<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C.
---------------
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES AND EXCHANGE ACT OF 1934
Date of Report (date of earliest event reported): July 12, 1999
WORLD COLOR PRESS, INC.
(Exact Name of Registrant as Specified in Charter)
DELAWARE
(State or Other Jurisdiction of Incorporation)
001-11802
(Commission File Number)
37-1167902
(I.R.S. Employer Identification No.)
THE MILL, 340 PEMBERWICK ROAD, GREENWICH, CT 06831
(Address of principal executive offices)(Zip Code)
(203) 532-4200
(Registrant's Telephone Number, Including Area Code)
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2
Item 5. OTHER EVENTS
On July 12, 1999, World Color Press, Inc. (the "Company"), Quebecor
Printing Inc., a corporation amalgamated under the laws of Canada ("Quebecor
Printing") and Printing Acquisition Inc., a Delaware corporation and a wholly
owned subsidiary of Quebecor Printing ("Acquisition Sub") entered into an
Agreement and Plan of Merger (the "Merger Agreement").
The Merger Agreement contemplates the acquisition of the Company by
Quebecor Printing in two-steps, subject to the possibility of an alternative
acquisition structure discussed in the next paragraph. In the first step, upon
the terms and conditions set forth in the Merger Agreement, Acquisition Sub will
commence a tender offer (the "Offer") to purchase for cash up to 23,500,000 (the
"Maximum Number") of the outstanding shares of Common Stock, par value $0.01 per
share, of the Company ("Common Stock") at a cash price of $35.69 per share of
Common Stock. The Offer is conditioned, among other things, on (i) there being
validly tendered and not withdrawn prior to the expiration of the Offer a number
of shares of Common Stock (together with any shares of Common Stock owned by
Qubecor Printing or Acquisition Sub) constituting greater than 50% of the voting
power (determined on a fully-diluted basis), of all the securities of the
Company entitled to vote generally in a merger (such condition, the "Minimum
Condition") and (ii) any waiting periods under the Hart Scott Rodino Antitrust
Improvements Act having expired or been terminated (such condition, the "HSR
Condition"). In the second step, after the consummation of the Offer,
Acquisition Sub will be merged with and into the Company, with the Company being
the surviving corporation in the merger. Pursuant to the merger, if the Maximum
Number of shares of Common Stock are purchased in the Offer, each issued and
outstanding share of Common Stock (other than shares held in the treasury of the
Company and shares owned by Acquisition Sub, which will be canceled without
payment), will be converted into the right to receive 1.6455 subordinate voting
shares of Quebecor Printing ("Subordinate Voting Shares"). In the event that
less than the Maximum Number of shares of Common Stock is purchased in the
Offer, each issued and outstanding share of Common Stock (other than shares
canceled without payment as set forth above), will be converted into the right
to receive an amount of cash and a number of Subordinate Voting Shares as set
forth in Section 2.5(b) of the Merger Agreement.
Notwithstanding the foregoing, pursuant to the Merger Agreement, if on
September 13, 1999, either or both of the Minimum Condition or HSR Condition has
not been satisfied, Acquisition Sub shall, unless Quebecor Printing and the
Company otherwise agree, terminate the Offer. Following such termination of the
Offer, the parties to the Merger Agreement shall seek to consummate the merger
of Acquisition Sub with and into the Company in a one-step transaction pursuant
to which each issued and outstanding share of Common Stock (other than shares
canceled without payment as set forth above), will be converted into the right
to receive (i)$22.00 in cash and (ii) .6311 Subordinate Voting Shares. As a
result of such merger (or the merger described in the immediately preceding
paragraph), the Company will become a wholly owned subsidiary of Quebecor
Printing.
Under the Merger Agreement, the Company has agreed not to solicit,
initiate or encourage the submission of an alternative Acquisition Proposal (as
such term is defined in the Merger Agreement). The Board of Directors of the
Company may, however, respond to unsolicited Acquisition Proposals in a manner
consistent with its fiduciary duties under
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3
applicable law. Among the actions which the Company may take in connection with
an alternative Acquisition Proposal is to withdraw its recommendation of the
transactions contemplated by the Merger Agreement or to enter into an agreement
for the consummation of such alternative Acquisition Proposal. The Merger
Agreement may by its terms be terminated under certain circumstances related to
actions taken in connection with an alternative Acquisition Proposal, and the
Merger Agreement provides that the Company will pay a termination fee to
Quebecor Printing in the event the Merger Agreement is terminated under certain
circumstances related to actions taken in connection with an Alternative
Acquisition Proposal. In particular, if (A) any third party has on or prior to
July 26, 1999 (x) made a bona fide unsolicited Acquisition Proposal (as such
term is defined in the Merger Agreement) or (y) requested that the Company enter
into negotiations or discussions concerning an Acquisition Proposal or possible
Acquisition Proposal and has indicated a potential price or range of prices in
connection therewith, and (B) a termination fee is required to be paid to
Quebecor Printing as a result of the Company entering into a written agreement
to accept an Acquisition Proposal with any such third party or such third party
acquiring 50% or more of the outstanding shares of Common Stock, the amount of
the termination fee to be paid by the Company to Quebecor Printing shall be
$10,662,000. In each other circumstance, the amount of such termination fee
shall be $42,648,000.
A copy of the Merger Agreement is attached hereto as Exhibit 2.1, and
is incorporated herein by reference.
Pursuant to a Stock Option Agreement dated as of July 12, 1999 between
Quebecor Printing and the Company (the "Stock Option Agreement"), upon the terms
and conditions of the Stock Option Agreement, the Company has granted to
Quebecor Printing an option (the "Option") to purchase a number of shares of
Common Stock at a price per share in cash of $35.69 in the event that a
termination fee is required to be paid by the Company to Quebecor Printing
pursuant to the Merger Agreement. In the event that a termination fee of
$10,662,000 is required to be paid under the Merger Agreement, the Option
shall be exercisable for 3,760,000 shares of Common Stock (representing
approximately 9.9% of the outstanding shares of Common Stock) and in the
event that a termination fee of $42,648,000 is required to be paid under the
Merger Agreement, the Option shall be exercisable for 7,558,300 shares of
Common Stock (representing approximately 19.9% of the outstanding shares of
Common Stock). Notwithstanding the foregoing, under no circumstances shall
the aggregate profit realized by Quebecor Printing in connection with (i) the
applicable termination fee under the Merger Agreement and (ii) the Option
exceed the amount of the applicable termination fee under the Merger
Agreement. In addition, the ability of Quebecor Printing to exercise the
Option terminates upon the occurrence of certain events as set forth in the
Stock Option Agreement. A copy of the Stock Option Agreement is attached
hereto as Exhibit 10.1 and is incorporated herein by reference.
Pursuant to a Tender,Voting and Option Agreement (the "TVO Agreement")
dated as of July 12, 1999 among APC Associates, GR Associates, WCP Associates,
KKR Partners II, L.P., KKR Associates (collectively the "KKR Stockholders"),
Robert G. Burton, Marc L. Reisch, Jennifer L. Adams, Robert B. Lewis, James E.
Lillie (such individuals, together with KKR Stockholders, the "Stockholders")
and Quebecor Printing, the Stockholders have agreed, among other things, to
tender the shares of Common Stock owned by them in the Offer; provided that no
--------
Stockholder who is a natural person is required to tender any of such
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4
Stockholder's shares of Common Stock if such Stockholder would be subject to
liability under Section 16 of the Securities Exchange Act of 1934, as amended.
The Stockholders have further agreed to vote any such shares owned by them in
favor of the merger, and against any action which would reasonably be expected
to result in a failure of the conditions set forth in the Merger Agreement to be
satisfied. Finally, subject to the terms and conditions of the TVO Agreement,
the Stockholders have granted to Quebecor Printing an option to purchase all,
but not less than all, of the Stockholders' shares of Common Stock at a price of
$35.69 per share in cash. Such option is exercisable upon the occurrence of the
same events that trigger the exercisability of the Option described above. In
addition, in the event that Quebecor Printing receives any per share
consideration in any sale or other disposition of shares of Common Stock
purchased pursuant to exercise of such option that is in excess of $35.69 per
share, Quebecor Printing shall immediately remit to the Stockholders on a pro
rata basis 50% of such excess amount with respect to each share of Common Stock
so sold or otherwise disposed of. The ability of Quebecor Printing to
exercise the option to purchase the Stockholders' shares of Common Stock, and
the obligation of the Stockholders to tender their shares of Common Stock
into the Offer and vote such shares in favor of the merger, each terminate
upon the occurrence of specified events as set forth in the TVO Agreement. A
copy of the TVO Agreement is attached hereto as Exhibit 10.2, and is
incorporated herein by reference.
A copy of the Company's and Quebecor Printing's joint press release
dated July 12, 1999 is attached hereto as Exhibit 99.1 and is incorporated
herein by reference.
Item 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS.
(c) Exhibits.
2.1 Agreement and Plan of Merger, dated as of July 12,
1999, by and among World Color Press, Inc., Quebecor
Printing Inc. and Printing Acquisition Inc.
10.1 Tender, Voting and Option Agreement dated as of July
12, 1999 by and among Quebecor Printing Inc. and each
of the parties listed on the signature page thereto.
10.2 Stock Option Agreement dated as of July 12, 1999
between Quebecor Printing Inc. and World Color Press,
Inc.
99.1 Press Release dated July 12, 1999.
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5
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 hereunto duly authorized.
WORLD COLOR PRESS, INC.
By: /s/ Jennifer L. Adams
---------------------------------
Name: Jennifer L. Adams
Title: Vice Chairman, Chief
Legal and Administrative Officer
and Secretary
Date: July 13, 1999
<PAGE>
6
EXHIBIT INDEX
Exhibit No. Exhibit
- ----------- -------
2.1 Agreement and Plan of Merger, dated as of July 12, 1999, by
and among World Color Press, Inc., Quebecor Printing Inc. and
Quebecor Sub Inc.
10.1 Tender, Voting and Option Agreement dated as of July 12, 1999
by and among Quebecor Printing Inc. and each of the parties
listed on the signature page thereto.
10.2 Stock Option Agreement dated as of July 12, 1999 between
Quebecor Printing Inc. and World Color Press, Inc.
99.1 Press Release dated July 12, 1999.
<PAGE>
Exhibit 2.1
AGREEMENT AND PLAN OF MERGER
AMONG
QUEBECOR PRINTING INC.
PRINTING ACQUISITION INC.
AND
WORLD COLOR PRESS, INC.
Dated as of
July 12, 1999
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
<S> <C>
ARTICLE I THE OFFER......................................................................................1
1.1. The Offer..............................................................................1
1.2. Company Action.........................................................................3
1.3. Directors..............................................................................4
ARTICLE II THE MERGER....................................................................................5
2.1. The Merger.............................................................................5
2.2. Effect of the Merger...................................................................5
2.3. Consummation of the Merger.............................................................5
2.4. Certificate of Incorporation and By-Laws; Directors and Officers.......................5
2.5. Conversion of Securities...............................................................6
2.6. Stock Options..........................................................................7
2.7. Closing of Company Transfer Books......................................................9
2.8. Exchange of Certificates...............................................................9
2.9. Funding of Paying Agent...............................................................10
2.10. Taking of Necessary Action; Further Action............................................10
2.11. Dissenting Shares.....................................................................10
2.12. Fractional Shares.....................................................................11
2.13. No Further Ownership Rights in Common.................................................11
ARTICLE III REPRESENTATIONS AND WARRANTIES OF PARENT AND PURCHASER......................................11
3.1. Organization and Qualification........................................................11
3.2. Authority Relative to this Agreement..................................................12
3.3. Financing Arrangements................................................................13
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3.4. Ownership of Shares...................................................................13
3.5. Subsidiaries..........................................................................13
3.6. Capitalization........................................................................14
3.7. Commission Filings....................................................................14
3.8. Litigation............................................................................15
3.9. Employees and Labor...................................................................15
3.10. Taxes and Tax Returns.................................................................15
3.11 Employee Benefit Plans................................................................15
3.12. Compliance with Laws..................................................................17
3.13. Environmental Matters.................................................................18
3.14. Intellectual Property.................................................................20
3.15. Year 2000.............................................................................20
3.16. No Stockholder Vote Required..........................................................20
3.17. Parent Consents.......................................................................21
3.18. Subscription Rights...................................................................21
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF THE COMPANY................................................21
4.1. Organization and Qualification........................................................21
4.2. Subsidiaries..........................................................................21
4.3. Capitalization........................................................................22
4.4. Authority Relative to this Agreement..................................................22
4.5. Commission Filings....................................................................23
4.6. Litigation............................................................................24
4.7. Employees and Labor...................................................................25
4.8. Taxes and Tax Returns.................................................................25
4.9 Employee Benefit Plans................................................................25
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4.10. Stockholder Vote Required.............................................................27
4.11. Compliance with Laws..................................................................27
4.12. Properties............................................................................28
4.13. Environmental Matters.................................................................28
4.14. Intellectual Property.................................................................28
4.15. Insurance.............................................................................29
4.16. Year 2000.............................................................................29
ARTICLE V CONDUCT OF BUSINESS PENDING THE MERGER........................................................29
5.1. Conduct of Business by the Company Pending the Merger.................................29
5.2. Certain Actions by Parent Pending the Merger..........................................31
ARTICLE VI ADDITIONAL AGREEMENTS........................................................................31
6.1. Action of Company Stockholders........................................................31
6.2. Company Proxy Statement...............................................................32
6.3. Preparation of the Form F-4 and the Parent Proxy Statement; Parent Stockholders
Meeting...............................................................................32
6.4. Expenses..............................................................................33
6.5. Additional Agreements.................................................................33
6.6. Limitation on Negotiations............................................................34
6.7. Notification of Certain Matters.......................................................35
6.8. Listing...............................................................................35
6.9. Access to Information.................................................................35
6.10. Stockholder Claims....................................................................35
6.11. Treatment of Employee Compensation and Benefits.......................................36
6.12. Indemnification Rights................................................................37
6.13. Parent Guarantee......................................................................38
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6.14. Affiliates............................................................................39
ARTICLE VII CONDITIONS..................................................................................39
7.1. Conditions to Obligations of Each Party to Effect the Merger..........................39
7.2. Additional Conditions to Obligation of Parent and Purchaser to Effect the
Merger................................................................................40
7.3. Additional Conditions to Obligation of the Company to Effect the Merger...............40
ARTICLE VIII TERMINATION, AMENDMENT AND WAIVER..........................................................41
8.1. Termination...........................................................................41
8.2. Amendment.............................................................................42
8.3. Fees Upon Termination.................................................................42
8.4. Effect of Termination.................................................................43
8.5. Waiver................................................................................44
ARTICLE IX GENERAL PROVISIONS...........................................................................44
9.1. Brokers...............................................................................44
9.2. Public Statements.....................................................................44
9.3. Notices...............................................................................44
9.4. Interpretation........................................................................45
9.5. Representations and Warranties........................................................45
9.6. Severability..........................................................................46
9.7. Miscellaneous.........................................................................46
9.8. Counterparts..........................................................................46
9.9. Survival..............................................................................47
9.10. Third Party Beneficiaries.............................................................47
</TABLE>
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<PAGE>
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER dated as of July 12, 1999 (the
"AGREEMENT") by and among QUEBECOR PRINTING INC., a corporation amalgamated
under the laws of Canada ("PARENT"), PRINTING ACQUISITION INC., a Delaware
corporation and a subsidiary of Parent ("PURCHASER"), and WORLD COLOR PRESS,
INC., a Delaware corporation (the "COMPANY").
