<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE
ACT OF 1934
<TABLE>
<S> <C>
FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 28, 1997 COMMISSION FILE NUMBER 1-11802
</TABLE>
[LOGO]
WORLD COLOR PRESS, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
<TABLE>
<S> <C>
DELAWARE 37-1167902
(State or other jurisdiction of (IRS Employer Identification Number)
incorporation or organization)
THE MILL, 340 PEMBERWICK ROAD 06831
GREENWICH, CONNECTICUT (Zip Code)
(Address of principal executive offices)
</TABLE>
203-532-4200
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. YES [X] No [ ]
At November 7, 1997, 38,356,531 shares of the registrant's common stock,
$.01 par value, were outstanding.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
WORLD COLOR PRESS, INC.
QUARTERLY REPORT ON FORM 10-Q
FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 28, 1997
INDEX
<TABLE>
<CAPTION>
PAGE
---------
<S> <C>
PART I. FINANCIAL INFORMATION
Condensed Consolidated Balance Sheets as of September 28, 1997 and December 29, 1996.................. 3
Condensed Consolidated Statements of Operations for the Three and Nine Months Ended September 28, 1997
and September 29, 1996.............................................................................. 4
Condensed Consolidated Statements of Cash Flows for the Nine Months Ended September 28, 1997 and
September 29, 1996.................................................................................. 5
Notes to Condensed Consolidated Financial Statements.................................................. 6-7
Management's Discussion and Analysis of Financial Condition and Results of Operations................. 8-10
PART II. OTHER INFORMATION.............................................................................. 11-12
</TABLE>
2
<PAGE>
WORLD COLOR PRESS, INC.
PART I. FINANCIAL INFORMATION
CONDENSED CONSOLIDATED BALANCE SHEETS
SEPTEMBER 28, 1997 AND DECEMBER 29, 1996
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
SEPTEMBER 28, DECEMBER 29,
1997 1996
------------- ------------
<S> <C> <C>
(UNAUDITED) (NOTE)
ASSETS
CURRENT ASSETS:
Cash and cash equivalents......................................................... $ 24,202 $ 33,182
Accounts receivable-net........................................................... 204,722 311,478
Inventories....................................................................... 211,728 140,160
Deferred income taxes............................................................. 22,781 32,944
Other............................................................................. 39,708 24,843
------------- ------------
Total current assets.......................................................... 503,141 542,607
------------- ------------
Property, plant and equipment, at cost............................................ 1,495,203 1,346,496
Accumulated depreciation and amortization......................................... (615,752) (528,339)
------------- ------------
Property, plant and equipment-net............................................... 879,451 818,157
Goodwill-net...................................................................... 530,684 423,880
Other............................................................................. 53,656 37,788
------------- ------------
TOTAL ASSETS........................................................................ $ 1,966,932 $1,822,432
------------- ------------
------------- ------------
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable and accrued expenses............................................. $ 305,892 $ 306,867
Current maturities of long-term debt.............................................. 16,838 8,672
------------- ------------
Total current liabilities..................................................... 322,730 315,539
------------- ------------
Long-term debt.................................................................... 984,992 889,195
Deferred income taxes............................................................. 90,794 91,555
Other long-term liabilities....................................................... 117,045 111,211
------------- ------------
Total liabilities............................................................. 1,515,561 1,407,500
------------- ------------
STOCKHOLDERS' EQUITY:
Common stock, $.01 par value-shares authorized, 100,000,000 at September 28, 1997
and December 29, 1996; shares outstanding, 33,756,531 at September 28, 1997 and
33,744,531 at December 29, 1996................................................. 338 337
Additional paid-in capital........................................................ 583,803 583,721
Accumulated deficit............................................................... (132,770) (169,126)
------------- ------------
Total stockholders' equity.................................................... 451,371 414,932
------------- ------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY.......................................... $ 1,966,932 $1,822,432
------------- ------------
------------- ------------
</TABLE>
Note: Derived from audited financial statements.
See notes to condensed consolidated financial statements.
3
<PAGE>
WORLD COLOR PRESS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
THREE AND NINE MONTHS ENDED SEPTEMBER 28, 1997 AND SEPTEMBER 29, 1996
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
THREE MONTHS NINE MONTHS
-------------------------- --------------------------
<S> <C> <C> <C> <C>
1997 1996 1997 1996
------------ ------------ ------------ ------------
Net sales................................................ $ 557,268 $ 487,804 $ 1,441,266 $ 1,159,181
Cost of sales............................................ 446,567 391,398 1,179,198 952,547
------------ ------------ ------------ ------------
Gross profit............................................. 110,701 96,406 262,068 206,634
Selling, general and administrative expenses............. 50,435 45,249 138,287 113,177
------------ ------------ ------------ ------------
Operating income......................................... 60,266 51,157 123,781 93,457
Interest expense and securitization fees................. 20,831 18,025 61,099 40,333
------------ ------------ ------------ ------------
Income before income taxes............................... 39,435 33,132 62,682 53,124
Income tax provision..................................... 16,562 13,915 26,326 21,912
------------ ------------ ------------ ------------
Net income............................................... $ 22,873 $ 19,217 $ 36,356 $ 31,212
------------ ------------ ------------ ------------
------------ ------------ ------------ ------------
Net income per common and common equivalent share........ $ 0.66 $ 0.55 $ 1.05 $ 0.89
Weighted average common and common equivalent shares
outstanding............................................ 34,745,304 35,059,968 34,596,401 34,998,285
</TABLE>
See notes to condensed consolidated financial statements.
4
<PAGE>
WORLD COLOR PRESS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
NINE MONTHS ENDED SEPTEMBER 28, 1997 AND SEPTEMBER 29, 1996
(IN THOUSANDS)
<TABLE>
<CAPTION>
NINE MONTHS
------------------------
<S> <C> <C>
1997 1996
----------- -----------
OPERATING ACTIVITIES:
Net income............................................................................ $ 36,356 $ 31,212
Adjustments to reconcile net income to net cash flows provided by (used in) operating
activities:
Depreciation and amortization....................................................... 100,498 75,203
Deferred income tax provision....................................................... 9,402 8,464
Changes in operating assets and liabilities:
Proceeds from sale of accounts receivable......................................... 170,000 --
Other changes in accounts receivable--net......................................... (21,787) (32,368)
Inventories....................................................................... (60,237) (11,472)
Accounts payable and accrued expenses............................................. (32,930) 33,712
Other assets and liabilities-net.................................................. (49,545) (39,434)
----------- -----------
Net cash provided by operating activities....................................... 151,757 65,317
----------- -----------
INVESTING ACTIVITIES:
Additions to property, plant and equipment--net....................................... (72,247) (41,375)
Acquisitions of businesses, net of cash acquired...................................... (172,539) (163,148)
----------- -----------
Net cash used in investing activities........................................... (244,786) (204,523)
----------- -----------
FINANCING ACTIVITIES:
Net borrowings on debt................................................................ 83,966 137,539
Proceeds from issuance of common stock................................................ 83 8,905
----------- -----------
Net cash provided by financing activities....................................... 84,049 146,444
----------- -----------
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS........................................ (8,980) 7,238
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD.......................................... 33,182 8,902
----------- -----------
CASH AND CASH EQUIVALENTS, END OF PERIOD................................................ $ 24,202 $ 16,140
----------- -----------
----------- -----------
</TABLE>
See notes to condensed consolidated financial statements.
5
<PAGE>
WORLD COLOR PRESS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(DOLLARS IN THOUSANDS, EXCEPT SHARE DATA)
1. BASIS OF PRESENTATION
The accompanying condensed consolidated interim financial statements have
been prepared by World Color Press, Inc. (along with its subsidiaries, the
"Company") pursuant to the rules and regulations of the Securities and Exchange
Commission and reflect normal and recurring adjustments, which are, in the
opinion of the Company, considered necessary for a fair presentation. As
permitted by these regulations, these statements do not include all information
required by generally accepted accounting principles to be included in an annual
set of financial statements, however, the Company believes that the disclosures
made are adequate to make the information presented not misleading. It is
suggested that these condensed consolidated financial statements be read in
conjunction with the consolidated financial statements and the notes thereto
included in the Company's latest Annual Report on Form 10-K.
During the nine-month period ended September 28, 1997, the Company acquired
certain businesses whose contributions were not significant to the Company's
results of operations for the periods presented, nor are they expected to have a
material effect on the Company's results on a continuing basis.
Certain reclassifications have been made to prior period amounts to conform
with the current presentation.
2. IMPLEMENTATION OF NEW ACCOUNTING STANDARD
In February 1997, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards ("SFAS") No. 128, Earnings per Share, which
establishes new standards for computing and presenting net income per share. The
statement is effective for periods ending after December 15, 1997. Accordingly,
the Company will adopt SFAS No. 128 in the fourth quarter of 1997. If SFAS No.
128 had been implemented for the three and nine months ended September 28, 1997
and September 29, 1996, pro forma basic and diluted net income per share
amounts, as defined in the statement, would not have been materially different
from net income per common and common equivalent share shown in the accompanying
condensed consolidated statements of operations.
3. INVENTORIES
Inventories are summarized as follows:
<TABLE>
<CAPTION>
SEPTEMBER 28, DECEMBER 29,
1997 1996
------------- ------------
<S> <C> <C>
Work-in-process................................................. $ 128,211 $ 73,747
Raw materials................................................... 83,517 66,413
------------- ------------
Total..................................................... $ 211,728 $ 140,160
------------- ------------
------------- ------------
</TABLE>
6
<PAGE>
WORLD COLOR PRESS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(DOLLARS IN THOUSANDS, EXCEPT SHARE DATA)
4. AMENDMENT TO CREDIT FACILITY
In June 1997, the Company's Second Amended and Restated Credit Agreement
dated as of June 6, 1996, (as amended, the "Credit Agreement") was amended in
conjunction with the securitization transaction described in Note 5. The effect
of this amendment was to provide for an additional $100,000 in commitments upon
the liquidation of indebtedness from the proceeds of the securitization
transaction, after which the aggregate total commitments of the Credit Agreement
were $920,000. These commitments were comprised of $95,000 in term loan
commitments, $250,000 of revolving loan commitments and $575,000 in acquisition
term loan commitments. All other significant financial provisions of the Credit
Agreement remained substantially unchanged.
5. ASSET SECURITIZATION
In conjunction with the amended Credit Agreement described in Note 4, on
June 30, 1997, the Company entered into an agreement to sell, on a revolving
basis for a period of up to five years, certain of its accounts receivable to a
wholly-owned subsidiary, which entered into an agreement to transfer, on a
revolving basis, an undivided percentage ownership interest in a designated pool
of accounts receivable to a maximum of $204,000. At September 28, 1997, $170,000
of accounts receivable had been sold and reflected as a reduction of accounts
receivable. Fees arising from the securitization transaction of $2,236 are
included in interest expense and securitization fees in the statement of
operations for the three and nine months ended September 28, 1997. These fees
vary based on commercial paper rates plus a margin, providing a lower effective
rate than that available under the Company's Credit Agreement. The Company
maintains an allowance for doubtful accounts based on the expected
collectibility of all accounts receivable, including receivables sold.
6. SUBSEQUENT EVENTS
In October 1997, the Company issued 4,600,000 shares of its common stock,
receiving net proceeds of approximately $128,000 (the "Stock Offering").
Concurrent with the Stock Offering, the Company issued $151,800 aggregate
principal amount of Convertible Senior Subordinated Notes (the "Convertible
Notes"), receiving net proceeds of approximately $148,000. Interest on the
Convertible Notes is payable semiannually at the annual rate of 6%. The
Convertible Notes have no required principal payments prior to maturity on
October 1, 2007. The Convertible Notes in the aggregate are convertible into
3,660,477 shares of the Company's common stock at $41.47 per share, subject to
adjustment upon the occurrence of certain events. The net proceeds from the
Stock Offering and Convertible Notes offering were utilized to repay certain
indebtedness incurred under the Credit Agreement (as defined in Note 4).
Concurrent with the repayment of indebtedness, the Company amended the Credit
Agreement, the effect of which was to maintain aggregate total commitments under
the Credit Agreement of $920,000. All other significant financial provisions of
the Credit Agreement remained substantially unchanged.
7
<PAGE>
WORLD COLOR PRESS, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
(DOLLARS IN THOUSANDS, EXCEPT SHARE DATA)
GENERAL
In January 1997, the Company purchased Rand McNally Book Services Group
("Book Services"), an operating unit of Rand McNally, for approximately
$155,000. Book Services is the third largest producer of hardcover books in the
United States and provides manufacturing and other value-added services to book
club, trade, professional, educational, reference and mail-order publishers. In
addition, the Company acquired another business in 1997 whose contribution was
not significant to the Company's results of operations for the periods
presented, nor is it expected to have a material effect on the Company's results
on a continuing basis. These acquisitions will hereinafter be referred to as the
"1997 Acquisitions."
In June 1996, the Company acquired from Ringier A.G. all of the issued and
outstanding capital stock of Krueger Acquisition Corporation, including all of
the issued and outstanding capital stock of Ringier Holdings, Inc., Ringier
America, Inc., Krueger Ringier, Inc., Ringier Print U.S., Inc. and W.A. Krueger
Co. Olathe (collectively, "Ringier America"), for approximately $128,000. In
addition, the Company assumed approximately $287,000 of Ringier America's
indebtedness, of which approximately $281,000 was liquidated upon consummation
of the acquisition. Ringier America is a leading diversified commercial printer
whose business includes the printing of catalogs, magazines and mass-market,
racksize books. In addition, the Company acquired certain other businesses in
1996 whose contributions were not significant to the Company's results of
operations for the periods presented, nor are they expected to have a material
effect on the Company's results on a continuing basis. Collectively, Ringier
America and these other acquired companies will hereinafter be referred to as
the "1996 Acquisitions."
RESULTS OF OPERATIONS
THREE MONTHS ENDED SEPTEMBER 28, 1997 VERSUS THREE MONTHS ENDED SEPTEMBER 29,
1996
Net sales increased $69,464 or 14.2% to $557,268 in 1997 from $487,804 in
1996. The increase was due to the inclusion of the sales from the 1997
Acquisitions and improved base business performance.
Gross profit increased $14,295 or 14.8% to $110,701 in 1997 from $96,406 in
1996, increasing the gross profit margin to 19.9% from 19.8% in 1996. This
improvement is due primarily to the benefits of certain cost reduction
initiatives and other synergies resulting from the integration of acquisitions.
Selling, general and administrative expenses increased $5,186 or 11.5% to
$50,435 in 1997 from $45,249 in 1996. The increase was primarily attributable to
the 1997 Acquisitions, including the related additional amortization expense for
goodwill, partially offset by benefits derived from cost savings initiatives.
Interest expense and securitization fees increased $2,806 or 15.6% to
$20,831 in 1997 from $18,025 in 1996. The increase is due to higher average
borrowings incurred to fund the 1997 Acquisitions, capital expenditures and
working capital requirements, offset slightly by a lower average cost of funds.
The third quarter 1997 amount includes $2,236 of fees resulting from the
securitization transaction described below (the "Asset Securitization").
The effective tax rate, primarily composed of the combined federal and state
statutory rates, was 42% for the third quarter of 1997 and 1996.
8
<PAGE>
WORLD COLOR PRESS, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
(DOLLARS IN THOUSANDS, EXCEPT SHARE DATA)
NINE MONTHS ENDED SEPTEMBER 28, 1997 VERSUS NINE MONTHS ENDED SEPTEMBER 29, 1996
Net sales increased $282,085 or 24.3%, to $1,441,266 in 1997 from $1,159,181
in 1996. The increase was primarily due to the inclusion of the sales from the
1996 and 1997 Acquisitions and improved base business performance. Lower paper
prices in the period versus 1996 partially offset the revenue increases.
Gross profit increased $55,434 or 26.8% to $262,068 in 1997 from $206,634 in
1996, improving the gross profit margin to 18.2% from 17.8% in 1996. This
improvement is a result of the 1996 and 1997 Acquisitions, including the
benefits of certain cost reduction initiatives and other synergies resulting
from the combination of the businesses and the effect of lower paper prices.
Selling, general and administrative expenses increased $25,110 or 22.2% to
$138,287 in 1997 from $113,177 in 1996. The increase was attributable to the
1996 and 1997 Acquisitions, including the related additional amortization
expense for goodwill, offset by benefits derived from cost savings initiatives.
Interest expense and securitization fees increased $20,766 or 51.5% to
$61,099 in 1997 from $40,333 in 1996. The increase was attributable to higher
average borrowings incurred to fund acquisitions, capital expenditures and
working capital requirements. The 1997 amount includes $2,236 of fees incurred
under the Asset Securitization.
The effective tax rate, primarily composed of the combined federal and state
statutory rates, was 42% for the first nine months of 1997 compared to
approximately 41% for the comparable period in 1996. The increase was primarily
due to the additional non-deductible amortization expense for goodwill resulting
from acquisitions.
LIQUIDITY AND CAPITAL RESOURCES
The Company has historically met its liquidity and capital investment needs
with internally-generated funds and external borrowings. Net income plus
depreciation and amortization and deferred income taxes was $146,256 and
$114,879 for the nine months ended September 28, 1997 and September 29, 1996,
respectively. The Company's outstanding indebtedness less cash, before the
effect of the Asset Securitization, increased $282,943 from December 29, 1996 to
September 28, 1997 due primarily to borrowings incurred to fund acquisitions.
Working capital, before the effect of the Asset Securitization, was $350,411 at
September 28, 1997 and $257,897 at September 29, 1996. The increase of $92,514
or 35.9% was primarily due to the increase in work-in-process inventories, the
effect of the 1997 Acquisitions and the paydown of accounts payable. In
accordance with the Company's ongoing program to maintain modern, efficient
plants and increase productivity, the Company anticipates that 1997 capital
expenditures will be approximately $90,000.
The Company's capital expenditures and acquisitions have been funded in part
by borrowings under the Company's Second Amended and Restated Credit Agreement,
dated as of June 6, 1996 (as amended, the "Credit Agreement"). In June 1997, the
Credit Agreement was amended in conjunction with the Asset Securitization. The
effect of this amendment was to provide for an additional $100,000 in
commitments upon the liquidation of indebtedness from the proceeds of the Asset
Securitization, after which the aggregate total commitments of the Credit
Agreement were $920,000.
9
<PAGE>
WORLD COLOR PRESS, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
(DOLLARS IN THOUSANDS, EXCEPT SHARE DATA)
In conjunction with the amended Credit Agreement described above, on June
30, 1997, the Company entered into an agreement to sell, on a revolving basis
for a period of up to five years, certain of its accounts receivable to a
wholly-owned subsidiary, which entered into an agreement to transfer, on a
revolving basis, an undivided percentage ownership interest in a designated pool
of accounts receivable to a maximum of $204,000. At September 28, 1997, $170,000
of accounts receivable had been sold and reflected as a reduction of accounts
receivable. Fees associated with the Asset Securitization vary based on
commercial paper rates plus a margin, providing a lower effective rate than that
available under the Company's Credit Agreement. The Company maintains an
allowance for doubtful accounts based on the expected collectibility of all
accounts receivable, including receivables sold.
In October 1997, the Company issued 4,600,000 shares of its common stock,
receiving net proceeds of approximately $128,000 (the "Stock Offering").
Concurrent with the Stock Offering, the Company issued $151,800 aggregate
principal amount of Convertible Senior Subordinated Notes (the "Convertible
Notes"), receiving net proceeds of approximately $148,000. Interest on the
Convertible Notes is payable semiannually at the annual rate of 6%. The
Convertible Notes have no required principal payments prior to maturity on
October 1, 2007. The Convertible Notes in the aggregate are convertible into
3,660,477 shares of the Company's common stock at $41.47 per share, subject to
adjustment upon the occurrence of certain events. The net proceeds from the
Stock Offering and Convertible Notes offering were used to repay certain
indebtedness incurred under the Credit Agreement. Concurrent with the repayment
of indebtedness, the Company amended the Credit Agreement, the effect of which
was to maintain aggregate total commitments under the Credit Agreement of
$920,000. These commitments are comprised of $95,000 in term loan commitments,
$250,000 of revolving loan commitments and $575,000 in acquisition term loan
commitments. All other significant financial provisions of the Credit Agreement
remained substantially unchanged. After this amendment, the Company had undrawn
commitments of approximately $390,000 under its Credit Agreement.
The Company believes that its liquidity, capital resources and cash flows
are sufficient to fund planned capital expenditures, working capital
requirements and interest and principal payments for the foreseeable future.
SEASONALITY
Results of operations for this interim period are not necessarily indicative
of results for the full year. The Company's operations are seasonal.
Historically, approximately two-thirds of its operating income has been
generated in the second half of the fiscal year, primarily due to the higher
number of magazine pages, new product launches and back-to-school and holiday
catalog promotions.
10
<PAGE>
WORLD COLOR PRESS, INC.
PART II. OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
Exhibits required in accordance with Item 601 of Regulation S-K are
incorporated by reference herein as filed with registrant's Annual Report
on Form 10-K for the fiscal year ended December 29, 1996, dated March 27,
1997.
In addition, the Company has filed herewith the following exhibits:
4.1 Indenture between World Color Press, Inc. and State Street Bank and
Trust Company, as trustee, relating to World Color Press, Inc.'s 6%
Convertible Senior Subordinated Notes due 2007 (the "Convertible Notes"),
including the specimen of the Convertible Notes.
10.1 The World Color Press, Inc. Second Amended and Restated Supplemental
Retirement Plan dated June 14, 1995, as amended July 15, 1997.
10.2 Stock Option Agreement dated as of June 12, 1997.
10.3 Stock Option Agreement dated as of June 12, 1997.
10.4 Limited Waiver, Consent and Fourth Amendment to Second Amended and
Restated Credit Agreement dated as of September 29, 1997 by and among
World Color Press, Inc., the Lenders party to the Second Amended and
Restated Credit Agreement, as amended, Bankers Trust Company, as
Administrative Agent, and the Guarantors listed on the signature pages.
27.0 Financial Data Schedule for the period ended September 28, 1997 (filed
in electronic form only).
(b) Reports on Form 8-K
No reports on Form 8-K were filed during the quarterly period ended
September 28, 1997.
11
<PAGE>
WORLD COLOR PRESS, INC.
PART II. OTHER INFORMATION
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
<TABLE>
<S> <C> <C>
WORLD COLOR PRESS, INC.
By: /s/ THOMAS M. PIERNO
-----------------------------------------
Thomas M. Pierno
EXECUTIVE VICE PRESIDENT, CHIEF FINANCIAL
Date: November 12, 1997 OFFICER
</TABLE>
12
<PAGE>
World Color Press, Inc.
$151,800,000
6% Convertible Senior Subordinated Notes due 2007
INDENTURE
Dated as of October 8, 1997
State Street Bank and Trust Company
Trustee
<PAGE>
CROSS-REFERENCE TABLE (*)
Trust Indenture Indenture
Act Section Section
310(a)(1). . . . . . . . . . . . . . . . . . . . . . 7.10; 12.2
(a)(2). . . . . . . . . . . . . . . . . . . . . . 7.10
(a)(3). . . . . . . . . . . . . . . . . . . . . . N.A.*(*)
(a)(4). . . . . . . . . . . . . . . . . . . . . . N.A.
(b) . . . . . . . . . . . . . . . . . . . . . . 7.8; 7.10;
. . . . . . . . . . . . . . . . . . . . . . 12.2
(c) . . . . . . . . . . . . . . . . . . . . . . N.A.
311(a) . . . . . . . . . . . . . . . . . . . . . . 7.11
(b) . . . . . . . . . . . . . . . . . . . . . . 7.11
(c) . . . . . . . . . . . . . . . . . . . . . . N.A.
312(a) . . . . . . . . . . . . . . . . . . . . . . 2.5
(b) . . . . . . . . . . . . . . . . . . . . . . 12.3
(c) . . . . . . . . . . . . . . . . . . . . . . 12.3
313(a) . . . . . . . . . . . . . . . . . . . . . . 7.6
(b)(1). . . . . . . . . . . . . . . . . . . . . . N.A.
(b)(2). . . . . . . . . . . . . . . . . . . . . . 7.6;
(c) . . . . . . . . . . . . . . . . . . . . . . 7.6; 12.2
(d) . . . . . . . . . . . . . . . . . . . . . . 7.6
314(a) . . . . . . . . . . . . . . . . . . . . . . 4.3; 12.2
(b) . . . . . . . . . . . . . . . . . . . . . . N.A.
(c)(1). . . . . . . . . . . . . . . . . . . . . . 12.4
(c)(2). . . . . . . . . . . . . . . . . . . . . . 12.4
(c)(3). . . . . . . . . . . . . . . . . . . . . . N.A.
(d) . . . . . . . . . . . . . . . . . . . . . . N.A.
(e) . . . . . . . . . . . . . . . . . . . . . . 11.5
(f) . . . . . . . . . . . . . . . . . . . . . . N.A.
315(a) . . . . . . . . . . . . . . . . . . . . . . 7.1(2)
(b) . . . . . . . . . . . . . . . . . . . . . . 7.5; 12.2
(c) . . . . . . . . . . . . . . . . . . . . . . 7.1(1)
(d) . . . . . . . . . . . . . . . . . . . . . . 7.1(3)
(e) . . . . . . . . . . . . . . . . . . . . . . 6.11
316(a)(last sentence). . . . . . . . . . . . . . . . 2.9
- --------------------
* This Cross-Reference Table is not part of the Indenture.
N.A. means not applicable.
i
<PAGE>
(a)(1)(A) . . . . . . . . . . . . . . . . . . . . 6.5
(a)(1)(B) . . . . . . . . . . . . . . . . . . . . 6.4
(a)(2). . . . . . . . . . . . . . . . . . . . . . N.A.
(b) . . . . . . . . . . . . . . . . . . . . . . 6.7
(c) . . . . . . . . . . . . . . . . . . . . . . 9.4
317(a)(1). . . . . . . . . . . . . . . . . . . . . . 6.8
(a)(2). . . . . . . . . . . . . . . . . . . . . . 6.9
(b) . . . . . . . . . . . . . . . . . . . . . . 2.4
318(a) . . . . . . . . . . . . . . . . . . . . . . 12.1
- ---------------
* This Cross-Reference Table is not part of the Indenture.
** N.A. means not applicable.
ii
<PAGE>
PAGE
TABLE OF CONTENTS
ARTICLE I
DEFINITIONS AND INCORPORATION
BY REFERENCE
Section 1.1 Definitions. . . . . . . . . . . . . . . . . . . . . . 1
Section 1.2 Other Definitions. . . . . . . . . . . . . . . . . . . 10
Section 1.3 Incorporation by Reference of Trust Indenture Act. . . 10
Section 1.4 Rules of Construction. . . . . . . . . . . . . . . . . 11
ARTICLE II
THE SECURITIES
Section 2.1 Form and Dating. . . . . . . . . . . . . . . . . . . . 12
Section 2.2 Execution and Authentication . . . . . . . . . . . . . 13
Section 2.3 Registrar and Paying Agent . . . . . . . . . . . . . . 13
Section 2.4 Paying Agent to Hold Assets in Trust . . . . . . . . . 17
Section 2.5 Holder Lists . . . . . . . . . . . . . . . . . . . . . 17
Section 2.6 Transfer and Exchange. . . . . . . . . . . . . . . . . 18
Section 2.7 Replacement Securities . . . . . . . . . . . . . . . . 19
Section 2.8 Outstanding Securities . . . . . . . . . . . . . . . . 19
Section 2.9 Treasury Securities. . . . . . . . . . . . . . . . . . 20
Section 2.10 Temporary Securities . . . . . . . . . . . . . . . . . 20
Section 2.11 Cancellation . . . . . . . . . . . . . . . . . . . . . 20
Section 2.12 Defaulted Interest . . . . . . . . . . . . . . . . . . 21
ARTICLE III
OPTIONAL REDEMPTION
Section 3.1 Notices to Trustee . . . . . . . . . . . . . . . . . . 21
Section 3.2 Selection of Securities to be Redeemed . . . . . . . . 21
Section 3.3 Notice of Redemption . . . . . . . . . . . . . . . . . 22
Section 3.4 Effect of Notice of Redemption . . . . . . . . . . . . 23
Section 3.5 Deposit of Redemption Price. . . . . . . . . . . . . . 24
Section 3.6 Securities Redeemed in Part. . . . . . . . . . . . . . 24
Section 3.7 Optional Redemption. . . . . . . . . . . . . . . . . . 25
Section 3.8 No Sinking Fund. . . . . . . . . . . . . . . . . . . . 25
iii
<PAGE>
Section 3.9 Conversion Arrangement on Call for Redemption. . . . . 25
Section 3.10 Redemption at Option of Holders. . . . . . . . . . . . 26
ARTICLE IV
COVENANTS
Section 4.1 Payment of Securities. . . . . . . . . . . . . . . . . 34
Section 4.2 Maintenance of Office or Agency. . . . . . . . . . . . 35
Section 4.3 Waiver of Stay, Extension and Usury Laws.. . . . . . . 35
Section 4.4 Corporate Existence. . . . . . . . . . . . . . . . . . 36
Section 4.5 Limitation on Other Subordinated Indebtedness. . . . . 36
Section 4.6 SEC Reports; Financial Statements. . . . . . . . . . . 36
Section 4.7 Compliance Certificate; Notice of Default. . . . . . . 37
ARTICLE V
SUCCESSORS
Section 5.1 Merger, Consolidation, or Sale of Assets. . . . . . . 38
Section 5.2 Opinion of Counsel to Trustee; Officers' Certificate . 38
Section 5.3 Successor Corporation Substituted. . . . . . . . . . . 39
ARTICLE VI
DEFAULTS AND REMEDIES
Section 6.1 Events of Default. . . . . . . . . . . . . . . . . . . 39
Section 6.2 Acceleration.. . . . . . . . . . . . . . . . . . . . . 41
Section 6.3 Other Remedies.. . . . . . . . . . . . . . . . . . . . 43
Section 6.4 Waiver Of Past Defaults. . . . . . . . . . . . . . . . 43
Section 6.5 Control By Majority. . . . . . . . . . . . . . . . . . 44
Section 6.6 Limitations On Suits . . . . . . . . . . . . . . . . . 44
Section 6.7 Rights Of Holders To Receive Payment.. . . . . . . . . 45
Section 6.8 Collection Suit By Trustee.. . . . . . . . . . . . . . 45
Section 6.9 Trustee May File Proofs Of Claim.. . . . . . . . . . . 45
Section 6.10 Priorities.. . . . . . . . . . . . . . . . . . . . . . 46
Section 6.11 Undertaking For Costs. . . . . . . . . . . . . . . . . 46
ARTICLE VII
TRUSTEE
iv
<PAGE>
Section 7.1 Duties of Trustee. . . . . . . . . . . . . . . . . . . 47
Section 7.2 Rights of Trustee. . . . . . . . . . . . . . . . . . . 49
Section 7.3 Individual Rights of Trustee . . . . . . . . . . . . . 49
Section 7.4 Trustee's Disclaimer . . . . . . . . . . . . . . . . . 50
Section 7.5 Notice of Default. . . . . . . . . . . . . . . . . . . 50
Section 7.6 Reports by Trustee to Holders. . . . . . . . . . . . . 50
Section 7.7 Compensation and Indemnity . . . . . . . . . . . . . . 51
Section 7.8 Replacement of Trustee . . . . . . . . . . . . . . . . 52
Section 7.9 Successor Trustee by Merger, Etc.. . . . . . . . . . . 53
Section 7.10 Eligibility; Disqualification. . . . . . . . . . . . . 53
Section 7.11 Preferential Collection of Claims against Company. . . 54
ARTICLE VIII
DISCHARGE OF INDENTURE
Section 8.1 Termination of Company's Obligations . . . . . . . . . 54
Section 8.2 Application of Trust Asset . . . . . . . . . . . . . . 56
Section 8.3 Repayment to Company . . . . . . . . . . . . . . . . . 56
Section 8.4 Reinstatement. . . . . . . . . . . . . . . . . . . . . 57
ARTICLE IX
AMENDMENTS, SUPPLEMENTS AND WAIVERS
Section 9.1 Supplemental Indentures Without Consent of
Holders. . . . . . . . . . . . . . . . . . . . . . . . 58
Section 9.2 Amendments, Supplemental Indentures and Waivers
with Consent of Holders . . . . . . . . . . . . . . . 59
Section 9.3 Compliance with TIA. . . . . . . . . . . . . . . . . . 60
Section 9.4 Revocation and Effect of Consents. . . . . . . . . . . 60
Section 9.5 Notation on or Exchange of Securities. . . . . . . . . 61
Section 9.6 Trustee to Sign Amendments, Etc. . . . . . . . . . . . 61
ARTICLE X
SUBORDINATION
Section 10.1 Securities Subordinated to Senior . . . . . . . . . .
Indebtedness . . . . . . . . . . . . . . . . . . . . . 62
v
<PAGE>
Section 10.2 No Payment on Securities in Certain . . . . . . . . .
Circumstances. . . . . . . . . . . . . . . . . . . . . 62
Section 10.3 Securities Subordinated to Prior Payment of All Senior
Indebtedness on Dissolution, Liquidation or Reorganization
of Company . . . . . . . . . . . . . . . . . . . . . . 64
Section 10.4 Holders to Be Subrogated to Rights of Holders of Senior
Indebtedness . . . . . . . . . . . . . . . . . . . . . 66
Section 10.5 Obligations of the Company Unconditional . . . . . . . 67
Section 10.6 Trustee Entitled to Assume Payments Not Prohibited in
Absence of Notice. . . . . . . . . . . . . . . . . . . 68
Section 10.7 Subordination Rights Not Impaired by Acts or Omissions of
Company or Holders of Senior Indebtedness. . . . . . . 68
Section 10.8 Holders Authorize Trustee to Effectuate Subordination of
Securities . . . . . . . . . . . . . . . . . . . . . . 69
Section 10.9 Right of Trustee to Hold Senior Indebtedness . . . . . 70
Section 10.10 Article Ten Not to Prevent Events of Default . . . . . 70
Section 10.11 No Fiduciary Duty of Trustee to Holders of Senior
Indebtedness . . . . . . . . . . . . . . . . . . . . . 70
ARTICLE XI
CONVERSION OF SECURITIES
Section 11.1 Right to Convert.. . . . . . . . . . . . . . . . . . . 71
Section 11.2 Exercise of Conversion Privilege; Issuance of Common
Stock on Conversion; No Adjustment for Interest
or Dividends.. . . . . . . . . . . . . . . . . . . . . 72
Section 11.3 Cash Payments in Lieu of Fractional Shares. . . . . . 74
Section 11.4 Conversion Rate. . . . . . . . . . . . . . . . . . . . 75
Section 11.5 Adjustment of Conversion Rate. . . . . . . . . . . . . 75
Section 11.6 Effect of Reclassification, Consolidation, Merger or
Sale . . . . . . . . . . . . . . . . . . . . . . . . . 86
Section 11.7 Taxes on Shares Issued.. . . . . . . . . . . . . . . . 87
Section 11.8 Reservation of Shares; Shares to Be Fully Paid;
Compliance with Governmental Requirements; Listing
of Common Stock. . . . . . . . . . . . . . . . . . . . 88
Section 11.9 Responsibility of Trustee. . . . . . . . . . . . . . . 89
Section 11.10 Notice to Holders Prior to Certain Actions. . . . . . 90
vi
<PAGE>
ARTICLE XII
MISCELLANEOUS
Section 12.1 Trust Indenture Act Controls . . . . . . . . . . . . . 91
Section 12.2 Notices. . . . . . . . . . . . . . . . . . . . . . . . 91
Section 12.3 Communication by Holders With Other Holders. . . . . . 92
Section 12.4 Certificate and Opinion as to Conditions Precedent . . 93
Section 12.5 Statements Required in Certificate or Opinion. . . . . 93
Section 12.6 Rules by Trustee and Agents. . . . . . . . . . . . . . 94
Section 12.7 Legal Holidays . . . . . . . . . . . . . . . . . . . . 94
Section 12.8 No Recourse Against Others . . . . . . . . . . . . . . 94
Section 12.9 Governing Law. . . . . . . . . . . . . . . . . . . . . 94
Section 12.10 No Adverse Interpretation of Other Agreements. . . . . 95
Section 12.11 Successors . . . . . . . . . . . . . . . . . . . . . . 95
Section 12.12 Severability . . . . . . . . . . . . . . . . . . . . . 95
Section 12.13 Counterpart originals. . . . . . . . . . . . . . . . . 95
Section 12.14 Trustee as Paying Agent and Registrar. . . . . . . . . 95
Section 12.15 Table of Contents, Headings, Etc.. . . . . . . . . . . 96
SIGNATURES . . . . . . . . . . . . . . . . . . . . . . . . . . . 97
EXHIBIT A . . . . . . . . . . . . . . . . . . . . . . . . . . . A-1
vii
<PAGE>
INDENTURE, dated as of October 8, 1997, among World Color Press, Inc., a
Delaware corporation, and State Street Bank and Trust Company, a Massachusetts
trust company (the "Trustee").
Each party agrees as follows for the benefit of the other party and
for the equal and ratable benefit of the Holders (as defined below) of 6%
Convertible Senior Subordinated Notes due 2007 (the "Securities") issued by the
Company (as defined below):
DEFINITIONS AND INCORPORATION
BY REFERENCE
I.1 Definitions.
"Affiliate" of any specified Person means any other Person directly or
indirectly controlling or controlled by or under direct or indirect common
control with such specified Person. A Person shall be deemed to "control"
(including the correlative meanings, the terms "controlling," "controlled by,"
and "under common control with") another Person if the controlling Person
possesses, directly or indirectly, the power to direct or cause the direction of
the management or policies of the controlled Person, whether through ownership
of voting securities, by agreement or otherwise.
"Agent" means any Registrar or Paying Agent.
"Bankruptcy Law" means Title 11, U.S. Code or any similar federal or
state law for the relief of debtors.
"Board of Directors" means, with respect to any Person, the Board of
Directors of such Person or any committee of the Board of Directors of such
Person authorized, with respect to any particular matter, to exercise the power
of the Board of Directors of such Person.
<PAGE>
"Board Resolution" means, with respect to any Person, a duly adopted
resolution of the Board of Directors of such Person.
"Business Day" means any day other than a Legal Holiday.
"Capital Lease Obligation" means, at the time any determination
thereof is to be made, the amount of liability in respect of a capital lease
which would at such time be required to be capitalized on the balance sheet in
accordance with GAAP.
"Capital Stock" means any and all shares, interests, participations,
rights or other equivalents (however designated) of corporate stock.
"Cash Equivalents" means (i) securities issued or directly and fully
guaranteed or insured by the United States of America or any agency or
instrumentality thereof (provided that the full faith and credit of the United
States of America is pledged in support thereof), (ii) time deposits and
certificates of deposit of any domestic commercial bank of recognized standing
having capital and surplus in excess of $500,000,000 which may be the Trustee or
a commercial bank organized under the laws of any other country that is a member
of the OECD and having total assets in excess of $500,000,000 with a maturity
date not more than one year from the date of acquisition, (iii) repurchase
obligations with a term of not more than 7 days for underlying securities of the
types described in clause (i) above entered into with any bank meeting the
qualifications specified in clause (ii) above, (iv) commercial paper issued by
the parent corporation of any domestic commercial bank of recognized standing
having capital and surplus in excess of $500,000,000 and commercial paper issued
by others rated at least A-2 or the equivalent thereof by Standard & Poor's
Corporation or at least P-2 or the equivalent thereof by Moody's Investors
Service, Inc. which may be the Trustee and in each case maturing within one year
after the date of acquisition and (v) investments in money market funds
2
<PAGE>
substantially all of whose assets comprise securities of the types described in
clauses (i) through (iv) above.
"Common Stock" means any stock of any class of the Company which has
no preference in respect of dividends or of amounts payable in the event of any
voluntary or involuntary liquidation, dissolution or winding up of the Company
and which is not subject to redemption by the Company. Subject to the
provisions of Section 11.6, however, shares issuable on conversion of Securities
shall include only shares of the class designated as common stock of the Company
at the date of this Indenture or shares of any class or classes resulting from
any reclassification or reclassifications thereof and which have no preference
in respect of dividends or of amounts payable in the event of any voluntary or
involuntary liquidation, dissolution or winding up of the Company and which are
not subject to redemption by the Company; provided, that if at any time there
shall be more than one such resulting class, the shares of each such class then
so issuable shall be substantially in the proportion which the total number of
shares of such class resulting from all such reclassifications bears to the
total number of shares of all such classes resulting from all such
reclassifications.
"Company" means (i) World Color Press, Inc., a Delaware corporation,
and (ii) any successor of World Color Press, Inc. pursuant to Article Five
hereof.
"Corporate Trust Office of the Trustee" shall be at either of the
addresses of the Trustee specified in Section 12.2 or such other address as the
Trustee may give notice to the Company.
"Credit Agent" means the agent or representative of the lenders under
the Credit Agreement.
"Credit Agreement" means the Company's Second Amended and Restated
Credit Agreement, dated as of June 6, 1996, including any related notes,
guarantees, collateral documents, instruments and agreements executed in
3
<PAGE>
connection therewith, and in each case as amended, modified, supplemented,
renewed, refunded, refinanced, restructured or replaced from time to time
(including without limitation, any extension of maturity thereof, or the
inclusion of additional borrowers or guarantors thereunder).
"Currency Agreement" means the obligations of any Person pursuant to
any foreign exchange contract, currency swap agreement or other similar
agreement or arrangement designed to protect such Person or any of its
Subsidiaries against fluctuations in currency values.
"Custodian" means any receiver, trustee, assignee, liquidator or
similar official under any Bankruptcy Law.
"Default" means any event, act or condition that is or, after notice
or the passage of time or both, would be an Event of Default.
"Depositary" means, with respect to the Securities issuable or issued
in whole or in part in global form, the person specified in Section 2.3 as the
Depositary with respect to such Securities, until a successor shall have been
appointed and become such pursuant to the applicable provisions of this
Indenture, and thereafter, "Depositary" shall mean or include such successor.
"Designated Senior Debt" means (i) the Senior Bank Debt and (ii)any
other Senior Indebtedness permitted hereunder having a principal amount of at
least $30.0 million that is designated as "Designated Senior Debt" by written
notice from the Company to the Trustee.
"DTC" means The Depositary Trust Company-
"Equity Interests" means Capital Stock, warrants, options or other
rights to acquire Capital Stock (but excluding any debt security which is
convertible into, or exchangeable for, Capital Stock).
4
<PAGE>
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"FASB" means the Financial Accounting Standards Board.
"GAAP" means generally accepted accounting principles set forth in the
opinions and pronouncements of the Accounting Principles Board of the American
Institute of Certified Public Accountants and statements and pronouncements of
the Financial Accounting Standards Board ("FASB") or in such other statements by
such other entity as approved by a significant segment of the accounting
profession which are in effect in the United States as of the time when and for
the period as to which such accounting principles are to be applied; provided,
however, that for purposes of determining compliance with the covenants in this
Indenture "GAAP" means such generally accepted accounting principles as adopted
by the Company on the Issue Date, and shall exclude the effects, if any, of the
adoption and continuing implementation of Statements 106, 109 and 112 of FASB.
"GECC Lease" means the Participation Agreement, dated as of April 30,
1990, by and among World Color Press, Inc., as lessee, General Electric Capital
Corporation, as owner participant, and The Connecticut National Bank, as owner
trustee, and all other agreements entered into in connection therewith, each, as
amended from time to time.
"Global Note" means any Security evidenced in global form.
"Indebtedness" means, with respect to any Person, any indebtedness,
contingent or otherwise, in respect of borrowed money (whether or not the
recourse of the lender is to the whole of the assets of such Person or only to a
portion thereof), or evidenced by bonds, notes, debentures or similar
instruments or letters of credit (or reimbursement obligations with respect
thereto) or representing the balance deferred and unpaid of
5
<PAGE>
the purchase price of any property (including pursuant to financing leases),
if and to the extent any of the foregoing indebtedness would appear as a
liability upon a balance sheet of such Person prepared in accordance with
GAAP (except that any such balance that constitutes a trade payable and/or an
accrued liability arising in the ordinary course of business shall not be
considered Indebtedness), and shall also include, to the extent not otherwise
included, any Capital Lease Obligations, the maximum fixed repurchase price
of any Redeemable Stock, indebtedness secured by a Lien to which the property
or assets owned or held by such Person is subject, whether or not the
obligations secured thereby shall have been assumed, guarantees of items that
would be included within this definition to the extent of such guarantees
(exclusive of whether such items would appear upon such balance sheet), net
liabilities in respect of Currency Agreements and Interest Rate Agreements.
For purposes of the preceding sentence, the maximum fixed repurchase price of
any Redeemable Stock which does not have a fixed repurchase price shall be
calculated in accordance with the terms of such Redeemable Stock as if such
Redeemable Stock were repurchased on any date on which Indebtedness shall be
required to be determined pursuant to this Indenture, provided that if such
Redeemable Stock is not then permitted to be repurchased, the repurchase
price shall be the book value of such Redeemable Stock. The amount of
Indebtedness of any Person at any date shall be without duplication (i) the
outstanding balance at such date of all unconditional obligations as
described above and the maximum liability of any such contingent obligations
at such date and (ii) in the case of Indebtedness of others secured by a Lien
to which the property or assets owned or held by such Person is subject, the
lesser of the fair market value at such date of any asset subject to a Lien
securing the Indebtedness of others and the amount of the Indebtedness
secured.
"Indenture" means this Indenture as amended or supplemented from time
to time in accordance with the terms hereof.
6
<PAGE>
"Interest Payment Date" has the meaning assigned to such terms in
paragraph 1 of the Securities.
"Interest Rate Agreements" means the obligations of any Person
pursuant to any interest rate swap agreement, interest rate collar agreement or
other similar agreement or arrangement designed to protect such Person or any of
its Subsidiaries against fluctuations in interest rates.
"Issue Date" means the date of first issuance of the Securities
hereunder.
"Issue Price" means with respect to any Security (or any portion
thereof) 100% of the principal amount at maturity of such Security (or such
portion thereof).
"Lien" means any mortgage, lien, pledge, charge, security interest or
encumbrance of any kind, whether or not filed, recorded or otherwise perfected
under applicable law (including any conditional sale or other title retention
agreement, any lease in the nature thereof, any option or other agreement to
sell or give any security interest in and any filing or other agreement to give
any financing statement under the Uniform Commercial Code (or equivalent
statutes) of any jurisdiction).
"Maturity Date" means, with respect to any Security, the date on which
the principal of (and premium, if any) and interest on such Security become due
and payable as therein or herein provided, whether at Stated Maturity, or by
declaration of acceleration, call for redemption or otherwise.
"Noteholder" or "Holder" means a Person in whose name a Security is
registered. The Noteholder or Holder of a Security will be treated as the owner
of such Security for all purposes.
7
<PAGE>
"Obligations" means any principal, interest, penalties, fees,
indemnifications, reimbursements, damages and other liabilities payable under
the documentation governing any Indebtedness.
"OECD" means the Organization for Economic Cooperation and
Development.
"Officers" means the Chief Executive officer, the President, any Vice
President, the Chief Financial Officer, the Treasurer, any Assistant Treasurer,
the Controller or the Secretary of the Company.
"Officers' Certificate" means a certificate signed by two Officers,
one of whom must be the Company's Chief Executive Officer, Chief Financial
Officer or the Controller.
"Opinion of Counsel" means a written opinion prepared in accordance
with Section 12.5 hereof, from legal counsel who is reasonably acceptable to the
Trustee. Except as specified in Section 8.1(d), the counsel may be an employee
of or counsel to the Company or the Trustee.
"Person" means any individual, corporation, partnership, joint
venture, incorporated or unincorporated association, joint-stock company, trust,
unincorporated organization or government or other agency or political
subdivision thereof or other entity of any kind.
"Redeemable Stock" means any Equity Interest which, by its terms (or
by the terms of any security into which it is convertible or for which it is
exchangeable before the stated maturity of the Securities), or upon the
happening of any event, matures or is mandatorily redeemable, in whole or in
part, prior to the stated maturity of the Securities, or is, by its terms or
upon the happening of any event, redeemable at the option of the holder thereof,
in whole or in part, at any time prior to the stated maturity of the Securities,
except for Equity Interests of the Company issued to present and
8
<PAGE>
former members of management of the Company and its Subsidiaries pursuant to
agreements in effect on the Issue Date and Equity Interests of the Company
issued after the Issue Date to members of management of the Company and its
Subsidiaries pursuant to agreements containing provisions for the repurchase
of such Equity Interests upon death, disability or termination of employment
of such persons which are substantially identical to those contained in the
agreements in effect on the Issue Date.
"Redemption Date," when used with respect to any Security to be
redeemed, means the date fixed for such redemption pursuant to this Indenture
and Paragraph 5 in the Form of Security.
"Redemption Price," with respect to any Security, means the applicable
Redemption Price as set forth in such Security.
"Representative" means the indenture trustee or other trustee, agent
or representative for any Senior Indebtedness.
"SEC" means the Securities and Exchange Commission.
"Securities" or "Notes" means the Securities described above issued
under this Indenture.
"Securities Act" means the Securities Act of 1933, as amended.
"Security Custodian" means the Trustee, as custodian with respect to
the Notes in global form, or any successor entity thereto.
"Senior Bank Debt" means Indebtedness and all other monetary
obligations of every nature outstanding under the Credit Agreement including
letters of credit and reimbursement obligations in respect thereof and letters
9
<PAGE>
of credit and reimbursement obligations in respect of letters of credit issued
by lenders party to the Credit Agreement.
"Senior Indebtedness" means (i) the Senior Bank Debt, (ii) all
obligations of the Company under the GECC Lease and (iii) any other Indebtedness
permitted to be incurred pursuant to the terms hereof, unless the instrument
under which such Indebtedness is incurred expressly provides that it is on a
parity with or subordinated in right of payment to the Securities.
Notwithstanding anything to the contrary in the foregoing, "Senior Indebtedness"
shall not include (i) Indebtedness that is expressly subordinate or junior in
right of payment to any Indebtedness of the Company, (ii) Indebtedness that is
represented by Redeemable Stock, (iii) any liability for federal, state, local
or other taxes owed or owing by the Company, (iv) Indebtedness of the Company to
any Subsidiary or any other Affiliate of the Company, (v) trade payables, (vi)
Indebtedness that is incurred in violation of the Indenture governing the
Company's 9-1/8% Senior Subordinated Notes and (vii) the Company's 9-1/8% Senior
Subordinated Notes due 2003.
"Stated Maturity" means, when used with respect to any Security or
installment of interest thereon, the date specified in such Security as the
fixed date on which the principal of such Security or such installment of
interest is due and payable.
"Subsidiary" of any Person means any equity of which shares of
Capital Stock or other equity interests (including partnership interests)
entitled (without regard to the occurrence of any contingency) to cast at least
a majority of the votes that may be cast by all shares or equity interests
having ordinary voting power for the election of directors or other governing
body of such entity are owned by such Person directly and/or through one or more
Subsidiaries.
"TIA" means the Trust Indenture Act of 1939, as amended (15 U.S.C.
Sections 77aaa-77bbbb).
10
<PAGE>
"Trustee" means State Street Bank and Trust Company, a Massachusetts
trust company until a successor replaces it in accordance with the applicable
provisions of this Indenture and thereafter means the successor serving
hereunder.
"Trust Officer" means any officer or assistant officer of the Trustee
assigned by the Trustee to administer this Indenture.
"U.S. Government Obligations" means direct noncallable obligations of
or guaranteed by the United States of America.
"U.S. Legal Tender" means such coin or currency of the United States
of America as at the time of payment shall be legal tender for the payment of
public and private debts.
I.2 Other Definitions.
Defined
Term in Section
"beneficial owner" . . . . . . . . . . . 3.10(c)
"Closing Price". . . . . . . . . . . . . 11.5(g)
"Change in Control . . . . . . . . . . . 3.10(c)
"Company Notice. . . . . . . . . . . . . 3.10(b)
"Conversion Rate". . . . . . . . . . . . 11.4
"Current Market Price" . . . . . . . . . 11.5(g)
"Distributed Securities" . . . . . . . . 11.5(d)
"Expiration Time". . . . . . . . . . . . 11.5(f)
"fair market value". . . . . . . . . . . 11.5(g)
"Legal Holiday". . . . . . . . . . . . . 12.7
"Paying Agent" . . . . . . . . . . . . . 2.3
"Payment Blockage Period". . . . . . . . 10.2(a)
"Purchased Shares" . . . . . . . . . . . 11.5(f)
"Record Date" . . . . . . . . . . . . . 11.5(g)
"Registrar" . . . . . . . . . . . . . 2.3
"Repurchase Date". . . . . . . . . . . . 3.10(a)
"Repurchase Price" . . . . . . . . . . . 3.10(a)
"Surviving Entity" . . . . . . . . . . . 5.1
11
<PAGE>
"Trading Day" . . . . . . . . . . . . . 11.5(g)
"Trigger Event". . . . . . . . . . . . . 11.5(h)
I.3 Incorporation by Reference of Trust Indenture Act.
