Document:

Exhibit 10.1

 

SEPARATION AGREEMENT

 

This SEPARATION AGREEMENT (this “Agreement”) is made and entered into by and between Broadwind Energy, Inc. (the “Company”) and Jesse E. Collins, Jr. (the “Executive”).

 

WHEREAS, the Company has assessed its long range strategic plan, which has, among other things, included an evaluation of the Company’s management structure, including the size and structure of the Company’s management team;

 

WHEREAS, the Company and the Executive have discussed opportunities to reduce management expenses and determined that in connection with such efforts, the Executive’s position with the Company should be eliminated;  and

 

WHEREAS, the Executive and the Company desire to settle fully and amicably all issues between them, including, but not limited to, any issues arising out of the Executive’s employment with the Company pursuant to the Executive’s Amended and Restated Employment Agreement dated December 17, 2012 (the “Employment Agreement”) and the termination of the Executive’s employment.

 

NOW, THEREFORE, for and in consideration of the mutual promises contained herein, and for other good and sufficient consideration, receipt of which is hereby acknowledged, the Executive and the Company (sometimes hereinafter referred to individually as a “Party” and collectively as the “Parties”), intending to be legally bound, agree as follows:

 

Section 1.                                          Termination Date.  As of the close of business on December 31, 2013,   or such earlier date as determined by the Company’s Board of Directors or Chief Executive Officer (but in any event no earlier than November 24, 2013) (the “Termination Date”), the Executive’s service as an officer of and employment with the Company will be terminated and the Executive will irrevocably resign from all other positions with, and boards of directors of, the Company and any subsidiaries and affiliated companies of the Company.  The Executive acknowledges that he has been provided with written notice of termination of employment that satisfies the requirements under Section 6(b) of the Employment Agreement.

 

Section 2.                                          Restrictive Covenants.  The Executive expressly acknowledges and agrees that the terms, conditions and restrictions set forth in Section 5 of the Employment Agreement shall remain in full force and effect as provided therein following the Executive’s termination of employment.  The Executive may seek the Company’s written consent to engage in activities covered by Section 5 of the Employment Agreement, and the granting or denying of such consent shall be provided in writing to the Executive within ten (10) business days of the Executive’s written request for such consent and shall be within the sole discretion of the Company, not to be unreasonably withheld.

 

Section 3.                                          Benefits.  Subject to (i) the Executive’s compliance with this Agreement and the restrictive covenants set forth in Section 5 of the Employment Agreement, (ii) the Executive’s timely execution of this Agreement without revocation as provided herein, and (iii) with respect to subpart (a) of this Section 3 only, the Executive’s timely execution of the Release pursuant to Section 8 below without revocation as provided therein, the Executive shall receive the benefits set forth in this Section 3 (collectively referred to herein as the “Severance Benefits”) in full satisfaction of all post-termination benefits to which the Executive may be entitled under the Employment Agreement or otherwise.

 

 

(a)                                 Severance, Payment in Lieu of Continued Benefits Coverage and STIP Payment.  The Executive shall receive a cash severance benefit of $251,384 (the “Salary Benefit”), which represents one-half (1/2) of the Executive’s base salary for a period of eighteen (18) months following the Termination Date and the cost associated with continued healthcare premiums under the Consolidated Omnibus Budget Reconciliation Act of 1986. The Salary Benefit shall be paid in substantially equal installments in accordance with the Company’s normal payroll practices and schedule over the eighteen (18) month period following the Termination Date, with the first installment to be paid within ninety (90) days following the Termination Date.  In addition, the Executive shall receive a lump sum payment equal to $33,180 which represents a portion of Executive’s personal component under the Company’s Executive Short-Term Incentive Plan (the “STIP”), with such payment to be paid at the same time that other participants in the STIP receive their 2013 STIP payments (but in any event no later than March 15, 2014).

 

(b)                                 Restricted Stock Units.  A portion of the unvested restricted stock units (the “Unvested Units”) which were awarded by the Company to the Executive on February 21, 2013 and May 4, 2012 pursuant to Restricted Stock Unit Award Agreements under the Company’s 2012 Equity Incentive Plan (the “2012 EIP”), and which would have otherwise been forfeited under the terms of such Restricted Stock Unit Award Agreements upon the Termination Date, shall not be forfeited and shall vest on October 24, 2013.  Specifically, forty thousand three hundred thirty-four (40,334) Unvested Units shall vest on October 24, 2013 (which number was determined by dividing $322,271 by $7.99, the closing price of the Company’s common stock on October 24, 2013).  The Executive acknowledges and agrees that he is not entitled to receive any additional cash incentive or equity awards of any type from the Company under the STIP, the 2012 EIP or otherwise and, without limiting the foregoing and except as otherwise set forth in Section 3(a), he acknowledges that he is forfeiting any payments under the STIP for any performance periods ending on or prior to the Termination Date.

 

(c)                                  Outplacement.  The Executive shall be provided with outplacement services through the Executive (12 Month) Program with Challenger, Gray & Christmas, Inc.

 

Section 4.                                          Final Paycheck and Business Expenses.  Regardless of whether the Executive signs this Agreement, the Company will provide the Executive his final paycheck for his employment services and for his earned and unused vacation time, through the Termination Date.  The Company also will reimburse the Executive for reasonable business expenses appropriately incurred by the Executive prior to the Termination Date in furtherance of his employment with the Company, subject to the Company’s applicable business expense reimbursement policy.  The Executive shall submit all requests to the Company for expense reimbursements within ten (10) days after the Termination Date.  Any requests submitted thereafter shall not be eligible for reimbursement, except as required by applicable law.

 

Section 5.                                          Executive Acknowledgement.  The Executive acknowledges and agrees that, subject to fulfillment of all obligations provided for herein, the Executive has been fully compensated by the Company for all amounts owed to him under the Employment Agreement 

 

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and the Company’s policies, practices and rules, and any applicable law, and that nothing else is owed to the Executive with respect to salaries, bonuses, benefits or any other form of compensation.  The Executive further acknowledges and agrees that the Severance Benefits referred to in Section 3 are consideration for the Executive’s promises contained in this Agreement, and that the Severance Benefits constitute full satisfaction of all amounts to which the Executive is entitled from the Company under the terms of the Executive’s employment or under the Employment Agreement or any other contract or law.  The Executive also acknowledges and agrees that the Company’s Policy Statement on Inside Information and Securities Trading prohibits the Executive from trading in the Company’s stock until the next business day - and at least twenty-four (24) hours - following the public release of the Company’s quarterly earnings report, which is currently scheduled for October 31, 2013.

 

Section 6.                                          Termination of Benefits.  Except as provided in Section 3 above, the Executive’s participation in all Company employee benefit (pension and welfare) and compensation plans will cease as of the Termination Date.  Nothing contained herein shall limit or otherwise impair the Executive’s right to receive pension or similar benefit payments which are vested as of the Termination Date under any applicable tax qualified pension or other tax qualified or non-qualified benefit plans, pursuant to the terms and conditions of the applicable plan.

 

Section 7.                                          Consulting Services.  As partial consideration for the accelerated vesting of a portion of the Unvested Units pursuant to Section 3(b) above, the Executive hereby agrees to make himself available to perform consulting services with respect to the businesses conducted by the Company, for up to a maximum of ten (10) hours after the Termination Date.  In accordance with the terms of this Agreement, the Executive shall comply with reasonable requests for the Executive’s consulting services and shall devote his best efforts, skill and attention to the performance of such consulting services.  The Executive shall take his direction as a consultant solely from the Company’s Board of Directors or Chief Executive Officer and shall not interact with any of the Company’s other employees in his capacity as a consultant, except (i) for interactions with members of the Company’s Extended Executive Team to the extent necessary to perform the consulting services contemplated by this Section 7 and (ii) to the extent he is directed to do so by the Company’s Board of Directors or Chief Executive Officer.  Notwithstanding anything herein to the contrary, the Company and the Executive agree that in no event shall the level of consulting services to be provided by the Executive pursuant to this Section 7 exceed more than 20% of the average level of services performed by the Executive for the Company and its affiliated “service recipients” (within the meaning of Treasury Regulation §1.409A-1(h)(3)) over the immediately preceding 36-month period.

