pope III, as a stockholder of the
Company, concurrently with the execution of this Agreement as an inducement to
Parent to enter into this Agreement, pursuant to which such stockholder has,
among other things, granted to Sub the right to purchase, and in certain
circumstances Sub has agreed to purchase, such stockholder's Class B Shares; and
<PAGE> 7
WHEREAS, Parent, Sub and the Company desire to make certain
representations, warranties, covenants and agreements in connection with the
Offer and the Merger and also to prescribe various conditions to the Offer and
the Merger.
NOW, THEREFORE, in consideration of the foregoing and the
mutual covenants and agreements herein contained, and intending to be legally
bound hereby, Parent, Sub and the Company hereby agree as follows:
ARTICLE I
The Offer
SECTION 1.01. The Offer. (a) Subject to the provisions of this
Agreement, as promptly as practicable but in no event later than five business
days after the date of the public announcement by Parent and the Company of this
Agreement, Sub shall, and Parent shall cause Sub to, commence the Offer. The
obligation of Sub to, and of Parent to cause Sub to, commence the Offer and
accept for payment, and pay for, any Shares tendered pursuant to the Offer shall
be subject only to the conditions set forth in Exhibit A (the "Offer
Conditions") and to the terms and conditions of this Agreement (any of which may
be waived in whole or in part by Sub in its sole discretion, except that Sub
shall not waive the Minimum Condition (as defined in Exhibit A) without the
consent of the Company). Sub expressly reserves the right to modify the terms of
the Offer, except that, without the consent of the Company, Sub shall not (i)
reduce the number of Shares subject to the Offer, (ii) reduce the Offer Price,
(iii) impose any other conditions to the Offer other than the Offer Conditions
or modify the Offer Conditions (other than to waive any Offer Conditions to the
extent permitted by this Agreement), (iv) except as provided in the next
sentence, extend the Offer or (v) change the form of consideration payable in
the Offer. Notwithstanding the foregoing, Sub may, without the consent of the
Company, (i) extend the Offer, if at the scheduled or extended expiration date
of the Offer any of the Offer Conditions shall not be satisfied or waived, until
such time as such conditions are satisfied or waived, (ii) extend the Offer for
any period required by any rule, regulation, interpretation or position of the
Securities and Exchange Commission (the "SEC") or the staff thereof applicable
to the Offer and (iii) extend the Offer for any reason on one or more occasions
for an aggregate period of not more than 15 business days beyond the latest
expiration date that would otherwise be permitted under clause (i) or (ii) of
this sentence, in each case subject to the right of Parent, Sub or the Company
to terminate this Agreement pursuant to the terms hereof. Parent and Sub agree
that if at any scheduled expiration date of the Offer, the Minimum Condition,
the HSR Condition (as defined in Exhibit A) or either of the conditions set
forth in paragraphs (e) or (f) of Exhibit A
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<PAGE> 8
shall not have been satisfied, but at such scheduled expiration date all the
conditions set forth in paragraphs (a), (b), (c), (d) and (g) shall then be
satisfied, at the request of the Company (confirmed in writing), Sub shall
extend the Offer from time to time, subject to the right of Parent, Sub or the
Company to terminate this Agreement pursuant to the terms hereof. Subject to the
terms and conditions of the Offer and this Agreement, Sub shall, and Parent
shall cause Sub to, accept for payment, and pay for, all Shares validly tendered
and not withdrawn pursuant to the Offer that Sub becomes obligated to accept for
payment, and pay for, pursuant to the Offer as soon as practicable after the
expiration of the Offer.
(b) On the date of commencement of the Offer, Parent and Sub
shall file with the SEC a Tender Offer Statement on Schedule 14D-1 (the
"Schedule 14D-1") with respect to the Offer, which shall contain an offer to
purchase and a related letter of transmittal and summary advertisement (such
Schedule 14D-1 and the documents included therein pursuant to which the Offer
will be made, together with any supplements or amendments thereto, the "Offer
Documents"), and Parent and Sub shall cause to be disseminated the Offer
Documents to holders of Shares as and to the extent required by applicable
Federal securities laws. Parent, Sub and the Company each agrees promptly to
correct any information provided by it for use in the Offer Documents if and to
the extent that such information shall have become false or misleading in any
material respect, and Parent and Sub further agree to take all steps necessary
to cause the Schedule 14D-1 as so corrected to be filed with the SEC and the
other Offer Documents as so corrected to be disseminated to holders of Shares,
in each case as and to the extent required by applicable Federal securities
laws. The Company and its counsel shall be given reasonable opportunity to
review and comment upon the Offer Documents prior to their filing with the SEC
or dissemination to the stockholders of the Company. Parent and Sub agree to
provide the Company and its counsel any comments Parent, Sub or their counsel
may receive from the SEC or its staff with respect to the Offer Documents
promptly after the receipt of such comments and to cooperate with the Company
and its counsel in responding to any such comments.
(c) Parent shall provide or cause to be provided to Sub on a
timely basis the funds necessary to accept for payment, and pay for, any Shares
that Sub becomes obligated to accept for payment, and pay for, pursuant to the
Offer.
SECTION 1.02. Company Actions. (a) The Company hereby approves
of and consents to the Offer and represents and warrants that the Board of
Directors of the Company, at a meeting duly called and held, at which all
directors were present, duly and unanimously adopted resolutions approving and
adopting this Agreement, approving the Offer, the Merger and the Stockholder
Agreement, determining that the terms of the Offer and the Merger
-3-
<PAGE> 9
are fair to, and in the best interests of, the Company's stockholders and
recommending that holders of Shares accept the Offer and that the Company's
stockholders approve this Agreement and the Merger. The Company represents and
warrants that its Board of Directors has received the opinion of
Interstate/Johnson Lane Corporation that the proposed consideration to be
received by holders of Shares pursuant to the Offer, and by holders of Shares
and Class B Shares pursuant to the Merger, is fair to such holders from a
financial point of view, and a complete and correct signed copy of such opinion
has been delivered by the Company to Parent. The Company has been advised by
each of its directors and executive officers that each such person intends to
tender all Shares owned by such person pursuant to the Offer.
(b) On the date the Offer Documents are filed with the SEC,
the Company shall file with the SEC a Solicitation/ Recommendation Statement on
Schedule 14D-9 with respect to the Offer (such Schedule 14D-9, as amended from
time to time, the "Schedule 14D-9") containing the recommendation described in
paragraph (a) (subject to the right of the Board of Directors of the Company to
withdraw or modify its approval or recommendation of the Offer, the Merger and
this Agreement as set forth in Section 6.02(b)), and the Company shall cause to
be disseminated the Schedule 14D-9 to holders of Shares as and to the extent
required by applicable Federal securities laws. Each of the Company, Parent and
Sub agrees promptly to correct any information provided by it for use in the
Schedule 14D-9 if and to the extent that such information shall have become
false or misleading in any material respect, and the Company further agrees to
take all steps necessary to amend or supplement the Schedule 14D-9 and to cause
the Schedule 14D-9 as so amended or supplemented to be filed with the SEC and
disseminated to holders of Shares, in each case as and to the extent required by
applicable Federal securities laws. Parent and its counsel shall be given
reasonable opportunity to review and comment upon the Schedule 14D-9 prior to
its filing with the SEC or dissemination to stockholders of the Company. The
Company agrees to provide Parent and its counsel any comments the Company or its
counsel may receive from the SEC or its staff with respect to the Schedule 14D-9
promptly after the receipt of such comments and to cooperate with Parent, Sub
and their counsel in responding to any such comments.
(c) In connection with the Offer and the Merger, the Company
shall cause its transfer agent or agents to furnish Sub promptly with mailing
labels containing the names and addresses of the record holders of Shares and
Class B Shares as of a recent date and of those persons becoming record holders
subsequent to such date, together with copies of all lists of stockholders,
security position listings and computer files and all other information in the
Company's possession or control, to the extent reasonably available to the
Company, regarding the beneficial owners of Shares, Class B Shares and any
securities convertible
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<PAGE> 10
into Shares, and shall furnish to Sub such information and assistance (including
updated lists of stockholders, security position listings and computer files) as
Parent may reasonably request in communicating the Offer to the Company's
stockholders. Subject to the requirements of applicable law, and except for such
steps as are necessary to disseminate the Offer Documents and any other
documents necessary to consummate the Merger, Parent and Sub and their agents
shall hold in confidence the information contained in any such labels, listings
and files, will use such information only in connection with the Offer and the
Merger and, if this Agreement shall be terminated, will, upon request, deliver,
and will use their best efforts to cause their agents to deliver, to the Company
all copies of such information then in their possession or control.
(d) The Company shall transmit to each holder of Class B
Shares contemporaneously with the transmission of the Offer Documents to the
holders of Shares (i) the Offer Documents, (ii) a letter stating that holders of
Class B Shares who wish to participate in the Offer must request the conversion
of their Class B Shares into Shares pursuant to the Amended and Restated
Articles of Incorporation of the Company and (iii) a form of conversion request,
which conversion request shall provide that a holder of Class B Shares requests
conversion thereof simultaneous with Sub's first acceptance for payment of
Shares pursuant to the Offer, and that the Shares received upon such conversion
shall be deemed validly tendered pursuant to the Offer.
ARTICLE II
The Merger
SECTION 2.01. The Merger. Upon the terms and subject to the
conditions set forth in this Agreement, and in accordance with the Georgia
Business Corporation Code (the "GBCC"), Sub shall be merged with and into the
Company at the Effective Time (as defined in Section 2.03). Following the
Effective Time, the separate corporate existence of Sub shall cease and the
Company shall continue as the surviving corporation (the "Surviving
Corporation") and shall succeed to and assume all the rights and obligations of
Sub in accordance with the GBCC.
SECTION 2.02. Closing. The closing of the Merger will take
place at 10:00 a.m. on a date mutually agreed to by Parent and the Company,
which shall be no later than the second business day after satisfaction or
waiver of the conditions set forth in Article VIII (the "Closing Date"), at the
offices of Sidley & Austin, One First National Plaza, Chicago, Illinois 60603,
unless another date, time or place is agreed to in writing by the parties
hereto.
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<PAGE> 11
SECTION 2.03. Effective Time. Subject to the provisions of
this Agreement, as soon as practicable on or after the Closing Date, the parties
shall file a certificate of merger or other appropriate documents (in any such
case, the "Certificate of Merger") executed in accordance with the relevant
provisions of the GBCC and shall make all other filings or recordings required
under the GBCC. The Merger shall become effective at such time as the
Certificate of Merger is duly filed with the Secretary of State of the State of
Georgia, or at such other time as Sub and the Company shall agree should be
specified in the Certificate of Merger (the time the Merger becomes effective
being hereinafter referred to as the "Effective Time").
SECTION 2.04. Effects of the Merger. The Merger shall have the
effects set forth in Section 14-2-1106 of the GBCC.
SECTION 2.05. Articles of Incorporation and By-laws. (a) The
Amended and Restated Articles of Incorporation of the Company, as in effect
immediately prior to the Effective Time, shall be amended as of the Effective
Time so that Article V of such Amended and Restated Articles of Incorporation
reads in its entirety as follows: "The total number of shares of all classes of
stock that the corporation shall have authority to issue is 1,000 shares of
Common Stock, par value $.10 per share. Any references to Class B Common Stock,
Class B Stock or Preferred Stock contained in any other Article hereof shall be
disregarded." Such Amended and Restated Articles of Incorporation, as so
amended, shall be the articles of incorporation of the Surviving Corporation
until thereafter changed or amended as provided therein or by applicable law.
(b) The By-laws of Sub as in effect immediately prior to the
Effective Time shall be the By-laws of the Surviving Corporation, until
thereafter changed or amended as provided therein or by applicable law.
SECTION 2.06. Directors. The directors of Sub immediately
prior to the Effective Time shall be the directors of the Surviving Corporation,
until the earlier of their resignation or removal or until their respective
successors are duly elected and qualified, as the case may be.
SECTION 2.07. Officers. The officers of the Company
immediately prior to the Effective Time shall be the officers of the Surviving
Corporation, until the earlier of their resignation or removal or until their
respective successors are duly elected and qualified, as the case may be.
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ARTICLE III
Effect of the Merger on the Capital Stock of the
Constituent Corporations; Exchange of Certificates
SECTION 3.01. Effect on Capital Stock. As of the Effective
Time, by virtue of the Merger and without any action on the part of the holder
of any Shares or Class B Shares or any shares of capital stock of Sub:
(a) Capital Stock of Sub. Each issued and outstanding share of
capital stock of Sub shall be converted into and become one fully paid
and nonassessable share of Common Stock, par value $.10 per share, of
the Surviving Corporation.
(b) Cancellation of Treasury Stock and Parent Owned Stock.
Each Share and Class B Share that is owned by the Company or by any
subsidiary of the Company and each Share and Class B Share that is
owned by Parent, Sub or any other subsidiary of Parent shall
automatically be canceled and retired and shall cease to exist, and no
consideration shall be delivered in exchange therefor.