Whenever this Indenture refers to a provision of the TIA, the
provision is incorporated by reference in and made a part of this Indenture.
The following TIA terms used in this Indenture have the following
meanings:
"indenture securities" means the Securities and/or the Notes;
"indenture security holder" means a Holder;
"indenture to be qualified" means this Indenture;
"indenture trustee" or "institutional trustee" means the Trustee;
"obligor" on the Securities means the Company, any other obligor upon
the Securities or any successor obligor upon the Securities.
All other terms used in this Indenture that are defined by the TIA,
defined by TIA reference to another statute or defined by SEC rule under the TIA
have the meanings so assigned to them.
I.4 Rules of Construction.
Unless the context otherwise requires:
(1) a term has the meaning assigned to it;
(2) an accounting term not otherwise defined has the meaning assigned
to it in accordance with GAAP;
12
<PAGE>
(3) "or" is not exclusive;
(4) words in the singular include the plural, and in the plural
include the singular; and
(5) provisions apply to successive events and transactions.
(6) references to "Sections" are to Sections of this Indenture unless
otherwise indicated.
II
THE SECURITIES
II.1 Form and Dating.
The Securities and the Trustee's certificate of authentication shall
be substantially in the form of Exhibit A hereto, which is a part of this
Indenture. The Securities may have notations, legends or endorsements required
by law, stock exchange rule or usage. The Company shall approve the form of
Securities and any notation, legend or endorsement on them. Each Security shall
be dated the date of its authentication. The Securities shall be in
denominations of $1,000 and integral multiples thereof.
The terms and provisions contained in the Securities shall
constitute, and are hereby expressly made, a part of this Indenture and to
the extent applicable, the Company and the Trustee, by their execution and
delivery of this Indenture, expressly agree to such terms and provisions and
to be bound thereby.
Any Security in global form shall represent such of the outstanding
Securities as shall be specified therein and shall provide that it shall
13
<PAGE>
represent the aggregate amount of outstanding Securities from time to time
endorsed thereon and that the aggregate amount of outstanding Securities
represented thereby may from time to time be increased or reduced to reflect
transfers or exchanges permitted hereby. Any endorsement of a Security in
global form to reflect the amount of any increase or decrease in the amount of
outstanding Securities represented thereby shall be made by the Trustee or the
Security Custodian, at the direction of the Trustee, in such manner and upon
instructions given by the holder of such Securities in accordance with this
Indenture.
Payment of principal amount at maturity, Issue Price, Redemption
Price, Repurchase Price and interest on any Security in global form shall be
made to the holder of such Security.
II.2 Execution and Authentication.
Two Officers shall sign the Securities for the Company by manual or
facsimile signature. The Company's seal shall be reproduced on the Securities
and may be in facsimile form.
If an Officer whose signature is on a Security at the time of such
execution no longer holds that office at the time the Trustee authenticates the
Security, the Security shall be valid and the Company shall nevertheless be
bound by the terms of the Securities and this Indenture.
A Security shall not be valid until an authorized signatory of the
Trustee manually signs the certificate of authentication on the Security
authenticated by the manual signature of the Trustee. The signature shall be
conclusive evidence that the Security has been authenticated under this
Indenture.
The Trustee shall authenticate Securities for original issue up to the
aggregate principal amount stated in paragraph 4 of the Securities, upon a
written order of the Company signed by an Officer to a Trust Officer of the
14
<PAGE>
Trustee. The aggregate principal amount of Securities outstanding at any time
may not exceed such amount except as provided in Section 2.7 hereof.
The Trustee may appoint an authenticating agent acceptable to the
Company to authenticate Securities. An authenticating agent may authenticate
Securities whenever the Trustee may do so. Each reference in this Indenture to
authentication by the Trustee includes authentication by such agent. An
authenticating agent has the same rights as an Agent to deal with the Company,
any Affiliate of the Company or any of their respective Subsidiaries.
Securities shall be issuable only in registered form without coupons
in denominations of $1,000 and any integral multiple thereof.
II.3 Registrar and Paying Agent.
(a) The Company shall maintain an office or agency, where Securities
may be presented for registration of transfer or for exchange ("Registrar") and
an office or agency where Securities may be presented for payment ("Paying
Agent") and an office or agency where notices and demands to or upon the Company
in respect of the Securities may be served. The Company may act as its own
Registrar or Paying Agent. The Registrar shall keep a register of the
Securities and of their transfer and exchange. The Company may have one or more
co-Registrars and one or more additional Paying Agents. The term "Registrar"
includes any Co-Registrar and the term "Paying Agent" includes any additional
Paying Agent. The Company hereby initially appoints the Trustee as Registrar
and Paying Agent, and the Trustee hereby initially agrees so to act.
The Company shall enter into an appropriate written agency agreement
with any Agent not a party to this Indenture, which agreement shall implement
the provisions of this Indenture that relate to such Agent. The Company shall
15
<PAGE>
promptly notify the Trustee in writing of the name and address of any such
Agent. If the Company fails to maintain a Registrar or Paying Agent, the
Trustee shall act as such.
(b) So long as the Securities are eligible for book-entry settlement
with the Depositary, or unless otherwise required by law, all Securities that
are so eligible may be represented by one or more Securities in global form (a
"Global Note") registered in the name of the Depositary or the nominee of the
Depositary, except as otherwise specified below. The transfer and exchange of
beneficial interests in any such Global Note shall be effected through the
Depositary in accordance with this Indenture and the procedures of the
Depositary therefor.
Transfers of interests in the Securities between any Global Note and
any other Security will be made in accordance with the standing instructions and
procedures of the Depositary and its participants. The Trustee shall make
appropriate endorsements to reflect increases or decreases in the principal
amounts of such Global Notes as set forth on the face of the Security
("Principal Amount") to reflect any such transfers.
Except as provided below, beneficial owners of a Global Note shall not
be entitled to have certificates registered in their names, will not receive or
be entitled to receive physical delivery of certificates in definitive form and
will not be considered Holders of such Securities in global form.
(c) Any Security in global form may be endorsed with or have
incorporated in the text thereof such legends or recitals or changes not
inconsistent with the provisions of this Indenture as may be required by the
Custodian, the Depositary or by the New York Stock Exchange, Inc. in order for
the Securities to be tradeable on the New York Stock Exchange or as may be
required for the Securities to be tradeable on any other market developed for
trading of such securities or required to comply with any applicable law or any
regulation thereunder or with the rules and regulations of any securities
16
<PAGE>
exchange or automated quotation system upon which the Securities may be listed
or traded or to conform with any usage with respect thereto, or to indicated any
special limitations or restrictions to which any particular Securities are
subject.
(d) As used in Sections 2.3(d), the term "transfer" encompasses any
sale, pledge, transfer or other disposition whatsoever of any Security.
Notwithstanding any other provisions of this Indenture (other than the
provisions set forth in the second paragraph of Section 2.3(b) and in this
Section 2.3(d)), a Security in global form may not be transferred as a whole or
in part except by the Depositary to a nominee of the Depositary or by a nominee
of the Depositary to the Depositary or another nominee of the Depositary or by
the Depositary or any such nominee to a successor Depositary or a nominee of
such successor Depositary.
The Depositary shall be a clearing agency registered under the
Exchange Act. The Company initially appoints DTC to act as Depositary with
respect to the Securities in global form. Initially, any Global Note shall be
issued to the Depositary, registered in the name of Cede & Co., as the nominee
of the Depositary, and deposited with the Custodian for Cede & Co.
If (i) the Company notifies the Trustee in writing that the DTC is no
longer willing or able to continue as Depositary and the Company is unable to
locate a qualified successor with respect to such Security within ninety (90)
days, or (ii) the Company, at its option, notifies the Trustee in writing that
it elects to cause the issuance of Securities in definitive form under the
Indenture, then, upon surrender by DTC of the Global Notes, certificated
Securities will be issued to each person that DTC identifies as the beneficial
owner of the Securities represented by the Global Notes. In addition, any
person having a beneficial interest in a Global Note may, upon request to the
17
<PAGE>
Trustee, exchange such beneficial interests for Securities in the form of
certificated Securities. Upon any such issuance, the Trustee is required to
register such certificated Securities in the name of such person or persons (or
the nominee of any thereof), and to cause the same to be delivered thereto.
If a Security in certificated form is issued in exchange for any
portion of a Global Note after the close of business at the office or agency
where such exchange occurs on any record date and before the opening of business
at such office or agency on the next succeeding interest payment date, interest
will not be payable on such interest payment date in respect of such Security,
but will be payable on such interest payment date, subject to the provisions of
this Indenture, only to the person to whom interest in respect of such portion
of such Global Note is payable in accordance with the provisions of this
Indenture.
At such time as all interests in a Security in global form have been
redeemed, converted, canceled, exchanged for Securities in certificated form, or
transferred to a transferee who receives Securities in certificated form
thereof, such Security in global form shall, upon receipt thereof, be canceled
by the Trustee in accordance with standing procedures and instructions existing
between the Depositary and the Custodian. At any time prior to such
cancellation, if any interest in a Global Note is exchanged for Securities in
certificated form, redeemed, converted, repurchased or canceled, or transferred
to a transferee who receives Securities in certificated form therefor or any
Security in certificated form is exchanged or transferred for part of a Security
in global form, the principal amount at maturity of such Security in global form
shall, in accordance with the standing procedures and instructions existing
between the Depositary and the Custodian, be appropriately reduced or increased,
as the case may be, and an endorsement shall be made on such Global Note, by the
Trustee or the Custodian, at the direction of the Trustee, to reflect such
reduction or increase.
18
<PAGE>
Neither the Company nor the Trustee shall be liable for any delay of
the Depositary or any participant or indirect participant therein in identifying
the beneficial owners of the Securities, and the Company and the Trustee may
conclusively rely on, and shall be protected in relying on, instructions from
DTC for all purposes (including with respect to the registration and delivery,
and the respective principal amounts of the Securities to be issued).
II.4 Paying Agent to Hold Assets in Trust.
The Company shall require each Paying Agent other than the Trustee to
agree in writing that each Paying Agent shall hold in trust for the benefit of
Holders or the Trustee all assets held by the Paying Agent for the payment of
principal of, or interest on, the Securities (whether such assets have been
distributed to it by the Company or any other obligor on the Securities), and
shall notify the Trustee in writing of any Default by the Company (or any other
obligor on the Securities) in making any such payment. If the Company or
Subsidiary of the Company acts as Paying Agent, it shall segregate such assets
and hold them as a separate trust fund for the benefit of the Holders or the
Trustee. The Company at any time may require a Paying Agent to distribute all
assets held by it to the Trustee and account for any assets disbursed and the
Trustee may at any time during the continuance of any payment Default, upon
written request to a Paying Agent, require such Paying Agent to distribute all
assets held by it to the Trustee and to account for any assets distributed.
Upon distribution to the Trustee of all assets that shall have been delivered by
the Company to the Paying Agent, the Paying Agent (if other than the Company or
a Subsidiary of the Company) shall have no further liability for such assets.
II.5 Holder Lists.
The Trustee shall preserve in as current a form as is reasonably
practicable the most recent list available to it of the names and addresses of
Holders and shall otherwise comply with TIA Section 312(a).
19
<PAGE>
If the Trustee is not the Registrar, the Company shall furnish to the Trustee
at least seven Business Days before each Interest Payment Date and, at such
other times as the Trustee may request in writing, a list in such form and as
of such date as the Trustee may reasonably require of the names and addresses
of Holders and the Company shall otherwise comply with TIA Section 312(a).
20
<PAGE>
II.6 Transfer and Exchange.
When Securities are presented to a Registrar with a request to
register the transfer of such Securities or to exchange such Securities for
an equal principal amount of Securities of other authorized denominations,
the Registrar shall register the transfer or make the exchange as requested
if its reasonable requirements for such transaction are met; provided,
however, that the Securities surrendered for transfer or exchange shall be
duly endorsed or accompanied by a written instrument of transfer in form
reasonably satisfactory to the Company and the Registrar, duly executed by
the Holder thereof or his attorney duly authorized in writing. To permit
registrations of transfers and exchanges, the Company shall execute and the
Trustee shall authenticate Securities at the Registrar's request. No service
charge shall be made for any registration of transfer or exchange, but the
Company may require payment of a sum sufficient to cover any transfer tax,
assessments, or similar governmental charge payable in connection therewith
(other than any such transfer taxes, assessments, or similar governmental
charge payable upon exchanges or transfers pursuant to Section 2.2, 2.10,
3.6, 3.10(b)(5) or 9.5). The Registrar shall not be required to register the
transfer of or exchange of (a) any Security selected for redemption in whole
or in part pursuant to Article Three, except the unredeemed portion of any
Security being redeemed in part, (b) any Security for a period beginning 15
Business Days before the mailing of a notice of an offer to repurchase or
redeem Securities and ending at the close of business on the day of such
mailing, or (c) any Security or a portion thereof surrendered for conversion
pursuant to Article Eleven hereof.
21
<PAGE>
II.7 Replacement Securities.
If any mutilated Security is surrendered to the Trustee, or the
Company and the Trustee receive evidence to their satisfaction of the
destruction, loss or theft of any Security, the Company shall issue and the
Trustee, upon the written order of the Company signed by an Officer, shall
authenticate a replacement Security if the Trustee's requirements are met.
If required by the Trustee or the Company, an indemnity bond must be supplied
by the Holder that is sufficient in the judgment of both the Trustee and the
Company to protect the Company, the Trustee, any Agent or any authenticating
agent from any loss which any of them may suffer if a Security is replaced.
The Company may charge such Holder for its reasonable out-of-pocket expenses
in replacing a Security.
Every replacement Security is an additional obligation of the
Company and shall be entitled to all benefits of this Indenture equally and
proportionately with all other Securities duly issued hereunder.
II.8 Outstanding Securities.
Securities outstanding at any time are all the Securities that have
been authenticated by the Trustee except for those cancelled by it, those
delivered to it for cancellation and those described in this Section as not
outstanding. A Security does not cease to be outstanding because the Company
or an Affiliate of the Company holds the Security except as provided in
Section 2.9.
If a Security is replaced pursuant to Section 2.7 hereof (other than
a mutilated Security surrendered for replacement), it ceases to be
outstanding unless the Trustee receives proof satisfactory to it that the
re-placed Security is held by a bona fide purchaser. A mutilated Security
ceases to be outstanding upon surrender of such Security and replacement
thereof pursuant to Section 2.7.
22
<PAGE>
If on the Maturity Date the Paying Agent (other than the Company, a
Subsidiary of the Company or any Affiliate thereof) holds U.S. Legal Tender or
U.S. Government obligations sufficient to pay all of the principal and interest
due on the Securities payable on that date and payment of the Securities called
for redemption is not otherwise prohibited, then on and after that date such
Securities cease to be outstanding and interest on them ceases to accrue.
II.9 Treasury Securities.
In determining whether the Holders of the required principal amount
of Securities have concurred in any direction, waiver or consent, Securities
owned by the Company or by any Affiliate of the Company shall be considered
as though not outstanding, except that for the purposes of determining
whether the Trustee shall be protected in relying on any such direction,
waiver or, consent, only Securities which a Trustee knows are so owned shall
be so disregarded.
II.10 Temporary Securities.
Until definitive Securities are ready for delivery, the Company may
prepare and the Trustee shall authenticate temporary Securities upon a
written order of the Company signed by an Officer and delivered or caused to
be delivered to a Trust Officer. Temporary Securities shall be substantially
in the form of definitive Securities but may have variations that the Company
considers appropriate for temporary Securities. Without unreasonable delay,
the Company shall prepare and the Trustee shall authenticate definitive
Securities in exchange for temporary Securities. Until so exchanged, the
temporary Securities shall in all respects be entitled to the same benefits
under this Indenture as permanent Securities authenticated and delivered
hereunder.
23
<PAGE>
II.11 Cancellation.
The Company at any time may deliver Securities to the Trustee for
cancellation. The Registrar and Paying Agent shall forward to the Trustee
any Securities surrendered to them for redemption, conversion or registration
of transfer, exchange or payment. The Trustee, or at the direction of the
Trustee, the Registrar or Paying Agent (other than the Company or an
Affiliate of the Company) and no one else shall cancel all Securities
surrendered for redemption, conversion, registration of transfer, exchange,
payment, replacement or cancellation. Subject to Section 2.7, the Company
may not issue new Securities to replace Securities that it has paid or that
have been delivered to the Trustee for cancellation. No Securities shall be
authenticated in lieu of or in exchange for any Securities cancelled as
provided in this Section 2.11, except as expressly permitted in the form of
Securities and as permitted by this Indenture.
II.12 Defaulted Interest.
If the Company defaults in a payment of interest on the Securities,
it shall pay the defaulted interest in any lawful manner plus, (to the extent
lawful) interest on the defaulted interest, to the Persons who are Holders on
a subsequent special record date, which date shall be the fifteenth day next
preceding the date fixed by the Company for the payment of defaulted
interest, whether or not such day is a Business Day, in each case at the rate
provided in the Securities and in Section 4.1 hereof. At least 15 days
before the subsequent special record date, the Company shall mail to each
Holder with a copy to the Trustee a notice that states the special record
date, the related payment date and the amount of defaulted interest, and
interest payable on defaulted interest, if any, to be paid.
24
<PAGE>
III
OPTIONAL REDEMPTION
III.1 Notices to Trustee.
If the Company elects to redeem Securities pursuant to the optional
redemption provisions of Section 3.7 hereof, it shall furnish to the Trustee,
at least 45 days but not more than 60 days before a Redemption Date, an
Officers' Certificate setting forth that such redemption shall occur pursuant
to Section 3.7 hereof and setting forth the Redemption Date, the principal
amount of Securities to be redeemed and the Redemption Price.
III.2 Selection of Securities to be Redeemed.
If less than all of the Securities are to be redeemed pursuant to
Paragraph 5 thereof, the Trustee shall select the Securities to be redeemed
pro rata or by lot or by such other method as the Trustee shall determine to
be fair and appropriate and in such manner as complies with any applicable
legal and stock exchange requirements.
The Trustee shall make the selection from the Securities outstanding
and not previously called for redemption and shall promptly notify the
Company in writing of the Securities selected for redemption and, in the case
of any Security selected for partial redemption, the principal amount thereof
to be redeemed. Securities in denominations of $1,000 may be redeemed only
in whole. The Trustee may select for redemption portions (equal to $1,000 or
any integral multiple thereof) of the principal of Securities that have
denominations larger than $1,000. Provisions of this Indenture that apply to
Securities called for redemption also apply to portions of Securities called
for redemption.
25
<PAGE>
III.3 Notice of Redemption.
At least 30 days but not more than 60 days before a Redemption Date,
the Company shall mail a notice of redemption by first class mail, postage
prepaid, to the Trustee and each Holder whose Securities are to be redeemed at
the last address for such Holder shown on the registry books. At the Company's
request, the Trustee shall give the notice of redemption in the Company's name
and at the Company's expense. Each notice for redemption shall identify the
Securities to be redeemed and shall state:
(a) the Redemption Date;
(b) the Redemption Price, including the amount of accrued and
unpaid interest to be paid upon such redemption;
(c) the name, address and telephone number of the Paying
Agent;
(d) that Securities called for redemption must be surrendered
to the Paying Agent at the address specified in such notice to collect the
Redemption Price;
(e) that, unless the Company defaults in its obligation to
deposit U.S. Legal Tender with the Paying Agent in accordance with Section
3.5 hereof, interest on Securities called for redemption ceases to accrue
on and after the Redemption Date and the only remaining right of the
Holders of such Securities is to receive payment of the Redemption Price
upon surrender to the Paying Agent of the Securities called for redemption
and to be redeemed;
(f) if any Security is being redeemed in part, the portion of
the principal amount, equal to $1,000 or any integral multiple thereof, of
such Security to be redeemed and that, after the Redemption Date, and upon
surrender of such Security, a new Security or Securities in aggregate
principal amount equal to the unredeemed portion thereof will be issued;
26
<PAGE>
(g) if less than all the Securities are to be redeemed, the
identification of the particular Securities (or portion thereof) to be
redeemed, as well as the aggregate principal amount of such Securities to
be redeemed and the aggregate principal amount of Securities to be
outstanding after such partial redemption;
(h) the CUSIP number of the Securities to be redeemed; and
(i) that the notice is being sent pursuant to this Section 3.3
and pursuant to the optional redemption provisions of Paragraph 5 of the
Securities.
III.4 Effect of Notice of Redemption.
Once notice of redemption is mailed in accordance with Section 3.3,
Securities called for redemption become due and payable on the Redemption
Date and at the Redemption Price together with accrued and unpaid interest.
Upon surrender to the Trustee or Paying Agent, such Securities called for
redemption shall be paid at the Redemption Price plus interest, if any,
accrued and unpaid on the Redemption Date; provided, that if a Redemption
Date is a Legal Holiday, payment shall be made on the next succeeding
Business Day and no interest shall accrue for the period from such Redemption
Date to such succeeding Business Day.
27
<PAGE>
III.5 Deposit of Redemption Price.
At least one Business Day prior to the Redemption Date, the Company
shall deposit with the Paying Agent (other than the Company or an Affiliate
of the Company) U.S. Legal Tender sufficient to pay the Redemption Price of,
and accrued and unpaid interest on, all Securities to be redeemed on such
Redemption Date (other than Securities or portions thereof called for
redemption on that date that have been delivered by the Company to the
Trustee for cancellation). The Paying Agent shall promptly return to the
Company any U.S. Legal Tender so deposited in excess of the amounts necessary
to pay the Redemption Price and accrued interest on all Securities to be
redeemed.
If the Company complies with the preceding paragraph and payment of
the Securities called for redemption is not prohibited, interest on the
Securities to be redeemed will cease to accrue on the applicable Redemption
Date, whether or not such Securities are presented for payment.
Notwithstanding anything herein to the contrary, if any Security surrendered
for redemption in the manner provided in the Securities shall not be so paid
upon surrender for redemption because of the failure of the Company to comply
with the preceding paragraph, interest shall continue to accrue and be paid
from the Redemption Date until such payment is made on the unpaid principal,
and, to the extent lawful, on any interest not paid on such unpaid principal,
in each case at the rate and in the manner provided in Section 4.1 hereof and
the Security.
III.6 Securities Redeemed in Part.
Upon surrender of a Security that is to be redeemed in part, the
Company shall execute and the Trustee shall authenticate and deliver to the
Holder, without service charge, a new Security or Securities equal in
principal amount to the unredeemed portion of the Security surrendered.
28
<PAGE>
III.7 Optional Redemption.
The Company may not redeem the Securities prior to October 4, 2000.
Thereafter, the Company may, at its option, upon notice as set forth in
Section 3.3, redeem all or any of the Securities, in whole or in part at any
time, at the applicable Redemption Price specified in the form of Security
attached as Exhibit A set forth therein in Paragraph 5 thereof, in each case
together with accrued interest to and including the date fixed for
redemption; provided, that on or after October 4, 2000 and prior to October
4, 2002, the Securities will not be redeemable pursuant to this Section 3.7
unless the Closing Price of the Common Stock for twenty Trading Days within a
period of thirty consecutive Trading Days ending within five Trading Days
prior to the mailing of the notice of redemption under Section 3.3 shall have
exceeded $58.06 per share (subject to adjustment upon the occurrence of
certain events set forth in Section 11.5 hereof); and provided, further, that
any semi-annual payment of interest becoming due on the date fixed for
redemption shall be payable to the holders of record on the relevant record
date of the Securities being redeemed. Notwithstanding the foregoing, the
Company may not redeem any Securities unless all accrued and unpaid interest
has been paid on all outstanding Securities for all interest periods
terminating on or prior to the last interest payment date before the date of
redemption.
III.8 No Sinking Fund.
The Securities shall not be entitled to the benefit of any sinking
fund.
29
<PAGE>
III.9 Conversion Arrangement on Call for Redemption.
30
<PAGE>
In connection with any redemption of Securities, the Company may arrange
for the purchase and conversion of any Securities by an agreement with one or
more investment bankers or other purchasers to purchase such Securities by
paying to the Trustee in trust for the Noteholders, on or before the close of
business on the date fixed for redemption, an amount not less than the
applicable Redemption Price, together with interest accrued to the date fixed
for redemption, of such Securities. Notwithstanding anything to the contrary
contained in this Article Three, the obligation of the Company to pay the
Redemption Price of such Securities, together with interest accrued to the
date fixed for redemption, shall be deemed to be satisfied and discharged to
the extent such amount is so paid by such purchasers. If such an agreement
is entered into, a copy of which will be filed with the Trustee prior to the
date fixed for redemption, any Securities not duly surrendered for conversion
by the holders thereof may, at the option of the Company, be deemed, to the
fullest extent permitted by law, acquired by such purchasers from such
holders and (notwithstanding anything to the contrary contained in Article
Eleven) surrendered by such purchasers for conversion, all as of immediately
prior to the close of business on the date fixed for redemption, subject to
payment of the above amount as aforesaid. At the direction of the Company,
the Trustee shall hold and dispose of any such amount paid to it in the same
manner as it would monies deposited with it by the Company for the redemption
of Securities. Without the Trustee's prior written consent, no arrangement
between the Company and such purchasers for the purchase and conversion of
any Securities shall increase or otherwise affect any of the powers, duties,
responsibilities or obligations of the Trustee as set forth in this
Indenture, and the Company agrees to indemnify the Trustee from, and hold it
harmless against, any loss, liability or expense arising out of or in
connection with any such arrangement for the purchase and conversion of any
Securities between the Company and such purchasers to which the Trustee has
not consented in writing, including the costs and expenses incurred by the
Trustee in the defense of any claim or
31
<PAGE>
liability arising out of or in connection with the exercise or performance of
any of its powers, duties, responsibilities or obligations under this
Indenture.
32
<PAGE>
III.10 Redemption at Option of Holders.
33
<PAGE>
(a) Right to Require Repurchase. In the event that a Change in
Control (as hereinafter defined) shall occur, then each Holder shall have the
right, at the Holder's option, to require the Company to repurchase, and upon
the exercise of such right the Company shall repurchase, all of such Holder's
Securities, or any portion of the principal amount thereof that is equal to
U.S. $1,000 or any integral multiple of U.S. $1,000 in excess thereof, on the
date (the "Repurchase Date") that is 45 days after the date of the Company
Notice (as defined in paragraph (b) below) at a purchase price equal to 100%
of the principal amount of the Securities to be repurchased (the "Repurchase
Price") together with interest accrued to the Repurchase Date; provided,
however, that installments of interest on Securities whose Stated Maturity is
on or prior to the Repurchase Date shall be payable to the Holders of such
Securities registered as such on the relevant Record Date according to their
terms and the provisions of Section 4.1. Such right to require the
repurchase of the Securities shall not continue after a discharge of the
Company from its obligations with respect to the Securities in accordance
with Article Eight, unless a Change in Control shall have occurred prior to
such discharge. At the option of the Company, the Repurchase Price may be
paid in cash or, except as otherwise provided in paragraph (b)(7) below, by
delivery of shares of Common Stock having a fair market value equal to the
Repurchase Price; provided that payment may not be made in Common Stock
unless at the time of payment such stock is listed on a national securities
exchange or quoted on the Nasdaq National Market. For purposes of this
Section, the fair market value of shares of Common Stock shall be determined
by the Company and shall be equal to 95% of the average of the Closing Price
of the Common Stock for the five consecutive Trading Days ending on and
including the third Trading Day immediately preceding the Repurchase Date.
Whenever in this Indenture there is a reference, in any context, to the
principal of any Security as of any time, such reference shall be deemed to
include reference to the Repurchase Price payable in respect of such Security
to the extent that such Repurchase Price is, was or would be so payable at
such time,
34
<PAGE>
and express mention of the Repurchase Price in any provision of
this Indenture shall not be construed as excluding the Repurchase Price in
those provisions of this Indenture when such express mention is not made.
(b) Notices; Method of Exercising Repurchase Right, Etc.
(1) Unless the Company shall have theretofore called for redemption
all of the Securities, on or before the 30th day after the occurrence of a
Change in Control, the Company or, at the request and expense of the Company,
the Trustee, shall give to all Holders of Securities, in the manner provided
in Section 12.2, notice (the "Company Notice") of the occurrence of the
Change in Control and of the repurchase right set forth herein arising as a
result thereof. The Company shall also deliver a copy of such notice of a
repurchase right to the Trustee.
Each notice of a repurchase right shall state:
(i) the Repurchase Date,
(ii) the date by which the repurchase right must be exercised,
(iii)the Repurchase Price,
(iv) a description of the procedure which a Holder must follow to
exercise a repurchase right, and the place or places where
such Securities are to be surrendered for payment of the
Repurchase Price and accrued interest, if any,
(v) that on the Repurchase Date the Repurchase Price, and
accrued interest, if any, will become due and payable upon
each such Security designated by the Holder to be
repurchased, and that interest thereon shall cease to accrue
on and after said date,
35
<PAGE>
(vi) the Conversion Rate then in effect, the date on which the
right to convert the principal amount of the Securities to
be repurchased will terminate and the place or places where
such Securities may be surrendered for conversion, and
(vii)the place or places that the certificate required by the
form of Security in Exhibit A to the Indenture shall be
delivered, and the form of such certificate.
In addition, at lease two Business Days preceding the Repurchase Date,
the Company shall give to all Holders of the Securities, in the manner provided
in Section 12.2 notice specifying whether the Repurchase Price will be payable
in cash or Common Stock and shall deliver a copy of such notice to the Trustee.
No failure of the Company to give the foregoing notices or defect
therein shall limit any Holder's right to exercise a repurchase right or affect
the validity of the proceedings for the repurchase of Securities.
If any of the foregoing provisions or other provisions of this Section
3.10 are inconsistent with applicable law, such law shall govern.
(2) To exercise a repurchase right, a Holder shall deliver to the
Trustee or any Paying Agent on or before the 30th day after the date of the
Company Notice (i) written notice of the Holder's exercise of such right,
which notice shall set forth the name of the Holder, the principal amount of
the Securities to be repurchased (and, if any Security is to repurchased in
part, the serial number thereof, the portion of the principal amount thereof
36
<PAGE>
to be repurchased and the name of the Person in which the portion thereof to
remain outstanding after such repurchase is to be registered) and a statement
that an election to exercise the repurchase right is being made thereby, and,
in the event that the Repurchase Price shall be paid in Common Stock, the
name or names (with addresses) in which the certificate or certificates for
Common Stock shall be issued, and (ii) the Securities with respect to which
the repurchase right is being exercised. Such written notice shall be
irrevocable, except that the right of the Holder to convert the Securities
with respect to which the repurchase right is being exercised shall continue
until the close of business on the Repurchase Date.
(3) In the event a repurchase right shall be exercised in
accordance with the terms hereof, the Company shall pay or cause to be paid
to the Trustee or the Paying Agent the Repurchase Price in cash or Common
Stock, as provided above, for payment to the Holder on the Repurchase Date
or, if Common Stock are to be paid, as promptly after the Repurchase Date as
practicable, together with accrued and unpaid interest to the Repurchase Date
payable with respect to the Securities as to which the purchase right has
been exercised; provided, however, that installments of interest that mature
on or prior to the Repurchase Date shall be payable in cash, in the case of
Securities, to the Holders of such Securities, registered as such at the
close of business on the relevant record date, in each case according to the
terms and provisions of Article Two.
(4) If any Security (or portion thereof) surrendered for repurchase
shall not be so paid on the Repurchase Date, the principal amount of such
Security (or portion thereof, as the case may be) shall, until paid, bear
interest to the extent permitted by applicable law from the Repurchase Date
at the rate of 6% per annum, and each Security shall remain convertible into
Common Stock until the principal of such Security (or portion thereof, as the
case may be) shall have been paid or duly provided for.
37
<PAGE>
(5) Any Security which is to be repurchased only in part shall be
surrendered to the Trustee (with, if the Company or the Trustee so requires, due
endorsement by, or a written instrument of transfer in form satisfactory to the
Company and the Trustee duly executed by, the Holder thereof or his attorney
duly authorized in writing), and the Company shall execute, and the Trustee
shall authenticate and make available for delivery to the Holder of such
Security without service charge, a new Security or Securities, containing
identical terms and conditions, each in an authorized denomination in aggregate
principal amount equal to and in exchange for the unrepurchased portion of the
principal of the Security so surrendered.
(6) Any issuance of Common Stock in respect of the Repurchase Price
shall be deemed to have been effected immediately prior to the close of business
on the Repurchase Date and the Person or Persons in whose name or names any
certificate or certificates for Common Stock shall be issuable upon such
repurchase shall be deemed to have become on the Repurchase Date the holder or
holders of record of the shares represented thereby; provided, however, that any
surrender for repurchase on a date when the stock transfer books of the Company
shall be closed shall constitute the Person or Persons in whose name or names
the certificate or certificates for such shares are to be issued as the
recordholder or holders thereof for all purposes at the opening of business on
the next succeeding day on which such stock transfer books are open. No payment
or adjustment shall be made for dividends or distributions on any Common Stock
issued upon repurchase of any Security declared prior to the Repurchase Date.
(7) No fraction of shares shall be issued upon repurchase of
Securities. If more than one Security shall be repurchased from the same Holder
and the Repurchase Price shall be payable in Common Stock, the number of full
shares which shall be issuable upon such repurchased shall be computed on the
basis of the aggregate
38
<PAGE>
principal amount of the Securities so repurchased. Instead of any fractional
share of Common Stock which would otherwise be issuable on the repurchase of
any Security or Securities, the Company will deliver to the applicable Holder
its check for the current market value of such fractional share. The current
market value of a fraction of a share is determined by multiplying the
current market price of a full share by the fraction, and rounding the result
to the nearest cent. For purposes of this Section 3.10(b)(7), the current
market price of shares of Common Stock shall be determined by the Company and
shall be equal to 95% of the average of the Closing Price of the Common Stock
for the five consecutive Trading Days ending on and including the third
Trading Day immediately preceding the Repurchase Date.
(8) Any issuance and delivery of certificates for Common Stock on
repurchase of Securities shall be made without charge to the Holder of
Securities being repurchased for such certificates or for any tax or duty in
respect of the issuance or delivery of such certificates or the securities
represented thereby; provided, however, that the Company shall not be required
to pay any tax or duty which may be payable in respect of (i) income of the
Holder or (ii) any transfer involved in the issuance of delivery of certificates
for Common Stock in a name other than that of the Holder of the Securities being
repurchased, and no such issuance or delivery shall be made unless and until the
Person requesting such issuance or delivery has paid to the Company the amount
of any such tax or duty or has established, to the satisfaction of the Company,
that such tax or duty has been paid.
(9) If any Common Stock to be issued upon repurchase of Securities
hereunder require registration with or approval of any governmental authority
under any federal or state law before such shares may be validly issued or
delivered upon repurchase, the Company covenants that it will in good faith and
as expeditiously as possible endeavor to secure such registration or approval,
as the case may be; provided, however, that nothing
39
<PAGE>
in this Section shall be deemed to affect in any way the obligations
of the Company to repurchase Securities as provided in this Section
3.10 and if such registration is not completed or does not become
effective or such approval is not obtained prior to the Repurchase
Date, the Repurchase Price shall be paid in cash.
(10) The Company covenants that all Common Stock which may
be issued upon repurchase of Securities will upon issue be duly and
validly issued and fully paid and nonassessable.
(c) Certain Definitions. For purposes of this Section
3.10:
(1) the term "beneficial owner" shall be determined in
accordance with Rule 13d-3, as in effect on the date of the original
execution of this Indenture, promulgated by the Commission pursuant to
the Exchange Act;
(2) a "Change in Control" shall be deemed to have occurred
at the time, after the original issuance of the Securities, of:
(i) the acquisition by any Person of beneficial
ownership, directly or indirectly, through a
purchase, merger or other acquisition transaction
or series of transactions, of shares of capital
stock of the Company entitling such Person to
exercise 50% or more of the total voting power of
all shares of capital stock of the Company
entitled to vote generally in the elections of
directors (any shares of voting stock of which
such person or group is the beneficial owner that
are not then outstanding being deemed outstanding
for purposes of calculating such percentage) other
than
40
<PAGE>
any such acquisition by the Company, any
Subsidiary of the Company or any employee benefit
plan of the Company; or
(ii) any consolidation of the Company with, or merger
of the Company into, any other Person, any merger
of another Person into the Company, or any sale or
transfer of all or substantially all of the assets
of the Company to another Person (other than (a)
any such transaction (x) which does not result in
any reclassification, conversion, exchange or
cancellation of outstanding shares of Common Stock
and (y) pursuant to which holders of Common Stock
immediately prior to such transaction have the
entitlement to exercise, directly or indirectly,
50% or more of the total voting power of all
shares of capital stock entitled to vote generally
in the election of directors of the continuing or
surviving person immediately after such
transaction and (b) any merger which is effected
solely to change the jurisdiction of incorporation
of the Company and results in a reclassification,
conversion or exchange of outstanding shares of
Common Stock into solely shares of common stock);
provided, however, that a Change in Control shall not be deemed
to have occurred if either (x) the Closing Price of the Common
Stock for any five Trading Days within the period of 10
consecutive Trading Days ending immediately after the later of
the Change in Control or the public announcement of
41
<PAGE>
the Change in Control (in the case of a Change in Control under
clause (i) above) or ending immediately before the Change in
control (in the case of a Change in Control under clause (ii)
above) shall equal or exceed 105% of the Conversion Rate in
effect on such Trading Day or (y) all of the consideration
(excluding cash payments for fractional shares) in the
transaction or transactions constituting the Change in Control
consists of common stock traded on a national securities exchange
or quoted on the Nasdaq National Market and as a result of such
transaction or transactions the Securities become convertible
solely into such common stock; and
(3) the term "Person" shall include any syndicate or group
which would be deemed to be a "person" under Section 13(d)(3) of the
Exchange Act, as in effect on the date of the original execution of
this Indenture.
IV
COVENANTS
IV.1 Payment of Securities.
The Company shall pay or cause to be paid the principal
amount at maturity, Issue Price, Redemption Price, Repurchase Price,
and interest on each of the Securities at the places, at the
respective times and in the manner provided herein and in the
Securities. Principal and interest shall be considered paid on the
date due if the Paying Agent, other than the Company or an Affiliate
of the Company, holds on that date money deposited by the Company in
available funds and designated for and sufficient to pay all principal
and interest then due.
Interest may, at the option of the Company, be paid either
(i) by check mailed to the address of the person entitled thereto as
it appears in the Security
42
<PAGE>
register or (ii) by transfer to an account maintained by such person
located in the United States; provided, however, that payments to DTC
will be made by wire transfer of immediately available funds to the
account of DTC or its nominee.
The Company shall pay interest (including post-petition
interest in any proceeding under any Bankruptcy Law) on overdue
principal and premium, if any, at the same rate per annum on the
Securities to the extent lawful; it shall pay interest (including
post-petition interest in any proceeding under any Bankruptcy Law) on
overdue installments of interest (without regard to any applicable
grace period) at the same rate to the extent lawful.
IV.2 Maintenance of Office or Agency.
The Company shall maintain, in the Borough of Manhattan, The
City of New York, an office or agency (which may be an office of the
Trustee, or its affiliate, or the Registrar) where Securities may be
surrendered for registration of transfer or exchange or for
presentation for payment or for conversion or redemption and where
notices and demands to or upon the Company in respect of the
Securities and this Indenture may be served. The Company shall give
prompt written notice to the Trustee of the location, and any change
in the location, of such office or agency. If at any time the Company
shall fail to maintain any such required office or agency or shall
fail to furnish the Trustee with the address thereof, such
presentations, surrenders, notices and demands may be made or served
at the Corporate Trust Office of the Trustee.
The Company may also from time to time designate one or more
other offices or agencies where the Securities may be presented or
surrendered for any or all such purposes and may from time to time
rescind such designations; provided, however, that no such designation
or rescission shall in any manner relieve the Company of its
obligation to maintain an office or agency in the
43
<PAGE>
Borough of Manhattan, The City of New York for such purposes. The
Company shall give prompt written notice to the Trustee of any such
designation or rescission and of any change in the location of any
such other office or agency.
IV.3 Waiver of Stay, Extension and Usury Laws.
The Company covenants (to the extent that it may lawfully do
so) that it shall not at any time insist upon, plead, or in any manner
whatsoever claim or take the benefit or advantage of, any stay,
extension or usury law wherever enacted, now or at any time hereafter
in force, which would prohibit or forgive the Company from paying all
or any portion of the principal of or interest on the Securities as
contemplated herein or which may affect the covenants or the
performance of this Indenture; and the Company (to the extent that it
may lawfully do so) hereby expressly waives all benefit or advantage
of any such law insofar as such law applies to the Securities, and
covenants that it shall not, by resort to any such law, hinder, delay
or impede the execution of any power herein granted to the Trustee,
but will suffer and permit the execution of every such power as
through no such law has been enacted.
IV.4 Corporate Existence.
Subject to Article V, the Company will do or cause to be
done all things necessary to preserve and keep in full force and
effect its corporate existence.
IV.5 Limitation on Other Subordinated Indebtedness.
The Company shall not incur, create, issue, assume,
guarantee or otherwise become liable for any Indebtedness that is
expressly by its terms subordinate or junior in right of payment to
any Senior Indebtedness and senior in any respect in right of payment
to the Securities.
44
<PAGE>
IV.6 SEC Reports; Financial Statements.
(a) The Company shall deliver to the Trustee and mail
to each Holder, within 15 days after the filing of the same with the
SEC, copies of its annual report and of the information, documents and
other reports, if any, which the Company is required to file with the
SEC pursuant to Section 13 or 15(d) of the Exchange Act. The Company
shall also comply with the other provisions of TIA Section 314(a).
(b) The Company shall deliver to the Trustee and to
each Holder, within 15 days after it files the same with the SEC,
copies of all reports and information that the Company is required to
file with the SEC pursuant to Section 13 or 15(d) of the Exchange Act.
Notwithstanding that the Company may not be required to remain subject
to the reporting requirements of Section 13 or 15(d) of the Exchange
Act, the Company shall file with the SEC and provide the Trustee and
Holders with such annual reports and such information, documents and
other reports as would otherwise be required if it were subject to
such requirements.
IV.7 Compliance Certificate; Notice of Default.
(a) The Company shall deliver to the Trustee within 120
days after the end of its fiscal year an Officers' Certificate
complying with Section 314(a)(4) of the TIA and stating that a review
of its activities during the preceding fiscal year has been made under
the supervision of the signing Officers with a view to determining
whether the Company has kept, observed, performed and fulfilled its
obligations under this Indenture and further stating, as to each such
Officer signing such certificate, whether or not the signer knows of
any failure by the Company to comply with any conditions or covenants
in this Indenture and, if such signer does know of such a failure to
comply, the certificate shall describe such failure with
particularity. The Officers' Certificate shall also notify the
Trustee should the
45
<PAGE>
relevant fiscal year end on any date other than the current fiscal year end
date.
(b) So long as not contrary the then current policies of
the American Institute of Certified Public Accountants, the Company
shall deliver to the Trustee within 120 days after the end of each of
its fiscal years a written report of a firm of independent certified
public accountants with an established national reputation stating
that in conducting their audit for such fiscal year, nothing has come
to their attention that caused them to believe that the Company was
not in compliance with the provisions set forth in Article Four or
Five of this Indenture.
(c) The Company shall, so long as any of the Securities are
outstanding, deliver to the Trustee, promptly upon becoming aware of
any Default or Event of Default under this Indenture, an Officers'
Certificate specifying such Default or Event of Default and what
action the Company is taking or proposes to take with respect thereto.
The Trustee shall not be deemed to have knowledge of a Default or an
Event of Default unless one of its Trust Officers receives notice of
the Default giving rise thereto from the Company or any of the
Holders.
46
<PAGE>
V
SUCCESSORS
V.1 Merger, Consolidation, or Sale of Assets.
Subject to the provisions of Section 5.3, nothing contained
in this Indenture or in any of the Securities shall prevent any
consolidation or merger of the Company with or into any other
corporation or corporations (whether or not affiliated with the
Company), or successive consolidations or mergers in which the Company
or its successor or successors shall be a party or parties, or shall
prevent any sale, conveyance or lease (or successive sales,
conveyances or leases) of all or substantially all of the property of
the Company, to any other corporation (whether or not affiliated with
the Company), authorized to acquire and operate the same and which
shall be organized under the laws of the United States of America, any
state thereof or the District of Columbia; provided, that upon any
such consolidation, merger, sale, conveyance or lease, the due and
punctual payment of the principal amount at maturity, Issue Price,
Redemption Price, Repurchase Price and interest in respect of all of
the Securities, according to their tenor, and the due and punctual
performance and observance of all of the covenants and conditions of
this Indenture to be performed by the Company, shall be expressly
assumed, by supplemental indenture satisfactory in form to the
Trustee, executed and delivered to the Trustee by the corporation (if
other than the Company) formed by such consolidation, or into which
the Company shall have been merged, or by the corporation which shall
be acquired or leased such property (the "Surviving Entity"), and such
supplemental indenture shall provide for the applicable conversion
rights set forth in Section 11.6.
47
<PAGE>
V.2 Opinion of Counsel to Trustee; Officers' Certificate.
The Trustee, subject to the provisions of Section 7.1 and
7.2, shall receive and be entitled to rely upon an Officers'
Certificate and an Opinion of Counsel each stating that such
consolidation, merger, sale, transfer, lease or conveyance complies
with the applicable provisions of this Indenture and that all
conditions precedent herein provided relating to such transaction have
been complied with.
V.3 Successor Corporation Substituted.
Upon any consolidation or merger, or any sale, transfer,
lease or conveyance of properties or assets in accordance with Section
5.1, the Surviving Entity formed by such consolidation or into which
the Company is merged or to which such transfer is made shall succeed
to, and be substituted for, and may exercise every right and power of,
the Company under this Indenture with the same effect as if such
Surviving Entity had been named as the Company herein. When a
Surviving Entity duly assumes all of the obligations of the Company
pursuant hereto and pursuant to the Securities, the predecessor shall
be released from such obligations, provided that, in the case of
transfer by lease, the predecessor corporation shall not be released
from the payment of principal and interest on the Securities.
48
<PAGE>
VI
DEFAULTS AND REMEDIES
VI.1 Events of Default.
An "Event of Default" whenever used herein, means any one of
the following events (whatever the reason for such Event of Default
and whether or not it shall be occasioned or prohibited by the
provisions of Article Ten or voluntarily or involuntarily be effected
by the operation of law or pursuant to any judgment, decree or order
of any administrative or governmental body):
(a) a default in the payment of interest on any Security
when the same shall become due and payable and the continuance of
such default for a period of 30 days;
(b) a default in the payment of all or any part of the
principal of or premium, if any, on any Security when and as the
same shall become due and payable at maturity, or upon
acceleration, redemption or otherwise;
(c) a failure by the Company to comply with any of the
other agreements or covenants in, or provisions of, the
Securities or this Indenture which failure continues for the
period and after the notice specified below;
(d) the Company, pursuant to or within the meaning of any
Bankruptcy Law:
(i) commences a voluntary case,
(ii) consents to the entry of an order for relief
against it in an involuntary case,
49
<PAGE>
(iii) consents to the appointment of a Custodian of it
or for all or substantially all of its property, or
(iv) makes a general assignment for the benefit of its
creditors;
(e) a court of competent jurisdiction enters an order or
decree under any Bankruptcy Law that:
(i) is for relief against the Company as debtor in an
involuntary case,
(ii) appoints a Custodian of the Company or a Custodian
for all or substantially all of the property of the
Company, or
(iii) orders the liquidation of the Company,
and the order or decree remains unstayed and in effect for 60 days;
The Company is required, pursuant to Section 4.7(a) hereof,
to deliver to the Trustee annually a statement regarding compliance
with the provisions of the Indenture, and the Company is required,
pursuant to Section 4.7(a) hereof, upon becoming aware of any Default
or Event of Default to deliver a statement to the Trustee specifying
such default or Event of Default.
A Default under clause (c) is not an Event of Default until
the Trustee notifies the Company, or the Holders of at least 30% (25%
in the case of an Event of Default with respect to the payment of
principal of or interest on the Securities) in principal amount of the
then outstanding Securities notify the Company and the Trustee, in
writing of the Default and the Company does not cure the Default
within 30 days after receipt of the notice. The notice must specify
the Default, demand that
50
<PAGE>
it be remedied and state that the notice is a "Notice of Default."
In the case of any Event of Default pursuant to the
provisions of this Section 6.1 occurring by reason of any willful
action (or inaction) taken (or not taken) by or on behalf of the
Company with the intention of avoiding payment of the premium, if any,
which the Company would have had to pay if the Company then had
elected to redeem the Securities pursuant to Section 3.7 hereof, an
equivalent premium shall also become and be immediately due and
payable to the extent permitted by law, anything in this Indenture or
in the Securities contained to the contrary withstanding.
51
<PAGE>
VI.2 Acceleration.
If an Event of Default (other than an Event of Default with
respect to the Company specified in clauses (d) or (e) of Section 6.1
hereof) occurs and is continuing, the Trustee by written notice to the
Company or the Holders of not less than 30% (25% in the case of an
Event of Default with respect to the payment of principal of or
interest on the Securities) in aggregate principal amount of the then
outstanding Securities by written notice to the Company and
the Trustee, may and the Trustee at the request of such Holders shall,
declare all unpaid principal of, premium, if any, and accrued and
unpaid interest on the Securities to be due and payable immediately;
provided, however, that if any Senior Indebtedness is outstanding
pursuant to the Credit Agreement, upon a declaration of acceleration,
such principal and interest shall be due and payable upon the earlier
of (x) the day that is five Business Days after the provision to the
Company and the Credit Agent of such written notice, unless such Event
of Default is cured or waived prior to such date, and (y) the date of
acceleration of any Senior Indebtedness under the Credit Agreement.
Upon such declaration of acceleration the principal, premium, if any,
and accrued interest, due and payable on the Securities, as determined
in the next succeeding paragraph, shall be due and payable
immediately. If an Event of Default with respect to the Company
specified in clause (d) or (e) of Section 6.1 hereof occurs, all
unpaid principal of, premium, if any, and accrued interest on the
Securities then outstanding shall ipso facto become and be immediately
due and payable without any declaration, notice or other act on the
part of the Trustee or any Holder.
At any time after a declaration of acceleration has been
made and before a judgment or decree for payment of the money due has
been obtained, the Holder or Holders of a majority in aggregate
principal amount of then outstanding Securities, by written notice to
the Company and
52
<PAGE>
the Trustee, may waive, on behalf of all Holders, any past default if:
(1) the Company has paid or deposited with the Trustee a
sum sufficient to pay
(A) all overdue interest on all Securities,
(B) the principal of (and premium, if any,
applicable to) any Securities which would become due
otherwise than by such declaration of acceleration, and
interest thereon at the rate borne by the Securities,
(C) to the extent that payment of such interest
is lawful, interest upon overdue interest at the rate borne
by the Securities,
(D) all sums paid or advanced by the Trustee
hereunder and the reasonable compensation, expenses,
disbursements and advances of the Trustee and counsel, and
(2) all Events of Default, other than the non-payment of
the principal of Securities which have become due solely by such
declaration of acceleration, have been cured or waived.
Notwithstanding the previous sentence of this Section 6.2, no waiver
shall be effective for any Default or Event of Default in the payment
of the principal of premium, if any, or interest on any Security held
by a nonconsenting Holder or any Default or Event of Default with
respect to any covenant or provision which cannot be modified or
amended without the consent of the Holder of each outstanding
Security, unless all such affected Holders agree, in writing, to waive
such Event of Default or event. No such waiver shall cure or waive
any subsequent default or impair any right consequent thereon.
VI.3 Other Remedies.
53
<PAGE>
If an Event of Default occurs and is continuing, the Trustee
may pursue any available remedy to collect the payment of principal,
premium, if any, or interest then due on the Securities or to enforce
the performance of any provision of the Securities or this Indenture.