 

Section 8.                                          Release of Claims.  The benefits and payments to the Executive pursuant to Section 3(a) above are further subject to the Executive’s execution of and delivery to the Company by the twenty-first (21st) day following the Termination Date of a release and waiver of claims (the “Release”) in the form attached hereto as Exhibit A, without revocation of the Release by the Executive as provided therein.

 

Section 9.                                          Representations by Executive.  The Executive represents and warrants (a) that the Executive is legally competent to execute this Agreement; (b) that the Executive has not relied on any statements or explanations made by the Company or its attorneys; (c) that the 

 

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Executive has read and understands the terms and effect of this Agreement; (d) that the Executive has the full right and power to grant, execute and deliver the releases, undertakings and agreements contained in this Agreement and in Exhibit A attached hereto; and (e) that the releases and waiver of claims under this Agreement and Exhibit A attached hereto are in exchange for consideration in addition to anything of value to which the Executive already is entitled.  Moreover, the Executive hereby acknowledges that the Executive has been afforded the opportunity to be advised by legal counsel regarding the terms of this Agreement and of his right to be advised by legal counsel regarding the terms of this Agreement, including the release of all claims and waiver of rights set forth in Exhibit A attached hereto.  The Executive acknowledges that the Executive has been offered twenty-one (21) days to consider whether to execute this Agreement, and that the Executive may, at the Executive’s sole option, revoke this Agreement within seven (7) days after the date on which the Executive signs this Agreement upon written notice to Julie Nass, the Company’s Vice President — Corporate Human Resources, and that the Agreement will not become effective or enforceable until this seven-day revocation period has expired without any revocation by the Executive.  If the Executive revokes this Agreement, it shall be null and void.  After being so advised, and without coercion of any kind, the Executive freely, knowingly and voluntarily enters into this Agreement and this Agreement shall be effective on the date the Agreement has been duly executed by the required Parties (the “Effective Date”).

 

Section 10.                                   Company Property.

 

(a)                                 The Executive agrees to return to the Company, within five (5) business days following the Termination Date, all information, property and supplies belonging to the Company and/or its affiliates, including without limitation any company autos, keys (for equipment or facilities), laptop computer and related equipment, cellular phone, smart phone or PDA (including SIM cards), security cards, corporate credit cards, and the originals and all copies of all files, materials or documents (whether in tangible or electronic form) containing confidential information or relating to the Company’s and/or its affiliates’ business.

 

(b)                                 The Executive agrees that the Executive shall not, at any time on or after the Termination Date, directly or indirectly use, access or in any way alter or modify any of the databases, e-mail systems, software, computer systems or hardware or other electronic, computerized or technological systems of the Company.  The Executive acknowledges and agrees that any such conduct by the Executive would be illegal and could subject the Executive to legal action by the Company, including without limitation claims for damages and/or appropriate injunctive relief.

 

Section 11.                                   Future Cooperation.  In connection with any and all claims, disputes, negotiations, governmental or internal investigations, lawsuits or administrative proceedings (the “Legal Matters”) involving the Company, or any of its current or former officers, employees or board members (collectively, the “Disputing Parties” or, individually, a “Disputing Party”), the Executive agrees to make himself reasonably available and provide his best efforts, upon reasonable notice from the Company and without the necessity of subpoena, to provide information or documents, provide truthful declarations or statements regarding a Disputing Party, meet with attorneys or other representatives of a Disputing Party, prepare for and give truthful depositions or testimony, and/or otherwise cooperate in the investigation, defense or 

 

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prosecution of any or all such Legal Matters, as may, in the good faith and judgment of the Company, be reasonably requested.  The Company agrees to reimburse the Executive for all reasonable out-of-pocket expenses associated with such assistance, including meals, travel and hotel expenses, if any.

 

Section 12.                                   No Admissions.  Nothing in this Agreement is intended to or shall be construed as an admission by the Company or any of the other Released Parties (as defined in Exhibit A attached hereto) that any of them violated any law, interfered with any right, breached any obligation or otherwise engaged in any improper or illegal conduct with respect to the Executive or otherwise.  The Company and the other Released Parties deny that they have taken any improper action against the Executive, and the Executive agrees that this Agreement shall not be admissible in any proceeding as evidence of improper action by the Company or any of the other Released Parties.

 

Section 13.                                   Non-Waiver.  The Company’s waiver of a breach of this Agreement by the Executive shall not be construed or operate as a waiver of any subsequent breach by the Executive of the same or of any other provision of this Agreement.

 

Section 14.                                   Withholding.  All amounts and benefits payable under this Agreement shall be reduced by any and all required or authorized withholding and deductions.

 

Section 15.                                   Choice of Law; Forum; Attorneys’ Fees.  This Agreement is executed pursuant to and is governed by the substantive law of Illinois without regard to choice-of-law principles.  All claims shall be brought, commenced and maintained only in a state or federal court of competent jurisdiction situated in the County of Cook, State of Illinois.  Each Party hereby (i) consents to the exercise of jurisdiction over his or its person and property by any court of competent jurisdiction situated in the County of Cook, State of Illinois for the enforcement of any claim, case or controversy based on or arising under this Agreement, (ii) waives any and all personal or other rights to object to such jurisdiction for such purposes, and (iii) waives any objection which it may have to the laying of venue of any such action, suit or proceeding in any such court.

 

Section 16.                                   Entire Agreement.  The Employment Agreement is hereby terminated, null and void effective as of the Termination Date, except that Sections 4, 5, 11, and 12 of the Employment Agreement shall continue in full force and effect in accordance with their respective terms.  Except as otherwise provided in Section 3 of this Agreement and in the foregoing sentence, this Agreement sets forth the entire agreement of the Parties with respect to the subject matter described herein and supersedes any and all prior and/or contemporaneous agreements and understandings, oral and written, between such Parties regarding such matters.

 

Section 17.                                   Counterparts.  This Agreement may be executed in any number of counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same Agreement.  Facsimile transmission of any executed original document shall be deemed to be the same as the delivery of the executed original.

 

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Section 18.                                   Enforcement.  The provisions of this Agreement shall be regarded as divisible and separable, and if any provision should be declared invalid or unenforceable by a court of competent jurisdiction (after reformation pursuant to Section 5(h) of the Employment Agreement pursuant to Section 3 above, where applicable), the validity and enforceability of the remaining provisions shall not be affected thereby.  In addition, the Executive agrees and stipulates that breach by the Executive of any restrictions and requirements under this Agreement will cause irreparable damage to the Released Parties and the Company would not have entered into this Agreement without the Executive binding himself to these restrictions and requirements.  In the event of the Executive’s breach of this Agreement, in addition to any other remedies the Company has and without bond and without prejudice to any other rights and remedies that the Company may have for the Executive’s breach of this Agreement, the Company shall be relieved of any obligation to provide Severance Benefits pursuant to this Agreement and shall be entitled to an injunction to prevent or restrain any such violation by the Executive and any and all persons directly or indirectly acting for or with the Executive.  The Executive further stipulates that the restrictive period for which the Company is entitled to an injunction shall be extended in such event for a period which equals the time period during which the Executive is or has been in violation of the restrictions contained herein.

 

Section 19.                                   Miscellaneous.  The headings used in this Agreement are for convenience only, shall not be deemed to constitute a part hereof, and shall not be deemed to limit, characterize or in any way affect the construction or enforcement of the provisions of this Agreement.  Wherever from the context that it appears appropriate, each term stated in either the singular or plural shall include the singular and the plural and the pronouns stated in either the masculine, feminine or the neuter gender shall include the masculine, feminine and neuter, and the words “include,” “includes” and “including” shall mean “include, without limitation,” “includes, without limitation” and “including, without limitation,” respectively.  The subject matter and language of this Agreement have been the subject of negotiations between the Parties and their respective counsel, and this Agreement has been jointly prepared by their respective counsel.  Accordingly, this Agreement shall not be construed against either Party on the basis that this Agreement was drafted by such Party or its counsel.  This Agreement shall be binding upon and inure to the benefit of the Executive and the Executive’s heirs and personal representatives and the Company and its successors, representatives and assigns.  This Agreement may be modified only in a written agreement signed by both Parties, and any Party’s failure to enforce this Agreement in the event of one or more events which violate this Agreement shall not constitute a waiver of any right to enforce this Agreement against subsequent violations.  The Section headings used herein are for convenience of reference only and are not to be considered in construction of the provisions of this Agreement.