W I T N E S S E T H:
WHEREAS, the Board of Directors of the Company has determined that it
would be fair to, advisable and in the best interests of the Company's
stockholders to enter into this Agreement and the Board of Directors of Parent
and Purchaser have approved this Agreement providing for the acquisition of the
Company by Purchaser pursuant to a tender offer (the "OFFER") by Purchaser to
purchase for cash up to 23,500,000 (the "MAXIMUM Number") of the outstanding
shares of Common Stock, par value $0.01, of the Company (the "SHARES"), at a
price of $35.69 in cash per Share; followed by a merger (the "MERGER") of
Purchaser with and into the Company, all upon the terms and subject to the
conditions set forth herein; and
WHEREAS, in furtherance thereof, the respective Boards of Directors of
Parent, Purchaser and the Company have approved this Agreement, the Offer and
the Merger; and
WHEREAS, contemporaneously with the execution and delivery of this
Agreement and as a condition to Parent's willingness to enter this Agreement,
(i) Parent and certain stockholders of the Company are entering into the Tender,
Voting and Option Agreement in substantially the form of EXHIBIT C hereto (the
"TENDER, VOTING AND OPTION AGREEMENT"), and (ii) the Company, Parent and
Purchaser are entering in to the Stock Option Agreement in substantially the
form of EXHIBIT D hereto (the "STOCK OPTION AGREEMENT").
NOW THEREFORE, in consideration of the premises and the mutual
agreements, provisions and covenants herein contained, the parties hereby agree
as follows:
ARTICLE I
THE OFFER
1.1. THE OFFER.
(a) Provided that this Agreement shall not have been terminated in
accordance with Section 8.1, Purchaser shall, as soon as reasonably practical
after the date hereof, commence within the meaning of Rule 14d-2 under the
Securities Exchange Act of 1934, as amended, including the rules and regulations
promulgated thereunder (the "EXCHANGE ACT"), the Offer but in any event within
five business days (as such term is
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defined in Rule 14e-1 under the Exchange Act) from the date of public
announcement of the execution hereof. The Offer will be subject only to the
satisfaction or waiver of the conditions set forth in Annex I hereto (the "OFFER
CONDITIONS"), any of which conditions may be waived in the sole discretion of
Purchaser (other than the Minimum Condition (as such term is defined in Annex
I), which may only be waived with the consent of the Board of Directors of the
COMPANY). Assuming all of the conditions to consummation of the Offer are
satisfied, Purchaser shall consummate the Offer as promptly as possible.
(b) Parent and Purchaser covenant and agree that upon the terms and
subject to the conditions of this Agreement (including the Offer Conditions),
Purchaser shall accept for payment all Shares, up to the Maximum Number of
Shares, that are validly tendered on or prior to the expiration of the Offer and
not timely withdrawn, as soon as it is permitted to do so under applicable law,
and shall pay for such Shares promptly thereafter. Purchaser may, at any time,
assign to one or more corporations, which are direct or indirect wholly owned
subsidiaries of Parent, the right to purchase all or any portion of the Shares
tendered pursuant to the Offer, but any such transfer or assignment shall not
relieve Purchaser and Parent of their obligations under the Offer or prejudice
the rights of tendering stockholders to receive payment for Shares properly
tendered and accepted for payment in accordance with the terms of this
Agreement.
(c) The Offer shall initially be scheduled to expire 20 business days
following the commencement thereof; PROVIDED that, unless this Agreement shall
have been terminated pursuant to Section 8.1, Purchaser shall, subject to
Section 1.1(e), extend the Offer from time to time in the event that, at a
then-scheduled expiration date, the Offer Conditions have not been satisfied
(other than incurable breaches of representations, warranties and covenants,
PROVIDED that the determination of whether a breach is incurable is not in the
sole discretion of Purchaser) each such extension not to exceed (unless
otherwise consented to by the Company) the lesser of 10 additional business days
or such fewer number of days that the Company and Parent reasonably believe are
necessary to cause such Offer Condition to be satisfied; PROVIDED that, under no
circumstances shall any such extension be less than the minimum number of days
required by the Exchange Act or the rules and regulations promulgated thereunder
or by applicable law and PROVIDED further that Purchaser shall not be required
to extend the Offer more than 15 business days after making a public
announcement that all of the Offer Conditions other than the Minimum Condition
have been satisfied. Except as provided in Section 1.1(d) and Section 1.1(e),
Purchaser shall not terminate the Offer without purchasing Shares pursuant to
the Offer. As soon as reasonably practical on the date the Offer is commenced,
Purchaser shall file with the Securities and Exchange Commission (the
"COMMISSION") a Tender Offer Statement on SCHEDULE 14D-1 (together with all
amendments and supplements thereto, the "SCHEDULE 14D-1") with respect to the
Offer, that shall comply in all material respects with the provisions of such
Schedule and all applicable Federal securities laws, and shall contain an Offer
to Purchase and forms of the related letter of transmittal and summary
advertisement (which Schedule 14D-1, Offer to Purchase and other documents are
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referred to herein collectively as the "TENDER OFFER DOCUMENTS"). Parent and
Purchaser agree that the Company and its counsel shall be given an opportunity
to review the Schedule 14D-1 before it is filed with the Commission. Parent,
Purchaser and the Company each agree promptly to correct any information
provided by it for use in the Offer Documents that shall have become false or
misleading in any material respect, and Parent and Purchaser further agree to
take all steps necessary to cause the Schedule 14D-1 as so corrected to be filed
with the Commission and the other Offer Documents as so corrected to be
disseminated to holders of Shares in each case as and to the extent required by
applicable securities laws. Parent will provide the Company with a copy of any
comments Parent or Purchaser may receive from the Commission or its staff with
respect to the Tender Offer Documents promptly following receipt thereof.
Purchaser shall not, without the prior written consent of the Board of Directors
of the Company, (i) decrease or change the form of the consideration payable in
the Offer, (ii) reduce the number of Shares sought pursuant to the Offer, (iii)
amend the Offer Conditions or impose additional conditions to the Offer, (iv)
amend or change any term of the Offer or (v) waive the Minimum Condition.
(d) In the event that this Agreement has been terminated pursuant to
Section 8.1, Purchaser shall, and Parent shall cause Purchaser to, promptly
terminate the Offer without accepting any Shares for payment.
(e) If on September 13, 1999, either or both of the Minimum Condition
or paragraph (b) of the Offer Conditions has not been satisfied, Purchaser
shall, unless Parent and the Company otherwise agree, terminate the Offer, and
the parties shall, subject to the terms and conditions hereof, seek to
consummate the Merger in accordance with Section 2.5(c).
1.2. COMPANY ACTION. The Company hereby consents to the Offer and
represents that its Board of Directors has determined by a unanimous vote that
the Offer and the Merger are fair to, advisable and in the best interests of,
the Company and its stockholders, has approved the Offer and the Merger, has
approved and adopted this Agreement, and has resolved to recommend acceptance of
the Offer to, and adoption of this Agreement by, the Company's stockholders (it
being understood that, notwithstanding anything in this Agreement to the
contrary, if the Company's Board of Directors shall conclude, acting in good
faith, after receiving advice from outside counsel or its financial advisor,
that failure to modify or withdraw its recommendation would constitute a breach
of their fiduciary duties under applicable law, the Board of Directors may so
modify or withdraw its recommendation and such modification or withdrawal shall
not constitute a breach of this Agreement). The Company further represents that
Morgan Stanley & Co. Incorporated has delivered its written opinion to the Board
of Directors of the Company that, as of the date hereof, the consideration to be
received by holders of Shares pursuant to the Offer and the Merger is fair to
such holders from a financial point of view. Contemporaneously with the
commencement of the Offer, but in no event prior to such date as the Purchaser
has filed the Tender Offer Documents with the Commission, the Company shall file
with the Commission and mail to holders of
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record and beneficial owners of Shares a Solicitation/Recommendation Statement
on SCHEDULE 14D-9 with respect to the Offer (such SCHEDULE 14D-9, as amended
from time to time, the "SCHEDULE 14D-9"), which shall contain the recommendation
of the Company's Board of Directors set forth in the preceding sentence. Parent,
Purchaser and the Company each agree promptly to correct any information
provided by it for use in the Schedule 14D-9 that shall have become false or
misleading in any material respect, and the Company further agrees to take all
steps necessary to cause the Schedule 14D-9 as so corrected to be filed with the
Commission and disseminated to holders of Shares, in each case as and to the
extent required by applicable securities laws. The Company shall from time to
time furnish Purchaser with such additional information, if any, including
updated or additional lists of stockholders, mailing labels and lists of
securities positions, and other assistance as the Purchaser may reasonably
request in order to be able to communicate the Offer to the stockholders of the
Company. Subject to the requirements of law, and except for such steps as are
necessary to disseminate the Offer Documents, Parent, Purchaser and each of
their respective affiliates and associates shall hold in confidence the
information contained in any of such lists, labels or additional information
and, if this Agreement is terminated, shall promptly redeliver to the Company
all copies (of whatever nature) of such information then in their possession.
1.3. DIRECTORS.
(a) Promptly upon the purchase by Purchaser of Shares pursuant to the
Offer, Purchaser shall be entitled to designate such number of directors,
rounded up to the next whole number, on the Board of Directors of the Company as
will give Purchaser, subject to compliance with Section 14(f) of the Exchange
Act, representation on the Board of Directors of the Company equal to the
product of (a) the number of directors on the Board of Directors of the Company
(after giving effect to the appointment of such directors) and (b) the
percentage that such number of Shares so purchased bears to the number of Shares
outstanding, and the Company shall, upon request by Purchaser, promptly (i)
increase the size of the Board of Directors of the Company to the extent
permitted by its Amended and Restated Certificate of Incorporation and By-Laws
(and amend the By-Laws, if so required, to increase the size of the Board of
Directors to allow for such additional directors); and/or (ii) use reasonable
best efforts to secure the resignations of such number of directors as is
necessary to enable Purchaser's designees to be elected to the Board of
Directors of the Company (and shall hold a Board meeting for such purpose); and
(iii) shall cause Purchaser's designees to be so elected. At any time after the
execution hereof, at the request of Purchaser, the Company shall promptly take,
at its expense, all action necessary to effect any such election, including
mailing to its stockholders the information required by Section 14(f) of the
Exchange Act and Rule 14f-1 promulgated thereunder in form and substance
reasonably satisfactory to Purchaser and its counsel. Purchaser shall supply the
Company and be solely responsible for any information included in the filings
with the Commission with respect to themselves and their nominees, officers,
directors and affiliates required by said Section 14(f) and Rule 14f-1.
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(b) Following the election or appointment of Purchaser's designees
pursuant to this Section 1.3 and prior to the Effective Time, any amendment or
waiver of any term or condition of this Agreement, any amendment of the
provisions of the Amended and Restated Certificate of Incorporation or By-Laws
of the Company affecting indemnification, any termination of this Agreement by
the Company, any extension by the Company of the time for the performance of any
of the obligations or other acts of Purchaser or Parent or waiver or assertion
of any of the Company's rights hereunder, and any other consent or action by the
Board of Directors with respect to this Agreement, will require the separate
concurrence of a majority of the continuing directors of the Company who hold
office as of the date of this Agreement or if there are no such continuing
directors, then a majority of the directors of the Company then in office who
were not designated by Purchaser (the "DISINTERESTED DIRECTORS") and such
concurrence shall constitute the authorization of the Board of Directors of the
Company. The number of Disinterested Directors shall be not less than two. Any
person who is a director on the date of this Agreement, but who, in order to
carry out the provisions of this Section 1.3, is not a director at the Effective
Time, shall be entitled to receive all payments at the time such director
resigns as if he or she had been a director as of the Effective Time.
ARTICLE II
THE MERGER
2.1. THE MERGER. At the Effective Time (as defined in Section 2.3), in
accordance with this Agreement and the General Corporation Law of the State of
Delaware, as amended (the "DELAWARE LAW"), Purchaser shall be merged with and
into the Company, the separate existence of Purchaser (except as may be
continued by operation of law) shall cease, and the Company shall continue as
the surviving corporation. The Company, in its capacity as the corporation
surviving the Merger, sometimes is referred to herein as the "Surviving
Corporation."
2.2. EFFECT OF THE MERGER. The Surviving Corporation shall possess all
the rights, privileges, powers and franchises, of a public as well as a private
nature, and be subject to all the restrictions, disabilities and duties, of each
of Purchaser and the Company (collectively, the "CONSTITUENT CORPORATIONS"); the
Surviving Corporation shall be vested with the rights, privileges, powers and
franchises, all properties and assets and all debts due on whatever account, and
all other things in action or belonging to, and all and every other interest of,
each of the Constituent Corporations; and all debts, liabilities and duties of
each of the Constituent Corporations shall thenceforth attach to the Surviving
Corporation and may be enforced against it to the same extent as if such debts,
liabilities and duties had been incurred or contracted by it, all with the
effect set forth in Section 259 of the Delaware Law.
2.3. CONSUMMATION OF THE MERGER. As soon as is practicable after the
satisfaction or waiver of the conditions set forth in Article VII, and in no
event later than five business days after such satisfaction or waiver, the
parties to this Agreement will cause a
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Certificate of Merger to be filed with the Secretary of State of the State of
Delaware, in such form as required by, and executed in accordance with, the
relevant provisions of the Delaware Law. The Merger shall be effective at such
time as the Certificate of Merger is duly filed with the Secretary of State of
the State of Delaware or at such later time as specified in the Certificate of
Merger (the "EFFECTIVE TIME").
2.4. CERTIFICATE OF INCORPORATION AND BY-LAWS; DIRECTORS AND OFFICERS.
The Certificate of Incorporation of the Company, as in effect immediately prior
to the Effective Time, shall be amended and restated at the Effective Time so as
to read in its entirety in the form set forth as EXHIBIT A hereto and, as so
amended, shall be the Certificate of Incorporation of the Surviving Corporation
immediately after the Effective Time. The By-Laws of Purchaser, as in effect
immediately prior to the Effective Time, shall be the By-Laws of the Surviving
Corporation immediately after the Effective Time and the directors of the
Company shall submit their resignations at the Effective Time. The directors of
Purchaser holding office immediately prior to the Effective Time shall be the
directors of the Surviving Corporation immediately after the Effective Time. The
officers of the Company holding office immediately prior to the Effective Time
shall be the officers (holding the same offices as they held with the Company)
of the Surviving Corporation immediately after the Effective Time until such
time as their successors shall have been duly appointed.
2.5. CONVERSION OF SECURITIES. At the Effective Time, by virtue of the
Merger and without any action on the part of Purchaser, the Company or the
holder of any of the following securities:
(a) If Purchaser shall have purchased, pursuant to the Offer, the
Maximum Number of Shares, each Share issued and outstanding immediately prior to
the Effective Time (other than Shares to be canceled pursuant to Section 2.5(d))
shall be canceled, extinguished and converted into the right to receive a number
(rounded to the nearest one-millionth of a share) of fully paid and
nonassessable, Subordinate Voting Shares of Parent ("PARENT STOCK"), equal to
the Exchange Ratio (as defined below).
(b) If Purchaser shall have purchased, pursuant to the Offer, less than
the Maximum Number of Shares (the number of Shares so paid for and purchased in
the Offer being referred to herein as the "PURCHASED SHARE Number"), each Share
issued and outstanding immediately prior to the Effective Time (other than any
Shares to be canceled pursuant to Section 2.5(d) and other than Shares with
respect to which the provisions of Section 2.11 are applicable) shall be
cancelled, extinguished and converted into the right to receive, (i) cash, in an
amount equal to the product of the Cash Proration Factor (as defined below)
multiplied by $35.69 and (ii) a number (rounded to the nearest one-millionth of
a share) of fully paid and non-assessable shares of Parent Stock equal to the
product of (x) 1 minus the Cash Proration Factor multiplied by (y) the Exchange
Ratio.
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(c) If the Offer is terminated pursuant to Section 1.1(e), each Share
issued and outstanding immediately prior to the Effective Time (other than any
Shares to be canceled pursuant to Section 2.5(d)) shall be canceled,
extinguished and converted into the right to receive, (i) cash, in an amount
equal to $22.00 and (ii) .6311 shares of Parent Stock.
(d) Each Share held in the treasury of the Company and each Share owned
by Purchaser, in each case immediately prior to the Effective Time, shall
automatically be canceled and retired without any conversion thereof and no
payment or distribution shall be made with respect thereto.
(e) Each share of capital stock of Purchaser issued and outstanding
immediately prior to the Effective Time shall be converted and changed into one
validly issued, fully paid and nonassessable share of such capital stock of the
Surviving Corporation.