The Trustee may maintain a proceeding even if it does not
possess any of the Securities or does not produce any of them in the
proceeding. A delay or omission by the Trustee or any Holder in
exercising any right or remedy accruing upon an Event of Default shall
not impair the right or remedy or constitute a waiver of or
acquiescence in the Event of Default. All remedies hereunder are
cumulative to the extent permitted by law.
VI.4 Waiver Of Past Defaults.
Prior to the declaration of acceleration of maturity of the
Securities as provided in Section 6.2, the Holders of a majority in
principal amount of the then outstanding Securities by notice to the
Trustee may waive an existing Default or Event of Default and its
consequences (including waivers obtained in connection with a tender
offer or exchange offer for Securities), except a continuing Default
or Event of Default (i) in the payment of the principal of, premium,
if any, or interest on any Security (including, without limitation,
pursuant to any mandatory or optional redemption obligation hereunder)
or (ii) with respect to any covenant or provision which cannot be
modified or amended without the consent of the Holder of each
outstanding Security affected. Upon any such waiver, such Default
shall cease to exist, and any Event of Default arising therefrom shall
be deemed to have been cured for every purpose of this Indenture; but
no such waiver shall extend to any subsequent or other Default or
impair any right consequent thereon.
54
<PAGE>
VI.5 Control By Majority.
The Holders of a majority in principal amount of the then
outstanding Securities may direct the time, method and place of
conducting any proceeding for any remedy available to the Trustee or
exercising any trust or power conferred on it. However, the Trustee
may refuse to follow any direction that conflicts with law or this
Indenture, that the Trustee determines may be unduly prejudicial to
the rights of other Holders or that may involve the Trustee in
personal liability.
VI.6 Limitations On Suits.
A Holder may not pursue a remedy with respect to this
Indenture or the Securities unless:
(1) the Holder gives to the Trustee written notice of a
continuing Event of Default;
(2) the Holders of at least 30% (25% in the case of an
Event of Default with respect to payment of principal of or
interest on the Securities) in principal amount of the then
outstanding Securities make a written request to the Trustee to
pursue the remedy;
(3) such Holder or Holders offer to the Trustee indemnity
satisfactory to the Trustee against any loss, liability or
expense;
(4) the Trustee does not comply with the request within 60
days after receipt of the request and the offer of indemnity; and
(5) during such 60-day period the Holders of a majority in
principal amount of the then outstanding Securities do not give the
Trustee a direction which is inconsistent with the request.
55
<PAGE>
A Holder may not use this Indenture to prejudice the rights
of another Holder or to obtain a preference or priority over another
Holder.
VI.7 Rights Of Holders To Receive Payment.
Notwithstanding any other provision of this Indenture, the
right of any Holder of a Security to receive payment of principal and
interest on the Security, on or after the respective due dates
expressed in the Security, or to bring suit for the enforcement of any
such payment on or after such respective dates, shall not be impaired
or affected without the consent of the Holder.
VI.8 Collection Suit By Trustee.
If an Event of Default specified in Section 6.1(a) or (b)
hereof occurs and is continuing, the Trustee is authorized to recover
judgment in its own name and as trustee of an express trust against
the Company for the amount of principal, premium, if any, and interest
remaining unpaid on the Securities, determined in accordance with
Section 6.2 hereof and interest on overdue principal, premium, if any,
and, to the extent lawful, interest, and such further amount as shall
be sufficient to cover the costs and expenses of collection, including
the reasonable compensation, expenses, disbursements and advances of
the Trustee and counsel.
VI.9 Trustee May File Proofs Of Claim.
The Trustee is authorized to file such proofs of claim and
other papers or documents as may be necessary or advisable in order to
have the claims of the Trustee (including any claim for the reasonable
compensation, expenses, disbursements and advances of the Trustee, its
agents and counsel) and the Holders allowed in any judicial
proceedings relative to the Company, its creditors or its property and
shall be entitled and empowered to collect, receive and distribute any
money or other property payable or deliverable on any such claims
56
<PAGE>
and any Custodian in any such judicial proceeding is hereby authorized
by each Holder to make such payments to the Trustee, and in the event
that the Trustee shall consent to the making of such payments directly
to the Holders, to pay to the Trustee any amount due to it for the
reasonable compensation, expenses, disbursements and advances of the
Trustee, its agents and counsel, and any other amounts due the Trustee
under Section 7.7 hereof. To the extent that the payment of any such
compensation, expenses, disbursements and advances of the Trustee, its
agents and counsel, and any other amounts due the Trustee under
Section 7.7 hereof out of the estate in any such proceeding, shall be
denied for any reason, payment of the same shall be secured by a Lien
on, and shall be paid out of, any and all distributions, dividends,
money, securities and other properties which the Holders of the
Securities may be entitled to receive in such proceeding whether in
liquidation or under any plan of reorganization or arrangement or
otherwise. Nothing herein contained shall be deemed to authorize the
Trustee to authorize or consent to or accept or adopt on behalf of any
Holder any plan or reorganization, arrangement, adjustment or
composition affecting the Securities or the rights of any Holder
thereof, or to authorize the Trustee to vote in respect of the claim
of any Holder in any such proceeding.
VI.10 Priorities.
Subject to Article Ten, if the Trustee collects any money
pursuant to this Article Six, it shall pay out the money in the
following order:
First: to the Trustee for amounts due under Section 7.7
hereof;
Second: to Holders for amounts due and unpaid on the
Securities for principal, premium, if any, and interest, ratably,
without preference or priority of any kind, according to the
amounts due and payable on the Securities for principal, premium,
if any, and interest, respectively; and
57
<PAGE>
Third: to the Company.
The Trustee may fix a record date and payment date for any
payment to Holders pursuant to this Article Six.
VI.11 Undertaking For Costs.
In any suit for the enforcement of any right or remedy under this
Indenture or in any suit against the Trustee for any action taken or
omitted by it as a Trustee, a court in its discretion may require the
filing by any party litigant in the suit of an undertaking to pay the
costs of the suit, and the court in its discretion may assess
reasonable, costs, including reasonable attorneys' fees, against any
party litigant in the suit, having due regard to the merits and good
faith of the claims or defenses made by the party litigant. This
Section 6.11 does not apply to a suit by the Trustee, a suit by a
Holder pursuant to Section 6.7 hereof, or a suit by Holders of more
than 10% in principal amount of the then outstanding Securities.
VII
TRUSTEE
VII.1 Duties of Trustee.
(a) If an Event of Default has occurred and is continuing,
the Trustee shall exercise such of the rights and powers vested in it
by this Indenture, and use the same degree of care and skill in such
exercise, as a prudent man would exercise or use under the
circumstances in the conduct of his own affairs.
(b) Except during the continuance of a Default or an Event
of Default:
58
<PAGE>
(i) the Trustee need perform only those duties
that are specifically set forth in this Indenture and no others,
and no implied covenants or obligations shall be read into this
Indenture against the Trustee; and
(ii) in the absence of bad faith on its part, the
Trustee may conclusively rely, as to the truth of the statements
and the correctness of the opinions expressed therein, upon
certificates or opinions furnished to the Trustee and conforming
to the requirements of this Indenture. However, the Trustee
shall examine the certificates and opinions to determine whether
or not, on their face, they appear to conform to the requirements
of this Indenture.
(c) the Trustee may not be relieved from liability for its
own negligent action, its own negligent failure to act, or its own
willful misconduct, except that:
(i) this paragraph does not limit the effect of
paragraph (b) of this Section 7.1;
(ii) the Trustee shall not be liable for any error
of judgment made in good faith by a Trust Officer or other
officer, unless it is proved that the Trustee was negligent in
ascertaining the pertinent facts; and
(iii) the Trustee shall not be liable with respect
to any action it takes or omits to take in good faith in
accordance with a direction received by it pursuant to Section
6.5 hereof.
(d) Whether or not therein expressly so provided, every
provision of this Indenture that in any way relates to the Trustee is
subject to paragraphs (a), (b) and (c) of this Section 7.1.
59
<PAGE>
(e) No provision of this Indenture shall require the
Trustee to expend or risk its own funds or otherwise incur any
financial liability in the performance of any of its duties hereunder
or to take or omit to take any action under this Indenture or at the
request, order or direction of the Holders or in the exercise of any
of its rights or powers if it shall have reasonable grounds for
believing that repayment of such funds or adequate indemnity against
such risk or liability is not reasonably assured to it.
(f) The Trustee shall not be liable for interest on any
assets received by it except as the Trustee may agree in writing with
the Company. Assets held in trust by the Trustee need not be
segregated from other funds except to the extent required by law.
VII.2 Rights of Trustee.
Subject to Section 7.1:
(a) The Trustee may rely on any document believed by it to
be genuine and to have been signed or presented by the proper Person.
The Trustee need not investigate any fact or matter stated in the
document.
(b) Before the Trustee acts or refrains from acting, it may
require an Officers' Certificate or an Opinion of Counsel, which shall
conform to Sections 12.4 and 12.5. The Trustee shall not be liable
for any action it takes or omits to take in good faith in reliance on
such certificate or opinion.
(c) The Trustee may act through its attorneys and agents
and shall not be responsible for the misconduct or negligence of any
agent (other than an agent who is an employee of the Trustee)
appointed and monitored with due care.
(d) The Trustee shall not be liable for any action it takes
or omits to take in good faith which it
60
<PAGE>
believes to be authorized or within its rights or powers conferred
upon it by this Indenture.
(e) The Trustee shall be under no obligation to exercise
any of the rights or powers vested in it by this Indenture at the
request, order or direction of any of the Holders, pursuant to the
provisions of this Indenture, unless such Holders shall have offered
to the Trustee reasonable security or indemnity against the costs,
expenses and liabilities which may be incurred therein or thereby.
VII.3 Individual Rights of Trustee.
The Trustee in its individual or any other capacity may
become the owner or pledgee of Securities and may otherwise deal with
the Company or any of its Affiliates with the same rights it would
have if it were not Trustee. Any Agent may do the same with like
rights. However, the Trustee is subject to Sections 7.10 and 7.11
hereof.
VII.4 Trustee's Disclaimer.
The Trustee makes no representation as to the validity or
adequacy of this Indenture or the Securities, it shall not be
accountable for the Company's use of the proceeds from the Securities
or any money paid to the Company or upon the Company's direction under
any provision hereof, it shall not be responsible for the use or
application of any money received by any Paying Agent other than the
Trustee and it shall not be responsible for any statement or recital
herein or any statement in the Securities other than its certificate
of authentication.
VII.5 Notice of Default.
If a Default or Event of Default occurs and is continuing
and if it is known to the Trustee, the Trustee shall mail to each
Holder a notice of the Default or Event of Default within 30 days
after it occurs or, if
61
<PAGE>
later, within ten days after such Default or Event of Default becomes
known to the Trustee unless such Default or Event of Default has been
cured. Except in the case of a Default or Event of Default in payment
of principal of, premium, if any, or interest on any Security, the
Trustee may withhold the notice if and so long as a committee of its
Trust Officers determines in good faith that withholding the notice is
in the interests of the Holders.
VII.6 Reports by Trustee to Holders.
Within 60 days after each May 15 beginning with May 15,
1998, the Trustee shall mail to Holders a brief report dated as of
such reporting date that complies with TIA Section 313(a) (but if no
event described in TIA Section 313(a) has occurred within the twelve
months preceding the reporting date, no report need be transmitted).
The Trustee also shall comply with TIA Section 313(b). The Trustee
shall also transmit by mail all reports as required by TIA Section
313(c).
A copy of each report at the time of its mailing to Holders
shall be filed with the SEC and each stock exchange on which the
Securities are listed. The Company shall notify the Trustee when the
Securities are listed on any stock exchange.
VII.7 Compensation and Indemnity.
The Company shall pay to the Trustee from time to time
reasonable compensation for its acceptance of this Indenture and
services hereunder. The Trustee's compensation shall not be limited
by any law on compensation of a trustee of an express trust. The
Company shall reimburse the Trustee upon request for all reasonable
disbursements, advances and expenses incurred by it, except for any
such disbursements, advances and expenses arising from its negligence
or bad faith. Subject to the foregoing, such expenses shall include
the reasonable compensation, disbursements and expenses of the
Trustee's counsel.
62
<PAGE>
The Company shall indemnify and hold harmless the Trustee
against any loss, liability or expense (including without limitation
reasonable fees and expenses of counsel) incurred by it arising out of
or in connection with the acceptance or administration of its duties
under this Indenture including, without limitation, costs and expenses
of defending itself against any claim or liability in connection with
the exercise or performance of its powers and duties hereunder, except
as set forth in the next paragraph. The Trustee shall notify the
Company promptly of any claim for which it may seek indemnity. The
Company shall defend the claim and the Trustee shall cooperate in the
defense. The Trustee may have separate counsel and the Company shall
pay the reasonable fees and expenses of such counsel. The Company
need not pay for any settlement made without its consent, which
consent shall not be unreasonably withheld.
The Company need not reimburse any expense or indemnify
against any loss or liability incurred by the Trustee through
negligence or bad faith.
To secure the Company's payment obligations in this Section
7.7, the Trustee shall have a Lien prior to the Securities on all
money or property held or collected by the Trustee, except that held
in trust to pay principal, premium, if any, and interest on particular
Securities. Such Lien shall survive the satisfaction and discharge of
the Indenture.
When the Trustee incurs expenses or renders services after
an Event of Default specified in Section 6.1(d) or (e) hereof occurs,
the expenses and the compensation for the services are intended to
constitute expenses of administration under any Bankruptcy Law.
63
<PAGE>
VII.8 Replacement of Trustee.
The Trustee may resign and be discharged from the trust
hereby created by so notifying the Company. The Holders of a majority
in principal amount of the then outstanding Securities may remove the
Trustee by so notifying the Trustee and the Company. The Company may
remove the Trustee if:
(a) the Trustee fails to comply with Section 7.10
hereof;
(b) the Trustee is adjudged a bankrupt or an insolvent
or an order for relief is entered with respect to the
Trustee under any Bankruptcy Law;
(c) a Custodian or public officer takes charge of the
Trustee or its property; or
(d) the Trustee becomes incapable of acting.
The foregoing notwithstanding, a resignation or removal of the Trustee
and appointment of a successor Trustee shall become effective only
upon the successor Trustee's acceptance of appointment as provided in
this Section 7.8.
If The Trustee resigns or is removed or if a vacancy exists
in the office of Trustee for any reason, the Company shall promptly
appoint a successor Trustee. Within one year after the successor
Trustee takes office, the Holder or Holders of a majority in principal
amount of the Securities may appoint a successor Trustee appointed by
the Company:
If a successor Trustee does not take office within 60 days
after the retiring Trustee resigns or is
64
<PAGE>
removed, the retiring Trustee, the Company or the Holder or Holders of
at least 10% in principal amount of the then outstanding Securities
may petition any court of competent jurisdiction for the appointment
of a successor Trustee.
If the Trustee fails to comply with Section 7.10, any Holder
may petition any court of competent jurisdiction for the removal of
the Trustee and the appointment of a successor Trustee.
A successor Trustee shall deliver a written acceptance of
its appointment to the retiring Trustee and to the Company.
Immediately after that and provided that all sums owing to the Trustee
provided for in Section 7.7 have been paid, the retiring Trustee shall
transfer all property held by it as Trustee to the successor Trustee,
subject to the Lien provided for in Section 7.7, the resignation or
removal of the retiring Trustee shall become effective, and the
successor Trustee shall have all the rights, powers and duties of the
Trustee under this Indenture. Notwithstanding replacement of the
Trustee pursuant to this Section 7.8, the Company's obligations under
Section 7.7 hereof shall continue for the benefit of the retiring
Trustee. The successor Trustee shall mail a notice of its succession
to the Holders.
VII.9 Successor Trustee by Merger, Etc.
Subject to Section 7.10 hereof, if the Trustee consolidates,
merges or converts into, or transfers all or substantially all of its
corporate trust business to, another corporation, the resulting,
surviving or transferee corporation without any further act shall, if
such resulting, surviving or transferee corporation is other wise
eligible hereunder, be the Successor Trustee.
65
<PAGE>
VII.10 Eligibility; Disqualification.
The Trustee shall at all times satisfy the requirements of
TIA Section 310(a)(1) and TIA Section 310(a)(5). The Trustee shall
have a combined capital and surplus of at least $25,000,000 as set
forth in its most recent published annual report of condition. The
Trustee shall comply with TIA Section 310(b).
VII.11 Preferential Collection of Claims against
Company.
The Trustee shall comply with TIA Section 311(a), excluding
any creditor relationship listed in TIA Section 311(b). A Trustee who
has resigned or been removed shall be subject to TIA Section 311(a) to
the extent indicated.
VIII
DISCHARGE OF INDENTURE
VIII.1 Termination of Company's Obligations.
This Indenture shall cease to be of further effect (except
that the Company's obligations under Section 7.7 hereof and the
Trustee's and Paying Agent's obligations under Section 8.3 hereof
shall survive) when all outstanding Securities theretofore
authenticated and issued have been delivered (other than destroyed,
lost or stolen Securities that have been replaced or paid) to the
Trustee for cancellation and the Company has paid all sums payable
hereunder. In addition, the Company may terminate all of its
obligations under this Indenture if:
(a) The Company irrevocably deposits, or causes to be
deposited, in trust with the Trustee, for the benefit of the
Holders pursuant to an irrevocable trust and security agreement
in form and substance reasonably satisfactory to the Trustee (i)
U.S. Legal Tender (ii) U.S. Government Obligations
66
<PAGE>
or (iii) any combination thereof in an amount, which, after
payment of all Federal, State and local taxes or other charges or
assessments in respect thereof, through the payment of interest
and principal will provide, not later than one Business Day
before the due date of payment in respect of the Securities, U.S.
Legal Tender in an amount which, in the opinion of a nationally
recognized firm of independent certified public accountants
expressed in a written certification thereof (in form and
substance reasonably satisfactory to the Trustee) delivered to
the Trustee, is sufficient to pay the principal of, premium, if
any, and interest on the Securities then outstanding on the dates
on which any such payments are due and payable in accordance with
the terms of this Indenture and the Securities; provided that (i)
the trustee of the irrevocable trust shall have been irrevocably
instructed to pay such money or the proceeds of such U.S.
Government Obligations to the Trustee and (ii) the Trustee shall
have been irrevocably instructed to apply such money or the
proceeds of such U.S. Government Obligations to the payment of
said principal and interest with respect to the Securities;
(b) the Company delivers to the Trustee an Officers'
Certificate and an Opinion of Counsel, each in form and substance
reasonably satisfactory to the Trustee, each stating that all
conditions precedent relating to the satisfaction and discharge
of this Indenture have been complied with;
(c) no Default or Event of Default shall have occurred
and be continuing on the date of such deposit and such deposit
will not result in a Default or Event of Default under this
Indenture or a breach or violation of, or constitute a default
under, any other instrument to which the Company or any
Subsidiary of the Company is a party or by which it or its
property is bound; and
67
<PAGE>
(d) the Company shall have delivered to the Trustee an
Opinion of Counsel from independent counsel reasonably
satisfactory to the Trustee, or a tax ruling from the Internal
Revenue Service, to the effect that the Holders of the Securities
will not recognize income, gain or loss for Federal income tax
purposes as a result of the Company's exercise of its option
under this Section 8.1 and will be subject to Federal income tax
on the same amount and in the same manner and at the same times
as would have been the case if such option had not been
exercised.
In such event, this Indenture shall cease to be of further effect
(except as provided in the next succeeding paragraph), and the
Trustee, on demand of the Company, shall execute proper instruments
acknowledging confirmation of and discharge under this Indenture.
However, the Company's obligations in Sections 2.3, 2.4,
2.5, 2.6, 2.7, 4.1, 4.3, 7.7, 7.8 and 8.4 hereof and the Company's,
the Trustee's and Paying Agent's obligations in Section 8.3 hereof,
and the Trustee's rights under Article Seven hereof, shall survive
until the Securities are no longer outstanding. Thereafter, only the
Company's obligations in Section 7.7 hereof and the Trustee's and
Paying Agent's obligations in Section 8.3 hereof shall survive.
After such irrevocable deposit made pursuant to this Section
8.1 and satisfaction of the other conditions set forth herein, the
Trustee upon request shall acknowledge in writing the discharge of the
Company's obligations under this Indenture except for those surviving
obligations specified above.
In order to have money available on a payment date to pay
principal or interest on the Securities, the U.S. Government
Obligations shall be payable as to principal or interest on or before
such payment date in such amounts as will provide the necessary money.
U.S. Govern-
68
<PAGE>
ment Obligations shall not be callable at the issuer's option.
VIII.2 Application of Trust Assets.
The Trustee shall hold any U.S. Legal Tender or U.S.
Government Obligations deposited with it pursuant to Section 8.1
hereof. Subject to Article Ten, the Trustee shall apply the deposited
U.S. Legal Tender or U.S. Government Obligations, together with
earnings thereon through the Paying Agent and in accordance with this
Indenture and the terms of the irrevocable trust agreement to the
payment of principal of and interest on the securities.
VIII.3 Repayment to Company.
Upon termination of the trust established pursuant to
Section 8.1, the Trustee and the Paying Agent shall promptly pay to
the Company upon request any excess U.S. Legal Tender or U.S.
Government Obligations held by them.
The Trustee and the Paying Agent shall pay to the Company,
and, if applicable, in accordance with the irrevocable trust
established pursuant to Section 8.1, any U.S. Legal Tender or U.S.
Government Obligations held by them for the payment of principal of or
interest on the Securities that remain unclaimed for two years after
the date on which such payment shall have become due; provided,
however, that the Trustee or such Paying Agent, before being required
to make any such repayment, may, at the expense of the Company, cause
to be published once, in a newspaper customarily published on each
Business Day and of general circulation in the Borough of Manhattan,
The City of New York, notice that such money remains unclaimed and
that, after a date specified therein, which shall not be less than 30
days from the date of such publication, any unclaimed balance of such
money then remaining shall be repaid to the Company. After payment to
the Company, Holders entitled to such payment must look to the Company
for such payment as general creditors unless
69
<PAGE>
an applicable abandoned property law designates another person.
VIII.4 Reinstatement.
If the Trustee or Paying Agent is unable to apply any U.S.
Legal Tender or U.S. Government Obligations in accordance with Section
8.1 or 8.2 by reason of any legal proceeding or by reason of any order
or judgment of any court or governmental authority enjoining,
restraining or otherwise prohibiting such application, the Company's
obligations under this Indenture and the Securities shall be revived
and reinstated as though no deposit had occurred pursuant to Section
8.1 or 8.2 until such time as the Trustee or Paying Agent is permitted
to apply all such U.S. Legal Tender or U.S. Government Obligations in
accordance with Section 8.1 or 8.2; provided, however, that if the
Company has made any payment of principal of or interest on any
Securities because of the reinstatement of its obligations, the
Company shall be subrogated to the rights of the Holders of such
Securities to receive such payment from the U.S. Legal Tender or U.S.
Government Obligations held by the Trustee or Paying Agent.
IX
AMENDMENTS, SUPPLEMENTS AND WAIVERS
IX.1 Supplemental Indentures Without Consent
of Holders.
Without the consent of any Holder, the Company, when
authorized by Board Resolutions, and the Trustee, at any time and from
time to time, may enter into one or more indentures supplemental
hereto, in form satisfactory to the Trustee, for any of the following
purposes:
(a) to cure any ambiguity, defect, or inconsistency,
provided such action pursuant to this
70
<PAGE>
clause (a) shall not adversely affect the interests of any Holder
in any respect;
(b) to add to the covenants of the Company for the
benefit of the Holders, or to surrender any right or power herein
conferred upon the Company or to make any other change that does
not adversely affect the rights of any Holder;
(c) to provide for collateral for the Securities;
(d) to evidence the succession of another person to
the Company, and the assumption by any such successor of the
obligations of the Company, herein and in the Securities in
accordance with Article Five;
(e) to make provision with respect to the conversion
rights of the Holders of the Securities pursuant to the
requirements of Section 11.6;
(f) to provide for uncertificated Securities; or
(g) to effect or maintain the qualification of this
Indenture under the TIA.
71
<PAGE>
IX.2 Amendments, Supplemental Indentures and
Waivers with Consent of Holders.
Subject to Section 6.7, with the consent of the Holders of a
majority in aggregate principal amount of then outstanding Securities,
by written act of said Holders delivered to the Company and the
Trustee, the Company, when authorized by Board Resolutions, and the
Trustee may amend or supplement this Indenture or the Securities or
enter into an indenture or indentures supplemental hereto for the
purpose of adding any provisions to or changing in any manner or
eliminating any of the provisions of this Indenture or the Securities
or of modifying in any manner the rights of the Holders under this
Indenture or the Securities. Subject to Sections 6.4 and 6.7, the
Holder or Holders of a majority, in principal amount of then
outstanding Securities may waive compliance by the Company with any
provision of this Indenture or the Securities. Notwithstanding any of
the above, however, no such amendment, supplemental indenture or
waiver shall, without the consent of the Holder of each outstanding
Security affected thereby, (i) extend the fixed maturity of any
Security, reduce the rate or extend the time for payment of interest
thereon, reduce the principal amount thereof or premium, if any,
thereon, reduce any amount payable upon redemption or repurchase
thereof, change the obligation of the Company to repurchase any Note
upon the happening of any Change in Control in a manner adverse to
holders of Notes, impair the right of any Noteholder to institute suit
for the payment thereof, change the currency in which the Notes are
payable, or impair the right of a Holder to convert the Securities
into Common Stock subject to the terms set forth herein, or modify the
provisions of this Indenture with respect to the subordination of the
Notes in a manner adverse to the Noteholders in any material respect,
without the consent of the holder of each Note so affected, or (ii)
reduce the aforesaid percentage of Notes, the holders of which are
required to consent to any such supplemental indenture, without the
consent of the holders of all Notes then outstanding.
72
<PAGE>
It shall not be necessary for the consent of the Holders
under this Section to approve the particular form of any proposed
amendment, supplement or waiver, but it shall be sufficient if such
consent approves the substance thereof.
After an amendment, supplement or waiver under this Section
becomes effective, the Company shall mail to the Holders affected
thereby a notice briefly describing the amendment, supplement or
waiver. Any failure of the Company to mail such notice, or any defect
therein, shall not, however, in any way impair or affect the validity
of any such supplemental indenture.
After an amendment, supplement or waiver under this Section
9.2 or Section 9.4 becomes effective, it shall bind each Holder.
In connection with any amendment, supplement or waiver under
this Article Nine, the Company may, but shall not be obligated to,
offer to any Holder who consents to such amendment, supplement or
waiver, or to all Holders, consideration for such Holder's consent to
such amendment, supplement or waiver.
IX.3 Compliance with TIA.
Every amendment, waiver or supplement of this Indenture or
the Securities shall comply with the TIA as then in effect.
73
<PAGE>
IX.4 Revocation and Effect of Consents.
Until an amendment, waiver or supplement becomes effective,
a consent to it by a Holder is a continuing consent by the Holder and
every subsequent Holder of a Security or portion of a Security that
evidences the same debt as the consenting Holder's Security, even if
notation of the consent is not made on any Security. However, any
such Holder or subsequent Holder may revoke the consent as to his
Security or portion of his Security by written notice to the Company
or the person designated by the Company as the person to whom consents
should be sent received before the date on which the Trustee receives
an Officers' Certificate certifying that the Holders of the requisite
principal amount of Securities have consented (and not theretofore
revoked such consent) to the amendment, supplement or waiver.
The Company may, but shall not be obligated to, fix a record
date for the purpose of determining the Holders entitled to consent to
any amendment, supplement or waiver, which record date shall be the
date so fixed by the Company notwithstanding the provisions of the
TIA. If a record date is fixed, then notwithstanding the last
sentence of the immediately preceding paragraph, those persons who
were Holders at such record date, and only those persons (or their
duly designated proxies), shall be entitled to revoke any consent
previously given, whether or not such persons continue to be Holders
after such record date. No such consent shall be valid or effective
for more than 90 days after such record date.
After an amendment, supplement or waiver becomes effective,
it shall bind every Noteholder, unless it makes a change described in
clauses (i) or (ii) of Section 9.2, in which case, the amendment,
supplement or waiver shall bind only each Holder of a Security who has
consented to it and every subsequent Holder of a Security or portion
of a Security that evidences the same debt as the consenting Holder's
Security; provided, that any such waiver shall not impair or affect
the right of any Holder
74
<PAGE>
to receive payment of principal and premium of and interest on a
Security, on or after the respective dates set for such amounts to
become due and payable expressed in such Security, or to bring suit
for the enforcement of any such payment on or after such respective
dates.
IX.5 Notation on or Exchange of Securities.
If an amendment, supplement or waiver changes the terms of a
Security, the Trustee may require the Holder of the Security to
deliver it to the Trustee or require the Holder to put an appropriate
notation on the Security. The Trustee may place an appropriate
notation on the Security about the changed terms and return it to the
Holder. Alternatively, if the Company or the Trustee so determines,
the Company in exchange for the Security shall issue and the Trustee
shall authenticate a new Security that reflects the changed terms.
Any failure to make the appropriate notation or to issue a new
Security shall not affect the validity of such amendment, supplement
or waiver.
IX.6 Trustee to Sign Amendments, Etc.
The Trustee shall execute any amendment, supplement or
waiver authorized pursuant to this Article Nine; provided, that the
Trustee may, but shall not be obligated to, execute any such
amendment, supplement or waiver which affects the Trustee's own
rights, duties or immunities under this Indenture. The Trustee shall
be entitled to receive, and shall be fully protected in relying upon,
an Officers' Certificate and an Opinion of Counsel stating that the
execution of any amendment, supplement or waiver authorized pursuant
to this Article Nine is authorized or permitted by this Indenture.
75
<PAGE>
X
SUBORDINATION
X.1 Securities Subordinated to Senior
Indebtedness.
The Company, for itself and its successors, and each Holder,
by his acceptance of Securities, agrees that the payment of the
principal of, premium, if any, and interest on the Securities is
subordinated, to the extent and in the manner provided in this Article
Ten, to the prior payment in full in cash or cash equivalents of all
Senior Indebtedness whether outstanding on the Issue Date or
thereafter incurred including any interest accruing subsequent to a
bankruptcy or other similar proceeding whether or not such interest is
an allowed claim enforceable against the Company in a bankruptcy case
under Title 11 of the United States Code.
This Article Ten shall constitute a continuing offer to all
persons who, in reliance upon such provisions, become holders of, or
continue to hold, Senior Indebtedness, and such provisions are made
for the benefit of the holders of Senior Indebtedness, and such
holders are made obligees hereunder and any one or more of them may
enforce such provisions.
76
<PAGE>
X.2 No Payment on Securities in Certain
Circumstances.
77
<PAGE>
(a) No direct or indirect payment by or on behalf of
the Company of principal of, premium, if any, or interest on the
Securities whether pursuant to the terms of the Securities or upon
acceleration or otherwise shall be made if, at the time of such
payment there exists a default in the payment of all or any portion of
principal of, premium, if any, or interest on any Designated Senior
Debt (and the Trustee has received written notice thereof), and such
default shall not have been cured or waived or the benefits of this
sentence waived by or on behalf of the holders of Designated Senior
Debt. In addition, during the continuance of any other event of
default with respect to (i) the Credit Agreement pursuant to which the
maturity thereof may be accelerated, upon the occurrence of (a)
receipt by the Trustee of written notice from the Credit Agent, or (b)
if such event of default results from the acceleration of the
Securities, the date of such acceleration, no such payment may be made
by or on behalf of the Company upon or in respect of the Securities
for a period ("Payment Blockage Period") commencing on the earlier of
the date of receipt of such notice or the date of such acceleration
and ending 179 days thereafter (unless such Payment Blockage Period
shall be terminated by written notice to the Trustee from the Credit
Agent), or (ii) any other Designated Senior Debt upon receipt by the
Trustee of written notice from the trustee or other representative for
the holders of such Designated Senior Debt (or the holders of at least
a majority in principal amount of such other Designated Senior Debt
then outstanding), no such payment may be made by or on behalf of the
Company upon or in respect of the Securities for a Payment Blockage
Period commencing on the date of receipt of such notice and ending 119
days thereafter (unless such Payment Blockage Period shall be
terminated by written notice to the Trustee from such trustee or other
representative commencing the Payment Blockage Period).
Notwithstanding anything herein to the contrary, in no event will a
Payment Blockage Period extend beyond 179 days from the date on which
such Payment Blockage Period was commenced. Not more than one Payment
Blockage Period may be commenced with respect to the Securities during
any
78
<PAGE>
period of 360 consecutive days; provided that the commencement of a
Payment Blockage Period by the holders of Designated Senior Debt other
than under the Credit Agreement shall not bar the commencement of
another Payment Blockage Period by the Credit Agent within such period
of 360 consecutive days. For all purposes of this paragraph, no Event
of Default which existed or was continuing on the date of the
commencement of any Payment Blockage Period with respect to the
Designated Senior Debt initiating such Payment Blockage Period shall
be, or be made, the basis for the commencement of a second Payment
Blockage Period by the representative of such Designated Senior Debt
whether or not within a period of 360 consecutive days unless such
event of default shall have been cured or waived for a period of not
less than 90 consecutive days.
(b) In furtherance of the provisions of Section 10.1,
in the event that, notwithstanding the foregoing provisions of this
Section 10.2, any payment on account of principal of, premium, if any,
or interest on the Securities or to redeem (or make a deposit in
redemption of), defease or acquire any of the Securities shall be made
by or on behalf of the Company and received by the Trustee, by any
Holder or by any Paying Agent (or, if the Company is acting as its own
Paying Agent, money for any such payment shall be segregated and held
in trust), at a time when such payment was prohibited by the
provisions of this Section 10.2, then, unless and until such payment
is no longer prohibited by this Section 10.2, such payment (subject to
the provisions of Section 10.6) shall be received and held in trust by
the Trustee or such Holder or Paying Agent for the benefit of the
holders of Senior Indebtedness or their representative, ratably
according to the respective amounts of the Senior Indebtedness held or
represented by each, and shall be immediately paid over or delivered
to the holders of the Senior Indebtedness remaining unpaid to the
extent necessary to enable payment in full in cash and cash
equivalents to the holders of Senior Indebtedness of all Senior
Indebtedness remaining unpaid, after giving effect to all
79
<PAGE>
concurrent payments and such distributions to or for the holders of
Senior Indebtedness.
The Company shall give prompt written notice to the Trustee
and the Holders of any default or event of default, and any cure or
waiver thereof, or any acceleration under any Senior Indebtedness or
under any agreement pursuant to which Senior Indebtedness may have
been issued.
X.3 Securities Subordinated to Prior Payment of All Senior
Indebtedness on Dissolution, Liquidation or Reorganization
of Company.
Upon any distribution of assets of the Company of any kind
or character, whether in cash, property or securities upon any
dissolution, winding up, total or partial liquidation or
reorganization of the Company (including, without limitation, in
bankruptcy, insolvency or receivership proceedings or upon any
assignment for the benefit of creditors or any other marshalling of
assets and liabilities of the Company):
(a) the holders of all Senior Indebtedness shall first
be entitled to receive payment in full in cash or cash
equivalents of all amounts payable under Senior Indebtedness
(including interest after the commencement of any such proceeding
at the rate specified in the applicable Senior Indebtedness
whether or not such interest is an allowed claim against the
Company in a bankruptcy case under Title 11 of the United States
Code), before the Holders or the Trustee on behalf of the Holders
are entitled to receive any payment on account of the principal
of, premium, if any or interest on the Securities;
(b) any payment or distribution of assets or
securities of the Company of any kind or character, whether in
cash, property or securities, to which the Holders or the Trustee
on behalf of the Holders would be entitled except for the
provisions
80
<PAGE>
of this Article Ten, shall be immediately paid by the Company or
by any liquidating trustee or agent or other person making such a
payment or distribution, directly to the holders of Senior
Indebtedness or their Representative, ratably according to the
respective amounts of Senior Indebtedness held or represented by
each, to the extent necessary to make payment in full in cash or
cash equivalents of all Senior Indebtedness remaining unpaid
after giving effect to all concurrent payments and distributions
to or for the holders of such Senior Indebtedness; and
(c) in the event that, notwithstanding the foregoing,
any payment or distribution of assets or securities of the
Company of any kind or character, whether in cash, property or
securities, shall be received by the Trustee or the Holders or
any Paying Agent (or, if the Company is acting as its own Paying
Agent, money for any such payment or distribution shall be
segregated or held in trust) on account of principal of, premium,
if any, or interest on the Securities before all Senior
Indebtedness is paid in full in cash or cash equivalents, such
payment or distribution (subject to the provisions of Sections
10.6) shall be received and held in trust by the Trustee or such
Holder or Paying Agent for the benefit of the holders of the
Senior Indebtedness, or their respective representative, ratably
according to the respective amounts of Senior Indebtedness held
or represented by each, and shall be immediately paid over or
delivered to the holders of the Senior Indebtedness remaining
unpaid to the extent necessary to make payment in full of all
Senior Indebtedness remaining unpaid after giving effect to all
concurrent payments and distributions to or for the holders of
such Senior Indebtedness.
The Company shall give prompt written notice to the Trustee
of any dissolution, winding up, liquidation
81
<PAGE>
or reorganization of the Company or assignment for the benefit of
creditors by the Company.
X.4 Holders to Be Subrogated to Rights of
Holders of Senior Indebtedness.
Subject to the payment in full in cash or cash equivalents
of all Senior Indebtedness, the Holders of Securities shall be
subrogated to the rights of the holders of Senior Indebtedness to
receive payments or distributions of assets of the Company applicable
to the Senior Indebtedness until all amounts owing on the Senior Debt
shall be paid in full, and for the purpose of such subrogation no such
payments or distributions to the holders of Senior Indebtedness by or
on behalf of the Company, or by or on behalf of the Holders by virtue
of this Article Ten, which otherwise would have been made to the
Holders shall, as between the Company and the Holders, be deemed to be
payment by the Company to or on account of the Senior Indebtedness, it
being understood that the provisions of this Article Ten are and are
intended solely for the purpose of defining the relative rights of the
Holders, on the one hand, and the holders of Senior Indebtedness, on
the other hand.
If any payment or distribution to which the Holders would
otherwise have been entitled but for the provisions of this Article
Ten shall have been applied, pursuant to the provisions of this
Article Ten, to the payment of amounts payable under the Senior
Indebtedness, then the Holders shall be entitled to receive from the
holders of such Senior Indebtedness any payments or distributions
received by such holders of Senior Indebtedness in excess of the
amount sufficient to pay all amounts payable under or in respect of
the Senior Indebtedness in full in cash or cash equivalents.
82
<PAGE>
X.5 Obligations of the Company Unconditional.
Nothing contained in this Article Ten or elsewhere in this
Indenture or in the Securities is intended to or shall impair, as
between the Company and the Holders, the obligation of the Company,
which is absolute and unconditional, to pay to the Holders the
principal of, premium, if any, and interest on the Securities as and
when the same shall become due and payable in accordance with their
terms, or is intended to or shall affect the relative rights of the
Holders and creditors of the Company other than the holders of the
Senior Indebtedness, nor shall anything herein or therein prevent the
Trustee or any Holder from exercising all remedies otherwise permitted
by applicable law upon default under this Indenture, subject to the
rights, if any, under this Article Ten, of the holders of Senior
Indebtedness in respect of cash, property or securities of the Company
received upon the exercise of any such remedy. Upon any distribution
of assets or securities of the Company referred to in this Article
Ten, the Trustee, subject to the provisions of Sections 7.1 and 7.2,
and the Holders shall be entitled to rely upon any order or decree
made by any court of competent jurisdiction in which such dissolution,
winding up, liquidation or reorganization proceedings are pending, or
a certificate of the liquidating trustee or agent or other person
making any distribution to the Trustee or to the Holders for the
purpose of ascertaining the persons entitled to participate in such
distribution, the holders of the Senior Indebtedness and other
Indebtedness of the Company, the amount thereof or payable thereon,
the amount or amounts paid or distributed thereon and all other facts
pertinent thereto or to this Article Ten. Nothing in this Section
10.5 shall apply to the claims of, or payments to, the Trustee under
or pursuant to Section 7.7.
83
<PAGE>
X.6 Trustee Entitled to Assume Payments Not
Prohibited in Absence of Notice.
Neither the Trustee nor any Paying Agent shall at any time
be charged with the knowledge of the existence of any facts which
would prohibit the making of any payment to or by the Trustee or
Paying Agent, unless and until the Trustee or Paying Agent shall have
received written notice thereof from the Company or one or more
holders of Senior Indebtedness or from any trustee or agent therefor,
and, prior to the receipt of any such written notice, the Trustee or
paying agent shall be entitled to assume conclusively that no such
facts exist. Unless at least three Business Days prior to the date on
which by the terms of this Indenture any moneys are to be deposited by
the Company with the Trustee or any Paying Agent (whether or not in
trust) for any purpose (including, without limitation, the payment of
the principal, premium, if any, the interest or other amounts due on
any Security), the Trustee or Paying Agent shall have received with
respect to such monies the notice provided for in the preceding
sentence, the Trustee or Paying Agent shall have full power and
authority to receive such moneys and to apply the same to the purpose
for which they were received, and shall not be affected by any notice
to the contrary which may be received by it on or after such date.
The foregoing shall not apply to the Paying Agent if the Company is
acting as Paying Agent. Nothing contained in this Section 10.6 shall
limit the right of the holders of Senior Indebtedness to recover
payments as contemplated by Section 10.2.
84
<PAGE>
X.7 Subordination Rights Not Impaired by Acts
or Omissions of Company or Holders of
Senior Indebtedness.
(a) No right of any present or future holders of any Senior
Indebtedness to enforce subordination provisions contained in this
Article Ten shall at any time in any way be prejudiced or impaired by
any act or failure to act on the part of the Company or by any act or
failure to act, in good faith, by any such holder, or by any
noncompliance by the Company with the terms of this Indenture,
regardless of any knowledge thereof which any such holder may have or
be otherwise charged with.
(b) Without in any way limiting the generality of the
foregoing paragraph, the holders of Senior Indebtedness may, at any
time and from time to time, without the consent of or notice to the
holders of any Indebtedness of the Company, without incurring
responsibility to the holders of any Indebtedness of the Company, and
without impairing or releasing the subordination provisions contained
in this Article Ten, or the obligations hereunder of the holders of
the Indebtedness of the Company, do any one or more of the following:
(a) change the manner, place or terms of payment or extend the time of
payment of, or renew or alter, Senior Indebtedness or any instrument
evidencing the same or any agreement under which Senior Indebtedness
is outstanding; (b) sell, exchange, release or otherwise deal with any
property pledged, mortgaged or otherwise securing Senior Indebtedness
or fail to perfect or delay the perfection of any such lien; (c)
release any Person liable in any manner for the collection of Senior
Indebtedness; and (d) exercise or refrain from exercising any rights
against the Company and any other Person.
X.8 Holders Authorize Trustee to Effectuate
Subordination of Securities.
Each Holder of the Securities by his acceptance thereof
authorizes and expressly directs the Trustee on
85
<PAGE>
his behalf to take such action as may be necessary or appropriate to
effectuate the subordination provisions contained in this Article Ten
and to protect the rights of the Holders pursuant to this Indenture,
and appoints the Trustee his attorney-in-fact for such purpose,
including, in the event of any dissolution, winding up, liquidation or
reorganization of the Company (whether in bankruptcy, insolvency or
receivership proceedings or upon an assignment for the benefit of
creditors or any other marshaling of assets and liabilities of the
Company) tending towards liquidation of the business and assets of the
Company, the immediate filing of a claim for the unpaid balance of his
Securities in the form required in said proceedings and cause said
claim to be approved. If the Trustee does not file a proper claim or
proof of debt in the form required in such proceeding prior to 30 days
before the expiration of the time to file such claim or claims, then
the holders of the Senior Indebtedness or their representative are or
is hereby authorized to have the right to file and are or is hereby
authorized to file an appropriate claim for and on behalf of the
Holders of said Securities. Nothing herein contained shall be deemed
to authorize the Trustee or the holders of Senior Indebtedness or
their Representative to authorize or consent to or accept or adopt on
behalf of any Holder any plan of reorganization, arrangement,
adjustment or composition affecting the Securities or the rights of
any Holder thereof, or to authorize the Trustee or the holders of
Senior Indebtedness or their Representative to vote in respect of the
claim of any Holder in any such proceeding.
X.9 Right of Trustee to Hold Senior
Indebtedness.
The Trustee shall be entitled to all of the rights set forth
in this Article Ten in respect of any Senior Indebtedness at any time
held by it to the same extent as any other holder of Senior
Indebtedness, and nothing in this Indenture shall be construed to
deprive the Trustee of any of its rights as such holder.
86
<PAGE>
X.10 Article Ten Not to Prevent Events of
Default.
The failure to make a payment on account of principal of or
interest on the Securities by reason of any provision of this Article
10 shall not be construed as preventing the occurrence of a Default or
an Event of Default under Section 6.1.
X.11 No Fiduciary Duty of Trustee to Holders
of Senior Indebtedness.
The Trustee shall not be deemed to owe any fiduciary duty to
the holders of Senior Indebtedness, and shall not be liable to any
such holders (other than for its willful misconduct or negligence) if
it shall in good faith mistakenly pay over or distribute to the
Holders of Securities or the Company or any other person, cash,
property or securities to which any holders of Senior Indebtedness
shall be entitled by virtue of this Article Ten or otherwise. Nothing
in this Section 10.11 shall affect the obligation of any other such
person to hold such payment for the benefit of, and to pay such
payment over to, the holders of Senior Indebtedness or their
representative.
87
<PAGE>
XI
CONVERSION OF SECURITIES
XI.1 Right to Convert.
88
<PAGE>
Subject to and upon compliance with the provisions of this
Indenture, the holder of any Security shall have the right, at his or
her option, at any time after ninety (90) days following the latest
date of original issuance of the Securities (without taking into
account any over-allotment option granted to the Underwriters
exercised pursuant to the Registration Statement) and prior to the
close of business on the first Business Day prior to October 1, 2007
(except that, with respect to any Security or portion of a Security
which shall be called for redemption, such right shall terminate,
except as provided in Section 11.2 or Section 3.5, at the close of
business on the Business Day next preceding the date fixed for
redemption of such Security or portion of a Security unless the
Company shall default in payment due upon redemption thereof) to
convert the principal amount at maturity of any such Security, or any
portion of such principal amount at maturity which is $ 1,000 or an
integral multiple thereof, into that number of fully paid and
non-assessable shares of Common Stock (as such shares shall then be
constituted) obtained by dividing the principal amount at maturity of
the Security or portion thereof surrendered for conversion by $1,000
and multiplying the result so obtained by the Conversion Rate in
effect at such time, by surrender of the Security so to be converted
in whole or in part in the manner provided, together with any required
funds, in Section 11.2; provided, that any Security in respect of
which a Holder is exercising its option to require redemption upon a
Change in Control pursuant to Section 3.10 may only be converted if
such Holder withdraws its election to exercise such redemption option
in accordance with the terms of the Indenture. A holder of Securities
is not entitled to any rights of a holder of Common Stock until such
holder has converted his Securities to Common Stock, and only to the
extent such Securities are deemed to have been converted to Common
Stock under this Article Eleven.
89
<PAGE>
XI.2 Exercise of Conversion Privilege; Issuance
of Common Stock on Conversion; No Adjust-
ment for Interest or Dividends.
In order to exercise the conversion privilege with respect
to any Security in certificated form, the holder of any such Security
to be converted in whole or in part shall surrender such Security,
duly endorsed, at an office or agency maintained by the Company
pursuant to Section 4.2, accompanied by the funds, if any, required by
the penultimate paragraph of this Section 11.2, and shall give written
notice of conversion in the form provided on the Securities (or such
other notice which is acceptable to the Company) to the office or
agency that the holder elects to convert such Security or the portion
thereof specified in said notice. Such notice shall also state the
name or names (with address or addresses) in which the certificate or
certificates for shares of Common Stock which shall be issuable on
such conversion shall be issued, and shall be accompanied by transfer
taxes, if required pursuant to Section 11.7. Each such Security
surrendered for conversion shall, unless the shares issuable on
conversion are to be issued in the same name as the registration of
such Security, be duly endorsed by, or be accompanied by instruments
of transfer in form satisfactory to the Company duly executed by, the
holder or his duly authorized attorney.
In order to exercise the conversion privilege with respect
to any interest in a Security in global form, the beneficial holder
must complete the appropriate instruction form for conversion pursuant
to the Depository's book-entry conversion program, deliver by
book-entry delivery an interest in such Security in global form,
furnish appropriate endorsements and transfer documents if required by
the Company or the Trustee or conversion agent, and pay the funds, if
any, required by this Section 11.2 and any transfer taxes if required
pursuant to Section 11.7.
90
<PAGE>
As promptly as practicable after satisfaction of the
requirements for conversion set forth above, subject to compliance
with any restrictions on transfer if shares issuable on conversion are
to be issued in a name other than that of the Noteholder (as if such
transfer were a transfer of the Security or Securities (or portion
thereof) so converted), the Company shall issue and shall deliver to
such holder at the office or agency maintained by the Company for such
purpose pursuant to Section 4.2, a certificate or certificates for the
number of full shares of Common Stock issuable upon such conversion of
such Security or portion thereof in accordance with the provisions of
this Article and a check or cash in respect of any fractional interest
in respect of a share of Common Stock arising upon such conversion, as
provided in Section 11.3. In case any Security of a denomination
greater than $1,000 shall be surrendered for partial conversion, and
subject to the terms and provisions of the Securities, the Company
shall execute and the Trustee shall authenticate and deliver to the
holder of the Security so surrendered, without charge to him, a new
Security or Securities in authorized denominations in an aggregate
principal amount equal to the unconverted portion of the surrendered
Security.
Each conversion shall be deemed to have been effected as to
any such Security (or portion thereof) on the date on which the
requirements set forth above in this Section 11.2 have been satisfied
as to such Security (or portion thereof), and the person in whose name
any certificate or certificates for shares of Common Stock shall be
issuable upon such conversion shall be deemed to have become on said
date the holder of record of the shares represented thereby; provided,
however, that any such surrender on any date when the stock transfer
books of the Company shall be closed shall constitute the person in
whose name the certificates are to be issued as the record holder
thereof for all purposes on the next succeeding day on which such
stock transfer books are open, but such conversion shall be at the
Conversion Rate in effect on the date upon which such Security shall
be surrendered.
91
<PAGE>
The Company's delivery of the fixed number of shares of
Common Stock into which the Securities are convertible will be deemed
to satisfy the Company's obligation to pay the principal amount at
maturity of the Securities and all accrued interest that has not
previously been (or is not simultaneously being) paid. The Common
Stock is treated as issued first in payment of accrued interest and
then in payment of principal.
Any Security or portion thereof surrendered for conversion
during the period from the close of business on the record date for
any interest payment date to the close of business on the Business Day
next preceding the following interest payment date shall (unless such
Security or portion thereof being converted shall have been called for
redemption on a redemption date which occurs during the period from
the close of business on such record date to the close of business on
the Business Day next preceding the following interest payment date or
is to be redeemed in connection with a Change in Control on a
Repurchase Date which occurs during such period) be accompanied by
payment, in New York Clearing House funds or other funds acceptable to
the Company, of an amount equal to the interest otherwise payable on
such interest payment date on the principal amount being converted;
provided, however, that no such payment need be made if there shall
exist at the time of conversion a default in the payment of interest
on the Securities. Except as provided above in this Section 11.2, no
payment or other adjustment shall be made for interest accrued on any
Security converted or for dividends on any shares issued upon the
conversion of such Security as provided in this Article.
Upon the conversion of an interest in a Security in global
form, the Trustee, or the Custodian at the direction of the Trustee,
shall make a notation on such Security in global form as to the
reduction in the principal amount at maturity represented thereby.
92
<PAGE>
XI.3 Cash Payments in Lieu of Fractional
Shares.
No fractional shares of Common Stock or scrip representing
fractional shares shall be issued upon conversion of Securities. If
more than one Security shall be surrendered for conversion at one time
by the same holder, the number of full shares which shall be issuable
upon conversion shall be computed on the basis of the aggregate
principal amount at maturity of the Securities (or specified portions
thereof to the extent permitted hereby) so surrendered. If any
fractional share of stock would be issuable upon the conversion of any
Security or Securities, the Company shall make an adjustment and
payment therefor in cash at the current market value thereof to the
holder of Securities. The current market value of a share of Common
Stock shall be the Closing Price on the first Business Day immediately
preceding the day on which the Securities (or specified portions
thereof) are deemed to have been converted.