(c) Conversion of Shares and Class B Shares. Subject to
Section 3.01(d), each Share and Class B Share issued and outstanding
(other than Shares and Class B Shares to be canceled in accordance with
Section 3.01(b)) shall be converted into the right to receive from the
Surviving Corporation in cash, without interest, the price paid in the
Offer (the "Merger Consideration"). As of the Effective Time, all such
Shares and Class B Shares shall no longer be outstanding and shall
automatically be canceled and retired and shall cease to exist, and
each holder of a certificate representing any such Shares or Class B
Shares shall cease to have any rights with respect thereto, except the
right to receive the Merger Consideration, without interest.
(d) Shares of Dissenting Stockholders. Notwithstanding
anything in this Agreement to the contrary, any issued and outstanding
Shares or Class B Shares held by a person (a "Dissenting Stockholder")
who objects to the Merger and complies with all the provisions of GBCC
concerning the right of holders of Shares and/or Class B Shares to
dissent from the Merger and require appraisal of their Shares and/or
Class B Shares ("Dissenting Shares") shall not be converted as
described in Section 3.01(c), but shall be converted into the right to
receive such consideration as may be determined to be due to such
Dissenting Stockholder pursuant to the GBCC. If, after the Effective
Time, such Dissenting Stockholder withdraws his demand for appraisal or
fails to perfect or otherwise loses his right of appraisal, in any case
pursuant to the GBCC,
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<PAGE> 13
his Shares and/or Class B Shares shall be deemed to be converted as of
the Effective Time into the right to receive the Merger Consideration.
The Company shall give Parent (i) prompt notice of any demands for
appraisal of Shares or Class B Shares received by the Company and (ii)
the opportunity to participate in and direct all negotiations and
proceedings with respect to any such demands. The Company shall not,
without the prior written consent of Parent, make any payment with
respect to, or settle, offer to settle or otherwise negotiate, any such
demands.
SECTION 3.02. Exchange of Certificates. (a) Paying Agent.
Prior to the Effective Time, Parent shall designate a bank or trust company to
act as paying agent in the Merger (the "Paying Agent"), and, from time to time
on, prior to or after the Effective Time, Parent shall make available, or cause
the Surviving Corporation to make available, to the Paying Agent cash in amounts
and at the times necessary for the payment of the Merger Consideration upon
surrender of certificates representing Shares or Class B Shares as part of the
Merger pursuant to Section 3.01 (it being understood that any and all interest
earned on funds made available to the Paying Agent pursuant to this Agreement
shall be turned over to Parent).
(b) Exchange Procedure. As soon as reasonably practicable
after the Effective Time, the Paying Agent shall mail to each holder of record
of a certificate or certificates that immediately prior to the Effective Time
represented Shares or Class B Shares (the "Certificates"), (i) a letter of
transmittal (which shall specify that delivery shall be effected, and risk of
loss and title to the Certificates shall pass, only upon delivery of the
Certificates to the Paying Agent and shall be in a form and have such other
provisions as Parent may reasonably specify) and (ii) instructions for use in
effecting the surrender of the Certificates in exchange for the Merger
Consideration. Upon surrender of a Certificate for cancellation to the Paying
Agent or to such other agent or agents as may be appointed by Parent, together
with such letter of transmittal, duly executed, and such other documents as may
reasonably be required by the Paying Agent, the holder of such Certificate shall
be entitled to receive in exchange therefor the amount of cash into which the
Shares or Class B Shares theretofore represented by such Certificate shall have
been converted pursuant to Section 3.01, and the Certificate so surrendered
shall forthwith be canceled. In the event of a transfer of ownership of Shares
or Class B Shares that is not registered in the transfer records of the Company,
payment may be made to a person other than the person in whose name the
Certificate so surrendered is registered, if such Certificate shall be properly
endorsed or otherwise be in proper form for transfer and the person requesting
such payment shall pay any transfer or other taxes required by reason of the
payment to a person other than the registered holder of such Certificate or
establish to the satisfaction of the Surviving Corporation
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<PAGE> 14
that such tax has been paid or is not applicable. Until surrendered as
contemplated by this Section 3.02, each Certificate (other than Certificates
representing Dissenting Shares) shall be deemed at any time after the Effective
Time to represent only the right to receive upon such surrender the amount of
cash, without interest, into which the Shares or Class B Shares theretofore
represented by such Certificate shall have been converted pursuant to Section
3.01. No interest will be paid or will accrue on the cash payable upon the
surrender of any Certificate. Parent, Sub, the Surviving Corporation, the
Company or the Paying Agent shall be entitled to deduct and withhold from the
consideration otherwise payable pursuant to this Agreement to any holder of
Shares or Class B Shares such amounts as Parent, Sub, the Surviving Corporation,
the Company or the Paying Agent is required to deduct and withhold with respect
to the making of such payment under the Code (as hereinafter defined) or under
any provisions of state, local or foreign tax law. To the extent that amounts
are so withheld by Parent, Sub, the Surviving Corporation, the Company or the
Paying Agent, such withheld amounts shall be treated for all purposes of this
Agreement as having been paid to the holder of the Shares or Class B Shares in
respect of which such deduction or withholding was made by Parent, Sub, the
Surviving Corporation, the Company or the Paying Agent.
(c) No Further Ownership Rights in Shares or Class B Shares.
All cash paid upon the surrender of Certificates in accordance with the terms of
this Article III shall be deemed to have been paid in full satisfaction of all
rights pertaining to the Shares and Class B Shares theretofore represented by
such Certificates. At the Effective Time, the stock transfer books of the
Company shall be closed, and there shall be no further registration of transfers
on the stock transfer books of the Surviving Corporation of the Shares and the
Class B Shares that were outstanding immediately prior to the Effective Time.
If, after the Effective Time, Certificates are presented to the Surviving
Corporation or the Paying Agent for any reason, they shall be canceled and
exchanged as provided in this Article III.
(d) Termination of Payment Fund. Any portion of the funds made
available to the Paying Agent to pay the Merger Consideration which remains
undistributed to the holders of Shares or Class B Shares for six months after
the Effective Time shall be delivered to Parent, upon demand, and any holders of
Shares or Class B Shares who have not theretofore complied with this Article III
and the instructions set forth in the letter of transmittal mailed to such
holders after the Effective Time shall thereafter look only to Parent for
payment of the Merger Consideration to which they are entitled.
(e) No Liability. None of Parent, Sub, the Company or
the Paying Agent shall be liable to any person in respect of any
cash delivered to a public official pursuant to any applicable
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<PAGE> 15
abandoned property, escheat or similar law. If any Certificates shall not have
been surrendered prior to seven years after the Effective Time (or immediately
prior to such earlier date on which any payment pursuant to this Article III
would otherwise escheat to or become the property of any Governmental Entity (as
defined in Section 4.05)), the cash payment in respect of such Certificate
shall, to the extent permitted by applicable law, become the property of the
Surviving Corporation, free and clear of all claims or interests of any person
previously entitled thereto.
ARTICLE IV
Representations and Warranties of the Company
The Company represents and warrants to Parent and Sub as
follows:
SECTION 4.01. Organization. The Company and each of its
subsidiaries (as defined in Section 10.03) is a corporation duly organized,
validly existing and in good standing under the laws of the jurisdiction of its
incorporation and has all requisite corporate power and authority to carry on
its business as now being conducted. The Company and each of its subsidiaries is
duly qualified or licensed to do business and in good standing in each
jurisdiction in which the property owned, leased or operated by it or the nature
of the business conducted by it makes such qualification or licensing necessary,
except in such jurisdictions where the failure to be so duly qualified or
licensed and in good standing would not have a material adverse effect (as
defined in Section 10.03) on the Company or prevent or materially delay the
consummation of the Offer and/or the Merger. The Company has delivered to Parent
complete and correct copies of its Amended and Restated Articles of
Incorporation and By-laws and the articles of incorporation and by-laws (or
similar organizational documents) of its subsidiaries.
SECTION 4.02. Subsidiaries. Item 4.02 of the letter from the
Company to Parent dated the date hereof, which letter relates to this Agreement
and is designated therein as the Company Disclosure Letter (the "Company
Letter") lists each subsidiary of the Company. Except as set forth in Item 4.02
of the Company Letter, all the outstanding shares of capital stock of each such
subsidiary are owned by the Company, by another wholly owned subsidiary of the
Company or by the Company and another wholly owned subsidiary of the Company,
free and clear of all pledges, claims, liens, charges, encumbrances and security
interests of any kind or nature whatsoever (collectively, "Liens"), and are duly
authorized, validly issued, fully paid and nonassessable. Except as set forth in
Item 4.02 of the Company Letter and except for the capital stock of its
subsidiaries, the Company does not own, directly or indirectly, any capital
stock
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or other ownership interest in any corporation, partnership, joint venture,
limited liability company or other entity.
SECTION 4.03. Capitalization. The authorized capital stock of
the Company consists of 20,000,000 Shares, 10,000,000 Class B Shares and 500,000
shares of Preferred Stock, no par value per share. At the close of business on
September 26, 1997, (i) 8,086,951 Shares were issued and outstanding, (ii)
83,287 Shares were held by the Company in its treasury, (iii) 1,506,163 Shares
were reserved for issuance upon exercise of options to purchase Shares ("Company
Stock Options") issued pursuant to the Company's stock option plans, (iv)
307,374 shares were reserved for issuance under the Company's Associate Stock
Purchase Plan and 477,786 shares were reserved for issuance under the Company's
1992 Stock Award Plan, (v) 1,190,954 Shares were reserved for issuance upon
conversion of the Company's 7% Convertible Subordinated Debentures due May 15,
2006 (the "Convertible Debentures"), (vi) 4,518,817 Class B Shares were issued
and outstanding and (vii) no Class B Shares were held by the Company in its
treasury. Except as set forth above, as of the date of this Agreement, no shares
of capital stock or other voting securities of the Company were issued, reserved
for issuance or outstanding. All outstanding shares of capital stock of the
Company are, and all shares which may be issued will be, when issued, duly
authorized, validly issued, fully paid and nonassessable and not subject to
preemptive rights. Except as set forth above, there are no bonds, debentures,
notes or other indebtedness of the Company having the right to vote (or
convertible into, or exchangeable for, securities having the right to vote) on
any matters on which stockholders of the Company may vote. Except as set forth
above, as of the date of this Agreement, there are not any securities, options,
warrants, calls, rights, commitments, agreements, arrangements or undertakings
of any kind to which the Company or any of its subsidiaries is a party or by
which any of them is bound obligating the Company or any of its subsidiaries to
issue, deliver or sell, or cause to be issued, delivered or sold, additional
shares of capital stock or other voting securities of the Company or of any of
its subsidiaries or obligating the Company or any of its subsidiaries to issue,
grant, extend or enter into any such security, option, warrant, call, right,
commitment, agreement, arrangement or undertaking. As of the date of this
Agreement, there are not any outstanding contractual obligations of the Company
or any of its subsidiaries (i) to repurchase, redeem or otherwise acquire any
shares of capital stock of the Company or (ii) to vote or to dispose of any
shares of the capital stock of any of the Company's subsidiaries.
SECTION 4.04. Authority. The Company has the requisite
corporate power and authority to execute and deliver this Agreement and, subject
to the approval of this Agreement by the holders of a majority of the combined
voting power of the Shares and the Class B Shares (the "Company Stockholder
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Approval"), to consummate the transactions contemplated hereby. The execution,
delivery and performance of this Agreement and the consummation by the Company
of the Merger and of the other transactions contemplated hereby have been duly
authorized by all necessary corporate action on the part of the Company and no
other corporate proceedings on the part of the Company are necessary to
authorize this Agreement or to consummate the transactions so contemplated (in
each case, other than, with respect to the Merger, the Company Stockholder
Approval). This Agreement has been duly executed and delivered by the Company
and, assuming this Agreement constitutes a valid and binding obligation of
Parent and Sub, constitutes a valid and binding obligation of the Company
enforceable against the Company in accordance with its terms.
SECTION 4.05. Consents and Approvals; No Violations. Except as
set forth in Item 4.05 of the Company Letter, and except for filings, permits,
authorizations, consents and approvals as may be required under, and other
applicable requirements of, the Securities Exchange Act of 1934, as amended (the
"Exchange Act") (including the filing with the SEC of the Schedule 14D-9 and a
proxy statement relating to any required Company Stockholder Approval (the
"Proxy Statement")), the Hart- Scott-Rodino Antitrust Improvements Act of 1976,
as amended (the "HSR Act"), the GBCC, the laws of other states in which the
Company is qualified to do or is doing business, state takeover laws and foreign
and supranational laws relating to antitrust and anticompetition clearances,
neither the execution, delivery or performance of this Agreement by the Company
nor the consummation by the Company of the transactions contemplated hereby will
(i) conflict with or result in any breach of any provision of the Amended and
Restated Articles of Incorporation or By-laws of the Company or of the similar
organizational documents of any of its subsidiaries, (ii) require any filing
with, or permit, authorization, consent or approval of, any Federal, state or
local government or any court, tribunal, administrative agency or commission or
other governmental or other regulatory authority or agency, domestic, foreign or
supranational (a "Governmental Entity") (except where the failure to obtain such
permits, authorizations, consents or approvals or to make such filings would not
have a material adverse effect on the Company or prevent or materially delay the
consummation of the Offer and/or the Merger), (iii) result in a violation or
breach of, or constitute (with or without due notice or lapse of time or both) a
default (or give rise to any right of termination, amendment, cancellation or
acceleration) under, any of the terms, conditions or provisions of any note,
bond, mortgage, indenture, lease, license, contract, agreement or other
instrument or obligation to which the Company or any of its subsidiaries is a
party or by which any of them or any of their properties or assets may be bound
or (iv) violate any order, writ, injunction, decree, statute, rule or regulation
applicable to the Company, any of its subsidiaries or any of their properties or
assets, except in the
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case of clauses (iii) or (iv) for violations, breaches or defaults that would
not have a material adverse effect on the Company or prevent or materially delay
the consummation of the Offer and/or the Merger.
