AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON DECEMBER 17, 1998
REGISTRATION NO. 333-65677
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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AMENDMENT NO. 2
TO
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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CONSOLIDATED GRAPHICS, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
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TEXAS 5858 WESTHEIMER, SUITE 200 76-0190827
(STATE OR OTHER JURISDICTION HOUSTON, TEXAS 77057 (I.R.S. EMPLOYER
OF (713) 787-0977 IDENTIFICATION NUMBER)
INCORPORATION OR ORGANIZATION)
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(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER,
INCLUDING AREA CODE, OF REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
JOE R. DAVIS
PRESIDENT AND CHIEF EXECUTIVE OFFICER
CONSOLIDATED GRAPHICS, INC.
5858 WESTHEIMER, SUITE 200
HOUSTON, TEXAS 77057
(713) 787-0977
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER,
INCLUDING AREA CODE, OF AGENT FOR SERVICE)
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COPY TO:
R. CLYDE PARKER, JR.
WINSTEAD SECHREST & MINICK P.C.
910 TRAVIS STREET, SUITE 2400
HOUSTON, TEXAS 77002
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APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: From time
to time after this Registration Statement becomes effective.
If the only securities being registered on this Form are to be offered
pursuant to dividend or interest reinvestment plans, please check the following
box. [ ]
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933 (the "Securities Act"), other than securities offered only in connection
with dividend or interest reinvestment plans, check the following box. [X]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]
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CALCULATION OF REGISTRATION FEE
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TITLE OF EACH CLASS AMOUNT PROPOSED PROPOSED MAXIMUM
OF SECURITIES TO BE MAXIMUM OFFERING AGGREGATE AMOUNT OF
TO BE REGISTERED REGISTERED PRICE PER SHARE(1) OFFERING PRICE(1) REGISTRATION FEE
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common stock, par value $0.01 per
share................................. 651,193 $55.8125 $36,344,709.00 $7,936.52
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(1) Calculated solely for the purpose of calculating the registration fee
pursuant to Rule 457(c) and based upon the average of the high and low
sales prices of the common stock as reported by the New York Stock Exchange
on (i) October 9, 1998, resulting in a filing fee of $3,599.61 for the
374,728 shares included the Registration Statement originally filed; (ii)
December 1, 1998, resulting in an additional filing fee of $3,065.35 for
the 194,513 shares added in Amendment No. 1; and (iii) December 15, 1998,
resulting in an additional filing fee of $1,271.56 for the 81,952 shares
added in this Amendment No. 2.
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
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PROSPECTUS
651,193 SHARES
CONSOLIDATED GRAPHICS, INC.
COMMON STOCK
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This prospectus may be used by the selling shareholders to sell such shares
to the public. Such sales may be made through transactions on exchanges, in the
over-the-counter market, in negotiated transactions, in broker's transactions or
otherwise. These shares may be sold at the current market price or at a
negotiated price. Consolidated Graphics will not receive any proceeds from the
sale of the shares offered pursuant to this prospectus although it will pay
certain expenses incurred to register the shares.
The common stock is traded on the New York Stock Exchange under the symbol
"CGX". On December 15, 1998, the last reported sale price for the common stock
on such Exchange was $54.625 per share.
-----------------------------
YOU SHOULD READ THIS ENTIRE PROSPECTUS AND ITS APPENDICES CAREFULLY,
ESPECIALLY THE RISK FACTORS BEGINNING ON PAGE 2, BEFORE YOU DECIDE TO INVEST IN
THE SHARES OFFERED BY THIS PROSPECTUS.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR PASSED UPON THE
ADEQUACY OR ACCURACY OF THE PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
THE INFORMATION CONTAINED IN THIS PROSPECTUS SPEAKS AS OF THE DATE BELOW.
YOU SHOULD NOT IMPLY THAT SUCH INFORMATION HAS NOT CHANGED SINCE THAT DATE.
-----------------------------
THE DATE OF THIS PROSPECTUS IS DECEMBER , 1998.
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RISK FACTORS
BEFORE YOU INVEST IN THE SHARES OFFERED IN THIS PROSPECTUS, YOU SHOULD BE
AWARE THAT THERE ARE VARIOUS RISKS, INCLUDING THOSE DESCRIBED BELOW. YOU SHOULD
CONSIDER CAREFULLY THESE RISK FACTORS TOGETHER WITH ALL OF THE OTHER INFORMATION
INCLUDED IN THIS PROSPECTUS BEFORE YOU DECIDE TO PURCHASE ANY OF THE SHARES.
SOME OF THE INFORMATION IN THIS PROSPECTUS MAY CONTAIN FORWARD-LOOKING
STATEMENTS. SUCH STATEMENTS CAN BE IDENTIFIED BY THE USE OF FORWARD-LOOKING
TERMINOLOGY SUCH AS "MAY," "WILL," "EXPECT," ANTICIPATE," "ESTIMATE,"
"CONTINUE" OR OTHER SIMILAR WORDS. THESE STATEMENTS DISCUSS FUTURE
EXPECTATIONS, MAKE VARIOUS ASSUMPTIONS, CONTAIN PROJECTIONS OF RESULTS OF
OPERATIONS OR OF FINANCIAL CONDITION OR STATE OTHER "FORWARD-LOOKING"
INFORMATION. WHEN CONSIDERING SUCH FORWARD-LOOKING STATEMENTS, YOU SHOULD KEEP
IN MIND THE RISK FACTORS AND OTHER CAUTIONARY STATEMENTS IN THIS PROSPECTUS. THE
RISK FACTORS NOTED IN THIS SECTION AND OTHER FACTORS NOTED THROUGHOUT THIS
PROSPECTUS COULD CAUSE OUR ACTUAL RESULTS TO DIFFER MATERIALLY FROM THOSE
CONTAINED IN ANY FORWARD-LOOKING STATEMENT.
POTENTIAL DIFFICULTIES IN IMPLEMENTING ACQUISITION STRATEGY
A key component of our growth strategy is accomplished by acquiring
printing companies located throughout the United States. While there are many
such companies, we may not always be able to identify and acquire printing
companies meeting our acquisition criteria on terms acceptable to us.
Additionally, various competitors have developed growth strategies similar to
that of the Company and thus the competition for acquisition candidates is
constantly increasing within our industry. Moreover, financing to complete
significant acquisitions may not always be available on satisfactory terms.
Further, the Company's acquisition strategy presents a number of special risks
to the Company that it would not otherwise contend with absent such strategy,
including possible adverse effects on our earnings after each acquisition,
diversion of management's attention from the core business of the Company due to
the special attention that a particular acquisition may require, failure to
retain key acquired personnel and risks associated with unanticipated events or
liabilities arising after each acquisition, some or all of which could have a
material adverse effect on the Company.
POTENTIAL DIFFICULTIES IN INTEGRATING ACQUIRED BUSINESSES
Even if we are able to continue to identify and acquire suitable businesses
in furtherance of our growth strategy, we may at some point in the future
experience difficulty in profitably managing all of the acquired businesses or
in successfully integrating the acquired businesses as a whole without incurring
substantial costs, delays or other operational or financial problems that the
Company has not previously experienced. An acquisition may also initially have
an adverse effect upon our operating results while the acquired business adopts
our management practices. Finally, although we have so far been generally
successful in integrating our acquisitions, we may not in all circumstances be
able to establish, maintain or increase the profitability of an acquired entity.
COMPANY'S DEPENDENCE ON KEY PERSONNEL
We believe that our continued success will depend to a significant extent
upon our senior management, particularly Joe R. Davis, the founder, President
and Chief Executive Officer of Consolidated Graphics. If for any reason Mr.
Davis were unable to continue with his duties as President and Chief Executive
Officer, the Company's continued success would likely depend upon its ability to
quickly identify and promote or hire a qualified individual with the same or
substantially similar visionary outlook, philosophies, experience and standing
within the printing industry to replace Mr. Davis. Furthermore, because Mr.
Davis places substantial emphasis on identifying and retaining senior management
who he believes will adopt his philosophy about the manner in which the core
business of the Company should be operated, if existing senior management became
unavailable, the inability to quickly identify and hire or promote individuals
into senior management positions could also have a significant adverse effect on
the success of the Company. Accordingly, the loss of the
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services of Mr. Davis or such other key personnel in senior management could
have a direct material adverse effect on our future business and prospects.
SIGNIFICANT CONCENTRATION OF VOTING INFLUENCE AMONG A FEW PARTIES
Based upon the latest information available to us, Joe R. Davis
beneficially owns approximately 10.2% and Jeffrey N. Vinik, et al. ("Vinik")
beneficially owns approximately 9.3%, of our outstanding common stock. As a
result, although Mr. Davis and Vinik have never acted together in the past, if
they acted together, these two parties alone would have the ability to
substantially influence the election of persons to the Board of Directors of the
Company and the outcome of other matters requiring shareholder approval.
DIVIDEND POLICY -- WE WILL DECLARE NO DIVIDENDS FOR FORESEEABLE FUTURE
We currently intend to retain all future earnings to finance the continuing
development of our business and do not anticipate paying cash dividends on the
common stock in the foreseeable future.
EXPOSURE TO YEAR 2000 ISSUES
We have undertaken a Year 2000 compliance program to ensure that we will be
Year 2000 compliant by December 31, 1999. While we believe substantially all of
the equipment utilized in our printing operations will not be affected by the
Year 2000 issue, certain of our management information systems and associated
computer equipment are not currently Year 2000 compliant. While we are
scheduling and installing upgrades to our hardware and software where necessary
to address this issue and anticipate that substantially all such systems will be
made Year 2000 compliant, there can be no assurance that this will be
accomplished on a timely basis. We have communicated with certain third parties
and are communicating with others to assess potential Year 2000 problems. The
ability of third parties with which we transact business to address their Year
2000 issues are, however, outside of our control. Although Year 2000 problems
with any one customer or supplier should not have a material adverse effect on
us, the disruption of a significant number of businesses could materially and
adversely affect our operations.
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THE COMPANY
Consolidated Graphics, Inc.'s (hereinafter referred to as the "Company"
or "Consolidated Graphics") principal executive offices are located at 5858
Westheimer, Suite 200, Houston, Texas 77057, and its telephone number is (713)
787-0977.