XI.4 Conversion Rate.
The conversion rate shall be as specified in the form of
Security (herein called the "Conversion Rate") attached as Exhibit A
hereto, subject to adjustment as provided in this Article XI.
XI.5 Adjustment of Conversion Rate.
The Conversion Rate shall be adjusted from time to time by
the Company as follows:
(a) In case the Company shall pay a dividend or make a
distribution, in shares of its Common Stock, on its Common Stock,
the Conversion Rate in effect at the opening of business on the
date following the date fixed for the determination of
stockholders entitled to receive such dividend or other
distribution shall be increased by multiplying such Conversion
Rate by a fraction of which the
93
<PAGE>
denominator shall be the number of shares of Common Stock
outstanding at the close of business on the date fixed for such
determination and the numerator shall be the sum of such number
of shares and the total number of shares constituting such
dividend or other distribution, such reduction to become
effective immediately after the opening of business on the day
following the date fixed for such determination. The Company
will not pay any dividend or make any distribution on shares of
Common Stock held in the treasury of the Company. If any
dividend or distribution of the type described in this Section
11.5(a) is declared but is not so paid or made and not required
to be so paid or made, the Conversion Rate shall again be
adjusted to the Conversion Rate which would then be in effect if
such dividend or distribution had not been declared.
(b) In case the Company shall issue rights or warrants to
all holders of its Common Stock entitling them (for a period
expiring within 45 days after the date fixed for determination of
stockholders entitled to receive such rights or warrants) to
subscribe for or purchase Common Stock at a price per share less
than the Current Market Price per share of Common Stock (as
defined in Section 11.5(g) below) at the record date for the
determination of stockholders entitled to receive such rights or
warrants, the Conversion Rate in effect immediately prior thereto
shall be adjusted so that the same shall equal the rate
determined by multiplying the Conversion Rate in effect
immediately prior to the date fixed for determination of
stockholders entitled to receive such rights or warrants by a
fraction the denominator of which shall be the number of shares
of Common Stock outstanding at the close of business on the date
fixed for determination of stockholders entitled to receive such
rights or warrants plus the number of shares which the aggregate
offering price of the total number of shares so offered would
purchase at such Current Market Price and the numerator of which
shall be the number of
94
<PAGE>
shares of Common Stock outstanding on the date fixed for
determination of stockholders entitled to receive such rights or
warrants plus the number of additional shares of Common Stock
offered for subscription or purchase. Such adjustment shall be
made successively whenever any such rights or warrants are
issued, and shall become effective immediately after the opening
of business on the day following the record date for the
determination of the stockholders entitled to receive such rights
or warrants. In determining whether any rights or warrants
entitle the holders to subscribe for or purchase shares of Common
Stock at less than such Current Market Price, and in determining
the aggregate offering price of such shares of Common Stock,
there shall be taken into account any consideration received by
the Company for such rights or warrants, the value of such
consideration, if other than cash, to be determined by the Board
of Directors. To the extent that shares of Common Stock are not
delivered or required to be delivered after the expiration of
such rights or warrants, the Conversion Rate shall be readjusted
to the Conversion Rate which would then be in effect had the
adjustments made upon the issuance of such rights or warrants
been made on the basis of delivery of only the number of shares
of Common Stock actually delivered. If such rights or warrants
are not so issued and not required to be so issued, the
Conversion Rate shall again be adjusted to be the Conversion Rate
which would then be in effect if such record date for the
determination of stockholders entitled to receive such rights or
warrants had not been fixed.
(c) In case outstanding shares of Common Stock shall be
subdivided into a greater number of shares of Common Stock, the
Conversion Rate in effect at the opening of business on the day
following the day upon which such subdivision becomes effective
shall be proportionately increased, and conversely, in case
outstanding shares of Common Stock shall be combined into a
smaller number of shares of Common
95
<PAGE>
Stock, the Conversion Rate in effect at the opening of business
on the day following the day upon which such combination becomes
effective shall be proportionately reduced, such reduction or
increase, as the case may be, to become effective immediately
after the opening of business on the day following the day upon
which such subdivision or combination becomes effective.
(d) In case the Company shall distribute to all holders of
its Common Stock shares of any class of capital stock of the
Company (other than Common Stock) or evidences of its
indebtedness or assets (excluding cash dividends or other
distributions to the extent paid from retained earnings of the
Company) or rights or warrants to subscribe for or purchase any
of its securities (excluding those referred to in Section 11.5(b)
above) (any of the foregoing hereinafter in this Section 11.5(d)
called the "Distributed Securities"), then in each such case the
Conversion Rate shall be adjusted so that the same shall equal
the rate determined by multiplying the Conversion Rate in effect
on the record date with respect to such distribution by a
fraction of which the denominator shall be the Current Market
Price per share of the Common Stock on such record date less the
fair market value on such record date (as determined by the Board
of Directors of the Company, whose determination shall be
conclusive, and described in a certificate filed with the
Trustee) of the Distributed Securities applicable to one share of
Common Stock and the numerator of which shall be the Current
Market Price per share of the Common Stock on the record date for
the determination of shareholders entitled to receive such
distribution; such adjustment shall become effective immediately
prior to the opening of business on the day following such record
date. Notwithstanding the foregoing, in the event the then fair
market value (as so determined) of the portion of the Distributed
Securities applicable to one share of Common Stock is equal to or
greater than the Current Market Price
96
<PAGE>
of the Common Stock on the relevant record date, in lieu of the
foregoing adjustment, adequate provision shall be made so that
each Noteholder shall have the right to receive upon conversion
the amount of Distributed Securities such holder would have
received had such holder converted each Security on such record
date. In the event that such distribution is not so paid or
made, the Conversion Rate shall again be adjusted to the
Conversion Rate which would then be in effect if such
distribution had not been declared. If the Board of Directors
determines the fair market value of any distribution for purposes
of this subsection (d) by reference to the actual or when issued
trading market for any securities, it must in doing so consider
the prices in such market over the same period used in computing
the Current Market Price of the Common Stock.
Notwithstanding the foregoing provisions of this subsection
(d), no adjustment shall be made thereunder for any distribution
of Distributed Securities if the Company makes proper provision
so that each holder of a Security who converts such Security (or
any portion thereof) after the record date for such distribution
shall be entitled to receive upon such conversion, in addition to
the shares of Common Stock issuable upon such conversion, the
amount and kind of Distributed Securities that such holder would
have been entitled to receive if such holder had, immediately
prior to such record date, converted such Security into Common
Stock, provided that, with respect to any Distributed Securities
that are convertible, exchangeable or exercisable, the foregoing
provision shall only apply to the extent (and so long as) the
Distributed Securities receivable upon conversion of such
Security would be convertible, exchangeable or exercisable, as
applicable, without any loss of rights or privileges for a period
of at least 60 days following conversion of such Security.
97
<PAGE>
(e) In case the Company shall, by dividend or otherwise,
distribute to all holders of its Common Stock cash (excluding (x)
any quarterly cash dividend on the Common Stock to the extent the
aggregate cash dividend per share of Common Stock in any fiscal
quarter does not exceed the greater of (A) the amount per share
of Common Stock of the next preceding quarterly cash dividend on
the Common Stock to the extent such preceding quarterly dividend
did not require any adjustment of the Conversion Rate pursuant to
this Section 11.5(e) (as adjusted to reflect subdivisions or
combinations of the Common Stock), and (B) 3.75% of the average
of the last reported sales price of the Common Stock (determined
as provided in Section 11.5(g)) during the ten Trading Days (as
defined in Section 11.5(g)) next preceding the date of
declaration of such dividend and (y) any dividend or distribution
in connection with the liquidation, dissolution or winding up of
the Company, whether voluntary or involuntary), then, in such
case, unless the Company elects to reserve such cash for
distribution to the holders of the Securities upon the conversion
of the Securities so that any such holder converting Securities
will receive upon such conversion, in addition to the shares of
Common Stock to which such holder is entitled, the amount of cash
which such holder would have received if such holder had,
immediately prior to the record date for such distribution of
cash, converted its Securities into Common Stock, the Conversion
Rate shall be adjusted so that the same shall equal the rate
determined by multiplying the Conversion Rate in effect
immediately prior to the close of business on such record date by
a fraction of which the denominator shall be such Current Market
Price of the Common Stock on the record date less the amount of
cash so distributed (and not excluded as provided above)
applicable to one share of Common Stock and the numerator of
which shall be the Current Market Price of the Common Stock on
such record date; such adjustment to be effective immediately
prior to the opening of busi-
98
<PAGE>
ness on the day following the record date; provided, however,
that in the event the portion of the cash so distributed
applicable to one share of Common Stock is equal to or greater
than the Current Market Price of the Common Stock on the record
date, in lieu of the foregoing adjustment, adequate provision
shall be made so that each Noteholder shall have the right to
receive upon conversion the amount of cash such holder would have
received had such holder converted each Security on the record
date. If such dividend or distribution is not so paid or made,
the Conversion Rate shall again be adjusted to be the Conversion
Rate which would then be in effect if such dividend or
distribution had not been declared.
If any adjustment is required to be made as set forth in
this subsection (e) as a result of a distribution that is a
quarterly dividend, such adjustment shall be based upon the
amount by which such distribution exceeds the amount of the
quarterly cash dividend permitted to be excluded pursuant hereto.
If an adjustment is required to be made as set forth in this
subsection (e) above as a result of a distribution that is not a
quarterly dividend, such adjustment shall be based upon the full
amount of the distribution.
(f) In case a tender or exchange offer made by the Company
or any subsidiary of the Company for all or any portion of the
Common Stock shall expire and such tender or exchange offer (as
amended upon the expiration thereof) shall require the payment to
shareholders (based on the acceptance (up to any maximum
specified in the terms of the tender offer) of Purchased Shares
(as defined below)) of an aggregate consideration having a fair
market value (as determined by the Board of Directors, whose
determination shall be conclusive and described in a Board
Resolution filed with the Trustee) that combined together with
the aggregate of the cash plus the fair market value (as
determined by the Board of Directors, whose determination shall
be conclusive
99
<PAGE>
and described in a Board Resolution), as of the expiration of
such tender or exchange offer, of consideration payable in
respect of any other tender or exchange offer, by the Company or
any subsidiary of the Company for all or any portion of the
Common Stock expiring within the 12 months preceding the
expiration of such tender or exchange offer and in respect of
which no adjustment pursuant to this paragraph (f) has been made,
exceeds 15% of the product of the Current Market Price of the
Common Stock as of the last time (the "Expiration Time") tenders
or exchanges could have been made pursuant to such tender or
exchange offer (as it may be amended) times the number of shares
of Common Stock outstanding (including any tendered or exchanged
shares) on the Expiration Time, then, and in each such case,
immediately prior to the opening of business on the day after the
date of the Expiration Time, the Conversion Rate shall be
adjusted so that the same shall equal the rate determined by
dividing the Conversion Rate immediately prior to the close of
business on the date of the Expiration Time by a fraction (A) the
numerator of which shall be equal to (1) the product of (x) the
Current Market Price of the Common Stock on the date of the
Expiration Time and (y) the number of shares of Common Stock
outstanding (including any tendered or exchanged shares) on the
date of the Expiration Time less (2) the amount of cash plus the
fair market value (determined as aforesaid) of the aggregate
consideration payable to shareholders based on the acceptance (up
to any maximum specified in the terms of the tender offer) of
Purchased Shares, and (B) the denominator of which shall be equal
to the product of (x) the Current Market Price of the Common
Stock as of the Expiration Time and (y) the number of shares of
Common Stock outstanding (including any tendered or exchanged
shares) as of the Expiration Time less the number of all shares
validly tendered or exchanged and not withdrawn as of the
Expiration Time (the shares deemed so accepted up to any such
maximum, being referred to as the
100
<PAGE>
"Purchased Shares"). In the event that the Company is obligated
to purchase shares pursuant to any such tender offer, but the
Company is permanently prevented by applicable law from effecting
any such purchases or all such purchases are rescinded, the
Conversion Rate shall again be adjusted to be the Conversion Rate
which would then be in effect if such tender offer had not been
made.
(g) For purposes of this Section 11.5, the following terms
shall have the meaning indicated:
(i) "Current Market Price" per share of Common
Stock at any date shall be deemed to be the
average of the last reported sale prices for
the ten (10) consecutive Trading Days (as
defined below) preceding the day before the
record date with respect to any distribution,
issuance or other event requiring such
computation.
(ii) "Closing Price" with respect to any securities
on any day shall mean the closing sale price
regular way on such day or, in case no such
sale takes place on such day, the average of
the reported closing bid and asked prices,
regular way, in each case on the Nasdaq
National Market or New York Stock Exchange, or,
if such security is not listed or admitted to
trading on such quotation system or exchange,
on the principal national security exchange or
quotation system on which such security is
quoted or listed or admitted to trading, or, if
not quoted or listed or admitted to trading on
any national securities exchange or quotation
system, the
101
<PAGE>
average of the closing bid and asked prices of
such security on the over-the-counter market on
the day in question as reported by the National
Quotation Bureau Incorporated, or a similar
generally accepted reporting service, or if not
so available, in such manner as furnished by
any New York Stock Exchange member firm
selected from time to time by the Board of
Directors for that purpose, or a price
determined in good faith by the Board of
Directors, whose determination shall be
conclusive and described in a Board Resolution.
(iii) "fair market value" shall mean the amount which
a willing buyer under no compulsion to buy
would pay a willing seller under no compulsion
to sell in an arm's length transaction.
(iv) "Record Date" shall mean, with respect to any
dividend, distribution or event in which the
holders of Common Stock the right to receive
any cash, securities or other property or in
which the Common Stock (or other applicable
security) is exchanged for or converted into
any combination of cash, securities or other
property, the date fixed for determination of
stockholders entitled to receive such cash,
securities or other property (whether such date
is fixed by the Board of Directors or by
statute, contract or otherwise).
102
<PAGE>
(v) "Trading Day" shall mean (x) if the applicable
security is quoted on the Nasdaq National
Market, a day on which trades may be made on
thereon or (y) if the applicable security is
listed or admitted for trading on the New York
Stock Exchange or another national security
exchange, a day on which the New York Stock
Exchange or another national security exchange
is open for business or (z) if the applicable
security is not so listed, admitted for trading
or quoted, any day other than a Saturday or
Sunday or a day on which banking institutions
in the State of New York are authorized or
obligated by law or executive order to close.
(h) Rights or warrants distributed by the Company to all
holders of Common Stock entitling the holders thereof to
subscribe for or purchase shares of the Company's capital stock
(either initially or under certain circumstances), which rights
or warrants, until the occurrence of a specified event or events
("Trigger Event"):
(i) are deemed to be transferred with such shares
of Common Stock,
(ii) are not exercisable, and
(iii) are also issued in respect of future issuances
of Common Stock,
shall not be deemed distributed for purposes of this Section 11.5
until the occurrence of the earliest Trigger Event. In addition, in
the event of any distribution of rights or warrants, or any Trigger
Event with respect thereto, that shall have resulted in an adjustment
to the Conversion Rate under this
103
<PAGE>
Section 11.5, (1) in the case of any such rights or warrants which
shall all have been redeemed or repurchased without exercise by any
holders thereof, the Conversion Rate shall be readjusted upon such
final redemption or repurchase to give effect to such distribution or
Trigger Event, as the case may be, as though it were a cash
distribution, equal to the per share redemption or repurchase price
received by a holder of Common Stock with respect to such rights or
wan-ants (assuming such holder had retained such rights or warrants),
made to all holders of Common Stock as of the date of such redemption
or repurchase, and (2) in the case of any such rights or warrants all
of which shall have expired without exercise by any holder thereof,
the Conversion Rate shall be readjusted as if such issuance had not
occurred.
(i) No adjustment to the Conversion Rate shall be required unless such
adjustment would require an increase or decrease of at least 1% in such rate;
provided, however, that any adjustments which by reason of this subsection
(i) are not required to be made shall be carried forward and taken into
account in any subsequent adjustment. All calculations under this Article
Fifteen shall be made by the Company and shall be made to the nearest cent or
to the nearest one hundredth of a share, as the case may be. Anything in
this Section 11.5 to the contrary notwithstanding, the Company shall be
entitled to make such increases in the Conversion Rate, in addition to those
required by this Section 11.5, as it in its discretion shall determine to be
advisable in order that any stock dividends, subdivision of shares,
distribution of rights to purchase stock or securities, or any distribution
of securities convertible into or exchangeable for stock hereafter made by
the Company to its stockholders shall not be taxable. To the extent
permitted by applicable law, the Company from time to time may increase the
Conversion Rate by any amount for any period of time if the period is at
least 20 days, the increase is
104
<PAGE>
irrevocable during the period and the Board of Directors shall
have made a determination that such increase would be in the best
interests of the Company, which determination shall be
conclusive. Whenever the Conversion Rate is so increased, the
Company shall mail to Noteholders and file with the Trustee and
the conversion agent a notice of the increase. The Company shall
mail the notice at least 15 days before the date the increased
Conversion Rate takes effect. The notice shall state the
increased Conversion Rate and the period it will be in effect.
(j) Whenever the Conversion Rate is adjusted, as herein
provided, the Company shall promptly file with the Trustee and
any conversion agent other than the Trustee an Officers'
Certificate setting forth the Conversion Rate after such
adjustment and setting forth a brief statement of the facts
requiring such adjustment. Promptly after delivery of such
certificate, the Company shall prepare a notice of such
adjustment of the Conversion Rate setting forth the adjusted
Conversion Rate and the date on which such adjustment becomes
effective and shall mail such notice of such adjustment of the
Conversion Rate to each Noteholder at its last address appearing
on the Security register provided for in Section 2.6 of this
Indenture, within twenty (20) days after execution thereof.
Failure to deliver such notice shall not affect the legality or
validity of any such adjustment.
(k) In any case in which this Section 11.5 provides that an
adjustment shall become effective immediately after a record date
for an event, the Company may defer until the occurrence of such
event (i) issuing to the holder of any Security converted after
such record date and before the occurrence of such event the
additional shares of Common Stock issuable upon such conversion
by reason of the adjustment required by such event over and above
the Common Stock issuable upon such conversion before
105
<PAGE>
giving effect to such adjustment and (ii) paying to such holder
any amount in cash or additional shares in lieu of any fractional
share pursuant to Section 11.3.
XI.6 Effect of Reclassification, Consolidation,
Merger or Sale.
If any of the following events occur, namely (i) any
reclassification or change of the outstanding shares of Common Stock
(other than a subdivision or combination to which Section 11.5(c)
applies), (ii) any consolidation, merger or combination of the Company
with another corporation as a result of which holders of Common Stock
shall be entitled to receive stock, securities or other property or
assets (including cash) with respect to or in exchange for such Common
Stock, or (iii) any sale or conveyance of the properties and assets of
the Company as, or substantially as, an entirety to any other
corporation as a result of which holders of Common Stock shall be
entitled to receive stock, securities or other property or assets
(including cash) with respect to or in exchange for such Common Stock,
then the Company or the successor or purchasing corporation, as the
case may be, shall execute with the Trustee a supplemental indenture
(which shall comply with the Trust Indenture Act as in force at the
date of execution of such supplemental indenture) providing that such
Security shall be convertible into the kind and amount of shares of
stock and other securities or property or assets (including cash)
receivable upon such reclassification, change, consolidation, merger,
combination, sale or conveyance by a holder of a number of shares of
Common Stock issuable upon conversion of such Securities (assuming,
for such purposes, a sufficient number of authorized shares of Common
Stock available to convert all such Securities) immediately prior to
such reclassification, change, consolidation, merger, combination,
sale or conveyance assuming such holder of Common Stock did not
exercise his rights of election, if any, as to the kind or amount of
securities, cash or other property receivable upon such consolidation,
merger, statutory exchange, sale or conveyance
106
<PAGE>
(provided, that, if the kind or amount of securities, cash or other
property receivable upon such consolidation, merger, statutory
exchange, sale or conveyance is not the same for each share of Common
Stock in respect of which such rights of election shall not have been
exercised ("nonelecting-share")), then for the purposes of this
Section 11.6 the kind and amount of securities, cash or other property
receivable upon such consolidation, merger, statutory exchange, sale
or conveyance for each non-electing share shall be deemed to be the
kind and amount so receivable per share by a plurality of the
non-electing shares. Such supplemental indenture shall provide for
adjustments which shall be as nearly equivalent as may be practicable
to the adjustments provided for in this Article.
The Company shall cause notice of the execution of such
supplemental indenture to be mailed to each holder of Securities, at
his address appearing on the Security register provided for in Section
2.6 of this Indenture, within twenty (20) days after execution
thereof. Failure to deliver such notice shall not affect the legality
or validity of such supplemental indenture.
The above provisions of this Section shall similarly apply
to successive reclassifications, changes, consolidations, mergers,
combinations, sales and conveyances.
If this Section 11.6 applies to any event or occurrence,
Section 11.5 shall not apply.
107
<PAGE>
XI.7 Taxes on Shares Issued.
The issue of stock certificates on conversions of Securities
shall be made without charge to the converting Noteholder for any tax
in respect of the issue thereof. The Company shall not, however, be
required to pay any tax which may be payable in respect of any
transfer involved in the issue and delivery of stock in any name other
than that of the holder of any Security converted, and the Company
shall not be required to issue or deliver any such stock certificate
unless and until the person or persons requesting the issue thereof
shall have paid to the Company the amount of such tax or shall have
established to the satisfaction of the Company that such tax has been
paid.
XI.8 Reservation of Shares; Shares to Be
Fully Paid; Compliance with Governmental
Requirements; Listing of Common Stock.
The Company shall provide, free from preemptive rights, out
of its authorized but unissued shares or shares held in treasury,
sufficient shares of Common Stock to provide for the conversion of the
Securities from time to time as such Securities are presented for
conversion.
Before taking any action which would cause an adjustment
reducing the Conversion Price below the then par value, if any, of the
shares of Common Stock issuable upon conversion of the Securities, the
Company will take all corporate action which may, in the opinion of
its counsel, be necessary in order that the Company may validly and
legally issue shares of such Common Stock at such adjusted Conversion
Price.
The Company covenants that all shares of Common Stock which
may be issued upon conversion of Securities will upon issue be fully
paid and non-assessable by the Company and free from all taxes, liens
and charges with respect to the issue thereof.
108
<PAGE>
The Company covenants that if any shares of Common Stock to
be provided for the purpose of conversion of Securities hereunder
require registration with or approval of any governmental authority
under any federal or state law before such shares may be validly
issued upon conversion, the Company will in good faith and as
expeditiously as possible endeavor to secure such registration or
approval, as the case may be.
The Company further covenants that if at any time the Common
Stock shall be listed on the Nasdaq National Market, the New York
Stock Exchange or any other national securities exchange or automated
quotation system the Company will, if permitted by the rules of such
exchange or automated quotation system, list and keep listed, so long
as the Common Stock shall be so listed on such exchange or automated
quotation system, all Common Stock issuable upon conversion of the
Securities; provided, however, that if rules of such exchange or
automated quotation system permit the Company to defer the listing of
such Common Stock until the first conversion of the Securities into
Common Stock in accordance with the provisions of this Indenture, the
Company covenants to list such Common Stock issuable upon conversion
of the Securities in accordance with the requirements of such exchange
or automated quotation system at such time.
109
<PAGE>
XI.9 Responsibility of Trustee.
The Trustee and any other conversion agent shall not at any time be
under any duty or responsibility to any holder of Securities to determine
whether any facts exist which may require any adjustment of the Conversion
Price, or with respect to the nature or extent or calculation of any such
adjustment when made, or with respect to the method employed, or herein or in
any supplemental indenture provided to be employed, in making the same. The
Trustee and any other conversion agent shall not be accountable with respect to
the validity or value (or the kind or amount) of any shares of Common Stock, or
of any securities or property, which may at any time be issued or delivered upon
the conversion of any Security; and the Trustee and any other conversion agent
make no representations with respect thereto. Subject to the provisions of
Section 7.1, neither the Trustee nor any conversion agent shall be responsible
for any failure of the Company to issue, transfer or deliver any shares of
Common Stock or stock certificates or other securities or property or cash upon
the surrender of any Security for the purpose of conversion or to comply with
any of the duties, responsibilities or covenants of the Company contained in
this Article. Without limiting the generality of the foregoing, neither the
Trustee nor any conversion agent shall be under any responsibility to determine
the correctness of any provisions contained in any supplemental indenture
entered into pursuant to Section 11.6 relating either to the kind or amount of
shares of stock or securities or property (including cash) receivable by
Noteholders upon the conversion of their Securities after any event referred to
in such Section 11.6 or to any adjustment to be made with respect thereto, but,
subject to the provisions of Section 7.1, may accept as conclusive evidence of
the correctness of any such provisions, and shall be protected in relying upon,
the Officers' Certificate (which the Company shall be obligated to file with the
Trustee prior to the execution of any such supplemental indenture) with respect
thereto.
110
<PAGE>
XI.10 Notice to Holders Prior to Certain Actions.
In case:
(a) the Company shall declare a dividend (or any other
distribution) on its Common Stock that would require an adjustment in
the Conversion Price pursuant to Section 11.5; or
(b) the Company shall authorize the granting to the holders of
its Common Stock of rights or warrants to subscribe for or purchase any
share of any class or any other rights or warrants; or
(c) of any reclassification or reorganization of the Common
Stock of the Company (other than a subdivision or combination of its
outstanding Common Stock, or a change in par value, or from par value to no
par value, or from no par value to par value), or of any consolidation or
merger to which the Company is a party and for which approval of any
shareholders of the Company is required, or of the sale or transfer of all
or substantially all of the assets of the Company; or
(d) of the voluntary or involuntary dissolution, liquidation or
winding-up of the Company;
the Company shall cause to be filed with the Trustee and to be mailed to
each holder of Securities at his address appearing on the Security register
provided for in Section 2.6 of this Indenture, as promptly as possible but
in any event at least fifteen (15) days prior to the applicable date
hereinafter specified, a notice stating (x) the date on which a record is
to be taken for the purpose of such dividend, distribution or rights or
warrants, or, if a record is not to be taken, the date as of which the
holders of Common Stock of record to be entitled to such dividend,
distribution or rights are to be determined, or (y) the date on which such
reclassification,
111
<PAGE>
consolidation, merger, sale, transfer, dissolution, liquidation or
winding-up is expected to become effective or occur, and the date as of
which it is expected that holders of Common Stock of record shall be
entitled to exchange their Common Stock for securities or other property
deliverable upon such reclassification, consolidation, merger, sale,
transfer, dissolution, liquidation or winding-up. Failure to give such
notice, or any defect therein, shall not affect the legality or validity
of such dividend, distribution, reclassification, consolidation, merger,
sale, transfer, dissolution, liquidation or winding-up.
XII
MISCELLANEOUS
XII.1 Trust Indenture Act Controls.
If any provision of this Indenture limits, qualifies or conflicts with
another provision which is required to be included herein by any of Sections 310
to 317 inclusive of the TIA, such required provisions shall control.
XII.2 Notices.
Any notice or communication by the Company or the Trustee to the other
is duly given if in writing and delivered in person or mailed by first-class
mail (registered or certified, return receipt requested), telex, telecopier or
overnight air courier guaranteeing next day delivery, to the other's address:
If to the Company:
World Color Press, Inc.
The Mill
340 Pemberwick Road
Greenwich, Connecticut 06831
112
<PAGE>
Attention: Jennifer L. Adams, Esq.
Telecopier No.: (203)532-4200
If to the Trustee:
State Street Bank and Trust Company
Two International Place
Boston, Massachusetts 02110
Attention: Gerald R. Wheeler
Telecopier No.: (617) 664-5373
Company or the Trustee by notice to the other may designate additional or
different addresses for subsequent notices or communications.
All notices and communications shall be deemed to have been duly
given: at the time delivered by hand, if personally delivered; five Business
Days after being deposited in the mail, postage prepaid, if mailed; when
answered back, if telexed; when receipt acknowledged, if telecopied; and the
next Business Day after timely delivery to the courier, if sent by overnight air
courier guaranteeing next day delivery.
Any notice or communication to a Holder shall be mailed by first-class
mail, certified or registered, return receipt requested, to the Holder's address
shown on the register kept by the Registrar. Failure to mail a notice or
communication to a Holder or any defect in it shall not affect its sufficiency
with respect to other Holders.
If a notice or communication is mailed in the manner provided above
within the time prescribed, it is duly given, whether or not the addressee
receives it.
If the Company mails a notice or communication to Holders, it shall
mail a copy to the Trustee and each Agent at the same time.
113
<PAGE>
XII.3 Communication by Holders With Other Holders.
Holders may communicate pursuant to TIA Section 312(b) with other
Holders with respect to their rights under this Indenture or the Securities.
The Company, the Trustee, the Registrar and anyone else shall have the
protection of TIA Section 312(c).
XII.4 Certificate and Opinion as to Conditions
Precedent.
Upon any request or application by the Company to the Trustee to take
any action under this Indenture, the Company shall furnish to the Trustee:
(a) an Officers' Certificate (which shall include the statements
set forth in Section 12.5 hereof) stating that, in the opinion of the
signers, all conditions precedent and covenants, if any, provided for in
this Indenture relating to the proposed action have been complied with; and
(b) an opinion of Counsel to the Trustee (which shall include
the statements set forth in Section 12.5 hereof) stating that, in the
opinion of such counsel, all such conditions precedent and covenants have
been complied with.
XII.5 Statements Required in Certificate or
Opinion.
Each certificate or opinion with respect to compliance with a
condition or covenant provided for in this Indenture shall include:
(a) a statement that the Person making such certificate or
opinion has read and understands such covenant or condition;
(b) a brief statement as to the nature and scope of the
examination or investigation upon
114
<PAGE>
which the statements or opinions contained in such certificate or opinion
are based;
(c) a statement that, in the opinion of such Person, he has made
such examination or investigation as is necessary to enable him to express
an informed opinion as to whether or not such covenant or condition has
been complied with; and
(d) a statement as to whether or not, in the opinion of such
Person, such condition or covenant has been complied with; provided that
with respect to matters of fact Opinions of Counsel may rely on an
Officers' Certificate or certificates of public officials.
XII.6 Rules by Trustee and Agents.
The Trustee may make reasonable rules for action by or at a meeting of
Holders. The Registrar or Paying Agent may make reasonable rules and set
reasonable requirements for its functions.
XII.7 Legal Holidays.
A "Legal Holiday" is a Saturday, a Sunday or a day on which banking
institutions in The City of New York or at a place of payment are authorized or
obligated by law, regulation or executive order to remain closed. If a payment
date is a Legal Holiday at a place of payment, payment may be made at that place
on the next succeeding day that is not a Legal Holiday, and no interest shall
accrue for the intervening period.
115
<PAGE>
XII.8 No Recourse Against Others.
No past, present or future director, officer, employee, incorporator
or stockholder of the Company or any successor corporation, as such, shall have
any liability for any obligations of the Company under the Securities or this
Indenture or for any claim based on, in respect of, or by reason of, such
obligations or their creation. Each Holder by accepting a Security waives and
releases all such liability. The waiver and release are part of the
consideration for issuance of the Securities.
XII.9 Governing Law.
THIS INDENTURE AND THE SECURITIES SHALL BE GOVERNED BY AND CONSTRUED
IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, AS APPLIED TO CONTRACTS
MADE AND PERFORMED WITHIN THE STATE OF NEW YORK, WITHOUT REGARD TO PRINCIPLES OF
CONFLICTS OF LAW. THE COMPANY HEREBY IRREVOCABLY SUBMITS TO THE JURISDICTION OF
ANY NEW YORK STATE COURT SITTING IN THE BOROUGH OF MANHATTAN IN THE CITY OF NEW
YORK OR ANY FEDERAL COURT SITTING IN THE BOROUGH OF MANHATTAN IN THE CITY OF NEW
YORK IN RESPECT OF ANY SUIT, ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO
THIS INDENTURE AND THE SECURITIES, AND IRREVOCABLY ACCEPTS FOR ITSELF AND IN
RESPECT OF ITS PROPERTY, GENERALLY AND UNCONDITIONALLY, JURISDICTION OF THE
AFORESAID COURTS. THE COMPANY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT THEY
MAY EFFECTIVELY DO SO UNDER APPLICABLE LAW, TRIAL BY JURY AND ANY OBJECTION
WHICH THEY MAY NOW OR HEREAFTER HAVE TO THE LAYING OF THE VENUE OF ANY SUCH
SUIT, ACTION OR PROCEEDING BROUGHT IN ANY SUCH COURT AND ANY CLAIM THAT ANY SUCH
SUIT, ACTION OR PROCEEDING BROUGHT IN ANY SUCH COURT HAS BEEN BROUGHT IN AN
INCONVENIENT FORUM. NOTHING HEREIN SHALL AFFECT THE RIGHT OF THE TRUSTEE OR ANY
NOTEHOLDER TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR TO COMMENCE
LEGAL PROCEEDINGS OR OTHERWISE PROCEED AGAINST THE COMPANY IN ANY OTHER
JURISDICTION.
116
<PAGE>
XII.10 No Adverse Interpretation of Other
Agreements.
This Indenture may not be used to interpret another indenture, loan or
debt agreement of the Company or a Subsidiary. Any such indenture, loan or debt
agreement may not be used to interpret this Indenture.
XII.11 Successors.
All agreements of the Company in this Indenture and the Securities
shall bind its successor. All agreements of the Trustee in this Indenture shall
bind its successor.
XII.12 Severability.
In case any provision in this Indenture or in the Securities shall be
invalid, illegal or unenforceable, the validity, legality and enforceability of
the remaining provisions shall not in any way be affected or impaired thereby.
XII.13 Counterpart originals.
The parties may sign any number of copies of this Indenture. Each
signed copy shall be an original, but all of them together represent the same
agreement.
XII.14 Trustee as Paying Agent and Registrar.
The Company initially appoints the Trustee as Paying Agent and
Registrar.
XII.15 Table of Contents, Headings, Etc.
The Table of Contents, Cross-Reference Table and headings of the
Articles and Sections of this Indenture have been inserted for convenience of
reference only, are not to be considered a part hereof and shall in no way
modify or restrict any of the terms or provisions hereof.
117
<PAGE>
[Signatures on Next Page]
118
<PAGE>
SIGNATURES
WORLD COLOR PRESS, INC.
By: /s/Jennifer L. Adams
--------------------
Name: Jennifer L. Adams
Title: Executive Vice President, Chief Legal and Administrative
Officer
Dated as of October 8, 1997 (SEAL)
Attest:
/s/Michelle Case
- -----------------
STATE STREET BANK AND TRUST COMPANY,
Trustee
By: /s/Gerald R. Wheeler
--------------------
Name: Gerald R. Wheeler
Title: Vice President
Dated as of October 8, 1997 (SEAL)
Attest:
/s/Carolina Ottoman
- -------------------
119
<PAGE>
EXHIBIT A
[For Global Note only:
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE COMPANY OR ITS
AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT AND ANY CERTIFICATE
ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS
REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO
CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER
HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.]
<PAGE>
6% CONVERTIBLE SENIOR SUBORDINATED NOTE DUE 2007
No. 1 $151,800,000
WORLD COLOR PRESS, INC.
promises to pay to Cede & Co.
or registered assigns,
the principal sum of
ONE HUNDRED FIFTY ONE MILLION EIGHT HUNDRED THOUSAND
Dollars on October 1, 2007.
Interest Payment Dates: April 1 and October 1
Record Dates: March 15 and September 15
A reference is hereby made to the further provisions of this Convertible Senior
Subordinated Note due 2007 set forth on the reverse side hereof and such further
provisions shall have the same effect as if set forth on the front side hereof.
CERTIFICATE OF AUTHENTICATION: Dated: October 8, 1997
This is one of the Securities
referred to in the within
mentioned Indenture.
as Trustee
By:
--------------------------------
Authorized Signatory
A-2
<PAGE>
IN WITNESS WHEREOF, the Company has caused this certificate to be duly executed
by its duly authorized officers and to be sealed with the seal of the Company.
WORLD COLOR PRESS, INC.
By: ___________________________ By: ___________________
Name: Jennifer L. Adams Name: Thomas M. Pierno
Title: Executive Vice Title: Executive Vice
President, Chief Legal President, Chief
and Administrative Financial Officer
Officer and Secretary
[SEAL]
A-3
<PAGE>
6% CONVERTIBLE SENIOR SUBORDINATED NOTE DUE 2007
Capitalized terms used herein have the meaning assigned to them in the
Indenture (as defined in Section 4 below) unless otherwise indicated.
(a) Interest. World Color Press, Inc., a Delaware corporation
(the "Company"), promises to pay interest on the principal amount of this
Security at 6%-per annum from October 8, 1997 until maturity. The Company will
pay interest semiannually on April 1 and October 1 of each year, or if any such
day is not a Business Day, on the next succeeding Business Day (each an
"Interest Payment Date"). The person in whose name any Note is registered at
the close of business on any record date with respect to any interest payment
date shall be entitled to receive the interest payable on such interest payment
date, except (i) that the interest payable upon redemption (unless the date of
redemption is an interest payment date) will be payable to the person to whom
principal is payable and (ii) as set forth in the next succeeding sentence. In
the case of any Note (or portion thereof) which is converted into Common Stock
of the Company during the period from (but excluding) a record date to (but
excluding) the next succeeding interest payment date either (i) if such Note (or
portion thereof) has been called for redemption on a redemption date which
occurs during such period, or is to be redeemed in connection with a Change in
Control on a Repurchase Date (as defined in Section 3.10) which occurs during
such period, the Company shall not be required to pay interest on such interest
payment date in respect of any such Note or portion thereof or (ii) if
otherwise, any Note (or portion thereof) submitted for conversion during such
period shall be accompanied by funds equal to the interest payable on such
succeeding interest payment date on the principal amount so converted.
Interest on the Securities will accrue from the most recent date on
which interest has been paid or, if no interest has been paid, from the Issue
Date; provided that if there is no existing Default in the payment of interest,
and if this Security is authenticated between a record date referred to on the
face hereof and the next succeeding Interest Payment Date, interest shall accrue
from such next succeeding Interest
A-4
<PAGE>
Payment Date; provided, further, that the first Interest Payment Date shall be
April 1, 1998. The Company shall pay interest on overdue principal from time to
time on demand at the same rate per annum on the Securities to the extent
lawful; it shall pay interest (including post-petition interest in any
proceeding under any Bankruptcy Law) on overdue installments of interest
(without regard to any applicable grace periods) from time to time on demand at
the same rate to the extent lawful. Interest will be computed on the basis of a
360-day year of twelve 30-day months.
(b) Method of Payment. The Company will pay interest on the
securities (except defaulted interest) to the Persons who are registered Holders
of Securities at the close of business on the March 15 or September 15 next
preceding the Interest Payment Date, even if such Securities are cancelled after
such record date and on or before such Interest Payment Date. Interest may, at
the option of the Company, be paid either (i) by check mailed to the address of
the person entitled thereto as it appears in the Note register or (ii) by
transfer to an account maintained by such person located in the United States;
provided, however, that payments to DTC will be made by wire transfer of
immediately available funds to the account of DTC or its nominee.
(c) Paying Agent and Registrar. Initially, State Street Bank and
Trust Company, the Trustee under the Indenture, will act as Paying Agent and
Registrar. The Company may change any Paying Agent or Registrar without notice
to any Holder. The Company or any its Subsidiaries may act in any such
capacity.
(d) Indenture. The Company issued the Securities under an Indenture
dated as of October 8, 1997 (the "Indenture") between the Company and the
Trustee. The terms of the Securities include those stated in the Indenture and
those made part of the Indenture by reference to the Trust Indenture Act of
1939, as amended (15 U.S. Code Sections 77aaa-77bbbb) (the "TIA"). The
Securities are subject to all such terms, and Holders are referred to the
Indenture and the TIA for a statement of such terms. The Securities are general
unsecured obligations of the Company limited to $132,000,000 (or $151,800,000 if
the over-allotment option set forth in the
A-5
<PAGE>
Underwriting Agreement dated October 3, 1997 (as amended from time to time by
the parties thereto) by and between the Company and the Representatives (as
defined therein) is exercised in full) in aggregate principal amount, plus
premium, if any, plus amounts, if any, sufficient to pay interest on outstanding
Securities as set forth in Paragraph 2 hereof.
(e) Redemption.
The Company may not redeem the Securities prior to October 4, 2000.
Thereafter, the Company may redeem all or any of the Securities on at least 30
days' notice, in whole or in part at any time, at the Redemption Price
(expressed as a percentage of the principal amount thereof) set forth below, in
each case together with accrued interest to and including the Redemption Date,
as set forth in Section 3.7 of the Indenture; provided, that on or after October
4, 2000 and prior to October 4, 2002, the Securities will not be redeemable
pursuant to Section 3.7 unless the Closing Price of the Common Stock for twenty
Trading Days within a period of thirty consecutive Trading Days ending within
five Trading Days prior to the mailing of the notice of redemption under Section
3.3 shall have exceeded $58.06 per share (subject to adjustment upon the
occurrence of certain events set forth in Section 11.5 of the Indenture).
If redeemed during the period beginning October 4, 2000, and ending
September 30, 2001, a redemption price of 104.2%, and if redeemed during the
12-month period beginning October 1:
Year Redemption Price
2001 103.6%
2002 103.0%
2003 102.4%
2004 101.8%
2005 101.2%
2006 100.6%
and 100% at October 1, 2007; provided that any semi-annual payment of interest
becoming due on the date fixed for redemption shall be payable to the holders of
record on the relevant
A-6
<PAGE>
record date of the Securities being redeemed. Notwithstanding the foregoing,
the Company may not redeem any Securities unless all accrued and unpaid interest
has been paid on all outstanding Securities for all interest periods terminating
on or prior to the last interest payment date before the date of redemption.
Such redemption will comply with Article Three of the Indenture.
(f) Notice of Redemption. Notice of redemption will be mailed at
least 30 days but not more than 60 days before the Redemption Date to each
Holder whose Securities are to be redeemed at its registered address.
Securities in denominations larger than $1,000 may be redeemed in part but only
in whole multiples of $1,000, unless all of the Securities held by a Holder are
to be redeemed. On and after the Redemption Date interest ceases to accrue on
Securities or portions thereof called for redemption.
(g) Sinking Fund. The Notes are not subject to redemption through
the operation of any sinking fund.
(h) Redemption at Option of Holders. If there shall occur a Change
in Control, then each Noteholder shall have the right, at such Holder's option
in accordance with the provisions of the Indenture, to require the Company to
repurchase all of such Holder's Notes, or any portion thereof that is an
integral multiple of $1,000 principal amount at maturity, for cash at a
Repurchase Price equal to 100% of the principal amount thereof plus interest
accrued to the Repurchase Date. At the option of the Company, the Repurchase
Price may be paid in cash or, except as otherwise provided in the Indenture, by
delivery of Common Stock having a fair market value equal to the Repurchase
Price; provided, that payment may not be made in Common Stock unless at the time
of payment such stock is listed on a national securities exchange or quoted on
the NASDAQ National Market. For purposes of this paragraph, the fair market
value of shares of Common Stock shall be determined by the Company and shall be
equal to 95% of the average of the Closing Price of the Common Stock for the
five consecutive Trading Days ending on and including the third Trading Day
immediately preceding the Repurchase Date. When-
A-7
<PAGE>
ever in this Note there is a reference, in any context, to the principal of any
Note as of any time, such reference shall be deemed to include reference to the
Repurchase Price payable in respect of such Note to the extent that such
Repurchase Price is, was or would be so payable at such time, and express
mention of the Repurchase Price in any provision of this Note shall not be
construed as excluding the Repurchase Price in those provisions of this Note
when such express mention is not made. For a Note to be so repaid at the option
of the holder, the Company must receive at the office or agency of the Company
maintained for that purpose in the Borough of Manhattan, The City of New York,
such Note with the form entitled "Option to Elect Repayment Upon a Change in
Control" on the reverse hereof duly completed, together with such Notes duly
endorsed for transfer, on or before the 30th day after the date of such notice
(or if such 30th day is not a Business Day, the immediately preceding Business
Day).
(i) Right to Convert. Subject to the provisions of the Indenture,
the holder hereof has the right, at its option, at any time after 90 days
following the latest date of original issuance of the Notes and prior to the
close of business on the first Business Day prior to October 1, 2007, or, as to
all or any portion hereof called for redemption, prior to the close of business
on the Business Day immediately preceding the date fixed for redemption (unless
the Company shall default in payment due upon redemption thereof), to convert
the principal hereof or any portion of such principal which is $1,000 principal
amount at maturity or an integral multiple thereof, into that number of fully
paid and nonassessable shares of Company's Common Stock, as said shares shall be
constituted at the date of conversion, obtained by dividing the principal amount
at maturity of this Note or portion thereof to be converted by $1,000 and
multiplying the result so obtained by $41.47 (the "Conversion Rate") or such
Conversion Rate as adjusted from time to time as provided in the Indenture, upon
surrender of this Note, together with a conversion notice as provided in the
Indenture, to the Company at the office or agency of the Company maintained for
that purpose in the Borough of Manhattan, The City of New York, or at the option
of such holder, the Corporate Trust Office, and, unless the shares issuable on
conversion are to be issued in the same name as this Note, duly endorsed by, or
accompanied
A-8
<PAGE>
by instruments of transfer in form satisfactory to the Company duly executed by,
the holder or by his duly authorized attorney. No adjustment in respect of
interest or dividends will be made upon any conversion; provided, however, that
if this Note shall be surrendered for conversion during the period from the
close of business on any record date for the payment of interest to the close of
business on the Business Day preceding the interest payment date, this Note
(unless it or the portion being converted shall have been called for redemption
during the period from the close of business on any record date for the payment
of interest to the close of business on the Business Day preceding the interest
payment date) must be accompanied by an amount, in New York Clearing House funds
or other funds acceptable to the Company, equal to the interest payable on such
interest payment date on the principal amount at maturity being converted. No
fractional shares will be issued upon any conversion, but an adjustment in cash
will be made, as provided in the Indenture, in respect of any fraction of a
share which would otherwise be issuable upon the surrender of any Note or Notes
for conversion.
(j) Denominations, Transfer, Exchange. The Securities are in
registered form without coupons in denominations of $1,000 and integral
multiples of $1,000. The transfer of Securities may be registered and
Securities may be exchanged as provided in the Indenture. The Registrar and the
Trustee may require a Holder, among other things, to furnish appropriate
endorsements and transfer documents and the Company may require a Holder to pay
any taxes and fees required by law or permitted by the Indenture. The Company
need not exchange or register the transfer of any Security or portion of a
Security selected for redemption, except the unredeemed portion of any Security
being redeemed in part. Also, it need not exchange or register the transfer of
any Securities surrendered for conversion or for a period of 15 days before a
selection of Securities to be redeemed or during the period between a record
date and the corresponding Interest Payment Date.
(k) Persons Deemed Owners. The registered Holder of a Security may
be treated a its owner for all purposes.
(l) Amendments Supplements and Waivers. Subject to certain
exceptions, the Indenture or the Securities may be
A-9
<PAGE>
amended or supplemented with the consent of the Holders of at least a majority
in principal amount of the Securities then outstanding (including consents
obtained in connection with a tender offer or exchange offer for Securities).
Without the consent of any Holder the Company and the Trustee may amend or
supplement the Indenture or the Securities to cure any ambiguity, defect or
inconsistency (provided that such action shall not adversely affect the
interests of the Holders in any respect); to add to the covenants of the Company
for the benefit of Holders or to surrender any right or power herein conferred
upon the Company or to make any other change that does not adversely affect the
rights of any Holder; to provide collateral for the Securities; to make
provision with respect to the conversion rights of the Holders of the Securities
pursuant to the requirements of Section 11.6; to evidence the succession of
another person to the Company; to provide for uncertificated Securities; and to
effect or maintain the qualification of the Indenture under the TIA.
Without the consent of each Holder affected, an amendment or waiver
may not (with respect to any Securities held by a non-consenting holder)(i)
extend the fixed maturity of any Note, or reduce the rate or extend the time of
payment of interest thereon, or reduce the principal amount at maturity, Issue
Price, Redemption Price, Redemption Price or interest, change the obligation of
the Company to repurchase any Note upon the happening of a Change in Control in
a manner adverse to holders of Notes, impair the right of any Noteholder to
institute suit for the payment thereof, make the principal amount at maturity
thereof, or Redemption Price, Repurchase Price or interest thereon, payable in
any coin or currency other than that provided in the Notes, or impair the right
of a Holder to convert the Notes into Common Stock subject to the terms set
forth in the Indenture, or modify the provisions of this Indenture with respect
to the subordination of the Notes in a manner adverse to the Noteholders in any
material respect, without the consent of the holder of each Note so affected, or
(ii) reduce the aforesaid percentage of Notes, the holders of which are required
to consent to any such supplemental indenture, without the consent of the
holders of all Notes then outstanding.
A-10
<PAGE>
The right of any Holder to participate in any consent required or
sought pursuant to any provision of the Indenture or this Security (and the
obligation of the Company to obtain any such consent otherwise required from
such Holder) may be subject to the requirement that such Holder shall have been
the Holder of record of any Securities with respect to which such consent is
required or sought as of a date identified by the Trustee in a notice furnished
to Holders in accordance with the terms of the Indenture.
(m) Defaults and Remedies. Events of Default include: default in
payment of Interest on any Security for 30 days; default in payment of principal
of or premium on the Securities at maturity, or upon acceleration, redemption or
otherwise; failure by the Company for 30 days after written notice to it from
the Trustee or Holders of at least 30% (25% in the case of an Event of Default
with respect to the payment of principal of or interest on the Notes) in
principal amount of the then outstanding Securities to comply with any of its
other agreements in the Indenture or the Securities; and certain events of
bankruptcy or insolvency. If an Event of Default occurs and is continuing, the
Trustee or the Holders of at least 30% (25% in the case of an Event of Default
with respect to the payment of principal of or interest on the Notes) in
aggregate principal amount of the then outstanding Securities may declare all
the Securities to be immediately due and payable for an amount equal to 100% of
the principal amount of the Securities plus premium, if any, and accrued
interest to the date of payment, except that in the case of an Event of Default
arising from certain events of bankruptcy or insolvency, all outstanding
Securities become due and payable immediately without further action or notice
and except that if any Senior Indebtedness is outstanding pursuant to the Credit
Agreement, upon a declaration of acceleration, such principal, premium, if any,
and interest shall be due and payable upon the earlier of (x) the day that is
five business days after the provision to the Company and the Credit Agent of
such written notice, unless such Event of Default is cured or waived prior to
such date and (y) the date of acceleration of any Senior Indebtedness under the
Credit Agreement. Holders may not enforce the Indenture or the Securities
except as provided in the Indenture. The Trustee may require indemnity
satisfactory to it before it enforces the Indenture or the
A-11
<PAGE>
Securities. Subject to certain limitations, Holders of a majority in principal
amount of the then outstanding Securities may direct the Trustee in its exercise
of any trust or power. The Trustee may withhold from Holders notice of any
continuing Default or Event of Default (except a Default or an Event of Default
in payment of principal premium, if any, or interest) if and so long as a
committee of its Trust Officers determines in good faith that withholding notice
is in their interests. The Company must furnish an annual compliance
certificate to the Trustee.
(n) Covenants. The Indenture contains certain limited covenants of
the Company including certain limitations on the ability of the Company to incur
other Subordinated Indebtedness.
(o) Trustee Dealings With Company. Subject to applicable provisions
under the TIA, the Trustee, in its individual or any other capacity, may make
loans to, accept deposits from, and perform services for the Company or its
Affiliates, and may otherwise deal with the Company or its Affiliates as if it
were not Trustee.
(p) No Recourse Against Others. No past, present or future director
officer, employee, incorporator or stockholder of the Company or any successor
corporation, as such, shall have any liability for any obligations of the
Company under the Securities or the Indenture or for any claim based on, in
respect of or by reason of such obligations or their creation. Each Holder by
Accepting a Security waives and releases all such liability. The waiver and
release are part of the consideration for the issuance of the Securities.
(q) Authentication. This Security shall not be valid until
authenticated by the manual signature of the Trustee or an authenticating agent.
(r) Abbreviations. Customary Abbreviations may be used in the name
of a Holder or an assignee, such as: TEN COM (= tenants in common), TEN ENT (=
tenants by the entireties), JT TEN (= joint tenants with right of survivorship
and not as tenants in common), CUST (= Custodian), and U/G/M/A (= Uniform Gifts
to Minors Act).