SECTION 4.06. SEC Reports and Financial Statements. The
Company and each of its subsidiaries has filed with the SEC, and has heretofore
made available to Parent true and complete copies of, all forms, reports,
schedules, statements and other documents required to be filed by it since
February 1, 1994, under the Exchange Act or the Securities Act of 1933 (the
"Securities Act") (such forms, reports, schedules, statements and other
documents, including any financial statements or schedules included therein, are
referred to as the "Company SEC Documents"). The Company SEC Documents, at the
time filed, (a) did not contain any untrue statement of a material fact or omit
to state a material fact required to be stated therein or necessary in order to
make the statements therein, in light of the circumstances under which they were
made, not misleading and (b) complied in all material respects with the
applicable requirements of the Exchange Act and the Securities Act, as the case
may be, and the applicable rules and regulations of the SEC thereunder. Except
to the extent that information contained in any Company SEC Document has been
revised or superseded by a subsequently filed Company Filed SEC Document (as
defined in Section 4.07) (a copy of which has been made available to Parent
prior to the date hereof), none of the Company SEC Documents contains an untrue
statement of a material fact or omits to state a material fact required to be
stated or incorporated by reference therein or necessary in order to make the
statements therein, in light of the circumstances under which they were made,
not misleading. The financial statements of the Company included in the Company
SEC Documents comply as to form in all material respects with applicable
accounting requirements and with the published rules and regulations of the SEC
with respect thereto, have been prepared in accordance with generally accepted
accounting principles applied on a consistent basis during the periods involved
(except as may be indicated in the notes thereto or, in the case of the
unaudited statements, as permitted by Form 10-Q of the SEC) and fairly present
(subject, in the case of the unaudited statements, to normal, recurring audit
adjustments) the consolidated financial position of the Company and its
consolidated subsidiaries as at the dates thereof and the consolidated results
of their operations and cash flows for the periods then ended.
SECTION 4.07. Absence of Certain Changes or Events. Except as
disclosed in the Company SEC Documents filed and publicly available prior to the
date of this Agreement (the "Company Filed SEC Documents") or in Item 4.07 of
the Company Letter, since February 1, 1997, the Company and its subsidiaries
have conducted their respective businesses only in the ordinary course, and
there has not been (i) any material adverse change
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with respect to the Company, (ii) any declaration, setting aside or payment of
any dividend or other distribution with respect to its capital stock (other than
regular quarterly cash dividends not in excess of $.07 per Share and $.05 per
Class B Share with usual record and payment dates and in accordance with the
Company's present dividend policy) or any redemption, purchase or other
acquisition of any of its capital stock, (iii) any split, combination or
reclassification of any of its capital stock or any issuance or the
authorization of any issuance of any other securities in respect of, in lieu of
or in substitution for shares of its capital stock, (iv) (x) any granting by the
Company or any of its subsidiaries to any officer of the Company or any of its
subsidiaries of any increase in compensation, except in the ordinary course of
business (including in connection with promotions) consistent with past practice
or as was required under employment agreements in effect as of September 26,
1997, (y) any granting by the Company or any of its subsidiaries to any such
officer of any increase in severance or termination pay, except as part of a
standard employment package to any person promoted or hired, or as was required
under employment, severance or termination agreements in effect as of September
26, 1997, or (z) except employment agreements in the ordinary course of business
consistent with past practice with employees other than any executive officer of
the Company, any entry by the Company or any of its subsidiaries into any
employment, consulting, severance, termination or indemnification agreement with
any such employee or executive officer, (v) any damage, destruction or loss,
whether or not covered by insurance, that has or reasonably could be expected to
have a material adverse effect on the Company, (vi) any revaluation by the
Company of any of its material assets or (vii) any material change in accounting
methods, principles or practices by the Company.
SECTION 4.08. No Undisclosed Liabilities. Except as and to the
extent set forth in Item 4.08 of the Company Letter or in the Company's Annual
Report to Shareholders for the fiscal year ended January 31, 1997, as of January
31, 1997, neither the Company nor any of its subsidiaries had any liabilities or
obligations of any nature, whether or not accrued, contingent or otherwise, that
would be required by generally accepted accounting principles to be reflected on
a consolidated balance sheet of the Company and its subsidiaries (including the
notes thereto). Since January 31, 1997, except as and to the extent set forth in
Item 4.08 of the Company Letter or in the Company Filed SEC Documents, neither
the Company nor any of its subsidiaries has incurred any liabilities of any
nature, whether or not accrued, contingent or otherwise, that would be
reasonably expected to have a material adverse effect on the Company.
SECTION 4.09. Information Supplied. None of the information
supplied or to be supplied by the Company specifically for inclusion or
incorporation by reference in (i) the Offer Documents, (ii) the Schedule 14D-9,
(iii) the
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information to be filed by the Company in connection with the Offer pursuant to
Rule 14f-1 promulgated under the Exchange Act (the "Information Statement") or
(iv) the Proxy Statement, will, in the case of the Offer Documents, the Schedule
14D-9 and the Information Statement, at the respective times the Offer
Documents, the Schedule 14D-9 and the Information Statement are filed with the
SEC or first published, sent or given to the Company's stockholders, or, in the
case of the Proxy Statement, at the time the Proxy Statement is first mailed to
the Company's stockholders or at the time of the Stockholders Meeting (as
defined in Section 7.01), contain any untrue statement of a material fact or
omit to state any material fact required to be stated therein or necessary in
order to make the statements therein, in light of the circumstances under which
they are made, not misleading. The Schedule 14D-9, the Information Statement and
the Proxy Statement will comply as to form in all material respects with the
requirements of the Exchange Act and the rules and regulations thereunder,
except that no representation or warranty is made by the Company with respect to
statements made or incorporated by reference therein based on information
supplied by Parent or Sub specifically for inclusion or incorporation by
reference therein.
SECTION 4.10. Benefit Plans; Employees and Employment
Practices. (a) Except as disclosed in the Company Filed SEC Documents or Item
4.10(a) of the Company Letter, since the date of the most recent audited
financial statements included in the Company Filed SEC Documents, there has not
been any adoption or amendment in any material respect (including any increase
or improvements in benefits or coverage) by the Company or any of its
subsidiaries of any collective bargaining agreement or any bonus, pension,
profit sharing, deferred compensation, incentive compensation, stock ownership,
stock purchase, stock option, phantom stock, retirement, vacation, severance,
disability, death benefit, hospitalization, medical, fringe benefit, excess
supplemental executive compensation, employee stock purchase, stock
appreciation, restricted stock or other material employee benefit plan, policy,
arrangement or understanding (whether or not in writing) providing benefits to
any current or former employee, officer or director of the Company or any of its
subsidiaries (collectively, "Benefit Plans"); provided that, with respect to any
Benefit Plans sponsored by a subsidiary of the Company, the foregoing
representation is limited to the actual knowledge of the Company. Except as
disclosed in Item 4.10(a) of the Company Letter, there exist no employment,
consulting, severance, termination or indemnification agreements, or any other
similar arrangements or understandings (whether or not in writing) between the
Company or any of its subsidiaries and any current or former employee, officer
or director of the Company or any of its subsidiaries.
(b) Item 4.10(b) of the Company Letter contains a list
of all "employee pension benefit plans" (as defined in
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Section 3(2) of the Employee Retirement Income Security Act of 1974, as amended
("ERISA")) (sometimes referred to herein as "Pension Plans"), "employee welfare
benefit plans" (as defined in Section 3(1) of ERISA) and all other Benefit Plans
maintained, sponsored or contributed to, by the Company or any of its
subsidiaries for the benefit of any current or former employees, officers or
directors of the Company or any of such subsidiaries (the "Subject Benefit
Plans"); provided that, with respect to any Subject Benefit Plans sponsored by a
subsidiary of the Company ("Subsidiary Subject Benefit Plans"), the foregoing
representation is limited to the actual knowledge of the Company. The Company
has delivered to Parent true, complete and correct copies of (i) each Subject
Benefit Plan listed in Item 4.10(b) of the Company Letter, including any
amendments thereto (or, in the case of any unwritten Subject Benefit Plans,
descriptions thereof), (ii) the most recent annual report on Form 5500 (and
related schedules and financial statements or opinions required in connection
therewith) filed with the Internal Revenue Service with respect to each such
Subject Benefit Plan (if any such report was required), (iii) if applicable, the
most recent actuarial report with respect to each such Subject Benefit Plan,
(iv) the most recent summary plan description (and a summary of material
modifications, if applicable) for each such Subject Benefit Plan, (v) if
applicable, the most recent determination letter issued by the Internal Revenue
Service with respect to each such Subject Benefit Plan and (vi) if applicable,
each trust agreement and group annuity contract relating to each such Subject
Benefit Plan. Any Benefit Plan that is not a Subject Benefit Plan is either
required by and maintained in accordance with applicable local law or is
immaterial to the applicable subsidiary.
(c) Except as disclosed in Item 4.10(c) of the Company Letter,
all Pension Plans listed in Item 4.10(b) of the Company Letter which are
intended to be tax-qualified have been timely amended to comply with ERISA and
the Internal Revenue Code of 1986, as amended (the "Code"), including changes
required by the Unemployment Compensation Amendments of 1992 and the Omnibus
Budget Reconciliation Act of 1993, and determination letters in respect of such
Pension Plans have been received from the Internal Revenue Service to the effect
that such Pension Plans are qualified and exempt from Federal income taxes under
Section 401(a) and 501(a), respectively, of the Code, and no such determination
letter has been revoked nor, to the best knowledge of the Company, has
revocation been threatened, nor has any such Pension Plan been amended since the
date of its most recent determination letter or application therefor in any
respect that would adversely affect its qualification or materially increase its
costs. With respect to any Pension Plan maintained by a subsidiary of the
Company, the representation set forth in the preceding sentence is limited to
the actual knowledge of the Company.
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(d) Except as disclosed in Item 4.10(d) of the Company Letter,
each Benefit Plan has been administered in all material respects in conformity
with its terms and the applicable requirements of ERISA and the Code and other
applicable laws; and all contributions required to be made have been made in
accordance with the provisions of each such Benefit Plan and with ERISA and the
Code and other applicable laws.
(e) Except as disclosed in on Item 4.10(e) of the Company
Letter, none of the Company or any of its subsidiaries, or any other person or
entity that, together with the Company, is treated as a single employer under
Section 414(b), (c), (m) or (o) of the Code, currently maintains or has
maintained, or has or had any obligation to contribute to, during the five-year
period preceding the date hereof any "defined benefit plan" (within the meaning
of Section 3(35) of ERISA) or any "multiemployer plan" (within the meaning of
Section 3(37) of ERISA), or has incurred any liability under Title IV of ERISA
or to the Pension Benefit Guaranty Corporation that has not been fully paid as
of the date hereof. None of the Company, any officer of the Company, any of the
Benefit Plans which are subject to ERISA, including the Pension Plans, any
trusts created thereunder or, to the knowledge of the Company, any trustee or
administrator thereof or any subsidiary of the company (or officer thereof), has
engaged in a non-exempt "prohibited transaction" (as such term is defined in
Section 406 of ERISA or Section 4975 of the Code) or any other breach of
fiduciary responsibility that could reasonably be expected to subject the
Company, any of its subsidiaries or any officer of the Company or any of its
subsidiaries to any tax or penalty on prohibited transactions imposed by Section
4975 of the Code or to any liability or civil penalty under Section 502(i) or
(1) of ERISA.
(f) With respect to any Benefit Plan that is an employee
welfare benefit plan, except as disclosed in Item 4.10(f) of the Company Letter,
(i) no such Benefit Plan is funded through a "welfare benefits fund", as such
term is defined in Section 419(e) of the Code, (ii) each such Benefit Plan that
is a "group health plan," as such term is defined in Section 607 of ERISA,
complies with the applicable requirements of part 6 of Title I of ERISA, (iii)
each such Benefit Plan that is a "group health plan," as such term is defined in
Section 706 of ERISA, complies with the applicable requirements of part 7 of
Title I of ERISA and (iv) except as disclosed on Item 4.10(f) of the Company
Letter, each such Benefit Plan (including any such Plan covering retirees or
other former employees) may be amended or terminated without material liability
to the Company or any of its subsidiaries on or at any time after the
consummation of the Offer.
(g) Except as disclosed on Item 4.10(g) of the Company
Letter, with respect to each Benefit Plan, all material reports
and information required to be filed with the U.S. Department of
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Labor, the Internal Revenue Service or each Benefit Plan participant have been
timely filed.
(h) There is no dispute, arbitration, claim, suit or
grievance, pending or threatened, involving a Benefit Plan (other than routine
claims for benefits payable under any such plan), and, to the knowledge of the
Company, there is no basis for such a claim.