USE OF PROCEEDS
The Company will not receive any of the proceeds from the sale of the
common stock offered by the shareholders pursuant to this prospectus.
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SELLING SHAREHOLDERS
This prospectus covers offers and sales from time to time by the
shareholders set forth below (the "Selling Shareholders") of certain of the
shares owned by such shareholders. Set forth below are (i) the names of the
Selling Shareholders and (ii) the number of shares of common stock (the
"Shares") held as of the date of this prospectus by the Selling Shareholders,
which number is also the number of shares which may be offered by each Selling
Shareholder pursuant to this prospectus. Each person named below has sole voting
and investment power with respect to the Shares indicated. Any or all of the
Shares listed below may be offered for sale by the Selling Shareholders from
time to time.
NUMBER OF SHARES OF
COMMON STOCK HELD
AND OFFERED PURSUANT
TO THIS PROSPECTUS
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John T. Gowland...................... 125,074
U.A. Yates........................... 161,051
Bruce P. McGough..................... 34,626
Thomas E. Samuels.................... 18,000
McKay Communications, Inc............ 119,561
A. William Harrison, Jr.............. 22,022
Marriott Winchester, Jr.............. 17,779
AHAB & Co.*.......................... 71,128
John R. Carty........................ 51,501
Michelle E. Crowell.................. 10,717
Roland F. Gundling................... 2,577
Charles W. Mills..................... 359
Patrick J. Dooley.................... 14,888
Charles R. Wesley.................... 1,192
John R. Pugh......................... 359
William R. Wise...................... 359
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* Record title for such shares held by AHAB & Co., nominee for Tax-Managed
Growth Portfolio.
Because the Company does not know how many Shares will be sold by the
Selling Shareholders pursuant to this prospectus, no estimate can be given as to
the number of Shares that will be held by the Selling Shareholders upon
termination of this offering.
John T. Gowland and U.A. Yates acquired their Shares in connection with the
merger of Printing Corporation of America with a subsidiary of the Company.
Since the merger, John T. Gowland and U.A. Yates have been officers of a
subsidiary of the Company. Bruce P. McGough and Thomas E. Samuels acquired their
Shares in connection with the acquisition of Geyer Printing Company, Inc. by the
Company. Since the acquisition, Mr. McGough had been an officer of a subsidiary
of the Company. Following the acquisition of Geyer Printing Company, Inc., Mr.
McGough pledged certain of his Shares to Prudential Securities Incorporated.
McKay Communications, Inc. acquired its Shares in connection with the merger of
The McKay Press, Inc. with a subsidiary of the Company. A. William Harrison,
Jr., and Marriott Winchester, Jr. acquired their Shares in connection with the
merger of Graphic Technology of Maryland, Inc. with a subsidiary of the Company.
Since the merger, Mr. Harrison has been an officer of a subsidiary of the
Company. Also, subsequent to the above transactions, Messrs. Gowland and
Harrison transferred certain shares to AHAB & Co and Mr. Winchester pledged
certain of his Shares to NationsBank N.A. Messrs. Carty, Crowell, Gundling,
Mills, Dooley, Wesley, Pugh and Wise acquired their Shares in connection with
the merger of Carty Enterprises, Inc., with a subsidiary of the Company. Since
the merger, Messrs. Carty, Gundling and Dooley have been officers of a
subsidiary of the Company.
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The fact that the Shares are held by the Selling Shareholders should not be
construed as a recommendation by them as to the investment quality of such
Shares, nor should it be construed to imply that such Selling Shareholders will
assist the Company in meeting any of its future financial obligations.
PLAN OF DISTRIBUTION
The Shares may be sold from time to time by or for the account of the
Selling Shareholders. As used herein, the term "Selling Shareholders" includes
their pledgees, donees, transferees or other successors in interest, including,
without limitation (a) Prudential Securities Incorporated, as pledgee of Bruce
P. McGough and (b) NationsBank N.A., as pledgee of Marriott Winchester, Jr.,
selling Shares received from a Selling Shareholder after the date of this
prospectus. Such sales may be effected by the Selling Shareholders from time to
time in one or more transactions on one or more exchanges (including the New
York Stock Exchange) or in the over-the-counter market or otherwise at prices
and at terms then prevailing or at prices related to the then current market
price, at negotiated prices or at fixed prices, directly or through agents
designated from time to time or through dealers or underwriters to be designated
or in negotiated transactions. The Shares may be sold by one or more of the
following: (a) a block trade (which may involve crosses) in which the broker or
dealer so engaged will attempt to sell Shares as agent but may position and
resell a portion of the block as principal to facilitate the transaction; (b)
purchases by a broker or dealer as principal and resale by such broker or dealer
for its account pursuant to this prospectus; (c) an exchange distribution in
accordance with the rules of such exchange; (d) ordinary brokerage transactions
and transactions in which the broker solicits purchasers; (e) through the
writing of options on shares (whether such options are listed on an options
exchange or otherwise); or (f) privately negotiated transactions.
Each Selling Shareholder may effect the above transactions by selling
Shares directly to other purchasers, through agents or through broker-dealers,
which may act as agents or principals. In effecting sales, brokers or dealers
engaged by the Selling Shareholders may arrange for other brokers or dealers to
participate. Brokers or dealers will receive commissions, concessions or
discounts from Selling Shareholders in amounts to be negotiated immediately
prior to the sale. The Selling Shareholders have advised the Company that they
have not entered into any agreements, understandings or arrangements with any
underwriters or broker-dealers regarding the sale of their shares, nor is there
an underwriter or coordinating broker acting in connection with the proposed
sale of Shares by Selling Shareholders.
Because Selling Shareholders may be deemed to be "underwriters" within
the meaning of Section 2(11) of the Securities Act, the Selling Shareholders
will be subject to the prospectus delivery requirements of the Securities Act,
which may include delivery through the facilities of the New York Stock Exchange
pursuant to Rule 153 under the Securities Act. Upon the Company being notified
by a Selling Shareholder that a material arrangement has been entered into with
a broker-dealer for the sale of Shares through a block trade, special offering,
exchange distribution or secondary distribution or a purchase by a broker or
dealer, a supplement to this prospectus will be filed with the Securities and
Exchange Commission ("Commission"), if required, pursuant to Rule 424(b) under
the Securities Act disclosing (i) the name of each such Selling Shareholder and
of the participating broker-dealer(s), (ii) the number of Shares involved, (iii)
the price at which such Shares were sold, (iv) the commissions paid or discounts
or concessions allowed to such broker-dealer(s), where applicable, (v) that such
broker-dealer(s) did not conduct any investigation to verify the information set
out or incorporated by reference in this prospectus and (vi) other facts
material to the transaction. With respect to sales by donees and pledgees, a
supplement to this prospectus is not required to be filed by the Company unless
the Company is notified by the Selling Shareholder that such donee or pledgee
intends to sell more than five hundred (500) Shares.
From time to time the Selling Shareholders may engage in short sales, short
sales versus the box, puts and calls and other transactions in securities of the
Company or derivatives thereof, and may sell
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and deliver the Shares in connection therewith. The Selling Shareholders may
enter into hedging transactions with broker-dealers or other financial
institutions. In connection with such transactions, broker-dealers or other
financial institutions may engage in short sales of the Company's common stock
in the course of hedging the positions they assume with Selling Shareholders.
The Selling Shareholders may also enter into options or other transactions with
broker-dealers or other financial institutions which require the delivery to
such broker-dealer or other financial institution of Shares offered hereby,
which Shares such broker-dealer or other financial institution may resell
pursuant to this prospectus (as supplemented or amended to reflect such
transaction).
The Company will bear all costs and expenses incurred by it in connection
with the offering and sale of Shares pursuant to this prospectus, but will not
be responsible for any commissions, underwriting discounts or similar amounts
payable in respect of any such sale. Notwithstanding the foregoing, the Company,
on the one hand, has agreed to indemnify the Selling Shareholders and the
Selling Shareholders, on the other hand, have severally agreed to indemnify the
Company from certain liabilities relating to the offering made hereby, including
liabilities under the Securities Act. The Selling Shareholders may also agree to
indemnify any agent, dealer or broker-dealer that participates in transactions
regarding sales of the Shares against certain liabilities, including liabilities
arising under the Securities Act.
In addition, any securities covered by this prospectus which qualify for
sale pursuant to Rule 144 may be sold under Rule 144 rather than pursuant to
this prospectus, provided they meet the criteria and conform to the requirements
of such Rule.
The Company may be required to file a supplemental prospectus to describe a
specific sale of shares or to identify any other selling shareholders not
already discussed in this prospectus.
DESCRIPTION OF CAPITAL STOCK
The Company's authorized capital stock consists of 100,000,000 shares of
common stock of which 14,222,018 shares were issued and outstanding as of
November 30, 1998, and 5,000,000 shares of preferred stock, par value $1.00 per
share, issuable in series, no shares of which were issued and outstanding as of
the date of this prospectus.
COMMON STOCK
Holders of common stock are entitled to one vote per share in the election
of directors and on all other matters on which shareholders are entitled or
permitted to vote. Such holders are not entitled to vote cumulatively for the
election of directors. Holders of common stock have no redemption, conversion,
preemptive or other subscription rights. In the event of the liquidation,
dissolution or winding up of the Company, holders of common stock are entitled
to share ratably in all of the assets of the Company remaining, if any, after
satisfaction of the debts and liabilities of the Company and the preferential
rights of the holders of the preferred stock, if any, then outstanding. The
outstanding shares of common stock are validly issued, fully paid and
nonassessable.
Holders of common stock are entitled to receive dividends when and as
declared by the Board of Directors of the Company out of funds legally available
therefor only after payment of, or provision for, full dividends (on a
cumulative basis, if applicable) on all outstanding shares of any series of
preferred stock and after the Company has made provision for any sinking or
purchase funds for any series of preferred stock. The Company has not paid any
cash dividends on the common stock since its incorporation and does not
anticipate paying cash dividends in the foreseeable future.