 

Section 20.                                   Section 409A Compliance.  The payments to the Executive pursuant to this Agreement are intended to be exempt from Section 409A of the Internal Revenue Code of 1986, as amended, to the maximum extent possible, under either the separation pay exemption pursuant to Treasury regulation §1.409A-1(b)(9)(iii) or as short-term deferrals pursuant to Treasury regulation §1.409A-1(b)(4), and for such purposes, each installment paid to the Executive under this Agreement shall be considered a separate payment.

 

(Remainder of page intentionally blank)

 

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IN WITNESS WHEREOF, this Agreement has been duly executed as of the dates set forth below.

 

Jesse E. Collins, Jr.

 

 

	
/s/ Jesse E. Collins, Jr.
    	
 
    	
Date:
    	
October 24,   2013
    
	
Jesse E. Collins, Jr.
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
Broadwind   Energy, Inc.  
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
/s/ Peter Duprey
    	
 
    	
Date:
    	
October 24,   2013
    
	
By:
    	
Peter   Duprey
    	
 
    	
 
    	
 
    
	
Its:
    	
President and CEO
    	
 
    	
 
    

 

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Exhibit A

 

Release and Waiver of Claims

 

Broadwind Energy, Inc. (the “Company”) and Jesse E. Collins, Jr. (the “Executive”) hereby enter into this Release and Waiver of Claims (“Release”) in accordance with the Separation Agreement between the Company and the Executive dated as of October 24, 2013 (the “Agreement”).  Capitalized terms not expressly defined in this Release shall have the meanings set forth in the Agreement.

 

1.                                      The Executive understands and agrees that the Executive’s execution of this Release within twenty-one (21) days after (but not before) the Termination Date (without revoking this Release as set forth in Paragraph 5 below) is among the conditions precedent to the Company’s obligation to provide any of the payments or benefits set forth in Section 3(a) of the Agreement.  The Company will provide such payments or benefits subject to and in accordance with the terms and conditions of the Agreement.

 

2.                                      The term “Released Parties” as used in this Release includes:  (a) the Company and its past, present and future parents, divisions, subsidiaries, partnerships, affiliates and other related entities (whether or not they are wholly owned); and (b) the past, present and future owners, trustees, fiduciaries, administrators, shareholders, directors, officers, partners, agents, representatives, members, associates, employees and attorneys of each entity listed in subpart (a) above; and (c) the predecessors, successors and assigns of each entity listed in subparts (a) and (b) above.

 

3.                                      The Executive, on the Executive’s own behalf and that of the Executive’s heirs, executors, attorneys, administrators, successors, assigns, and anyone claiming through the Executive or on his behalf, hereby waives and releases the Company and the other Released Parties with respect to any and all liability, claims and demands the Executive now has or has ever had, whether currently known or unknown, against the Company or any of the other Released Parties arising from or related to any act, omission or thing occurring or existing at any time prior to or on the date on which the Executive signs this Release.  Without limiting the generality of the foregoing, the claims waived and released by the Executive hereunder include but are not limited to:

 

(a)                                 any and all claims arising from or relating to the Executive’s employment, the terms and conditions of the Executive’s employment, or the termination of the Executive’s employment, including without limitation any and all claims relating to wages, bonuses, other compensation, or benefits (but not vested benefits pursuant to the Company’s 401(k) plan), and any and all claims arising from or relating to any employment contract (including without limitation the Employment Agreement);

 

(b)                                 any and all claims arising from or relating to any employment or other federal, state, local, employment, or other law, regulation, ordinance, constitutional provision, executive order or other source of law, including without limitation any of the following laws as amended from time to time:  the Age Discrimination in Employment 

 

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Act; the United States Constitution or the constitution of any state; Title VII of the Civil Rights Act of 1964; the Civil Rights Act of 1991; the Illinois Human Rights Act or similar applicable statute of any other state; the Employee Retirement Income Security Act of 1974; the Americans with Disabilities Act; the Equal Pay Act; the Lilly Ledbetter Fair Pay Act of 2009; the Family and Medical Leave Act; Executive Order 11246; the Illinois Equal Pay Act; the Cook County Human Rights Ordinances; the Texas Labor Code, Chapter 21, §§ 21.001 et seq.; the Disability Discrimination Law, Tex. Hum. Res. Code Ann., §§ 121.001 et seq.; and any other federal, state or local statute, ordinance or regulation with respect to employment;

 

(c)                                  any and all claims with respect to the Executive’s employment with the Company or other association with the Company through the Termination Date;

 

(d)                                 any and all claims under any tort or common law theory, including, but not limited to, all claims for breach of contract (oral, written or implied), defamation, intentional or negligent infliction of emotional distress, breach of the covenant of good faith and fair dealing, promissory estoppel, wrongful termination, invasion of privacy, tortious interference, fraud, estoppel, unjust enrichment, and negligence; and

 

(e)                                  any and all claims that were or could have been asserted by the Executive or on his behalf  in any federal, state or local court, commission, or agency.

 

The Executive acknowledges, agrees, represents and warrants, without limiting the generality of the above release, that (i)  the Executive hereby irrevocably and unconditionally waives any and all rights to recover damages concerning the claims that are lawfully released in this Release, (ii) the Executive has not previously filed, initiated or joined in any such claims or proceedings against any of the Released Parties; (iii) no such proceedings have been initiated against any of the Released Parties on the Executive’s behalf; (iv) the Executive is the sole owner of the claims that are released above; and (v) none of these claims has been transferred or assigned or caused to be transferred or assigned to any other person, firm or other legal entity.

 

4.                                      Excluded from the Release above are any claims or rights which cannot be waived or released by law.  Also excluded is the Executive’s right to file a charge with an administrative agency or participate in any agency investigation.  The Executive is, however, waiving the right to recover any money in connection with any such charge or investigation.  The Executive is also waiving the right to recover any money in connection with a charge filed by any other individual or by the Equal Employment Opportunity Commission or any other federal or state agency.

 

5.                                      The Executive represents warrants (a) that the Executive is legally competent to execute this Release; (b) that the Executive has not relied on any statements or explanations made by the Company or its attorneys; (c) that the Executive has read and understands the terms and effect of this Release; (d) that the Executive has the full right and power to grant, execute and deliver the releases, undertakings and agreements contained in this Release; and (e) that the releases and waiver of claims under this Release is knowingly and voluntarily,  in exchange for consideration in addition to anything of value to which the Executive already is entitled.  Moreover, the Executive hereby acknowledges that the Executive has been afforded the 

 

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opportunity to be advised by legal counsel regarding the terms of this Release and of his right to be advised by legal counsel regarding the terms of this Release.  The Executive acknowledges that the Executive has been offered twenty-one (21) days to consider whether to execute this Release, and that the Executive may, at the Executive’s sole option, revoke this Release within seven (7) days after the date on which the Executive signs this Release upon written notice to Julie Nass, the Company’s Vice President — Corporate Human Resources, and that the Release will not become effective or enforceable until this seven-day revocation period has expired without any revocation by the Executive. If the Executive revokes this Release, the Release shall be null and void and the Executive shall not be entitled to any of the payments or benefits set forth in Section 3(a) of the Agreement.  After being so advised, and without coercion of any kind, the Executive freely, knowingly and voluntarily enters into this Release and this Release shall be effective on the date the Release has been duly executed by the required parties.

 

THE PARTIES STATE THAT THEY HAVE READ AND UNDERSTAND THE FOREGOING AND KNOWINGLY AND VOLUNTARILY INTEND TO BE BOUND THERETO:

 

	
JESSE   E. COLLINS, JR.
    	
BROADWIND   ENERGY, INC.
    