(i) Item 4.10(i) of the Company Letter sets forth the names of
all current officers and directors of the Company and all employees of the
Company whose compensation is in excess of $80,000 per year, together with each
employee's current salary, most recent bonus (excluding sales bonuses), date of
birth and date of employment.
(j) Except as disclosed in Item 4.10(j) of the Company Letter,
there are no material controversies, strikes, work stoppages or disputes pending
or, to the knowledge of the Company, threatened between the Company or any of
its subsidiaries and any current or former employees, no labor union or other
collective bargaining unit represents or has ever represented any employee of
the Company or any of its subsidiaries and no organizational effort by any labor
union or other collective bargaining unit currently is under way or threatened
with respect to any employee. A true, complete and correct copy of any
applicable collective bargaining agreement has been provided to Parent, and the
Company and its subsidiaries are in compliance in all material respects with the
terms thereof.
SECTION 4.11. Contracts; Indebtedness. (a) Except as disclosed
in Item 4.11 of the Company Letter or in the Company Filed SEC Documents, there
are no contracts or agreements that are material to the business, properties,
assets, financial condition or results of operations of the Company and its
subsidiaries taken as a whole. Neither the Company nor any of its subsidiaries
is in violation of or in default under (nor does there exist any condition which
upon the passage of time or the giving of notice would cause such a violation of
or default under) any loan or credit agreement, note, bond, mortgage, indenture,
lease, permit, concession, franchise, license or any other contract, agreement,
arrangement or understanding, to which it is a party or by which it or any of
its properties or assets is bound, except for violations or defaults that could
not reasonably be expected to result in a material adverse effect on the
Company.
(b) Item 4.11 of the Company Letter sets forth (i) a list of
all agreements, instruments and other obligations pursuant to which any
indebtedness of the Company or any of its subsidiaries in a principal amount in
excess of $250,000 is
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outstanding or may be incurred and (ii) the respective principal amounts
outstanding thereunder as of August 31, 1997.
SECTION 4.12. Litigation. Except as disclosed in Item 4.12 of
the Company Letter or in the Company Filed SEC Documents, as of the date of this
Agreement, there is no suit, claim, action, proceeding or investigation pending
or, to the knowledge of the Company, threatened against the Company or any of
its subsidiaries that could reasonably be expected to have a material adverse
effect on the Company or prevent or materially delay the consummation of the
Offer and/or the Merger. Except as disclosed in Item 4.12 of the Company Letter
or in the Company Filed SEC Documents, as of the date of this Agreement, neither
the Company nor any of its subsidiaries is subject to any outstanding judgment,
order, writ, injunction or decree that could reasonably be expected to have a
material adverse effect on the Company or prevent or materially delay the
consummation of the Offer and/or the Merger.
SECTION 4.13. Compliance with Applicable Law. The Company and
its subsidiaries hold all permits, licenses, variances, exemptions, orders and
approvals of all Governmental Entities necessary for the lawful conduct of their
respective businesses (the "Company Permits"), except for failures to hold such
permits, licenses, variances, exemptions, orders and approvals that would not
have a material adverse effect on the Company or prevent or materially delay the
consummation of the Offer and/or the Merger. The Company and its subsidiaries
are in compliance with the terms of the Company Permits, except where the
failure so to comply would not have a material adverse effect on the Company or
prevent or materially delay the consummation of the Offer and/or the Merger.
Except as disclosed in the Company Letter or in the Company Filed SEC Documents,
to the knowledge of the Company, the businesses of the Company and its
subsidiaries are not being conducted in violation of any law, ordinance or
regulation of any Governmental Entity, except for possible violations that would
not have a material adverse effect on the Company or prevent or materially delay
the consummation of the Offer and/or the Merger. To the knowledge of the
Company, except as set forth in the Company Filed SEC Documents, as of the date
of this Agreement, no investigation or review by any Governmental Entity with
respect to the Company or any of its subsidiaries is pending or threatened,
other than, in each case, those the outcome of which would not be reasonably
expected to have a material adverse effect on the Company or prevent or
materially delay the consummation of the Offer and/or the Merger.
SECTION 4.14. Tax Matters. Except as set forth in Item 4.14 of
the Company Letter:
(a) The Company and each of its subsidiaries has filed
all Federal income tax returns and reports and all other material
tax returns and reports required to be filed by it. All such
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returns and reports are complete and correct in all material respects. The
Company and each of its subsidiaries has paid (or the Company has paid on its
subsidiaries' behalf) all taxes (as defined below) shown as due on such returns
and reports and all material taxes for which no return was required to be filed,
and the most recent financial statements contained in the Company Filed SEC
Documents reflect an adequate reserve for all taxes payable by the Company and
its subsidiaries for all taxable periods and portions thereof through the date
of such financial statements.
(b) No material tax return of the Company or any of its
subsidiaries is under audit or, to the knowledge of the Company, examination by
any taxing authority. Each material deficiency resulting from any audit or
examination relating to taxes of the Company or any of its subsidiaries by any
taxing authority has been paid. No material issues relating to taxes were raised
in writing by the relevant taxing authority during any presently pending audit
or examination, and no material issues relating to taxes were raised in writing
by the relevant taxing authority in any completed audit or examination that can
reasonably be expected to recur in a later taxable period. The Federal income
tax returns of the Company and each of its subsidiaries consolidated in such
returns have been examined by and settled with the Internal Revenue Service for
all years through the taxable year ended January 31, 1994.
(c) There is no agreement or other document extending, or
having the effect of extending, the period of assessment or collection of any
taxes and no power of attorney with respect to any taxes has been executed or
filed with any taxing authority.
(d) No material liens for taxes exist with respect to any
assets or properties of the Company or any of its subsidiaries, except for
statutory liens for taxes not yet due.
(e) None of the Company or any of its subsidiaries is a party
to or is bound by any tax sharing agreement, tax indemnity obligation or similar
agreement, arrangement or practice with respect to taxes (including any advance
pricing agreement, closing agreement or other agreement relating to taxes with
any taxing authority), in all cases other than this Agreement.
(f) None of the Company or any of its subsidiaries shall be
required to include in a taxable period ending after the Effective Time taxable
income attributable to income that accrued in a prior taxable period but was not
recognized in any prior taxable period as a result of the installment method of
accounting, the completed contract method of accounting, the long-term contract
method of accounting, the cash method of accounting or Section 481 of the Code
or comparable provisions of state, local or foreign tax law.
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(g) The disallowance of a deduction under Section 162(m) of
the Code for employee remuneration will not apply to any amount paid or payable
by the Company or any of its subsidiaries under any contract, plan, program,
arrangement or understanding currently in effect.
(h) No amount or other entitlement that could be received
(whether in cash or property or the vesting of property) by any Person who, with
respect to the Company or any of its affiliates, is a "disqualified individual"
(as such term is defined in proposed Treasury Regulation Section 1.280G-1) under
any employment, severance or termination agreement, other compensation
arrangement or Company Benefit Plan currently in effect will be characterized as
an "excess parachute payment" or a "parachute payment" (as such terms are
defined in Section 280G(b)(1) of the Code) as a result of any of the
transactions contemplated by this Agreement.
(i) No taxes will be required to be withheld under Section
1445, and no sales taxes, transfer, real property transfer or gains taxes, or
similar taxes will be imposed as a result of the transactions contemplated by
this Agreement.
(j) As used in this Agreement, "taxes" shall include all
Federal, state, local and foreign income, property, sales, use, excise,
employment, withholding and other taxes, tariffs or governmental charges of any
nature whatsoever, together with any interest and penalties, and "tax return"
shall include any return, report or similar statement required to be filed with
respect to any tax (including any attached schedules), including, without
limitation, any information return, claim for refund, amended return or
declaration of estimated tax.
SECTION 4.15. State Takeover Statutes; Charter Provisions.
Section 14-2-1111 of the GBCC is inapplicable to the Offer, the Merger, this
Agreement, the Stockholder Agreement and the transactions contemplated by this
Agreement and the Stockholder Agreement. The action of the Board of Directors of
the Company in approving and adopting this Agreement and approving the Offer,
the Merger and the Stockholder Agreement is sufficient (i) to render
inapplicable to the Offer, the Merger, this Agreement, the Stockholder Agreement
and the transactions contemplated by this Agreement and the Stockholder
Agreement the supermajority voting provisions of Article VII of the Company's
Amended and Restated Articles of Incorporation and (ii) to comply with the
provisions of Section 14-2-1132 of the GBCC. To the knowledge of the Company, no
other state takeover statute or similar statute or regulation applies or
purports to apply to the Offer, the Merger, this Agreement, the Stockholder
Agreement or any of the transactions contemplated by this Agreement or the
Stockholder Agreement.
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SECTION 4.16. Environmental Matters. (a) Except as set forth
in Item 4.16 of the Company Letter, neither the Company nor any of its
subsidiaries has (i) placed, held, located, released, transported or disposed of
any Hazardous Substances (as defined below) on, under, from or at any of the
Company's or any of its subsidiaries' properties or any other properties, other
than in a manner that could not, in all such cases taken individually or in the
aggregate, reasonably be expected to result in a material adverse effect on the
Company, (ii) any knowledge or reason to know of the presence of any Hazardous
Substances on, under or at any of the Company's or any of its subsidiaries'
properties or any other property but arising from the Company's or any of its
subsidiaries' properties, other than in a manner that could not reasonably be
expected to result in a material adverse effect on the Company, or (iii)
received any written notice (A) of any violation of any statute, law, ordinance,
regulation, rule, judgment, decree or order of any Governmental Entity relating
to any matter of pollution, protection of the environment, environmental
regulation or control or regarding Hazardous Substances on, under or emanating
from any of the Company's or any of its subsidiaries' properties or any other
properties (collectively, "Environmental Laws") that has not been resolved or
settled with the relevant Governmental Entity, (B) of the institution or
pendency of any suit, action, claim, proceeding or investigation by any
Governmental Entity or any third party in connection with any such violation,
(C) requiring the response to or remediation of Hazardous Substances at or
arising from any of the Company's or any of its subsidiaries' properties or any
other properties, (D) alleging noncompliance by the Company or any of its
subsidiaries with the terms of any permit required under any Environmental Law
in any manner reasonably likely to require material expenditures or to result in
material liability or (E) demanding payment for response to or remediation of
Hazardous Substances at or arising from any of the Company's or any of its
subsidiaries' properties or any other properties, except in each case for the
notices set forth in Item 4.16 of the Company Letter. For purposes of this
Agreement, the term "Hazardous Substance" shall mean any toxic or hazardous
materials or substances, including asbestos, buried contaminants, chemicals,
flammable explosives, radioactive materials, petroleum and petroleum products
and any substances defined as, or included in the definition of, "hazardous
substances", "hazardous wastes," "hazardous materials" or "toxic substances"
under any Environmental Law.
(b) Except as set forth in Item 4.16 of the Company Letter, no
Environmental Law imposes any obligation upon the Company or its subsidiaries
arising out of or as a condition to any transaction contemplated by this
Agreement or the Stockholder Agreement, including any requirement to modify or
to transfer any permit or license, any requirement to file any notice or other
submission with any Governmental Entity, the placement of any notice,
acknowledgment or covenant in any land records, or the
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modification of or provision of notice under any agreement, consent order or
consent decree, except where any failure to notify or place any notice would not
reasonably be expected to result in a material adverse effect on the Company or
prevent or materially delay the consummation of the Offer and/or the Merger. No
Lien has been placed upon any of the Company's or its subsidiaries' properties
under any Environmental Law.
(c) Except as set forth in the Item 4.16 of the Company
Letter, none of the Company or any of its subsidiaries owns, operates or leases
any facility qualifying as an industrial establishment under the New Jersey
Industrial Site Recovery Act.
SECTION 4.17. Intellectual Property. The Company and its
subsidiaries own, or are validly licensed or otherwise have the right to use,
all patents, patent rights, trademarks, trade names, service marks, copyrights,
know how and other proprietary intellectual property rights and computer
programs (collectively, "Intellectual Property Rights") that are material to the
conduct of the business of the Company and its subsidiaries taken as a whole.
Item 4.17 of the Company Letter sets forth a description of all Intellectual
Property Rights that are material to the conduct of the business of the Company
and its subsidiaries taken as a whole. Except as set forth in Item 4.17 of the
Company Letter, no claims are pending or, to the knowledge of the Company,
threatened that the Company or any of its subsidiaries is infringing or
otherwise adversely affecting the rights of any person with regard to any
Intellectual Property Right so as to materially adversely affect any of the
Company's material Intellectual Property Rights, and the Company is not aware of
any basis for any such claims. To the knowledge of the Company, except as set
forth in Item 4.17 of the Company Letter, no person is infringing the rights of
the Company or any of its subsidiaries with respect to any material Intellectual
Property Right so as to materially adversely affect such Intellectual Property
Right.
SECTION 4.18. Brokers; Schedule of Fees and Expenses. No
broker, investment banker, financial advisor or other person, other than
Interstate/Johnson Lane Corporation and R. J. Wareham & Company, Incorporated,
the fees and expenses of which will be paid by the Company (and as reflected in
agreements between Interstate/Johnson Lane Corporation and the Company and R. J.