PREFERRED STOCK
The preferred stock is issuable by the Board of Directors in one or more
series. The number of shares of each series and the rights, preferences and
limitations of each series may be determined by the Board of Directors,
including without limitation: the annual rate of dividends; the redemption
price, if any; the terms of a sinking or purchase fund, if any; the amount
payable in the event of any
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voluntary liquidation, dissolution or winding up of the affairs of the Company;
conversion rights, if any; and voting powers, if any. All series of preferred
stock rank equally and are identical in all respects except as may otherwise be
provided in the Statement or Statements of Resolution establishing such series.
The Board of Directors of the Company, without obtaining stockholder approval,
may issue shares of the preferred stock with voting rights or conversion rights
which could affect the voting power of the holders of common stock. The issuance
of any shares of preferred stock could be utilized, under certain circumstances,
in an attempt to prevent the acquisition of the Company. There are no shares of
preferred stock outstanding as of the date of this prospectus, and the Company
has no present intention to issue any shares of preferred stock.
CERTAIN ANTI-TAKEOVER PROVISIONS
Certain provisions of the Certificate of Incorporation and Bylaws
summarized in the following paragraph may have the effect of discouraging,
delaying or preventing an acquisition proposal that a shareholder might consider
favorable, including a proposal that might result in the payment of a premium
over the market price for the shares held by shareholders.
The Company's authorized capital stock consists of 100,000,000 shares of
common stock and 5,000,000 shares of preferred stock, all of which shares of
preferred stock are undesignated as of the date of this prospectus. The
authorized but unissued (and in the case of preferred stock, undesignated) stock
may be given voting rights and privileges and issued by the Board of Directors
in one or more transactions. Such rights and privileges, when exercised, may
make it more difficult for a shareholder or any group of shareholders to obtain
control of the Company.
SHARES ELIGIBLE FOR FUTURE SALE; RESTRICTED SECURITIES
The Company has issued a significant number of shares of common stock in
acquisition transactions or under other circumstances, including shares issuable
upon exercise of certain stock purchase options that have been or may be granted
under our existing incentive stock option plan. Certain of these shares
constitute either "restricted securities" as such term is defined in Rule 144
promulgated under the Securities Act of 1933, as amended, or are held by
"affiliates" of the Company and consequently are subject to the resale
limitations of Rule 144. Future sales of significant numbers of shares of common
stock in the public market could adversely affect the prevailing market price of
the common stock and could also impair the Company's ability to raise capital
through subsequent offerings of securities with the Commission.
OTHER REGISTRATIONS
The Company has on file with the Commission several effective registration
statements under the Securities Act pursuant to which shares of its common stock
that were issued as restricted securities in connection with business
acquisitions may be resold. The Company also has on file an effective
registration statement covering two million shares of its common stock for use
in future acquisitions.
LEGAL OPINION
The validity of the issuance of the shares of the common stock offered
hereby will be passed upon for the Company by Winstead Sechrest & Minick P.C.,
Houston, Texas.
EXPERTS
The financial statements incorporated by reference in this prospectus to
the extent and for the periods indicated in their reports have been audited by
Arthur Andersen LLP, independent public accountants, and are incorporated herein
by reference in reliance upon the authority of said firm as experts in
accounting and auditing.
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AVAILABLE INFORMATION
Consolidated Graphics files annual, quarterly and current reports, proxy
statements and other information with the Commission. You may read and copy any
reports, statements or other information that Consolidated Graphics files at the
Commission's public reference room at 450 Fifth Street N.W., Washington, D.C.
20549 or at its regional public reference rooms in New York, New York and
Chicago, Illinois. Please call the Commission at 1-800-SEC-0330 for further
information on the operations and locations of the public reference rooms. The
public filings of Consolidated Graphics are also available to the public from
commercial document retrieval services and at the Internet World Wide Web site
maintained by the Commission at "http://www.sec.gov." Reports, proxy
statements and other information concerning Consolidated Graphics may also be
inspected at the offices of the New York Stock Exchange, 20 Broad Street, New
York, New York 10005.
Consolidated Graphics has filed a Registration Statement to register with
the Commission the Shares to be offered by the Selling Shareholders pursuant to
this prospectus. This prospectus is a part of the Registration Statement and
constitutes the prospectus of Consolidated Graphics with respect to those Shares
being offered by the Selling Shareholders. As allowed by the rules of the
Commission, this prospectus does not contain all of the information that can be
found in the Registration Statement or in the exhibits to the Registration
Statement. You should read the Registration Statement and its exhibits for a
complete understanding of all of the information included in the Registration
Statement.
The Commission allows Consolidated Graphics to "incorporate by reference"
information into this prospectus, which means that Consolidated Graphics can
disclose important information to you by referring you to another document filed
separately with the Commission. The information incorporated by reference
becomes part of the prospectus, except for any information superseded by
information contained directly in this prospectus. This prospectus incorporates
by reference the documents set forth below that Consolidated Graphics has
previously filed with the Commission. These documents contain important
information about Consolidated Graphics and its financial condition.
1. Annual Report on Form 10-K for the fiscal year ended March 31, 1998;
2. Quarterly Reports on Form 10-Q for the quarters ended June 30, 1998 and
September 30, 1998;
3. The description of the capital stock of Consolidated Graphics set forth
in its Form 8-A filed with the Commission on January 8, 1997; and
4. Current Reports on Forms 8-K filed October 13, October 23, October 28,
October 30, November 4 and November 17, 1998.
This prospectus also incorporates by reference additional documents that
Consolidated Graphics may file with the Commission after the date of this
prospectus. These include periodic reports, such as annual reports on Form 10-K,
quarterly reports on Form 10-Q and current reports on Form 8-K.
Documents incorporated by reference may be obtained as described above and
are also available from Consolidated Graphics without charge, excluding all
exhibits unless specifically incorporated by reference as an exhibit to this
prospectus. You may obtain documents incorporated by reference in the prospectus
by requesting them in writing or by telephone from Consolidated Graphics at the
following address and telephone number: Consolidated Graphics, Inc., 5858
Westheimer, Suite 200, Houston, Texas 77057, Attention: Secretary, telephone:
(713) 787-0977.
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NO DEALER, SALESMAN, OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS NOT CONTAINED IN THIS PROSPECTUS,
AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED
UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY OR ANY SELLING SHAREHOLDER OR
UNDERWRITER. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL, OR A
SOLICITATION OF AN OFFER TO BUY, THE SECURITIES OFFERED HEREBY IN ANY
JURISDICTION WHERE, OR TO ANY PERSON TO WHOM, IT IS UNLAWFUL TO MAKE SUCH OFFER
OR SOLICITATION. THE DELIVERY OF THIS PROSPECTUS AT ANY TIME AND ANY SALE MADE
HEREUNDER DOES NOT IMPLY THAT THE INFORMATION CONTAINED OR INCORPORATED BY
REFERENCE HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO ITS DATE.
-----------------------------
TABLE OF CONTENTS
PAGE
----
Risk Factors......................... 2
The Company.......................... 3
Use of Proceeds...................... 3
Selling Shareholders................. 3
Plan of Distribution................. 5
Description of Capital Stock......... 6
Legal Opinion........................ 7
Experts.............................. 7
Available Information................ 8
651,193 SHARES
CONSOLIDATED
GRAPHICS, INC.
COMMON STOCK
----------------------
PROSPECTUS
----------------------
DECEMBER , 1998
================================================================================
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The estimated expenses to be paid by the Company in connection with this
offering are as follows:
Securities and Exchange Commission
registration fee................... $ 7,937.00
Printing and distribution expenses... 3,000.00
Accounting fees and expenses......... 2,000.00
Legal fees and expenses, including
Blue Sky............................. 15,000.00
Miscellaneous........................ 63.00
------------
Total........................... $ 28,000.00
============
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Article 2.02-1 of the Texas Business Corporation Act provides that a
corporation may indemnify any director or officer who was, is or is threatened
to be made a named defendant or respondent in a proceeding because he is or was
a director or officer, provided that the director or officer (i) conducted
himself in good faith, (ii) reasonably believed (a) in the case of conduct in
his official capacity, that his conduct was in the corporation's best interests,
and (b) in all other cases, that his conduct was at least not opposed to the
corporation's best interests and (iii) in the case of any criminal proceeding,
had no reasonable cause to believe his conduct was unlawful. Subject to certain
exceptions, a director or officer may not be indemnified if the person is found
liable to the corporation or if the person is found liable on the basis that he
improperly received a personal benefit. Under Texas law, reasonable expenses
incurred by a director or officer may be paid or reimbursed by the corporation
in advance of a final disposition of the proceeding after the corporation
receives a written affirmation by the director or officer of his good faith
belief that he has met the standard of conduct necessary for indemnification and
a written undertaking by or on behalf of the director or officer to repay to the
corporation such expenses if it is ultimately determined that the director or
officer is not entitled to indemnification by the corporation. Texas law
requires a corporation to indemnify an officer or director against reasonable
expenses incurred in connection with a proceeding in which he is named defendant
or respondent because he is or was a director or officer if he is wholly
successful in defense of the proceeding.
Texas law also permits a corporation to purchase and maintain insurance or
another arrangement on behalf of any person who is or was a director or officer
against any liability asserted against him and incurred by him in such a
capacity or arising out of his status as such a person, whether or not the
corporation would have the power to indemnify him against that liability under
Article 2.02-1.
The Company's Restated Bylaws (the "Bylaws"), provide for the
indemnification of its officers and directors, and the advancement to them of
expenses in connection with proceedings and claims, to the fullest extent
permitted under the Texas Business Corporation Act. Such indemnification may be
made even though directors and officers would not otherwise be entitled to
indemnification under other provisions of the Bylaws. The Company has entered
into indemnification agreements with its directors and certain of its officers
that contractually provide for indemnification and expense advancement. Both the
Bylaws and the agreements include related provisions meant to facilitate the
indemnitees' receipt of such benefits. These provisions cover, among other
things: (i) specification of the method of determining entitlement to
indemnification and the selection of independent counsel that will in some cases
make such determination, (ii) specification of certain time periods by which
certain payments or determinations must be made and actions must be taken and
(iii) the establishment of certain presumptions in favor of an indemnitee. The
benefits of certain of these provisions are available to an indemnitee only if
there has been a change in control (as defined). In addition, the
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<PAGE>
Company may, in the future, purchase directors and officers liability insurance
policies for its directors and officers.