(f) If prior to the Effective Time, Parent or the Company, as the case
may be, should (in the case of Parent, after obtaining the consent required by
Section 5.2 hereof; in the case of the Company, after obtaining the consent
required by Section 5.1 hereof) split, combine or otherwise reclassify the
Parent Stock or the Shares, or pay (or set a record date that is prior to the
Effective Time with respect to) a stock dividend or other stock distribution in
Parent Stock or the Shares, or otherwise change the Parent Stock or Shares into
any other securities, or make any other such stock dividend or distribution with
respect to the Parent Stock or the Shares in capital stock of Parent or the
Company or of their respective subsidiaries in respect of the Parent Stock or
the Shares, respectively, then the Merger Consideration and the Exchange Ratio
will be appropriately adjusted to reflect such split, combination, dividend or
other distribution or change to provide the holders of Shares the same economic
effect as contemplated by this Agreement prior to such event.
(g) Share certificates surrendered for exchange by any person
constituting an affiliate of the Company for purposes of Rule 145 under the
Securities Act shall not be exchanged for certificates representing Parent Stock
until Parent has received a written agreement from such person as provided in
Section 6.14.
(h) For purposes of this Agreement, "EXCHANGE RATIO" is equal to 1.6455
shares of Parent Stock per Share. The "CASH PRORATION FACTOR" shall be a
fraction, of which (A) the numerator is equal to (x) the Maximum Number minus
(y) the Purchased Share Number, if any, and (B) the denominator is equal to the
number of Shares issued and outstanding immediately prior to the Effective Time
(excluding Shares to be canceled pursuant to Section 2.5(d) and other than
Shares with respect to which the provisions of Section 2.11 are applicable) (the
"FINAL OUTSTANDING NUMBER"). The consideration provided for in Sections 2.5(a),
(b), or (c), as applicable, together with the consideration provided for in
Section 2.12, is referred to herein as the "MERGER CONSIDERATION".
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(i) At the Effective Time, all Shares shall no longer be outstanding
and shall be cancelled and retired and shall cease to exist (in the case of the
Shares to be cancelled pursuant to Section 2.5(d), without the payment of any
consideration therefor), and each certificate (a "CERTIFICATE") formerly
representing any of such Shares, other than the Shares to be cancelled pursuant
to Section 2.5(d), shall thereafter represent only the right to receive the
Merger Consideration.
2.6. STOCK OPTIONS. As soon as practicable following the date of this
Agreement, the Board of Directors of the Company (or, if appropriate, any
committee administering the Stock Plans (as defined below)) shall adopt such
resolutions or take such other actions as may be required to effect the
following:
(a) adjust the terms of all outstanding employee or director stock
options to purchase Shares and any related stock appreciation rights ("COMPANY
STOCK OPTIONS") granted under any stock option or stock purchase plan, program
or arrangement of the Company (the "STOCK PLANS"), to provide that, at the
consummation of the Offer, each Company Stock Option outstanding immediately
prior to the consummation of the Offer shall (except to the extent that Parent
and the holder of a Company Stock Option otherwise agree prior to the
consummation of the Offer or unless the holder of such Company Stock Option
shall have elected otherwise by written notice to Parent prior to the date 10
business days prior to the consummation of the Offer) be cancelled in exchange
for (A) a cash payment from the Surviving Corporation to be made promptly
following the consummation of the Offer (subject to any applicable withholding
taxes) equal in value to (1) the product of (x) the total number of shares of
Company Common Stock subject to such Company Stock Option (the "OPTION SHARES"),
multiplied by (y) $22.00, multiplied by (z) the excess of $35.69 over the
exercise price per share of Common Stock subject to such Company Stock Option,
divided by (2) $35.69, and (B) a number of shares of Parent Stock to be issued
promptly following the Effective Time equal to (1) the product of (x) the number
of Option Shares, multiplied by (y) 0.6311, multiplied by (z) the excess of
$35.69 over the exercise price per share of Common Stock subject to such Company
Stock Option, divided by (2) $35.69; PROVIDED, HOWEVER, that if the Offer is
terminated pursuant to Section 1.1(e), references to "consummation of the Offer"
above shall be deemed replaced by the term "Effective Time." The calculation of
the amounts described in (A) and (B) of this Section 2.6(a) may also be
expressed with the following formulas:
(A) = (Option Shares) X ($22.00) X ($35.69 - Exercise Price)
-------------------------
$35.69
(B) = (Option Shares) X (0.6311) X ($35.69 - Exercise Price)
-------------------------
$35.69
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(b) except as provided herein or as otherwise agreed to by the parties,
the Stock Plans and any other plan, program or arrangement providing for the
issuance or grant of any other interest in respect of the capital stock of the
Company or any subsidiary shall terminate as of the Effective Time, and the
Company shall ensure that following the Effective Time no holder of a Company
Stock Option nor any participant in any Stock Plan shall have any right
thereunder to acquire equity securities of the Company or the Surviving
Corporation; and
(c) prior to the expiration date of the Offer (or if the Offer is
terminated pursuant to Section 1.1(e), immediately prior to the Effective Time),
any restrictions imposed pursuant to any Stock Plan on any shares of Common
Stock of the Company (such shares, "COMPANY RESTRICTED STOCK") shall (subject,
if the Offer has not been terminated pursuant to Section 1.1(e), to the
consummation of the Offer) lapse and each share of Company Restricted Stock
shall be subject to the same terms and conditions of this Agreement as the
Shares; PROVIDED, HOWEVER, that in the event the Offer is terminated, such
restrictions shall be deemed to have not lapsed until immediately prior to the
Effective Time.
(d) To the extent that Parent is not a "foreign private issuer" within
the meaning of Rule 3b-4(c) under the Exchange Act, Parent shall take all steps
to cause any acquisitions of Parent equity securities (including derivative
securities) in connection with this Agreement by each individual who (i) is a
director or officer of the Company or (ii) at the Effective Time will become a
director or officer of Parent to become exempt under Rule 16b-3 promulgated
under the Exchange Act.
2.7. CLOSING OF COMPANY TRANSFER BOOKS. At the Effective Time, the
stock transfer books of the Company shall be closed with respect to Shares
issued and outstanding immediately prior to the Effective Time and no further
transfer of such Shares shall thereafter be made on such stock transfer books.
If, after the Effective Time, valid certificates previously representing such
Shares are presented to the Surviving Corporation or the Paying Agent (as
defined in Section 2.8), they shall be exchanged as provided in Section 2.8.
2.8. EXCHANGE OF CERTIFICATES. Prior to the Effective Time, Purchaser
shall designate a bank or trust company, reasonably satisfactory to the Company,
to act as agent (the "PAYING AGENT") for the holders of Shares to receive the
funds and certificates necessary to effect the exchange for the Merger
Consideration of certificates which, immediately prior to the Effective Time,
represented Shares entitled to payment pursuant to Section 2.5(a), 2.5(b) or
2.5(c). As soon as practicable after the Effective Time, the Surviving
Corporation shall cause the Paying Agent to mail a transmittal form (the "LETTER
OF TRANSMITTAL") (which shall specify that delivery shall be effected, and risk
of loss and title to the certificates theretofore representing such Shares shall
pass, only upon proper delivery to the Paying Agent) to each holder of record of
certificates theretofore representing such Shares advising such holder of the
procedure for surrendering to the Paying Agent such certificates for payment of
the Merger Consideration in respect
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thereof. If any certificate of Parent Stock is to be issued in the name of, or
if cash is to be remitted to, a person other than the person in whose name the
certificates for Shares surrendered for exchange are registered on the books of
the Company, it shall be a condition of the exchange that the certificate so
surrendered shall be properly endorsed and the person requesting such exchange
shall pay to the Paying Agent all transfer or other taxes required by reason of
the issuance of such check in the name of a person other than the registered
owner of the certificates surrendered, or shall establish to the satisfaction of
the Paying Agent that such taxes have been paid or are not applicable.
Notwithstanding the foregoing, neither the Paying Agent nor any party hereto
shall be liable to a holder of certificates theretofore representing Shares for
any amount paid to a public official pursuant to any applicable abandoned
property, escheat or similar laws. Upon the surrender and exchange of a
certificate theretofore representing Shares, together with such Letter of
Transmittal duly completed and validly executed in accordance with the
instructions thereto, and such other documents as may be required pursuant to
such instructions, the holder shall be entitled to receive a certificate for the
number of full shares of Parent Stock and the amount of cash, if any, without
interest thereon, to which he or she is entitled hereunder, less only such
amount required to be withheld under applicable backup withholding federal
income tax regulations, and such certificate shall forthwith be cancelled. Until
so surrendered and exchanged, each such certificate shall represent solely the
right to receive the Merger Consideration into which the Shares it theretofore
represented shall have been converted pursuant to Sections 2.5(a), 2.5(b) or
2.5(c), without interest, and the Surviving Corporation shall not be required to
pay the holder thereof the Merger Consideration to which such holder otherwise
would be entitled; provided that customary and appropriate certifications and
indemnities allowing for payment against lost or destroyed certificates shall be
permitted. If any certificates representing any Shares shall not have been
surrendered prior to five years after the Effective Time (or immediately prior
to such earlier date on which any payment in respect thereof would otherwise
escheat to or become the property of any governmental unit or agency), the
payment in respect of such certificates shall, to the extent permitted by
applicable law, become the property of the Surviving Corporation, free and clear
of all claims or interest of any person previously entitled thereto.
2.9. FUNDING OF PAYING AGENT. Parent or Purchaser shall transmit by
wire, or other acceptable means, to the Paying Agent prior to the Effective Time
funds required for the cash portion of the exchange of Shares and cancellation
of Company Options in accordance with this Agreement. The Paying Agent shall
agree to hold such funds in trust and deliver such funds (in the form of checks
of the Paying Agent) in accordance with this Section and Section 2.8. Any
portion of such funds which has not been paid to holders of the Shares or
Options pursuant to Section 2.8 within six months after the Effective Time shall
promptly be paid to the party which provided such funds, and thereafter holders
of certificates representing the right to receive the cash into which Shares or
Options formerly represented by such certificates shall have been converted
pursuant to Section 2.5(a), 2.5(b), 2.5(c) or 2.6 who have not theretofore
complied with
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<PAGE>
Section 2.8 shall look solely to the Surviving Corporation or the Paying Agent
for payment of the amount of cash to which they are entitled pursuant to this
Agreement.
2.10. TAKING OF NECESSARY ACTION; FURTHER ACTION. Parent, Purchaser and
the Company shall use all reasonable efforts to take all such actions as may be
necessary or appropriate in order to effectuate the Offer and the Merger as
promptly as possible. If, at any time after the Effective Time, any further
actions are necessary or desirable to carry out the purposes of this Agreement
or to vest the Surviving Corporation with full right, title and possession to
all assets, property, rights, privileges, immunities, powers and franchises of
either or both of the Constituent Corporations, the officers and directors of
the Surviving Corporation are fully authorized in the name of either or both of
the Constituent Corporations or otherwise to take, and shall take, all such
actions.
2.11. DISSENTING SHARES. Notwithstanding anything in this Agreement to
the contrary, if stockholders of the Company are entitled to appraisal rights
under Section 262 of the Delaware Law, Shares that are issued and outstanding
immediately prior to the Effective Time and that are held by stockholders who
(i) have not voted such Shares in favor of the Merger and (ii) have delivered
timely a written demand for appraisal of such Shares in the manner provided in
Section 262 of the Delaware Law shall not be cancelled and converted into the
right to receive the Merger Consideration described in Section 2.5(a), 2.5(b) or
2.5(c), unless and until such holder shall have failed to perfect, or
effectively shall have withdrawn or lost, such holder's right to appraisal and
payment under the Delaware Law. If such holder shall have so failed to perfect,
or effectively shall have withdrawn or lost such right, such holder's Shares
shall thereupon be deemed to have been cancelled and converted as described in
Sections 2.5(a), 2.5(b) and 2.5(c), at the Effective Time, and each Share shall
represent solely the right to receive the appropriate Merger Consideration. From
and after the Effective Time, no stockholder who has demanded appraisal rights
as provided in Section 262(d) of the Delaware Law shall be entitled to vote his
or her Shares for any purpose or to receive payment of dividends or other
distributions with respect to his or her Shares (except dividends and other
distributions payable to stockholders of record at a date which is prior to the
Effective Time). The Company will give Purchaser prompt notice of all written
demands received by the Company for appraisal of Shares.
2.12. FRACTIONAL SHARES.
(a) No certificates or scrip or shares of Parent Stock representing
fractional shares of Parent Stock shall be issued upon the surrender for
exchange of Certificates and such fractional interests will not entitle the
owner thereof to vote or to have any rights of a stockholder of Parent or a
holder of shares of Parent Stock.
(b) Notwithstanding any other provision of this Agreement, each holder
of Shares exchanged pursuant to the Merger and each holder of Company Stock
Options who would otherwise have been entitled pursuant to this Agreement to
receive a fraction of a share of Parent Stock (after taking into account all
certificates delivered by such
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<PAGE>
holder) shall receive, in lieu thereof, cash (without interest) in an amount
equal to the product of (i) such fractional part of a share of Parent Stock
multiplied by (ii) $21.6875.
2.13. NO FURTHER OWNERSHIP RIGHTS IN COMMON. From and after the Effective Time,
the holders of Shares which were outstanding immediately prior to the Effective
Time shall cease to have any rights with respect to such Shares except as
otherwise provided in this Agreement or by applicable law. All shares of Parent
Stock issued and cash paid upon the surrender of Certificates in accordance with
the terms hereof shall be deemed to have been issued or paid in full
satisfaction of all rights pertaining to the Shares.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF
PARENT AND PURCHASER
Parent and Purchaser hereby represent and warrant to the Company as
follows:
3.1. ORGANIZATION AND QUALIFICATION. Parent has been duly incorporated
and is validly existing as a corporation and in good standing under the laws of
Canada and has full corporate power and authority to own its properties and
conduct its business as presently owned and conducted, except where such failure
to be so incorporated, existing and in good standing or to have such power and
authority, individually or in the aggregate, would not reasonably be expected to
have a Material Adverse Effect (as defined below). Parent is duly qualified as a
foreign corporation and in good standing in each jurisdiction in which the
character of its properties owned or leased or the nature of its activities
makes such qualification necessary, except where the failure to be so qualified,
individually or in the aggregate, would not reasonably be expected to have a
Material Adverse Effect. Purchaser has been duly incorporated and is validly
existing as a corporation and in good standing under the laws of the State of
Delaware and has the full corporate power and authority to conduct its business
as presently conducted, except where such failure to be so incorporated,
existing and in good standing or to have such power and authority, individually
or in the aggregate, would not reasonably be expected to have a Material Adverse
Effect (as defined below). Purchaser has been formed solely for the purpose of
engaging in the transactions contemplated hereby, has engaged in no other
business activities and has no liabilities other than liabilities that, upon
merger of Purchaser and the Company, would not result in a breach or violation
by the Surviving Corporation of the covenants contained in (i) the Indenture
dated as of February 22, 1999, between the Company and The Bank of New York, as
Trustee, relating to the 7 3/4% Senior Subordinated Notes Due 2009; (ii) the
Indenture dated as of November 20, 1998, between the Company and The Bank of New
York, as Trustee, relating to the 8 3/8% Senior Subordinated Notes Due 2008;
(iii) the Indenture dated as of October 8, 1997,
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between the Company and State Street Bank, as Trustee, relating to the 6%
Convertible Senior Subordinated Notes Due 2007, (iv) Participation Agreement,
dated as of December 21, 1993 among World Color Press, Inc., General Electric
Capital Corporation, State Street Bank and Trust Company of Connecticut,
National Association and State Street Bank and Trust Company of California, N.A.
and ancillary documents related thereto; (v) Participation Agreement, dated as
of July 1, 1998 among World Color Press, Inc., General Electric Capital
Corporation, State Street Bank and Trust Company of Connecticut, National
Association and State Street Bank and Trust Company of California, N.A. and
ancillary documents related thereto; (vi) Master Lease Agreement, dated as of
May 11, 1998 by and between BancBoston Leasing Inc. and World Color Press, Inc.,
and ancillary documents related thereto; or (vii) Chattel Leasing Loan and
Security Agreement, dated as of December 20, 1994, by and among World Color
Press, Inc., the lenders named on the signature pages thereto and such other
lenders that may become parties thereto, and BancBoston Leasing Inc., and
ancillary documents related thereto. The copies of the Articles of Amalgamation
of the Parent, dated January 1, 1990, as amended, the Certificate of
Incorporation of the Purchaser, and the By-Laws of each of Parent and the
Purchaser previously delivered to the Company are true, correct and complete as
of the date hereof. When used in connection with Parent or any of its
subsidiaries, the term "Material Adverse Effect" means any change or effect that
is or would be materially adverse to the business, financial condition or
results of operations of Parent and its subsidiaries, taken as a whole, other
than any such effect attributable to or resulting from (i) the public
announcement or consummation of the transactions contemplated by this Agreement
including, without limitation, the loss of customers or employees resulting
therefrom (ii) any change in general economic conditions, financial market
conditions or in conditions affecting Parent's industry generally, (iii) any act
or omission of Parent or any of its subsidiaries taken with the prior consent of
the Company pursuant to Section 5.2 or (iv) actions taken by Parent or any of
its subsidiaries at the specific request of the Company.