Wareham & Company, Incorporated and the Company, copies of which have been
furnished to Parent), is entitled to any broker's, finder's, financial advisor's
or other similar fee or commission in connection with the transactions
contemplated by this Agreement based upon arrangements made by or on behalf of
the Company. The estimated fees and expenses incurred and to be incurred by the
Company in connection with this Agreement and the transactions contemplated by
this Agreement (including the fees of the Company's legal counsel and the legal
counsel for its
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financial advisor) are set forth in Item 4.18 of the Company Letter.
SECTION 4.19. Opinion of Financial Advisor. The Company has
received the opinion of Interstate/Johnson Lane Corporation, dated the date of
this Agreement, to the effect that, as of the date of this Agreement, the
consideration to be received in the Offer and the Merger by the Company's
stockholders is fair to the Company's stockholders from a financial point of
view, and a complete and correct signed copy of such opinion has been, or
promptly upon receipt thereof will be, delivered to Parent.
ARTICLE V
Representations and Warranties
of Parent and Sub
Parent and Sub represent and warrant to the Company as
follows:
SECTION 5.01. Organization. Each of Parent and Sub is a
corporation duly organized, validly existing and in good standing under the laws
of the jurisdiction of its incorporation and has all requisite corporate power
and authority to carry on its business as now being conducted.
SECTION 5.02. Authority. Parent and Sub have requisite
corporate power and authority to execute and deliver this Agreement and to
consummate the transactions contemplated hereby. The execution, delivery and
performance of this Agreement and the consummation of the transactions
contemplated hereby have been duly authorized by all necessary corporate action
on the part of Parent and Sub and no other corporate proceedings on the part of
Parent and Sub are necessary to authorize this Agreement or to consummate such
transactions. This Agreement has been duly executed and delivered by Parent and
Sub, as the case may be, and, assuming this Agreement constitutes a valid and
binding obligation of the Company, constitutes a valid and binding obligation of
each of Parent and Sub enforceable against them in accordance with its terms.
SECTION 5.03. Consents and Approvals; No Violations. Except
for filings, permits, authorizations, consents and approvals as may be required
under, and other applicable requirements of, the Exchange Act (including the
filing with the SEC of the Offer Documents), the HSR Act, the GBCC, the laws of
other states in which Parent is qualified to do or is doing business, state
takeover laws and foreign and supranational laws relating to antitrust and
anticompetition clearances, neither the execution, delivery or performance of
this Agreement by Parent and Sub nor the consummation by Parent and Sub of the
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transactions contemplated hereby will (i) conflict with or result in any breach
of any provision of the respective certificate of incorporation or by-laws of
Parent and Sub, (ii) require any filing with, or permit, authorization, consent
or approval of, any Governmental Entity (except where the failure to obtain such
permits, authorizations, consents or approvals or to make such filings would not
be reasonably expected to prevent or materially delay the consummation of the
Offer and/or the Merger), (iii) result in a violation or breach of, or
constitute (with or without due notice or lapse of time or both) a default (or
give rise to any right of termination, amendment, cancellation or acceleration)
under, any of the terms, conditions or provisions of any note, bond, mortgage,
indenture, license, lease, contract, agreement or other instrument or obligation
to which Parent or any of its subsidiaries is a party or by which any of them or
any of their properties or assets may be bound or (iv) violate any order, writ,
injunction, decree, statute, rule or regulation applicable to Parent, any of its
subsidiaries or any of their properties or assets, except in the case of clauses
(iii) and (iv) for violations, breaches or defaults which would not,
individually or in the aggregate, be reasonably expected to prevent or
materially delay the consummation of the Offer and/or the Merger.
SECTION 5.04. Information Supplied. None of the information
supplied or to be supplied by Parent or Sub specifically for inclusion or
incorporation by reference in (i) the Offer Documents, (ii) the Schedule 14D-9,
(iii) the Information Statement or (iv) the Proxy Statement will, in the case of
the Offer Documents, the Schedule 14D-9 and the Information Statement, at the
respective times the Offer Documents, the Schedule 14D-9 and the Information
Statement are filed with the SEC or first published, sent or given to the
Company's stockholders, or, in the case of the Proxy Statement, at the time the
Proxy Statement is first mailed to the Company's stockholders or at the time of
the Stockholders Meeting, contain any untrue statement of a material fact or
omit to state any material fact required to be stated therein or necessary in
order to make the statements therein, in light of the circumstances under which
they are made, not misleading. The Offer Documents will comply as to form in all
material respects with the requirements of the Exchange Act and the rules and
regulations thereunder, except that no representation or warranty is made by
Parent or Sub with respect to statements made or incorporated by reference
therein based on information supplied by the Company specifically for inclusion
or incorporation by reference therein.
SECTION 5.05. Interim Operations of Sub. Sub was formed solely
for the purpose of engaging in the transactions contemplated hereby, has engaged
in no other business activities and has conducted its operations only as
contemplated hereby.
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SECTION 5.06. Brokers. No broker, investment banker, financial
advisor or other person, other than Smith Barney Inc., the fees and expenses of
which will be paid by Parent, is entitled to any broker's, finder's, financial
advisor's or other similar fee or commission in connection with the transactions
contemplated by this Agreement based upon arrangements made by or on behalf of
Parent or Sub.
ARTICLE VI
Covenants
SECTION 6.01. Covenants of the Company. Until such time as
Parent's designees shall constitute a majority of the members of the Board of
Directors of the Company, the Company agrees as to itself and its subsidiaries
that (except as expressly contemplated or permitted by this Agreement or except
to the extent that Parent shall otherwise consent in writing):
(a) Ordinary Course. The Company shall, and shall cause its
subsidiaries to, carry on their respective businesses in the usual, regular and
ordinary course in substantially the same manner as heretofore conducted and
shall use all reasonable best efforts to preserve intact their present business
organizations, keep available the services of their present officers and
employees and preserve their relationships with customers, suppliers and others
having business dealings with the Company and its subsidiaries.
(b) Dividends; Changes in Stock. The Company shall not, and
shall not permit any of its subsidiaries to, (i) declare or pay any dividends on
or make other distributions in respect of any of its capital stock (other than
regular quarterly cash dividends not in excess of $.07 per Share or $.05 per
Class B Share with usual record and payment dates and in accordance with the
Company's present dividend policy), except for dividends by a direct or indirect
wholly owned subsidiary of the Company to its parent, (ii) split, combine or
reclassify any of its capital stock or issue or authorize or propose the
issuance of any other securities in respect of, in lieu of or in substitution
for shares of its capital stock or (iii) repurchase, redeem or otherwise acquire
any shares of capital stock of the Company or its subsidiaries or any other
securities thereof or any rights, warrants or options to acquire any such shares
or other securities.
(c) Issuance of Securities. The Company shall not, and shall
not permit any of its subsidiaries to, issue, deliver, sell, pledge or encumber,
or authorize or propose the issuance, delivery, sale, pledge or encumbrance of,
any shares of its capital stock of any class or any securities convertible into,
or any rights, warrants, calls, subscriptions or options to acquire,
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any such shares or convertible securities, or any other ownership interest
(including stock appreciation rights or phantom stock) other than (i) the
issuance of Shares upon the exercise of stock options pursuant to Stock-Based
Compensation Plans outstanding on the date of this Agreement and in accordance
with the terms of such stock options, (ii) the issuance of Shares upon the
conversion of Class B Shares, and (iii) the issuance of Shares upon the
conversion of any Convertible Debentures.
(d) Governing Documents. The Company shall not, and shall not
permit any of its subsidiaries to, amend or propose to amend its articles of
incorporation or by-laws (or similar organizational documents).
(e) No Acquisitions. The Company shall not, and shall not
permit any of its subsidiaries to, acquire or agree to acquire (i) by merging
or consolidating with, or by purchasing a substantial equity interest in or
substantial portion of the assets of, or by any other manner, any business or
any corporation, partnership, joint venture, limited liability company,
association or other business organization or division thereof or (ii) any
assets having a purchase price in excess of $1,000,000, individually, or
$5,000,000, in the aggregate, except purchases of inventory in the ordinary
course of business consistent with past practice and expenditures consistent
with the Company's current capital budget previously furnished to Parent.
(f) No Dispositions. Except as disclosed in Item 6.01(f) of
the Company Letter, other than sales of its products to customers and immaterial
dispositions of personal property, in each case in the ordinary course of
business consistent with past practice, the Company shall not, and shall not
permit any of its subsidiaries to, sell, lease, license, encumber or otherwise
dispose of, or agree to sell, lease, encumber or otherwise dispose of, any of
its assets.
(g) Indebtedness. The Company shall not, and shall not permit
any of its subsidiaries to, (i) incur any indebtedness for borrowed money or
guarantee any such indebtedness or issue or sell any debt securities or warrants
or rights to acquire any debt securities of the Company or any of its
subsidiaries, guarantee any debt securities of others, enter into any "keep-
well" or other agreement to maintain any financial statement condition of
another person or enter into any arrangement having the economic effect of any
of the foregoing, except for working capital borrowings incurred in the ordinary
course of business consistent with past practice, or (ii) make any loans,
advances or capital contributions to, or investments in, any other person, other
than to the Company or any direct or indirect wholly owned subsidiary of the
Company, except for travel advances made in the ordinary course of business.
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(h) Advice of Changes; Filings. The Company shall confer on a
regular basis with Parent with respect to operational matters and promptly
advise Parent orally and in writing of any material adverse change with respect
to the Company. The Company shall promptly provide to Parent (or its counsel)
copies of all filings made by the Company with any Governmental Entity in
connection with this Agreement and the transactions contemplated hereby.
(i) Tax Matters. The Company shall not make any tax election
that would have a material effect on the tax liability of the Company or any of
its subsidiaries or settle or compromise any tax liability of the Company or any
of its subsidiaries that would materially affect the tax liability of the
Company or any of its subsidiaries. The Company shall, before filing or causing
to be filed any material tax return of the Company or any of its subsidiaries or
settling any tax liability not described in the preceding sentence, consult with
Parent and its advisors as to the positions and elections that may be taken or
made with respect to such return or with respect to such settlement.
(j) Capital Expenditures. Neither the Company nor any of its
subsidiaries shall make or agree to make any new capital expenditure or
expenditures other than expenditures consistent with the Company's current
capital budget previously furnished to Parent.
(k) Discharge of Liabilities. The Company shall not, and shall
not permit any of its subsidiaries to, pay, discharge, settle or satisfy any
claims, liabilities or obligations (absolute, accrued, asserted or unasserted,
contingent or otherwise), other than the payment, discharge, settlement or
satisfaction, (i) in the ordinary course of business consistent with past
practice or in accordance with their terms, of claims, liabilities or
obligations recognized or disclosed in the most recent consolidated financial
statements (or the notes thereto) of the Company included in the Company Filed
SEC Documents or incurred since the date of such financial statements in the
ordinary course of business consistent with past practice or (ii) of claims,
liabilities or obligations to the extent they are less than $50,000 and
unrelated to the Company's stockholders or the transactions contemplated by this
Agreement and the Stockholder Agreement, or waive the benefits of, or agree to
modify in any manner, any confidentiality, standstill or similar agreement to
which the Company or any of its subsidiaries is a party.
(l) Benefit Plans. Except as disclosed in Item 6.01(l) of the
Company Letter, neither the Company nor any of its subsidiaries shall enter into
or accept, or amend any existing, severance plan, agreement or arrangement or
enter into or amend any Benefit Plan or employment or consulting agreement,
other than as required by law.
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(m) Compensation. Neither the Company nor any of its
subsidiaries shall increase the compensation payable or to become payable to its
directors, officers or employees, except for increases required under employment
agreements existing on the date hereof, and increases for employees in the
ordinary course of business consistent with past practice that, in any event, do
not increase such employee's aggregate compensation by more than 5% over such
employee's aggregate compensation in effect on the date hereof, or grant any
severance or termination pay to, or enter into any employment or severance
payment, or establish, adopt, enter into, or amend in any material respect or
take action to enhance in any material respect or accelerate any rights or
benefits under, any collective bargaining, bonus, profit sharing, thrift,
compensation, employment, termination, severance or other plan, agreement,
trust, fund, policy or arrangement for the benefit of any director, officer or
employee, except, in each case, as may be required to comply with applicable law
or regulation.
(n) Material Contracts. Except in the ordinary course of
business, neither the Company nor any of its subsidiaries shall (i) modify,
amend or terminate any material contract or agreement to which the Company or
such subsidiary is a party or (ii) waive, release or assign any material rights
or claims.
(o) General. The Company shall not, and shall not permit any
of its subsidiaries to, authorize any of, or commit or agree to take any of, the
foregoing actions otherwise prohibited by this Section 6.01.