A-12
<PAGE>
(s) Subordination. The Securities are subordinated to Senior
Indebtedness (as defined in the Indenture), which includes (i) the Senior Bank
Debt, (ii) all obligations of the Company under the GECC Lease and (iii) any
other Indebtedness permitted to be incurred pursuant to the terms of the
Indenture, unless the instrument under which such Indebtedness is incurred
expressly provides that it is on a parity with or subordinated in right of
payment to the Securities. Notwithstanding anything to the contrary in the
foregoing, "Senior Indebtedness" shall not include (i) Indebtedness that is
expressly subordinate or junior in right of payment to any Indebtedness of the
Company, (ii) Indebtedness that is represented by Redeemable Stock, (iii) any
liability for federal, state, or local taxes owed or owing by the Company, (iv)
Indebtedness of the Company to any Subsidiary or any Affiliate of the Company,
(v) trade payables, and (vi) Indebtedness that is incurred in violation of the
Indenture (other than Senior Bank Debt). To the extent provided in the
Indenture, Senior Indebtedness must be paid before the Securities may be paid.
The Company agrees, and each Holder by accepting a Security consents and agrees,
to the subordination provided in the Indenture and authorizes the Trustee to
give it effect.
The Company will furnish to any Holder upon written request and
without charge a copy of the Indenture. Requests may be made to:
WORLD COLOR PRESS, INC.
The Mill
340 Pemberwick Road
Greenwich, Connecticut 06831
Attention: General Counsel
A-13
<PAGE>
CONVERSION NOTICE
To: WORLD COLOR PRESS, INC.
The undersigned registered owner of this Note hereby irrevocably
exercises the option to convert this Note, or the portion hereof (which is
$1,000 principal amount at maturity or an integral multiple thereof) below
designated, into shares of Common Stock of World Color Press, Inc. in accordance
with the terms of the Indenture referred to in this Note, and directs that the
shares issuable and deliverable upon such conversion, together with any check in
payment for fractional shares and any Notes representing any unconverted
principal amount hereof, be issued and delivered to the registered holder hereof
unless a different name has been indicated below. If shares or any portion of
this Note not converted are to be issued in the name of a person other than the
undersigned, the undersigned will check the appropriate box below and pay all
transfer taxes payable with respect thereto. Any amount required to be paid to
the undersigned on account of interest accompanies this Note.
Dated: *Sign exactly as name appears on the other side of the
Note:
____________________________
____________________________
Signature(s)
____________________________
Signature Guarantee by an
institution that is a member
of the Signature Guarantee
Medallion Program
A-14
<PAGE>
Fill in for registration of
shares of Common Stock if to
be issued, and Notes if to be
delivered, other than to and
in the name of the registered holder:
________________________________
(Name)
________________________________
(Street Address)
________________________________
(City, State and Zip Code)
Please print name and address
Principal amount at maturity to be
converted (if less than all):
$__________
_________________________
Social Security or Other Taxpayer
Identification Number
A-15
<PAGE>
ASSIGNMENT FORM
To assign this Security, fill in the form below: (I) or (we) assign
and transfer this Security to
_________________________________________________________
(Insert assignee's soc. sec. or tax I.D. no.)
_________________________________________________________
_________________________________________________________
_________________________________________________________
_________________________________________________________
(Print or type assignee's name, address and zip code)
and irrevocably appoint _________________________________ to transfer this
Security on the books of the Company. The agent may substitute another to act
for him.
________________________________________________________________________________
Date: _______________
Your Signature:_________________
(Sign exactly as your name appears on the face of this Security)
Signature Guarantee by an
institution that is a member
of the Signature Guarantee
Medallion Program.
A-16
<PAGE>
OPTION TO ELECT REPAYMENT
UPON A CHANGE IN CONTROL
TO: WORLD COLOR PRESS, INC.
The undersigned registered owner of this Note hereby irrevocably
acknowledges receipt of a notice from WORLD COLOR PRESS, INC. (the "Company") as
to the occurrence of a Change in Control with respect to the Company and
requests and instructs the Company to repay the entire principal amount of this
Note, or the portion thereof (which is $1,000 principal amount at maturity or an
integral multiple thereof) below designated, in accordance with the terms of the
Indenture referred to in this Note at the redemption price, together with
accrued interest to, but excluding, such date, to the registered holder hereof.
Dated:_______________
____________________________________
____________________________________
Signature(s)
NOTICE: The above signatures of
the holder(s) hereof must
correspond with the name as
written upon the face of the Note
in every particular without
alteration or enlargement or any
change whatever.
A-17
<PAGE>
Principal amount at maturity
to be converted (if less than
all):
_____________
___________________________________
Social Security or Other
Taxpayer Identification Number
A-18
<PAGE>
Exhibit 10.1
THE WORLD COLOR PRESS, INC.
SECOND AMENDED AND RESTATED
SUPPLEMENTAL RETIREMENT PLAN
World Color Press, Inc., a Delaware corporation, adopted The World Color
Press, Inc. Supplemental Retirement Plan (the "Plan") on June 14, 1995,
effective April 1, 1995 (the "Effective Date"), for the benefit of Robert G.
Burton. The Plan was subsequently amended and restated in July, 1996. In order
to amend the Plan in certain respects, the Company hereby adopts this World
Color Press, Inc. Second Amended and Restated Supplemental Retirement Plan,
effective as of April 1, 1995.
The Plan is maintained primarily for the purpose of providing deferred
compensation for a select group of management or highly compensated employees,
within the meaning of Sections 201(2), 301(a)(3) and 401(a)(1) of the Employee
Retirement Income Security Act of 1974, as amended.
ARTICLE I
DEFINITIONS
Section 1.1. General
Whenever the following terms are used in the Plan with the first letter
capitalized, they shall have the meaning specified below unless the context
clearly indicates to the contrary.
Section 1.2. Actuarial Equivalent
"Actuarial Equivalent" shall mean the equivalent of a given Benefit or a
given amount payable in another manner or by other means, determined by or
under the direction of the Administrator in accordance with actuarial
principles, methods and assumptions which are found to be appropriate by the
Enrolled Actuary, acting independently of the Administrator or the Company
and in the exercise of his or her sole professional judgment. Such
principles, methods and assumptions, however, shall be reasonable in the
aggregate and shall constitute the Enrolled Actuary's best estimate of
anticipated experience under the Plan. Such assumptions shall include at any
time, those assumptions then in effect under the Qualified Plan.
Section 1.3. Administrator
"Administrator" shall mean the Company, acting through its Board or the
Committee. The Company shall have all duties and responsibilities imposed by
ERISA, except as specifically assigned to,
<PAGE>
delegated to or reserved to the Board and the Committee under the Plan.
Section 1.4. Beneficiary
"Beneficiary" shall mean the person or trust properly designated as the
Participant's primary beneficiary in the manner provided in the Qualified Plan;
provided that if no such primary beneficiary is designated under the Qualified
Plan, "Beneficiary" shall mean the person or trust so designated by the
Participant for purposes of this Plan.
2
<PAGE>
Section 1.5. Benefit
"Benefit" of the Participant shall mean the benefit payable pursuant to
Section 3.1 or 3.2.
Section 1.6. Benefit Commencement Date
"Benefit Commencement Date" is defined in Section 4.1.
Section 1.7. Board
"Board" shall mean the Board of Directors of the Company. The Board may
delegate any power or duty otherwise allocated to the Administrator to any other
person or persons, including the Committee.
Section 1.8. Cause
"Cause" for termination of the Participant's employment with the Company
shall mean his conviction of a felony involving moral turpitude and the
exhaustion of all appeals therefrom, or gross dereliction of duties as
determined by the Board and confirmed in an opinion of outside counsel which
dereliction is not cured after specific written notice thereof and reasonable
opportunity to cure.
Section 1.9. Change in Control
"Change in Control" shall mean that KKR or KKR Affiliates or any other
person or entity directly or indirectly controlled by KKR or KKR Affiliates
shall cease to be the beneficial owners of at least ten percent (10%) of the
equity interests of the Company having ordinary voting power in the election
of directors of the Company and such entities collectively shall not have
designated at least one-third of the then current directors of the Company.
For purposes of this definition, "control" shall have the meaning given such
term under Rule 405 of the Securities Act of 1933, as amended.
Section 1.10. Code
"Code" shall mean the Internal Revenue Code of 1986, as amended from time
to time.
Section 1.11. Committee
"Committee" shall mean the Compensation Committee of the Board of Directors
of World Color Press, Inc.
Section 1.12. Company; Company Affiliate
3
<PAGE>
(a) "Company" shall mean World Color Press, Inc. and any successor
company which continues the Plan under Section 6.3.
(b) "Company Affiliate" shall mean any employer which, at the time of
reference, was, with the Company, a member of a controlled group of corporations
or trades or businesses under common control, or a member of an affiliated
service group, as determined under regulations issued by the Secretary under
Code Sections 414(b), (c), (m) and 415(h) and any other entity required to be
aggregated with the Company pursuant to regulations issued under Code Section
414(o).
Section 1.13. Disability
"Disability" of the Participant shall mean his inability to discharge his
assigned duties on a substantially full-time basis for a continuous period of
not less than 180 days as a result of mental or physical disease, as determined
by the Administrator.
Section 1.14. Employer-Derived Benefit
"Employer-Derived Benefit" of the Participant for a period of time shall
mean the sum of his "Matching Contributions" and "Nonelective Contributions"
(including "Qualified Matching Contributions" and "Qualified Nonelective
Contributions"), as such terms are defined in the World Color Press 401(k)
Savings and Investment Plan, for such period, plus any earnings thereon for
all periods.
Section 1.15. Enrolled Actuary
"Enrolled Actuary" shall mean the person enrolled by the Joint Board for
the Enrollment of Actuaries established under subtitle C of title III of
ERISA who has been engaged by the Administrator on behalf of the Participant
to make and render all necessary actuarial determinations, statements,
opinions, assumptions, reports and valuations under the Plan as required by
law or requested by the Administrator.
Section 1.16. ERISA
"ERISA" shall mean the Employee Retirement Income Security Act of 1974,
as amended from time to time.
Section 1.17. Good Reason
"Good Reason" for termination of the Participant's employment with the
Company shall mean
4
<PAGE>
(a) his voluntary termination of his employment with the Company
within 90 days following a Change in Control of the Company; or
(b) his voluntary termination of his employment with the Company
following (i) the Company's diminishment of his duties or assignment to him
of duties inconsistent with his position, (ii) a material and adverse change
in his conditions of employment, or (iii) a reduction in his compensation
disproportionate to that of Company's senior executives generally.
Section 1.18. Joint Annuity Payment
"Joint Annuity Payment" is defined in Section 3.1(c).
5
<PAGE>
Section 1.19. KKR; KKR Affiliate
(a) "KKR" shall mean Kohlberg Kravis Roberts & Co., L.P., a New York
limited partnership.
(b) "KKR Affiliate" shall mean any other person or entity directly
or indirectly controlling, controlled by or under common control with KKR.
For purposes of this definition "control" shall have the meaning given such
term under Rule 405 of the Securities Act of 1933, as amended.
Section 1.20. Participant
"Participant" shall mean Robert G. Burton
Section 1.21. Plan
"Plan" shall mean The World Color Press, Inc. Supplemental Retirement Plan.
Section 1.22. Plan Year
"Plan Year" shall be the taxable year of the Company (presently ending on
the last Sunday in December); provided however, that the first Plan Year shall
be the period from the Effective Date through December 31, 1995.
Section 1.23. Qualified Benefit
"Qualified Benefit" of the Participant shall mean the payment payable under
the Qualified Plan at the times and over the applicable periods specified in
Article IV thereof.
Section 1.24. Qualified Plan
"Qualified Plan" shall mean the World Color Press, Inc. Employee
Retirement Plan, as in effect on the date hereof and as may be amended form
time to time.
Section 1.25. Separation from the Service
(a) "Separation from the Service" of the Participant shall mean his
Disability, retirement, or resignation from or discharge by the Company or a
Company Affiliate or his death, but not his transfer among the Company and
Company Affiliates.
(b) A leave of absence or sick leave authorized by the Company or a
Company Affiliate in accordance with established
6
<PAGE>
policies or a vacation period shall not constitute a Separation from the
Service; provided, however, that failure to return to work upon expiration of
any leave of absence, sick leave or vacation shall be considered a
resignation effective as of the commencement of any such leave of absence,
sick leave or vacation.
7
<PAGE>
Section 1.26. SERP
"SERP" shall mean the World Color Press, Inc. Supplemental Executive
Retirement Plan.
Section 1.27. SERP Benefit
"SERP Benefit" shall mean the payment payable under the SERP at the times
and over the applicable periods specified in Article IV thereof.
Section 1.28. Single Annuity Payment
"Single Annuity Payment" is defined in Section 3.1(b).
Section 1.29 Trust
"Trust" shall mean the trust maintained under the Trust Agreement.
Section 1.30. Trust Agreement
"Trust Agreement" shall mean that certain Trust under the World Color
Press, Inc. Supplemental Retirement Plan as it may be amended from time to
time, providing for the investment and administration of the Trust Fund. By
this reference, the Trust Agreement is incorporated herein.
Section 1.31. Trust Fund
"Trust Fund" shall mean the fund established under the Trust
Agreement from which any amounts payable under the Plan are to be paid.
Section 1.32. Vested Benefit
"Vested Benefit" of the Participant on a given date shall mean the
Benefit determined under Section 3.1 or 3.2, as applicable, to the extent
such Benefit is then Vested.
ARTICLE II
FUNDING OF BENEFITS
Section 2.1. Source of Benefits
(a) The Plan shall be unfunded for purposes of ERISA and the Code;
however the Company shall contribute to the Trust:
8
<PAGE>
(i) for each Plan Year beginning with the Plan Year ending
December 31, 1995, such amount as the Enrolled Actuary determines to
be necessary to contribute for such Plan Year to fund fully by the
fifth anniversary of the Effective Date, on a straight line basis, the
Benefit specified in Section 3.1(a)(i) commencing on April 1, 2000
with a Single Annuity Payment of $750,000; and
(ii) for each Plan Year beginning with the Plan Year ending
December 31, 1997, such additional amount as the Enrolled Actuary
determines to be necessary to contribute for such Plan Year so that
such amount together with the amount contributed under paragraph (i)
is sufficient to fund fully by April 1, 2002, on a straight line
basis, the Benefit specified in Section 3.1(a)(i) commencing on April
1, 2000 with a Single Annuity Payment of $1,000,000.
(b) Upon a Change in Control, the Company shall contribute to the Trust
such amount, if any, as the Enrolled Actuary determines to be necessary to fund
fully the Participant's Benefit.
Section 2.2. Timing of Contributions
The Company shall make the contributions described in Section 2.1(a) for a
Plan Year no later than 10 days after the end of the Plan Year for which such
contribution relates, and shall make the contributions described in Section
2.1(b) no later than 10 days after the effective date of a Change in Control.
Section 2.3. Investment of Trust
The Company may direct the investment of assets in the Trust Fund, but
shall do so prudently in accordance with the objectives of the Plan.
ARTICLE III
BENEFITS
Section 3.1. Determination of Retirement Benefit
(a) Subject to Section 3.3, in the event of the Participant's Separation
from the Service for any reason other than death or Disability, the Benefit
hereunder shall be that determined under (i) or (ii) below, as the
Participant shall elect pursuant to Section 4.3:
9
<PAGE>
(i) an annuity for the life of the Participant beginning on
the Benefit Commencement Date with annual payments equal to the excess
of
(A) the Single Annuity Payment per year over
(B) the sum of
(1) the Actuarial Equivalent of any Qualified Benefit
to which the Participant is entitled under the Qualified
Plan,
(2) the Actuarial Equivalent of any SERP Benefit to
which the Participant is entitled under the SERP, and
(3) the Actuarial Equivalent of any Employer-Derived
Benefit for the Participant's period of participation in the
Plan, or
(ii) a joint and survivor annuity consisting of payments to
the Participant commencing on the Benefit Commencement Date and
continuing until his death, with the provision that if his Beneficiary
survives him, the Beneficiary shall receive annuity payments in the
same amount until the Beneficiary's death, and such annual payments
shall equal the excess of
(A) the Joint Annuity Payment per year over
(B) the sum of
(1) the Actuarial Equivalent of any Qualified Benefit
to which the Participant is entitled under the Qualified
Plan,
(2) the Actuarial Equivalent of any SERP Benefit to
which the Participant is entitled under the SERP, and
(3) the Actuarial Equivalent of any Employer-Derived
Benefit for the Participant's period of participation in the
Plan.
(b) Subject to Section 3.3(b), the Single Annuity Payment shall be
$750,000; provided, however, that if the Participant's Separation from the
Service occurs on or after April 1, 2002 or if his Benefit becomes Vested prior
to such date pursuant to
10
<PAGE>
Section 3.3(a)(i), (ii) or (iii), the Single Annuity Payment shall be
$1,000,000.
(c) Subject to Section 3.3(b), the Joint Annuity Payment shall be
$577,000; provided, however, that if the Participant's Separation from the
Service occurs on or after April 1, 2002 or if his Benefit becomes Vested prior
to such date pursuant to Section 3.3(a)(i), (ii) or (iii), the Joint Annuity
Payment shall be $777,000.
Section 3.2. Death Benefit; Disability Benefit
(a) In the event of the Participant's Separation from the Service by
reason of his death, the Benefit hereunder shall consist of a life annuity
payable to the Participant's Beneficiary commencing on the Benefit Commencement
Date and continuing until his or her death with annual payments equal to the
excess of
(i) $1,000,000 per year over
(ii) the sum of
(A) the Actuarial Equivalent of any Qualified Benefit
to which the Participant is entitled under the Qualified
Plan,
(B) the Actuarial Equivalent of any SERP Benefit to
which the Participant is entitled under the SERP,
(C) the Actuarial Equivalent of any Employer-Derived
Benefit for the Participant's period of participation in the
Plan, and
(D) the Actuarial Equivalent of the amount of any
Company-provided life insurance benefits payable by reason
of the Participant's death.
(b) In the event of the Participant's Separation from the Service by
reason of his Disability, the Benefit hereunder shall be that determined under
(i) or (ii) below, as the Participant shall elect pursuant to Section 4.3:
(i) an annuity for the life of the Participant beginning on
the Benefit Commencement Date with annual payments equal to the excess
of
11
<PAGE>
(A) $1,000,000 per year over
(B) the sum of
(1) the Actuarial Equivalent of any Qualified Benefit to
which the Participant is entitled under the Qualified Plan,
(2) the Actuarial Equivalent of any SERP Benefit to which
the Participant is entitled under the SERP,
(3) the Actuarial Equivalent of any Employer-Derived Benefit
for his period of participation in the Plan, and
(4) the amount of payments to which the Participant is
entitled for such year pursuant to any long-term disability
plan maintained by the Company, or
(ii) a joint and survivor annuity consisting of payments to the
Participant commencing on the Benefit Commencement Date and continuing
until his death, with the provision that if his Beneficiary survives him,
the Beneficiary shall receive annuity payments in the same amount until the
Beneficiary's death, and such annual payments shall equal the excess of
(A) $777,000 per year over
(B) the sum of
(1) the Actuarial Equivalent of any Qualified Benefit
to which the Participant is entitled under the Qualified
Plan,
(2) the Actuarial Equivalent of any SERP Benefit to
which the Participant is entitled under the SERP,
(3) the Actuarial Equivalent of any Employer-Derived
Benefit for the Participant's period of participation in the
Plan, and
(4) the amount of payments to which the Participant is
entitled for such year pursuant to
12
<PAGE>
any long-term disability plan maintained by the Company.
Section 3.3. Vesting and Forfeiture
(a) The Participant's Benefit shall be 100% Vested on the earliest to
occur of
(i) his involuntary termination without Cause,
(ii) his termination for Good Reason,
(iii) if he is then an employee of the Company, a Change in
Control of the Company,
(iv) his Separation from the Service by reason of his death
or Disability, or
(v) if he is then an employee of the Company, the fifth
anniversary of the Effective Date;
and, except as otherwise provided in this subsection 3.3, the Participant's
Benefit shall not be Vested at all.
(b) If prior to April 1, 2000 the Participant shall incur a
Separation from the Service other than by reason of his death, Disability, an
involuntary termination without Cause or a termination for Good Reason, and
the Participant's Benefit shall not otherwise have Vested pursuant to
subsection (a), the Participant's Benefit hereunder shall be forfeited in its
entirety as of the date of such Separation from the Service.
Section 3.4. Health Coverage
(a) Upon the Participant's Separation from the Service and until the
earlier of the Participant's death or his or his spouse's eligibility for
Medicare coverage, the Company shall provide to the Participant and his spouse,
in any manner selected by the Company in its discretion, health insurance
coverage and benefits substantially equivalent to the coverage and benefits
provided under the Company's non-union retiree health benefit plan (the "Retiree
Plan") and the Supplemental Executive Health Plan (the "SEHP"), each as in
effect on the Effective Date, with the result that the net after-tax effect to
the Participant and his spouse is no less favorable than the net after-tax
effect to the Participant and his spouse of participating in the Retiree Plan
and the SEHP.
13
<PAGE>
(b) During such period of time as the Participant or his spouse shall
be eligible for Medicare coverage, the Company shall provide to the Participant
or his spouse, or both of them, as the case may be, insured Medicare
supplementary coverage with the extent of such coverage to be as provided in
Standard Plan J of the National Association of Insurance Commissioners ("NAIC")
or in the NAIC Standard Plan hereinafter adopted which provides for the most
extensive benefit coverage at any such time. If, with the full cooperation of
the Participant and his spouse, the Company is unable to secure such Medicare
supplementary coverage, this subsection (b) shall not apply and the Participant
and/or his spouse shall remain subject to subsection (a).
(c) Upon the death of the Participant, the Company shall provide to
the Participant's surviving spouse, for a period of 90 days, the coverage and
benefits specified in subsections (a) and/or (b), as applicable. Upon the
expiration of such 90-day period, the Company shall permit such spouse to
elect to continue such coverage and benefits for a period of three years,
provided that such spouse shall pay or reimburse the Company for the costs of
such coverage at the rates that would be applicable to such spouse for
"continuation coverage" as set forth at Code Section 4980B and the
regulations thereunder.
(d) The health insurance coverage and benefits to be provided
hereunder shall be offset by, and such coverage and benefits shall be
coordinated with, any health insurance coverage and benefits provided to the
Participant and/or his spouse by any other employer of the Participant or his
spouse.
ARTICLE IV
PAYMENT OF BENEFITS
Section 4.1. Commencement of Benefit
The Benefit Commencement Date for payment of any Vested Benefit to be made
under Section 3.1 shall be any date within 60 days following the Participant's
Separation from the Service; provided, however, that in the event of the
Participant's Separation from the Service prior to April 1, 2000 not as a result
of his involuntary termination without Cause or his termination for Good Reason,
the Benefit Commencement Date shall be any date within 60 days following the
later of the Participant's Separation from the Service or the fifth Anniversary
of the Effective Date. The Benefit Commencement Date for payment of any Vested
Benefit to be made under Section 3.2 shall be any date within 60 days following
the date of the Participant's Separation from the Service.
14
<PAGE>
Section 4.2. Forfeitures
The Participant's Benefit shall be forfeited upon his Separation from the
Service to the extent it has not become Vested, either previously or by reason
of such Separation.
Section 4.3. Form of Payment
(a) The form of payment of any Vested Benefit payable pursuant to Section
3.1(a) or 3.2(b) shall be irrevocably elected by the Participant not later
than five days prior to the Benefit Commencement Date. At least 10 days
prior to the Benefit Commencement Date the Administrator shall provide the
Participant with an election form for purposes of this Section 4.3(a).
(b) The form of payment of any Vested Benefit payable pursuant to Section
3.2(a) shall be as specified therein.
15
<PAGE>
ARTICLE V
ADMINISTRATIVE PROVISIONS
Section 5.1. Administrator's Duties and Powers
(a) The Administrator shall conduct the general administration of the
Plan in accordance with the Plan and shall have all the necessary power and
authority to carry out that function. Among its necessary powers and duties are
the following:
(i) To delegate all or part of its function as Administrator
to others and to revoke any such delegation.
(ii) To determine questions of vesting of the Participant and
his entitlement to benefits, subject to the provisions of Section 5.8.
(iii) To select and engage attorneys, accountants, actuaries,
appraisers, brokers, consultants, administrators, physicians or other
persons to render service or advice with regard to any responsibility
the Administrator or the Board has under the Plan, or otherwise, to
designate such persons to carry out fiduciary responsibilities under
the Plan, and (with the Committee, the Company, the Board and the
Company's officers and employees) to rely upon the advice, opinions or
valuations of any such persons, to the extent permitted by law, being
fully protected in acting or relying thereon in good faith.
(iv) To interpret the Plan for purpose of the administration
and application of the Plan in a manner not inconsistent with the Plan
or applicable law and to amend or revoke any such interpretation.
(v) To conduct claims procedures as provided in Section 5.8.
(b) Every finding, decision, and determination made by the Administrator
shall, to the full extent permitted by law, be final and binding upon all
parties, except to the extent found by a court of competent jurisdiction to
constitute an abuse of discretion.
Section 5.2. Limitations Upon Powers
The Plan shall be uniformly and consistently administered,
16
<PAGE>
interpreted and applied. The Plan shall be administered, interpreted and applied
fairly and equitably and in accordance with the specified purposes of the Plan.
Section 5.3. Final Effect of Administrator Action
Except as provided in Section 5.8, all actions taken and all determinations
made by the Administrator in good faith shall be final and binding upon the
Participant and each other person interested in the Plan.
17
<PAGE>
Section 5.4. Majority Rule
The Committee shall act, with respect to the Plan, by a majority of its
members in office; provided, however, that the Committee may appoint one of its
members or a delegate to act on behalf of the Committee on matters arising in
the daily administration of the Plan or on specific matters.
Section 5.5 Indemnification by the Company; Liability Insurance
(a) The Company shall pay or reimburse each of the Company's officers,
directors, Committee members or employees who are fiduciaries with respect to
the Plan for all expenses incurred by such persons in, and shall indemnify and
hold them harmless from, all claims, liability and costs (including reasonable
attorneys' fees) arising out of, resulting from or relating to, the good faith
performance of their fiduciary duties and functions.
(i) The Company may obtain and provide for any such person,
or all of them, at the Company's expense, liability insurance against
liabilities imposed on him by law.
Section 5.6. Recordkeeping
(a) The Administrator shall maintain suitable records (in reasonable
detail) as follows:
(i) Records of the Participant's individual Benefit.
(ii) Records which show the operations of the Plan during
each Plan Year.
(iii) Records of the Administrator's deliberations and decisions.
(b) The Administrator shall appoint a secretary, and, at its discretion,
an assistant secretary, to keep the record of proceedings, to transmit its
decisions, instructions, consents or directions to any interested party, to
execute and file, on behalf of the Committee, such documents, reports or
other matters as may be necessary or appropriate to perform ministerial acts.
(c) The Administrator shall not be required to maintain any records or
accounts which duplicate any records or accounts maintained by the Company.
18
<PAGE>
Section 5.7. Inspection of Records
Copies of the Plan and records of the Participant's Benefit shall be open
to inspection by the Participant or his duly authorized representatives at the
office of the Administrator upon reasonable notice and at any reasonable
business hour.
Section 5.8. Claims Procedure
The claims procedures hereunder shall be in accordance with the claims
procedures set forth in the Qualified Plan; provided that for purposes of the
claims procedure under this Plan, the review official described in the Qualified
Plan shall be the Chief Financial Officer of the Company.
Section 5.9. Conflicting Claims
The procedures for the resolution of conflicting claims by the Committee
shall be in accordance with the procedures set forth in the applicable section
of the Qualified Plan.
Section 5.10. Service of Process
The Secretary of the Company is hereby designated as agent of the Plan for
the service of legal process.
ARTICLE VI
MISCELLANEOUS PROVISIONS
Section 6.1. Termination of the Plan
The Plan may be amended or terminated by the Board at any time, provided
that no such amendment may be made to Articles II, III, IV or this Section 6.1
without the consent of the Participant, and provided further that if the Plan is
terminated before the Participant has received full payment of his Benefit,
whether before or after the effective date of such termination, the Company
shall contribute to the Trust all amounts, if any, as the Enrolled Actuary
determines to be necessary to fund fully the Participant's Benefit calculated as
if the Participant's Separation from the Service occurs on the fifth anniversary
of the Effective Date.
Section 6.2. Limitation on Rights of Participant
Nothing contained in the Plan shall give the Participant the right to be
retained in the service of a Company or to interfere with or restrict the right
of the Company, which is hereby expressly reserved, to discharge or retire the
Participant, except as provided
19
<PAGE>
by law, at any time without notice and with or without Cause.
Section 6.3. Plan Binding in Event of Consolidation or Merger
In the event of the consolidation or merger of the Company with or into any
other corporation, this Plan shall be binding on such survivor corporation.
Section 6.4. Assignments, etc. Prohibited
Except for the withholding of any tax under the laws of the United States
or any state or locality, no part of the Participant's Benefit hereunder shall
be liable for the debts, contracts or engagements of the Participant, his
beneficiaries or successors in interest, or be taken in execution by levy,
attachment or garnishment or by any other legal or equitable proceeding prior to
distribution, nor shall any such person have any rights to alienate, anticipate,
commute, pledge, encumber or assign any Benefits or payments hereunder in any
manner whatsoever.
20
<PAGE>
Section 6.5. Errors and Misstatements
In the event of any misstatement or omission of fact by the Participant to
the Administrator or any clerical error resulting in payment of benefits in an
incorrect amount, the Administrator shall promptly cause the amount of future
payments to be corrected upon discovery of the facts and shall cause the Company
to pay the Participant any underpayment in cash in a lump sum or to recoup any
overpayment from future payments to the Participant in such amounts as the
Administrator shall direct or to proceed against the Participant for recovery of
any such overpayment.
Section 6.6. Governing Law
This Plan shall be construed, administered and governed in all respects
under and by applicable federal laws and, where state law is applicable, the
laws of the State of New York.
Section 6.7. Pronouns and Plurality
The masculine pronoun shall include the feminine pronoun, and the singular
the plural where the context so indicates.
Section 6.8. Titles
Titles are provided herein for convenience only and are not to serve as a
basis for interpretation or construction of the Plan.
Section 6.9. References
Unless the context clearly indicates to the contrary, a reference to a
statute, regulation or document shall be construed as referring to any
subsequently enacted, adopted or executed statute, regulation or document.
[signature page follows]
21
<PAGE>
IN WITNESS WHEREOF, the Company has caused this instrument to be executed
by its officers duly authorized on this 15 day of July, 1997.
WORLD COLOR PRESS, INC.
By /s/ Jennifer L. Adams
----------------------------
By /s/ Thomas M. Pierno
----------------------------
22
<PAGE>
EXHIBIT 10.2
STOCK OPTION AGREEMENT
This Stock Option Agreement (this "Agreement") dated June 12, 1997, is made
by and between World Color Press, Inc., a Delaware corporation ("WCP"), and
Robert G. Burton, an individual with a residence at 170 Clapboard Ridge Road,
Greenwich, CT 06831 (the "Optionholder"). WCP and the Optionholder are
sometimes herein referred to collectively as the "Parties."
RECITALS
A. The Optionholder is a senior management employee of WCP.
B. WCP wishes to afford the Optionholder the opportunity to purchase
shares of its common stock, par value $.01 per share (the "Common Stock"). The
term "Options" as used in this Agreement shall include all Options granted to
the Optionholder pursuant to this Agreement. Upon exercise of Options granted
hereunder in accordance with the terms hereof and issuance of Common Stock upon
such exercise the Optionholder will become the holder of "Option Shares."
C. The Stock Option Committee (the "Committee") of the Board of Directors
of WCP (the "Board") has determined that it would be to the advantage and best
interest of WCP and its stockholders to grant the Options provided for herein to
the Optionholder as an inducement to continue to perform services for the
Company (as hereinafter defined) and as an incentive for increased efforts
during such service, and has advised WCP thereof and instructed the undersigned
officer to issue said Options. For the purposes of this Agreement, the
"Company" shall mean WCP, together with its subsidiaries.
D. This Agreement is one of several agreements ("Other Stock Option
Agreements") which have been, or which in the future will be, entered into
between WCP and other holders of options to purchase shares of Common Stock
granted from time to time (collectively, the "Other Optionholders").
AGREEMENTS
1. Grant of Options. In consideration of the Optionholder's agreement to
provide services to the Company and for other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, WCP irrevocably
grants to the Optionholder on the date hereof (the "Grant Date") an aggregate of
250,000 Options, each to purchase initially one share of Common Stock (shares
issuable upon exercise of the Options are collectively referred to herein as the
"Option Shares"), upon the terms and conditions set forth in this Agreement. The
Options granted hereby are designated non-qualified stock options and are
nontransferable except as otherwise expressly set forth in this Agreement.
2. Exercise Price. The purchase price of the Option Shares upon exercise
of any of the Options (the "Exercise Price" or "Option Price Per Share") shall
initially be $23.75 per share, without commission or other charge.
<PAGE>
3. Exercisability. (a) The Options shall become exercisable as
follows:
<TABLE>
<CAPTION>
Date Options Become Exercisable Exercisable Percentage of Options
- ------------------------------- ---------------------------------
<S> <C>
From Grant Date until the first anniversary of the Grant Date 0%
On and after the first anniversary of the Grant Date until the second anniversary of the Grant Date 20%
On and after the second anniversary of the Grant Date until the third anniversary of the Grant Date 40%
On and after the third anniversary of the Grant Date until the fourth anniversary of the Grant Date 60%
On and after the fourth anniversary of the Grant Date until the fifth anniversary of the Grant Date 80%
On and after the fifth anniversary of the Grant Date 100%
</TABLE>
(b) Notwithstanding the foregoing, all Options that are not exercisable at
the time of the termination of employment of the Optionholder for any reason
other than by reason of the Optionholder's death, Permanent Disability or
Permitted Retirement (each as hereinafter defined) shall be automatically and
immediately cancelled without any payment or other action by the Company. In
the event of and upon the termination of the Optionholder's employment because
of the Optionholder's death, Permanent Disability or Permitted Retirement, all
of the Optionholder's Options granted hereunder shall immediately become
exercisable.
(c) For purposes of this Agreement the following definitions shall apply:
"Cause" shall mean (i) the Optionholder's failure to render services to the
Company, which failure amounts to a material and flagrant neglect of such
duties, (ii) the Optionholder's willful engagement in conduct that is, or that
he or she intends to be, materially injurious to the Company, (iii) the
Optionholder's commission of an act of fraud, conversion, misappropriation
(including, but not limited to, the unauthorized use or disclosure of
confidential or proprietary information of the Company), embezzlement or felony,
(iv) a conviction of or guilty plea or his or her confession to any fraud,
conversion, misappropriation, embezzlement or felony or (v) the Optionholder's
repeated taking of any action prohibited by the Board, provided that he or she
has received at least one written notice of having taken an action so
prohibited; "Good Reason" shall mean, in each case without the Optionholder's
consent, (i) a material adverse change, when viewed in the aggregate, in the
Optionholder's duties, responsibilities, base compensation, bonus eligibility
and/or other material matters directly related to his or her employment with the
Company or (ii) the Optionholder's relocation by the Company to a location more
than 100 miles from the Optionholder's immediately prior location.
(d) For purposes of this Agreement, the Optionholder shall be deemed to
have a "Permanent Disability" if he or she is unable to engage in the activities
required by employment by reason of any medically determined physical or mental
impairment which can be expected to result in death or which has lasted or can
be expected to last for a continuous period of not less than 12 months, as
reasonably determined by the Board in good faith and in its discretion.
4. Manner of Exercise
(a) Partial Exercise. An exercisable Option may be exercised at any time
prior to the time when the Option becomes unexercisable under Section 10;
provided
2
<PAGE>
that each exercise shall be for not less than 50 Option Shares and
shall be for whole Option Shares only.
(b) Manner of Exercise. An exercisable Option shall be deemed exercised
upon delivery of all of the following to the Secretary of the Company or his or
her office:
(i) A written notice complying with the applicable rules established
by the Committee stating that the Option is exercised. The notice shall be
signed by the Optionholder or other person then entitled and authorized to
exercise the Option;
(ii) Such representations and documents as the Committee, in its
discretion, deems necessary, appropriate or advisable to effect compliance
with all applicable provisions of the Securities Act of 1933, as amended
(the "Act"), and any other federal or state securities laws, rules or
regulations. The Committee may, in its discretion, also take whatever
additional actions it deems necessary, appropriate or advisable to effect
such compliance, including, without limitation, placing legends on share
certificates and issuing stop-transfer notices to transfer agents and
registrars;
(iii) In the event that the Option shall be exercised by any
person or persons other than the Optionholder, appropriate proof of the
right of such person or persons to exercise the Option; and
(iv) Full payment (by certified or bank check or by wire transfer of
immediately available funds) to the Secretary of the Company for the Option
Shares with respect to which Options are exercised and any applicable
withholding taxes. In its discretion, however, the Committee may (A) allow
a delay in payment up to thirty (30) days from the date the Option is
exercised; (B) allow payment, in whole or in part, through the delivery of
shares of Common Stock owned by the Optionholder (including, subject to
Section 4(c), Option Shares issuable upon such exercise), duly endorsed for
transfer to WCP, having an Aggregate Market Value (as hereinafter defined)
on the date of delivery equal to the aggregate Exercise Price of the
Options; (C) allow payment, in whole or in part, through the delivery of
property of any kind which constitutes good and valuable consideration;
(D) allow payment, in whole or in part, through the delivery of a full
recourse promissory note bearing interest (at no less than such rate as
shall then preclude the imputation of interest under the Code) and payable
upon such terms as may be prescribed by the Committee; or (E) allow payment
through any combination of the consideration provided in the foregoing
subparagraphs (B), (C) and (D). In the case of a promissory note, the
Committee may also prescribe the form of such note and the security to be
given for such note. No Option may be exercised, however, by delivery of a
promissory note or by a loan from the Company when or where such loan or
other extension of credit is prohibited by law.
(c) Certain Timing Requirements. At the discretion of the Committee,
shares of Common Stock issuable to the Optionholder upon exercise of the Option
may be used to satisfy the Option Exercise Price or the tax withholding
consequences of such exercise, but in the case of persons subject to Section 16
of the Securities Exchange Act of 1934, as amended (the "Exchange Act") shares
of Common Stock maybe so used only (i) during the period beginning on the third
business day following the date of release of the quarterly or annual summary
statement of sales and earnings of the Company and ending on the twelfth
business day following such date or (ii) pursuant to an irrevocable written
election by the Optionholder to use shares of Common Stock issuable to the
Optionholder upon exercise of the Option to pay all or part of the Option
Exercise Price or the withholding taxes made at least six months prior to the
payment of such Option Exercise Price or withholding taxes.
3
<PAGE>
(d) Rights as Stockholders. The holders of Options shall not be, nor have
any of the rights or privileges of, stockholders of WCP in respect of any shares
purchasable upon the exercise of any Option unless and until certificates
representing such shares have been issued by the Company to such holders.
(e) Conditions to Issuance of Stock Certificates. WCP may postpone the
time of delivery of the certificates for Option Shares for such additional time
as WCP shall deem necessary or desirable to enable it to comply with the listing
requirements of any securities exchange with which the Common Stock may be
listed or the requirements of the Act or the Exchange Act, or any rules and
regulations of the Securities and Exchange Commission promulgated thereunder, or
the requirements of applicable state laws relating to the authorization,
issuance or sale of securities.
5. Representations, Warranties and Agreements of the Optionholder
(a) The Optionholder hereby represents and warrants that he or she is
acquiring the Options and any Option Shares issued upon exercise thereof for
investment for his or her own account and not with a view to, or for resale in
connection with, the distribution or other disposition thereof. The
Optionholder acknowledges that no Option nor any interest or right therein or
part thereof shall be liable for the debts, contracts or engagements of the
Optionholder or his successors in interest or shall be subject to disposition by
transfer, alienation, anticipation, pledge, encumbrance, assignment or any other
means whether such disposition be voluntary or involuntary or by operation of
law by judgment, levy, attachment, garnishment or any other legal or equitable
proceedings (including bankruptcy), and any attempted disposition thereof shall
be null and void and of no effect; provided, however, that this Section 5(a)
shall not prevent transfers by will or by the applicable laws of descent and
distribution. The Optionholder further agrees and acknowledges that he or she
will not, directly or indirectly, offer, transfer, sell, assign, pledge,
hypothecate or otherwise dispose of (any such act being referred to herein as a
"transfer") any Option Shares unless such transfer complies with Section 6 of
this Agreement and such transfer is pursuant to (i) an effective registration
statement under the Act and the rules and regulations thereunder and in
compliance with any applicable state securities or "blue sky" laws, or (ii) (A)
an opinion of counsel to the Optionholder (which counsel shall be reasonably
acceptable to WCP) furnished to WCP and satisfactory in form and substance to
WCP that no such registration is required because of the availability of an
exemption from registration under the Act and (B) if the Optionholder is a
citizen or resident of any country other than the United States, or the
Optionholder desires to effect any Transfer in any such country, counsel for the
Optionholder (which counsel shall be reasonably satisfactory to WCP) shall have
furnished WCP with an opinion or other advice satisfactory in form and substance
to WCP to the effect that such Transfer will comply with the securities laws of
such jurisdiction.
(b) Notwithstanding the foregoing, WCP acknowledges and agrees that any of
the following transfers of Option Shares are deemed to be in compliance with the
Act and this Agreement and no opinion of counsel is required in connection
therewith:
(i) A transfer of Option Shares made pursuant to Sections 7 or 8 of
this Agreement;
(ii) A transfer of Option Shares upon the death of the Optionholder to
his or her executors, administrators, testamentary trustees, legatees or
beneficiaries (the "Optionholder's Estate") or a transfer to the executors,
administrators, testamentary trustees, legatees or beneficiaries of a
person who has become a holder of Option Shares in accordance with the
terms of this Agreement; provided that such transfer is made expressly
subject to this Agreement and that the transferee agrees in writing to be
bound by the terms and conditions of this Agreement as if such transferee
were the Optionholder;
4
<PAGE>
(iii) A transfer of Option Shares made in compliance with the federal
securities laws to a trust or custodianship the beneficiaries of which, a
partnership (general or limited) the partners of which, or a limited
liability company the members of which, may include only the Optionholder,
his or her spouse or his or her lineal descendants by blood or adoption
(the "Optionholder's Trust") or a transfer of Option Shares made after the
third anniversary of the Grant Date to such a trust, partnership or limited
liability corporation by a person who has become a holder of such Option
Shares in accordance with the terms of this Agreement; provided that such
transfer is made expressly subject to this Agreement and that the
transferee agrees in writing to be bound by the terms and conditions of
this Agreement as if such transferee were the Optionholder; and
(iv) A pledge or hypothecation by the Optionholder or the
Optionholder's Trust of the Option Shares or his or her or its interest
therein to a bank or other financial institution (a "Pledgee") reasonably
satisfactory to WCP to secure a loan by such Pledgee to the Optionholder or
the Optionholder's Trust, as the case may be, for the purchase of the
Option Shares or the refinancing of any indebtedness incurred for the
purchase of the Option Shares; provided that (A) such Pledgee agrees in
writing to accept the Option Shares or interest therein subject to all of
the terms and conditions of this Agreement as if such Pledgee were the
Optionholder and to notify WCP upon the happening of any default or event
of default under the terms of the agreement with the Optionholder or the
Optionholder's Trust, as the case may be, relating to such pledge or
hypothecation and (B) the Optionholder or the Optionholder's Trust, as the
case may be, delivers to the Board a copy of all proposed documentation
relating to such pledge or hypothecation at least ten days before the
scheduled date of such pledge or hypothecation, and prior to such scheduled
date WCP has confirmed that such documentation is reasonably satisfactory
to it in form and substance.
(c) The certificate (or certificates) representing the Option Shares shall
bear the following legend:
"THE SHARES REPRESENTED BY THIS CERTIFICATE MAY NOT BE TRANSFERRED,
SOLD, ASSIGNED, PLEDGED, HYPOTHECATED OR OTHERWISE DISPOSED OF UNLESS
SUCH TRANSFER, SALE, ASSIGNMENT, PLEDGE, HYPOTHECATION OR OTHER
DISPOSITION COMPLIES WITH THE PROVISIONS OF STOCK OPTION AGREEMENT
DATED JUNE 12, 1997 BETWEEN WORLD COLOR PRESS, INC. ("WCP") AND THE
OPTIONHOLDER NAMED ON THE FACE HEREOF (A COPY OF WHICH IS ON FILE AT
THE PRINCIPAL OFFICE OF WCP). EXCEPT AS OTHERWISE PROVIDED IN SUCH
AGREEMENT, NO TRANSFER, SALE, ASSIGNMENT, PLEDGE, HYPOTHECATION OR
OTHER DISPOSITION OF THE SHARES REPRESENTED BY THIS CERTIFICATE MAY BE
MADE EXCEPT (A) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER
THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), AND IN COMPLIANCE
WITH ANY APPLICABLE STATE SECURITIES OR "BLUE SKY" LAWS OR (B) (I) IF
WCP HAS BEEN FURNISHED WITH A SATISFACTORY OPINION OF COUNSEL FOR THE
HOLDER THAT SUCH TRANSFER, SALE, ASSIGNMENT, PLEDGE, HYPOTHECATION OR
OTHER DISPOSITION IS EXEMPT FROM THE PROVISIONS OF SECTION 5 OF THE
ACT AND THE RULES AND REGULATIONS IN EFFECT THEREUNDER, AND IN
COMPLIANCE WITH APPLICABLE PROVISIONS OF STATE SECURITIES LAWS, AND
(II) IF THE HOLDER IS A CITIZEN OR RESIDENT OF ANY COUNTRY OTHER THAN
THE UNITED STATES, OR THE HOLDER DESIRES TO EFFECT ANY SUCH
TRANSACTION IN ANY SUCH COUNTRY, THE COMPANY HAS BEEN FURNISHED WITH A
SATISFACTORY OPINION OR OTHER ADVICE OF COUNSEL FOR THE HOLDER THAT
SUCH TRANSACTION WILL NOT VIOLATE THE LAWS OF SUCH COUNTRY."
(d) The Optionholder acknowledges that he or she has been advised that
(i) the issuance of the Option Shares upon exercise of the Options will not have
been registered under the Act, (ii) the Option Shares must be held indefinitely
and the Optionholder must continue to bear the economic risk of the investment
in the Option
5
<PAGE>
Shares unless they are subsequently registered under the Act or an
exemption from such registration is available, (iii) no assurance can be given
that there will be any public market for the Option Shares, (iv) no assurance
can be given that Rule 144 promulgated under the Act will be available with
respect to the sales of any securities of WCP, and WCP has made no covenant to
make such Rule available, (v) when and if any of the Option Shares may be
disposed of without registration in reliance on Rule 144, such disposition can
be made only in limited amounts in accordance with the terms and conditions of
such Rule, (vi) if the Rule 144 exemption is not available, public sale without
registration will require compliance with some other exemption under the Act,
(vii) a restrictive legend in the form heretofore set forth shall be placed on
the certificates representing the Option Shares and (viii) a notation shall be
made in the appropriate records of WCP and/or the transfer agent for the Common
Stock indicating that the Option Shares are subject to restriction on transfer
and appropriate stop transfer restrictions will be issued to WCP's stock
transfer agent with respect to the Option Shares.
(e) If any of the Option Shares are to be disposed of in accordance with
Rule 144 under the Act or otherwise, the Optionholder shall promptly notify WCP
of such intended disposition and shall deliver to WCP at or prior to the time of
such disposition such documentation as WCP may reasonably request in connection
with such sale and, in the case of a disposition pursuant to Rule 144, shall
deliver to WCP an executed copy of any notice on Form 144 required to be filed
with the Securities and Exchange Commission ("SEC").
(f) The Optionholder agrees that, if any securities of WCP are offered to
the public pursuant to an effective registration statement under the Act, the
Optionholder will not effect any public sale or distribution of any Option
Shares not covered by such registration statement within seven days prior to, or
within 180 days (or in an underwritten public offering, any such lesser period
as the underwriters may agree to) after, the effective date of such registration
statement, unless otherwise agreed to in writing by WCP; provided that the
Optionholder shall have been notified in writing of such offering.
6. Restriction on Transfer of Option Shares
(a) Except for transfers otherwise permitted by this Agreement, the
Optionholder agrees that he or she will not transfer, sell, assign, pledge,
hypothecate or otherwise dispose of any Option Shares at any time prior to the
fifth anniversary of the Grant Date. The restrictions on transfer provided in
this Section 6 shall not apply as of any date (the "Calculation Date") to a
number of Option Shares (the "Unrestricted Shares") held in the aggregate by the
Optionholder, the Optionholder's Trust, the Optionholder's Estate and all
Pledgees equal to the excess, if any, of (i) the product of (A) the total number
of Option Shares covered by all Options received by the Optionholder on the
Grant Date and (B) the lesser of (I) the Liquidity Percentage or (II) the Vested
Percentage as of such date over (ii) the total number of Option Shares
transferred by the Optionholder, the Optionholder's Trust, the Optionholder's
Estate and all Pledgees after the date hereof, other than pursuant to transfers
permitted by clauses (ii), (iii) and (iv) of Section 5(b) hereof. No transfer
of any such shares in violation hereof shall be made or recorded on the books of
WCP (or any transfer agent or registrar therefor) and any such transfer shall be
null and void and of no force or effect.
(b) For purposes of this Agreement, "Liquidity Percentage" as of any date
shall mean the ratio on such date of (X) the aggregate number of shares of
Common Stock sold by KKR Affiliates (as defined hereinafter) pursuant to one or
more Public Offerings to (Y) the maximum number of shares of Common Stock held
at any time by KKR Affiliates. For purposes of this Agreement, "KKR Affiliate"
shall mean any other Person directly or indirectly controlling, controlled by,
or under common control with, Kohlberg Kravis Roberts & Co., L.P.; "Person"
means an individual, partnership, corporation, business trust, joint stock
company, trust, unincorporated association,
6
<PAGE>
joint venture, governmental authority or other entity of whatever nature, and
"control" shall have the meaning given such term under Rule 405 of the Act.
(c) For purposes of this Agreement, the "Vested Percentage" with respect
to Option Shares shall be determined as follows:
Calculation Date Vested Percentage
- ---------------- -----------------
From Grant Date until the first anniversary of the Grant Date 0%
On and after the first anniversary of the Grant Date until
the second anniversary of the Grant Date 20%
On and after the second anniversary of the Grant Date until
the third anniversary of the Grant Date 40%
On and after the third anniversary of the Grant Date until
the fourth anniversary of the Grant Date 60%
On and after the fourth anniversary of the Grant Date until
the fifth anniversary of the Grant Date 80%
On and after the fifth anniversary of the Grant Date 100%
7. Optionholder's Right to Resell Option Shares and Options to WCP Upon
Death or Disability
(a) Except as otherwise provided herein, if on or before the fifth
anniversary of the Grant Date, (i) the Optionholder dies or becomes Permanently
Disabled (as hereinafter defined) and (ii) at the time of his or her death or
Permanent Disability, the Optionholder (A) was still in the employ of the
Company, (B) had retired from the Company at age 65 or over (or such other age
as may be approved by the Board) after having been employed by the Company
continuously for at least three years after the Grant Date (a "Permitted
Retirement"), or (C) had terminated employment with Good Reason (as hereinafter
defined), then the Optionholder, the Optionholder's Estate and/or the
Optionholder's Trust, as the case may be, shall have the right for six months
from the date of death or Permanent Disability to elect on one occasion (x) to
sell to WCP, and WCP shall be required to purchase all or any portion of the
Option Shares then held by the Optionholder, the Optionholder's Estate and/or
the Optionholder's Trust, as the case may be, at the Section 7 Repurchase Price,
as determined in accordance with Section 9 and/or (y) to require WCP to pay to
the Optionholder an amount equal to the Option Excess Price (as defined in
Section 10(a)) determined on the basis of the Section 7 Repurchase Price as
provided in Section 9 with respect to the termination of all or any portion of
outstanding Options held by the Optionholder.