3.2. AUTHORITY RELATIVE TO THIS AGREEMENT. Each of Parent and Purchaser
has the requisite corporate power and authority to enter into this Agreement and
to carry out its respective obligations hereunder. The execution and delivery of
this Agreement by Parent and Purchaser and the consummation by Parent and
Purchaser of the transactions contemplated hereby have been duly authorized by
the Boards of Directors of Parent and Purchaser, and no other corporate
proceedings (other than such consents which have already been obtained) on the
part of Parent or Purchaser are necessary to authorize this Agreement and the
transactions contemplated hereby. This Agreement has been duly executed and
delivered by Parent and Purchaser and constitutes a valid and binding obligation
of each such company, enforceable in accordance with its terms, except to the
extent that enforceability thereof may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or other similar laws relating to or
affecting the enforcement of creditors rights generally or by equitable
principles. None of Parent or Purchaser is subject to or obligated under any
provision of (a) its respective Certificate of Incorporation or By-Laws, (b) any
contract, (c) any license, franchise or permit or (d) any law, regulation,
order, judgment or decree, which would be breached or violated or in
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respect of which a right of termination or acceleration or any encumbrance on
any of its or any of its subsidiaries assets could be created by its execution,
delivery and performance of this Agreement and the consummation by it of the
transactions contemplated hereby, other than consent requirements that have
already been satisfied and, in the cases of clauses (b), (c) and (d), any such
breaches or violations which will not, individually or in the aggregate, have a
Material Adverse Effect. Other than in connection with or in compliance with the
provisions of the Delaware Law, the Exchange Act, the securities or blue-sky
laws of the various states of the United States and the provinces of Canada and
the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, (the
"H-S-R ACT"), no authorization, consent or approval of or filing with, any
public body, court or authority is necessary on the part of Parent or Purchaser
for the consummation by Parent and Purchaser of the transactions contemplated by
this Agreement, except for such authorizations, consents, approvals and filings
as to which the failure to obtain or make would not, individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect on Parent or
Purchaser or on the ability of Parent or Purchaser to perform their respective
obligations hereunder.
3.3. FINANCING ARRANGEMENTS. Purchaser shall have funds available to it
on the Expiration Date sufficient to purchase the Shares and enable the
Surviving Corporation to pay all amounts payable in consideration of the
cancellation of the Company Stock Options in accordance with the terms of this
Agreement and the refinancing of all indebtedness of the Company and its
subsidiaries required to be refinanced in connection with the transactions
contemplated by this Agreement.
3.4. OWNERSHIP OF SHARES. As of the date hereof, none of Parent,
Purchaser or any of their subsidiaries owns (beneficially or otherwise) any
Shares (except for Shares that may be held in any of their pension or employee
benefit plans).
3.5. SUBSIDIARIES. Each material subsidiary of Parent has been duly
incorporated or organized and is validly existing as a corporation or other
legal entity and is in good standing in its respective jurisdiction of
organization and has full corporate or organizational power and authority to own
its properties and conduct its businesses as presently owned and conducted,
except where such failure to be so incorporated or organized, existing and in
good standing or to have such power and authority, individually or in the
aggregate, would not reasonably be expected to have a Material Adverse Effect.
Each material subsidiary of Parent is duly qualified as a foreign corporation or
other legal entity and in good standing in each jurisdiction in which the
character of its properties owned or leased or the nature of its activities
makes such qualification necessary except where the failure to be so qualified,
would not reasonably be expected to have a Material Adverse Effect.
3.6. CAPITALIZATION.
(a) As of July 8, 1999, the authorized equity capitalization of Parent
consists of an unlimited number of Multiple Voting Shares, no par value, of
which
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62,984,552 are outstanding, an unlimited number of Subordinate Voting Shares, no
par value, of which 59,603,587 are outstanding and an unlimited number of
preferred shares, of which 12,000,000 are outstanding. All of the outstanding
shares of Parent's capital stock are validly issued, fully paid and
nonassessable. The aggregate number of outstanding awards of shares of Parent
Stock that have been issued pursuant to Parent's stock option plans as of July
8, 1999 is 2,568,613.
(b) Except as described in paragraph (a) above, there are no options,
warrants, conversion privileges or other rights, agreements, arrangements or
commitments obligating Parent or any of its subsidiaries to issue or sell any
shares of capital stock of Parent or of any of its subsidiaries or securities or
obligations of any kind convertible into or exchangeable for any shares of
capital stock of Parent or any of its subsidiaries. The holders of the
outstanding Subordinate Voting Shares are not entitled to any preemptive or
other similar rights.
3.7. COMMISSION FILINGS. Parent has made available to the Company
copies of Parent's (i) Annual Reports on Form 40-F for the fiscal years ended
December 31, 1997 and 1998, (ii) Parent's Current Reports on Form 6-K for 1999,
(iii) proxy statements relating to Parent's meetings of stockholders (whether
annual or special) during the years 1997 through 1999, inclusive, and (iv)
filings under the Securities Act of 1933, as amended (the "SECURITIES ACT"),
since January 1, 1997, in each case as filed with the Commission. Since January
1, 1997, Parent has filed all reports, registration statements and other
documents required to be filed under the Exchange Act and the rules and
regulations thereunder, and all such reports, registration statements and other
documents complied (except to the extent revised or superseded by a subsequent
public filing with the Commission prior to the date hereof), in all material
respects, with the requirements of the Exchange Act, such compliance to be
determined, to the extent applicable, in accordance with the standards applied
to Parent Reports in the following two sentences. As of their respective dates,
Parent's Annual Report for 1998, Parent's Current Reports on Form 6-K with
respect to events which occurred in 1999 and Parent's 1999 Proxy Statement
(together, the "PARENT Reports") (except to the extent revised or superseded by
a subsequent public filing with the Commission prior to the date hereof) did not
contain any untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein, in
light of the circumstances under which they were made, not misleading. The
audited consolidated financial statements and unaudited consolidated interim
financial statements of Parent (including any related notes and schedules)
included in the reports referred to in clauses (i) and (ii) of the first
sentence of this paragraph have been prepared in accordance with Canadian
generally accepted accounting principles ("CANADIAN GAAP") applied on a
consistent basis during the periods involved (except as may be indicated in the
notes thereto) and (except to the extent revised or superseded by financial
statements included in a subsequent public filing with the Commission prior to
the date hereof) fairly present the consolidated financial position of Parent
and its consolidated subsidiaries as of the dates thereof and the consolidated
results of their operations and cash flows for the periods then ended, subject,
in the case of the unaudited consolidated interim financial statements, to
normal
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year-end adjustments and any other adjustments described therein, and the fact
that the interim financial statements were prepared in accordance with the rules
and regulations of the Commission and, therefore, certain information required
by Canadian GAAP may have been omitted. Except as set forth in Parent Reports,
since March 31, 1999, (i) there has not been a Material Adverse Effect, and (ii)
except as permitted by this Agreement, there has been (1) no declaration,
setting aside or payment of any dividend or other distribution by Parent in
respect of Parent Stock, and (2) no material change in the accounting principles
as reflected in the first footnote of the audited financial statements of Parent
for the fiscal year ending December 31, 1998.
3.8. LITIGATION. Except as disclosed in the Parent Reports, there are
no claims, actions, proceedings, or investigations pending or, to the knowledge
of Parent, threatened in writing against Parent or any of its subsidiaries or
any of their officers or directors (in their capacity as such) before any court
or governmental or regulatory authority or body which would reasonably be
expected to result in a Material Adverse Effect and neither Parent nor any of
its subsidiaries or any of their officers or directors (in their capacity as
such) are subject to any writs, injunctions or decrees which would reasonably be
expected to result in a Material Adverse Effect.
3.9. EMPLOYEES AND LABOR. Except as disclosed in Parent Reports, there
is no pending or, to the knowledge of Parent or any subsidiary, threatened,
dispute between Parent or any subsidiary and their present or past employees
other than such disputes as do not or would not reasonably be expected to result
in a Material Adverse Effect.
3.10. TAXES AND TAX RETURNS. Except for such failures to file or pay as
would not reasonably be expected to result in a Material Adverse Effect or as
disclosed in Parent Reports, Parent and each of its subsidiaries have timely
filed all tax returns, declarations and information statements that they are
required to file and have timely paid all taxes shown thereon except to the
extent that such taxes are being contested in good faith. Parent's consolidated
liability for taxes is adequately provided for by reserves except for any
failure to provide reserves that would not reasonably be expected to result in a
Material Adverse Effect. As used in this Agreement, the term "TAXES" includes
all taxes of any nature whatsoever and however denominated, including, without
limitation, income, capital, franchise, sales, gross receipts, occupation, use,
severance, real and personal property, employment, excise, goods and services,
stamp, impost, governmental fees, environmental, transfer, duties and all other
charges, as well as penalties and interest thereon, imposed by any government or
instrumentality, whether federal, state, provincial, local, foreign or other.
3.11. EMPLOYEE BENEFIT PLANS.
(a) No liability under Title IV of ERISA or under sections 82-86 of the
Ontario Pension Benefits Act (the "PBA") and related regulation under that Act
has been incurred by Parent or any Parent ERISA Affiliate that has not been
satisfied in full, other
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than liability that, individually or in the aggregate, would not reasonably be
expected to have a Material Adverse Effect and no condition exists that presents
a material risk to Parent or any Parent ERISA Affiliate of incurring a liability
under such Title or such provisions of the PBA, other than liability for premium
payments to the Pension Benefit Guaranty Corporation or Pension Benefits
Guarantee Fund assessments and contributions in the ordinary course of business,
which premiums, assessments or contributions have been or will be paid when due,
and other than liability that, individually or in the aggregate, would not
reasonably be expected to have a Material Adverse Effect.
(b) Neither Parent nor any Parent ERISA Affiliate, nor any of the
Parent Plans, nor any trust created thereunder, nor any trustee or administrator
thereof has engaged in any prohibited transactions (within the meaning of
Section 406 of ERISA and Section 4975 of the Code) or engaged in any
transactions prohibited by any applicable Canadian federal or provincial pension
benefits standards legislation or by the Income Tax Act (Canada) (the "ITA")
with respect to any Parent Plan registered under such legislation in connection
with which Parent or any Parent ERISA Affiliate could, either directly or
indirectly, incur any liability (or liabilities) that either individually or the
aggregate would reasonably be expected to have a Material Adverse Effect. The
term "PARENT PLAN" means each bonus, deferred compensation, incentive
compensation, stock purchase, stock option, severance pay, medical, life or
other insurance, profit-sharing, or pension plan, program, agreement or
arrangement, and each other employee benefit plan, program, agreement or
arrangement, sponsored, maintained or contributed to or required to be
contributed to by Parent or by any trade or business, whether or not
incorporated, that together with Parent would be deemed a "single employer" with
Parent under Section 414 of the Code (a "PARENT ERISA AFFILIATE") for the
benefit of any employee or director or former employee or former director of
Parent or any Parent ERISA Affiliate.
(c) There has been no change in either the financial position or funded
status of the Parent Plans that are subject to Title IV of ERISA or applicable
Canadian federal or provincial pension benefits standards legislation since the
date of the information relating to the financial position and funded status of
such plans contained in the most recent Parent Form 40-F filed with the SEC or
actuarial reports filed with applicable regulatory authorities under Canadian
federal or provincial pension benefits standards legislation, other than such
changes that individually or in the aggregate would not reasonably be expected
to have a Material Adverse Effect.
(d) To the knowledge of the Parent, each of the Parent Plans that is
intended to satisfy the requirements of Section 125, 401(a) or 501(c)(9) of the
Code satisfies such requirements except where the failure to do so would not
either individually or in the aggregate reasonably be expected to have a
Material Adverse Effect. Each of the Parent Plans has been operated and
administered in compliance with its terms and applicable laws, including but not
limited to ERISA, the Code, the ITA and applicable Canadian federal or
provincial pension benefits standards legislation, except where the failure to
do so would not individually or in the aggregate reasonably be expected to have
a Material Adverse Effect.
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(e) With respect to any Parent Plan that is a "multiemployer pension
plan," as such term is defined in Section 3(37) of ERISA, the aggregate
withdrawal liability that Parent and the Parent ERISA Affiliates would incur if
Parent and the Parent ERISA Affiliates incurred a complete withdrawal under each
such plan on the date hereof would not reasonably be expected to have a Material
Adverse Effect.
(f) There are no actions, suits or claims pending, or, to the knowledge
of Parent, threatened or anticipated (other than routine claims for benefits)
against any Parent Plan, the assets of any Parent Plan or against Parent or any
Parent ERISA Affiliate with respect to any Parent Plan that would individually
or in the aggregate reasonably be expected to have a Material Adverse Effect.
(g) The consummation of the transactions contemplated by this Agreement
will not, by the terms of any Parent Plan, result in, and is not, under the
terms of any Parent Plan, a precondition to, (i) any current or former employee
or director of Parent or any Parent ERISA Affiliate becoming entitled to
severance pay, unemployment compensation or any similar payment, or (ii) any
acceleration in the time of payment or vesting, or increase the amount, of any
compensation due to any such current or former employee or director, or (iii)
the renewal or extension of the term of any agreement regarding compensation for
any such current or former employee or director.
(h) Any payment of surplus out of any Parent Plan and any contribution
holidays taken by the Parent or any of its subsidiaries under any Parent Plan
were authorized under the terms of the Parent Plan and under applicable law,
except any such payments or contribution holidays which in the aggregate would
not reasonably be expected to have a Material Adverse Effect.
3.12. COMPLIANCE WITH LAWS. Except as disclosed in Parent Reports,
Parent and its subsidiaries are in compliance in all material respects with all
laws, regulations, rules, orders, policies, guidelines and other requirements of
all governmental authorities applicable to their businesses in effect as of the
date hereof except where the failure to do so would not individually or in the
aggregate be reasonably be expected to have a Material Adverse Effect. Parent
and its subsidiaries each hold or have filed in a timely manner applications or
renewals for all permits, licenses, certificates, grants or other authorizations
of foreign, federal, state and local governmental agencies (being collectively
referred to herein as "AUTHORIZATIONS") required for the conduct of its business
as now conducted, and are in compliance with all provisions and conditions
thereof, except for those Authorizations or any such noncompliance which
individually or in the aggregate would not reasonably be expected to have a
Material Adverse Effect. Such Authorizations constitute all Authorizations
required to permit Parent and its subsidiaries to conduct their business in all
material respects in the manner so conducted from and after the Effective Time
except for such Authorizations the lack of which would not reasonably be
expected to result in a Material Adverse Effect. To the knowledge of Parent,
there is no reasonable ground to believe that any of the foregoing
Authorizations will not, in the ordinary course be
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renewable upon their expiration except for those Authorizations for which the
failure to renew would not reasonably be expected to result in a Material
Adverse Effect. Anything in this Section 3.12 notwithstanding, it is understood
and agreed that the foregoing shall not be deemed inaccurate by reason of the
ordinary expiration of Authorizations, the renewal of which is expected to be
obtained in the ordinary course or for which the failure to renew would not
reasonably be expected to result in a Material Adverse Effect.