SECTION 6.02. No Solicitation. (a) The Company shall, and
shall direct and use reasonable best efforts to cause its officers, directors,
employees, representatives and agents to, immediately cease any discussions or
negotiations with any parties that may be ongoing with respect to a Takeover
Proposal (as hereinafter defined). The Company shall not, nor shall it permit
any of its subsidiaries to, nor shall it authorize or permit any of its
officers, directors or employees or any investment banker, financial advisor,
attorney, accountant or other representative retained by it or any of its
subsidiaries to, directly or indirectly, (i) solicit, initiate or knowingly
encourage (including by way of furnishing information), or take any other action
designed or reasonably likely to facilitate, any inquiries or the making of any
proposal which constitutes, or may reasonably be expected to lead to, any
Takeover Proposal or (ii) participate in any discussions or negotiations
regarding any Takeover Proposal; provided, however, that if, at any time prior
to the acceptance for payment of Shares pursuant to the Offer, the Board of
Directors of the Company determines in good faith, after consultation with
outside counsel, that it is necessary to do so in order to comply with its
fiduciary duties to the Company's stockholders under applicable law, the Company
may, in response to a Takeover Proposal which was not solicited
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subsequent to the date hereof, and subject to compliance with Section 6.02(c),
(x) furnish information with respect to the Company to any person pursuant to a
customary confidentiality agreement (as determined by the Company after
consultation with its outside counsel) and (y) participate in negotiations
regarding such Takeover Proposal. For purposes of this Agreement, "Takeover
Proposal" means any inquiry, proposal or offer from any person relating to any
direct or indirect acquisition or purchase of 20% or more of the assets of the
Company and its subsidiaries or 20% or more of any class of equity securities of
the Company or any of its subsidiaries, any tender offer or exchange offer that
if consummated would result in any person beneficially owning 20% or more of any
class of equity securities of the Company or any of its subsidiaries, any
merger, consolidation, business combination, recapitalization, liquidation,
dissolution or similar transaction involving the Company or any of its
subsidiaries, other than the transactions contemplated by this Agreement, or any
other transaction the consummation of which could reasonably be expected to
impede, interfere with, prevent or materially delay the Offer and/or the Merger
or which would reasonably be expected to dilute materially the benefits to
Parent of the transactions contemplated by this Agreement and the Stockholder
Agreement.
(b) Except as set forth in this Section 6.02, neither the
Board of Directors of the Company nor any committee thereof shall (i) withdraw
or modify, or propose publicly to withdraw or modify, in a manner adverse to
Parent, the approval or recommendation by such Board of Directors or such
committee of the Offer, the Merger or this Agreement, (ii) approve or recommend,
or propose publicly to approve or recommend, any Takeover Proposal or (iii)
cause the Company to enter into any letter of intent, agreement in principle,
acquisition agreement or other similar agreement (each, an "Acquisition
Agreement") related to any Takeover Proposal. Notwithstanding the foregoing, in
the event that prior to the acceptance for payment of Shares pursuant to the
Offer the Board of Directors of the Company determines in good faith, after
consultation with outside counsel, that it is necessary to do so in order to
comply with its fiduciary duties to the Company's stockholders under applicable
law, the Board of Directors of the Company may (subject to this and the
following sentences) (x) withdraw or modify its approval or recommendation of
the Offer, the Merger and this Agreement or (y) approve or recommend a Superior
Proposal (as defined below) or terminate this Agreement (and concurrently with
or after such termination, if it so chooses, cause the Company to enter into an
Acquisition Agreement with respect to any Superior Proposal), but in each of the
cases set forth in this clause (y), only at a time that is after the fifth
business day following Parent's receipt of written notice (a "Notice of Superior
Proposal") advising Parent that (i) the Board of Directors of the Company has
received a Superior Proposal and (ii) the actions the Board of Directors of the
Company intends to
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take with respect to such Superior Proposal, specifying the material terms and
conditions of such Superior Proposal and identifying the person making such
Superior Proposal. For purposes of this Agreement, a "Superior Proposal" means
any bona fide proposal made by a third party to acquire, directly or indirectly,
for consideration consisting of cash and/or securities, more than 50% of the
combined voting power of the shares of Company Common Stock and Class B Common
Stock then outstanding or all or substantially all the assets of the Company and
otherwise on terms which the Board of Directors of the Company determines in its
good faith judgment (based on the advice of a financial advisor of nationally
recognized reputation) to be more favorable to the Company's stockholders than
the Offer and the Merger and for which financing, to the extent required, is
then committed.
(c) In addition to the obligations of the Company set forth in
paragraphs (a) and (b) of this Section 6.02, the Company shall immediately
advise Parent orally and in writing of any request for information or of any
Takeover Proposal, the material terms and conditions of such request or Takeover
Proposal and the identity of the person making such request or Takeover
Proposal. The Company will keep Parent fully informed of the status and details
(including amendments or proposed amendments) of any such request or Takeover
Proposal.
(d) Nothing contained in this Section 6.02 shall prohibit the
Company from taking and disclosing to its stockholders a position contemplated
by the Exchange Act or from making any disclosure to the Company's stockholders
if, in the good faith judgment of the Board of Directors of the Company, after
consultation with outside counsel, such disclosure is required by applicable
state or Federal securities laws or is necessary in order to comply with its
fiduciary duties to the Company's stockholders under applicable law; provided,
however, neither the Company nor its Board of Directors nor any committee
thereof shall, except as permitted by Section 6.02(b), withdraw or modify, or
propose publicly to withdraw or modify, its position with respect to the Offer,
this Agreement or the Merger or approve or recommend, or propose publicly to
approve or recommend, a Takeover Proposal.
SECTION 6.03. Third Party Standstill Agreements. During the
period from the date of this Agreement through the Effective Time, the Company
shall not terminate, amend, modify or waive any provision of any confidentiality
or standstill agreement to which the Company or any of its subsidiaries is a
party (other than any involving Parent) unless the Company's Board of Directors
shall have determined in good faith, after consultation with outside counsel,
that it is necessary to do so in order to comply with its fiduciary duties to
the Company's stockholders under applicable law.
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SECTION 6.04. Other Actions. Except as expressly contemplated
or permitted by this Agreement, the Company shall not, and shall not permit any
of its subsidiaries to, take any action that would, or that could reasonably be
expected to, result in (i) any of the representations and warranties of the
Company set forth in this Agreement that are qualified as to materiality
becoming untrue, (ii) any of such representations and warranties that are not so
qualified becoming untrue in any material respect or (iii) any of the Offer
Conditions not being satisfied (subject to the Company's right to take actions
specifically permitted by Section 6.02).
SECTION 6.05. Certain Waivers and Consents. The Company shall
use its reasonable best efforts to obtain any and all waivers or consents
necessary from the lenders listed on Item 6.05 of the Company Letter prior to
the acceptance by Sub of any Shares tendered pursuant to the Offer.
SECTION 6.06. Information Relating to Certain Benefit Plans.
(a) As soon as practicable, but in no event later than 30 days after the date of
this Agreement, the Company shall deliver to Parent each of the items listed in
clauses (i) through (vi) of the second sentence of Section 4.10(b) hereof with
respect to each Subsidiary Subject Benefit Plan, to the extent such information
was not previously delivered to Parent in accordance with Section 4.10(b)
hereof.
(b) As soon as practicable, but in no event later than three
business days after the date of this Agreement, the Company shall deliver to the
union pension fund office for each multiemployer plan to which the Company and
its subsidiaries contribute a written request for a withdrawal liability
calculation or for information that will allow the Company to make such a
calculation and the Company shall deliver such information to Parent no later
than one business day following the receipt by the Company.
SECTION 6.07. Certain Deliveries. The Company shall deliver to
Parent, not more than 20 days prior to, but not later than, Sub's acceptance for
payment of any Shares pursuant to the Offer, a statement in accordance with
Treas. Reg. ss.ss. 1.1445-2(c)(3) and 1.897-2(h), and neither Parent nor Sub
shall have actual knowledge that such statement is false or received a notice
that the statement is false pursuant to Treas. Reg. ss. 1.1445-4. In addition,
the Company shall deliver to Parent on the date Sub first accepts for payment
any Shares pursuant to the Offer the notification to the Internal Revenue
Service, in accordance with the requirements pursuant to Treas. Reg. ss.
1.897-(h)(2), of delivery of the statement referred to in the preceding
sentence, signed by a responsible corporate officer of the Company.
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ARTICLE VII
Additional Agreements
SECTION 7.01. Stockholder Approval; Preparation of Proxy
Statement. (a) If the Company Stockholder Approval is required by law, the
Company shall, as soon as practicable following the expiration of the Offer,
duly call, give notice of, convene and hold a meeting of its stockholders (the
"Stockholders Meeting") for the purpose of obtaining the Company Stockholder
Approval. The Company shall, through its Board of Directors (but subject to the
right of its Board of Directors to withdraw or modify its approval or
recommendation of the Offer, the Merger and this Agreement as set forth in
Section 6.02(b)), recommend to its stockholders that the Company Stockholder
Approval be given. Notwithstanding the foregoing, if Sub or any other
subsidiary of Parent shall acquire at least 90% of the outstanding Shares and at
least 90% of the outstanding Class B Shares, the parties shall, at the request
of Parent, take all necessary and appropriate action to cause the Merger to
become effective as soon as practicable after the expiration of the Offer
without a Stockholders Meeting in accordance with Section 14-2-1104 of the
GBCC. Without limiting the generality of the foregoing, the Company agrees that
its obligations pursuant to the first sentence of this Section 7.01(a) shall not
be affected by (i) the commencement, public proposal, public disclosure or
communication to the Company of any Takeover Proposal or (ii) the withdrawal or
modification by the Board of Directors of the Company of its approval or
recommendation of the Offer, this Agreement or the Merger.
(b) If the Company Stockholder Approval is required by law,
the Company shall, at Parent's request, as soon as practicable following the
expiration of the Offer, prepare and file a preliminary Proxy Statement with the
SEC and shall use its reasonable best efforts to respond to any comments of the
SEC or its staff and to cause the Proxy Statement to be mailed to the Company's
stockholders as promptly as practicable after responding to all such comments to
the satisfaction of the staff. The Company shall notify Parent promptly of the
receipt of any comments from the SEC or its staff and of any request by the SEC
or its staff for amendments or supplements to the Proxy Statement or for
additional information and will supply Parent with copies of all correspondence
between the Company or any of its representatives, on the one hand, and the SEC
or its staff, on the other hand, with respect to the Proxy Statement or the
Merger. If at any time prior to the Stockholders Meeting there shall occur any
event that should be set forth in an amendment or supplement to the Proxy
Statement, the Company shall promptly prepare and mail to its stockholders such
an amendment or supplement. The Company shall not mail any Proxy Statement, or
any amendment or supplement thereto, to which Parent reasonably objects. Parent
shall cooperate with the Company in the
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preparation of the Proxy Statement or any amendment or supplement thereto.
(c) Parent agrees to cause all Shares purchased pursuant to
the Offer and all other Shares owned by Parent or any subsidiary of Parent to be
voted in favor of the Company Stockholder Approval.
SECTION 7.02. Access to Information. Upon reasonable notice
and subject to restrictions contained in confidentiality agreements to which the
Company is subject (from which it shall use reasonable best efforts to be
released) and subject to the terms of the Confidentiality Agreement (the
"Confidentiality Agreement"), dated July 3, 1997, between the Company and
Parent, the Company shall, and shall cause each of its subsidiaries to, afford
to Parent and to the officers, employees, accountants, counsel and other
representatives of Parent all reasonable access, during normal business hours
during the period prior to the Effective Time, to all their respective
properties, books, contracts, commitments and records and, during such period,
the Company shall (and shall cause each of its subsidiaries to) furnish promptly
to Parent (a) a copy of each report, schedule, registration statement and other
document filed or received by it during such period pursuant to the requirements
of the Federal or state securities laws or the Federal tax laws and (b) all
other information concerning its business, properties and personnel as Parent
may reasonably request.
SECTION 7.03. Reasonable Best Efforts. Except as otherwise
contemplated in this Agreement, each of the Company, Parent and Sub agree to use
its reasonable best efforts to take, or cause to be taken, all actions necessary
to comply promptly with all legal requirements that may be imposed on itself
with respect to the Offer and the Merger (which actions shall include furnishing
all information required under the HSR Act and in connection with approvals of
or filings with any other Governmental Entity) and shall promptly cooperate with
and furnish information to each other in connection with any such requirements
imposed upon any of them or any of their subsidiaries in connection with the
Offer and the Merger. Except as otherwise contemplated in this Agreement, each
of the Company, Parent and Sub shall, and shall cause its subsidiaries to, use
its reasonable best efforts to take all reasonable actions necessary to obtain
(and shall cooperate with each other in obtaining) any consent, authorization,
order or approval of, or any exemption by, any Governmental Entity or other
public or private third party required to be obtained or made by Parent, Sub,
the Company or any of their subsidiaries in connection with the Offer and the
Merger or the taking of any action contemplated thereby or by this Agreement,
except that no party need waive any substantial rights or agree to any
substantial limitation on its operations or to dispose of any assets. Without
limiting the foregoing, Parent shall (i) contemporaneously with the purchase
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of Shares pursuant to the Offer, lend, contribute or otherwise transfer to the
Company funds in an amount sufficient to enable the Company to repay its then
outstanding indebtedness under the Amended and Restated Credit Agreement dated
as of July 15, 1997 referred to in Item 4.05 of the Company Letter and (ii) use
its reasonable best efforts to cause the Company to repay such indebtedness
contemporaneously with such purchase and obtain the release of all guaranties
and security interests granted in connection with such indebtedness.