	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
By:
    	
 
    
	
 
    	
 
    	
 
    
	
Date:
    	
 
    	
 
    	
Title:
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
Date:
    	
 
    
						

 

A-3Exhibit 10.1

 

EXECUTION VERSION

 

VOTING AGREEMENT

 

by and among

 

R. R. DONNELLEY & SONS COMPANY,

 

JOE R. DAVIS

 

and

 

CONSOLIDATED GRAPHICS, INC.

 

Dated as of October 23, 2013

 

 

TABLE OF CONTENTS

 

	
 
    	
 
    	
Page
    
	
 
    
	
ARTICLE I
    
	
 
    
	
General
    
	
 
    
	
1.1.
    	
Defined Terms
    	
1
    
	
ARTICLE II
    
	
 
    
	
Voting
    
	
2.1.
    	
Agreement to Vote
    	
2
    
	
2.2.
    	
No Inconsistent Agreements
    	
3
    
	
2.3.
    	
Other Matters
    	
3
    
	
ARTICLE III
    
	
 
    
	
Representations   and Warranties
    
	
 
    
	
3.1.
    	
Representations and Warranties of the Shareholder
    	
4
    
	
 
    	
 
    	
 
    
	
ARTICLE IV
    
	
 
    
	
Other   Covenants
    
	
 
    
	
4.1.
    	
Prohibition on Transfers, Other Actions
    	
5
    
	
4.2.
    	
Additional Shares
    	
6
    
	
4.3.
    	
No Solicitation
    	
6
    
	
4.4.
    	
Notice of Acquisitions
    	
7
    
	
4.5.
    	
Release
    	
7
    
	
4.6.
    	
Non-Compete
    	
7
    
	
4.7.
    	
Waiver of Appraisal Rights
    	
9
    
	
4.8.
    	
Further Assurances
    	
9
    
	
4.9.
    	
Company Agreement
    	
9
    
	
4.10.
    	
Public Announcement
    	
9
    
	
4.11.
    	
Consulting Agreement
    	
9
    
	
 
    	
 
    	
 
    
	
ARTICLE V
    
	
 
    
	
Miscellaneous
    
	
 
    
	
5.1.
    	
Termination
    	
9
    
	
5.2.
    	
No Ownership Interest
    	
10
    
	
5.3.
    	
Notices
    	
10
    
	
5.4.
    	
Interpretation
    	
11
    

 

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5.5.
    	
Counterparts
    	
12
    
	
5.6.
    	
Entire Agreement
    	
12
    
	
5.7.
    	
Governing Law; Submission to Jurisdiction; Waivers
    	
12
    
	
5.8.
    	
Amendment; Waiver; Expenses
    	
13
    
	
5.9.
    	
Remedies
    	
13
    
	
5.10.
    	
Severability
    	
13
    
	
5.11.
    	
Assignment
    	
14
    
	
5.12.
    	
Shareholder Capacity
    	
14
    

 

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VOTING AGREEMENT

 

VOTING AGREEMENT, dated as of October 23, 2013 (this “Agreement”), by and among R. R. Donnelley & Sons Company, a Delaware corporation (“Parent”), Joe R. Davis (the “Shareholder”) and Consolidated Graphics, Inc., a Texas corporation (the “Company”).  Capitalized terms used but not otherwise defined herein shall have the meanings ascribed to such terms in the Merger Agreement (as hereinafter defined).

 

W I T N E S S E T H:

 

WHEREAS, concurrently with the execution of this Agreement, Parent, Hunter Merger Sub, Inc., a Texas corporation and a wholly owned Subsidiary of Parent (“Merger Sub”), and the Company are entering into an Agreement and Plan of Merger, dated as of the date hereof (as amended from time to time, the “Merger Agreement”), pursuant to which, on the terms and subject to the conditions set forth therein, Merger Sub will be merged with and into the Company (the “Merger”), and each outstanding Share will be converted into the right to receive the Per Share Merger Consideration;

 

WHEREAS, as of the date hereof, the Shareholder is the record and Beneficial Owner (as hereinafter defined) of, and has sole investment authority over, in the aggregate, 2,479,121 issued and outstanding Shares;

 

WHEREAS, the Shareholder has been provided with the execution copy of the Merger Agreement and acknowledges that he will benefit directly and substantially from the consummation of the transactions contemplated thereby; and

 

WHEREAS, as a material condition and inducement to the willingness of Parent and Merger Sub to enter into the Merger Agreement, Parent has required that the Shareholder agree, and the Shareholder, in order to induce Parent and Merger Sub to enter into the Merger Agreement and in consideration of the substantial expenses incurred and to be incurred by Parent and Merger Sub in connection therewith, has agreed, to enter into this Agreement and abide by the covenants and obligations with respect to the Covered Shares (as hereinafter defined) and certain other matters as set forth herein.

 

NOW THEREFORE, in consideration of the foregoing and the representations, warranties, covenants and agreements set forth herein, and for other good and valuable consideration the receipt and adequacy of which are hereby acknowledged, the parties hereto, intending to be legally bound, hereby agree as follows:

 

ARTICLE I

 

General

 

1.1.                            Defined Terms.  The following capitalized terms, as used in this Agreement, shall have the meanings set forth below.

 

“Beneficial Owner” shall be interpreted in accordance with the term “beneficial owner” as defined in Rule 13d-3 adopted by the Securities and Exchange Commission under the

 

 

Securities Exchange Act of 1934, as amended; provided that for purposes of determining Beneficial Ownership, a Person shall be deemed to be the Beneficial Owner of any securities which such Person has, at any time during the term of this Agreement, the right to acquire pursuant to any agreement, arrangement or understanding or upon the exercise of conversion rights, exchange rights, warrants or options, or otherwise (irrespective of whether the right to acquire such securities is exercisable immediately or only after the passage of time, including the passage of time in excess of sixty (60) days, the satisfaction of any conditions, the occurrence of any event or any combination of the foregoing).  The terms “Beneficial Ownership,” “Beneficially Own” and “Beneficially Owned” shall have a correlative meaning.

 

“Covered Shares” means, with respect to the Shareholder, the Shareholder’s Existing Shares, together with any Shares or other voting capital stock of the Company of which the Shareholder acquires Beneficial Ownership on or after the date hereof.

 

“Existing Shares” means, with respect to the Shareholder, the number of Shares Beneficially Owned and/or owned of record by the Shareholder, as set forth in the recitals.

 

“Transfer” means, directly or indirectly, to sell, transfer, assign, deposit, pledge, encumber (including creating or incurring any Lien upon), hypothecate or similarly dispose of (including by gift, merger, consolidation by operation of Law or otherwise (including by conversion into securities or other consideration), either voluntarily or involuntarily, or by tendering into any tender or exchange offer), or to enter into any swap or other arrangement that transfers to another, in whole or in part, any of the economic consequences of ownership or any contract, option or other arrangement or understanding with respect to the voting of or sale, transfer, assignment, deposit, pledge, encumbrance (including the creation or incurment of any Lien upon), hypothecation or similar disposition of (including by gift, merger, consolidation by operation of Law or otherwise (including by conversion into securities or other consideration), either voluntarily or involuntarily, or by tendering into any tender or exchange offer); provided that, from and after the time the Company Stockholder Approval is obtained, the term “Transfer” shall not be deemed to include or prohibit any hedging transactions (including puts and options) that the Shareholder may enter into with respect to any Covered Shares in compliance with applicable Laws to the extent the Shareholder maintains exclusive Beneficial Ownership of the Covered Shares that are the subject of such hedging transactions.