(b) The Optionholder, the Optionholder's Estate and/or the Optionholder's
Trust, as the case may be, shall send written notice to WCP of his, her or its
election to sell such Option Shares and/or to terminate such Options in exchange
for the payment referred to in the preceding subsection (a) (the "Redemption
Notice") within the six-month period referred to in Section 7(a). The
completion of the purchase shall take place at the principal office of WCP on
the 15th business day after the receipt by WCP of a properly given Redemption
Notice. The Section 7 Repurchase Price and any payment with respect to the
Options as described above shall be paid by delivery to the Optionholder, the
Optionholder's Estate or the Optionholder's Trust, as the case may be, of a
certified or bank check or checks in the appropriate amount payable to the order
of the Optionholder, the Optionholder's Estate or the Optionholder's Trust, as
the case may be, against delivery of certificates or other instruments
representing the Option Shares so purchased and
7
<PAGE>
appropriate documents canceling the Options so terminated, appropriately
endorsed or executed by the Optionholder, the Optionholder's Estate or the
Optionholder's Trust, or his, her or its duly authorized representative.
(c) Notwithstanding any other provision of this Section 7 and subject to
Section 13, if there exists and is continuing a default or any event which after
a notice or lapse of time or both would cause a default under any loan,
guarantee or other agreement under which WCP or any of its Subsidiaries has
borrowed money or such repurchase would result in any default or event of
default on the part of the WCP or any of its Subsidiaries under any such
agreement or if the capital of WCP or any of its Subsidiaries is then impaired
or would be impaired as a result of such repurchase or such repurchase would
otherwise violate the General Corporation Law of the State of Delaware (each
such occurrence being an "Event"), WCP shall not be obligated to repurchase any
of the Option Shares from, or to make any payment with respect to the Options
to, the Optionholder, the Optionholder's Estate and/or the Optionholder's Trust,
as the case may be until the first business day which is five business days
after all of the foregoing Events have ceased to exist (the "Repurchase
Eligibility Date"), provided that (i) the Section 7 Repurchase Price shall be
calculated as of the time of the delivery of a Redemption Notice in accordance
with Section 7(b) and (ii) the number of Option Shares subject to repurchase
under this Section 7(c) and the number of Exercisable Option Shares (as defined
in Section 10(a)) for purposes of calculating the Option Excess Price payable
under Section 7(a), shall be that number of Option Shares and Exercisable Option
Shares, respectively, held by the Optionholder, the Optionholder's Estate or the
Optionholder's Trust, as the case may be, at the time of the delivery of a
Redemption Notice in accordance with Section 7(b). All Options exercisable as
of the date of a Redemption Notice shall continue to be exercisable until the
repurchase pursuant to such Redemption Notice.
(d) Notwithstanding any other provision of this Section 7 to the contrary,
the Optionholder, the Optionholder's Estate or the Optionholder's Trust, as the
case may be, shall have the right to withdraw any Redemption Notice which has
been pending for 120 or more days and which has remained unsatisfied because of
the provisions of Section 7(c).
8. WCP's Right to Repurchase Option Shares and Terminate Options of
Optionholder
(a) If on or prior to the fifth anniversary of the Grant Date, (i) the
Optionholder's employment with WCP (and, if applicable, its Subsidiaries) is
voluntarily or involuntarily terminated for any reason whatsoever, with or
without Cause or Good Reason, (ii) the beneficiaries of an Optionholder's Trust
shall include any person or entity other than the Optionholder, his or her
spouse or his or her lineal descendants by blood or adoption, (iii) the
Optionholder shall effect a transfer of any of the Option Shares other than as
permitted by this Agreement or (iv) there shall occur a transfer of Option
Shares then held by the Optionholder pursuant to a bankruptcy proceeding, levy,
property settlement or disposition pursuant to law incident to marital
separation or divorce (alternatively, a "Call Event"), then WCP shall have the
right to purchase all, but not less than all, of the Option Shares then held by
the Optionholder, the Optionholder's Estate, the Optionholder's Trust and all
Pledgees at the Section 8 Repurchase Price determined in accordance with Section
9 hereof; provided that the Call Event described in clause (iv) of this Section
8 shall entitle WCP to repurchase only the number of Option Shares that are the
subject of the transfer resulting in the Call Event; and provided, further, that
if the Call Event results from the death, Permanent Disability or Permitted
Retirement of the Optionholder, or the termination of the Optionholder's
employment by the Optionholder with Good Reason or by the Company without Cause,
WCP shall have the right to purchase all, but not less than all, of the Option
Shares held by the Optionholder, the Optionholder's Estate, the Optionholder's
Trust and any Pledgee at the Section 7 Repurchase Price. WCP shall have a
period of 75 days after the date of a Call Event (or the date of WCP's knowledge
that a Call Event described in clause (ii) or (iii)
8
<PAGE>
above has occurred) in which to give notice in writing to the Optionholder of
WCP's exercise of such repurchase election (the "Call Notice"). If (X) the
Optionholder holds Option Shares and Options and WCP exercises its right to
repurchase Option Shares pursuant to this Section 8 or (Y) the Optionholder
holds only Options and WCP elects (in accordance with the requirements of the
Call Notice), WCP shall also pay the Optionholder an amount equal to the
Option Excess Price determined on the basis of the Section 8 Repurchase Price
or Section 7 Repurchase Price, as applicable, with respect to the termination
of (A) if the Call Event is described in clause (i), (ii) or (iii) above,
all, but not less than all, of the then exercisable outstanding Options held
by the Optionholder and (B) if the Call Event is described in clause (iv)
above, a pro rata portion (based on the number of Option Shares that are the
subject of the transfer) of the then exercisable outstanding Options held by
the Optionholder.
(b) Subject to Section 13 hereof, the completion of the purchases pursuant
to Section 8 (a) shall take place at the principal office of WCP on the 15th
business day after the giving of notice of the exercise by WCP of its right to
purchase Option Shares and/or to terminate Options. All payments as described
above shall be made by delivery to the Optionholder, the Optionholder's Estate,
the Optionholder's Trust and/or the Pledgee, as the case may be, of a certified
or bank check or checks in the appropriate amounts payable to the order of the
Optionholder, the Optionholder's Estate, the Optionholder's Trust and/or the
Pledgee, as the case may be, against delivery of certificates or other
instruments representing the Option Shares so purchased and appropriate
documents canceling the Options so terminated, in each case appropriately
endorsed or executed by the Optionholder, the Optionholder's Estate, the
Optionholder's Trust, the Pledgee or his or her or its duly authorized
representatives.
(c) Notwithstanding any other provision of this Section 8 to the contrary
and subject to Section 13, if there exists and is continuing any Event, WCP
shall delay the repurchase of any of the Option Shares or the Options (pursuant
to a Call Notice timely given in accordance with Section 8(a) hereof) from the
Optionholder, the Optionholder's Estate or the Optionholder's Trust, as the case
may be, until the Repurchase Eligibility Date; provided that (i) the Section 8
Repurchase Price or the Section 7 Repurchase Price, as the case may be, shall be
calculated as of the time of the delivery of a Call Notice in accordance with
Section 8(a) and (ii) the number of Option Shares subject to repurchase under
this Section 8 and the number of Exercisable Option Shares for purposes of
calculating the Option Excess Price payable under this Section 8, shall be the
number of Option Shares and Exercisable Option Shares, respectively, held by the
Optionholder, the Optionholder's Estate or the Optionholder's Trust, as the case
may be, at the time of the delivery of a Call Notice in accordance with Section
8(a). All Options exercisable as of the date of a Call Notice shall continue to
be exercisable until the repurchase pursuant to such Call Notice.
(d) Notwithstanding any other provision of this Section 8 to the contrary,
WCP's right to purchase Option Shares and cancel Options pursuant to this
Section 8 shall terminate with respect to any Option Shares and Options that
have not been so repurchased or cancelled on or before the 120th day after the
date of the Call Notice.
9. Determination of Repurchase Price
(a) The Section 7 Repurchase Price and the Section 8 Repurchase Price are
hereinafter collectively referred to as the "Repurchase Price." The Repurchase
Price shall be calculated on the basis of the unaudited financial statements of
the Company or the Market Price Per Share (as defined in Section 9(e)) as of the
last day of the month preceding the month in which the event giving rise to the
repurchase occurs (the "Repurchase Calculation Date"). The event giving rise to
the repurchase shall be the transfer, death, Permanent Disability, Permitted
Retirement or termination of
9
<PAGE>
employment, or other event, as the case may be, not the giving of any notice
required pursuant to Section 7 or 8.
(b) The Section 7 Repurchase Price per Option Share shall be equal to the
greater of the Market Price Per Share and the Option Price Per Share.
(c) (i) If the Call Event results from the occurrence of an event
described in clauses (ii), (iii) or (iv) of Section 8(a), the Section 8
Repurchase Price per Option Share shall be equal to the lesser of (x) the
Market Price Per Share and (y) the Option Price Per Share plus the product
of (I) the Vested Percentage (as defined in Section 6) and (II) the amount,
if any, by which the Market Price Per Share exceeds the Option Price Per
Share.
(ii) If the Call Event results from the Optionholder's voluntary
termination of employment other than for Good Reason, the Section 8
Repurchase Price per Option Share shall be equal to the Market Price Per
Share.
(iii) If the Call Event results from the Optionholder's
termination of employment by the Company with Cause, the Section 8
Repurchase Price per Option Share shall be equal to the lesser of the
Market Price Per Share and the Option Price Per Share.
(d) As used herein the term "Public Offering" shall mean the sale of
shares of Common Stock to the public pursuant to a registration statement under
the Act which has been declared effective by the Securities and Exchange
Commission (other than a registration statement on Form S-8 or any other similar
form) immediately after which sale an active trading market in the Common Stock
exists; provided that an active trading market in the Common Stock shall be
deemed to exist if the Common Stock is listed on the New York Stock Exchange,
the American Stock Exchange or the NASDAQ National Market System, but the
failure of the Common Stock to be so listed shall not per se be determinative as
to whether an active trading market does not exist.
(e) As used herein the term "Market Price Per Share" shall mean the price
per share equal to the average of the last sale price of the Common Stock on
each of the ten trading days prior to the Repurchase Calculation Date on each
exchange on which the Common Stock may at the time be listed and on which the
Common Stock traded on such date or, if there shall have been no sales on any of
such exchanges on any such trading day, the average of the closing bid and asked
prices on each such exchange at the end of each such trading day or, if there is
no such bid and asked price on such trading day, on the next preceding date when
such bid and asked price occurred or, if the Common Stock shall not be so
listed, the average of the closing sales prices as reported by NASDAQ at the end
of each of the ten trading days prior to the Repurchase Calculation Date in the
over-the-counter market. If the Common Stock is not so listed or reported by
NASDAQ, then the Market Price Per Share shall be the fair market value
established by the Board acting in good faith.
(f) As used herein the term "Aggregate Market Value" shall mean the
product of (i) the number of shares of Common Stock to be applied as payment of
the Exercise Price pursuant to Section 4(b)(iv)(B) and (ii) the Market Value Per
Share as of the payment date.
(g) In determining the Repurchase Price, appropriate adjustments shall be
made for any future issuances of rights to acquire and securities convertible
into Common Stock and any stock dividends, splits, combinations,
recapitalizations or any other adjustment in the number of shares of outstanding
shares of Common Stock.
10
<PAGE>
10. Shares Issued to Optionholder upon Exercise of Options; Termination of
Options
(a) All Options, whether or not then exercisable, shall be automatically
terminated to the extent that, pursuant to the provisions of this Agreement, WCP
shall pay the Optionholder an amount equal to the Option Excess Price with
respect to such Options. If the Option Excess Price is zero or a negative
number, all outstanding Options granted to the Optionholder, whether or not then
exercisable, shall be automatically terminated upon the repurchase of any Option
Shares pursuant to Section 7 or Section 8. For purposes hereof, "Option Excess
Price" shall mean the excess, if any, of the Section 7 Repurchase Price or the
Section 8 Repurchase Price, depending on which Repurchase Price is (or would be)
used to repurchase the Option Shares, over the exercise price applicable to such
Options multiplied by the number of Exercisable Option Shares. For purposes
hereof, "Exercisable Option Shares" shall mean the shares of Common Stock which,
at the time of determination, could be purchased by the Optionholder upon
exercise of his or her outstanding exercisable Options.
(b) Except as otherwise provided herein, the Options shall expire and
cease to be exercisable to any extent after the first to occur of the following
events:
(i) the tenth anniversary of the Grant Date; or
(ii) the date that is six months after the Optionholder's termination
of employment by reason of death, Permanent Disability or Permitted Retirement;
or
(iii) the first business day which is fifteen calendar days after
the earlier of (A) 75 days after the Optionholder's termination of employment
for any reason other than for Cause, Good Reason, death, Permanent Disability or
Permitted Retirement, or (B) the delivery of notice by WCP that it does not
intend to exercise its call right under Section 8; provided that in any event
the Options shall remain exercisable under this Section 10 until at least 45
days after termination of the Optionholder's employment for any reason other
than death, Permanent Disability, or Permitted Retirement; or
(iv) upon the occurrence of a Transfer Event (as hereinafter defined)
and upon payment to the Optionholder of an amount in cash equal to the
difference between (i) the product of (A) the Per Share Consideration (as
hereinafter defined) received in such Transfer Event by a holder of Common Stock
multiplied by (B) the number of Option Shares for which the unexercised Options
are then exercisable and (ii) the aggregate Option Price Per Share for such
unexercised Options which are then exercisable. For the purposes of this
Section 10, the term "Per Share Consideration" shall mean the quotient of (x)
the aggregate consideration paid or to be paid (but only as and when received)
in respect of the Transfer Event to the holders of Common Stock of WCP, as
applicable, divided by (y) the number of outstanding shares of Common Stock on a
fully diluted basis (after giving effect to the exercise of all outstanding
options to acquire Common Stock to the extent then exercisable); and the term
"Transfer Event" shall mean any of a merger or consolidation involving WCP, a
sale or exchange of all or substantially all of the assets of WCP, an
acquisition by another corporation or other entity of 80% or more of WCP's
outstanding shares of voting stock or the liquidation or dissolution of WCP.
11. WCP's Representations and Warranties
(a) WCP represents and warrants to the Optionholder that (i) this
Agreement has been duly authorized, executed and delivered by WCP and (ii) the
Option Shares, when issued and delivered in accordance with the terms hereof,
will be duly and validly issued, fully paid and nonassessable.
(b) WCP shall file the reports required to be filed by it under the Act
and the Exchange Act to the extent required from time to time to enable the
Optionholder
11
<PAGE>
to sell Option Shares without registration under the Act within the
limitations of the exemptions provided by (i) Rule 144 under the Act, as such
Rule may be amended from time to time, or (ii) any similar rule or regulation
hereafter adopted by the SEC. Notwithstanding anything contained in this
Section 11(b), WCP may deregister under Section 12 of the Exchange Act if it is
then permitted to do so pursuant to the Exchange Act and the rules and
regulations thereunder, and, upon such deregistration, shall be relieved of its
obligations to file reports pursuant to this Section 11(b). Nothing in this
Section 11(b) shall be deemed to limit in any manner the restrictions on sales
of Option Shares contained in this Agreement.
12. "Piggyback" Registration Rights
(a) If WCP, in connection with any Public Offering, plans to register any
shares of Common Stock held by WCP Associates, L.P., APC Associates, L.P., GR
Associates, L.P. or KKR Partners II, L.P. (the "Institutional Investors") for
public offering pursuant to the Act, WCP will promptly notify the Optionholder
in writing (a "Registration Notice") of such proposed registration (the
"Proposed Registration"). If within ten business days of the receipt by the
Optionholder of such Registration Notice (and, in any event, within 15 business
days after such Registration Notice is sent by WCP), WCP receives from the
Optionholder, the Optionholder's Estate or the Optionholder's Trust a written
request (a "Registration Request") to register Option Shares held by the
Optionholder, the Optionholder's Estate or the Optionholder's Trust (which
Registration Request will be irrevocable unless otherwise mutually agreed to in
writing by the Optionholder and WCP), Option Shares will be so registered as
provided in this Section 12; provided that for each such Proposed Registration
only one Registration Request, which shall be executed by the Optionholder, the
Optionholder's Estate or the Optionholder's Trust, as the case may be, may be
submitted for all Registrable Securities held by the Optionholder, the
Optionholder's Estate and the Optionholder's Trust, respectively. All Option
Shares acquired by the Optionholder pursuant to the exercise of Options granted
pursuant to this Agreement and held by the Optionholder, the Optionholder's
Estate or the Optionholder's Trust, including shares purchased upon the exercise
of Options, shall be deemed to be Registrable Securities.
(b) The maximum number of Option Shares which will be registered pursuant
to a Registration Request will be the lowest of (i) the number of Option Shares
then held by the Optionholder (which for purposes of this subparagraph (b) shall
include shares held by the Optionholder's Estate or a Optionholder's Trust),
including all Option Shares which the Optionholder is then entitled to acquire
under an unexercised Option to the extent then exercisable (the "Maximum
Shares"), (ii) the Maximum Shares then held by the Optionholder multiplied by
the ratio of (A) the number of shares of Common Stock to be registered by the
Institutional Investors in the Proposed Registration to (B) the total number of
shares of Common Stock beneficially owned by all Institutional Investors and
(iii) the maximum number of shares which the Optionholder can register in the
public offering pursuant to any limits set by the managing underwriter for
inclusion in such public offering and agreed to in good faith by WCP.
(c) Except as may otherwise be provided in this Section 12, Option Shares
will be registered by WCP and offered to the public pursuant to his Section 12
on the same terms and subject to the same conditions applicable to registration
in the Proposed registration of shares held by an Institutional Investor. Such
terms and conditions shall include, without limitation: the public offering
price; the payment of fees, commissions and expenses; the provision of, and
representation and warranty as to, information requested by WCP; and the
provision of requisite indemnifications.
(d) Upon delivering a Registration Request, the Optionholder will, if
requested by WCP, execute and deliver a Custody Agreement and Power of Attorney
in form and substance satisfactory to WCP with respect to the Option Shares to
be registered pursuant to this Section 12 (a "Custody Agreement and Power of
Attorney"). The Custody Agreement and Power of Attorney will provide, among
other things, that the Optionholder, the Optionholder's Estate or the
Optionholder's Trust, as the case may
12
<PAGE>
be, will deliver to and deposit in custody with the custodian and
attorney-in-fact named therein a certificate or certificates representing
such Option Shares (duly endorsed in blank by the registered owner or owners
thereof or accompanied by duly executed stock powers in blank) and
irrevocably appoint said custodian and attorney-in-fact as the Optionholder,
the Optionholder's Estate's or the Optionholder's Trust's, as the case may
be, agent and attorney-in-fact with full power and authority to act under the
Custody Agreement and Power of Attorney on behalf of the Optionholder, the
Optionholder's Estate or the Optionholder's Trust, as the case may be, with
respect to the matters specified therein. The Optionholder agrees that he
will execute such other agreements as WCP may reasonably request to further
evidence the provisions of this Section 12.
13. Continued Exercisability of WCP's Right or Obligation to Repurchase.
Notwithstanding anything to the contrary contained in Sections 7 and 8 hereof,
if at any time consummation of all purchases and payments to be made by the
Company pursuant to this Agreement and the Other Stock Option Agreements would
result in an Event, then the Company shall make purchases from, and payments to,
the Optionholder and Other Optionholders pro rata (on the basis of the
proportion of the number of Option Shares and the number of Options each such
Optionholder and all Other Optionholders have elected or are required to sell to
the Company) for the maximum number of Option Shares and shall pay the Option
Excess Price for the maximum number of Options permitted without resulting in an
Event (the "Maximum Repurchase Amount"). The provisions of Section 7(d) and
8(c) shall apply in their entirety to payments and repurchases with respect to
Options and Option Shares which may not be made due to the limits imposed by the
Maximum Repurchase Amount under this Section 13. Until all of such Options and
Option Shares are purchased and paid for by the Company, the Optionholder and
the Other Optionholders whose Options and Option Shares are not purchased in
accordance with this Section 13 shall have priority, on a pro rata basis, over
other purchases of Options and Option Shares by the Company pursuant to this
Agreement and Other Stock Option Agreements.
14. Right to Negotiate Purchase Price. Nothing contained in this
Agreement shall be deemed to restrict or prohibit WCP from purchasing Option
Shares and the Options from the Optionholder, the Optionholder's Estate or the
Optionholder's Trust, at any time, for such price upon such other terms and
conditions as may be mutually agreed upon between such parties, whether or not
at the time of such purchase circumstances exist which specifically grant WCP
the right to purchase, or the Optionholder, the Optionholder's Estate or the
Optionholder's Trust to sell, Option Shares and the Options under the terms of
this Agreement, and all such purchases shall be deemed to be in accordance with
the terms of this Agreement.
15. COVENANT REGARDING 83(B) ELECTION. EXCEPT AS WCP MAY OTHERWISE AGREE
IN WRITING, THE OPTIONHOLDER HEREBY COVENANTS AND AGREES THAT HE OR SHE WILL
MAKE AN ELECTION UNDER SECTION 83(B) OF THE CODE PURSUANT TO TREASURY REGULATION
SECTION 1.83-2 WITH RESPECT TO ANY OPTION SHARES ISSUED UPON EXERCISE OF THE
OPTIONS. THE OPTIONHOLDER FURTHER COVENANTS AND AGREES THAT HE OR SHE WILL
FURNISH WCP WITH COPIES OF THE FORM OF ELECTION THE OPTIONHOLDER FILES WITHIN 30
DAYS AFTER EACH EXERCISE OF ANY OF THE OPTIONS AND WITH EVIDENCE THAT EACH SUCH
ELECTION HAS BEEN FILED IN A TIMELY MANNER.
13
<PAGE>
16. Notice of Change of Beneficiary. Immediately prior to any transfer of
Option Shares to the Optionholder's Trust, the Optionholder shall provide WCP
with a copy of the instruments creating the Optionholder's Trust and with the
identity of the beneficiaries of the Optionholder's Trust. The Optionholder
shall notify WCP immediately prior to any change in the identity of any
beneficiary of the Optionholder's Trust.
17. Expiration of Certain Provisions
(a) The provisions contained in Sections 7 and 8 of this Agreement, and
the portions of other provisions of this Agreement which incorporates the
provisions of Sections 7 and 8, shall terminate and be of no further force or
effect with respect to any Option Shares which are permitted to be sold by the
Optionholder pursuant to this Agreement and which are sold by the Optionholder
(i) pursuant to an effective registration statement filed by the Company under
the Act or (ii) pursuant to Rule 144, as amended from time to time, or any
similar rule or regulation hereafter adopted by the SEC.
(b) The provisions contained in Sections 5(f), 6, 7, 8 and 15 of this
Agreement, and the portion of any other provisions of this Agreement which
incorporate the provisions of any of such Sections, shall terminate and be of no
further force or effect upon the consummation of a Change of Control. For
purposes of this Section, "Change of Control" means the occurrence of any of the
following: (i) the sale, lease, transfer conveyance or other disposition (other
than by way of merger or consolidation), in one or a series of related
transactions, of all or substantially all of the assets of the Company taken as
a whole to any "person" (as such term is defined in Section 13(d)(3) of the
Exchange Act) other than the KKR Affiliates, (ii) the adoption of a plan
relating to the liquidation or dissolution of WCP, (iii) the consummation of any
transaction (including, without limitation, any merger or consolidation) the
result of which is that any "person" (as defined above), other than the KKR
Affiliates, becomes the "beneficial owner" (as such term is defined in Rule
13d-3 and Rule 13d-5 under the Exchange Act), directly or indirectly, of more
than 50% of the voting stock of WCP, (iv) the consummation of the first
transaction (including, without limitation, any merger or consolidation) the
result of which is that any "person" (as defined above) becomes the "beneficial
owner" (as defined above), directly or indirectly, of more of the voting stock
of WCP than is at the time "beneficially owned" (as defined above) by the KKR
Affiliates.
18. Recapitalization. Except to the extent otherwise provided by Section
17 hereof, the provisions of this Agreement shall apply, to the full extent set
forth herein with respect to the Option Shares and the Options, to any and all
capital stock of WCP and any partnership units, capital stock or other security
evidencing ownership interests in any successor or assign of WCP (whether by
merger, consolidation, sale of assets or otherwise) which may be issued in
respect of, in exchange for or in substitution of Option Shares and the Options,
by reason of any dividend, distribution, split, reverse split, combination,
recapitalization, liquidation, reclassification, merger, consolidation or
otherwise.
19. Optionholder's Employment by the Company. Nothing contained in this
Agreement or in any other agreement entered into by the Company and the
Optionholder in connection with the execution of this Agreement (i) obligates
the Company to employ the Optionholder in any capacity whatsoever or (ii)
prohibits or restricts the Company from terminating the employment, if any, of
the Optionholder at any time or for any reason whatsoever, with or without
cause, and the Optionholder hereby acknowledges and agrees that neither the
Company nor any other person has made any representations or promises whatsoever
to the Optionholder concerning the Optionholder's employment or continued
employment by the Company except as otherwise set forth in a separate written
agreement between the Company and the Optionholder.
14
<PAGE>
20. State Securities Laws. WCP hereby agrees to use all reasonable
efforts to comply with all state securities or "blue sky" laws which might be
applicable to the issuance of the Option Shares to the Optionholder.
21. Binding Effect. The provisions of this Agreement shall be binding
upon and accrue to the benefit of the parties hereto and their respective heirs,
legal representatives, successors and assigns. In the case of a transferee
permitted under Section 5(b) hereof, such transferee shall be deemed to be the
Optionholder hereunder; provided that no transferee (including, without
limitation, any transferee referred to in Section 5(b) hereof) shall derive any
rights under this Agreement unless and until such transferee has delivered to
WCP a valid undertaking and becomes bound by the terms of this Agreement.
22. Amendment. This Agreement may be amended only by a written agreement
or instrument signed by the Parties hereto; provided that WCP may, in its
discretion, amend this Agreement by a written agreement or instrument signed
only by WCP to reduce or eliminate any restriction on the sale, transfer or
other disposition of Option Shares.
23. Closing. Except as otherwise provided herein, the closing of each
purchase and sale of Option Shares and any outstanding Options pursuant to this
Agreement shall take place at the principal office of WCP on the 15th business
day following delivery of the notice by either Party to the other of its
exercise of the right to purchase or sell hereunder.
24. Applicable Law. The laws of the State of Delaware shall govern the
interpretation, validity and performance of the terms of this Agreement,
regardless of the law that might be applied under principles of conflicts of
law.
25. Assignability of Certain Rights by WCP. WCP shall have the right to
assign any or all of its rights or obligations to purchase Option Shares and any
outstanding Options pursuant to Sections 7 and 8 hereof.
26. Payment by WCP. If at any time WCP purchases Option Shares or any
outstanding Options from the Optionholder hereunder, and the Optionholder is
indebted to WCP in any amount whatsoever, WCP, in its sole discretion, may apply
all or any part of such indebtedness to the purchase price.
27. Notices. All notices and other communications necessary or
contemplated under this Agreement shall be in writing and shall be delivered in
the manner specified herein or, in the absence of such specification, shall be
deemed delivered when delivered in person or sent by first-class mail (certified
or registered mail, return receipt requested, postage prepaid), facsimile or
overnight air courier guaranteeing next day delivery, addressed as follows:
(a) If to WCP, to it at the following address:
World Color Press, Inc.
The Mill
340 Pemberwick Road
Greenwich, Connecticut 06831
Facsimile No.: (203) 532-4371
Attn: Chief Legal and Administrative Officer
With a copy to:
Kohlberg Kravis Roberts & Co., L.P.
9 West 57th Street
New York, New York 10019
Facsimile No.: (212) 750-0003
Attn: Mr. Scott M. Stuart
15
<PAGE>
(b) If to the Optionholder, to him or her at the following address:
170 Clapboard Ridge Road
Greenwich, CT 06831
28. Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be an original, but such counterparts shall
together constitute but one and the same instrument.
29. Section Headings. The section headings in this Agreement are for
convenience of reference only and shall not be deemed to alter or affect any
provision hereof.
30. Remedies for Violations. The Parties agree that they would be
irreparably damaged and that money damages would not be a sufficient remedy in
the event that this Agreement is not followed by the Parties. In the event of
any such breach, the non-breaching Party shall be entitled, without being
required to post a bond or other security, to equitable relief (including,
without limitation, injunction and specific performance) as a remedy for such
breach. Such remedies shall not be deemed to be the exclusive remedies for any
such breach but shall be in addition to all other remedies available at law or
equity to the non-breaching Party.
[signature page follows]
16
<PAGE>
IN WITNESS WHEREOF, the Parties have executed this Agreement as of the date
first above written.
World Color Press, Inc.
By: /s/ Jennifer L. Adams
-------------------------------
Jennifer L. Adams
Executive Vice President, Chief Legal
and Administrative Officer
/s/ Robert G. Burton
-------------------------------
Robert G. Burton
<PAGE>
EXHIBIT 10.3
STOCK OPTION AGREEMENT
This Stock Option Agreement (this "Agreement") dated June 12, 1997, is made
by and between World Color Press, Inc., a Delaware corporation ("WCP"), and
Robert G. Burton, an individual with a residence at 170 Clapboard Ridge Road,
Greenwich, CT 06831 (the "Optionholder"). WCP and the Optionholder are
sometimes herein referred to collectively as the "Parties."
RECITALS
A. The Optionholder is a senior management employee of WCP.
B. WCP has established the Amended and Restated 1995 Senior Management
Stock Option Plan of World Color Press, Inc. (the "Option Plan"), and, pursuant
to the Option Plan, WCP wishes to afford the Optionholder the opportunity to
purchase shares of its common stock, par value $.01 per share (the "Common
Stock"). The term "Options" as used in this Agreement shall include all Options
granted to the Optionholder pursuant to this Agreement. Upon exercise of
Options granted hereunder in accordance with the terms hereof and issuance of
Common Stock upon such exercise the Optionholder will become the holder of
"Option Shares."
C. The Stock Option Committee (the "Committee") of the Board of Directors
of WCP (the "Board") has determined that it would be to the advantage and best
interest of WCP and its stockholders to grant the Options provided for herein to
the Optionholder as an inducement to continue to perform services for the
Company (as hereinafter defined) and as an incentive for increased efforts
during such service, and has advised WCP thereof and instructed the undersigned
officer to issue said Options. For the purposes of this Agreement, the
"Company" shall mean WCP, together with its subsidiaries.
D. This Agreement is one of several agreements ("Other Stock Option
Agreements") which have been, or which in the future will be, entered into
between WCP and other holders of Options granted pursuant to the Option Plan
(collectively, the "Other Optionholders").
AGREEMENTS
1. Grant of Options. In consideration of the Optionholder's agreement to
provide services to the Company and for other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, WCP irrevocably
grants to the Optionholder on the date hereof (the "Grant Date") an aggregate of
125,000 Options, each to purchase initially one share of Common Stock (shares
issuable upon exercise of the Options are collectively referred to herein as the
"Option Shares"), upon the terms and conditions set forth in this Agreement.
This Agreement and the grant of the Options herein are subject to all of the
terms and provisions of the Option Plan attached hereto as Exhibit A (which
terms and provisions are incorporated herein by reference and are expressly made
part of this Agreement). In the event of any conflict between the provisions of
this Agreement and the Option Plan, the terms of the Option Plan shall govern.
All capitalized terms used herein without definition
<PAGE>
and defined in the Option Plan have the meanings ascribed to such terms in
the Option Plan. The Options granted hereby are designated non-qualified
stock options and are nontransferable except as otherwise expressly set forth
in the Option Plan.
2. Exercise Price. The purchase price of the Option Shares upon exercise
of any of the Options (the "Exercise Price" or "Option Price Per Share") shall
initially be $23.75 per share, without commission or other charge.
2
<PAGE>
3. Exercisability. (a) The Options shall become exercisable as
follows:
Date Options Become Exercisable Exercisable Percentage of Options
- ------------------------------- ---------------------------------
From Grant Date until the first anniversary 0%
of the Grant Date
On and after the first anniversary of the 20%
Grant Date until the second anniversary of
the Grant Date
On and after the second anniversary of the 40%
Grant Date until the third anniversary of
the Grant Date
On and after the third anniversary of the 60%
Grant Date until the fourth anniversary of
the Grant Date
On and after the fourth anniversary of the 80%
Grant Date until the fifth anniversary of
the Grant Date
On and after the fifth anniversary of the 100%
Grant Date
(b) Notwithstanding the foregoing, all Options that are not exercisable at
the time of the termination of employment of the Optionholder for any reason
other than by reason of the Optionholder's death, Permanent Disability or
Permitted Retirement (each as hereinafter defined) shall be automatically and
immediately cancelled without any payment or other action by the Company. In
the event of and upon the termination of the Optionholder's employment because
of the Optionholder's death, Permanent Disability or Permitted Retirement, all
of the Optionholder's Options granted hereunder shall immediately become
exercisable.
(c) For purposes of this Agreement the following definitions shall apply:
"Cause" shall mean (i) the Optionholder's failure to render services to the
Company, which failure amounts to a material and flagrant neglect of such
duties, (ii) the Optionholder's willful engagement in conduct that is, or that
he or she intends to be, materially injurious to the Company, (iii) the
Optionholder's commission of an act of fraud, conversion, misappropriation
(including, but not limited to, the unauthorized use or disclosure of
confidential or proprietary information of the Company), embezzlement or felony,
(iv) a conviction of or guilty plea or his or her confession to any fraud,
conversion, misappropriation, embezzlement or felony or (v) the Optionholder's
repeated taking of any action prohibited by the Board, provided that he or she
has received at least one written notice of having taken an action so
prohibited; "Good Reason" shall mean, in each case without the Optionholder's
consent, (i) a material adverse change, when viewed in the aggregate, in the
Optionholder's duties, responsibilities, base compensation, bonus eligibility
and/or other material matters directly related to his or her employment with the
Company or (ii) the Optionholder's relocation by the Company to a location more
than 100 miles from the Optionholder's immediately prior location.
(d) For purposes of this Agreement, the Optionholder shall be deemed to
have a "Permanent Disability" if he or she is unable to engage in the activities
required by employment by reason of any medically determined physical or mental
impairment which can be expected to result in death or which has lasted or can
be expected to last for a continuous period of not less than 12 months, as
reasonably determined by the Board in good faith and in its discretion.
4. Manner of Exercise
(a) Partial Exercise. An exercisable Option may be exercised at any time
prior to the time when the Option becomes unexercisable under Section 10;
provided
3
<PAGE>
that each exercise shall be for not less than 50 Option Shares and shall be for
whole Option Shares only.
(b) Manner of Exercise. An exercisable Option shall be deemed exercised
upon delivery of all of the following to the Secretary of the Company or his or
her office:
(i) A written notice complying with the applicable rules established
by the Committee stating that the Option is exercised. The notice shall be
signed by the Optionholder or other person then entitled and authorized to
exercise the Option;
(ii) Such representations and documents as the Committee, in its
discretion, deems necessary, appropriate or advisable to effect compliance
with all applicable provisions of the Securities Act of 1933, as amended
(the "Act"), and any other federal or state securities laws, rules or
regulations. The Committee may, in its discretion, also take whatever
additional actions it deems necessary, appropriate or advisable to effect
such compliance, including, without limitation, placing legends on share
certificates and issuing stop-transfer notices to transfer agents and
registrars;
(iii) In the event that the Option shall be exercised by any
person or persons other than the Optionholder, appropriate proof of the
right of such person or persons to exercise the Option; and
(iv) Full payment (by certified or bank check or by wire transfer of
immediately available funds) to the Secretary of the Company for the Option
Shares with respect to which Options are exercised and any applicable
withholding taxes. In its discretion, however, the Committee may (A) allow
a delay in payment up to thirty (30) days from the date the Option is
exercised; (B) allow payment, in whole or in part, through the delivery of
shares of Common Stock owned by the Optionholder (including, subject to
Section 4(c), Option Shares issuable upon such exercise), duly endorsed for
transfer to WCP, having an Aggregate Market Value (as hereinafter defined)
on the date of delivery equal to the aggregate Exercise Price of the
Options; (C) allow payment, in whole or in part, through the delivery of
property of any kind which constitutes good and valuable consideration;
(D) allow payment, in whole or in part, through the delivery of a full
recourse promissory note bearing interest (at no less than such rate as
shall then preclude the imputation of interest under the Code) and payable
upon such terms as may be prescribed by the Committee; or (E) allow payment
through any combination of the consideration provided in the foregoing
subparagraphs (B), (C) and (D). In the case of a promissory note, the
Committee may also prescribe the form of such note and the security to be
given for such note. No Option may be exercised, however, by delivery of a
promissory note or by a loan from the Company when or where such loan or
other extension of credit is prohibited by law.
(c) Certain Timing Requirements. At the discretion of the Committee,
shares of Common Stock issuable to the Optionholder upon exercise of the Option
may be used to satisfy the Option Exercise Price or the tax withholding
consequences of such exercise, but in the case of persons subject to Section 16
of the Securities Exchange Act of 1934, as amended (the "Exchange Act") shares
of Common Stock maybe so used only (i) during the period beginning on the third
business day following the date of release of the quarterly or annual summary
statement of sales and earnings of the Company and ending on the twelfth
business day following such date or (ii) pursuant to an irrevocable written
election by the Optionholder to use shares of Common Stock issuable to the
Optionholder upon exercise of the Option to pay all or part of the Option
Exercise Price or the withholding taxes made at least six months prior to the
payment of such Option Exercise Price or withholding taxes.
4
<PAGE>
(d) Rights as Stockholders. The holders of Options shall not be, nor have
any of the rights or privileges of, stockholders of WCP in respect of any shares
purchasable upon the exercise of any Option unless and until certificates
representing such shares have been issued by the Company to such holders.
(e) Conditions to Issuance of Stock Certificates. WCP may postpone the
time of delivery of the certificates for Option Shares for such additional time
as WCP shall deem necessary or desirable to enable it to comply with the listing
requirements of any securities exchange with which the Common Stock may be
listed or the requirements of the Act or the Exchange Act, or any rules and
regulations of the Securities and Exchange Commission promulgated thereunder, or
the requirements of applicable state laws relating to the authorization,
issuance or sale of securities.
5. Representations, Warranties and Agreements of the Optionholder
(a) The Optionholder hereby represents and warrants that he or she is
acquiring the Options and any Option Shares issued upon exercise thereof for
investment for his or her own account and not with a view to, or for resale in
connection with, the distribution or other disposition thereof. The
Optionholder acknowledges and affirms Section 7.1 of the Option Plan. The
Optionholder further agrees and acknowledges that he or she will not, directly
or indirectly, offer, transfer, sell, assign, pledge, hypothecate or otherwise
dispose of (any such act being referred to herein as a "transfer") any Option
Shares unless such transfer complies with Section 6 of this Agreement and such
transfer is pursuant to (i) an effective registration statement under the Act
and the rules and regulations thereunder and in compliance with any applicable
state securities or "blue sky" laws, or (ii) (A) an opinion of counsel to the
Optionholder (which counsel shall be reasonably acceptable to WCP) furnished to
WCP and satisfactory in form and substance to WCP that no such registration is
required because of the availability of an exemption from registration under the
Act and (B) if the Optionholder is a citizen or resident of any country other
than the United States, or the Optionholder desires to effect any Transfer in
any such country, counsel for the Optionholder (which counsel shall be
reasonably satisfactory to WCP) shall have furnished WCP with an opinion or
other advice satisfactory in form and substance to WCP to the effect that such
Transfer will comply with the securities laws of such jurisdiction.
(b) Notwithstanding the foregoing, WCP acknowledges and agrees that any of
the following transfers of Option Shares are deemed to be in compliance with the
Act and this Agreement and no opinion of counsel is required in connection
therewith:
(i) A transfer of Option Shares made pursuant to Sections 7 or 8 of
this Agreement;
(ii) A transfer of Option Shares upon the death of the Optionholder
to his or her executors, administrators, testamentary trustees, legatees or
beneficiaries (the "Optionholder's Estate") or a transfer to the executors,
administrators, testamentary trustees, legatees or beneficiaries of a
person who has become a holder of Option Shares in accordance with the
terms of this Agreement; provided that such transfer is made expressly
subject to this Agreement and that the transferee agrees in writing to be
bound by the terms and conditions of this Agreement as if such transferee
were the Optionholder;
(iii) A transfer of Option Shares made in compliance with the federal
securities laws to a trust or custodianship the beneficiaries of which, a
partnership (general or limited) the partners of which, or a limited
liability company the members of which, may include only the Optionholder,
his or her spouse or his or her lineal descendants by blood or adoption
(the "Optionholder's Trust") or a transfer of Option Shares made after the
third anniversary of the Grant Date to such a trust, partnership or limited
liability corporation by a person who has become a holder of such Option
Shares in
5
<PAGE>
accordance with the terms of this Agreement; provided that such transfer is
made expressly subject to this Agreement and that the transferee agrees in
writing to be bound by the terms and conditions of this Agreement as if such
transferee were the Optionholder; and
(iv) A pledge or hypothecation by the Optionholder or the
Optionholder's Trust of the Option Shares or his or her or its interest
therein to a bank or other financial institution (a "Pledgee") reasonably
satisfactory to WCP to secure a loan by such Pledgee to the Optionholder or
the Optionholder's Trust, as the case may be, for the purchase of the
Option Shares or the refinancing of any indebtedness incurred for the
purchase of the Option Shares; provided that (A) such Pledgee agrees in
writing to accept the Option Shares or interest therein subject to all of
the terms and conditions of this Agreement as if such Pledgee were the
Optionholder and to notify WCP upon the happening of any default or event
of default under the terms of the agreement with the Optionholder or the
Optionholder's Trust, as the case may be, relating to such pledge or
hypothecation and (B) the Optionholder or the Optionholder's Trust, as the
case may be, delivers to the Board a copy of all proposed documentation
relating to such pledge or hypothecation at least ten days before the
scheduled date of such pledge or hypothecation, and prior to such scheduled
date WCP has confirmed that such documentation is reasonably satisfactory
to it in form and substance.
(c) The certificate (or certificates) representing the Option Shares shall
bear the following legend:
"THE SHARES REPRESENTED BY THIS CERTIFICATE MAY NOT BE TRANSFERRED,
SOLD, ASSIGNED, PLEDGED, HYPOTHECATED OR OTHERWISE DISPOSED OF UNLESS
SUCH TRANSFER, SALE, ASSIGNMENT, PLEDGE, HYPOTHECATION OR OTHER
DISPOSITION COMPLIES WITH THE PROVISIONS OF STOCK OPTION AGREEMENT
DATED JUNE 12, 1997 BETWEEN WORLD COLOR PRESS, INC. ("WCP") AND THE
OPTIONHOLDER NAMED ON THE FACE HEREOF (A COPY OF WHICH IS ON FILE AT
THE PRINCIPAL OFFICE OF WCP). EXCEPT AS OTHERWISE PROVIDED IN SUCH
AGREEMENT, NO TRANSFER, SALE, ASSIGNMENT, PLEDGE, HYPOTHECATION OR
OTHER DISPOSITION OF THE SHARES REPRESENTED BY THIS CERTIFICATE MAY BE
MADE EXCEPT (A) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER
THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), AND IN COMPLIANCE
WITH ANY APPLICABLE STATE SECURITIES OR "BLUE SKY" LAWS OR (B) (I) IF
WCP HAS BEEN FURNISHED WITH A SATISFACTORY OPINION OF COUNSEL FOR THE
HOLDER THAT SUCH TRANSFER, SALE, ASSIGNMENT, PLEDGE, HYPOTHECATION OR
OTHER DISPOSITION IS EXEMPT FROM THE PROVISIONS OF SECTION 5 OF THE
ACT AND THE RULES AND REGULATIONS IN EFFECT THEREUNDER, AND IN
COMPLIANCE WITH APPLICABLE PROVISIONS OF STATE SECURITIES LAWS, AND
(II) IF THE HOLDER IS A CITIZEN OR RESIDENT OF ANY COUNTRY OTHER THAN
THE UNITED STATES, OR THE HOLDER DESIRES TO EFFECT ANY SUCH
TRANSACTION IN ANY SUCH COUNTRY, THE COMPANY HAS BEEN FURNISHED WITH A
SATISFACTORY OPINION OR OTHER ADVICE OF COUNSEL FOR THE HOLDER THAT
SUCH TRANSACTION WILL NOT VIOLATE THE LAWS OF SUCH COUNTRY."
(d) The Optionholder acknowledges that he or she has been advised that
(i) the issuance of the Option Shares upon exercise of the Options will not have
been registered under the Act, (ii) the Option Shares must be held indefinitely
and the Optionholder must continue to bear the economic risk of the investment
in the Option Shares unless they are subsequently registered under the Act or an
exemption from such registration is available, (iii) no assurance can be given
that there will be any public market for the Option Shares, (iv) no assurance
can be given that Rule 144 promulgated under the Act will be available with
respect to the sales of any securities of WCP, and WCP has made no covenant to
make such Rule available, (v) when and if any of the Option Shares may be
disposed of without registration in reliance on Rule 144, such disposition can
be made only in limited amounts in accordance with the terms and conditions of
such Rule, (vi) if the Rule 144 exemption is not available,
6
<PAGE>
public sale without registration will require compliance with some other
exemption under the Act, (vii) a restrictive legend in the form heretofore set
forth shall be placed on the certificates representing the Option Shares and
(viii) a notation shall be made in the appropriate records of WCP and/or the
transfer agent for the Common Stock indicating that the Option Shares are
subject to restriction on transfer and appropriate stop transfer restrictions
will be issued to WCP's stock transfer agent with respect to the Option Shares.
(e) If any of the Option Shares are to be disposed of in accordance with
Rule 144 under the Act or otherwise, the Optionholder shall promptly notify WCP
of such intended disposition and shall deliver to WCP at or prior to the time of
such disposition such documentation as WCP may reasonably request in connection
with such sale and, in the case of a disposition pursuant to Rule 144, shall
deliver to WCP an executed copy of any notice on Form 144 required to be filed
with the Securities and Exchange Commission ("SEC").
(f) The Optionholder agrees that, if any securities of WCP are offered to
the public pursuant to an effective registration statement under the Act, the
Optionholder will not effect any public sale or distribution of any Option
Shares not covered by such registration statement within seven days prior to, or
within 180 days (or in an underwritten public offering, any such lesser period
as the underwriters may agree to) after, the effective date of such registration
statement, unless otherwise agreed to in writing by WCP; provided that the
Optionholder shall have been notified in writing of such offering.
6. Restriction on Transfer of Option Shares
(a) Except for transfers otherwise permitted by this Agreement, the
Optionholder agrees that he or she will not transfer, sell, assign, pledge,
hypothecate or otherwise dispose of any Option Shares at any time prior to the
fifth anniversary of the Grant Date. The restrictions on transfer provided in
this Section 6 shall not apply as of any date (the "Calculation Date") to a
number of Option Shares (the "Unrestricted Shares") held in the aggregate by the
Optionholder, the Optionholder's Trust, the Optionholder's Estate and all
Pledgees equal to the excess, if any, of (i) the product of (A) the total number
of Option Shares covered by all Options received by the Optionholder on the
Grant Date and (B) the lesser of (I) the Liquidity Percentage or (II) the Vested
Percentage as of such date over (ii) the total number of Option Shares
transferred by the Optionholder, the Optionholder's Trust, the Optionholder's
Estate and all Pledgees after the date hereof, other than pursuant to transfers
permitted by clauses (ii), (iii) and (iv) of Section 5(b) hereof. No transfer
of any such shares in violation hereof shall be made or recorded on the books of
WCP (or any transfer agent or registrar therefor) and any such transfer shall be
null and void and of no force or effect.
(b) For purposes of this Agreement, "Liquidity Percentage" as of any date
shall mean the ratio on such date of (X) the aggregate number of shares of
Common Stock sold by KKR Affiliates (as defined hereinafter) pursuant to one or
more Public Offerings to (Y) the maximum number of shares of Common Stock held
at any time by KKR Affiliates. For purposes of this Agreement, "KKR Affiliate"
shall mean any other Person directly or indirectly controlling, controlled by,
or under common control with, Kohlberg Kravis Roberts & Co., L.P.; "Person"
means an individual, partnership, corporation, business trust, joint stock
company, trust, unincorporated association, joint venture, governmental
authority or other entity of whatever nature, and "control" shall have the
meaning given such term under Rule 405 of the Act.
(c) For purposes of this Agreement, the "Vested Percentage" with respect
to Option Shares shall be determined as follows:
Calculation Date Vested Percentage
- ---------------- -----------------
7
<PAGE>
From Grant Date until the first anniversary of the Grant 0%
Date
On and after the first anniversary of the Grant Date until 20%
the second anniversary of the Grant Date
On and after the second anniversary of the Grant Date until 40%
the third anniversary of the Grant Date
On and after the third anniversary of the Grant Date until 60%
the fourth anniversary of the Grant Date
On and after the fourth anniversary of the Grant Date until 80%
the fifth anniversary of the Grant Date
On and after the fifth anniversary of the Grant Date 100%
7. Optionholder's Right to Resell Option Shares and Options to WCP Upon
Death or Disability
(a) Except as otherwise provided herein, if on or before the fifth
anniversary of the Grant Date, (i) the Optionholder dies or becomes Permanently
Disabled (as hereinafter defined) and (ii) at the time of his or her death or
Permanent Disability, the Optionholder (A) was still in the employ of the
Company, (B) had retired from the Company at age 65 or over (or such other age
as may be approved by the Board) after having been employed by the Company
continuously for at least three years after the Grant Date (a "Permitted
Retirement"), or (C) had terminated employment with Good Reason (as hereinafter
defined), then the Optionholder, the Optionholder's Estate and/or the
Optionholder's Trust, as the case may be, shall have the right for six months
from the date of death or Permanent Disability to elect on one occasion (x) to
sell to WCP, and WCP shall be required to purchase all or any portion of the
Option Shares then held by the Optionholder, the Optionholder's Estate and/or
the Optionholder's Trust, as the case may be, at the Section 7 Repurchase Price,
as determined in accordance with Section 9 and/or (y) to require WCP to pay to
the Optionholder an amount equal to the Option Excess Price (as defined in
Section 10(a)) determined on the basis of the Section 7 Repurchase Price as
provided in Section 9 with respect to the termination of all or any portion of
outstanding Options held by the Optionholder.
(b) The Optionholder, the Optionholder's Estate and/or the Optionholder's
Trust, as the case may be, shall send written notice to WCP of his, her or its
election to sell such Option Shares and/or to terminate such Options in exchange
for the payment referred to in the preceding subsection (a) (the "Redemption
Notice") within the six-month period referred to in Section 7(a). The
completion of the purchase shall take place at the principal office of WCP on
the 15th business day after the receipt by WCP of a properly given Redemption
Notice. The Section 7 Repurchase Price and any payment with respect to the
Options as described above shall be paid by delivery to the Optionholder, the
Optionholder's Estate or the Optionholder's Trust, as the case may be, of a
certified or bank check or checks in the appropriate amount payable to the order
of the Optionholder, the Optionholder's Estate or the Optionholder's Trust, as
the case may be, against delivery of certificates or other instruments
representing the Option Shares so purchased and appropriate documents canceling
the Options so terminated, appropriately endorsed or executed by the
Optionholder, the Optionholder's Estate or the Optionholder's Trust, or his, her
or its duly authorized representative.
(c) Notwithstanding any other provision of this Section 7 and subject to
Section 13, if there exists and is continuing a default or any event which after
a notice or lapse of time or both would cause a default under any loan,
guarantee or other agreement under which WCP or any of its Subsidiaries has
borrowed money or such
8
<PAGE>
repurchase would result in any default or event of default on the part of the
WCP or any of its Subsidiaries under any such agreement or if the capital of
WCP or any of its Subsidiaries is then impaired or would be impaired as a
result of such repurchase or such repurchase would otherwise violate the
General Corporation Law of the State of Delaware (each such occurrence being
an "Event"), WCP shall not be obligated to repurchase any of the Option
Shares from, or to make any payment with respect to the Options to, the
Optionholder, the Optionholder's Estate and/or the Optionholder's Trust, as
the case may be until the first business day which is five business days
after all of the foregoing Events have ceased to exist (the "Repurchase
Eligibility Date"), provided that (i) the Section 7 Repurchase Price shall be
calculated as of the time of the delivery of a Redemption Notice in
accordance with Section 7(b) and (ii) the number of Option Shares subject to
repurchase under this Section 7(c) and the number of Exercisable Option
Shares (as defined in Section 10(a)) for purposes of calculating the Option
Excess Price payable under Section 7(a), shall be that number of Option
Shares and Exercisable Option Shares, respectively, held by the Optionholder,
the Optionholder's Estate or the Optionholder's Trust, as the case may be, at
the time of the delivery of a Redemption Notice in accordance with Section
7(b). All Options exercisable as of the date of a Redemption Notice shall
continue to be exercisable until the repurchase pursuant to such Redemption
Notice.