The above discussion of Article 2.02-1 of the Texas Business Corporation
Act and of the Company's Bylaws is not intended to be exhaustive and is
respectively qualified in its entirety by such statute and the Bylaws.
Reference is made to the form of the Registration Rights Agreements, filed
as Exhibits 10.1, 10.2, 10.3, 10.4 and 10.5 hereto, which contain provisions for
indemnification of the Company, its directors, officers, and any controlling
persons by the Selling Shareholders against certain liabilities for certain
information furnished by the Selling Shareholders.
ITEM 16. EXHIBITS
The following exhibits are filed herewith or incorporated herein by
reference:
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION OF EXHIBIT
- ------------------------ ------------------------------------------------------------------------------------------
<S> <C> <C> <C>
*4 -- Specimen Common Stock Certificate (Consolidated Graphics, Inc., Form 10-K (March 31, 1998)
SEC. File No. 0-24068, Exhibit 4).
5 -- Opinion of Winstead Sechrest & Minick P.C. regarding the legality of the securities being
offered.
**10.1 -- Registration Rights Agreement dated as of September 17, 1998 by and between Consolidated
Graphics, Inc. and John T. Gowland and U.A. Yates.
*10.2 -- Registration Rights Agreement dated as of October 1, 1997 by and between Consolidated
Graphics, Inc. and Bruce P. McGough and Thomas E. Samuels (Consolidated Graphics, Inc.,
Registration Statement on Form S-3 (as filed with the Commission on December 22, 1997)
SEC. File No. 0-24068, Exhibit 10.1).
**10.3 -- Registration Rights Agreement dated as of November 4, 1998 by and between Consolidated
Graphics, Inc., A. William Harrison, Jr., David E. Rosquist and Marriott Winchester, Jr.
**10.4 -- Registration Rights Agreement dated as of November 9, 1998 by and between Consolidated
Graphics, Inc. and McKay Communications, Inc.
10.5 -- Registration Rights Agreement dated as of December 14, 1998 by and between Consolidated
Graphics, Inc. and John R. Carty, Patrick J. Dooley, Michelle E. Crowell, Roland F.
Gundling, Charles R. Wesley, Charles W. Mills, John P. Pugh and William R. Wise.
23.1 -- Consent of Winstead Sechrest & Minick P.C. (set forth in Exhibit 5).
23.2 -- Consent of Arthur Andersen LLP.
**24 -- Power of Attorney (set forth on signature page).
</TABLE>
- ------------
* Incorporated by reference.
** Previously filed with this Registration Statement.
ITEM 17. UNDERTAKINGS
(a) The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made, a
post-effective amendment to this registration statement: (i) to include any
prospectus required by Section 10(a)(3) of the Securities Act; (ii) to reflect
in the prospectus any facts or events arising after the effective date of the
registration statement (or the most recent post-effective amendment thereof)
which, individually or in the aggregate, represent a fundamental change in the
information set forth in the registration statement; (iii) to include any
material information with respect to the plan of distribution not previously
disclosed in the registration statement or any material change to such
information in the registration statement; provided, however, that paragraph
(a)(1)(i) and (a)(1)(ii) do not apply if the information required to be included
in a post-effective amendment by those paragraphs is contained in
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<PAGE>
periodic reports filed by the registrant pursuant to Section 13 or Section 15(d)
of the Exchange Act that are incorporated by reference in the registration
statement.
(2) That, for the purpose of determining any liability under the
Securities Act, each post-effective amendment shall be deemed to be a new
registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(3) To remove from registration by means of a post-effective amendment any
of the securities being registered which remain unsold at the termination of the
offering.
(b) The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act, each filing of the
registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
Exchange Act (and, where applicable, each filing of an employee benefit plan's
annual report pursuant to Section 15(d) of the Exchange Act) that is
incorporated by reference in the registration statement shall be deemed to be a
new registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(c) Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors, officers and controlling persons of the
registrant pursuant to the provisions described in Item 15 above, or otherwise,
the registrant has been advised that in the opinion of the Commission such
indemnification is against public policy as expressed in the Securities Act and
is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the registrant of expenses
incurred or paid by a director, officer or controlling person of the registrant
in the successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against policy
as expressed in the Securities Act and will be governed by the final
adjudication of such issue.
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<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused this Amendment No. 2 to
its Registration Statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in the City of Houston, the State of Texas, on
December 17, 1998.
CONSOLIDATED GRAPHICS, INC.
By: /s/ JOE R. DAVIS
JOE R. DAVIS
PRESIDENT, CHIEF EXECUTIVE
OFFICER AND
CHAIRMAN OF THE BOARD OF
DIRECTORS
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THIS AMENDMENT
NO. 2 TO REGISTRATION STATEMENT HAS BEEN SIGNED BY THE FOLLOWING PERSONS ON
BEHALF OF THE REGISTRANT AND IN THE CAPACITIES AND ON THE DATES INDICATED.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ------------------------------------------------------ --------------------------------- -----------------
<S> <C> <C> <C>
/s/JOE R. DAVIS President, Chief Executive December 17, 1998
(JOE R. DAVIS) Officer and Director (Principal
Executive Officer)
/s/G. CHRISTOPHER COLVILLE Executive Vice President, Chief December 17, 1998
(G. CHRISTOPHER COLVILLE) Financial and Accounting Officer
* Director December 17, 1998
(LARRY J. ALEXANDER)
* Director December 17, 1998
(BRADY F. CARRUTH)
* Director December 17, 1998
(CLARENCE C. COMER)
* Director December 17, 1998
(GARY L. FORBES)
* Director December 17, 1998
(W. D. HAWKINS)
* Director December 17, 1998
(JAMES H. LIMMER)
* Director December 17, 1998
(THOMAS E. SMITH)
* Director December 17, 1998
(HUGH N. WEST)
*By: /s/JOE R. DAVIS
JOE R. DAVIS,
ATTORNEY-IN-FACT
</TABLE>
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EXHIBIT 5
[Letterhead WINSTEAD SECHREST & MINICK]
December 17, 1998
Consolidated Graphics, Inc.
5858 Westheimer, Suite 200
Houston, Texas 77057
Gentlemen:
This opinion is given in connection with the filing by Consolidated
Graphics, Inc. ("CGX") with the Securities and Exchange Commission under the
Securities Act of 1933, as amended, of a Registration Statement on Form S-3, as
amended, with respect to an aggregate of 651,193 shares of the common stock,
$.01 par value, of CGX (the "Common Stock"). All of such shares (the
"Shares") are being sold by selling stockholders.
We have acted as counsel for CGX in connection with the filing of the
Registration Statement. In so acting, we have examined originals or copies,
certified or otherwise identified to our satisfaction, of such corporate
records, agreements, documents and other instruments, and such certificates or
comparable documents of public officials and of officers and representatives of
CGX, and have made such inquiries of such officers and representatives as we
have deemed relevant and necessary as a basis for the opinions hereinafter set
forth.
In such examination, we have assumed the genuineness of all signatures, the
authenticity of all documents submitted to us as originals, the conformity to
original documents of documents submitted to us as certified or photostatic
copies and the authenticity of the originals of such latter documents. As to all
questions of fact material to this opinion that have not been independently
established, we have relied upon certificates, comparable documents or the
representations of officers and representatives of CGX and of the selling
stockholders.
Based on the foregoing, and subject to the qualifications stated herein, we
are of the opinion that the Shares being registered pursuant to the Registration
Statement are validly issued, fully paid and nonassessable.
We consent to the use of this opinion as an exhibit to the Registration
Statement. We further consent to the reference to our firm under the caption
"Legal Matters" in the prospectus which is a part of the Registration
Statement.
This opinion is rendered solely for your benefit in connection with the
transactions described above. Except as set forth above, this opinion may not be
used or relied upon by any other person and may not be disclosed, quoted, filed
with a governmental agency or otherwise referred to without our prior written
consent.
Very truly yours,
/s/ WINSTEAD SECHREST & MINICK P.C.
WINSTEAD SECHREST & MINICK P.C.
EXHIBIT 10.5
REGISTRATION RIGHTS AGREEMENT
This REGISTRATION RIGHTS AGREEMENT (the "Agreement"), dated as of December
14, 1998, by and among CONSOLIDATED GRAPHICS, INC., a Texas corporation (the
"Company") and JOHN R. CARTY, PATRICK J. DOOLEY, MICHELLE E. CROWELL, ROLAND F.
GUNDLING, CHARLES R. WESLEY, CHARLES W. MILLS, JOHN P. PUGH and WILLIAM R. WISE
(each individually a "Holder" and collectively the "Holders");
W I T N E S S E T H :
WHEREAS, it is a condition to the consummation of the transactions
contemplated by that certain Agreement and Plan of Reorganization dated of even
date herewith (the "Merger Agreement"), by and among the Company, MOUNT VERNON
PRINTING COMPANY, a Maryland corporation, CARTY ENTERPRISES, INC., a Maryland
corporation, and the Holders that this Agreement be executed and delivered by
the Company and the Holders;
NOW, THEREFORE, in consideration of the mutual covenants herein contained
and for other good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the Company and each Holder agree as follows:
Section 1. DEFINITIONS. As used in this Agreement, the following terms
have the meanings indicated below:
AGENT shall mean any Person acting for or on behalf of a Holder of
Registrable Securities with respect to the holding or sale of such Registrable
Securities.
AGREEMENT shall mean this Registration Rights Agreement.
BUSINESS DAY shall mean any day other than a Saturday, Sunday, or legal
holiday for banks in the State of Texas.
COMMISSION shall mean the Securities and Exchange Commission.
COMMON STOCK shall mean the Company's common stock, par value $0.01 per
share, or any successor class of the Company's common stock.
COMPANY shall mean Consolidated Graphics, Inc.