 

ARTICLE II

 

Voting

 

2.1.                            Agreement to Vote.  Subject to the terms of this Agreement, the Shareholder hereby irrevocably and unconditionally agrees that during the term of this Agreement, at the Stockholders’ Meeting and at any other meeting of the holders of Shares, however called, including any adjournment or postponement thereof, and in connection with any written consent of the holders of Shares, or in any other circumstance upon which a vote, consent or other approval of the holders of Shares is sought, the Shareholder shall, in each case, to the fullest extent that such matters are submitted for the vote, written consent or approval of the Shareholder and that the Covered Shares are entitled to vote thereon or consent thereto:

 

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(a)                                 appear at any such meeting or otherwise cause the Covered Shares to be counted as present thereat for purposes of calculating a quorum; and

 

(b)                                 vote (or cause to be voted), in person or by proxy, or deliver (or cause to be delivered) a written consent covering, all of the Covered Shares (A) in favor of the approval of the Merger Agreement and any related proposal in furtherance thereof and/or in furtherance of effecting the Merger and the other Transactions; (B) against any action or agreement submitted for the vote or written consent of the holders of Shares that would result in a breach in any material respect of any covenant, representation or warranty or other obligation or agreement of the Company under the Merger Agreement or that is otherwise in opposition to, or competitive or inconsistent with, the Merger or any of the other Transactions; (C) against any extraordinary corporate transaction (other than the Merger), such as a merger, consolidation, business combination, tender or exchange offer, reorganization, recapitalization, liquidation, sale or transfer of all or substantially all of the assets or securities of the Company and any of the Company Subsidiaries (other than pursuant to the Merger) or any other Alternative Proposal and (D) to the extent reasonably requested by Parent, against any other action, agreement or transaction submitted for the vote or written consent of the holders of Shares that could reasonably be expected to impede, interfere with, delay, postpone, discourage, frustrate the purposes of or adversely affect the consummation of the Merger and the other Transactions (including the economic benefits to Parent and Merger Sub of the Merger and the other Transactions) (the matters set forth in clauses (A)-(D) of this Section 2.1(b), the “Section 2.1(b) Matters”).

 

Any such vote shall be cast (or consent shall be given) by the Shareholder in accordance with such procedures relating thereto as will ensure that he is duly counted, including for purposes of determining whether a quorum is present.  This Section 2.1 shall not require the Shareholder to exercise any warrants or options (if any) to acquire Shares or other capital stock of the Company.  The Shareholder shall provide Parent with at least five (5) Business Days prior written notice prior to signing any action proposed to be taken by written consent with respect to any Covered Shares.  The obligations of the Shareholder under this Agreement, including this Article II, shall apply whether or not an Adverse Recommendation Change has occurred.

 

2.2.                            No Inconsistent Agreements.  The Shareholder hereby covenants and agrees that, other than this Agreement, he (a) has not entered into, and shall not enter into at any time while this Agreement is in effect, any voting arrangement, whether by proxy, consent, power of attorney, voting agreement, voting trust or otherwise, with respect to the Covered Shares with respect to any Section 2.1(b) Matters, (b) has not granted, and shall not grant at any time while this Agreement is in effect, a proxy, consent or power of attorney with respect to the Covered Shares with respect to any of the Section 2.1(b) Matters and (c) has not taken and shall not take any action that would have the effect of preventing or disabling the Shareholder from performing any of his obligations under this Agreement.

 

2.3.                            Other Matters.  The Shareholder shall not be restricted in any way from voting in favor of, voting against or abstaining from voting with respect to any matter presented to the holders of Shares, in each case except with respect to Section 2.1(b) Matters.

 

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ARTICLE III

 

Representations and Warranties

 

3.1.                            Representations and Warranties of the Shareholder.  The Shareholder hereby represents and warrants to Parent as follows:

 

(a)                                 Due Authority; Validity of Agreement.  The Shareholder has all requisite legal right, power, authority and capacity to execute and deliver this Agreement and to perform his obligations hereunder.  This Agreement has been duly executed and delivered by the Shareholder and, assuming this Agreement constitutes a valid and binding obligation of the other parties hereto, constitutes a legal, valid and binding obligation of the Shareholder, enforceable against him in accordance with its terms, subject to the Bankruptcy and Equity Exception.

 

(b)                                 Ownership.  The Shareholder’s Existing Shares are, and from the date hereof through and at Closing will be, Beneficially Owned and owned of record by the Shareholder.  Any Covered Shares acquired by the Shareholder after the date hereof and prior to the Closing will be Beneficially Owned and owned of record by the Shareholder from the date of such acquisition through and at Closing.  As of the date hereof, the Shareholder’s Existing Shares constitute all of the Shares Beneficially Owned or owned of record by the Shareholder.  The Shareholder has and will have at all times through the Effective Time the sole right and power (i) over the voting and disposition of the Covered Shares and (ii) to agree to all of the matters set forth in this Agreement, in each case, with respect to all of the Covered Shares, with no limitations, qualifications or restrictions on such rights or powers.  The Shareholder has good and valid legal title to the Existing Shares free and clear of any Liens whatsoever with respect to the ownership, Transfer or voting of the Existing Shares, except for any such Liens and restrictions arising hereunder and except for Transfer restrictions of general applicability under the Securities Act of 1933, as amended, and state “blue sky” Laws.

 

(c)                                  No Violation.  The execution, delivery and performance of this Agreement by the Shareholder do not and will not (whether with or without notice or lapse of time, or both) (i) breach, violate, result in the loss of any benefit under, constitute a default under, result in the termination of or a right of termination or cancellation under, or result in the creation, acceleration or change of any rights or obligations of any party or the creation of any Lien upon any of the Covered Shares under, any Contract that is binding on the Shareholder or any of his properties or assets, or (ii) violate any Laws applicable to the Shareholder or by which any of the Shareholder’s assets or properties is bound, except for any of the foregoing as would not, individually or in the aggregate, impair the ability of the Shareholder to consummate the transactions contemplated hereby.

 

(d)                                 Consents and Approvals.  Other than filings, permits, authorizations, consents and approvals as may be required under securities Laws and antitrust or competition Laws (including the HSR Act), the execution and delivery of this Agreement by the Shareholder do not, and the performance by the Shareholder of his obligations under this Agreement will not, require the Shareholder to obtain any consent, approval, authorization or permit of, or to make any filing or registration with or declaration or notification to, any Governmental Entity, except where the failure to obtain such consents, approvals, authorizations or permits, or to make such

 

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filings, registrations, declarations or notifications, would not, individually or in the aggregate, impair the ability of the Shareholder to consummate the transactions contemplated hereby.

 

(e)                                  Absence of Litigation.  As of the date hereof, to the Shareholder’s actual knowledge, there is no Legal Proceeding or Judgment in effect, pending or threatened against the Shareholder before or by any Governmental Entity that would, individually or in the aggregate, impair the ability of the Shareholder to consummate the transactions contemplated hereby.

 

(f)                                   Reliance by Parent and Merger Sub.  The Shareholder understands and acknowledges that Parent and Merger Sub are entering into the Merger Agreement in reliance upon the Shareholder’s execution and delivery of this Agreement and the representations and warranties, covenants and other agreements of the Shareholder contained herein.

 

(g)                                  Shareholder Has Adequate Information.  The Shareholder acknowledges that he is a sophisticated investor with respect to his Covered Shares and has adequate information concerning the business and financial condition of the Company to make an informed decision regarding the transactions contemplated by this Agreement and has, independently and without reliance upon any of Parent, Merger Sub or the Company and based on such information as the Shareholder has deemed appropriate, made his own analysis and decision to enter into this Agreement.  The Shareholder acknowledges that none of Parent, Merger Sub or the Company has made or is making any representation or warranty to the Shareholder, whether express or implied, of any kind or character except as expressly set forth in this Agreement.