3.13. ENVIRONMENTAL MATTERS.
(a) Parent and its subsidiaries are in compliance with all applicable
Environmental Laws, except as otherwise disclosed in Parent Reports and except
for noncompliance, which individually or in the aggregate, would not reasonably
be expected to result in a Material Adverse Effect.
(b) Except as disclosed in Parent Reports, to the knowledge of Parent:
(i) there have been no Releases of Hazardous Material in, on, under or affecting
the properties or any surrounding site that Parent or its subsidiaries have
operated or owned and (ii) neither Parent nor any of its subsidiaries has
disposed of any Hazardous Material or any substance in a manner that has led, or
would reasonably be anticipated to lead, to a Release except in each case under
clause (i) or (ii) for those which individually or in the aggregate would not
reasonably be expected to result in a Material Adverse Effect, and except in
each case for Releases made in compliance in all material respects with
Environmental Laws. Except as disclosed in Parent Reports, neither Parent nor
any of its subsidiaries or, to Parent's knowledge, any predecessors thereof, has
received any notice that it is a "POTENTIALLY RESPONSIBLE PARTY" under any
Environmental Law, except for any notice the basis of which has been determined
and Parent's liability, if any, has been paid or provided for in the financial
statements included as part of Parent Reports and except for any notice
concerning a liability whose amount, individually or in the aggregate, is not
reasonably expected to have a Material Adverse Effect.
(c) For purposes of this Agreement:
(1) "ENVIRONMENTAL LAW" means any applicable law in
effect as of the date hereof regulating or
prohibiting Releases of Hazardous Material into any
part of the environment, or pertaining to the
protection of natural resources, the environment and
public and employee health and safety including,
without limitation, the Comprehensive Environmental
Response, Compensation and Liability Act ("CERCLA")
(42 U.S.C. (S) 9601 et seq.), the Hazardous Materials
Transportation Act (49 U.S.C. (S) 1801 et seq.), the
Resource Conservation and
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Recovery Act (42 U.S.C. (S) 6901 et seq.), the Clean
Water Act (33 U.S.C. (S) 1251 et seq.), the Clean Air
Act (42 U.S.C. (S) 7401 et seq.), the Toxic
Substances Control Act (15 U.S.C. (S) 7401 et seq.),
the Emergency Planning and Community Right-to-Know
Act (42 U.S.C. (S) 11001 et seq., the Oil Pollution
Act (33 U.S.C. (S) 2701 et seq.), the Safe Drinking
Water Act (42 U.S.C. (S) 300 (et seq.), the Federal
Insecticide, Fungicide, and Rodenticide Act (7 U.S.C.
(S) 136 et seq.), the Canadian Environmental
Protection Act (R.S.C. 1985, c. 16), the
Transportation of Dangerous Goods Act (Canada ) (S.C.
1992, c. 34), the Dangerous Goods Transportation Act
(Ontario) (R.S.O. 1990, c. D.1), the Environmental
Protection Act (Ontario) (R.S.O. 1990, c. E.19), the
Occupational Health and Safety Act (Ontario) (R.S.O.
1990, c. O.1), the Ontario Water Resources Act
(R.S.O. 1990, c. O.40), the Environment Quality Act
(Quebec) (R.S.Q., c. Q-2) and the Transportation of
Dangerous Substances Regulation (Quebec) (R.R.Q.
1981, c. C-24.2, Reg 4.2) and the regulations
promulgated pursuant thereto, and any such applicable
federal, provincial, state or local statutes, and the
regulations promulgated pursuant thereto, as such
laws have been amended or supplemented through the
Effective Time;
(2) "HAZARDOUS MATERIAL" means any substance, pollutant,
material or waste which is regulated by Environmental
Law, including, without limitation, coal tar,
asbestos, polychlorinated biphenyls, petroleum, and
any material or substance which is defined as a
"HAZARDOUS WASTE," "HAZARDOUS MATERIAL," "HAZARDOUS
SUBSTANCE," "HAZARDOUS AIR POLLUTANT," "EXTREMELY
HAZARDOUS SUBSTANCE" or "RESTRICTED HAZARDOUS WASTE,"
"CONTAMINANT," "pollutant," "TOXIC WASTE" or "TOXIC
SUBSTANCE" under any provision of Environmental Law;
and
(3) "RELEASE" means any release, spill, effluent,
emission, leaking, pumping, injection, deposit,
disposal, discharge, dispersal, leaching, or
migration in or into the indoor or outdoor
environment (whether on site or off site), or in,
into or out of any
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property owned, operated or leased by the applicable
party or its subsidiaries or predecessors thereof.
3.14. INTELLECTUAL PROPERTY. Except in each case as would not,
individually or in the aggregate, have a Material Adverse Effect and except as
disclosed in Parent Reports filed and publicly available prior to the date of
this Agreement: (a) Parent and each of its subsidiaries owns, is licensed or
otherwise has the right to use, all Intellectual Property (as defined below)
used in or necessary for the conduct of its business as currently conducted; (b)
the use of any Intellectual Property by Parent and its subsidiaries does not
infringe on or otherwise violate the rights of any person and is in accordance
with any applicable license pursuant to which Parent or any subsidiary acquired
the right to use any Intellectual Property; (c) to the knowledge of Parent, no
person is challenging, infringing on or otherwise violating any right of Parent
or any of its subsidiaries with respect to any Intellectual Property owned by
and/or licensed to Parent or its subsidiaries; and (d) neither Parent nor any of
its subsidiaries has received any written notice of any pending claim with
respect to any Intellectual Property used by Parent and its subsidiaries and to
its knowledge no Intellectual Property owned and/or licensed by Parent or its
subsidiaries is being used or enforced in a manner that would result in the
abandonment, cancellation or unenforceability of such Intellectual Property. For
purposes of this Agreement, "Intellectual Property" shall mean trademarks,
service marks, brand names, certification marks, trade dress and other
indications of origin, the goodwill associated with the foregoing and
registrations in any jurisdiction of, and applications in any jurisdiction to
register, the foregoing, including any extension, modification or renewal of any
such registration or application; inventions, discoveries and ideas, whether
patentable or not, in any jurisdiction; patents, applications for patents
(including, without limitation, divisions, continuations, continuations in part
and renewal applications), and any renewals, extensions or reissues thereof, in
any jurisdiction; nonpublic information, trade secrets and confidential
information and rights in any jurisdiction to limit the use or disclosure
thereof by any person; proprietary writings and other works, whether
copyrightable or not, in any jurisdiction; registrations or applications for
registration of copyrights in any jurisdiction, and any renewals or extensions
thereof; any similar intellectual property or proprietary rights; and any claims
or causes of action arising out of or relating to any infringement or
misappropriation of any of the foregoing.
3.15. YEAR 2000. To the knowledge of Parent, the software, operations,
systems and processes (including, to the knowledge of Parent, software,
operations, systems and processes obtained from third parties) which, in whole
or in part, are used, operated, relied upon, or integral to, Parent's or any of
its subsidiaries, conduct of their business, are Year 2000 Compliant (as
hereinafter defined), to the extent that and except as disclosed in Parent
Reports filed and publicly available prior to the date of this Agreement or
where the failure to be Year 2000 Compliant would not, individually or in the
aggregate, have a Material Adverse Effect. For purposes of this Agreement, "YEAR
2000 COMPLIANT" means the ability to process (including calculate, compare,
sequence, display or store), transmit or receive data or data/time data from,
into and between the
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twentieth and twenty-first centuries, and the years 1999 and 2000, and leap year
calculations without error or malfunction.
3.16. NO STOCKHOLDER VOTE REQUIRED. Except as may be required by the
rules of the New York Stock Exchange, Inc. (the "NYSE"), the Montreal Exchange
("ME") or the Toronto Stock Exchange ("TSE"), no vote of the stockholders of
Parent is required to approve this Agreement and the transactions contemplated
hereby. To the extent that any such vote is required, the vote of Quebecor Inc.
will be sufficient to approve the transaction at a properly called meeting of
the stockholders of Parent.
3.17. PARENT CONSENTS. Parent has received all consents required under
the Shareholders Agreement between Quebecor Inc. and Caisse de Depot et
placement du Quebec and Parent's By-laws to Parent's entering into this
Agreement and the consummation of the transactions contemplated hereby.
3.18. SUBSCRIPTION RIGHTS. Parent has received confirmation that none
of the subscription rights attaching to its Multiple Voting Shares would be
exercised by the holders thereof in connection with the transactions
contemplated hereby.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company hereby represents and warrants to Parent and Purchaser
that:
4.1. ORGANIZATION AND QUALIFICATION. The Company has been duly
incorporated and is validly existing as a corporation and in good standing under
the laws of the State of Delaware and has full corporate power and authority to
own its properties and conduct its business as presently owned and conducted
except where such failure to be so incorporated, existing and in good standing
or to have such power and authority, individually or in the aggregate, would not
reasonably be expected to have a Material Adverse Effect (as defined below). The
Company is duly qualified as a foreign corporation and in good standing in each
jurisdiction in which the character of its properties owned or leased or the
nature of its activities makes such qualification necessary except where the
failure to be so qualified, individually or in the aggregate, would not
reasonably be expected to have a Material Adverse Effect. The copies of the
Amended and Restated Certificate of Incorporation and By-Laws of the Company
previously delivered to Purchaser are true, correct and complete as of the date
hereof. When used in connection with the Company or any of its subsidiaries, the
term "Material Adverse Effect" means any change or effect that is or would be
materially adverse to the business, financial condition or results of operations
of the Company and its subsidiaries, taken as a whole, other than any such
effect attributable to or resulting from (i) the public announcement or
consummation of the transactions contemplated by this Agreement including,
without limitation, the loss of customers or employees resulting therefrom, (ii)
any change in general economic conditions, financial market conditions or in
conditions affecting the Company's industry generally, (iii) any act or omission
of the Company or
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any of its subsidiaries taken with the prior consent of Purchaser pursuant to
Section 5.1 or (iv) actions taken by the Company at the specific request of
Purchaser or Parent.
4.2. SUBSIDIARIES. The Company has listed all subsidiaries required to
be so listed on Exhibit 21 ("EXHIBIT 21") to the Company's Annual Report on Form
10-K for the year ended December 31, 1998. The Company has listed all of its
material subsidiaries (the "MATERIAL SUBSIDIARIES"), including the subsidiaries
required to be listed on Exhibit 21, on Section 4.2 of the Company Disclosure
Schedule, and each such subsidiary has been duly incorporated or organized and
is validly existing as a corporation or other legal entity and is in good
standing in its respective jurisdiction of organization and has full corporate
or organizational power and authority to own its properties and conduct its
businesses as presently owned and conducted, except where such failure to be so
incorporated or organized, existing and in good standing or to have such power
and authority, individually or in the aggregate, would not reasonably be
expected to have a Material Adverse Effect. Each Material Subsidiary is duly
qualified as a foreign corporation or other legal entity and in good standing in
each jurisdiction in which the character of its properties owned or leased or
the nature of its activities makes such qualification necessary except where the
failure to be so qualified would not reasonably be expected to have a Material
Adverse Effect. The copies of the Certificate of Incorporation and By-Laws or
comparable organizational documents of each Material Subsidiary that is not
wholly owned by the Company has been previously delivered to Purchaser and are
true, correct and complete as of the date hereof.
4.3. CAPITALIZATION.
(a) As of July 8, 1999, the authorized equity capitalization of the
Company consists of 100,000,000 Shares, par value $.01 per share, of which
37,981,422 are outstanding (including 330,285 shares of Company Restricted
Stock), and 50,000,000 shares of preferred stock, par value $.01 per share, of
which none are outstanding. All of the outstanding shares of the Company's
capital stock are validly issued, fully paid (except for the unvested portion of
Company Restricted Stock) and nonassessable. The aggregate number of Shares
covered by outstanding Company Stock Options that have been issued pursuant to
the Company's Stock Option Plans as of July 8, 1999 is 4,798,818. As of July 8,
1999, the Company has granted stock awards totaling 337,500 under the Company's
Restricted Stock Plan. The Company has reserved 3,660,477 Shares for issuance
upon conversion of the 6% Convertible Senior Subordinated Notes.
(b) Except as described in paragraph (a) above, there are no options,
warrants, conversion privileges or other rights, agreements, arrangements or
commitments obligating the Company or any of its subsidiaries to issue or sell
any shares of capital stock of the Company or of any of its subsidiaries or
securities or obligations of any kind convertible into or exchangeable for any
shares of capital stock of the Company or any of its subsidiaries. The holders
of the outstanding Shares are not entitled to any preemptive or other similar
rights. Upon consummation of the Merger in accordance with the terms of this
Agreement, Purchaser will own the entire equity interest in the
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Company, and there will be no options, warrants, conversion privileges or other
rights, agreements, arrangements or commitments obligating the Company or any of
its subsidiaries to issue or sell any shares of capital stock of the Company or
any of its subsidiaries other than such rights, options, warrants, conversion
privileges or other agreements, arrangements or commitments, that are the result
of actions taken or caused to be taken by or on behalf of Purchaser.
4.4. AUTHORITY RELATIVE TO THIS AGREEMENT. The Company has the
requisite corporate power and authority to enter into this Agreement and the
Stock Option Agreement and, subject to adoption of this Agreement by its
stockholders as set forth in Section 6.1, to perform its obligations hereunder
and thereunder. Assuming the accuracy of Purchaser's representation as to the
ownership of Shares and that no pension or employee benefit plan of any of
Parent, Purchaser or any of their subsidiaries owns (beneficially or otherwise)
any Shares, the execution and delivery of this Agreement and the Stock Option
Agreement by the Company and the consummation by the Company of the transactions
contemplated by this Agreement and the Stock Option Agreement have been duly
authorized by the Board of Directors of the Company prior to Parent or Purchaser
becoming an "INTERESTED STOCKHOLDER" as defined in Section 203 of the Delaware
Law; and, except for adoption of this Agreement by its stockholders as set forth
in Section 6.1, no other corporate proceedings on the part of the Company are
necessary to authorize or consummate this Agreement and the transactions
contemplated hereby. The Board of Directors of the Company has approved
Purchaser and or any other direct or indirect wholly owned subsidiary of Parent
which would be able to make the representations and warranties in Article III
applicable to Purchaser to which Parent may assign its rights hereunder becoming
"INTERESTED STOCKHOLDERS" as defined in Section 203 of the Delaware Law pursuant
to the terms of this Agreement. This Agreement and the Stock Option Agreement
have been duly executed and delivered by the Company and constitute valid and
binding obligations of the Company, enforceable in accordance with their
respective terms except to the extent that enforceability thereof may be limited
by applicable bankruptcy, insolvency, reorganization, moratorium or other
similar laws relating to or affecting the enforcement of creditors rights'
generally or by equitable principles. Except as set forth in SECTION 4.4 of the
Company Disclosure Schedule, neither the Company nor any of its subsidiaries is
subject to or obligated under any provision of (a) its certificate or articles
of incorporation or by-laws, (b) any contract, (c) any license, franchise or
permit, or (d) any law, regulation, order, judgment or decree, which would be
breached or violated or in respect of which a right of termination or
acceleration or any encumbrance on any of its or any of its subsidiaries' assets
could be created by its execution, delivery and performance of this Agreement
and the consummation by it of the transactions contemplated hereby, other than,
in the case of clauses (b), (c) and (d), any such breaches, violations, rights
or encumbrances which will not, and would not reasonably be expected to
individually or in the aggregate, have a Material Adverse Effect. Other than in
connection with or in compliance with the provisions of the Delaware Law, the
Exchange Act, the securities or blue-sky laws of the various states of the
United States and the H-S-R Act, and except as set forth in SECTION 4.4 of the
Company Disclosure Schedule, no authorization (other than such
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Authorizations that are the subject of Section 4.11), consent or approval of, or
filing with, any public body, court or authority is necessary for the
consummation by the Company of the transactions contemplated by this Agreement
other than any authorization, consent or approval the failure to obtain, or any
filing the failure to perform, would not reasonably be expected to have a
Material Adverse Effect.