DEMAND REGISTRATION shall mean the registration pursuant to Section 3
hereof, upon demand by any one or more Holders, with the Commission of the offer
and sale of Registrable Securities under and in accordance with the provisions
of the Securities Act.
EXCESS DEMAND REGISTRATION shall mean the registration upon demand of the
Excess Requested Shares with the Commission of the offer and sale of the Excess
Requested Shares under and in accordance with the provisions of the Securities
Act.
<PAGE>
EXCESS REQUESTED SHARES shall mean Registrable Securities that were
requested to be included in the Demand Registration, but were not so included
pursuant to the terms of this Agreement.
EXCHANGE ACT shall mean the Securities Exchange Act of 1934, as amended.
HOLDER or HOLDERS shall mean John R. Carty, Patrick J. Dooley, Michelle E.
Crowell, Roland F. Gundling, Charles R. Wesley, Charles W. Mills, John P. Pugh
and William R. Wise and any affiliate thereof.
INSPECTORS shall mean a Requisite Group of the Holders of Registrable
Securities, any underwriter participating in any disposition of Registrable
Securities pursuant to a Demand Registration or Excess Demand Registration, and
any attorney, accountant or other agent retained by such Holders or underwriter.
LIABILITIES shall mean all losses, claims, damages, liabilities and
expenses (including reasonable costs of investigation).
MERGER AGREEMENT shall mean that certain Agreement and Plan of
Reorganization dated of even date herewith among the Company, Mount Vernon
Printing Company, Carty Enterprises, Inc., and the Holders.
NEW COMMON STOCK shall mean the shares of Common Stock to be acquired by
the Holders pursuant to the Merger Agreement, together with any Related
Securities.
PERSON shall mean any individual, corporation, limited liability company,
partnership (general or limited), joint venture, association, joint-stock
company, trust, unincorporated organization or government or a political
subdivision, agency or instrumentality thereof or other entity or organization
of any kind.
PIGGYBACK REGISTRATION shall mean the registration of Registrable
Securities pursuant to a registration statement filed by the Company under the
Securities Act as set forth in Section 2 of this Agreement.
RECORDS shall mean all financial and other records, pertinent corporate
documents and properties of the Company.
REGISTRABLE SECURITIES shall mean the New Common Stock, until such time as
the New Common Stock has been (a) distributed to the public pursuant to a
registration statement covering such securities that has been declared effective
under the Securities Act, (b) distributed to the public in accordance with the
provisions of Rule 144 (or any similar provision then in force) under the
Securities Act, or (c) repurchased by the Company.
REGISTRATION EXPENSES shall mean all expenses (including attorneys' fees)
incident to the Company's performance of or compliance with the Demand
Registration, Piggyback Registration or Excess Demand Registration pursuant to
this Agreement, including without limitation all
2
<PAGE>
Commission and securities exchange or National Association of Securities
Dealers, Inc. registration and filing fees, fees and expenses of compliance with
securities or blue sky laws (including fees and disbursements of counsel in
connection with blue sky qualifications of the Registrable Securities), rating
agency fees, printing expenses, messenger and delivery expenses, internal
expenses (including salaries and expenses of its officers and employees
performing legal or accounting duties), the fees and expenses incurred in
connection with the listing of the Registrable Securities to be registered on
each securities exchange on which similar securities issued by the Company are
then listed and fees and disbursements of counsel for the Company and its
independent certified public accountants (including the expenses of any legal
work, advice or opinions and of any special audit or interim review or "cold
comfort" letters required by or incident to such performance), the fees and
expenses of any special experts retained by the Company in connection with such
registration (including any underwriting fees, discounts or commissions
attributable to the sale of Registrable Securities) and any out-of-pocket
expenses of the Holders of Registrable Securities.
RELATED SECURITIES shall mean any securities issued in exchange for, as a
dividend on or in replacement of, or otherwise issued in respect of (including
securities issued in a stock dividend, split or recombination or pursuant to the
exercise of preemptive rights), the New Common Stock.
REQUISITE GROUP shall mean any one or more Holders of more than 50% of the
Registrable Securities.
SECURITIES ACT shall mean the Securities Act of 1933, as amended.
Section 2. PIGGY-BACK REGISTRATION. a. If at any time within one (1) year
of the date hereof the Company proposes to file a registration statement under
the Securities Act with respect to an offering by the Company for its own
account or for the account of any other Person of any class of equity security,
including any security convertible into or exchangeable for any equity security
(other than a registration statement on Forms S-4 or S-8 (or their successor
forms) or filed in connection with an exchange offer or an offering of
securities solely to the Company's existing shareholders), then the Company
shall in each case give written notice of such proposed filing to the Holders of
Registrable Securities at least twenty (20) days before the anticipated filing
date, and such notice shall offer the Holders the opportunity to register such
number of Registrable Securities as each such Holder may request. The Company
shall use reasonable diligence to cause the managing underwriter or underwriters
of a proposed underwritten offering to permit the Holders of Registrable
Securities requested to be included in the registration for such offering to
include such securities in such offering on the same terms and conditions as any
similar securities of the Company included therein. Notwithstanding the
foregoing, if the managing underwriter or underwriters of such offering delivers
a written opinion to the Holders that the total amount of securities which they
or the Company and any other Persons intend to include in such offering is
sufficiently large to materially and adversely affect the success of such
offering, then the amount of Registrable Securities to be offered for the
accounts of the Holders shall be reduced to the extent necessary, in the opinion
of such managing underwriter, to reduce the total amount of securities to be
included in such offering to the amount recommended by such managing
underwriter. The Holders acknowledge and agree that if the managing underwriter
determines that it is necessary to reduce the number of securities to be
registered on behalf of the Holders and any other Persons, such reduction will
not take place
3
<PAGE>
pro rata, but instead will be done with a preference being given to those other
Persons who are holders of securities of the Company which were issued prior to
the execution of this Agreement or which are issuable pursuant to contracts
entered into prior to the execution of this Agreement. From and after the date
of this Agreement, the Company agrees that it shall not, without the prior
written consent of a Requisite Group, enter into any agreement with any holder
or prospective holders of any securities of the Company which would grant to
such holder or prospective holders any piggy-back registration rights having a
preference or priority over the piggy-back registration rights granted to the
Holders pursuant to this Section 2; provided, however, that the foregoing
covenant and agreement shall not, in any manner, alter or otherwise affect the
preference or priorities previously granted to other Persons prior to the
execution of this Agreement.
b. Notwithstanding anything to the contrary contained in this Agreement,
the Company shall not be required to include Registrable Securities in any
registration statement if the proposed registration is (a) a registration of a
stock option or other employee incentive compensation plan or of securities
issued or issuable pursuant to any such plan, (b) a registration of securities
issued or issuable pursuant to a shareholder reinvestment plan or other similar
plan, (c) a registration of securities issued in exchange for any securities or
any assets of, or in connection with a merger or consolidation with, an
unaffiliated company, or (d) a registration of securities pursuant to a "rights"
or other similar plan designed to protect the Company's shareholders from a
coercive or other attempt to take control of the Company.
c. The Company may withdraw any registration statement and abandon any
proposed offering initiated by the Company without the consent of the Holder of
Registrable Securities, notwithstanding the request of the Holder to participate
therein in accordance with this provision, if the Company determines, in good
faith in its sole discretion, that such action is in the best interests of the
Company and its shareholders (for this purpose, the interest of the Holder shall
not be considered).
Section 3. DEMAND REGISTRATION RIGHTS. a. Subject to the conditions stated
herein, at any time after the 5th day following the closing of the transaction
contemplated in the Merger Agreement (the "Closing Date"), and on or before the
300th day following the Closing Date, a Requisite Group may make a written
request to the Company for registration with the Commission of the offer and
sale of the Registrable Securities held by the members of such Requisite Group
under and in accordance with the provisions of the Securities Act. Following
receipt of such request, the Company shall, no later than ten (10) Business Days
after receipt of such request, notify all the Holders that it will file a
registration statement covering the Registrable Securities for sale by certain
Holders; PROVIDED, HOWEVER, THAT the Company may, if necessary, delay the filing
of any registration statement relating to the Demand Registration for such
reasonable period of time, not to exceed thirty (30) days, as is necessary to
prepare the financial statements of the Company for the fiscal period most
recently ended prior to such written request. If any Holder of Registrable
Securities shall, within ten (10) days after receipt of such notice, withdraw
such Holder's Registrable Securities from the Demand Registration to the effect
that a Requisite Group is no longer proposing to participate in the Demand
Registration, the Holders shall not have any further rights under this Section 3
unless the Holders reimburse the Company for all Registration Expenses incurred
by the Company in connection with the such Demand Registration.
4
<PAGE>
b. All requests made pursuant to this Section 3 will specify the amount of
Registrable Securities to be registered and will also specify the intended
methods of disposition thereof.
c. The Holders shall be entitled, in the aggregate, to one Demand
Registration. Such Demand Registration must become effective under the
Securities Act to count as having occurred with respect to such Registrable
Securities. The Registration Expenses of the Demand Registration, whether or not
it becomes effective, shall be paid as set forth in Section 11 below.
d. If the Demand Registration is an underwritten offering, the Holders of
the Registrable Securities to be included in such demand registration will
select a managing underwriter or underwriters to administer the offering. Such
managing underwriter or underwriters shall be acceptable to the Company, and
such acceptance will not be unreasonably withheld or delayed.
Section 4. COMPANY REGISTRATION. Notwithstanding the provisions of Section
3, the Company shall not be obligated to effect a registration requested
pursuant to Section 3 if within 30 days after receiving the notice provided by
any Holder under Section 3, the Company notifies all Holders of its intention to
file a registration statement for an underwritten public offering of Common
Stock at least a portion of which shares are to be issued and/or sold for the
account of the Company and within 90 days after providing such notice, the
Company files a registration statement for such offering. In such case, the
Holders shall have all the rights provided herein as if no such demand
registration had been requested with the latest date by which a request for
registration must be made with respect to any Registrable Security not included
in the underwritten public offering delayed to a date 180 days after the
effective date of such registration statement filed for an offering for the
account of the Company that resulted in the application of this Section 4. If at
any time the Company fails to pursue diligently any such registration statement
or offering, the provisions of the preceding sentence shall not apply, and the
Company shall be obligated to satisfy its obligations under Section 3 promptly
following notice to do so from a Requisite Group. With respect to such Company
registration, the Company shall have the sole authority to select or terminate
the employment of underwriters and to make all decisions in connection with the
filing, effectiveness and consummation of the proposed offering, subject to the
express provisions hereof.