SECTION 7.04. Directors. Promptly upon Sub having acquired a
majority of the combined voting power of the Shares and Class B Shares, Sub
shall be entitled to designate such number of directors on the Board of
Directors of the Company as will give Sub, subject to compliance with Section
14(f) of the Exchange Act, a majority of such directors, and the Company shall,
at such time, cause Sub's designees to be so elected by its existing Board of
Directors; provided, however, that in the event that Sub's designees are elected
to the Board of Directors of the Company, until the Effective Time such Board of
Directors shall have at least three directors who are directors on the date of
this Agreement and who are not officers of the Company (the "Independent
Directors"); and provided further that, in such event, if the number of
Independent Directors shall be reduced below three for any reason whatsoever,
the remaining Independent Directors or Director shall designate a person or
persons to fill such vacancy or vacancies, each of whom shall be deemed to be an
Independent Director for purposes of this Agreement or, if no Independent
Directors then remain, the other directors shall designate three persons to fill
such vacancies who shall not be officers or affiliates of the Company or any of
its subsidiaries, or officers or affiliates of Parent or any of its
subsidiaries, and such persons shall be deemed to be Independent Directors for
purposes of this Agreement. Subject to applicable law, the Company shall take
all action requested by Parent that is reasonably necessary to effect any such
election, including mailing to its stockholders the Information Statement
containing the information required by Section 14(f) of the Exchange Act and
Rule 14f-1 promulgated thereunder, and the Company agrees to make such mailing
with the mailing of the Schedule 14D-9 (provided that Sub shall have provided to
the Company on a timely basis all information required to be included in the
Information Statement with respect to Sub's designees). In connection with the
foregoing, the Company will promptly, at the option of Parent, either increase
the size of the Company's Board of Directors and/or obtain the resignation of
such number of its current directors as is necessary to enable Sub's designees
to be elected or appointed to, and to constitute a majority of the directors on,
the Company's Board of Directors as provided above.
SECTION 7.05. Fees and Expenses. (a) Except as provided below
in this Section 7.05, all fees and expenses incurred in connection with the
Offer, the Merger, this Agreement
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and the transactions contemplated by this Agreement shall be paid by the party
incurring such fees or expenses, whether or not the Offer or the Merger is
consummated.
(b) The Company shall pay, or cause to be paid, in same day
funds to Parent (x) the Expenses (as hereinafter defined) in an amount up to but
not to exceed $500,000 and (y) $5,500,000 (the "Termination Fee") under the
circumstances and at the times set forth as follows:
(i) if Parent or Sub terminates this Agreement under Section
9.01(d), the Company shall pay the Expenses and the Termination Fee
upon demand;
(ii) if the Company terminates this Agreement under Section
9.01(e), the Company shall pay the Expenses and the Termination Fee
concurrently therewith; and
(iii) if, at the time of any other termination of this Agreement
(other than by the Company pursuant to Section 9.01(f) or 9.01(g)), a
Takeover Proposal shall have been made (other than a Takeover Proposal
made prior to the date hereof), the Company shall pay the Expenses, if
terminated by the Company, concurrently therewith or, if terminated by
Parent, upon demand; in addition, if within 18 months of such
termination, the Company shall enter into an Acquisition Agreement
providing for a Takeover Proposal or a Takeover Proposal shall be
consummated, the Company shall pay the Termination Fee concurrently
with the earlier of the entering into of such Acquisition Agreement or
the consummation of such Takeover Proposal.
"Expenses" shall mean documented and reasonable out-of-pocket fees and expenses
incurred or paid by or on behalf of Parent in connection with the Offer, the
Merger or the consummation of any of the transactions contemplated by this
Agreement, including all fees and expenses of law firms, commercial banks,
investment banking firms, accountants, experts and consultants to Parent.
SECTION 7.06. Indemnification; Insurance. (a) Parent and Sub
agree that all rights to indemnification for acts or omissions occurring at or
prior to the Effective Time now existing in favor of the current or former
directors, officers, employees and agents (the "Indemnified Parties") of the
Company and its subsidiaries as provided in their respective articles of
incorporation or by-laws (or similar organizational documents) shall survive the
Merger and shall continue in full force and effect in accordance with their
terms.
(b) For six years from the date Sub first purchases Shares
pursuant to the Offer, Parent shall maintain in effect the Company's current
directors' and officers' liability insurance covering those persons who are
currently covered by the Company's
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directors' and officers' liability insurance policy (a copy of which has been
heretofore delivered to Parent); provided, however, that in no event shall
Parent be required to pay a premium in any one year in an amount in excess of
150 percent of the last per annum amount of premiums paid by the Company prior
to the date hereof; and, provided, further, that if the annual premiums of such
insurance coverage exceed such amount, Parent shall be obligated to obtain a
policy with the greatest coverage available for a cost not exceeding such
amount.
(c) This Section 7.06 shall survive the consummation of the
Merger at the Effective Time, is intended to benefit the Company, Parent, the
Surviving Corporation and the Indemnified Parties, and shall be binding on all
successors and assigns of
Parent and the Surviving Corporation.
SECTION 7.07. Certain Litigation. The Company agrees that it
shall not settle any litigation commenced after the date hereof against the
Company or any of its directors by any stockholder of the Company relating to
the Offer, the Merger, this Agreement or the Stockholder Agreements, without the
prior written consent of Parent. In addition, the Company shall not voluntarily
cooperate with any third party that may hereafter seek to restrain or prohibit
or otherwise oppose the Offer or the Merger and shall cooperate with Parent and
Sub to resist any such effort to restrain or prohibit or otherwise oppose the
Offer or the Merger; provided, however, that the foregoing shall not limit any
rights of the Company under Section 6.02(b).
SECTION 7.08. Stock-Based Compensation. (a) Prior to purchase
of Shares pursuant to the Offer, the Company shall terminate each stock option
plan, stock appreciation right plan, limited stock appreciation right plan,
restricted stock plan, employee stock purchase plan, or any other plan or
arrangement providing for compensation wholly or partially in the form of Shares
(excluding any plan which is intended to be qualified under section 401(a) of
the Code) (collectively, the "Stock-Based Compensation Plans"), and shall grant
no additional options or awards under such Stock-Based Compensation Plans.
(b) Immediately upon the purchase of Shares pursuant to the
Offer, all outstanding options or awards under the Stock- Based Compensation
Plans, whether vested or unvested, shall cease to be exercisable, shall be
canceled by the Company, and shall thereafter represent only a right to receive,
upon its surrender to the Company, a cash payment from the Company in an amount
(if any) equal to the number of Shares subject to each such surrendered option
or award multiplied by the difference (if positive) between the exercise price
per Share (if any) covered by the option or award and the highest per Share
price paid to shareholders of the Company in the Offer.
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(c) All amounts payable pursuant to this Section shall be
subject to any required withholding of taxes and shall be paid without interest.
SECTION 7.09. Allocation of Shares Under Qualified Plans. The
Company shall take such action as is necessary so that, prior to the purchase of
Shares pursuant to the Offer, (i) no participant in a Pension Plan that is a
defined contribution plan intended to be qualified under section 401(a) of the
Code can have any additional amount allocated to the participant's account in
the form of Shares or in the form of any other securities of the Company and
(ii) to the extent any such plan provides for investment of participants'
accounts in an investment fund which is invested primarily in Shares, no
participant may direct that any portion of the participant's account be invested
in such fund (other than the portion of such account invested in such fund
immediately prior to the purchase of Shares pursuant to the Offer).
ARTICLE VIII
Conditions
SECTION 8.01. Conditions to Each Party's Obligation To Effect
the Merger. The respective obligation of each party to effect the Merger shall
be subject to the satisfaction (or waiver by each party) prior to the Closing
Date of the following conditions:
(a) Company Stockholder Approval. If required by applicable
law, the Company Stockholder Approval shall have been obtained.
(b) No Injunctions or Restraints. No statute, rule,
regulation, executive order, decree, temporary restraining order,
preliminary or permanent injunction or other order issued by any court
of competent jurisdiction or other Governmental Entity preventing the
consummation of the Merger shall be in effect; provided, however, that
each of the parties shall have used reasonable best efforts to prevent
the entry of any such injunction or other order and to appeal as
promptly as possible any injunction or other order that may be entered.
(c) Purchase of Shares. Sub shall have previously accepted for
payment and paid for Shares pursuant to the Offer.
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ARTICLE IX
Termination and Amendment
SECTION 9.01. Termination. This Agreement may be terminated at
any time prior to the Effective Time, whether before or after approval of the
terms of this Agreement by the stockholders of the Company:
(a) by mutual written consent of Parent and the Company;
(b) by either Parent or the Company:
(i) if (x) as a result of the failure of any of the Offer
Conditions the Offer shall have terminated or expired in
accordance with its terms without Sub having accepted for
payment any Shares pursuant to the Offer or (y) Sub shall not
have accepted for payment any Shares pursuant to the Offer
prior to January 31, 1998; provided, however, that the right
to terminate this Agreement pursuant to this Section
9.01(b)(i) shall not be available to any party whose failure
to perform any of its obligations under this Agreement results
in the failure of any such condition or if the failure of such
condition results from facts or circumstances that constitute
a breach of any representation or warranty under this
Agreement by such party; or
(ii) if any Governmental Entity shall have issued an
order, decree or ruling or taken any other action permanently
enjoining, restraining or otherwise prohibiting the acceptance
for payment of, or payment for, shares of Company Common Stock
pursuant to the Offer or shares of Company Common Stock or
Class B Shares pursuant to the Merger and such order, decree
or ruling or other action shall have become final and
nonappealable;
(c) by Parent or Sub prior to the purchase of Shares pursuant
to the Offer in the event of a breach by the Company of any
representation, warranty, covenant or other agreement contained in this
Agreement which (i) would give rise to the failure of a condition set
forth in paragraph (e) or (f) of Exhibit A and (ii) cannot be or has
not been cured within 20 days after the giving of written notice to the
Company;
(d) by Parent or Sub if either Parent or Sub is entitled to
terminate the Offer as a result of the occurrence of any event set
forth in paragraph (d) of Exhibit A to this Agreement;
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(e) by the Company in accordance with Section 6.02(b),
provided that it has complied with all provisions thereof, including
the notice provisions therein, and simultaneously with such termination
the Company pays to Parent the Expenses and the Termination Fee
specified under Section 7.05(b)(ii);
(f) by the Company, if Sub or Parent shall have breached in
any material respect any of their respective representations,
warranties, covenants or other agreements contained in this Agreement,
which breach or failure to perform is incapable of being cured or has
not been cured within 20 days after the giving of written notice to
Parent or Sub, as applicable; or
(g) by the Company, if the Offer has not been timely
commenced in accordance with Section 1.01.
SECTION 9.02. Effect of Termination. In the event of a
termination of this Agreement by either the Company or Parent as provided in
Section 9.01, this Agreement shall forthwith become void and there shall be no
liability or obligation on the part of Parent, Sub or the Company or their
respective officers or directors, except with respect to the last sentence of
Section 1.02(c), Section 4.18, Section 5.06, Section 7.05, this Section 9.02 and
Article X; provided, however, that nothing herein shall relieve any party for
liability for any breach hereof.
SECTION 9.03. Amendment. This Agreement may be amended by the
parties hereto, by action taken or authorized by their respective Boards of
Directors, at any time before or after obtaining the Company Stockholder
Approval (if required by law), but, after the purchase of Shares pursuant to the
Offer, no amendment shall be made which decreases the Merger Consideration and,
after the Company Stockholder Approval, no amendment shall be made which by law
requires further approval by such stockholders without obtaining such further
approval. This Agreement may not be amended except by an instrument in writing
signed on behalf of each of the parties hereto. Following the election or
appointment of the Sub's designees pursuant to Section 7.04 and prior to the
Effective Time, the affirmative vote of a majority of the Independent Directors
then in office shall be required by the Company to (i) amend or terminate this
Agreement by the Company, (ii) exercise or waive any of the Company's rights or
remedies under this Agreement, (iii) extend the time for performance of Parent
and Sub's respective obligations under this Agreement or (iv) take any action to
amend or otherwise modify the Company's Certificate of Incorporation or By-Laws.
SECTION 9.04. Extension; Waiver. At any time prior to
the Effective Time, the parties hereto, by action taken or
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authorized by their respective Boards of Directors, may, to the extent legally
allowed, (i) subject to the provisions of Section 9.03, extend the time for the
performance of any of the obligations or other acts of the other parties hereto,
(ii) subject to the provisions of Section 9.03, waive any inaccuracies in the
representations and warranties contained herein or in any document delivered
pursuant hereto or (iii) subject to the provisions of Section 9.03, waive
compliance with any of the agreements or conditions contained herein. Any
agreement on the part of a party hereto to any such extension or waiver shall be
valid only if set forth in a written instrument signed on behalf of such party.
The failure of any party to this Agreement to assert any of its rights under
this Agreement or otherwise shall not constitute a waiver of those rights.
ARTICLE X
Miscellaneous
SECTION 10.01. Nonsurvival of Representations, Warranties and
Agreements. None of the representations and warranties in this Agreement or in
any instrument delivered pursuant to this Agreement shall survive the Effective
Time. This Section 10.01 shall not limit any covenant or agreement of the
parties which by its terms contemplates performance after the Effective Time of
the Merger.