 

ARTICLE IV

 

Other Covenants

 

4.1.                            Prohibition on Transfers, Other Actions.  The Shareholder hereby agrees not to (i) Transfer any of the Covered Shares, Beneficial Ownership thereof or any other interest specifically therein (including by tendering into any tender or exchange offer by any Person other than Parent or any of its Subsidiaries), (ii) enter into any agreement, arrangement or understanding with any Person (other than Parent or Merger Sub), or take any other action that would prevent or disable the Shareholder from performing his, her or its obligations under this Agreement or (iii) take any action that would result in the Shareholder not having the legal power, authority or right to comply with and perform his, her or its covenants under this Agreement; provided that the Shareholder may Transfer Covered Shares (i) in the form of a gift to a charitable organization for philanthropic purposes or (ii) to trusts or other entities controlled by the Shareholder for estate planning purposes so long as, in each such case, the Shareholder maintains exclusive voting power over such Covered Shares and the recipient of such Covered Shares executes and delivers a joinder to this Agreement whereby such recipient becomes bound by the terms of this Agreement; and provided, further, that from and after the time the Company Stockholder Approval is obtained, the Shareholder may Transfer Covered Shares in such amounts as are necessary for the withholding of Taxes with respect to the settlement of any Company Stock Options or other awards under the Company Equity Plans.  Any purported Transfer of the Covered Shares in violation of this Section 4.1 shall be null and void ab initio.  Promptly following the date hereof, (i) the Shareholder and Parent shall deliver joint written

 

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instructions to the Company and the Company’s transfer agent stating that while this Agreement is in effect, the Existing Shares cannot be Transferred in any manner without the prior written consent of Parent and (ii) the Company shall (or shall cause the Company’s transfer agent to) comply with the requirements of § 3.202, § 3.205 and § 6.252 of the TBOC, including keeping a copy of this Agreement at the Company’s principal executive offices or registered office and allowing any owner of the Company to examine this Agreement in the same manner as such owner is entitled to examine the books and records of the Company, and causing this Agreement to be noted conspicuously on the certificates for the Existing Shares or noting this Agreement in a notice sent by or on behalf of the Company in accordance with § 3.205 of the TBOC if the Existing Shares are not represented by Certificates.  If any Covered Shares are acquired after the date hereof by the Shareholder, the foregoing instructions shall be delivered with respect to such newly acquired Covered Shares upon acquisition of such Covered Shares.

 

4.2.                            Additional Shares.  In the event of a stock split, stock dividend or distribution, or any change in the Shares by reason of any split-up, reverse stock split, recapitalization, combination, reclassification, exchange of Shares or the like, the terms “Existing Shares” and “Covered Shares” shall be deemed to refer to and include such Shares as well as all such stock splits, dividends and distributions and any securities into which or for which any or all of such Shares may be changed or exchanged or which are received in such transaction.

 

4.3.                            No Solicitation.  The Shareholder hereby agrees that during the term of this Agreement, he shall not, and he shall instruct and use his reasonable best efforts to cause his controlled Affiliates and Representatives not to: (i) initiate, solicit, seek, encourage or knowingly facilitate any inquiries or the making of any proposal or offer that constitutes, or could reasonably be expected to lead to, any Alternative Proposal, (ii) make or participate in, directly or indirectly, a “solicitation” of “proxies” (as such terms are used in the rules of the SEC) or powers of attorney or similar rights to vote, or seek to advise or influence any Person with respect to the voting of, any Shares in connection with any vote or other action on any of the Section 2.1(b) Matters, other than to recommend that the holders of Shares vote in favor of the approval of the Merger Agreement, (iii) furnish any information regarding the Company or any of the Company Subsidiaries to any Person (other than Parent and Parent’s or the Company’s Representatives acting in their capacity as such) in connection with or in response to an Alternative Proposal or any proposal, inquiry or offer that could reasonably be expected to lead to an Alternative Proposal, (iv) engage in, continue or otherwise participate in any discussions or negotiations regarding, or provide any non-public information or data to any Person relating to, any Alternative Proposal, (v) approve, endorse, submit for the consideration of the holders of Shares or recommend any Alternative Proposal or any proposal, inquiry or offer that could reasonably be expected to lead to an Alternative Proposal, (vi) make or authorize any public statement, recommendation or solicitation in support of any Alternative Proposal or any proposal, inquiry or offer that could reasonably be expected to lead to an Alternative Proposal, (vii) enter into any letter of intent or agreement in principle or any Contract providing for, relating to or in connection with any Alternative Proposal or any proposal, inquiry or offer that could reasonably be expected to lead to an Alternative Proposal or (viii) otherwise facilitate knowingly any effort or attempt to make an Alternative Proposal, in each case except to the extent that at such time the Company is permitted to take such action pursuant to the Merger Agreement (but subject to the same restrictions applicable to the Company with respect to the

 

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taking of such action under the Merger Agreement).  Immediately following the execution hereof, the Shareholder shall, and shall instruct and use his reasonable best efforts to cause his controlled Affiliates and Representatives to, immediately cease all existing activities, discussions or negotiations with any Person conducted heretofore with respect to any Alternative Proposal, or any proposal, inquiry or offer that could reasonably be expected to lead to an Acquisition Proposal.  For avoidance of doubt, the Shareholder shall have no obligation with respect to and shall have no responsibility hereunder with respect to any action taken or omission by the Company or any of the Company Subsidiaries or any of their respective Representatives.

 

4.4.                            Notice of Acquisitions.  The Shareholder hereby agrees to notify Parent in writing as promptly as practicable (and in any event within one business day following such acquisition by the Shareholder) of the number of any additional Shares or other securities of the Company of which the Shareholder acquires Beneficial Ownership on or after the date hereof.

 

4.5.                            Release.  From and after the Effective Time, the Shareholder hereby, on behalf of the Shareholder and his successors and assigns, unconditionally, irrevocably, finally and forever releases, waives and discharges each of Parent, Merger Sub, the Company and their respective Subsidiaries, and each of their respective successors, assigns and Representatives, past and present, from each and every past and present agreement, commitment, indebtedness, obligation, dispute, claim, controversy, action, demand, judgment, damage and accounting of every nature and kind whatsoever, known or unknown, suspected or unsuspected (each, a “Claim” and collectively, the “Claims”) that has arisen or arises directly out of the Shareholder’s interest as a holder of Shares or a shareholder of any of the Company Subsidiaries through the Effective Time, including Claims relating to, in connection with or arising from the Merger Agreement, the Merger or the other Transactions, the due authorization and execution and fairness (to the Shareholder and otherwise) of the Merger Agreement, the Merger and the other Transactions and the amount, allocation and distribution of the Per Share Merger Consideration, as applicable, in each case, other than the right to receive the Per Share Stock Option Consideration and the Per Share Merger Consideration in accordance with the terms and subject to the conditions of the Merger Agreement; provided, however, that notwithstanding the foregoing, the Shareholder does not release or waive any rights or Claims of the Shareholder arising out of or pursuant to: (i) this Agreement; (ii) Section 6.8 (Indemnification and Insurance) of the Merger Agreement; (iii) any D&O policies or articles of incorporation/formation, bylaws or other governing documents of the Company or the Company Subsidiaries providing indemnification or D&O insurance rights to the Shareholder; (iv) the Indemnification Agreement dated October 14, 2013 between the Shareholder and the Company; (v) the Amended and Restated Employment Agreement dated May 22, 2008, as amended, between the Shareholder and the Company; (vi) the Consulting Agreement to be entered into as contemplated in Section 4.11 below; and (vii) the Annual Incentive Award Agreement dated May 23, 2013 between the Company and the Shareholder.  For the avoidance of doubt, the waiver contained in this Section 4.5 shall be absolute and perpetual, and shall not have any effect until the Effective Time.

 

4.6.                            Non-Compete.

 

(a)                                 The Shareholder hereby agrees that, for a period of three (3) years after the Closing Date, he shall not, directly or indirectly, on behalf of himself or any other Person: (i) engage as a stockholder, employee, director, officer, consultant or otherwise in or of a business

 

7

 

that sells or otherwise provides printing and/or print-related services (the “Business”), in the U.S. or, with respect to any geographic area outside of the U.S., only in those geographic areas in which the Surviving Corporation and its Subsidiaries conduct operations as of the Closing Date (the “Specified Territory”); provided that the foregoing restriction shall not be deemed to apply to the Shareholder’s passive ownership of securities representing not more than 1% of the outstanding voting power of any entity the equity securities of which are listed on a national securities exchange, except in the case of Parent, in which case the Shareholder’s ownership shall not be restricted; (ii) render financial assistance to or receive any economic benefit from any Person that engages or could be reasonably expected to engage in the Business in the Specified Territory, other than Parent and its Affiliates, including the Surviving Corporation and its Subsidiaries; (iii) (x) induce or solicit any customer, supplier or agent of the Company or any of the Company Subsidiaries as of the Closing Date, to terminate or curtail any existing business or commercial relationship with the Surviving Corporation or any of its Subsidiaries or with Parent or any of its other Affiliates or (y) otherwise interfere with the relationship of Parent or any of its Affiliates, including the Surviving Corporation and its Subsidiaries, with any such customer, supplier or agent; and (iv) solicit, induce, recruit, offer employment to, hire or take any other action intended to have the effect of causing any Person who was an employee of the Company or any of the Company Subsidiaries as of the date of this Agreement or as of the Closing Date to terminate his or her employment.