Section 5. LIMITATIONS ON OBLIGATIONS OF COMPANY. The obligations of the
Company under Section 3 are subject to each of the following limitations,
conditions and qualifications:
a. The Company shall be entitled to postpone for a reasonable period of
time (not exceeding 60 days) the filing (but not the preparation) of any
registration statement otherwise required to be prepared and filed by it
pursuant hereto if, at the time the Company receives a request for such
registration, the Company is in possession of material non-public information
that would be required to be disclosed in a registration statement, but that has
not been and will otherwise not be disclosed to the public, and the Company
deems disclosure not to be in the best interests of the Company and its
shareholders (for this purpose, the interest of the Holders shall not be
considered). The Company shall be entitled to postpone the filing of such a
registration statement for additional 60 day periods (not to exceed in any event
an aggregate of 120 days) if it delivers to the Holders an opinion of counsel to
the effect that there is a reasonable likelihood that the filing of a
registration statement would result in the disclosure of material non-public
information that would be required
5
<PAGE>
to be disclosed in a registration statement, the disclosure of which at the time
of delivery of such opinion appears not to be in the best interests of the
Company and its shareholders (for this purpose, the interest of the Holders
shall not be considered).
b. The Company shall be entitled to postpone for a reasonable period of
time (not exceeding 90 days) the distribution of preliminary or final
prospectuses under any registration statement required to be prepared and filed
by it pursuant hereto, if at the time such distribution would otherwise be made,
the Company is engaged in an issuer tender offer within the meaning of Section
13(e) of the Exchange Act for securities of the same class (within the meaning
of the Exchange Act) as the Registrable Securities that are proposed to be
registered, unless the Holders of the Registrable Securities proposed to be
registered can obtain a no-action letter from the staff of the Commission to the
effect that the staff would not recommend enforcement action to the Commission
if offers or sales were made pursuant to a prospectus under such circumstances.
c. The Company shall be entitled to postpone for a reasonable period of
time (not exceeding 90 days) the effectiveness (but not the filing or
preparation) of any registration statement otherwise required to be prepared and
filed by it pursuant hereto if, within ten (10) Business Days after it receives
a request for a registration pursuant hereto, the Company's investment banking
firm determines (and the Company so notifies the Holders) that in its judgment,
such registration and offering would materially interfere with any financing,
acquisition, corporate reorganization or other material transaction involving
the Company that before such request was made the Board of Directors of the
Company had agreed by resolution to pursue.
d. During any period in which claims in excess of $500,000 made pursuant
to the Purchase Agreement remain disputed by the parties thereto, any
registration rights granted hereunder shall be suspended pending resolution of
such claim or claims.
Section 6. RESTRICTIONS ON PUBLIC SALE BY HOLDERS OF REGISTRABLE
SECURITIES. To the extent not inconsistent with applicable law, including
insurance codes, each Holder of Registrable Securities that are included in a
registration statement which registers Registrable Securities pursuant to this
Agreement agrees not to effect any public sale or distribution of the issue
being registered (or any securities of the Company convertible into or
exchangeable or exercisable for securities of the same type as the issue being
registered) during the 14 days before, and during the 90-day period beginning
on, the effective date of a registration statement filed by the Company (except
as part of such registration), but only if and to the extent requested in
writing (with reasonable prior notice) by the managing underwriter or
underwriters in the case of an underwritten public offering by the Company of
securities of the same type as the Registrable Securities; PROVIDED, HOWEVER,
THAT the period of time for which the Company is required to keep such
registration statement which includes Registrable Securities continuously
effective shall be increased by a period equal to such requested holdback
period.
Section 7. RESTRICTIONS ON PUBLIC SALE BY THE COMPANY. If the registration
in which the Holders of Registrable Securities are participating is an
underwritten offering and the managing underwriter or underwriters of such
registration shall so require, the Company agrees not to effect, for the account
of the Company, any public sale or distribution of any securities similar to
those
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being registered, or any securities convertible into or exchangeable or
exercisable for such securities, during the 14 days before, and during the
90-day period beginning on, the effective date of any registration statement in
which the Holders of Registrable Securities are participating; provided,
however, that the foregoing shall not prohibit or adversely affect the Company's
right to (i) participate in such registration statement, or (ii) undertake a
registration for its own account or for the account of any other Person of any
class of equity security pursuant to a Registration Statement on Forms S-4 or
S-8 (or their successor forms).
Section 8. COOPERATION BY HOLDERS. The offering of Registrable Securities
by any Holder shall comply in all respects with the applicable terms, provisions
and requirements set forth in this Agreement, and such Holder shall timely
provide the Company with all information and materials required to be included
in a registration statement that (a) relate to the offering, (b) are in
possession of such Holder and (c) relate to such Holder, and to take all such
action as may be reasonably required in order not to delay the registration and
offering of the securities by the Company. The Company shall have no obligation
to include in such registration statement shares of any Holder who has failed to
furnish such information which, in the written opinion of counsel to the
Company, is required in order for the registration statement to be in compliance
with the Securities Act. If a Holder of Registrable Securities which are the
subject of the Demand Registration or an Excess Demand Registration shall fail
to furnish such information and such Demand Registration or Excess Demand
Registration shall not become effective under the Securities Act as a result of
such Holder's failure to furnish such information, such Holder shall not have a
right to request inclusion of the Holder's Registrable Securities in a future
demand registration with respect to Registrable Securities.
Section 9. REGISTRATION PROCEEDINGS. Whenever any Registrable Securities
are to be registered pursuant to Sections 2 or 3 of this Agreement, the Company
will use reasonable diligence to effect the registration of such Registrable
Securities in accordance with the intended method of disposition thereof as
quickly as practicable. In connection with any Piggyback Registration, Demand
Registration or Excess Demand Registration, the Company will act as
expeditiously as possible to:
a. prepare and file with the Commission a registration statement which
includes the Registrable Securities and use reasonable diligence to cause such
registration statement to become effective; PROVIDED, HOWEVER, THAT before
filing a registration statement or prospectus or any amendments or supplements
thereto, including documents incorporated by reference after the initial filing
of the registration statement, the Company will furnish to the Holders of the
Registrable Securities covered by such registration statement and the
underwriters, if any, draft copies of all such documents proposed to be filed at
least five (5) Business Days prior thereto, which documents will be subject to
the reasonable review of the Holders and underwriters, and the Company will not
file any registration statement or amendment thereto or any prospectus or any
supplement thereto (including such documents incorporated by reference) to which
the Holders of a majority of the Registrable Securities covered by such
registration statement or the underwriters with respect to such Registrable
Securities, if any, shall reasonably object, and will notify each Holder of the
Registrable Securities of any stop order issued or threatened by the Commission
in connection therewith and take all reasonable actions required to prevent the
entry of such stop order or to remove it if entered;
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<PAGE>
b. prepare and file with the Commission such amendments and post-effective
amendments to the registration statement as may be necessary to keep the
registration statement effective for a period of 180 days if the registration is
pursuant to Section 2 or until the first anniversary of the date hereof if the
registration is pursuant to Section 3 (or such later date that results by adding
the number of days by which the effectiveness of the registration statement is
delayed as a result of any postponement permitted under subsections a through c
of Section 5) or such shorter period which will terminate when all Registrable
Securities covered by such registration statement have been sold or withdrawn,
but not before the expiration of the 90-day period referred to in Section 3(3)
of the Securities Act and Rule 174 thereunder, if applicable; cause the
prospectus to be supplemented by any required prospectus supplement, and as so
supplemented to be filed pursuant to Rule 424 under the Securities Act; and
comply with the provisions of the Securities Act applicable to it with respect
to the disposition of all securities covered by such registration statement
during the applicable period in accordance with the intended methods of
disposition by the sellers thereof set forth in such registration statement or
supplement to the prospectus; the Company shall not be deemed to have complied
with its obligations hereunder to keep a registration statement effective during
the applicable period if it voluntarily takes any action that would result in
the selling Holders of the Registrable Securities being prevented from selling
such Registrable Securities during that period unless such action is required
under applicable law;
c. furnish to any Holder of Registrable Securities included in such
registration statement and the underwriter or underwriters, if any, without
charge, such number of conformed copies of the registration statement and any
post-effective amendment thereto and such number of copies of the prospectus
(including each preliminary prospectus) and any amendments or supplements
thereto, and any documents incorporated by reference therein, as such Holder or
underwriter may reasonably request in order to facilitate the disposition of the
Registrable Securities being sold by such Holder (it being understood that the
Company consents to the use of the prospectus and any amendment or supplement
thereto, provided by the Company to each Holder of Registrable Securities
covered by the registration statement and the underwriter or underwriters, if
any, in connection with the offering and sale of the Registrable Securities
covered by the prospectus or any amendment or supplement thereto); PROVIDED,
HOWEVER, THAT before filing a registration statement or prospectus or any
amendments or supplements thereto, the Company will furnish to one counsel
selected by the Holders copies of all documents proposed to be filed which
documents will be subject to the review of such counsel;
d. notify each Holder of Registrable Securities included in such
registration statement, at any time when a prospectus relating thereto is
required to be delivered under the Securities Act, when the Company becomes
aware of the happening of any event as a result of which the prospectus included
in such registration statement (as then in effect) contains any untrue statement
of a material fact or omits to state a material fact necessary to make the
statements therein (in the case of the prospectus or any preliminary prospectus,
in light of the circumstances under which they were made) not misleading and, as
promptly as practicable thereafter, prepare and file with the Commission and
furnish a supplement or amendment to such prospectus so that, as thereafter
delivered to the purchasers of such Registrable Securities, such prospectus will
not contain any untrue statement of a material fact or omit to state a material
fact necessary to make the statements therein, in light of the circumstances
under which they were made, not misleading;
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<PAGE>
e. use reasonable diligence to cause all Registrable Securities included
in such registration statement to be listed, by the date of the first sale of
Registrable Securities pursuant to such registration statement, on each