4.5. COMMISSION FILINGS. The Company has made available to Purchaser
copies of the Company's (i) Annual Reports on Form 10-K for the fiscal years
ended December 27, 1997 and 1998, (ii) Quarterly Reports on Form 10-Q for the
quarter ended March 31, 1999, (iii) proxy statements relating to the Company's
meetings of stockholders (whether annual or special) during the years 1997
through 1999, inclusive, and (iv) filings under the Securities Act, since
January 1, 1997, in each case as filed with the Commission. Except as set forth
in SECTION 4.5 of the Company Disclosure Schedule, since January 1, 1997, the
Company has filed all reports, registration statements and other documents
required to be filed under the Exchange Act and the rules and regulations
thereunder, and all such reports, registration statements and other documents
complied (except to the extent revised or superseded by a subsequent filing with
the Commission prior to the date hereof), in all material respects, with the
requirements of the Exchange Act, such compliance to be determined, to the
extent applicable, in accordance with the standards applied to the Company
Reports in the following two sentences. As of their respective dates, the
Company's Annual Report on Form 10-K for 1998, the Company's Quarterly Reports
on Form 10-Q in 1999, the Company's Current Reports on Form 8-K with respect to
events which occurred in 1999 and the Company's 1999 Proxy Statement (together,
the "COMPANY REPORTS") (except to the extent revised or superseded by a
subsequent filing with the Commission prior to the date hereof) did not contain
any untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein, in
light of the circumstances under which they were made, not misleading. The
audited consolidated financial statements and unaudited consolidated interim
financial statements of the Company (including any related notes and schedules)
included in the reports referred to in clauses (i) and (ii) of the first
sentence of this paragraph have been prepared in accordance with United States
generally accepted accounting principles ("U.S. GAAP") applied on a consistent
basis during the periods involved (except as may be indicated in the notes
thereto) and (except to the extent revised or superseded by financial statements
included in a subsequent filing with the Commission prior to the date hereof)
fairly present the consolidated financial position of the Company and its
consolidated subsidiaries as of the dates thereof and the consolidated results
of their operations and cash flows for the periods then ended, subject, in the
case of the unaudited consolidated interim financial statements, to normal
year-end adjustments and any other adjustments described therein, and the fact
that the interim financial statements were prepared in accordance with the rules
and regulations of the Commission and, therefore, certain information required
by U.S. GAAP may have been omitted. Except as set forth in SECTION 4.5 of the
Company Disclosure Schedule, or in the Company Reports, since March 31, 1999,
(i) there has not been a Material Adverse Effect, and (ii) except as permitted
by this Agreement, there has been (1) no declaration, setting aside or payment
of any dividend or other distribution by the Company in respect
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of the Company's Common Stock, and (2) no material change in the accounting
principles as reflected in the first footnote of the audited financial
statements of the Company for the fiscal year ending December 27, 1998.
4.6. LITIGATION. Except as disclosed in the Company Reports or in
Section 4.6 of the Company Disclosure Schedule, there are no claims, actions,
proceedings, or investigations pending or, to the knowledge of the Company,
threatened in writing against the Company or any of its subsidiaries or any of
their officers or directors (in their capacity as such) before any court or
governmental or regulatory authority or body which would reasonably be expected
to result in a Material Adverse Effect and neither the Company nor any of its
subsidiaries or any of their officers or directors (in their capacity as such)
are subject to any writs, injunctions or decrees which would reasonably be
expected to result in a Material Adverse Effect.
4.7. EMPLOYEES AND LABOR.
(a) Except as disclosed in the Company Reports or in Section 4.7 of the
Company Disclosure Schedule, there is no pending or, to the knowledge of the
Company or any subsidiary, threatened, dispute between the Company or any
subsidiary and their present or past employees other than such disputes as do
not or would not reasonably be expected to result in a Material Adverse Effect.
(b) Except as disclosed in the Company Reports or set forth in SECTION
4.7 of the Company Disclosure Schedule, there are no written employment,
consulting or severance agreements between the Company or any of its
subsidiaries on the one hand, and any director or officer or, to the knowledge
of any Group A Executive (as defined in the Company Disclosure Schedule) after
due inquiry, other employee of the Company, on the other hand, which obligate
the Company to pay to any director, officer or employee more than $200,000 per
annum or $1,000,000 in the aggregate per agreement and which require more than
six months notice for termination.
4.8. TAXES AND TAX RETURNS. Except for such failures to file or pay as
would not reasonably be expected to result in a Material Adverse Effect or as
disclosed in the Company Reports, the Company and each of its subsidiaries have
timely filed all tax returns, declarations and information statements that they
are required to file and have timely paid all taxes shown thereon except to the
extent that such taxes are being contested in good faith. The Company's
consolidated liability for taxes is adequately provided for by reserves except
for any failure to provide reserves that would not reasonably be expected to
result in a Material Adverse Effect. As used in this Agreement, the term "TAXES"
includes all taxes of any nature whatsoever and however denominated, including,
without limitation, income, capital, franchise, sales, gross receipts,
occupation, use, severance, real and personal property, employment, excise,
goods and services, stamp, impost, governmental fees, environmental, transfer,
duties and all other charges, as well as penalties and interest thereon, imposed
by any government or instrumentality, whether federal, state, provincial, local,
foreign or other.
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4.9. EMPLOYEE BENEFIT PLANS.
(a) With respect to each of the material Company Plans (as hereinafter
defined), the Company has made available within 10 business days of the date
hereof to Parent true and complete copies of each of the following documents:
(i) the Company Plan and related documents (including all amendments thereto);
(ii) the most recent annual report, financial statement, and actuarial report,
if any; (iii) the most recent summary plan description, together with each
summary of material modifications, if any, required under ERISA with respect to
such Company Plan; and (iv) the most recent determination letter, if any,
received from the IRS with respect to each Company Plan that is intended to be
tax-qualified under the Code. The term "Company Plan" means each bonus, deferred
compensation, incentive compensation, stock purchase, stock option, severance
pay, medical, life or other insurance, profit-sharing, or pension plan, program,
agreement or arrangement, and each other employee benefit plan, program,
agreement or arrangement, sponsored, maintained or contributed to or required to
be contributed to by the Company or by any trade or business, whether or not
incorporated, that together with the Company would be deemed a "single employer"
with the Company under Section 414 of the Code (a "COMPANY ERISA AFFILIATE") for
the benefit of any employee or director or former employee or former director of
the Company or any Company ERISA Affiliate.
(b) No liability under Title IV of ERISA has been incurred by the
Company or any Company ERISA Affiliate that has not been satisfied in full,
other than a liability that, individually or in the aggregate, would not
reasonably be expected to have a Material Adverse Effect, and no condition
exists that presents a material risk to the Company or any Company ERISA
Affiliate of incurring a liability under such Title, other than liability for
premium payments to the Pension Benefit Guaranty Corporation and contributions
in the ordinary course of business, which premiums have been or will be paid
when due, and other than a liability that, individually or in the aggregate,
would not reasonably be expected have a Material Adverse Effect.
(c) Neither the Company nor any Company ERISA Affiliate, nor any of the
Company Plans, nor any trust created thereunder, nor any trustee or
administrator thereof has engaged in any prohibited transactions (within the
meaning of Section 406 of ERISA and Section 4975 of the Code) in connection with
which the Company or any Company ERISA Affiliate could, either directly or
indirectly, incur any liability (or liabilities) that either individually or in
the aggregate would reasonably be expected to have a Material Adverse Effect.
(d) There has been no change in either the financial position or funded
status of the Company Plans that are subject to Title IV of ERISA since the date
of the information relating to the financial position and funded status of such
plans contained in the most recent Company Form 10-K filed with the SEC, other
than such changes that individually or in the aggregate would not reasonably be
expected to have a Material Adverse Effect.
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(e) To the knowledge of the Company, each of the Company Plans that is
intended to satisfy the requirements of Section 125, 401(a) or 501(c)(9) of the
Code satisfies such requirements except where the failure to do so would not
either individually or in the aggregate reasonably be expected to have a
Material Adverse Effect. Each of the Company Plans has been operated and
administered in compliance with its terms and applicable laws, including but not
limited to ERISA and the Code, except where the failure to do so would not
individually or in the aggregate reasonably be expected to have a Material
Adverse Effect.
(f) With respect to any Company Plan that is a "multiemployer pension
plan," as such term is defined in Section 3(37) of ERISA, the aggregate
withdrawal liability that the Company ERISA Affiliates would incur if the
Company and the Company ERISA Affiliates incurred a complete withdrawal under
each such plan on the date hereof would not reasonably be expected to have a
Material Adverse Effect.
(g) There are no actions, suits or claims pending, or, to the knowledge
of the Company, threatened or anticipated (other than routine claims for
benefits) against any Company Plan, the assets of any Company Plan or against
the Company or any Company ERISA Affiliate with respect to any Company Plan that
would individually or in the aggregate reasonably be expected to have a Material
Adverse Effect.
(h) Except as set forth in Section 4.9 of the Company Disclosure
Schedule, the consummation of the transactions contemplated by this Agreement
will not, by the terms of any Company Plan, result in, and is not, by the terms
of any Company Plan, a precondition to (i) any current or former employee or
director of the Company or any Company ERISA Affiliate becoming entitled to
severance pay, unemployment compensation or any similar payment, or (ii) any
acceleration in the time of payment or vesting, or increase the amount, of any
compensation due to any such current or former employee or director, or (iii)
the renewal or extension of the term of any agreement regarding compensation for
any such current or former employee or director.
4.10. STOCKHOLDER VOTE REQUIRED. Under the Delaware Law and the
Company's Amended and Restated Certificate of Incorporation and By-Laws, the
Company's stockholders are required to adopt this Agreement in accordance with
the terms of this Agreement by the affirmative vote of the holders of a majority
of the outstanding Shares at a meeting called for such purpose.
4.11. COMPLIANCE WITH LAWS. The Company and its subsidiaries are in
compliance in all material respects with all laws, regulations, rules, orders,
policies, guidelines and other requirements of all governmental authorities
applicable to their businesses in effect as of the date hereof except where the
failure to do so would not individually or in the aggregate be reasonably
expected to have a Material Adverse Effect. The Company and its subsidiaries
each hold or have filed in a timely manner applications or renewals for all
Authorizations) required for the conduct of its business as now conducted, and
are in
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compliance with all provisions and conditions thereof, except for those
Authorizations or any such noncompliance which individually or in the aggregate
would not reasonably be expected to have a Material Adverse Effect). Such
Authorizations constitute all Authorizations required to permit the Company and
its subsidiaries to operate the businesses of the Principal Properties or
conduct their business in all material respects in the manner so conducted from
and after the Effective Time except for such Authorizations the lack of which
would not reasonably be expected to result in a Material Adverse Effect. To the
knowledge of the Company, there is no reasonable ground to believe that any of
the foregoing Authorizations will not, in the ordinary course, be renewable upon
their expiration except for those Authorizations, for which the failure to renew
would not reasonably be expected to result in a Material Adverse Effect.
Anything in this Section 4.11 notwithstanding, it is understood and agreed that
the foregoing shall not be deemed inaccurate by reason of the ordinary
expiration of Authorizations, the renewal of which is expected to be obtained in
the ordinary course or for which the failure to renew would not reasonably be
expected to result in a Material Adverse Effect.
4.12. PROPERTIES.
(a) For purposes of this Agreement "PRINCIPAL PROPERTIES" means all of
the properties listed in SECTION 4.12 of the Company Disclosure Schedule and
each reference to real property includes the improvements thereon .
(b) SECTION 4.12 of the Company Disclosure Schedule sets forth the
general location and size of each of the Principal Properties. Except as set
forth in SECTION 4.12 of the Company Disclosure Schedule, the Company and its
subsidiaries, as applicable, hold rights to or interests in each of the
Principal Properties, either in fee simple or under valid, subsisting and
enforceable leases, as the case may be, together with any easements,
rights-of-way or other surface access rights, necessary for the current
operation of each of the Principal Properties, except for any rights or
interests the absence of which would not be reasonably expected to result in a
Material Adverse Effect. Except as set forth in SECTION 4.12 of the Company
Disclosure Schedule, each Principal Property is held free and clear of all liens
and encumbrances which would not reasonably be expected to have a Material
Adverse Effect.
4.13. ENVIRONMENTAL MATTERS.
(a) The Company and its subsidiaries are in compliance with all
applicable Environmental Laws, except as otherwise disclosed in the Company
Reports and except for noncompliance, which individually or in the aggregate,
would not reasonably be expected to result in a Material Adverse Effect.
(b) Except as disclosed in the Company Reports or as set forth in
SECTION 4.13 of the Company Disclosure Schedule, to the knowledge of the
Company, (i) there have been no Releases of Hazardous Material in, on, under or
affecting the properties or any surrounding site that the Company or its
subsidiaries have operated or owned and (ii) neither the Company nor any of its
subsidiaries has disposed of any
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Hazardous Material or any substance in a manner that has led, or would
reasonably be anticipated to lead, to a Release, except in each case under
clause (i) or (ii) for those which individually or in the aggregate would not
reasonably be expected to result in a Material Adverse Effect, and except in
each case for Releases made in compliance in all material respects with
Environmental Laws. Except as disclosed in the Company Reports or in SECTION
4.13 of the Company Disclosure Schedule, neither the Company nor any of its
subsidiaries or, to the Company's knowledge, any predecessors thereof, has
received any notice that it is a "POTENTIALLY RESPONSIBLE PARTY" under any
Environmental Law, except for any notice the basis of which has been determined
and the Company's liability, if any, has been paid or provided for in the
financial statements included as part of the Company Reports and except for a
notice concerning a liability whose amount, individually or in the aggregate, is
not reasonably expected to have a Material Adverse Effect.
4.14. INTELLECTUAL PROPERTY. Except in each case as would not,
individually or in the aggregate, have a Material Adverse Effect and except as
disclosed in the Company Reports filed and publicly available prior to the date
of this Agreement or in Section 4.14 of the Company Disclosure Schedule: (a) the
Company and each of its subsidiaries owns, is licensed or otherwise has the
right to use, all Intellectual Property (as defined below) used in or necessary
for the conduct of its business as currently conducted; (b) the use of any
Intellectual Property by the Company and its subsidiaries does not infringe on
or otherwise violate the rights of any person and is in accordance with any
applicable license pursuant to which the Company or any subsidiary acquired the
right to use any Intellectual Property; (c) to the knowledge of the Company, no
person is challenging, infringing on or otherwise violating any right of the
Company or any of its subsidiaries with respect to any Intellectual Property
owned by and/or licensed to the Company or its subsidiaries; and (d) neither the
Company nor any of its subsidiaries has received any written notice of any
pending claim with respect to any Intellectual Property used by the Company and
its subsidiaries and to its knowledge no Intellectual Property owned and/or
licensed by the Company or its subsidiaries is being used or enforced in a
manner that would result in the abandonment, cancellation or unenforceability of
such Intellectual Property.
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4.15. INSURANCE. Except as set forth in Section 4.15 of the Company
Disclosure Schedule, all material insurance policies maintained by the Company
or its subsidiaries are in full force and effect and, to the Company's
knowledge, are not currently terminable, and the consummation of the
transactions contemplated by this Agreement would not be expected to give rise
to a right of termination, on the part of the insurance carriers, other than
those policies the absence or termination of which would not reasonably be
expected to have a Material Adverse Effect. In the judgment of the Company, such
policies, with respect to their amounts and types of coverage, are adequate to
insure against risks to which the Company and its subsidiaries are normally
exposed, or to which they reasonably could be expected to be exposed, in the
operation of their business.
4.16. YEAR 2000. To the knowledge of the Company, the software,
operations, systems and processes (including, to the knowledge of the Company,
software, operations, systems and processes obtained from third parties) which,
in whole or in part, are used, operated, relied upon, or integral to, the
Company's or any of its subsidiaries, conduct of their business, are Year 2000
Compliant (as hereinafter defined), to the extent that and except as disclosed
in the Company Reports filed and publicly available prior to the date of this
Agreement or where the failure to be Year 2000 Compliant would not, individually
or in the aggregate, have a Material Adverse Effect.