(d) Notwithstanding any other provision of this Section 7 to the contrary,
the Optionholder, the Optionholder's Estate or the Optionholder's Trust, as the
case may be, shall have the right to withdraw any Redemption Notice which has
been pending for 120 or more days and which has remained unsatisfied because of
the provisions of Section 7(c).
9
<PAGE>
8. WCP's Right to Repurchase Option Shares and Terminate Options of
Optionholder
(a) If on or prior to the fifth anniversary of the Grant Date, (i) the
Optionholder's employment with WCP (and, if applicable, its Subsidiaries) is
voluntarily or involuntarily terminated for any reason whatsoever, with or
without Cause or Good Reason, (ii) the beneficiaries of an Optionholder's Trust
shall include any person or entity other than the Optionholder, his or her
spouse or his or her lineal descendants by blood or adoption, (iii) the
Optionholder shall effect a transfer of any of the Option Shares other than as
permitted by this Agreement or (iv) there shall occur a transfer of Option
Shares then held by the Optionholder pursuant to a bankruptcy proceeding, levy,
property settlement or disposition pursuant to law incident to marital
separation or divorce (alternatively, a "Call Event"), then WCP shall have the
right to purchase all, but not less than all, of the Option Shares then held by
the Optionholder, the Optionholder's Estate, the Optionholder's Trust and all
Pledgees at the Section 8 Repurchase Price determined in accordance with Section
9 hereof; provided that the Call Event described in clause (iv) of this Section
8 shall entitle WCP to repurchase only the number of Option Shares that are the
subject of the transfer resulting in the Call Event; and provided, further, that
if the Call Event results from the death, Permanent Disability or Permitted
Retirement of the Optionholder, or the termination of the Optionholder's
employment by the Optionholder with Good Reason or by the Company without Cause,
WCP shall have the right to purchase all, but not less than all, of the Option
Shares held by the Optionholder, the Optionholder's Estate, the Optionholder's
Trust and any Pledgee at the Section 7 Repurchase Price. WCP shall have a
period of 75 days after the date of a Call Event (or the date of WCP's knowledge
that a Call Event described in clause (ii) or (iii) above has occurred) in which
to give notice in writing to the Optionholder of WCP's exercise of such
repurchase election (the "Call Notice"). If (X) the Optionholder holds Option
Shares and Options and WCP exercises its right to repurchase Option Shares
pursuant to this Section 8 or (Y) the Optionholder holds only Options and WCP
elects (in accordance with the requirements of the Call Notice), WCP shall also
pay the Optionholder an amount equal to the Option Excess Price determined on
the basis of the Section 8 Repurchase Price or Section 7 Repurchase Price, as
applicable, with respect to the termination of (A) if the Call Event is
described in clause (i), (ii) or (iii) above, all, but not less than all, of the
then exercisable outstanding Options held by the Optionholder and (B) if the
Call Event is described in clause (iv) above, a pro rata portion (based on the
number of Option Shares that are the subject of the transfer) of the then
exercisable outstanding Options held by the Optionholder.
(b) Subject to Section 13 hereof, the completion of the purchases pursuant
to Section 8 (a) shall take place at the principal office of WCP on the 15th
business day after the giving of notice of the exercise by WCP of its right to
purchase Option Shares and/or to terminate Options. All payments as described
above shall be made by delivery to the Optionholder, the Optionholder's Estate,
the Optionholder's Trust and/or the Pledgee, as the case may be, of a certified
or bank check or checks in the appropriate amounts payable to the order of the
Optionholder, the Optionholder's Estate, the Optionholder's Trust and/or the
Pledgee, as the case may be, against delivery of certificates or other
instruments representing the Option Shares so purchased and appropriate
documents canceling the Options so terminated, in each case appropriately
endorsed or executed by the Optionholder, the Optionholder's Estate, the
Optionholder's Trust, the Pledgee or his or her or its duly authorized
representatives.
(c) Notwithstanding any other provision of this Section 8 to the contrary
and subject to Section 13, if there exists and is continuing any Event, WCP
shall delay the repurchase of any of the Option Shares or the Options (pursuant
to a Call Notice timely given in accordance with Section 8(a) hereof) from the
Optionholder, the Optionholder's Estate or the Optionholder's Trust, as the case
may be, until the Repurchase Eligibility Date; provided that (i) the Section 8
Repurchase Price or the Section 7 Repurchase Price, as the case may be, shall be
calculated as of the time of
10
<PAGE>
the delivery of a Call Notice in accordance with Section 8(a) and (ii) the
number of Option Shares subject to repurchase under this Section 8 and the
number of Exercisable Option Shares for purposes of calculating the Option
Excess Price payable under this Section 8, shall be the number of Option
Shares and Exercisable Option Shares, respectively, held by the Optionholder,
the Optionholder's Estate or the Optionholder's Trust, as the case may be, at
the time of the delivery of a Call Notice in accordance with Section 8(a).
All Options exercisable as of the date of a Call Notice shall continue to be
exercisable until the repurchase pursuant to such Call Notice.
(d) Notwithstanding any other provision of this Section 8 to the contrary,
WCP's right to purchase Option Shares and cancel Options pursuant to this
Section 8 shall terminate with respect to any Option Shares and Options that
have not been so repurchased or cancelled on or before the 120th day after the
date of the Call Notice.
9. Determination of Repurchase Price
(a) The Section 7 Repurchase Price and the Section 8 Repurchase Price are
hereinafter collectively referred to as the "Repurchase Price." The Repurchase
Price shall be calculated on the basis of the unaudited financial statements of
the Company or the Market Price Per Share (as defined in Section 9(e)) as of the
last day of the month preceding the month in which the event giving rise to the
repurchase occurs (the "Repurchase Calculation Date"). The event giving rise to
the repurchase shall be the transfer, death, Permanent Disability, Permitted
Retirement or termination of employment, or other event, as the case may be, not
the giving of any notice required pursuant to Section 7 or 8.
(b) The Section 7 Repurchase Price per Option Share shall be equal to the
greater of the Market Price Per Share and the Option Price Per Share.
(c) (i) If the Call Event results from the occurrence of an event
described in clauses (ii), (iii) or (iv) of Section 8(a), the Section 8
Repurchase Price per Option Share shall be equal to the lesser of (x) the
Market Price Per Share and (y) the Option Price Per Share plus the product
of (I) the Vested Percentage (as defined in Section 6) and (II) the amount,
if any, by which the Market Price Per Share exceeds the Option Price Per
Share.
(ii) If the Call Event results from the Optionholder's voluntary
termination of employment other than for Good Reason, the Section 8
Repurchase Price per Option Share shall be equal to the Market Price Per
Share.
(iii) If the Call Event results from the Optionholder's termination
of employment by the Company with Cause, the Section 8 Repurchase Price per
Option Share shall be equal to the lesser of the Market Price Per Share and
the Option Price Per Share.
(d) As used herein the term "Public Offering" shall mean the sale of
shares of Common Stock to the public pursuant to a registration statement under
the Act which has been declared effective by the Securities and Exchange
Commission (other than a registration statement on Form S-8 or any other similar
form) immediately after which sale an active trading market in the Common Stock
exists; provided that an active trading market in the Common Stock shall be
deemed to exist if the Common Stock is listed on the New York Stock Exchange,
the American Stock Exchange or the NASDAQ National Market System, but the
failure of the Common Stock to be so listed shall not per se be determinative as
to whether an active trading market does not exist.
(e) As used herein the term "Market Price Per Share" shall mean the price
per share equal to the average of the last sale price of the Common Stock on
each of the ten trading days prior to the Repurchase Calculation Date on each
exchange on which
11
<PAGE>
the Common Stock may at the time be listed and on which the Common Stock
traded on such date or, if there shall have been no sales on any of such
exchanges on any such trading day, the average of the closing bid and asked
prices on each such exchange at the end of each such trading day or, if there
is no such bid and asked price on such trading day, on the next preceding
date when such bid and asked price occurred or, if the Common Stock shall not
be so listed, the average of the closing sales prices as reported by NASDAQ
at the end of each of the ten trading days prior to the Repurchase
Calculation Date in the over-the-counter market. If the Common Stock is not
so listed or reported by NASDAQ, then the Market Price Per Share shall be the
fair market value established by the Board acting in good faith.
(f) As used herein the term "Aggregate Market Value" shall mean the
product of (i) the number of shares of Common Stock to be applied as payment of
the Exercise Price pursuant to Section 4(b)(iv)(B) and (ii) the Market Value Per
Share as of the payment date.
(g) In determining the Repurchase Price, appropriate adjustments shall be
made for any future issuances of rights to acquire and securities convertible
into Common Stock and any stock dividends, splits, combinations,
recapitalizations or any other adjustment in the number of shares of outstanding
shares of Common Stock.
10. Shares Issued to Optionholder upon Exercise of Options; Termination of
Options
(a) All Options, whether or not then exercisable, shall be automatically
terminated to the extent that, pursuant to the provisions of this Agreement, WCP
shall pay the Optionholder an amount equal to the Option Excess Price with
respect to such Options. If the Option Excess Price is zero or a negative
number, all outstanding Options granted to the Optionholder, whether or not then
exercisable, shall be automatically terminated upon the repurchase of any Option
Shares pursuant to Section 7 or Section 8. For purposes hereof, "Option Excess
Price" shall mean the excess, if any, of the Section 7 Repurchase Price or the
Section 8 Repurchase Price, depending on which Repurchase Price is (or would be)
used to repurchase the Option Shares, over the exercise price applicable to such
Options multiplied by the number of Exercisable Option Shares. For purposes
hereof, "Exercisable Option Shares" shall mean the shares of Common Stock which,
at the time of determination, could be purchased by the Optionholder upon
exercise of his or her outstanding exercisable Options.
(b) Except as otherwise provided herein or in the Option Plan, the Options
shall expire and cease to be exercisable to any extent after the first to occur
of the following events:
(i) the tenth anniversary of the Grant Date; or
(ii) the date that is six months after the Optionholder's termination
of employment by reason of death, Permanent Disability or Permitted Retirement;
or
(iii) the first business day which is fifteen calendar days after
the earlier of (A) 75 days after the Optionholder's termination of employment
for any reason other than for Cause, Good Reason, death, Permanent Disability
or Permitted Retirement, or (B) the delivery of notice by WCP that it does
not intend to exercise its call right under Section 8; provided that in any
event the Options shall remain exercisable under this Section 10 until at
least 45 days after termination of the Optionholder's employment for any
reason other than death, Permanent Disability, or Permitted Retirement; or
(iv) upon the occurrence of a Transfer Event (as hereinafter defined)
and upon payment to the Optionholder of an amount in cash equal to the
difference between (i) the product of (A) the Per Share Consideration (as
hereinafter defined) received in such Transfer Event by a holder of Common Stock
multiplied by (B) the
12
<PAGE>
number of Option Shares for which the unexercised Options are then
exercisable and (ii) the aggregate Option Price Per Share for such
unexercised Options which are then exercisable. For the purposes of this
Section 10, the term "Per Share Consideration" shall mean the quotient of (x)
the aggregate consideration paid or to be paid (but only as and when
received) in respect of the Transfer Event to the holders of Common Stock of
WCP, as applicable, divided by (y) the number of outstanding shares of Common
Stock on a fully diluted basis (after giving effect to the exercise of all
outstanding options to acquire Common Stock to the extent then exercisable);
and the term "Transfer Event" shall mean any of a merger or consolidation
involving WCP, a sale or exchange of all or substantially all of the assets
of WCP, an acquisition by another corporation or other entity of 80% or more
of WCP's outstanding shares of voting stock or the liquidation or dissolution
of WCP.
11. WCP's Representations and Warranties
(a) WCP represents and warrants to the Optionholder that (i) this
Agreement has been duly authorized, executed and delivered by WCP and (ii) the
Option Shares, when issued and delivered in accordance with the terms hereof,
will be duly and validly issued, fully paid and nonassessable.
(b) WCP shall file the reports required to be filed by it under the Act
and the Exchange Act to the extent required from time to time to enable the
Optionholder to sell Option Shares without registration under the Act within the
limitations of the exemptions provided by (i) Rule 144 under the Act, as such
Rule may be amended from time to time, or (ii) any similar rule or regulation
hereafter adopted by the SEC. Notwithstanding anything contained in this
Section 11(b), WCP may deregister under Section 12 of the Exchange Act if it is
then permitted to do so pursuant to the Exchange Act and the rules and
regulations thereunder, and, upon such deregistration, shall be relieved of its
obligations to file reports pursuant to this Section 11(b). Nothing in this
Section 11(b) shall be deemed to limit in any manner the restrictions on sales
of Option Shares contained in this Agreement.
12. "Piggyback" Registration Rights
(a) If WCP, in connection with any Public Offering, plans to register any
shares of Common Stock held by WCP Associates, L.P., APC Associates, L.P., GR
Associates, L.P. or KKR Partners II, L.P. (the "Institutional Investors") for
public offering pursuant to the Act, WCP will promptly notify the Optionholder
in writing (a "Registration Notice") of such proposed registration (the
"Proposed Registration"). If within ten business days of the receipt by the
Optionholder of such Registration Notice (and, in any event, within 15 business
days after such Registration Notice is sent by WCP), WCP receives from the
Optionholder, the Optionholder's Estate or the Optionholder's Trust a written
request (a "Registration Request") to register Option Shares held by the
Optionholder, the Optionholder's Estate or the Optionholder's Trust (which
Registration Request will be irrevocable unless otherwise mutually agreed to in
writing by the Optionholder and WCP), Option Shares will be so registered as
provided in this Section 12; provided that for each such Proposed Registration
only one Registration Request, which shall be executed by the Optionholder, the
Optionholder's Estate or the Optionholder's Trust, as the case may be, may be
submitted for all Registrable Securities held by the Optionholder, the
Optionholder's Estate and the Optionholder's Trust, respectively. All Option
Shares acquired by the Optionholder pursuant to the exercise of Options granted
pursuant to this Agreement and held by the Optionholder, the Optionholder's
Estate or the Optionholder's Trust, including shares purchased upon the exercise
of Options, shall be deemed to be Registrable Securities.
(b) The maximum number of Option Shares which will be registered pursuant
to a Registration Request will be the lowest of (i) the number of Option Shares
then held by the Optionholder (which for purposes of this subparagraph (b) shall
include shares held by the Optionholder's Estate or a Optionholder's Trust),
including all Option Shares which the Optionholder is then entitled to acquire
under an unexercised Option
13
<PAGE>
to the extent then exercisable (the "Maximum Shares"), (ii) the Maximum
Shares then held by the Optionholder multiplied by the ratio of (A) the
number of shares of Common Stock to be registered by the Institutional
Investors in the Proposed Registration to (B) the total number of shares of
Common Stock beneficially owned by all Institutional Investors and (iii) the
maximum number of shares which the Optionholder can register in the public
offering pursuant to any limits set by the managing underwriter for inclusion
in such public offering and agreed to in good faith by WCP.
(c) Except as may otherwise be provided in this Section 12, Option Shares
will be registered by WCP and offered to the public pursuant to his Section 12
on the same terms and subject to the same conditions applicable to registration
in the Proposed registration of shares held by an Institutional Investor. Such
terms and conditions shall include, without limitation: the public offering
price; the payment of fees, commissions and expenses; the provision of, and
representation and warranty as to, information requested by WCP; and the
provision of requisite indemnifications.
(d) Upon delivering a Registration Request, the Optionholder will, if
requested by WCP, execute and deliver a Custody Agreement and Power of Attorney
in form and substance satisfactory to WCP with respect to the Option Shares to
be registered pursuant to this Section 12 (a "Custody Agreement and Power of
Attorney"). The Custody Agreement and Power of Attorney will provide, among
other things, that the Optionholder, the Optionholder's Estate or the
Optionholder's Trust, as the case may be, will deliver to and deposit in custody
with the custodian and attorney-in-fact named therein a certificate or
certificates representing such Option Shares (duly endorsed in blank by the
registered owner or owners thereof or accompanied by duly executed stock powers
in blank) and irrevocably appoint said custodian and attorney-in-fact as the
Optionholder, the Optionholder's Estate's or the Optionholder's Trust's, as the
case may be, agent and attorney-in-fact with full power and authority to act
under the Custody Agreement and Power of Attorney on behalf of the Optionholder,
the Optionholder's Estate or the Optionholder's Trust, as the case may be, with
respect to the matters specified therein. The Optionholder agrees that he will
execute such other agreements as WCP may reasonably request to further evidence
the provisions of this Section 12.
13. Continued Exercisability of WCP's Right or Obligation to Repurchase.
Notwithstanding anything to the contrary contained in Sections 7 and 8 hereof,
if at any time consummation of all purchases and payments to be made by the
Company pursuant to this Agreement and the Other Stock Option Agreements would
result in an Event, then the Company shall make purchases from, and payments to,
the Optionholder and Other Optionholders pro rata (on the basis of the
proportion of the number of Option Shares and the number of Options each such
Optionholder and all Other Optionholders have elected or are required to sell to
the Company) for the maximum number of Option Shares and shall pay the Option
Excess Price for the maximum number of Options permitted without resulting in an
Event (the "Maximum Repurchase Amount"). The provisions of Section 7(d) and
8(c) shall apply in their entirety to payments and repurchases with respect to
Options and Option Shares which may not be made due to the limits imposed by the
Maximum Repurchase Amount under this Section 13. Until all of such Options and
Option Shares are purchased and paid for by the Company, the Optionholder and
the Other Optionholders whose Options and Option Shares are not purchased in
accordance with this Section 13 shall have priority, on a pro rata basis, over
other purchases of Options and Option Shares by the Company pursuant to this
Agreement and Other Stock Option Agreements.
14. Right to Negotiate Purchase Price. Nothing contained in this
Agreement shall be deemed to restrict or prohibit WCP from purchasing Option
Shares and the Options from the Optionholder, the Optionholder's Estate or the
Optionholder's Trust, at any time, for such price upon such other terms and
conditions as may be mutually agreed upon between such parties, whether or not
at the time of such purchase circumstances exist which specifically grant WCP
the right to purchase, or the Optionholder, the Optionholder's Estate or the
Optionholder's Trust to sell, Option
14
<PAGE>
Shares and the Options under the terms of this Agreement, and all such
purchases shall be deemed to be in accordance with the terms of this
Agreement.
15. COVENANT REGARDING 83(B) ELECTION. EXCEPT AS WCP MAY OTHERWISE AGREE
IN WRITING, THE OPTIONHOLDER HEREBY COVENANTS AND AGREES THAT HE OR SHE WILL
MAKE AN ELECTION UNDER SECTION 83(B) OF THE CODE PURSUANT TO TREASURY REGULATION
SECTION 1.83-2 WITH RESPECT TO ANY OPTION SHARES ISSUED UPON EXERCISE OF THE
OPTIONS. THE OPTIONHOLDER FURTHER COVENANTS AND AGREES THAT HE OR SHE WILL
FURNISH WCP WITH COPIES OF THE FORM OF ELECTION THE OPTIONHOLDER FILES WITHIN 30
DAYS AFTER EACH EXERCISE OF ANY OF THE OPTIONS AND WITH EVIDENCE THAT EACH SUCH
ELECTION HAS BEEN FILED IN A TIMELY MANNER.
16. Notice of Change of Beneficiary. Immediately prior to any transfer of
Option Shares to the Optionholder's Trust, the Optionholder shall provide WCP
with a copy of the instruments creating the Optionholder's Trust and with the
identity of the beneficiaries of the Optionholder's Trust. The Optionholder
shall notify WCP immediately prior to any change in the identity of any
beneficiary of the Optionholder's Trust.
17. Expiration of Certain Provisions
(a) The provisions contained in Sections 7 and 8 of this Agreement, and
the portions of other provisions of this Agreement which incorporates the
provisions of Sections 7 and 8, shall terminate and be of no further force or
effect with respect to any Option Shares which are permitted to be sold by the
Optionholder pursuant to this Agreement and which are sold by the Optionholder
(i) pursuant to an effective registration statement filed by the Company under
the Act or (ii) pursuant to Rule 144, as amended from time to time, or any
similar rule or regulation hereafter adopted by the SEC.
(b) The provisions contained in Sections 5(f), 6, 7, 8 and 15 of this
Agreement, and the portion of any other provisions of this Agreement which
incorporate the provisions of any of such Sections, shall terminate and be of no
further force or effect upon the consummation of a Change of Control. For
purposes of this Section, "Change of Control" means the occurrence of any of the
following: (i) the sale, lease, transfer conveyance or other disposition (other
than by way of merger or consolidation), in one or a series of related
transactions, of all or substantially all of the assets of the Company taken as
a whole to any "person" (as such term is defined in Section 13(d)(3) of the
Exchange Act) other than the KKR Affiliates, (ii) the adoption of a plan
relating to the liquidation or dissolution of WCP, (iii) the consummation of any
transaction (including, without limitation, any merger or consolidation) the
result of which is that any "person" (as defined above), other than the KKR
Affiliates, becomes the "beneficial owner" (as such term is defined in Rule
13d-3 and Rule 13d-5 under the Exchange Act), directly or indirectly, of more
than 50% of the voting stock of WCP, (iv) the consummation of the first
transaction (including, without limitation, any merger or consolidation) the
result of which is that any "person" (as defined above) becomes the "beneficial
owner" (as defined above), directly or indirectly, of more of the voting stock
of WCP than is at the time "beneficially owned" (as defined above) by the KKR
Affiliates.
18. Recapitalization. Except to the extent otherwise provided by Section
17 hereof, the provisions of this Agreement shall apply, to the full extent set
forth herein with respect to the Option Shares and the Options, to any and all
capital stock of WCP and any partnership units, capital stock or other security
evidencing ownership interests in any successor or assign of WCP (whether by
merger, consolidation, sale of assets or otherwise) which may be issued in
respect of, in exchange for or in
15
<PAGE>
substitution of Option Shares and the Options, by reason of any dividend,
distribution, split, reverse split, combination, recapitalization,
liquidation, reclassification, merger, consolidation or otherwise.
19. Optionholder's Employment by the Company. Nothing contained in this
Agreement or in any other agreement entered into by the Company and the
Optionholder in connection with the execution of this Agreement (i) obligates
the Company to employ the Optionholder in any capacity whatsoever or (ii)
prohibits or restricts the Company from terminating the employment, if any, of
the Optionholder at any time or for any reason whatsoever, with or without
cause, and the Optionholder hereby acknowledges and agrees that neither the
Company nor any other person has made any representations or promises whatsoever
to the Optionholder concerning the Optionholder's employment or continued
employment by the Company except as otherwise set forth in a separate written
agreement between the Company and the Optionholder.
20. State Securities Laws. WCP hereby agrees to use all reasonable
efforts to comply with all state securities or "blue sky" laws which might be
applicable to the issuance of the Option Shares to the Optionholder.
21. Binding Effect. The provisions of this Agreement shall be binding
upon and accrue to the benefit of the parties hereto and their respective heirs,
legal representatives, successors and assigns. In the case of a transferee
permitted under Section 5(b) hereof, such transferee shall be deemed to be the
Optionholder hereunder; provided that no transferee (including, without
limitation, any transferee referred to in Section 5(b) hereof) shall derive any
rights under this Agreement unless and until such transferee has delivered to
WCP a valid undertaking and becomes bound by the terms of this Agreement.
22. Amendment. This Agreement may be amended only by a written agreement
or instrument signed by the Parties hereto; provided that WCP may, in its
discretion, amend this Agreement by a written agreement or instrument signed
only by WCP to reduce or eliminate any restriction on the sale, transfer or
other disposition of Option Shares.
23. Closing. Except as otherwise provided herein, the closing of each
purchase and sale of Option Shares and any outstanding Options pursuant to this
Agreement shall take place at the principal office of WCP on the 15th business
day following delivery of the notice by either Party to the other of its
exercise of the right to purchase or sell hereunder.
24. Applicable Law. The laws of the State of Delaware shall govern the
interpretation, validity and performance of the terms of this Agreement,
regardless of the law that might be applied under principles of conflicts of
law.
25. Assignability of Certain Rights by WCP. WCP shall have the right to
assign any or all of its rights or obligations to purchase Option Shares and any
outstanding Options pursuant to Sections 7 and 8 hereof.
26. Payment by WCP. If at any time WCP purchases Option Shares or any
outstanding Options from the Optionholder hereunder, and the Optionholder is
indebted to WCP in any amount whatsoever, WCP, in its sole discretion, may apply
all or any part of such indebtedness to the purchase price.
27. Notices. All notices and other communications necessary or
contemplated under this Agreement shall be in writing and shall be delivered in
the manner specified herein or, in the absence of such specification, shall be
deemed delivered when delivered in person or sent by first-class mail (certified
or registered mail, return receipt requested, postage prepaid), facsimile or
overnight air courier guaranteeing next day delivery, addressed as follows:
16
<PAGE>
(a) If to WCP, to it at the following address:
World Color Press, Inc.
The Mill
340 Pemberwick Road
Greenwich, Connecticut 06831
Facsimile No.: (203) 532-4371
Attn: Chief Legal and Administrative Officer
With a copy to:
Kohlberg Kravis Roberts & Co., L.P.
9 West 57th Street
New York, New York 10019
Facsimile No.: (212) 750-0003
Attn: Mr. Scott M. Stuart
(b) If to the Optionholder, to him or her at the following address:
170 Clapboard Ridge Road
Greenwich, CT 06831
28. Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be an original, but such counterparts shall
together constitute but one and the same instrument.
29. Section Headings. The section headings in this Agreement are for
convenience of reference only and shall not be deemed to alter or affect any
provision hereof.
30. Remedies for Violations. The Parties agree that they would be
irreparably damaged and that money damages would not be a sufficient remedy in
the event that this Agreement is not followed by the Parties. In the event of
any such breach, the non-breaching Party shall be entitled, without being
required to post a bond or other security, to equitable relief (including,
without limitation, injunction and specific performance) as a remedy for such
breach. Such remedies shall not be deemed to be the exclusive remedies for any
such breach but shall be in addition to all other remedies available at law or
equity to the non-breaching Party.
[signature page follows]
17
<PAGE>
IN WITNESS WHEREOF, the Parties have executed this Agreement as of the date
first above written.
World Color Press, Inc.
By: /s/ Jennifer L. Adams
---------------------
Jennifer L. Adams
Executive Vice President, Chief Legal
and Administrative Officer
/s/ Robert G. Burton
----------------------
Robert G. Burton
18
<PAGE>
EXHIBIT 10.4
EXECUTION
WORLD COLOR PRESS, INC.
LIMITED WAIVER, CONSENT AND FOURTH AMENDMENT
TO SECOND AMENDED AND RESTATED
CREDIT AGREEMENT
This LIMITED WAIVER, CONSENT AND FOURTH AMENDMENT TO SECOND AMENDED
AND RESTATED CREDIT AGREEMENT (this ``AMENDMENT'') is dated as of September 29,
1997 and entered into by and among WORLD COLOR PRESS, INC., a Delaware
corporation (``COMPANY''), the Lenders party to the Credit Agreement referred to
below on the date hereof (the ``LENDERS''), and BANKERS TRUST COMPANY, as
Administrative Agent, and, for purposes of Section 8 hereof, THE SUBSIDIARIES OF
COMPANY LISTED ON THE SIGNATURE PAGES HERETO (each a ``GUARANTOR'' and
collectively, the ``GUARANTORS''). All capitalized terms used herein without
definition shall have the same meanings herein as set forth in the Credit
Agreement (as defined below).
RECITALS
WHEREAS, Company, the Lenders, BancAmerica Securities, Inc., as
Syndication Agent, Citibank, N.A., as Documentation Agent and Bankers Trust
Company, as Administrative Agent, are parties to that certain Second Amended and
Restated Credit Agreement dated as of June 6, 1996, as amended or modified by
that certain First Amendment to Second Amended and Restated Credit Agreement
dated as of June 10, 1996, as further amended or modified by that certain
Limited Waiver, Consent and Second Amendment to Second Amended and Restated
Credit Agreement dated as of June 9, 1997, and as still further amended or
modified by that certain Third Amendment to Second Amended and Restated Credit
Agreement dated as of June 27, 1997 (as so amended and modified, the ``CREDIT
AGREEMENT'').
WHEREAS, Company has informed Administrative Agent and Lenders that
Company plans to issue certain convertible subordinated indebtedness and equity,
prepay the Tranche C Acquisition Term Loans and terminate the Tranche C
Commitments with the first $200,000,000 of proceeds received from the issuance
of such securities and prepay the Revolving Loans with all additional proceeds
received from the issuance of such securities. Company has requested that
Administrative Agent and Requisite Lenders agree that the Company's obligations
in connection with such convertible subordinated indebtedness constitutes
Additional Subordinated Indebtedness permitted pursuant to subsection 6.1(x) of
the Credit Agreement.
WHEREAS, Company has requested that Administrative Agent and Lenders
approve and consent to the addition of a new tranche D loan facility in the
aggregate original principal amount of $200,000,000 under the Credit Agreement
to be made available to the Company and the Subsidiary Borrowers as provided
herein.
<PAGE>
WHEREAS, Company has requested that Administrative Agent and Requisite
Lenders consent to (a) the release of World Sales from all of its obligations
under the Loan Documents and (b) the release of the stock of World Sales as
Pledged Collateral under the Security Agreement, which such stock was previously
pledged by Company pursuant to that certain Pledge Amendment dated as of August
19, 1997.
WHEREAS, the parties hereto wish to (i) amend and modify the Credit
Agreement to include the issuance of equity in the definition of ``Additional
Subordinated Indebtedness Refinancing'', in the manner and to the limited extent
described herein, (ii) amend and modify the Credit Agreement and certain of the
other Loan Documents to add Subsidiary Borrowers as co-borrowers under the
Credit Agreement for the purpose of making Redemption Acquisitions, in the
manner and to the limited extent described herein, (iii) amend and modify the
Credit Agreement and certain of the other Loan Documents to add an additional
loan facility to be maintained and continued as Tranche D Acquisition Term Loans
available to Company and/or one or more Subsidiary Borrowers as provided herein,
(iv) waive and modify compliance with the provisions of subsection 5.8 to the
extent such subsection requires that World Sales be a New Subsidiary under the
Credit Agreement, in the manner and to the limited extent described herein, (v)
release World Sales from its obligations under the Loan Documents, (vi) release
the stock of World Sales previously pledged by Company pursuant to the Security
Agreement, and (vii) make certain other amendments as set forth below.
NOW, THEREFORE, in consideration of the premises and the agreements,
provisions and covenants herein contained, the parties hereto agree as follows:
1
AMENDMENTS
1.1 AMENDMENTS TO SECTION 1: DEFINITIONS
A. Subsection 1.1 of the Credit Agreement is hereby amended by adding the
following definitions in the proper alphabetical order therein:
`` ``BORROWER'' or ``BORROWERS'' means Company and each Subsidiary
Borrower, it being understood that Subsidiary Borrowers shall only be
entitled to borrow Tranche D Acquisition Term Loans hereunder.''
`` ``COMPANY GUARANTY'' means the Company Guaranty executed by Company,
substantially in the form of EXHIBIT XXVI annexed hereto, as such Company
Guaranty may be amended, restated, supplemented or otherwise modified from
time to time in accordance with the terms hereof and thereof.''
`` ``FOURTH AMENDMENT'' means that certain Limited Waiver, Consent and
Fourth Amendment to Second Amended and Restated Credit Agreement dated as
of September 29, 1997 among Company, Lenders, Administrative
2
<PAGE>
Agent and the Subsidiaries of Company listed on the signature pages
thereto.''
`` ``FOURTH AMENDMENT EFFECTIVE DATE PART 2'' means the date of
satisfaction of the conditions referred to in subsection 5.2 of the Fourth
Amendment.''
`` ``REDEMPTION ACQUISITION'' means, from and after the Fourth Amendment
Effective Date Part 2, the merger of a Subsidiary Borrower with and into
another Person (the ``REDEMPTION TARGET'') and the redemption of the equity
interests held by the Persons who held the equity interests in such
Redemption Target immediately prior to such merger.''
`` ``SCHEDULED TRANCHE D REPAYMENT AMOUNT'' means, with respect to the
principal payments on Tranche D Acquisition Term Loans required pursuant to
subsection 2.1E(ii), for the last day of each Fiscal Quarter set forth
below, an amount equal to the Tranche D Acquisition Term Loan Amount
MULTIPLIED BY the correlative percentage set forth opposite such Fiscal
Quarter under Percentage Amortization, as adjusted by the operation of the
succeeding sentence:
3
<PAGE>
FISCAL YEAR PERCENTAGE
AMORTIZATION
Second Fiscal Quarter, 1999 12.50%
Fourth Fiscal Quarter, 1999 12.50%
Second Fiscal Quarter, 2000 12.50%
Fourth Fiscal Quarter, 2000 12.50%
Second Fiscal Quarter, 2001 12.50%
Fourth Fiscal Quarter, 2001 12.50%
Second Fiscal Quarter, 2002 12.50%
Fourth Fiscal Quarter, 2002 12.50%
TOTAL 100.00%
On any date occurring after the Tranche D Acquisition Commitment
Termination Date that any amounts in respect of Tranche D Acquisition Term Loans
are prepaid pursuant to subsections 2.4A(i) or 2.4A(ii), the Scheduled Tranche D
Repayment Amount set forth above shall be reduced by the amount of such
prepayment, such reduction to be effected by reducing the amounts calculated as
set forth above that correspond to scheduled principal installment or
installments of the Scheduled Tranche D Repayment Amount required to be reduced
as provided in subsection 2.4A(iii). The Scheduled Tranche D Repayment Amount
for the last day of the fourth Fiscal Quarter of the 2002 Fiscal Year shall be
an amount, if such amount is different from that specified above, sufficient to
repay all amounts owing by all Borrowers under the Tranche D Acquisition Term
Loans.''
`` ``SUBSIDIARY BORROWER'' means each wholly-owned Subsidiary of Company
formed after the Fourth Amendment Effective Date Part 2 and designated by
Company to be a Borrower under the Credit Agreement.''
`` ``TRANCHE D ACQUISITION COMMITMENT TERMINATION DATE'' means the Tranche D
Acquisition Commitment Termination Date then in effect, which shall be the
earliest of (i) June 29, 1999, (ii) the date as of which the Obligations shall
have become immediately due and payable pursuant to Section 7, and (iii) the
date on which all of the Obligations are paid in full (including, without
limitation, the repayment, expiration, termination or cash collateralization of
Letters of Credit pursuant to this Agreement) and all Commitments are reduced to
zero.''
`` ``TRANCHE D ACQUISITION TERM LOAN'' or ``TRANCHE D ACQUISITION TERM LOANS''
means the Loan or Loans made or maintained by a Lender or Lenders pursuant to
subsection 2.1A(ii)(d).''
4
<PAGE>
`` ``TRANCHE D ACQUISITION TERM LOAN AMOUNT'' means the aggregate principal
amount of Tranche D Acquisition Term Loans outstanding on the Tranche D
Acquisition Commitment Termination Date. ''
`` ``TRANCHE D ACQUISITION TERM NOTE'' means each promissory note issued
by Company or a Subsidiary Borrower, as applicable, to a Lender pursuant to
subsection 2.1F and substantially in the form of EXHIBIT XXV annexed hereto.''
`` ``TRANCHE D COMMITMENTS'' or ``TRANCHE D COMMITMENTS'' means the commitment
or commitments of a Lender or Lenders to make Tranche D Acquisition Term Loans
as set forth in subsection 2.1A(ii)(d).''
`` ``TRANCHE D EXPOSURE'' means, with respect to any Lender (i) as of any date
of determination prior to the termination of the Tranche D Commitments, that
Lender's Tranche D Commitment and (ii) as of any date of determination from and
after the termination of the Tranche D Commitments, the aggregate outstanding
principal amount of the Tranche D Acquisition Term Loans of that Lender.''
B. Subsection 1.1 of the Credit Agreement is hereby amended by adding the
following parenthetical after the words ``an equity interest in'' in clause (i)
of the definition of ``ACQUISITION'' therein:
``(whether by purchase of such equity interest or merger, consolidation or
other similar transaction)''
C. Subsection 1.1 of the Credit Agreement is hereby amended by amending
and restating the definition of ``ACQUISITION TERM LOAN'' or ``ACQUISITION TERM
LOANS'' in its entirety as follows:
``ACQUISITION TERM LOAN'' or ``ACQUISITION TERM LOANS'' means one or
more of the Tranche A Acquisition Term Loans, Tranche B Acquisition Term
Loans, Tranche C Acquisition Term Loans, or Tranche D Acquisition Term
Loans or any combination thereof.''
D. Subsection 1.1 of the Credit Agreement is hereby amended by amending
and restating clause (i) in the definition of ``ADDITIONAL SUBORDINATED
INDEBTEDNESS REFINANCING''in its entirety as follows:
``(i) the issuance by Company of Additional Subordinated Indebtedness
before June 30, 1998 pursuant to and in accordance with the provisions of
subsection 6.1(x) and/or common equity for which, collectively, the
proceeds received by Company are equal to or in excess of $200,000,000.''
E. Subsection 1.1 of the Credit Agreement is hereby amended by amending
and restating the definition of ``COMMITMENT'' or ``COMMITMENTS'' in its
entirety as follows:
``COMMITMENT'' or ``COMMITMENTS'' means the Tranche A Commitments,
Tranche B Commitments, Tranche C Commitments, Tranche D
5
<PAGE>
Commitments and the Revolving Loan Commitments of Lenders and the Swing
Line Loan Commitment of Bankers.''
F. Subsection 1.1 of the Credit Agreement is hereby amended by deleting
the words ``consummated on or prior to the Acquisition Commitment Termination
Date'' from the proviso in the definition of ``CONSOLIDATED CAPITAL
EXPENDITURES''.
G. Subsection 1.1 of the Credit Agreement is hereby amended by amending
and restating the definition of ``GUARANTY'' in its entirety as follows:
`` ``GUARANTY'' means the Second Amended and Restated Guaranty by and
among each Loan Party (other than Company) that becomes a party thereto,
substantially in the form of Exhibit XII annexed hereto, as such Guaranty
may be amended, restated, supplemented or otherwise modified from time to
time in accordance with the terms hereof and thereof.''
H. Subsection 1.1 of the Credit Agreement is hereby amended by amending
and restating the definition of ``LOAN DOCUMENTS'' in its entirety as follows:
`` ``LOAN DOCUMENTS'' means this Agreement, the Guaranty, the Company
Guaranty, the Collateral Documents, any applications, reimbursement
agreements and other documents or certificates executed in favor of an
Issuing Lender relating to the Letters of Credit and any Notes issued by
Borrowers.''
I. Subsection 1.1 of the Credit Agreement is hereby amended by amending
and restating the definition of ``NOTES'' in its entirety as follows:
``NOTES'' means any Existing Term Notes, Tranche A Acquisition Term
Notes, Tranche B Acquisition Term Notes, Tranche C Acquisition Term Notes,
Tranche D Acquisition Term Notes, Revolving Notes or Swing Line Note or any
combination thereof.''
J. Subsection 1.1 of the Credit Agreement is hereby amended by (i)
amending and restating clause (vi) in its entirety in the definition of ``PRO
RATA SHARE'' therein as follows and (ii) adding the following clause (vii) to
the definition of ``PRO RATA SHARE'' therein:
`` (vi) with respect to all payments, computations and other matters
relating to the Tranche D Commitment or the Tranche D Acquisition Term
Loan of any Lender, the percentage obtained by DIVIDING (x) the
Tranche D Exposure of that Lender BY (y) the aggregate Tranche D
Exposure of all Lenders;''
(vii) for all other purposes with respect to each Lender, the
percentage obtained by DIVIDING (x) the sum of the Existing Term Loan
Exposure, Tranche A Exposure, Tranche B Exposure, Tranche C Exposure,
Tranche D Exposure and Revolving Loan
6
<PAGE>
Exposure of that Lender BY (y) the sum of the aggregate Existing Term
Loan Exposure, Tranche A Exposure, Tranche B Exposure, Tranche C
Exposure, Tranche D Exposure and Revolving Loan Exposure of all
Lenders;''
K. Subsection 1.1 of the Credit Agreement is hereby amended by amending
and restating the definition of ``REQUISITE LENDERS'' in its entirety as
follows:
`` ``REQUISITE LENDERS'' means Lenders having or holding more than 50% of
the sum of (i) the aggregate Existing Term Loan Exposure of all Lenders,
(ii) the aggregate Tranche A Exposure of all Lenders, (iii) the aggregate
Tranche B Exposure of all Lenders, (iv) the aggregate Tranche C Exposure of
all Lenders, (v) the aggregate Tranche D Exposure of all Lenders, and (vi)
the aggregate Revolving Loan Exposure of all Lenders. ''
L. Subsection 1.1 of the Credit Agreement is hereby amended by adding the
following at the end of clause (ii) in the definition of ``SCHEDULED EXISTING
TERM LOAN REPAYMENT AMOUNT'' therein:
``PROVIDED that it being understood that the payments scheduled for the
second Fiscal Quarter, 1999, the fourth Fiscal Quarter, 1999 and the second
Fiscal Quarter, 2000 have previously been made by the Company:''
M. Subsection 1.1 of the Credit Agreement is hereby amended by adding the
following at the end of clause (ii) in the definition of ``SCHEDULED TRANCHE A
REPAYMENT AMOUNT'' therein:
``PROVIDED that it being understood that the payments scheduled for the
second Fiscal Quarter, 1999 and $7,500,000 of the $17,500,000 payment due
in the fourth Fiscal Quarter, 1999 have previously been made by the
Company:''
N. Subsection 1.1 of the Credit Agreement is hereby amended by adding the
following parenthetical after the words ``an equity interest in'' in the
definition of ``TARGET'' therein:
``(whether by purchase of such equity interest or merger, consolidation or
other similar transaction)''
1.2 AMENDMENTS TO SECTION 2: AMOUNTS AND TERMS OF COMMITMENTS AND LOANS; NOTES
A. TRANCHE D ACQUISITION TERM LOANS. Subsection 2.1A(ii) is hereby
amended by adding the following at the end thereof:
`` (d) TRANCHE D ACQUISITION TERM LOANS. Each Lender severally agrees,
subject to the limitations set forth below with respect to the maximum
amount of Tranche D Acquisition Term Loans permitted to be outstanding from
time to time, to lend to any Borrower from time to time during the period
from the Fourth Amendment Effective Date
7
<PAGE>
Part 2 to but excluding the Tranche D Acquisition Commitment Termination
Date an aggregate amount not exceeding its Pro Rata Share of the aggregate
Tranche D Commitments to be used for the purposes identified in
subsection 2.5G. Each Lender's commitment to make Tranche D Acquisition
Term Loans to a Borrower pursuant to this subsection 2.1A(ii)(d) is herein
called its ``TRANCHE D COMMITMENT'' and such commitments of all Lenders in
the aggregate are herein called the ``TRANCHE D COMMITMENTS.'' The
original amount of each Lender's Tranche D Commitment is set forth opposite
its name on SCHEDULE 1.1A/2.1 annexed hereto and the aggregate original
amount of the Tranche D Commitments is $200,000,000; PROVIDED that the
amount of the Tranche D Commitments shall be automatically and permanently
reduced from time to time by the amount of any reductions to the Tranche D
Commitments made pursuant to subsections 2.4C or 2.4D or the succeeding
paragraph of this subsection 2.1A(ii)(d). Each Lender's Tranche D
Commitment shall expire on the Tranche D Acquisition Commitment Termination
Date.
Anything contained in this Agreement to the contrary notwithstanding,
the Tranche D Acquisition Term Loans and the Tranche D Commitments shall be
subject to the following limitations:
1. subject to clause 2 of this paragraph, the Tranche D Commitments
shall be irrevocably and permanently reduced upon any voluntary or
mandatory prepayment of Tranche D Acquisition Term Loans as provided in
subsection 2.4;
2. at any date of determination, the aggregate principal amount of
all outstanding Tranche D Acquisition Term Loans shall not exceed the
aggregate Tranche D Commitments;
3. No Subsidiary Borrower shall be entitled to borrow Tranche D
Acquisition Term Loans except for the purpose of immediately consummating a
Redemption Acquisition; and
4. No Subsidiary of Company shall be deemed to be a Subsidiary
Borrower under this Agreement unless Company and such Subsidiary Borrower
have delivered a Subsidiary Borrower Election, substantially in the form of
EXHIBIT XXVII annexed hereto and such Subsidiary Borrower has satisfied all
of the requirements of subsection 5.8.''
B. BORROWING MECHANICS. Subsections 2.1B, C, D, E and F are hereby
amended and restated in their entirety as follows:
`` B. BORROWING MECHANICS. Acquisition Term Loans and Revolving Loans
made on any Funding Date shall be in an aggregate minimum amount of
$2,000,000 and integral multiples of $500,000 in excess of that amount.
Swing Line Loans made on any date shall not be subject to an aggregate
minimum amount. Whenever a Borrower desires that Lenders make an
Acquisition Term Loan or a Revolving Loan under subsection 2.1A(ii) or
2.1A(iii), as the case may be, it shall deliver to Administrative Agent a
Notice of Borrowing no later
8
<PAGE>
than 12:00 Noon (New York time) at least three Business Days in advance of
the proposed Funding Date in the case of a Eurodollar Rate Loan and at
least one Business Day in advance of the proposed Funding Date in the case
of a Prime Rate Loan. Whenever Company desires that Bankers make a Swing
Line Loan under subsection 2.1A(iv), it shall deliver to Administrative
Agent a Notice of Borrowing no later than 12:00 Noon (New York time) on the
proposed Funding Date. The Notice of Borrowing shall specify (i) the
proposed Funding Date (which shall be a Business Day), (ii) the amount and
type of Loans requested, (iii) in the case of Loans made on the Closing
Date, that such Loans shall be Prime Rate Loans, (iv) in the case of
Revolving Loans not made on the Closing Date, whether such Loans shall be
Prime Rate Loans or Eurodollar Rate Loans, (v) in the case of Loans
requested to be made during the first 90 days following the Closing Date as
Eurodollar Rate Loans, that the initial Interest Period applicable to such
Loans shall be one month unless Administrative Agent permits otherwise, in
its sole discretion; (vi) in the case of any Loans requested to be made as
Eurodollar Rate Loans, the initial Interest Period applicable thereto;
(vii) in the case of Revolving Loans and Swing Line Loans, that the amount
of the proposed borrowing will not cause the Total Utilization of Revolving
Loan Commitments to exceed the aggregate Revolving Loan Commitments; (viii)
in the case of Swing Line Loans, that the amount of the proposed borrowing
will not cause the aggregate principal amount of Swing Line Loans
outstanding to exceed the Swing Line Loan Commitment then in effect;
(ix) in the case of Tranche B Acquisition Term Loans, that the amount of
the proposed borrowing will not cause the aggregate principal amount of
Tranche B Acquisition Term Loans outstanding to exceed the Tranche B
Commitments then in effect, (x) in the case of Tranche D Acquisition Term
Loans, that the amount of the proposed borrowing will not cause the
aggregate principal amount of Tranche D Acquisition Term Loans outstanding
to exceed the Tranche D Commitments then in effect and (xi) in the case of
any Acquisition Term Loans, that (a) as of the last day of the Fiscal
Quarter immediately preceding the applicable scheduled Funding Date in
respect of such Acquisition the Leverage Ratio for the most recently
completed four Fiscal Quarters is equal to or less than 4.50:1.00 and
(b) no Event of Default or Potential Event of Default has occurred or is
continuing or would be caused by the consummation of the Acquisition. Term
Loans and Revolving Loans may be continued as or converted into Prime Rate
Loans and Eurodollar Rate Loans in the manner provided in subsection 2.2D.
In lieu of delivering the above described Notice of Borrowing, Borrowers
may give Administrative Agent telephonic notice by the required time of the
proposed borrowing under this subsection 2.1B; PROVIDED that such notice
shall be promptly confirmed in writing by delivery of a Notice of Borrowing
to Administrative Agent on or before the applicable Funding Date.
Neither Administrative Agent nor any Lender shall incur any liability
to any Loan Party in acting upon any telephonic notice referred to above
which Administrative Agent believes in good faith to have been given by a
duly authorized officer or other person authorized to borrow on behalf of
Borrowers or for otherwise acting
9
<PAGE>
in good faith under this subsection 2.1B and, upon funding of Loans by
Lenders in accordance with this Agreement pursuant to any telephonic
notice, Borrowers shall have effected Loans hereunder.
Except as provided in subsection 2.6B, 2.6C and 2.6G, a Notice of
Borrowing for a Eurodollar Rate Loan (or telephonic notice in lieu thereof)
shall be irrevocable on and after the related Interest Rate Determination
Date, and Borrowers shall be bound to make a borrowing in accordance
therewith.
C. DISBURSEMENT OF FUNDS. All Loans under this Agreement shall be
made by Lenders simultaneously and proportionately to their respective Pro
Rata Shares of the Commitments for the particular types of Loans requested,
it being understood that no Lender shall be responsible for any default by
any other Lender of that other Lender's obligation to make a Loan requested
hereunder nor shall the Commitment of any Lender to make the particular
type of Loan requested be increased or decreased as a result of the default
by any other Lender of that other Lender's obligation to make a Loan
requested hereunder. Promptly after receipt by Administrative Agent of a
Notice of Borrowing pursuant to subsection 2.1B (or telephonic notice in
lieu thereof), Administrative Agent shall notify each Lender or Bankers, as
the case may be, of the proposed borrowing. Each Lender shall make the
amount of its Loans available to Administrative Agent, in same day funds,
at the office of Administrative Agent located at One Bankers Trust Plaza,
New York, New York not later than 3:00 p.m. (New York time) on the Funding
Date. Except with respect to the repayment of Refunded Swing Line Loans,
as provided in subsection 2.1A(iv), or the reimbursement of an Issuing
Lender for a drawing on a Letter of Credit, as provided in subsection 2.7D,
upon satisfaction or waiver of the conditions precedent specified in
subsections 3.1 and 3.4 in the case of the initial Revolving Loans and
Swing Line Loans on the initial Funding Date (and/or subsection 3.1 and 3.4
in the case of any initial Acquisition Term Loans on the initial Funding
Date) and subsection 3.4 in the case of Revolving Loans and Swing Line
Loans on any subsequent Funding Date (and subsection 3.3 and 3.4 in the
case of Acquisition Term Loans on any subsequent Funding Date),
Administrative Agent shall make the proceeds of such Loans available to the
applicable Borrower on the Funding Date by causing an amount of same day
funds equal to the proceeds of all such Loans received by Administrative
Agent at its office located at the address set forth in the preceding
sentence to be credited to the account of the applicable Borrower at such
office of Administrative Agent.
Unless Administrative Agent shall have been notified by any Lender
prior to a Funding Date that such Lender does not intend to make available
to Administrative Agent such Lender's Loan requested on such Funding Date,
Administrative Agent may assume that such Lender has made such amount
available to Administrative Agent on such Funding Date and Administrative
Agent may, in its sole discretion, but shall not be obligated to, make
available to the applicable Borrower a corresponding amount on such Funding
Date. If such
10
<PAGE>
corresponding amount is not in fact made available to Administrative Agent
by such Lender, Administrative Agent shall be entitled to recover such
corresponding amount on demand from such Lender together with interest
thereon, for each day from such Funding Date until the date such amount is
paid to Administrative Agent, at the customary rate set by Administrative
Agent for the correction of errors among banks for three Business Days and
thereafter at the Prime Rate. If such Lender does not pay such
corresponding amount forthwith upon Administrative Agent's demand therefor,
Administrative Agent shall promptly notify the applicable Borrower and such
Borrower shall immediately pay such corresponding amount to Administrative
Agent together with interest thereon, for each day from such Funding Date
until the date such amount is paid to Administrative Agent, at the rate
payable under this Agreement for Prime Rate Loans. Nothing in this
subsection 2.1C shall be deemed to relieve any Lender from its obligation
to fulfill its Commitments hereunder or to prejudice any rights that any
Borrower may have against any Lender as a result of any default by such
Lender hereunder.