securities exchange (including, for this purpose, the New York Stock Exchange,
Inc.) on which the Common Stock of the Company is then listed or proposed to be
listed, if any;
f. make generally available to its security holders an earnings statement
satisfying the provisions of Section 11(a) of the Securities Act no later than
forty-five (45) days after the end of the twelve-month period beginning with the
first day of the Company's first fiscal quarter commencing after the effective
date of the registration statement, which earnings statement shall cover said
twelve-month period, which requirement will be deemed to be satisfied if the
Company timely files complete and accurate information on Forms 10-Q, 10-K, and
8-K under the Exchange Act and otherwise complies with Rule 158 under the
Securities Act as soon as feasible;
g. make every reasonable effort to obtain the withdrawal of any order
suspending the effectiveness of the registration statement at the earliest
possible moment;
h. if reasonably requested by the managing underwriter or underwriters or
the Holders of Registrable Securities covered by the registration statement,
promptly incorporate in a prospectus supplement or post-effective amendment such
information as the managing underwriter or underwriters or the Holders requests
to be included therein, including without limitation, with respect to the number
of Registrable Securities being sold by the Holders to such underwriter or
underwriters, the purchase price being paid therefor by such underwriter or
underwriters and any other terms of the underwritten offering of such
Registrable Securities, and promptly make all required filings of such
prospectus supplement or post-effective amendment;
i. as promptly as practicable after filing with the Commission of any
document which is incorporated by reference into a registration statement,
deliver a copy of such document to each Holder of Registrable Securities covered
by such registration statement;
j. on or before the date on which the registration statement is declared
effective, use reasonable diligence to register or qualify, and cooperate with
the Holders of Registrable Securities included in such registration statement,
the underwriter or underwriters, if any, and their counsel, in connection with
the registration or qualification of the Registrable Securities covered by the
registration statement for offer and sale under the securities or blue sky laws
of each state and other jurisdiction of the United States as any such Holder or
underwriter reasonably requests in writing, to use reasonable diligence to keep
each such registration or qualification effective, including through new
filings, or amendments or renewals, during the period such registration
statement is required to be kept effective and to do any and all other acts or
things necessary or advisable to enable the disposition in all such
jurisdictions of the Registrable Securities covered by the applicable
registration statement; PROVIDED, HOWEVER, THAT the Company will not be required
to qualify generally to do business in any jurisdiction where it is not then so
qualified or to take any action which would subject it to general service of
process in any such jurisdiction where it is not then so subject;
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<PAGE>
k. cooperate with the Holders of Registrable Securities covered by the
registration statement and the managing underwriter or underwriters, if any, to
facilitate the timely preparation and delivery of certificates (not bearing any
restrictive legends) representing securities to be sold under the registration
statement, and enable such securities to be in such denominations and registered
in such names as the managing underwriter or underwriters, if any, or such
Holder may request, subject to the underwriters' obligation to return any
certificates representing securities not sold;
l. use reasonable diligence to cause the Registrable Securities covered by
the registration statement to be registered with or approved by such other
governmental agencies or authorities within the United States as may be
necessary to enable the seller or sellers thereof or the underwriter or
underwriters, if any, to consummate the disposition of such securities;
m. enter into such customary agreements (including an underwriting
agreement in customary form) and take all such other reasonable actions as the
Holders of a majority of the Registrable Securities being sold or the
underwriters retained by the Holders participating in an underwritten public
offering, if any, reasonably request in order to expedite or facilitate the
disposition of such Registrable Securities;
n. make available for inspection by the Inspectors such Records as shall
be reasonably necessary to enable them to exercise their due diligence
responsibility, and cause the Company's officers, directors, and employees to
respond to all reasonable inquiries from, and to supply all Records reasonably
requested by any such Inspector in connection with such registration statement;
PROVIDED, HOWEVER, THAT with respect to any Records that are confidential, the
Inspectors shall execute such confidentiality agreements as the Company may
reasonably request in order to maintain the confidentiality of confidential
Records; and
o. use reasonable diligence in connection with any underwritten offering
to obtain a "cold comfort" letter from the Company's independent public
accountants in customary form and covering such matters of the type customarily
covered by cold comfort letters as the managing underwriter or underwriters may
reasonably request.
Notwithstanding the foregoing provisions of this Section 9, each Holder
acknowledges that there may occasionally be times when the Company must suspend
the use of the prospectus included in such registration statement until such
time as an amendment to the registration statement has been filed by the Company
and declared effective by the Commission, or until such time as the Company has
filed an appropriate report with the Commission pursuant to the Exchange Act.
Each Holder, upon receipt of any notice from the Company of the happening of any
event of the kind described in subsection d. of this Section 9, will forthwith
discontinue disposition of the Registrable Securities until the Holders' receipt
of the copies of the supplemented or amended prospectus contemplated by
subsection d of this Section 9 or until it is advised in writing by the Company
that the use of the prospectus may be resumed, and has received copies of any
additional or supplemental filings which are incorporated by reference in the
prospectus, and, if so directed by the Company, such Holder will, or will
request the managing underwriter or underwriters, if any, to, deliver to the
Company (at the Company's expense) all copies in their possession or control,
other than permanent file copies
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then in the Holders' possession, of the prospectus covering such Registrable
Securities current at the time of receipt of such notice. If the Company shall
give any such notice, the time periods mentioned in subsection b of this Section
9 shall be extended by the number of days during the period from and including
the date of the giving of such notice to and including the date when each seller
of Registrable Securities covered by such registration statement shall have
received the copies of the supplemented or amended prospectus contemplated by
subsection d of this Section 9 hereof or the notice that they may resume use of
the prospectus.
Section 10. REFERENCE TO HOLDERS IN REGISTRATION STATEMENT. If such
registration statement refers to any Holder by name or otherwise as the holder
of any securities of the Company, then such Holder shall have the right to
require (a) the insertion therein of language, in form and substance
satisfactory to such Holder, to the effect that the holding by such Holder of
such securities is not to be construed as a recommendation of such Holder of the
investment quality of the Company's securities covered thereby and that such
holding does not imply that such Holder will assist in meeting any future
financial requirements of the Company, or (b) if such reference to such Holder
by name or otherwise is not required by the Securities Act or any similar
federal statute then in force, the deletion of the reference to such Holder.
Section 11. DEMAND AND PIGGYBACK REGISTRATION EXPENSES. All Registration
Expenses incident to the Company's performance of or compliance with the Demand
Registration, Excess Demand Registration or Piggyback Registration pursuant to
this Agreement, except underwriting fees, discounts or commissions attributable
to the sale of Registrable Securities and any out-of-pocket expenses (including
attorneys' fees) of the Holders of the Registrable Securities, will be borne by
the Company.
Section 12. INDEMNIFICATION BY THE COMPANY. The Company agrees to
indemnify and hold harmless each Holder of Registrable Securities, and each
Person who controls such Holder (within the meaning of the Securities Act), and
any Agent (as hereinafter defined), or investment advisor thereof against all
Liabilities arising out of or based upon any untrue or alleged untrue statement
of material fact contained in any registration statement, any amendment or
supplement thereto, any prospectus or preliminary prospectus, or any omission or
alleged omission to state therein a material fact required to be stated therein
or necessary to make the statements therein not misleading, except insofar as
any such Liabilities arise out of or are based upon any untrue statement or
omission based upon information with respect to such indemnified Person
furnished in writing to the Company by such indemnified Person expressly for use
therein. In connection with an underwritten offering, the Company will indemnify
the underwriters thereof, their officers and directors and each Person who
controls such underwriters (within the meaning of the Securities Act) to the
same extent as provided above with respect to the indemnification of such Holder
of Registrable Securities or to such other extent as the Company and such
underwriters may agree.
Section 13. INDEMNIFICATION BY HOLDERS OF REGISTRABLE SECURITIES. In
connection with any registration statement in which a Holder of Registrable
Securities is participating, each such Holder will furnish to the Company in
writing such information with respect to the name and address of such Holder and
the amount of Registrable Securities held by such Holder and such other
information as the Company shall reasonably request for use in connection with
any such registration
11
<PAGE>
statement or prospectus, and agrees to indemnify, to the extent permitted by
law, the Company, its directors and officers, and each Person who controls the
Company (within the meaning of the Securities Act) against any losses, damages
and expenses resulting from any untrue statement of a material fact or any
omission of a material fact required to be stated in the registration statement
or prospectus or any amendment thereof or supplement thereto or necessary to
make the statements therein not misleading, to the extent, but only to the
extent, that such untrue statement or omission is based upon any information
with respect to such Holder so furnished in writing by such Holder specifically
for inclusion in any prospectus or registration statement.
Section 14. CONDUCT OF INDEMNIFICATION PROCEEDINGS. Any Person entitled to
indemnification hereunder agrees to give prompt written notice to the
indemnifying party after the receipt by such Person of any written notice of the
commencement of any action, suit, proceeding or investigation or threat thereof
made in writing for which such Person may claim indemnification or contribution
pursuant to this Agreement and, unless in the written opinion of counsel for
such indemnified party a conflict of interest may exist between such indemnified
party and the indemnifying party with respect to such claim, permit the
indemnifying party to assume the defense of such claim with counsel reasonably
satisfactory to such indemnified party. Whether or not such defense is assumed
by the indemnifying party, the indemnifying party will not be subject to any
liability for any settlement made without its consent. No indemnifying party
will consent to entry of any judgment or enter into any settlement which does
not include as an unconditional term thereof the giving by the claimant or
plaintiff to such indemnified party of a release from all liability in respect
of such claim or litigation. If the indemnifying party is not entitled to, or
elects not to, assume the defense of a claim, it will not be obligated to pay
the fees and expenses of more than one counsel with respect to such claim,
unless in the opinion of counsel for any indemnified party a conflict of
interest may exist between such indemnified party and any other of such
indemnified parties with respect to such claim, in which event the indemnifying
party shall be obligated to pay the fees and expenses of such additional counsel
or counsels.