 

(b)                                 The parties acknowledge and agree that the restrictions contained in this Section 4.6 are reasonable (including as to scope, time and area), not unduly restrictive of the Shareholder’s rights, supported by adequate consideration and necessary protection of the immediate interests of Parent, and any violation of these restrictions would cause immediate and irreparable injury to Parent for which there would be no adequate monetary damages.  In the event of a breach or a threatened breach by the Shareholder of these restrictions, the Shareholder acknowledges and agrees that Parent will be entitled to apply to any court of competent jurisdiction for an injunction restraining the Shareholder from such breach or threatened breach, in addition to any other remedy to which Parent may be entitled at law or in equity without the requirement of posting bond.  In addition, the parties acknowledge and agree that the restrictions contained in this Section 4.6 are essential elements of the Merger Agreement and that but for these restrictions, Parent would not have agreed to enter into the Merger Agreement and the transactions contemplated thereby, and the Shareholder agrees not to challenge the validity or importance of the restrictions contained in this Section 4.6.  The covenants contained in this Section 4.6 shall be deemed to apply to each State of the United States of America, each county within each State of the United States of America, each foreign country and each other geographic area separately, not collectively, and shall be severable as to each such State of the United States of America, county, each foreign country or other geographic area.  If any court determines that any provision of this Section 4.6 is unenforceable, such court will have the power to reduce the duration or scope of such provision, as the case may be, or terminate such provision until, in such reduced form, such provision shall be enforceable.  It is the intention of the parties hereto that the foregoing restrictions shall not be terminated, unless so terminated by a court, but shall be deemed amended to the extent required to render them valid and enforceable, such amendment to apply only with respect to the operation of this Section 4.6 in the jurisdiction of the court that has made the adjudication.

 

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4.7.                            Waiver of Appraisal Rights.  The Shareholder hereby unconditionally waives, and agrees not to exercise, assert or perfect, any rights of appraisal or any dissenters’ rights that the Shareholder may have (whether under applicable Law or otherwise) or could potentially have or acquire in connection with the Merger.

 

4.8.                            Further Assurances.  From time to time, at Parent’s reasonable request, the Shareholder shall execute and deliver such additional documents and take all such further reasonable action as may be necessary to effectuate the intent of this Agreement.

 

4.9.                            Company Agreement.  The Company hereby acknowledges the restrictions on Transfers of Covered Shares contained in Section 4.1.  The Company agrees (i) not to register the Transfer of any certificated or uncertificated interest representing any Covered Shares without the prior written consent of Parent and (ii) to take all such other actions reasonably necessary in furtherance of the Shareholder’s commitments hereunder, including (to the extent reasonably within the Company’s power) prohibiting or refusing to give effect to any action in violation hereof.

 

4.10.                     Public Announcement.  The initial press release regarding the Merger shall be a joint press release of Parent and the Company, and thereafter, so long as the Merger Agreement is in effect, none of the Shareholder, the Company, Parent or any of their respective Affiliates shall issue or cause the publication of any press release or other announcement with respect to this Agreement and the transactions contemplated hereby or make any filings with any third party or Governmental Entity without the prior written approval of the other parties, except as may be required by Law or by any listing agreement with a securities exchange or by the request of any Governmental Entity (with respect to which the disclosing party shall not be required to consult with the non-disclosing party but shall provide prior notice to the non-disclosing party of any such public announcements or filings), it being understood and agreed that the Shareholder hereby authorizes Parent and the Company to disclose in any reports required to be filed under the Securities Act or the Exchange Act, including any report on Form 8-K or any Schedule 13D, if applicable, and any other applicable Laws, this Agreement and the information contained herein.

 

4.11.                     Consulting Agreement.  In consideration of the Shareholder’s agreement to abide by the terms of Section 4.5 and 4.6 above, Parent shall engage the Shareholder as a consultant to Parent for a term of three (3) years from the Effective Time, for a consulting fee of $200,000 per annum, for no more than ten (10) hours per week, and on such other terms as the parties may mutually agree.  The parties agree to negotiate the terms thereof in good faith and enter into such agreement as soon as reasonably practicable following the date hereof.

 

ARTICLE V

 

Miscellaneous

 

5.1.                            Termination.  This Agreement shall remain in effect until the earliest to occur of (i) the Effective Time, (ii) the termination of the Merger Agreement in accordance with its terms and (iii) the amendment or modification of the Merger Agreement without the written consent of the Shareholder to (x) decrease the amount of the Per Share Merger Consideration (it

 

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being understood that any changes in the value of Parent Shares shall not constitute a decrease in the Per Share Merger Consideration) or (y) change the mix of cash and stock that constitutes the Per Share Merger Consideration.  Upon the occurrence of any such event, this Agreement (other than Section 5.8(b)) shall automatically terminate without any notice or further action from the parties hereto and be of no further force or effect.

 

5.2.                            No Ownership Interest.  Nothing contained in this Agreement shall be deemed to vest in Parent any direct or indirect ownership or incidence of ownership of or with respect to any Covered Shares, except as otherwise provided herein.  All rights, ownership and economic benefits of and relating to the Covered Shares shall remain vested in and belong to the Shareholder, and Parent shall have no authority to direct the Shareholder in the voting or disposition of any of the Covered Shares, except as otherwise provided herein.

 

5.3.                            Notices.

 

(a)                                 Any and all notices or other communications or deliveries required or permitted to be provided hereunder shall be in writing and shall be deemed given and effective on the earliest of (i) the date of transmission, if such notice or communication is delivered via facsimile, at the facsimile telephone number specified in this Section 5.3, prior to 5:00 p.m., New York City time, on a Business Day, (ii) the Business Day after the date of transmission, if such notice or communication is delivered via facsimile at the facsimile telephone number specified in this Section 5.3 (x) at or after 5:00 p.m., New York City time, on a Business Day or (y) on a day that is not a Business Day, (iii) when received, if sent by nationally recognized overnight courier service, or (iv) upon actual receipt by the party to whom such notice is required or permitted to be given.  The address for such notices and communications (unless changed by the applicable party by like notice) shall be as follows:

 

(i)                                     if to Parent, to:

 

R. R. Donnelley & Sons Company

111 South Wacker Drive

Chicago, Illinois 60606

Attention: General Counsel

Facsimile No.: (312) 326-7620

 

With a copy (which shall not constitute notice) to:

 

Sullivan & Cromwell LLP

125 Broad Street

New York, New York 10004

Attention:                                         Audra D. Cohen

Krishna Veeraraghavan

Facsimile No.: (212) 558-3588

 

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(ii)                                  if to the Company, to:

 

Consolidated Graphics, Inc.

5858 Westheimer Rd.

Suite 200

Houston, Texas 77057

Attention: Jon C. Biro

Facsimile No.: (713) 787-5013

 

With a copy (which shall not constitute notice) to:

 

Haynes and Boone, LLP

1221 McKinney, Suite 2100

Houston, Texas 77010

Attention:  Ricardo Garcia-Moreno

Facsimile No.: (713) 236-5432

 

(iii)                               if to the Shareholder, to:

 

Joe R. Davis
 5858 Westheimer Rd.

Suite 200

Houston, Texas 77057

 

Facsimile No.: (713) 787-5013

 

(b)                                 A copy of all notices and other communications from Parent or Merger Sub to the Company (and vice versa) under the Merger Agreement shall be sent at the same time to the Shareholder at the above address, with a copy to its counsel at the above address, and the provisions of this Section 5.3 shall apply to such notices and communications; provided that no failure to provide such notice to the Shareholder shall relieve the Shareholder of its obligations under this Agreement.

 

5.4.                            Interpretation.  (a) The terms and provisions of this Agreement represent the results of negotiations among the parties hereto, each of which has been represented by counsel of its own choosing, and none of which has acted under duress or compulsion, whether legal, economic or otherwise.  Accordingly, the terms and provisions of this Agreement shall be interpreted and construed in accordance with their usual and customary meanings, and each of the parties hereto hereby waives the application in connection with the interpretation and construction of this Agreement of any Law to the effect that ambiguous or conflicting terms or provisions contained in this Agreement shall be interpreted or construed against the party whose attorney prepared the executed draft or any earlier draft of this Agreement.