D. REGISTER.
(i) Administrative Agent shall maintain, at its address referred to in
subsection 9.10, a register for the recordation of the names and addresses
of Lenders and the Commitments and Loans of each Lender from time to time
(the ``REGISTER''). Borrowers, Administrative Agent and Lenders may treat
each Person whose name is recorded in the Register as a Lender hereunder
for all purposes of this Agreement. The Register shall be available for
inspection by any Borrower or any Lender at any reasonable time and from
time to time upon reasonable prior notice.
(ii) Administrative Agent shall record in the Register the Commitments
and the Loans from time to time of each Lender and each repayment or
prepayment in respect of the principal amount of the Loans of each Lender.
Any such recordation in accordance with the terms of this Agreement shall
be conclusive and binding on each Borrower and each Lender, absent manifest
error; PROVIDED that failure to make any such recordation, or any error in
such recordation, shall not affect any Borrower's Obligations in respect of
the applicable Loans.
(iii) Each Lender shall record on its internal records (including,
without limitation, any Note described in subsection 2.1F) the amount of
the Loan made by it and each payment in respect thereof. Any such
recordation in accordance with the terms of this Agreement shall be
conclusive and binding on Borrowers, absent manifest error; PROVIDED that
failure to make any such recordation, or any error in such recordation,
shall not affect any Borrower's Obligations in respect of the applicable
Loans; PROVIDED FURTHER that in the event of any inconsistency between the
Register and any Lender's records, the recordations in the Register shall
govern.
11
<PAGE>
(iv) Borrowers, Administrative Agent and Lenders shall deem and treat
the Persons listed as Lenders in the Register as the holders and owners of
the corresponding Commitments and Loans listed therein for all purposes
hereof, and no assignment or transfer of any such Commitment or Loan shall
be effective, in each case unless and until an Assignment Agreement
effecting the assignment or transfer thereof shall have been accepted by
Administrative Agent and recorded in the Register as provided in subsection
9.2B(ii). Prior to such recordation, all amounts owed with respect to the
applicable Commitment or Loan shall be owed to the Lender listed in the
Register as the owner thereof, and any request, authority or consent of any
Person who, at the time of making such request or giving such authority or
consent, is listed in the Register as a Lender shall be conclusive and
binding on any subsequent holder, assignee or transferee of the
corresponding Commitments or Loans.
E. SCHEDULED PAYMENTS OF TERM LOANS.
(i) Company shall make principal payments in the aggregate amount of
the Scheduled Existing Term Repayment Amount on the last day of each Fiscal
Quarter of each Fiscal Year set forth in the definition of Scheduled
Existing Term Repayment Amount; PROVIDED that the Existing Term Loans and
all other amounts owed hereunder with respect to the Existing Term Loans
shall be paid in full no later than December 29, 2002.
(ii) (a) Company shall make principal payments (x) in the aggregate
amount of the Scheduled Tranche A Repayment Amount on the last day of each
Fiscal Quarter of each Fiscal Year set forth in the definition of Scheduled
Tranche A Repayment Amount, (y) in the aggregate amount of the Scheduled
Tranche B Repayment Amount on the last day of each Fiscal Quarter of each
Fiscal Year set forth in the definition of Scheduled Tranche B Repayment
Amount and (z) in the aggregate amount of the Scheduled Tranche C Repayment
Amount on the last day of each Fiscal Quarter of each Fiscal Year set forth
in the definition of Scheduled Tranche C Repayment Amount and (b) Borrowers
shall make principal payments in the aggregate amount of the Scheduled
Tranche D Repayment Amount on the last day of each Fiscal Quarter of each
Fiscal Year set forth in the definition of Scheduled Tranche D Repayment
Amount; PROVIDED that the Acquisition Term Loans and all other amounts owed
hereunder with respect to the Acquisition Term Loans shall be paid in full
no later than December 29, 2002.
F. NOTE OPTION. Any Lender may, by notice to Administrative Agent
and Company, request that all or part of the principal amount of any
Borrower's Loans from such Lender hereunder be evidenced by an Existing
Term Note, a Tranche A Acquisition Term Note, Tranche B Acquisition Term
Note, Tranche C Acquisition Term Note, Tranche D Acquisition Term Note,
Revolving Note and/or Swing Line Note, as applicable. Within three
Business Days of such Borrower's receipt of such notice, such Borrower
shall execute and deliver to Administrative Agent for delivery to the
appropriate Lender a Note or Notes, payable to the notifying Lender or, if
so specified in such
12
<PAGE>
notice, any Person who is an assignee of such Lender pursuant to
subsection 9.2 hereof.''
C. FEES. Subsection 2.3A is hereby amended by adding the following new
paragraph at the end thereof:
`` Company agrees to pay to Administrative Agent, for distribution to
each Lender in proportion to that Lender's Pro Rata Share, commitment fees
for the period from and including the Fourth Amendment Effective Date Part
2 to and excluding the date the Tranche D Commitments expire, equal to the
average of the daily excess of the Tranche D Commitments over the aggregate
principal amount of Tranche D Acquisition Term Loans outstanding MULTIPLIED
BY 3/8 of 1% per annum, such commitment fees to be calculated on the basis
of a 360-day year and the actual number of days elapsed and to be payable
quarterly in arrears on the last day of each Fiscal Quarter, commencing on
the first such date to occur after the Fourth Amendment Effective Date Part
2, and on the date the Tranche D Commitments expire; PROVIDED HOWEVER that
such per annum percentage shall be reduced to 1/4 of 1% per annum for each
day during any Pricing Period in which the Leverage Ratio as of the last
day of the most recently ended Fiscal Quarter is equal to or less than
4.50:1.00. ''
D. VOLUNTARY PREPAYMENTS. Subsection 2.4A(i)(b) is hereby amended by
adding the following at the end of clause (2) therein:
``in the case of the prepayment of the Tranche D Acquisition Term Loans of
any Lender pursuant to this subsection 2.4A(i)(b), the Tranche D Commitment
of such Lender is terminated concurrently with such prepayment pursuant to
subsection 2.4C(ii) (at which time SCHEDULE 1.1A/2.1 shall be deemed
modified to reflect the changed Tranche D Commitments), and''
E. MANDATORY PREPAYMENTS. Subsection 2.4A(ii) is hereby by amended by
amending and restating it in its entirety as follows:
`` (ii) MANDATORY PREPAYMENTS. The Loans shall be prepaid and/or the
Tranche B Commitments, the Tranche D Commitments and Revolving Loan
Commitments shall be permanently reduced in the amounts and under the
circumstances set forth below, all such prepayments and/or reductions to be
applied as set forth below or as more specifically provided in subsection
2.4A(iii).
(a) PREPAYMENTS AND REDUCTIONS FROM ASSET SALES. Subject to the
Intercreditor Agreement, no later than the first Business Day
following the date of receipt by Company or any of its Subsidiaries of
Cash Proceeds of any Asset Sale, Borrowers shall prepay the Loans
and/or the Tranche B Commitments, the Tranche D Commitments and
Revolving Loan Commitments shall be permanently reduced in an amount
equal to 75% of the Estimated Net Cash Proceeds of such Asset Sale;
PROVIDED that, in the event on the date of receipt by Company or any
of its Subsidiaries of such Cash Proceeds, the Leverage Ratio as of
13
<PAGE>
the last day of the then most recently ended Fiscal Quarter for which
financial statements have been delivered pursuant to subsection 5.1(i)
or 5.1(ii) is less than 2.50:1.00, then the percentage applicable to
Estimated Net Cash Proceeds set forth above shall be reduced to 50%.
On or before the 90th day after receipt of any such Cash Proceeds,
Borrowers shall promptly make an additional prepayment of the Loans
and/or the Tranche B Commitments, the Tranche D Commitments and
Revolving Loan Commitments shall be permanently reduced in an amount
equal to 75% (or 50%, if the applicable percentage is reduced pursuant
to the preceding proviso) of the excess, if any, of (1) the Net Cash
Proceeds of Sale of such Asset Sale over (2) the portion of the
Estimated Net Cash Proceeds of such Asset Sale already applied under
the preceding sentence, to be applied in the manner described above
with respect to the application of Estimated Net Cash Proceeds.
Concurrently with any prepayment of the Loans and/or reduction of the
Tranche B Commitments, the Tranche D Commitments and Revolving Loan
Commitments pursuant to this subsection 2.4A(ii)(a), Company shall
deliver to Administrative Agent an Officers' Certificate demonstrating
the derivation of the Net Cash Proceeds of Sale or Estimated Net Cash
Proceeds, as the case may be.
(b) PREPAYMENTS AND REDUCTIONS DUE TO REVERSION OF SURPLUS
ASSETS OF PENSION PLANS. Within one Business Day after the return to
Company or any of its Subsidiaries of any surplus assets of any
pension plan of Company or any of its Subsidiaries, Borrowers shall
prepay the Loans and/or the Tranche B Commitments, the Tranche D
Commitments and Revolving Loan Commitments shall be permanently
reduced in an amount (the ``NET REVERSION AMOUNT'') equal to 100% of
such returned surplus assets, net of transaction costs and expenses
incurred in obtaining such return, including incremental taxes payable
as a result thereof.
(c) PREPAYMENTS AND REDUCTIONS DUE TO ISSUANCE OF DEBT. Within
one Business Day of receipt by Company or any of its Subsidiaries of
the cash proceeds (net of underwriting discounts and commissions and
other reasonable costs associated therewith) from the issuance or sale
of any Additional Subordinated Indebtedness or other debt Securities
of Company or any of its Subsidiaries (excluding Indebtedness
permitted by subsection 6.1 (other than subsection 6.1(x)), Borrowers
shall prepay the Loans and/or the Tranche B Commitments, the Tranche D
Commitments and Revolving Loan Commitments shall be permanently
reduced in an amount equal to such net cash proceeds; PROVIDED that a
prepayment and/or reduction pursuant to this subsection 2.4A(ii)(c)
shall not be required in respect of any such net cash proceeds (``NET
ADDITIONAL DEBT PROCEEDS'') to the extent that such Net Additional
Debt Proceeds are to be applied to consummate Acquisitions in
accordance with subsection 6.7(v) within 90 days of the receipt
thereof. On or before the 90th day after receipt of any such
14
<PAGE>
Net Additional Debt Proceeds, Borrowers shall promptly make an
additional prepayment of Loans and/or the Tranche B Commitments, the
Tranche D Commitments and Revolving Loan Commitments shall be
permanently reduced in an amount equal to any Net Additional Debt
Proceeds that have for any reason not been applied to consummate
Acquisitions or to make such prepayments and/or reductions.
Concurrently with any prepayment of the Term Loans and/or reduction of
the Tranche B Commitments, the Tranche D Commitments and Revolving
Loan Commitments pursuant to this subsection 2.4A(ii)(c), Company
shall deliver to Administrative Agent an Officers' Certificate
demonstrating the derivation and application of the Net Additional
Debt Proceeds.
(d) PREPAYMENTS DUE TO REDUCTIONS OR RESTRICTIONS OF
COMMITMENTS. Company shall from time to time prepay the Swing Line
Loans and Revolving Loans to the extent necessary to give effect to
the limitations set forth in the first two paragraphs of
subsection 2.1A(iv) and the second paragraph of subsection 2.1A(iii),
as applicable. Any such mandatory prepayments shall be applied first
to the Swing Line Loans and then to the Revolving Loans, and otherwise
as specified in subsection 2.4A(iii). Borrowers shall from time to
time prepay the Tranche B Acquisition Term Loans and the Tranche D
Acquisition Term Loans to the extent necessary to give effect to the
limitations set forth in the second paragraph of
subsection 2.1A(ii)(b) and the second paragraph of subsection
2.1A(ii)(d), respectively, such prepayments to be applied as specified
in subsection 2.4A(iii).
(e) PREPAYMENTS FROM CONSOLIDATED EXCESS CASH FLOW AND UNUSED
PROCEEDS OF SALES OF PRINTING EQUIPMENT. In the event that there
shall be either (x) on April 15th of any year, Unused Proceeds of
Sales of Printing Equipment derived from the Proceeds of Sales of
Printing Equipment sold during the immediately preceding Fiscal Year
commencing with 1996 or (y) Consolidated Excess Cash Flow for any
Fiscal Year commencing with 1997, or both, Borrowers shall, on the
April 15th following the end of each such Fiscal Year, as applicable,
prepay Loans and/or the Tranche B Commitments, the Tranche D
Commitments and Revolving Loan Commitments shall be permanently
reduced in an amount equal to the amount of any such Unused Proceeds
of Sales of Printing Equipment PLUS 50% of any such Consolidated
Excess Cash Flow; PROVIDED that Borrowers shall not be required to
make any prepayment and/or reduction in respect of Consolidated Excess
Cash Flow pursuant to this subsection 2.4A(ii)(e) in the event that on
the relevant April 15th, the Leverage Ratio as of the last day of the
most recently ended Fiscal Quarter for which financial statements have
been delivered pursuant to subsections 5.1(i) or 5.1(ii) is less than
2.50:1.00. On or before the last day of each Fiscal Year, Borrowers
shall promptly make an additional prepayment of Loans and/or the
Tranche B Commitments, the
15
<PAGE>
Tranche D Commitments and Revolving Loan Commitments shall be
permanently reduced in an amount equal to any Unused Proceeds of Sales
of Printing Equipment derived from Proceeds of Sales of Printing
Equipment sold during any and all prior Fiscal Years (but not
including the Fiscal Year ending on such day) that have for any reason
whatsoever not theretofore been applied to make such prepayments
and/or reductions (including, without limitation, because such
Proceeds of Sales of Printing Equipment had become Committed Printing
Equipment Proceeds in accordance with the definition thereof but the
purchase order pursuant to which they were to have been expended
subsequently was cancelled, revoked or otherwise terminated). On each
April 15th commencing with April 15, 1997 and concurrently with the
making of any prepayment and/or reduction pursuant to this
subsection 2.4A(ii)(e) on any other date, Company shall deliver an
Officers' Certificate demonstrating the calculation of the Leverage
Ratio, if applicable, and the derivation of the amounts required to be
prepaid and/or reduced in connection with such Unused Proceeds of
Sales of Printing Equipment and such Consolidated Excess Cash Flow.
(f) PREPAYMENTS FROM PROCEEDS OF PERMITTED RECEIVABLES
TRANSACTION. Within one Business Day of receipt by Company or any of
its Subsidiaries of Receivables Proceeds from any Permitted
Receivables Transaction Borrowers shall prepay Loans and/or the
Tranche B Commitments, the Tranche D Commitments and Revolving Loan
Commitments shall be permanently reduced in an amount equal to the
aggregate amount of such Receivables Proceeds.''
16
<PAGE>
F. APPLICATION OF PREPAYMENTS. Subsection 2.4A(iii) is hereby by amended
by amending and restating it in its entirety as follows:
`` (iii) APPLICATION OF PREPAYMENTS.
(a) APPLICATION OF VOLUNTARY PREPAYMENTS BY TYPE OF LOANS AND
ORDER OF MATURITY. Any voluntary prepayments pursuant to
subsection 2.4A(i) shall be applied to the Loans as Borrowers may
elect in their notice of prepayment delivered pursuant to
subsection 2.4A(i). In the event that no such election is made, such
prepayment shall be applied FIRST to repay outstanding Acquisition
Term Loans and Existing Term Loans to the full extent thereof, SECOND
to prepay outstanding Swing Line Loans to the full extent thereof, and
THIRD to prepay outstanding Revolving Loans to the full extent
thereof; PROVIDED that any prepayment of Tranche B Term Loans pursuant
to this subsection 2.4A(iii) shall effect a corresponding reduction of
Tranche B Commitments in accordance with clause 1 of the second
paragraph of subsection 2.1A(ii)(b); PROVIDED FURTHER that any
prepayment of Tranche D Term Loans pursuant to this subsection
2.4A(iii) shall effect a corresponding reduction of Tranche D
Commitments in accordance with clause 1 of the second paragraph of
subsection 2.1A(ii)(d). Any voluntary prepayments of the Term Loans
pursuant to subsection 2.4A(i) shall be applied proportionally to
reduce the remaining Scheduled Existing Term Loan Repayment Amount,
the Scheduled Tranche A Repayment Amount, the Scheduled Tranche B
Repayment Amount, the Scheduled Tranche C Repayment Amount and the
Scheduled Tranche D Repayment Amount on a PRO RATA basis.
(b) APPLICATION OF MANDATORY PREPAYMENTS BY TYPE OF LOANS. Any
amount (the ``APPLIED AMOUNT'') required to be applied as a mandatory
prepayment of the Loans and/or a reduction of the Tranche B
Commitments, the Tranche D Commitments and Revolving Loan Commitments
pursuant to subsections 2.4A(ii)(a)-(c), 2.4A(ii)(e) or 2.4A(ii)(f)
shall be applied FIRST to prepay the principal amount of Term Loans to
the full extent thereof, SECOND to the extent of any remaining portion
of the Applied Amount, to permanently reduce the Tranche B
Commitments, the Tranche D Commitments and Revolving Loan Commitments
on a PRO RATA basis and THEN, to the extent that the Revolving Loan
Commitments are less than the Letter of Credit Usage, cash
collateralize Letters of Credit outstanding.
(c) PRO RATA APPLICATION OF MANDATORY PREPAYMENTS OF TERM LOANS
FROM ASSET SALES, PENSION PLAN SURPLUS, EXCESS CASH FLOW, UNUSED
PROCEEDS OF SALES OF PRINTING EQUIPMENT, ISSUANCE OF DEBT SECURITIES
AND PERMITTED RECEIVABLES TRANSACTIONS. Any mandatory prepayments of
the Term Loans pursuant to subsections 2.4A(ii)(a), (b), (c), (e) or
(f) shall be applied to prepay the outstanding Tranche A Acquisition
Term Loans, Tranche B
17
<PAGE>
Acquisition Term Loans, Tranche C Acquisition Term Loans, the Tranche
D Acquisition Term Loans and Existing Term Loans and to make
corresponding reductions of the Scheduled Tranche A Repayment Amount,
Scheduled Tranche B Repayment Amount, Scheduled Tranche C Repayment
Amount, Scheduled Tranche D Repayment Amount and Scheduled Existing
Term Loan Repayment Amounts, respectively, by the amount of the
related prepayments in each case on a PRO RATA basis.
(d) APPLICATION OF PREPAYMENTS TO PRINCIPAL AND INTEREST.
Except as set forth in subsection 2.2C, all prepayments of principal
shall be accompanied by payment of accrued interest on the principal
amount being prepaid and shall be applied to the payment of interest
before application to principal. Considering Term Loans, Swing Line
Loans and Revolving Loans being prepaid separately, any prepayment
shall be applied first to Prime Rate Loans to the full extent thereof
before application to Eurodollar Rate Loans, in each case in a manner
which minimizes the amount of any payments required to be made by
Company pursuant to subsection 2.6D.''
G. VOLUNTARY REDUCTIONS OF COMMITMENTS. Subsection 2.4C is hereby amended
by amending and restating it in its entirety as follows:
`` C. VOLUNTARY REDUCTIONS OF COMMITMENTS.
(i) Borrowers shall have the right, at any time and from time to
time, to terminate in whole or permanently reduce in part, without premium
or penalty, (i) the Revolving Loan Commitments in an amount up to the
amount by which the Revolving Loan Commitments exceed the Total Utilization
of Revolving Loan Commitments, (ii) the Tranche B Commitments in an amount
up to the amount by which the Tranche B Commitments exceed the aggregate
principal amount of Tranche B Acquisition Term Loans then outstanding and
(iii) the Tranche D Commitments in an amount up to the amount by which the
Tranche D Commitments exceed the aggregate principal amount of Tranche D
Acquisition Term Loans then outstanding. Borrowers shall give not less
than five Business Days' prior written notice to Administrative Agent
designating the date (which shall be a Business Day) of such termination or
reduction and the amount of any partial reduction. Promptly after receipt
of a notice of such termination or partial reduction, Administrative Agent
shall notify each Lender of the proposed termination or reduction. Such
termination or partial reduction of the Revolving Loan Commitments or
Tranche B Commitments or Tranche D Commitments, as the case may be, shall
be effective on the date specified on Borrowers' notice and shall reduce
the Revolving Loan Commitments or Tranche B Commitments or Tranche C
Commitments or Tranche D Commitments, as the case may be, of each Lender
proportionately to its Pro Rata Share. Any such partial reduction of the
Revolving Loan Commitments or Tranche B Commitments or Tranche D
Commitments shall be in an aggregate minimum amount of $5,000,000, and
integral multiples of $1,000,000 in excess of that amount.
18
<PAGE>
(ii) In the event Company is entitled to replace a non-consenting
Lender pursuant to subsection 9.7B, Borrowers shall have the right, upon
five Business Days' written notice to Administrative Agent (which notice
Administrative Agent shall promptly transmit to each of the Lenders), to
terminate the entire Revolving Loan Commitment, Tranche B Commitment, and
Tranche D Commitment of such Lender, so long as (1) all Loans, together
with accrued and unpaid interest, fees and other amounts owing to such
Lender are repaid, including without limitation amounts owing to such
Lender pursuant to subsection 2.6D, pursuant to subsection 2.4A(i)(b)
concurrently with the effectiveness of such termination (at which time
SCHEDULE 1.1A/2.1 shall be deemed modified to reflect such changed amounts)
and (2) the consents required by subsection 9.7B in connection with the
prepayment pursuant to subsection 2.4A(i)(b) shall have been obtained, and
at such time, such Lender shall no longer constitute a ``Lender'' for
purposes of this Agreement, except with respect to indemnifications under
this Agreement (including, without limitation, subsections 2.6D, 2.8, 2.7H,
9.3 and 9.4), which shall survive as to such Lender.''
H. MANDATORY REDUCTIONS OF COMMITMENTS. Subsection 2.4D is hereby amended
by amending and restating it in its entirety as follows:
``D. MANDATORY REDUCTIONS OF COMMITMENTS. The Revolving Loan
Commitments shall be permanently reduced on the date of any reduction of
Revolving Loan Commitments in accordance with the provisions of subsections
2.4A(ii)(a), (b), (c), (e) or (f). The Tranche B Commitments shall be
permanently reduced upon any mandatory prepayment of Tranche B Acquisition
Term Loans as and to the extent provided in subsection 2.4A(ii)(a), (b),
(c), (e) or (f) and on the date of any reduction of Tranche B Commitments
in accordance with the provisions of subsection 2.4A(iii)(a) and as
provided in the second paragraph of subsection 2.1A(ii)(b). The Tranche D
Commitments shall be permanently reduced upon any mandatory prepayment of
Tranche D Acquisition Term Loans as and to the extent provided in
subsection 2.4A(ii)(a), (b), (c), (e) or (f) and on the date of any
reduction of Tranche D Commitments in accordance with the provisions of
subsection 2.4A(iii)(a) and as provided in the second paragraph of
subsection 2.1A(ii)(d).''
I. USE OF PROCEEDS.
1. Subsection 2.5 is hereby amended by adding the following paragraph G.
at the end therein:
`` G. TRANCHE D ACQUISITION TERM LOANS. As of the Fourth
Amendment Effective Date Part 2, the proceeds of the Tranche D Acquisition
Term Loans (when, if and to the extent borrowed) shall be immediately
applied (i) by Company to acquire equity interests or other business assets
and pay related expenditures in connection with Acquisitions, including,
without limitation, the repayment of indebtedness and transaction expenses
in connection therewith and/or
19
<PAGE>
(ii) by a Subsidiary Borrower in connection with Redemption Acquisitions,
including, without limitation, the repayment of indebtedness and
transaction expenses in connection therewith.''
1.3 AMENDMENTS TO SECTION 5: AFFIRMATIVE COVENANTS
A. NEW SUBSIDIARIES. Subsection 5.8 of the Credit Agreement is hereby
amended by adding the following clause (vi) at the end thereof:
`` (vi) In addition to the foregoing, in the event a Subsidiary is
designated a Subsidiary Borrower hereunder, Company shall cause to be
delivered an opinion of counsel in form and substance reasonably
satisfactory to Administrative Agent and Requisite Lenders and covering,
among other things, the due authorization, execution, delivery and
enforceability of the obligations of the Subsidiary Borrower under the
Credit Agreement and the other Loan Documents to which it is a party.''
1.4 AMENDMENTS TO SECTION 6: NEGATIVE COVENANTS
A. INDEBTEDNESS. Subsection 6.1(xi) of the Credit Agreement is hereby
amended by adding the following to the end thereof:
``and (3) (x) prior to the Tranche D Acquisition Commitment Termination
Date, the amount by which the Tranche D Commitments have been reduced
pursuant to subsection 2.4C or 2.4D and (y) from and after the Tranche D
Acquisition Commitment Termination Date, the amount by which the Tranche D
Commitments have been reduced pursuant to subsection 2.4C or 2.4D prior to
the Tranche D Acquisition Commitment Termination Date; and''
B. CONTINGENT OBLIGATIONS. Subsection 6.4(vi) of the Credit Agreement is
hereby amended by changing the reference therein to ``6.1(xi)(c)'' to
``6.1(xi)(b)'' and by adding the phrase ``plus the amount specified in
subsection 6.1(xi)(b)(3) at any time'' at the end of subsection 6.4(vi).
C. RESTRICTION ON FUNDAMENTAL CHANGES. Subsection 6.7 of the Credit
Agreement is hereby amended by adding the phrase ``(including, without
limitation, Redemption Acquisitions)'' after the phrase ``and (e) make
Acquisitions'' in subsection 6.7(v).
D. CONDUCT OF BUSINESS. Subsection 6.13 of the Credit Agreement is hereby
amended by adding the following sentence at the end of the first paragraph
therein:
``World Color Foreign Sales Corp., a Barbados corporation and
wholly-owned Subsidiary of Company, (i) shall at all times be a
``FSC'' within the meaning of such term under Section 922 of the
Internal Revenue Code and (ii) shall at no time be engaged in a
business other than the business of distributing printed materials
into foreign markets and activities incidental thereto.''
20
<PAGE>
1.5 AMENDMENTS TO EXHIBITS
A. EXHIBIT XXV: FORM OF TRANCHE D ACQUISITION TERM NOTE
The Exhibits to the Credit Agreement shall be amended by adding thereto
EXHIBIT XXV, Form of Tranche D Acquisition Term Note, in the form of ANNEX A
attached hereto.
B. EXHIBIT XXVI: FORM OF COMPANY GUARANTY
The Exhibits to the Credit Agreement shall be amended by adding thereto
EXHIBIT XXVI, Form of Company Guaranty, in the form of ANNEX B attached hereto.
C. EXHIBIT XII: FORM OF SECOND AMENDED AND RESTATED GUARANTY
The Exhibits to the Credit Agreement shall be amended by amending and
restating EXHIBIT XII, Form of Amended and Restated Guaranty, in its entirety
and replacing it with EXHIBIT XII, Form of Second Amended and Restated Guaranty,
in the form of ANNEX C attached hereto.
D. EXHIBIT XXVII: FORM OF SUBSIDIARY BORROWER ELECTION
The Exhibits to the Credit Agreement shall be amended by adding thereto
EXHIBIT XXVII, Form of Subsidiary Borrower Election, in the form of ANNEX D
attached hereto.
1.6 AMENDMENTS TO SCHEDULES
A. SCHEDULE 1.1A/2.1
Schedule 1.1A/2.1 shall be amended by amending and restating it in its
entirety as attached hereto on ANNEX E.
2
LIMITED WAIVER
Subject to the terms and conditions set forth herein and in reliance
on the representations and warranties of Company herein contained, Lenders
hereby waive and modify compliance with the provisions of subsection 5.8 of the
Credit Agreement to the extent that such provisions require (a) that World Sales
(i) execute and deliver the Guaranty (or a Counterpart thereto), (ii) assume all
obligations as a ``Pledgor'' under the Security Agreement including the
obligation to pledge all shares of capital stock and other equity of any direct
or indirect Subsidiary of Company to Collateral Agent for the benefit of Secured
Parties, (iii) execute and deliver a promissory note evidencing all Intercompany
Indebtedness owed by it to Company and its Subsidiaries, and (iv) execute and
deliver a counterpart to the Security Agreement or (b) that Company pledge any
and all of the equity interest in World Sales to the Collateral Agent; PROVIDED
that World Sales (i) shall at all times be a ``FSC'' within
21
<PAGE>
the meaning of such term under Section 922 of the Internal Revenue Code, (ii)
shall at no time be engaged in a business other than the business of
distributing printed materials into foreign markets and activities incidental
thereto and (iii) shall at no time own assets (including Receivables Assets)
valued at an amount greater than $500,000.
3
CONSENTS
A. RELEASE OF OBLIGATIONS RELATING TO WORLD SALES.
Administrative Agent and Requisite Lenders hereby consent to and hereby (i)
release World Sales from any and all obligations under the Counterpart to
Guaranty, the Counterpart and Acknowledgement to Security Agreement and the
Subordinated Intercompany Demand Note, each dated as of August 19, 1997, and
hereby (ii) release the stock of World Sales previously pledged by Company as
Pledged Collateral pursuant to that certain Pledge Amendment dated as of August
19, 1997; PROVIDED that World Sales (i) shall at all times be ``FSC'' within the
meaning of such term under Section 922 of the Internal Revenue Code, (ii) shall
at no time be engaged in a business other than the business of distributing
printed materials into foreign markets and activities incidental thereto and
(iii) shall at no time own assets (including Receivable Assets) valued at an
amount greater than $500,000.
B. CONSENT OF LENDERS TO ADDITIONAL SUBORDINATED INDEBTEDNESS.
Pursuant to subsection 6.1(x) of the Credit Agreement, Administrative Agent
and Requisite Lenders hereby consent to the terms and conditions of the
Additional Subordinated Indebtedness to be issued in the Additional Subordinated
Indebtedness Refinancing on substantially the terms described in the draft
prospectus dated September 16, 1997 distributed to the Lenders and agree that
the terms thereof are satisfactory; PROVIDED that and the Administrative Agent
and Requisite Lenders hereby consent and agree that, notwithstanding subsection
2.4 of the Credit Agreement (i) the first $200,000,000 of proceeds received from
such Additional Subordinated Indebtedness Refinancing shall be applied to prepay
the Tranche C Loans and reduce the Tranche C Commitments and (ii) all additional
proceeds from such Additional Subordinated Indebtedness Refinancing shall be
applied to prepay the Revolving Loans.
4
LIMITATION OF WAIVERS, AMENDMENTS AND CONSENT
Without limiting the generality of the provisions of subsection 9.7 of
the Credit Agreement, the waivers, amendments and consent set forth above shall
be limited precisely by their terms, shall not have any force or effect with
respect to any other matter except as expressly provided above, and nothing in
this Amendment shall be deemed to:
22
<PAGE>
(a) constitute a waiver or modification of any other term, provision
or condition of the Credit Agreement or any other instrument or agreement
referred to therein; or
(b) prejudice any right or remedy that Administrative Agent or any
Lender may now have (except to the extent such right or remedy was based
upon existing defaults that will not exist after giving effect to this
Amendment) or may have in the future under or in connection with the Credit
Agreement or any other instrument or agreement referred to therein.
Except as expressly set forth herein, the terms, provisions and
conditions of the Credit Agreement and the other Loan Documents shall remain in
full force and effect and in all other respects are hereby ratified and
confirmed.
5
CONDITIONS TO EFFECTIVENESS
5.1 FOURTH AMENDMENT EFFECTIVE DATE PART 1
Sections 1.4C, 2 and 3 of this Amendment shall become effective only
upon the satisfaction of all of the following conditions precedent (the date of
satisfaction of such conditions being referred to herein as the ``FOURTH
AMENDMENT EFFECTIVE DATE PART 1''):
A. On or before the Fourth Amendment Effective Date Part 1, Company and
the Guarantors shall have delivered to Administrative Agent executed copies of
this Amendment.
B. On or before the Fourth Amendment Effective Date Part 1, Requisite
Lenders shall have delivered to Administrative Agent an executed original or
telefacsimile of a counterpart of this Amendment or shall have orally confirmed
to Administrative Agent that such Lender agreed to all of the terms and
conditions of this Amendment, as set forth herein.
5.2 FOURTH AMENDMENT EFFECTIVE DATE PART 2
Sections 1.1, 1.2, 1.3, 1.4A, 1.4B, 1.5 and 1.6 of this Amendment shall
become effective only upon the satisfaction of all of the following conditions
precedents on or prior to December 31, 1997 (the date of satisfaction of such
conditions being referred to herein as the ``FOURTH AMENDMENT EFFECTIVE DATE
PART 2''):
A. All of the conditions set forth in subsection 5.1 of this Amendment
have been satisfied.
B. On or before the Fourth Amendment Effective Date Part 2, all Lenders
shall have delivered to Administrative Agent an executed original or
telefacsimile of a counterpart of this Amendment or shall have orally confirmed
to Administrative Agent that such Lender agreed to all of the terms and
conditions of this Amendment, as set forth herein.
23
<PAGE>
C. On or before the Fourth Amendment Effective Date Part 2, Company shall
have delivered Resolutions of the Board of Directors of Company approving and
authorizing the execution, delivery and performance of this Amendment, certified
as of the Fourth Amendment Effective Date Part 2 by its corporate secretary or
an assistant secretary as being in full force and effect without modification or
amendment.
D. On or before the Fourth Amendment Effective Date Part 2, Company shall
have delivered to Administrative Agent executed originals of the Tranche D
Acquisition Term Notes for each of the Lenders which has a Tranche D Commitment
(drawn to the order of each Lender with appropriate insertions) in the principal
amount of such Lender's Tranche D Acquisition Term Loan as set forth in SCHEDULE
1.1A/2.1 annexed hereto.
E. On or before the Fourth Amendment Effective Date Part 2, Company shall
have delivered to Administrative Agent an originally executed copy of a written
opinion, dated as of the date hereof, of counsel for the Loan Parties, in form
and substance reasonably satisfactory to Administrative Agent and its counsel
and setting forth certain matters with respect to Company set forth in the
opinion of such counsel delivered on the Closing Date as they relate to this
Amendment, the Amended Agreement and the Tranche D Acquisition Term Notes.
F. On or before the Fourth Amendment Effective Date Part 2, Company shall
have delivered to Administrative Agent originally executed copies of the Company
Guaranty and the Second Amended and Restated Guaranty, each in the form as
annexed hereto.
G. On or before the Fourth Amendment Effective Date Part 2, Company
shall have received not less than $200,000,000 from the Additional Subordinated
Indebtedness Refinancing that shall have been applied to prepay the Tranche C
Loans in full and terminate the Tranche C Commitments.
6
COMPANY'S REPRESENTATIONS AND WARRANTIES
In order to induce Lenders to enter into this Amendment and to amend
the Credit Agreement in the manner provided herein, Company represents and
warrants to each Lender as of the date hereof, as of the Fourth Amendment
Effective Date Part 1 and as of the Fourth Amendment Effective Date Part 2 that
the following statements are true, correct and complete:
A. CORPORATE POWER AND AUTHORITY. Company has all requisite corporate
power and authority to enter into this Amendment and to carry out the
transactions contemplated by, and perform its obligations under, the Credit
Agreement as amended by this Amendment (the ``AMENDED AGREEMENT'').
24
<PAGE>
B. AUTHORIZATION OF AGREEMENTS. The execution and delivery of this
Amendment and the performance of the Amended Agreement have been duly authorized
by all necessary corporate action on the part of Company.
C. NO CONFLICT. The execution and delivery by Company of this Amendment
and the performance by Company of the Amended Agreement do not and will not
(i) violate any provision of any law or any governmental rule or regulation
applicable to Company or any of its Subsidiaries, the Certificate or Articles of
Incorporation or Bylaws of Company or any of its Subsidiaries or any order,
judgment or decree of any court or other agency of government binding on Company
or any of its Subsidiaries, (ii) conflict with, result in a breach of or
constitute (with due notice or lapse of time or both) a default under any
Contractual Obligation of Company or any of its Subsidiaries, (iii) result in or
require the creation or imposition of any Lien upon any of the properties or
assets of Company or any of its Subsidiaries (other than Liens created under any
of the Loan Documents in favor of Administrative Agent on behalf of Lenders), or
(iv) require any approval of stockholders or any approval or consent of any
Person under any Contractual Obligation of Company or any of its Subsidiaries,
except for such approvals or consents which will be obtained on or before the
Fourth Amendment Effective Date Part 1 and disclosed in writing to Lenders.
D. GOVERNMENTAL CONSENTS. The execution and delivery by Company of this
Amendment and the performance by Company of the Amended Agreement do not and
will not require any registration with, consent or approval of, or notice to, or
other action to, with or by, any federal, state or other governmental authority
or regulatory body.
E. BINDING OBLIGATION. This Amendment has been duly executed and
delivered by Company and, when executed and delivered, this Amendment and the
Amended Agreement will be the legally valid and binding obligations of Company,
enforceable against Company in accordance with their respective terms, except as
may be limited by bankruptcy, insolvency, reorganization, moratorium or similar
laws relating to or limiting creditors' rights generally or by equitable
principles relating to enforceability.
F. INCORPORATION OF REPRESENTATIONS AND WARRANTIES FROM CREDIT AGREEMENT.
The representations and warranties contained in Section 4 of the Credit
Agreement are and will be true, correct and complete in all material respects to
the same extent as though made on and as of that date, except to the extent such
representations and warranties specifically relate to an earlier date, in which
case they were true, correct and complete in all material respects on and as of
such earlier date.
G. ABSENCE OF DEFAULT. No event has occurred and is continuing or will
result from the consummation of the transactions contemplated by this Amendment
that would constitute an Event of Default or a Potential Event of Default.
25
<PAGE>
7
MISCELLANEOUS
A. REFERENCE TO AND EFFECT ON THE CREDIT AGREEMENT AND THE OTHER LOAN
DOCUMENTS.
(i) On and after the Fourth Amendment Effective Date Part 1 and the
Fourth Amendment Effective Date Part 2, as applicable, each reference in
the Credit Agreement to ``this Agreement'', ``hereunder'', ``hereof'',
``herein'' or words of like import referring to the Credit Agreement, and
each reference in the other Loan Documents to the ``Credit Agreement'',
``thereunder'', ``thereof'' or words of like import referring to the Credit
Agreement shall mean and be a reference to the Amended Agreement.
(ii) Except as specifically amended by this Amendment, the Credit
Agreement and the other Loan Documents shall remain in full force and
effect and are hereby ratified and confirmed.
(iii) The execution, delivery and performance of this Amendment
shall not, except as expressly provided herein, constitute a waiver of any
provision of, or operate as a waiver of any right, power or remedy of Agent
or any Lender under, the Credit Agreement or any of the other Loan
Documents.
B. FEES AND EXPENSES. Company acknowledges that all costs, fees and
expenses as described in subsection 9.3 of the Credit Agreement incurred by
Administrative Agent and its counsel with respect to this Amendment and the
documents and transactions contemplated hereby shall be for the account of
Company.
C. HEADINGS. Section and subsection headings in this Amendment are
included herein for convenience of reference only and shall not constitute a
part of this Amendment for any other purpose or be given any substantive effect.
D. APPLICABLE LAW. THIS AMENDMENT AND THE RIGHTS AND OBLIGATIONS OF THE
PARTIES HEREUNDER SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED AND ENFORCED IN
ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF NEW YORK (INCLUDING WITHOUT
LIMITATION SECTION 5-1401 OF THE GENERAL OBLIGATIONS LAW OF THE STATE OF NEW
YORK), WITHOUT REGARD TO CONFLICTS OF LAWS PRINCIPLES.
E. COUNTERPARTS; EFFECTIVENESS. This Amendment may be executed in any
number of counterparts and by different parties hereto in separate counterparts,
each of which when so executed and delivered shall be deemed an original, but
all such counterparts together shall constitute but one and the same instrument;
signature pages may be detached from multiple separate counterparts and attached
to a single counterpart so that all signature pages are physically attached to
the same document. This Amendment (other than the provisions of Sections 1, 2
and 3 hereof, the effectiveness of which are governed by Section 5 hereof) shall
become effective upon the execution of a counterpart hereof by Company, Lenders,
Syndication Agent, Distribution Agent and Administrative Agent and receipt
26
<PAGE>
by Company and Administrative Agent of written or telephonic notification of
such execution and authorization of delivery thereof.
8
ACKNOWLEDGEMENT AND CONSENT BY GUARANTORS
Each Guarantor hereby acknowledges that it has read this Amendment and
consents to the terms thereof and the inclusion of the Tranche D Acquisition
Term Loans and related obligations as obligations guarantied by such Guarantor
pursuant to the Loan Documents and further hereby confirms and agrees that,
notwithstanding the effectiveness of this Amendment, the obligations of such
Guarantor under the Guaranty and the other Loan Documents to which such
Guarantor is a party shall not be impaired or affected and the Guaranty and such
other Loan Documents are, and shall continue to be, in full force and effect and
is hereby confirmed and ratified in all respects.
[Remainder of page intentionally left blank]
27
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to
be duly executed and delivered by their respective officers thereunto duly
authorized as of the date first written above.
WORLD COLOR PRESS, INC.
By: /s/ Jennifer Adams
-------------------------
Name: Jennifer Adams
Title: Executive Vice President, Chief
Legal and Administrative Officer
THE LANMAN COMPANIES, INC.
By: /s/ Jennifer Adams
-------------------------
Name:
Title:
LANMAN LITHOTECH, INC.
By: /s/ Jennifer Adams
-------------------------
Name:
Title:
CENTRAL FLORIDA PRESS, L.C.
By: /s/ Jennifer Adams
-------------------------
Name:
Title:
NORTHEAST GRAPHICS INC.
By: /s/ Jennifer Adams
-------------------------
Name:
Title:
THE WESSEL COMPANY, INC.
By: /s/ Jennifer Adams
-------------------------
Name:
Title:
S-1
<PAGE>
IMAGE TECHNOLOGIES, INC.
By: /s/ Jennifer Adams
-------------------------
Name:
Title:
SHEA COMMUNICATIONS COMPANY
By: /s/ Jennifer Adams
-------------------------
Name:
Title:
KRUEGER ACQUISITION CORPORATION
By: /s/ Jennifer Adams
-------------------------
Name:
Title:
KRI, INC.
By: /s/ Jennifer Adams
-------------------------
Name:
Title:
RAI, INC.
By: /s/ Jennifer Adams
-------------------------
Name:
Title:
BCK 140 PARTNERSHIP
By: WORLD COLOR PRESS, INC.,
its General Partner
By: /s/ Jennifer Adams
-------------------------
Name:
Title:
S-2
<PAGE>
By: THE LANMAN COMPANIES, INC., its General
Partner
By: /s/ Jennifer Adams
-------------------------
Name:
Title:
WORLD COLOR BOOK SERVICES, INC.
By: /s/ Jennifer Adams
-------------------------
Name:
Title:
THE JOHNSON & HARDIN CO.
By: /s/ Jennifer Adams
-------------------------
Name:
Title:
JOHNSON & HARDIN ENTERPRISES,
INC.
By: /s/ Jennifer Adams
-------------------------
Name:
Title:
S-3
<PAGE>
BANKERS TRUST COMPANY,
individually as a Lender and
as Administrative Agent and as
Collateral Agent
By: /s/ Mary Jo Jolly
-------------------------
Name: Mary Jo Jolly
Title: Assistant Vice President
BANK OF AMERICA NT & SA,
as a Lender
By: /s/ John Pocalyko
-------------------------
Name: John Pocalyko
Title:
CITIBANK, N.A.,
as a Lender
By: /s/ Charles Foster
-------------------------
Name: Charles Foster
Title: Vice President & Attorney-in-Fact
ABN AMRO BANK, NV, NEW YORK BRANCH, as Lender
By: ABN Amro North America,
Inc.,
as Agent
By: /s/ Frances Or Logan
-------------------------
Name: Frances Or Logan
Title: Group Vice President
By: /s/ R. Scott Boris
-------------------------
Name: R. Scott Boris
Title: AVP
BANK OF MONTREAL,
as Lender
By: /s/ Richard McClorey
-------------------------
Name: Richard McClorey
Title: Director
S-4
<PAGE>
THE BANK OF NOVA SCOTIA
as Lender
By: /s/ J. Alan Edwards
-------------------------
Name: J. Alan Edwards
Title: Authorized Signatory
BANK OF SCOTLAND,
as Lender
By: /s/ Annie Chin Tat
-------------------------
Name: Annie Chin Tat
Title: Vice President
BANK OF TOKYO - MITSUBISHI TRUST COMPANY, as
Lender
By: /s/ Peter Stearn
-------------------------
Name: Peter J. Stearn
Title: Assistant Vice President
BANQUE PARIBAS,
as Lender
By: /s/ John J. McCormick, III
--------------------------
Name: John J. McCormick, III
Title: Vice President
By: /s/ Mary Finnegan
-------------------------
Name: Mary Finnegan
Title: Director
CIBC, INC., as Lender
By: /s/ Timothy E. Doyle
-------------------------
Name: Timothy E. Doyle
Title: Managing Director CIBC Wood Gundy
Securities Corp., as Agent
S-5
<PAGE>
FLEET NATIONAL BANK,
as Lender
By: /s/ Jeff Lynch
-------------------------
Name: Jeff Lynch
Title: Vice President
THE FUJI BANK, LIMITED, NEW YORK BRANCH,
as Lender
By: /s/ Teiji Teramoto
-------------------------
Name: Teiji Teramoto
Title: Vice President & Manager
THE INDUSTRIAL BANK OF JAPAN, LTD., as Lender
By: /s/ Takuya Houjo
-------------------------
Name: Takuya Houjo
Title: Senior Vice President
THE LONG-TERM CREDIT BANK OF JAPAN, LTD.
CHICAGO BRANCH,
as Lender
By: /s/ Mark A. Thompson
-------------------------
Name: Mark A. Thompson
Title: Senior Vice President &
Team Leader
PNC BANK, KENTUCKY, INC.,
as Lender
By: /s/ Ralph A. Phillips
-------------------------
Name: Ralph A. Phillips
Title: Vice President
S-6
<PAGE>
THE SANWA BANK, LIMITED,
as Lender
By: /s/ Dominic J. Sorrasso
-------------------------
Name: Dominic J. Sorrasso
Title: Vice President
BANKBOSTON, N.A. (formerly know as The First
National Bank of Boston), as Lender
By: /s/ Julie V. Jalelian
-------------------------
Name: Julie V. Jalelian
Title: Vice President
CREDIT SUISSE FIRST BOSTON
(formerly known as Credit
Suisse), as Lender
By: /s/ Chris T. Horgan
-------------------------
Name: Chris T. Horgan
Title: Vice President
By: /s/ Daniel R. Wenger
-------------------------
Name: Daniel R. Wenger
Title: Associate
THE DAI-ICHI KANGYO BANK, LTD.,
as Lender
By: /s/ Stephanie R. Rogers
-------------------------
Name: Stephanie R. Rogers
Title: Vice President
DRESDNER BANK AG, NEW YORK AND GRAND
CAYMAN BRANCHES,
as Lender
By: /s/ William E. Lambert
-------------------------
Name: William E. Lambert
Title: Assistant Vice President
By: /s/ Brian Haughney
-------------------------
Name: Brian Haughney
S-7
<PAGE>
Title: Assistant Treasurer
THE SAKURA BANK, LIMITED, as
Lender
By: /s/ Yoshikazu Nagura
-------------------------
Name: Yoshikazu Nagura
Title: Vice President
THE SUMITOMO BANK, LIMITED, NEW YORK
BRANCH, as Lender
By: /s/ John C. Kissinger
-------------------------
Name: John C. Kissinger
Title: Joint General Manager
THE SUMITOMO TRUST & BANKING CO., LTD.,
NEW YORK BRANCH, as Lender
By: /s/ Suraj P. Bhatia
-------------------------
Name: Suraj P. Bhatia
Title: Senior Vice President
Manager, Corporate Finance Dept.
THE YASUDA TRUST AND BANKING CO., LTD.,
NEW YORK BRANCH, as Lender
By: /s/ Rohn M. Laudenschlacer
--------------------------
Name: Rohn M. Laudenschlacer
Title: Senior Vice President
THE TOKAI BANK, LTD., NEW YORK BRANCH,
as Lender
By: /s/ Karou Oda
-------------------------
Name: Karou Oda
Title: Associate General Manager
S-8
<PAGE>
MERITA BANK LTD NEW YORK BRANCH
as Lender
By: /s/ Eric I. Mann
-------------------------
Name: Eric I. Mann
Title: Vice President
By: /s/ Frank Maffei
-------------------------
Name: Frank Maffei
Title: Vice President
BAYERISCHE VEREINSBANK AG, NEW YORK
BRANCH, as Lender
By: /s/ Ralf Enke
-------------------------
Name: Ralf Enke
Title:
By: /s/ Sylvia Chong
-------------------------
Name: Sylvia Chong
Title:
THE BANK OF NEW YORK,
as Lender
By: /s/ William G. C. Dakin
-------------------------
Name: William G. C. Dakin
Title: Vice President
FIRST UNION NATIONAL BANK,
as Lender
By: /s/ Michael R. Chalian
-------------------------
Name: Michael R. Chalian
Title: Senior Vice President
S-9
<PAGE>
GIROCREDIT BANK
AKTIENGESELLSCHAFT DER SPARKASSEN,
GRAND CAYMAN ISLAND BRANCH, as Lender
By: /s/ John Redding
-------------------------
Name: John Redding
Title: Vice President
By: /s/ John Rannion
-------------------------
Name: John Rannion
Title: FVP
BANK LEUMI TRUST COMPANY NEW
YORK, as Lender
By: /s/ Gloria Bucher
-------------------------
Name: Gloria Bucher
Title: Vice President
CAISSE NATIONALE DE CREDIT
AGRICOLE, as Lender
By: /s/ John McCloskey
-------------------------
Name: John McCloskey
Title: Vice President
GOLDMAN SACHS CREDIT PARTNERS
L.P., as Lender
By: /s/ Stephen J. McGuinness
-------------------------
Name: Stephen J. McGuinness
Title: Authorized Signatory
S-10
<PAGE>
LEHMAN COMMERCIAL PAPER INC.,
as Lender
By: /s/ Michelle Swanson
-------------------------
Name: Michelle Swanson
Title: Authorized Signatory
MORGAN STANLEY SENIOR FUNDING, INC.,
as Lender
By: /s/ Michael T. McLaughlin
-------------------------
Name: Michael T. McLaughlin
Title: Vice President
THE TOYO TRUST AND BANKING CO.
LTD.,
as Lender
By: /s/ Takashi Mikumo
-------------------------
Name: Takashi Mikumo
Title: Vice President
S-11
<PAGE>
ALLIED IRISH BANKS PLC, CAYMAN
ISLANDS BRANCH,
as Lender
By: /s/ Marcia Meeker
-------------------------
Name: Marcia Meeker
Title: Vice President
By: /s/ W. J. Strickland
-------------------------
Name: W. J. Strickland
Title:
GULF INTERNATIONAL BANK B.S.C.,
as Lender
By: /s/ Thomas E. Fitzherbert
-------------------------
Name: Thomas E. Fitzherbert
Title: Vice President
By: /s/ Issa N. Baconi
-------------------------
Name: Issa N. Baconi
Title: Senior Vice President &
Branch Manager
THE MITSUI TRUST AND BANKING
COMPANY, LIMITED,
as Lender
By: /s/ Eiichi Akama
-------------------------
Name: Eiichi Akama
Title: Vice President
S-12
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONDENSED CONSOLIDATED BALANCE SHEET AS OF SEPTEMBER 28, 1997 AND THE CONDENSED
CONSOLIDATED STATEMENT OF OPERATIONS FOR THE NINE MONTHS ENDED SEPTEMBER 28,
1997 OF WORLD COLOR PRESS, INC. AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO
SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-28-1997
<PERIOD-END> SEP-28-1997
<CASH> 24,202
<SECURITIES> 0
<RECEIVABLES> 204,722
<ALLOWANCES> 0
<INVENTORY> 211,728
<CURRENT-ASSETS> 503,141
<PP&E> 1,495,203
<DEPRECIATION> 615,752
<TOTAL-ASSETS> 1,966,932
<CURRENT-LIABILITIES> 322,730
<BONDS> 984,992
0
0
<COMMON> 338
<OTHER-SE> 451,033
<TOTAL-LIABILITY-AND-EQUITY> 1,966,932
<SALES> 1,441,266
<TOTAL-REVENUES> 1,441,266
<CGS> 1,179,198
<TOTAL-COSTS> 1,179,198
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 61,099
<INCOME-PRETAX> 62,682
<INCOME-TAX> 26,326
<INCOME-CONTINUING> 36,356
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 36,356
<EPS-PRIMARY> 1.05
<EPS-DILUTED> 1.05
</TABLE>