Section 15. CONTRIBUTION. If the indemnification provided for in Sections
12 and 13 from the indemnifying party is unavailable to an indemnified party
hereunder in respect of any losses, claims, damages, liabilities, or expenses
referred to therein, then the indemnifying party, in lieu of indemnifying such
indemnified party, shall contribute to the amount paid or payable by such
indemnified party as a result of such losses, claims, damages, liabilities, or
expenses in such proportion as is appropriate to reflect the relative fault of
the indemnifying party and indemnified parties in connection with the actions
which resulted in such losses, claims, damages, liabilities, or expenses, as
well as any other relative equitable considerations. The relative fault of such
indemnifying party and indemnified parties shall be determined by reference to,
among other things, whether any action in question, including any untrue or
alleged untrue statement of a material fact, has been made by, or relates to
information supplied by, such indemnifying party or indemnified parties, and the
parties' relative intent, knowledge, access to information, and opportunity to
correct or prevent such action. The amount paid or payable by a party as a
result of any losses, claims, damages, liabilities, and expenses referred to
above shall be deemed to include, subject to the limitations set forth in
Section 14, any legal or other fees or expenses reasonably incurred by such
party in connection with any investigation or proceeding. The parties hereto
agree that it would not be just and equitable if contribution pursuant to this
Section 15 were determined by pro rata
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allocation or by any other method of allocation which does not take account of
the equitable considerations referred to in this paragraph. No Person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the
Securities Act) shall be entitled to contribution from any Person who was not
guilty of such fraudulent misrepresentation. The obligations of the Company
pursuant to Sections 12, 13, 14 and 15 shall be further subject to such
additional express agreements of the Company as may be required to facilitate an
underwritten offering, PROVIDED, HOWEVER, THAT no such agreement shall in any
way limit the rights of the Holders of Registrable Securities under this
Agreement, or create additional obligations of the Holders not set forth herein,
except as otherwise expressly agreed in writing by the Holders.
Section 16. PARTICIPATION IN UNDERWRITTEN REGISTRATIONS. The Holders of
Registrable Securities may not participate in any underwritten registration
hereunder unless each such Holder (a) agrees to sell the Holder's securities on
the terms of and on the basis provided in any underwriting arrangements approved
by the Persons entitled hereunder to approve such arrangements (which shall be
the Company in the case of an offering of securities by the Company), and (b)
completes and executes all questionnaires, powers of attorney, indemnities,
underwriting agreements and other documents reasonably required under the terms
of such underwriting arrangements.
Section 17. RULE 144. The Company covenants that it will file the reports
required to be filed by it under the Securities Act and the Exchange Act and the
rules and regulations adopted by the Commission thereunder (or, if the Company
is not required to file such reports, it will, upon the request of the Holders
of Registrable Securities, make publicly available other nonconfidential
information so long as necessary to permit sales under Rule 144 under the
Securities Act), and it will take such other action as the Holders of
Registrable Securities may reasonably request, all to the extent required from
time to time to enable the Holders to sell Registrable Securities without
registration under the Securities Act within the limitation of the exemptions
provided by (a) Rule 144 under the Securities Act, as such Rule may be amended
from time to time, or (b) any similar rule or regulation hereafter adopted by
the Commission. Upon the request of the Holders of Registrable Securities, the
Company will deliver to the Holders a written statement as to whether it has
complied with such requirements.
Section 18. RECAPITALIZATIONS, EXCHANGES, ETC. The provisions of this
Agreement shall apply, to the full extent set forth herein, with respect to the
Registrable Securities, to any and all shares of equity capital of the Company
or any successor or assign of the Company (whether by merger, consolidation,
sale of assets, or otherwise) which may be issued in respect of, in exchange
for, or in substitution of the Registrable Securities, in each case as the
amounts of such securities outstanding are appropriately adjusted for any equity
dividends, splits, reverse splits, combinations, recapitalizations, and the like
occurring after the date of this Agreement.
Section 19. OPINIONS. When any legal opinion is required to be delivered
hereunder, such opinion may contain such qualifications as may be customary or
otherwise appropriate for legal opinions in similar circumstances.
Section 20. NOTICES. For purposes of this Agreement, notices and all other
communications provided for herein shall be in writing and shall be deemed to
have been duly given
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when personally delivered or when mailed by United States registered or
certified mail, return receipt requested, postage prepaid, addressed as follows:
IF TO COMPANY, TO:
Consolidated Graphics, Inc.
5858 Westheimer, Suite 200
Houston, Texas 77057
Attention: Joe R. Davis,
Chief Executive Officer
WITH A COPY TO:
R. Clyde Parker, Jr.
Winstead Sechrest & Minick, P.C.
910 Travis Street, Suite 2400
Houston, Texas 77002
IF TO THE HOLDERS, TO:
The Shareholders of Carty Enterprises, Inc.
c/o John R. Carty
__________________________
__________________________
__________________________
WITH A COPY TO:
__________________________
__________________________
__________________________
IF TO ANY PERSON OTHER THAN THE HOLDERS:
to the address of such Person on the records of the transfer agent of
the Company as of the date prior to the date of any notice by the Company
or to such other address as any party may furnish to the others in writing in
accordance herewith, except that notices of changes of address shall be
effective only upon receipt, and that failure to copy legal counsel shall not
invalidate notices otherwise properly given.
Section 21. APPLICABLE LAW. This Agreement and all rights and obligations
hereunder, including matters of construction, validity and performance, shall be
governed by the laws of the State of Texas, without giving effect to the
principles of conflicts of laws thereof.
14
<PAGE>
Section 22. AMENDMENT AND WAIVER. This Agreement may be amended, and the
provisions hereof may be waived, only by a written instrument signed by (a) the
Holders of a majority of the Registrable Securities and (b) the Company. No
failure by either party hereto at any time to give notice of any breach by the
other party of, or to require compliance with, any condition or provision of
this Agreement shall be deemed a waiver of similar or dissimilar provisions or
conditions at the same or at any prior or subsequent time.
Section 23. REMEDY FOR BREACH OF CONTRACT. The parties agree that if there
is any breach or asserted breach of the terms, covenants, or conditions of this
Agreement, the remedy of the parties hereto shall be at law and in equity and
injunctive relief shall lie for the enforcement of or relief from any provisions
of this Agreement. If any remedy or relief is sought and obtained by any party
against one of the other parties pursuant to this Section 23, the other party
shall, in addition to the remedy of relief so obtained, be liable to the party
seeking such remedy or relief for the reasonable expenses incurred by such party
in successfully obtaining such remedy or relief, including the reasonable fees
and expenses of such party's counsel.
Section 24. SEVERABILITY. It is a desire and intent of the parties that
the terms, provisions, covenants, and remedies contained in this Agreement shall
be enforceable to the fullest extent permitted by law. If any such term,
provision, covenant, or remedy of this Agreement or the application thereof to
any Person or circumstances shall, to any extent, be construed to be invalid or
unenforceable, in whole or in part, then such term, provision, covenant, or
remedy shall be construed in a manner so as to permit its enforceability under
the applicable law to the fullest extent permitted by law. In any case, the
remaining provisions of this Agreement, or the application thereof to any Person
or circumstances other than those to which they have been held invalid or
unenforceable, shall remain in full force and effect.
Section 25. COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original, but all of which
together will constitute one and the same Agreement.
Section 26. HEADINGS. The section and paragraph headings have been
inserted for purposes of convenience of reference only and shall not be used for
interpretive purposes.
Section 27. BINDING EFFECT. Unless otherwise provided herein, the
provisions of this Agreement shall be binding upon and inure to the benefit of
the parties hereto and their respective heirs, legal representatives,
successors, and permitted assigns, and is not intended to confer upon any other
Person any right or remedies hereunder; PROVIDED, HOWEVER, THAT a transferee of
a Holder, other than as contemplated in (a), (b) or (c) of the definition of
Registrable Securities in Section 1, shall be deemed to be the Holder for
purposes of obtaining the benefits or enforcing the rights of the Holder.
Section 28. ENTIRE AGREEMENT. This Agreement, together with the other
agreements referenced herein, constitutes the entire agreement and supersedes
all prior agreements, understandings, both written and oral, among the parties
with respect to the subject matter hereof.
15
<PAGE>
Section 29. INFORMATION. So long as the Holders own Registrable
Securities, the Holders agree to deliver to the Company, upon request, such
information about the Holders and the Holders' holdings of Registrable
Securities as the Company may reasonably request as is necessary to permit the
Company to prepare and file its annual report on Form 10-K, its proxy statements
under the Exchange Act and any filings under the Securities Act. Without
limiting the generality of the foregoing, the Holders agrees to provide the
Company, upon request, with information concerning the number of shares then
held by the Holders that are the subject of this Agreement.
[THE REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]
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IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.
CONSOLIDATED GRAPHICS, INC.
By:/s/ JOE R. DAVIS
Joe R. Davis, Chief Executive Officer
/s/ JOHN R. CARTY
JOHN R. CARTY
/s/ PATRICK J. DOOLEY
PATRICK J. DOOLEY
/s/ MICHELLE W. CROWELL
MICHELLE W. CROWELL
/s/ ROLAND F. GUNDLING
ROLAND F. GUNDLING
/s/ CHARLES R. WESLEY
CHARLES R. WESLEY
/s/ CHARLES W. MILLS
CHARLES W. MILLS
[SIGNATURE PAGE TO REGISTRATION RIGHTS AGREEMENT]
17
<PAGE>
/s/ JOHN P. PUGH
JOHN P. PUGH
/s/ WILLIAM R. WISE
WILLIAM R. WISE
[SIGNATURE PAGE TO REGISTRATION RIGHTS AGREEMENT]
18
EXHIBIT 23.2
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation
by reference in Amendment No. 2 of this Registration Statement on Form S-3
(Registration # 333-65677), of our report dated May 8, 1998, included in the
Consolidated Graphics, Inc. Annual Report on Form 10-K for the year ended March
31, 1998, and to all references to our Firm included in this Registration
Statement.
/s/__ARTHUR ANDERSEN LLP
ARTHUR ANDERSEN LLP
Houston, Texas
December 17, 1998