 

(b)                                 All references in this Agreement to Sections and Articles without further specification are to Sections and Articles of this Agreement.

 

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(c)                                  The Table of Contents and the captions in this Agreement are for convenience only and shall not in any way affect the meaning, interpretation or construction of any provisions of this Agreement.

 

(d)                                 The word “including” means “including but not limited to”.

 

(e)                                  The definitions contained in this Agreement are applicable to the singular as well as the plural forms of such terms and to the masculine as well as the feminine and neutral genders of such term.

 

(f)                                   Time is of the essence in the performance of the parties’ respective obligations under this Agreement.

 

5.5.                            Counterparts.  This Agreement may be executed in two (2) or more counterparts, all of which shall be considered one and the same agreement, and shall become effective when each party has received counterparts signed by each of the other parties, it being understood and agreed that delivery of a signed counterpart of this Agreement by facsimile transmission or by email shall constitute valid and sufficient delivery thereof.

 

5.6.                            Entire Agreement.  This Agreement and, to the extent referenced herein, the Merger Agreement, together with the several agreements and other documents and instruments referred to herein or therein or annexed hereto or thereto, (i) constitute the entire agreement and supersede all prior agreements and understandings, both written and oral, among the parties with respect to the subject matter of this Agreement, and there are no representations, understandings or agreements relating to the subject matter hereof that are not fully expressed in this Agreement and the documents and instruments executed and delivered in connection herewith and (ii) are not intended to confer upon any Person other than the parties hereto any rights or remedies whatsoever.

 

5.7.                            Governing Law; Submission to Jurisdiction; Waivers.

 

(a)                                 THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS, WITHOUT REGARD TO THE CONFLICTS OF LAWS PROVISIONS THEREOF OR OF ANY OTHER JURISDICTION.

 

(b)                                 Except as set forth in Section 4.6, each of the Shareholder, the Company and Parent irrevocably agrees that any legal action, suit or proceeding arising out of or relating to this Agreement or any of the transactions contemplated hereby shall be brought and determined exclusively in the courts of Harris County in the State of Texas or, if under applicable Law exclusive jurisdiction over the matter is vested in the federal courts, in any federal court located in Harris County in the State of Texas, and each of the Shareholder, the Company and Parent hereby irrevocably submits with regard to any such action or proceeding for itself and in respect to its property, generally and unconditionally, to the exclusive jurisdiction of the aforesaid courts.  Except as set forth in Section 4.6, each of the Shareholder, the Company and Parent hereby irrevocably waives, and agrees not to assert, by way of motion, as a defense, counterclaim or otherwise, in any such action, suit or proceeding, (i) any claim that it is not personally subject to the jurisdiction of the above-named courts for any reason other than the

 

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failure to lawfully serve process, (ii) that it or its property is exempt or immune from jurisdiction of such court or from any legal process commenced in such courts (whether through service of notice, attachment prior to judgment, attachment in aid of execution of judgment, execution of judgment or otherwise) and (iii) that (x) such action, suit or proceeding in any such court is brought in an inconvenient forum, (y) the venue of such action, suit or proceeding is improper and (z) this Agreement, the transactions contemplated hereby or the subject matter hereof or thereof, may not be enforced in or by such courts.

 

(c)                                  Each party hereto acknowledges and agrees that any CONTROVERSY WHICH MAY ARISE UNDER THIS AGREEMENT IS LIKELY TO INVOLVE COMPLICATED AND DIFFICULT ISSUES AND, THEREFORE, EACH PARTY HERETO IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LEGAL ACTION, SUIT OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OF THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT.  EACH PARTY HERETO CERTIFIES AND ACKNOWLEDGES THAT (I) NO REPRESENTATIVE OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT SEEK TO ENFORCE THE FOREGOING WAIVER IN THE EVENT OF ANY SUCH LEGAL ACTION, SUIT OR PROCEEDING, (II) SUCH PARTY HAS CONSIDERED THE IMPLICATIONS OF THIS WAIVER, (III) SUCH PARTY MAKES THIS WAIVER VOLUNTARILY AND (IV) SUCH PARTY HAS BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION 5.7(c).

 

5.8.                            Amendment; Waiver; Expenses.

 

(a)                                 This Agreement may not be amended except by an instrument in writing signed by each of the parties hereto.  Each party hereto may waive any right of such party hereunder by an instrument in writing signed by such party and delivered to the other parties hereto.

 

(b)                                 The Shareholder shall be responsible for all of his expenses in connection with this Agreement and the transactions contemplated hereby, and shall not seek reimbursement from the Company with respect thereto.

 

5.9.                            Remedies.  The parties hereto agree that irreparable damage would occur in the event any of the provisions of this Agreement were not performed in accordance with the terms hereof or were otherwise breached.  It is accordingly agreed that, subject to the provisions of this Section 5.9, the parties hereto shall be entitled to an injunction or injunctions to prevent breaches of this Agreement and to enforce specifically the terms and provisions of this Agreement.  This right is in addition to any other remedy to which such party is entitled at law or in equity, including monetary damages.  The parties further agree not to assert that a remedy of specific enforcement is unenforceable, invalid or contrary to law.

 

5.10.                     Severability.  If any term, provision, covenant or restriction of this Agreement is held by a court of competent jurisdiction or other authority to be invalid, void, unenforceable or against its regulatory policy, the remainder of the terms, provisions, covenants

 

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and restrictions of this Agreement shall nevertheless remain in full force and effect and shall in no way be affected, impaired or invalidated.  Upon such determination that any term, provision, covenant or restriction is invalid, illegal, void, unenforceable or against regulatory policy, the parties hereto shall negotiate in good faith to modify this Agreement so as to effect the original intent of the parties hereto as closely as possible in an acceptable manner in order that the transactions contemplated hereby are consummated as originally contemplated to the greatest extent possible.

 

5.11.                     Assignment.  Neither this Agreement nor any of the rights, interests or obligations hereunder may be assigned by any of the parties hereto, in whole or in part (whether by operation of law or otherwise), without the prior written consent of the other parties hereto.  Subject to the preceding sentence, this Agreement shall be binding upon, inure to the benefit of and be enforceable by the parties and their respective successors and permitted assigns.  Any purported assignment in violation of the provisions of this Agreement shall be null and void ab initio.

 

5.12.                     Shareholder Capacity.  The Shareholder is entering into this Agreement solely in his, her or its capacity as the Beneficial Owner of Shares, and, if applicable, not the Shareholder’s capacity as a director or officer of the Company or any of the Company Subsidiaries.  Accordingly, notwithstanding anything to the contrary contained in this Agreement, nothing herein shall in any way (a) restrict or limit the Shareholder from taking (or omitting to take) any action in his or her capacity as a director or officer of the Company taken in order to fulfill his or her fiduciary obligations under applicable Law or (b) restrict or limit (or require the Shareholder to attempt to restrict or limit) the Shareholder from acting in such capacity or voting in such capacity in the good faith exercise of his or her fiduciary duties under applicable Law.  Notwithstanding the foregoing, the parties hereto acknowledge that the directors and officers of the Company are restricted in the manner set forth in the Merger Agreement.

 

[Signature page follows]

 

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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be signed (where applicable, by their respective officers or other authorized Person thereunto duly authorized) as of the date first written above.

 

 

	
 
    	
R.   R. DONNELLEY & SONS COMPANY
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/   Daniel N. Leib
    
	
 
    	
 
    	
Name:
    	
Daniel   N. Leib
    
	
 
    	
 
    	
Title:
    	
Executive   Vice President and
    
	
 
    	
 
    	
 
    	
Chief   Financial Officer
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
JOE   R. DAVIS
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
/s/   Joe R. Davis
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
CONSOLIDATED   GRAPHICS, INC.
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/   Jon C. Biro
    
	
 
    	
 
    	
Name:
    	
Jon   C. Biro
    
	
 
    	
 
    	
Title:
    	
Executive   Vice President, Chief Financial and Accounting Officer and Secretary

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