ARTICLE V
CONDUCT OF BUSINESS PENDING THE MERGER
5.1. CONDUCT OF BUSINESS BY THE COMPANY PENDING THE MERGER. The Company
covenants and agrees that, prior to the Effective Time, unless Purchaser shall
otherwise agree in writing (which consent shall not be unreasonably withheld) or
as otherwise expressly contemplated or permitted by this Agreement (including
Section 5.1 of the Company Disclosure Schedule and Section 6.11 of the Company
Disclosure Schedule):
(a) The Company shall use reasonable efforts to conduct the businesses
and affairs of the Company and its subsidiaries only in the ordinary course of
business and consistent with past practice;
(b) except as set forth in Section 5.1 of the Company Disclosure
Schedule and except in connection with the adoption by the Company of a
shareholder rights plan that would not be applicable to, or adversely affect the
transactions contemplated hereby among the parties to this Agreement, neither
the Company nor any of its subsidiaries shall: (i) issue (except pursuant to
employee and non-employee director stock options outstanding on the date hereof)
sell, pledge, dispose of or encumber (or permit any of its subsidiaries to
issue, sell, pledge, dispose of or encumber): (A) any additional shares of, or
any options, warrants, conversion privileges or rights of any kind to acquire
any shares of, any capital stock of the Company or any of its subsidiaries, or
(B) any material assets
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of the Company or any of its subsidiaries except in the ordinary course of
business; (ii) amend or propose to amend the certificate or articles of
incorporation or bylaws or similar governing instruments of the Company or any
of its subsidiaries; (iii) split, combine or reclassify any outstanding Shares,
or declare, set aside or pay any dividend or other distribution, payable in
cash, stock, property or otherwise with respect to the Shares; (iv) redeem,
purchase or acquire, or offer to acquire (or permit any of its subsidiaries to
redeem, purchase or acquire or offer to acquire) any Shares or other securities
of the Company; or (v) enter into or modify any contract, agreement, commitment
or arrangement with respect to any of the matters set forth in this Section
5.1(b);
(c) neither the Company nor any of its subsidiaries shall (i) acquire
(by merger, consolidation, acquisition of stock or assets or otherwise) any
corporation, partnership or other business organization or division or material
assets thereof for aggregate consideration for all such acquisitions in excess
of $25,000,000; (ii) incur any indebtedness for borrowed money or issue any debt
securities except the borrowing of working capital in the ordinary course of
business and consistent with past practice; or (iii) enter into or materially
modify any contract, agreement, commitment or arrangement with respect to any of
the foregoing;
(d) except as set forth in Section 5.1 of the Company Disclosure
Schedule, or in the ordinary course of business in accordance with past
practice, neither the Company nor any of its subsidiaries shall enter into or
modify any employment, severance or similar agreements or arrangements with, or
grant any bonuses, salary increases, severance or termination pay to, any
officers, directors or employees;
(e) except as set forth in Section 5.1 of the Company Disclosure
Schedule, or contemplated by this Agreement (including Section 2.6(a)), neither
the Company nor any of its subsidiaries shall adopt or amend any bonus, profit
sharing, compensation, stock option, pension, retirement, deferred compensation,
employment or other employee benefit plan, agreement, trust, fund or arrangement
for the benefit or welfare of any officer, director or employee, other than (i)
in the ordinary course of business consistent with past practice for the benefit
or welfare of any employee, (ii) for the purpose of accelerating the vesting of
restricted stock and stock options, (iii) to the extent required by law or (iv)
with respect to new hires or promotions in the ordinary course of business;
(f) the Company shall use reasonable efforts (i) to cause its current
insurance (or reinsurance) policies not to be cancelled or terminated; and (ii)
to not permit any of the coverage thereunder to lapse, in any such case unless
prior to or promptly after such termination, cancellation or lapse, replacement
policies underwritten by insurance and reinsurance companies of nationally
recognized standing;
(g) the Company shall use reasonable efforts, and cause each of its
subsidiaries to use reasonable efforts, to keep substantially intact their
respective business organizations and good will, keep available the services of
their officers and employees
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as a group and maintain their present relationships with suppliers and customers
and others having business relationships with them; and
(h) the Company shall make no awards of restricted stock or grants of
options.
5.2. CERTAIN ACTIONS BY PARENT PENDING THE MERGER. Parent covenants and
agrees that prior to the Effective Time, unless the Company shall otherwise
agree in writing (which consent shall not be unreasonably withheld prior to the
consummation of the Offer), Parent shall not (i) (A) declare, set aside or pay
any dividends on, or make any other distributions in respect of, any of its
capital stock, except that Parent may continue the declaration and payment of
regular quarterly cash dividends (with usual record and payment dates and in
accordance with its past dividend policy), (B) split, combine or reclassify or
otherwise alter the Parent Stock or any other class of Parent's capital stock or
issue or authorize the issuance of any other securities in respect of, in lieu
of or in substitution for shares of its capital stock, or (C) purchase, redeem
or otherwise acquire any shares of Parent Stock or any other class of Parent's
capital stock or other securities convertible into or exchangeable for such
shares, and (ii) authorize for issuance, issue, deliver or sell for below market
value any shares of Parent Stock or any other class of Parent's capital stock,
other than non-voting preferred stock, or other securities convertible into or
exchangeable for such shares (except upon (x) the conversion of Multiple Voting
Shares, (y) the grant of options issued in the ordinary course of business
pursuant to the existing stock option plans of Parent, or (z) the exercise of
stock options).
ARTICLE VI
ADDITIONAL AGREEMENTS
6.1. ACTION OF COMPANY STOCKHOLDERS. The Company shall take all action
necessary in accordance with and subject to applicable law and its Amended and
Restated Certificate of Incorporation and By-Laws to convene a meeting of its
stockholders promptly after the consummation of the Offer (or if the Offer has
been terminated pursuant to Section 1.1(e), as promptly as practicable) to
consider and vote upon this Agreement. The Company shall use all reasonable
efforts to obtain the necessary adoption of this Agreement by the stockholders
of the Company, subject to the exercise of fiduciary duties by the Board of
Directors under applicable law. At any such meeting, Purchaser and Parent shall
vote or cause to be voted all of the Shares then owned by them and their
subsidiaries in favor of adoption of this Agreement and the Company shall vote
or cause to be voted all Shares with respect to which proxies in the form
distributed by the Company have been given, and not voted against the adoption
of this Agreement, in favor of adoption of this Agreement. Between the date of
consummation, if any, of the Offer and the date of the Company stockholders
meeting referred to above, Parent and Purchaser shall not sell, transfer,
dispose of or encumber in any manner or otherwise subject to any voting or other
agreement with any party any of the Shares purchased in the Offer or any voting
rights with respect thereto. Between the date hereof and the
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Effective Time, neither Parent nor any of its subsidiaries shall acquire, or
agree to acquire, whether in the open market or otherwise, any rights in any
securities of the Company other than pursuant to the Offer or the Merger.
6.2. COMPANY PROXY STATEMENT. The Company shall file with the
Commission under the Exchange Act within 20 business days from the date hereof,
and shall use all reasonable efforts to have cleared by the Commission, in each
case at the earliest practicable date, a proxy statement (the "COMPANY PROXY
STATEMENT"), with respect to the adoption by the Company's stockholders of this
Agreement in form and substance reasonably satisfactory to Purchaser and its
counsel. The Company shall use its reasonable best efforts to include the
Company Proxy Statement in the Form F-4 (as defined in Section 6.3). Parent,
Purchaser and the Company will cooperate with each other in the preparation of
the Company Proxy Statement; without limiting the generality of the foregoing,
each of Parent and Purchaser will furnish to the Company the information
relating to it required by the Exchange Act and the rules and regulations
promulgated thereunder to be set forth in the Company Proxy Statement. The
Company Proxy Statement shall, subject to the exercise of fiduciary duties by
the Board of Directors under applicable law, contain the determination and
recommendation of the Board of Directors of the Company referred to in SECTION
1.2.
6.3. PREPARATION OF THE FORM F-4 AND THE PARENT PROXY STATEMENT; PARENT
STOCKHOLDERS MEETING.
(a) The Parent Stock to be issued in the Merger shall be registered
under the Securities Act on a Form F-4 registration statement (the "Form F-4").
As soon as practicable following the date of this Agreement, but in no event
later than 20 business days from the date hereof, Parent shall prepare and file
with the Commission the Form F-4. Parent shall use its reasonable best efforts
to respond promptly to any comments of the commission and to have the Form F-4
declared effective under the Securities Act as promptly as practicable after
such filing. Parent shall use its reasonable best efforts to include the Company
Proxy Statement in the Submission of the Form F-4 to the Commission. Parent will
advise the Company, promptly after it receives notice thereof, of the time when
the Form F-4 has become effective or any supplement or amendment has been filed,
the issuance of any stop order, the suspension of the qualification of the
Parent Stock issuable in connection with the Merger for offering or sale in any
jurisdiction, or any request by the SEC for amendment of Form F-4 or comments
thereon and responses thereto or requests by the SEC for additional information.
Parent shall obtain, and shall provide evidence reasonably satisfactory to the
Company of, all necessary rulings or orders of Canadian securities regulatory
authorities exempting the distribution by Parent of the shares of Parent Stock
issuable in connection with the Merger and the resale of such shares from the
registration and prospectus delivery requirements and resale restrictions of
applicable Canadian securities laws on terms reasonably satisfactory to the
Company.
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(b) Parent shall use its reasonable best efforts to have any approval
by the shareholders of Parent that may be required by the rules and regulations
of the NYSE, ME and TSE waived by such exchanges. If any such waiver is not
obtained, Parent shall, as soon as practicable following the date of this
Agreement, take all action necessary in accordance with Canadian law or the
rules of the NYSE, ME and TSE to convene and hold a meeting of its stockholders
(together with any adjournment or postponement thereof, the "PARENT STOCKHOLDER
MEETING") for the purpose of obtaining the approval (the "PARENT STOCKHOLDER
APPROVAL") of a majority of votes cast by the stockholders of Parent of the
issuance of the Parent Stock in connection with the Merger (the "ISSUANCE"), and
shall, through its Board of Directors, recommend to its stockholders the
approval of the Issuance, and shall use reasonable best efforts to cause a proxy
statement to be mailed to Parent shareholders and to solicit from its
stockholders proxies in favor the issuance.
6.4. EXPENSES. All costs and expenses incurred in connection with the
Offer, this Agreement and the transactions contemplated hereby shall be paid by
the party incurring such expenses, except as set forth in Section 8.3.
6.5. ADDITIONAL AGREEMENTS. (a) Subject to the conditions herein
provided, each of the parties hereto agrees to use all reasonable efforts to
take, or cause to be taken, all action and to do, or cause to be done, all
things necessary, proper or advisable to consummate and make effective as
promptly as practicable the transactions contemplated by the Offer and this
Agreement, including, without limitation, cooperating with each other, using
reasonable efforts to obtain all necessary waivers, consents and approvals and
effecting all necessary registrations and filings, including, without
limitation, submissions of information requested by governmental authorities.
(c) Notwithstanding the foregoing, Parent and Purchaser (i) shall on or
prior to November 9, 1999 (unless extended in the sole discretion of the
Company) secure the expiration or termination of any applicable waiting period
under the H-S-R Act or the statutes, rules, regulations, administrative and
judicial doctrines and any other antitrust or competition laws of the United
States, any State thereof, any foreign country or the European Union (the
"ANTITRUST LAWS"), (ii) shall take all action necessary or required, including
any litigation or appeals, to permit the consummation no later than November 9,
1999 (unless extended in the sole discretion of the Company) of the Offer, the
Merger and the other transactions contemplated by this Agreement under the
Antitrust Laws, and (iii) shall avoid the imposition of any injunction or other
order under the Antitrust Laws (and to the extent an injunction or other order
has been issued, shall secure its immediate dissolution) that would prevent the
consummation of the Offer, the Merger or the transactions contemplated by this
Agreement on or prior to November 9, 1999 (unless extended in the sole
discretion of the Company). The Company shall cooperate with Parent and
Purchaser in connection with the satisfaction of the covenant of Parent and
Purchaser in this Section 6.5; PROVIDED, HOWEVER, that the steps or actions
referred to
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in this Section 6.5 that may be required to be taken by the Company shall be
subject to the consummation of the Offer (or if the Offer has been terminated
pursuant to Section. 1.1(e), to the closing of the Merger).
6.6. LIMITATION ON NEGOTIATIONS.
(a) From the date hereof until the termination hereof, except as set
forth in Section 6.6(c) below, the Company and its subsidiaries will not,
directly or indirectly, make, solicit, initiate or encourage submission of
proposals or offers from any persons (including any of its officers or
employees) relating to an Acquisition Proposal. As used herein, the term
"ACQUISITION PROPOSAL" means any proposal or offer involving a liquidation,
dissolution, recapitalization, merger, consolidation or acquisition or purchase
of all or substantially all of the assets of, or equity interest in, the Company
or other similar transaction or business combination involving the Company or
its material subsidiaries.
(b) The Company shall:
(i) immediately cease and cause to be terminated all discussions or
negotiations with third parties with respect to any Acquisition Proposal, if
any, existing on the date hereof; and
(ii) promptly notify Purchaser after receipt of any bona fide
Acquisition Proposal or any inquiry from any person relating to an Acquisition
Proposal and promptly provide Purchaser with a reasonable summary of the
financial and other material terms of such Acquisition Proposal.
(c) To the extent that the Board of Directors of the Company shall
conclude, acting in good faith, after receiving advice from outside counsel or
its financial advisor, that the following action is necessary or appropriate in
order for the Board of Directors to act in a manner which is consistent with its
fiduciary duties under applicable law, the Company may:
(i) furnish or cause to be furnished information concerning the
Company and its businesses, properties or assets to a third party;
(ii) engage in discussions or negotiations with a third party
concerning an Acquisition Proposal initiated by such third party;
(iii) following receipt of an Acquisition Proposal, take and
disclose to its stockholders a position contemplated by Rule 14e-2(a) under the
Exchange Act or otherwise make disclosure to the Company's stockholders; and
(iv) following receipt of an Acquisition Proposal, (1) through its
Board of Directors, withdraw, modify or amend its recommendation referred to in
Section 1.2, and/or (2) enter into an agreement providing for the consummation
of such
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Acquisition Proposal; PROVIDED, that no action shall be taken by the Company
pursuant to this subsection (iv) with respect to any Acquisition Proposal until
a time that is after the third business day following Parent's receipt of
written notice advising Parent that the Board of Directors of the Company has
received such an Acquisition Proposal, and specifying the material terms and
conditions of, and identifying the person making, such Acquisition Proposal.
(d) The Company will direct its financial and other advisors and
representatives to comply with each of the covenants contained in this Section
6.8.
6.7. NOTIFICATION OF CERTAIN MATTERS. Each party shall give prompt
notice to the others of (to the extent it has knowledge thereof) (i) the
occurrence or failure to occur of any event, which occurrence or failure would
cause or may cause any representation or warranty on its part contained in this
Agreement to be untrue or inaccurate in any respect which would have a Material
Adverse Effect; and (ii) any failure of such party, or any officer, director,
employee or agent thereof, to comply with or satisfy in all material respects
any covenant, condition or agreement to be complied with or satisfied by it
hereunder.
6.8. LISTING. Parent shall use its reasonable best efforts to have the
shares of Parent Stock issued pursuant to this Agreement admitted for listing on
the NYSE, the TSE and the ME (together, the "LISTING"). Any fees in connection
with the Listing payable prior to the Effective Time shall be paid by Parent.
Parent will take no action, for at least three years from the Effective Time, to
cause the Listing to be terminated, except with respect to the NYSE listing, in
accordance with the applicable requirements of the NYSE, including compliance
with Rule 500 of the NYSE, as interpreted in Section 806 of the NYSE Listed
Company Manual as in effect on the date hereof.
6.9. ACCESS TO INFORMATION. Subject to and in accordance with the
Antitrust Laws, from the date hereof to the Effective Time, each party hereto
shall, and shall cause its subsidiaries, officers, directors, employees and
agents to, afford the officers, employees and agents of the other parties hereto
reasonable access at all reasonable times to its officers, employees, agents,
premises, books and records, and properties and shall furnish the other parties
hereto all financial, operating, personal, compensation, tax and other data and
information, that the other party, through its officers, employees or agents,
may reasonably request.