SECTION 10.02. Notices. All notices and other communications
hereunder shall be in writing and shall be deemed given if delivered personally,
telecopied (which is confirmed), sent by overnight courier (providing proof of
delivery) or mailed by registered or certified mail (return receipt requested)
to the parties at the following addresses (or at such other address for a party
as shall be specified by like notice):
(a) if to the Company, to:
Graphic Industries, Inc.
2155 Monroe Drive, N.E.
Atlanta, Georgia 30324
Attention: Chairman
Telecopy No.: (404) 874-7589
and with a copy (which copy shall not constitute a
notice) to:
Powell, Goldstein, Frazer & Murphy, LLP
191 Peachtree Street, NE
Atlanta, Georgia 30303
Attention: G. William Speer
Telecopy No.: (404) 572-5958
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and
(b) if to the Parent or Sub, to:
Wallace Computer Services, Inc.
2275 Cabot Drive
Lisle, Illinois 60532
Attention: President
Telecopy No.: (603) 588-5111
and with a copy (which copy shall not constitute a
notice) to:
Sidley & Austin
One First National Plaza
Chicago, Illinois 60603
Attention: Frederick C. Lowinger and
Steve Sutherland
Telecopy No.: (312) 853-7036
SECTION 10.03. Interpretation. When a reference is made in
this Agreement to an Article or a Section, such reference shall be to an Article
or a Section of this Agreement unless otherwise indicated. The table of contents
and headings contained in this Agreement are for reference purposes only and
shall not affect in any way the meaning or interpretation of this Agreement.
Whenever the words "include", "includes" or "including" are used in this
Agreement, they shall be deemed to be followed by the words "without
limitation". The phrase "made available" in this Agreement shall mean that the
information referred to has been made available if requested by the party to
whom such information is to be made available. As used in this Agreement, the
term "subsidiary" of any person means another person, an amount of the voting
securities, other voting ownership or voting partnership interests of which is
sufficient to elect at least a majority of its Board of Directors or other
governing body (or, if there are no such voting interests, 50% or more of the
equity interests of which) is owned directly or indirectly by such first person.
As used in this Agreement, "material adverse change" or "material adverse
effect" means, when used in connection with the Company, any change or effect
(or any development that, insofar as can reasonably be foreseen, is likely to
result in any change or effect) or fact or condition that, individually or in
the aggregate with any such other changes or effects, is materially adverse to
the business, properties, assets, financial condition, results of operations or
prospects of the Company and its subsidiaries taken as a whole.
SECTION 10.04. Counterparts. This Agreement may be executed in
two or more counterparts, all of which shall be considered one and the same
agreement and shall become effective when two or more counterparts have been
signed by each of the
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parties and delivered to the other parties, it being understood that all parties
need not sign the same counterpart.
SECTION 10.05. Entire Agreement; No Third Party Beneficiaries.
This Agreement, the Stockholder Agreement and the Confidentiality Agreement
constitute the entire agreement and supersede all prior agreements and
understandings, both written and oral, among the parties with respect to the
subject matter hereof, and except as provided in Section 7.06 are not intended
to confer upon any person other than the parties hereto or thereto any rights or
remedies hereunder or thereunder.
SECTION 10.06. Governing Law. This Agreement shall be
governed and construed in accordance with the laws of the State
of Georgia without regard to any applicable conflicts of law.
SECTION 10.07. Publicity. Except as otherwise required by law,
court process or the rules of the New York Stock Exchange, for so long as this
Agreement is in effect, neither the Company nor Parent shall, or shall permit
any of its subsidiaries to, issue or cause the publication of any press release
or other public announcement with respect to the transactions contemplated by
this Agreement without prior consultation with the other party, which consent
shall not be unreasonably withheld.
SECTION 10.08. Assignment. Neither this Agreement nor any of
the rights, interests or obligations hereunder shall be assigned by any of the
parties hereto (whether by operation of law or otherwise) without the prior
written consent of the other 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.
SECTION 10.09. Merger of the Company into Sub. If at any time
prior to the Closing Date Parent notifies the Company that it desires for the
Company to be merged with and into Sub (in lieu of Sub merging with and into the
Company), the Company, Parent and Sub will promptly negotiate in good faith an
amendment to and restatement of this Agreement which provides for such changes
to this Agreement as are necessary or appropriate to effectuate such merger (and
upon finalization thereof, the parties will promptly enter into such amendment
and restatement).
SECTION 10.10. 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
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Agreement in any court of the United States or any state, this being in addition
to any other remedy to which they are entitled at law or in equity.
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<PAGE> 50
IN WITNESS WHEREOF, Parent, Sub and the Company have caused
this Agreement to be signed by their respective officers thereunto duly
authorized as of the date first written above.
WALLACE COMPUTER SERVICES, INC.
By: /s/ Robert J. Cronin
----------------------------
Name: Robert J. Cronin
Title: President
GREENWICH ACQUISITION CORP.
By: /s/ Michael T. Leatherman
----------------------------
Name: Michael T. Leatherman
Title: President
GRAPHIC INDUSTRIES, INC.
By: /s/ Mark C. Pope III
----------------------------
Name: Mark C. Pope III
Title: Chairman
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<PAGE> 51
EXHIBIT A
CONDITIONS OF THE OFFER
Notwithstanding any other term of the Offer or this Agreement,
Sub shall not be required to accept for payment or, subject to any applicable
rules and regulations of the SEC, including Rule 14e-1(c) under the Exchange Act
(relating to Sub's obligation to pay for or return tendered Shares after the
termination or withdrawal of the Offer), to pay for any Shares tendered pursuant
to the Offer unless (i) there shall have been validly tendered and not withdrawn
prior to the expiration of the Offer such number of Shares that, together with
the Shares and Class B Shares subject to the Option contained in the Stockholder
Agreement, would constitute a majority of the Shares and Class B Shares that in
the aggregate are outstanding, determined on a fully diluted basis for all
outstanding stock options, the Convertible Debentures, other securities
convertible into Shares or Class B Shares and any other rights to acquire Shares
or Class B Shares(the "Minimum Condition") and (ii) any waiting period under the
HSR Act applicable to the purchase of Shares pursuant to the Offer shall have
expired or been terminated (the "HSR Condition"). Furthermore, notwithstanding
any other term of the Offer or this Agreement, Sub shall not be required to
accept for payment or, subject as aforesaid, to pay for any Shares not
theretofore accepted for payment or paid for, and may terminate the Offer if, at
any time on or after the date of this Agreement and before the acceptance of
such Shares for payment or the payment therefor, any of the following conditions
exists (other than as a result of any action or inaction of Parent or any of its
subsidiaries that constitutes a breach of this Agreement):
(a) there shall be threatened or pending by any Governmental
Entity any suit, action or proceeding (i) challenging the acquisition
by Parent or Sub of any Shares under the Offer or pursuant to the
Stockholder Agreement, seeking to restrain or prohibit the making or
consummation of the Offer or the Merger or the performance of any of
the other transactions contemplated by this Agreement or the
Stockholder Agreement (including the voting provisions thereunder), or
seeking to obtain from the Company, Parent or Sub any damages that are
material in relation to the Company and its subsidiaries taken as a
whole, (ii) seeking to prohibit or materially limit the ownership or
operation by the Company, Parent or any of their respective
subsidiaries of a material portion of the business or assets of the
Company and its subsidiaries, taken as a whole, or Parent and its
subsidiaries, taken as a whole, or to compel the Company or Parent to
dispose of or hold separate any material portion of the business or
assets of the Company and its subsidiaries, taken as a whole, or Parent
and its subsidiaries, taken as a whole, as a result of the Offer or any
of the other transactions contemplated by this Agreement or the
Stockholder Agreement,
<PAGE> 52
(iii) seeking to impose material limitations on the ability of Parent
or Sub to acquire or hold, or exercise full rights of ownership of, any
Shares to be accepted for payment pursuant to the Offer or purchased
under the Stockholder Agreement including, without limitation, the
right to vote such Shares on all matters properly presented to the
stockholders of the Company, (iv) seeking to prohibit Parent or any of
its subsidiaries from effectively controlling in any material respect
any material portion of the business or operations of the Company or
its subsidiaries or (v) which otherwise is reasonably likely to have a
material adverse effect on the business, properties, assets, financial
condition, results of operations or prospects of the Company and its
subsidiaries taken as a whole; or there shall be pending by any other
person any suit, action or proceeding which is reasonably likely to
have a material adverse effect on the business, properties, assets,
financial condition, results of operations or prospects of the Company
and its subsidiaries taken as a whole.
(b) there shall be enacted, entered, enforced, promulgated or
deemed applicable to the Offer or the Merger by any Governmental Entity
any statute, rule, regulation, judgment, order or injunction, other
than the application to the Offer or the Merger of applicable waiting
periods under the HSR Act, that is reasonably likely to result,
directly or indirectly, in any of the consequences referred to in
clauses (i) through (v) of paragraph (a) above;
(c) there shall have occurred any material adverse
change with respect to the Company;
(d) (i) the Board of Directors of the Company or any committee
thereof shall have withdrawn or modified in a manner adverse to Parent
or Sub its approval or recommendation of the Offer, the Merger or this
Agreement, or approved or recommended any Takeover Proposal or (ii) the
Board of Directors of the Company or any committee thereof shall have
resolved to take any of the foregoing actions;
(e) any of the representations and warranties of the Company
set forth in this Agreement that are qualified as to materiality shall
not be true and correct or any such representations and warranties that
are not so qualified shall not be true and correct in any material
respect, in each case at the date of this Agreement and at the
scheduled or extended expiration of the Offer;
(f) the Company shall have failed to perform in any material
respect any material obligation or to comply in any material respect
with any material agreement or covenant of the Company to be performed
or complied with by it under this Agreement;
<PAGE> 53
(g) there shall have occurred and continued to exist for not
less than three business days (i) any general suspension of trading in,
or limitation on prices for, securities on a national securities
exchange in the United States (excluding any coordinated trading halt
triggered solely as a result of a specified decrease in a market
index), (ii) a declaration of a banking moratorium or any suspension of
payments in respect of banks in the United States, (iii) any limitation
(whether or not mandatory) by any Governmental Entity on, or other
event that materially adversely affects, the extension of credit by
banks or other lending institutions, (iv) a commencement of a war or
armed hostilities or other national or international calamity directly
or indirectly involving the United States which in any case is
reasonably expected to have a material adverse effect on the Company or
to materially adversely affect Parent's or Sub's ability to complete
the Offer and/or the Merger or materially delay the consummation of the
Offer and/or the Merger;
(h) the Stockholder Agreement shall not be in full force and
effect or the Stockholder (as defined therein) shall be in material
breach thereof or have indicated its intention not to perform its
obligations thereunder; and
(i) this Agreement shall have been terminated in accordance
with its terms.
The foregoing conditions are for the sole benefit of Parent
and Sub and may, subject to the terms of this Agreement, be waived by Parent and
Sub in whole or in part at any time and from time to time in their sole
discretion. The failure by Parent or Sub at any time to exercise any of the
foregoing rights shall not be deemed a waiver of any such right, the waiver of
any such right with respect to particular facts and circumstances shall not be
deemed a waiver with respect to any other facts and circumstances and each such
right shall be deemed an ongoing right that may be asserted at any time and from
time to time. Terms used but not defined herein shall have the meanings assigned
to such terms in the Agreement to which this Exhibit A is a part.
<PAGE> 1
EXHIBIT (c)(2)
STOCKHOLDER AGREEMENT
STOCKHOLDER AGREEMENT, dated as of September 28, 1997, among
WALLACE COMPUTER SERVICES, INC., a Delaware corporation ("Parent"), GREENWICH
ACQUISITION CORP., a Georgia corporation and a wholly owned subsidiary of Parent
("Sub"), and Mark C. Pope 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 Hart-Scott-Rodino Antitrust Improvements Act of 1976
(the "HSR Act") 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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<PAGE> 3
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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<PAGE> 4
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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<PAGE> 5
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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<PAGE> 6
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:
Wallace Computer Services, Inc.
2275 Cabot Drive
Lisle, Illinois 60532
Attention: President
Facsimile: (630) 588-5111
with a copy to:
Sidley & Austin
One First National Plaza
Chicago, Illinois 60603
Attention: Frederick C.
Lowinger and Steven Sutherland
Facsimile: (312) 853-7036
if to the Stockholder, to:
Mark C. Pope III
c/o Graphic Industries, Inc.
2155 Monroe Drive, N.E.
Atlanta, Georgia 30324
Facsimile: (404) 874-7589
with a copy to:
Powell, Goldstein, Frazer
& Murphy, LLP
191 Peachtree Street, N.E.
Sixteenth Floor
Atlanta, Georgia 30303
Attention: G. William Speer
Facsimile: (404) 572-6999
(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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<PAGE> 8
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.
WALLACE COMPUTER SERVICES, INC.
By: /s/ Robert J. Cronin
--------------------------
Name: Robert J. Cronin
Title: President
GREENWICH ACQUISITION CORP.
By: /s/ Michael T. Leatherman
--------------------------
Name: Michael T. Leatherman
Title: President
/s/ Mark C. Pope III
--------------------------
Mark C. Pope III
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