6.10. STOCKHOLDER CLAIMS. The Company shall not settle or compromise
any claim brought by any present, former or purported holder of any securities
of the Company in connection with the Offer or the Merger prior to the Effective
Time, without the prior written consent of Purchaser, which consent may not be
unreasonably withheld, and shall notify Purchaser promptly upon receipt of all
written demands for appraisal rights.
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6.11. TREATMENT OF EMPLOYEE COMPENSATION AND BENEFITS.
(a) Effective no later than the Effective Time, the Company (or Parent,
as applicable) shall enter into agreements and adopt plans or programs, the
terms and conditions of which shall be consistent in all material respects with
those set forth in Section 6.11 of the Company Disclosure Schedule.
(b) For the two - year period immediately following the consummation of
the Offer, Parent shall provide each Group A and Group B executive (as described
in Section 6.11 of the Company Disclosure Schedule) with an annual base salary
and target bonus no less than such executive was eligible to receive immediately
prior to the consummation of the Offer and with employee benefits including
pension, welfare, fringe and other employee benefits that are comparable, on a
benefit by benefit basis, to these benefits as provided by the Company
immediately prior to the consummation of the Offer. Notwithstanding the
foregoing, during the two - year period immediately following the consummation
of the Offer, all employees of Parent who were employees of the Company
immediately prior to the consummation of the Offer shall be entitled to
severance benefits upon termination without Cause (as defined below) that are no
less than those under the severance policies of the Company in effect
immediately prior to the consummation of the Offer.
(c) Bonuses for the fiscal year ended December 31, 1999 ("1999 Fiscal
Year") shall be paid to each participant ("Participant") under the Company's
Management by Objective bonus plan ("MBO Plan") as follows: (i) at the
consummation of the Offer, a pro rata bonus, if any, shall be paid based on
achievement of the Participant's performance targets under the MBO Plan, as
determined by Marc L. Reisch, and the portion of the 1999 Fiscal Year completed
as of the consummation of the Offer and (ii) the balance of such 1999 bonus, if
any, shall be paid on January 31, 2000, based on achievement of the
Participant's performance targets under the MBO Plan, as determined by Mr.
Reisch and Charles G. Cavell, and the portion of the 1999 Fiscal Year after the
consummation of the Offer; provided, however, that if such Participant's
employment is terminated after the consummation of the Offer by Parent or the
Company for other than Cause (as defined in Section 6.11(d)) or by the
Participant with Good Reason (as defined in Section 6.11(d)), the balance of
such 1999 bonus, if any, shall be paid promptly following termination based on
the achievement of Participant's performance targets as determined by Mr. Reisch
at the consummation of the Offer (pursuant to (i) above) and the portion of the
1999 Fiscal Year completed after the consummation of the Offer.
(d) For purposes of this Section 6.11, (1) "Cause" shall mean the
Company Employee's (i) conviction or guilty plea or plea of nolo contendere of a
felony involving fraud or dishonesty, (ii) theft or embezzlement of property
from Parent or (iii) willful and continued refusal by the Company Employee
substantially to perform the
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duties of his position (other than any such failure resulting from the Company
Employee's incapacity due to physical or mental illness or any such actual or
anticipated failure after the Company Employee's issuance of a notice of
termination for Good Reason) within a reasonable period of time after receipt of
written notice from Parent specifying the manner in which Parent believes the
Company Employee is not substantially performing the duties of his position. For
this definition, no act or failure to act shall be deemed willful unless done,
or omitted to be done, by the Company Employee not in good faith and without
reasonable belief that the Company Employee's act, or failure to act was in the
best interests of Parent and (2) Good Reason shall mean (i) the Company Employee
is not elected, reelected, or otherwise continued in the office of Parent or any
of its subsidiaries which he held immediately prior to the consummation of the
Offer, or he is removed as a member of the Board of Directors of Parent or any
of its subsidiaries if the Company Employee was a Director immediately prior to
the consummation of the Offer; (ii) the Company Employee's duties,
responsibilities, status or authority are materially reduced, diminished or
adversely altered from those in effect on the consummation of the Offer or the
Company Employee is assigned duties inconsistent with the Company Employee's
status as a senior officer of Parent; (iii) the Company Employee's future or
current compensation or benefits are reduced; (iv) Parent reduces the potential
earnings of the Company Employee under any performance-based bonus, equity or
other incentive plan of Parent in effect immediately prior to consummation of
the Offer; (v) Parent requires that the Company Employee's employment be based
at a location more than ten miles away from the location at which it is based at
consummation of the Offer; (vi) any purchaser, assign, surviving corporation, or
successor of Parent or its business or assets (whether by acquisition, merger,
liquidation, consolidation, reorganization, sale or transfer of assets of
business or otherwise) fails or refuses to expressly assume in writing this
Agreement and all of the duties and obligations of Parent thereunder (vii)
Parent fails to pay any amounts due to the Company Employee; (viii) Parent
requires the Company Employee to travel substantially more than he traveled
prior to consummation of the Offer; or (ix) Parent breaches any of the
provisions of this Agreement.
(e) If the Offer is terminated pursuant to Section 1.1(e), references
to "consummation of the Offer" in this Section 6.11 shall be deemed replaced by
the term "Effective Time".
6.12. INDEMNIFICATION RIGHTS.
(a) From and after the Effective Time, to the extent not covered by the
insurance set forth in the next succeeding sentence, Parent shall indemnify,
defend and hold harmless the officers, directors and employees of the Company or
any of its subsidiaries against all losses, expenses, claims, damages or
liabilities arising out of claims brought or made by third parties, including,
without limitation, derivative claims, in connection with the transactions
contemplated by this Agreement to the fullest extent permitted or required under
applicable law and shall advance expenses prior to the final disposition of such
claims and liabilities to which this sentence applies. Parent agrees
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that all rights to indemnification now existing in favor of the directors,
officers or employees of the Company or any of its subsidiaries (including,
without limitation, any person who was or becomes a director, officer or
employee prior to the Effective Time (the "INDEMNIFIED PARTIES")) under the
Delaware Law or as provided in the Company's Amended and Restated Certificate of
Incorporation or by By-Laws with respect to matters occurring on or prior to the
Effective Time shall survive the Merger and shall continue in full force and
effect for a period of not less than six years after the Effective Time (or, in
the case of claims or other matters occurring on or prior to the expiration of
such six year period which have not been resolved prior to the expiration of
such six year period, until such matters are finally resolved) and Parent shall
honor, and shall cause the Company to honor, all such rights. Parent shall cause
to be maintained in effect for not less than six years from the Effective Time
the current policies of the directors' and officers' liability insurance
maintained by the Company (provided that Parent may substitute therefor policies
of at least the same coverage containing terms and conditions which are no less
advantageous to the Company's directors, officers or employees) with respect to
matters occurring on or prior to the Effective Time; provided that in no event
shall Parent or the Company be required to expend annually more than 200% of the
amount that the Company spent for these purposes in the last fiscal year to
maintain or procure insurance coverage pursuant hereto; and provided further
that if Parent or the Company are unable to obtain the insurance called for by
this section, Parent or the Company will obtain as much comparable insurance as
is available for such amount per year.
(b) Without limiting the foregoing, in the event any claim, action,
suit, proceeding or investigation to which the provisions of this Section 6.12
are applicable is brought against any Indemnified Party (whether arising before
or after the Effective Time), (i) any counsel retained by the Indemnified
Parties for any period after the Effective Time shall be subject to the approval
of the Surviving Corporation (such approval to not be unreasonably withheld; it
being hereby agreed that the retention of any of Simpson Thacher & Bartlett,
Richards, Layton & Finger or Osler, Hoskin & Harcourt by the Indemnified Parties
shall not require the approval of the Surviving Corporation)); (ii) after the
Effective Time, the Surviving Corporation shall pay all reasonable fees and
expenses of such counsel for the Indemnified Parties promptly as statements
therefor are received; and (iii) after the Effective Time, the Surviving
Corporation will use reasonable efforts to assist in the vigorous defense of any
such matter, provided that the Surviving Corporation shall not be liable for any
settlement of any claim effected without its written consent, which consent,
however, shall not be unreasonably withheld. Any Indemnified Party wishing to
claim indemnification under this Section 6.12, upon learning of any such claim,
action, suit, proceeding or investigation, shall notify the Surviving
Corporation (but the failure so to notify the Surviving Corporation shall not
relieve it from any liability which it may have under this Section 6.12 except
to the extent such failure materially prejudices the Surviving Corporation). The
Surviving Corporation shall be liable for the fees and expenses hereunder with
respect to only one law firm, in addition to local counsel in each applicable
jurisdiction, to represent the Indemnified Parties as a group with respect to
each such matter unless there is, under applicable standards of
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professional conduct, a conflict between the positions of any two or more
Indemnified Parties that would preclude or render inadvisable joint or multiple
representation of such parties.
6.13. PARENT GUARANTEE. Parent unconditionally and irrevocably
guarantees to the Company the due, prompt and faithful performance of, and
compliance with, all agreements and obligations of Purchaser in this Agreement.
Parent hereby agrees that the Company shall have the right to enforce the
guarantee set forth in this Section 6.13 to ensure Purchaser's performance of,
and compliance with, all agreements and obligations of Purchaser in this
Agreement without being required to first proceed against Purchaser.
6.14. AFFILIATES. Prior to the Effective Time of the Merger, the
Company shall deliver to Parent a letter identifying all persons who are, at the
time this Agreement is submitted for adoption by the shareholders of the
Company, "affiliates" of the Company for purposes of Rule 145 under the
Securities Act. The Company shall use its reasonable efforts to cause each such
person to deliver to Parent as of the Closing Date, a written agreement
substantially in the form attached as EXHIBIT B hereto.
ARTICLE VII
CONDITIONS
7.1. CONDITIONS TO OBLIGATIONS OF EACH PARTY TO EFFECT THE MERGER. The
respective obligations of each party to effect the Merger shall be subject to
the fulfillment at or prior to the Effective Time of the following conditions:
(a) Unless the Offer has been terminated pursuant to Section 1.1(e),
the Offer shall have been consummated in accordance with its terms; PROVIDED,
HOWEVER, that this condition shall be deemed to be satisfied if Purchaser fails
to accept for payment and pay for Shares pursuant to the Offer other than as a
result of a failure of a condition thereof;
(b) If the Offer has been terminated pursuant to Section 1.1(e), the
waiting period applicable to the consummation of the Merger under the H-S-R Act
shall have expired or been terminated;
(c) the requisite approval of the respective shareholders of Parent (if
required), and of the Company shall have been obtained;
(d) the Form F-4 shall have become effective under the Securities Act
and shall not be the subject of any stop order or proceedings seeking a stop
order and no stop order or similar restraining order shall be threatened or
entered by the SEC or any state securities administration preventing the Merger,
and all necessary rulings or orders of Canadian securities authorities exempting
the distribution by Parent of the shares of
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Parent Stock issuable in connection with the Merger and the resale of such
shares from the registration and prospectus delivery requirements and resale
restrictions of applicable Canadian securities laws shall have been received;
(e) the shares of Parent Stock issuable to the Company's stockholders
and holders of Company Stock Options as contemplated by this Agreement shall
have been approved for listing on the NYSE, TSE and ME subject to official
notice of issuance;
(f) there shall have been no law, statute, rule or regulation in the
United States, Canada, the European Union or member state of the European Union
enacted or promulgated which is in effect and, in the judgment of a majority of
the Continuing Directors (or if the Offer has been terminated pursuant to
Section 1.1(e), in the reasonable judgement of the Company), has the effect of
making the acquisition of Shares illegal or otherwise prohibits consummation of
the Merger; and
(g) there shall not be in effect any preliminary or final injunction or
temporary restraining order or other order or decree issued by any federal,
provincial or state court or administrative agency or authority in the United
States, Canada, the European Union or any member state of the European Union
enjoining, restraining or otherwise prohibiting the Offer, the Merger or the
acquisition by Purchaser of Shares.
7.2. ADDITIONAL CONDITIONS TO OBLIGATION OF PARENT AND PURCHASER TO
EFFECT THE MERGER. If the Offer is terminated pursuant to Section 1.1(e), then
the obligations of Parent and Purchaser to consummate the Merger shall also be
subject to the satisfaction at or prior to the Effective Time of the following
conditions:
(a) The representations and warranties of the Company set forth in this
Agreement shall be true and correct immediately prior to the Effective Time,
except for failures to be true and correct that would not be reasonably likely
to have a Material Adverse Effect, PROVIDED, HOWEVER, that representations or
warranties which by their terms are given as of a specified date shall be true
and correct as of such date (except for failures to be true and correct that
would not be reasonably likely to have a Material Adverse Effect).
(b) The Company shall have performed and complied in all material
respects with all agreements and covenants required to be performed or complied
with by it on or before the Effective Time.
7.3. ADDITIONAL CONDITIONS TO OBLIGATION OF THE COMPANY TO EFFECT THE
MERGER. If the Offer is terminated pursuant to Section 1.1(e), then the
obligations of the Company to consummate the Merger shall also be subject to the
satisfaction at or prior to the Effective Time of the following conditions:
(a) The representations and warranties of Parent and Purchaser set
forth in this Agreement shall be true and correct immediately prior to the
Effective
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Time, except for failures to be true and correct that would not be reasonably
likely to have a Material Adverse Effect, PROVIDED, HOWEVER, that
representations or warranties which by their terms are given as of a specified
date shall be true and correct as of such date (except for failures to be true
and correct that would not be reasonably likely to have a Material Adverse
Effect).
(b) Parent and Purchaser shall have performed and complied in all
material respects with all agreements and covenants required to be performed or
complied with by them on or before the Effective Time.
ARTICLE VIII
TERMINATION, AMENDMENT AND WAIVER
8.1. TERMINATION. This Agreement may be terminated at any time prior to
the Effective Time, whether prior to or after approval by the stockholders of
the Company:
(a) by written mutual consent of Purchaser and the Company prior to the
consummation of the Offer (or, if the Offer has been terminated pursuant to
Section 1.1(e), prior to the Effective Time);
(b) by either Purchaser or the Company:
(i) Unless the Offer has been terminated pursuant to Section 1.1(e), if
the Offer shall not have been consummated by November 10, 1999, or, if all of
the Offer Conditions other than the Minimum Condition shall have been satisfied
by November 10, 1999, such later date as provides at least 15 business days from
the date the Purchaser shall have publicly announced that all of the Offer
Conditions other than the Minimum Condition have been satisfied; or
(ii) a permanent injunction or other final, non-appealable order by any
federal or state court in the United States or federal or provincial court in
Canada which prohibits the consummation of the Merger shall have been issued and
remain in effect; PROVIDED, HOWEVER, that prior to invoking this right of
termination each party agrees to comply with Section 6.5 hereof; and, PROVIDED
FURTHER, that the occurrence of an event described in this Section 8.1(b)(ii)
related to the Antitrust Laws shall constitute a breach of the covenant of
Parent and Purchaser in Section 6.5(b); or
(iii) if the Offer has been terminated pursuant to Section 1.1(e) and
if the Merger has not been consummated on or prior to November 19, 1999;
(c) by Purchaser prior to the consummation of the Offer (or, if the
Offer has been terminated pursuant to Section 1.1(e), prior to the Effective
Time):
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(i) if (1) the Board of Directors of the Company shall have failed to
recommend, or shall have withdrawn, its approval or recommendation of the Offer
(unless the Offer has been terminated pursuant to Section 1.1.(e)) or the Merger
or shall have resolved to do any of the foregoing; or (2) if the Company shall
have entered into a definitive agreement to accept an Acquisition Proposal;
(ii) if the Board of Directors of the Company shall have modified its
approval of the Offer (unless the Offer has been terminated pursuant to Section
1.1.(e)) or the Merger in a manner adverse to Purchaser and the Minimum
Condition shall not have been met on the then scheduled expiration date of the
Offer immediately following such modification;
(iii) if the Offer shall have terminated or expired in accordance with
the terms of this Agreement (unless the Offer has been terminated pursuant to
Section 1.1.(e)) without Purchaser or a subsidiary of Parent having purchased
any Shares thereunder, PROVIDED, HOWEVER, that prior to invoking this right of
termination Purchaser agrees to comply with Section 1.1(c) hereof; or
(d) by the Company prior to the consummation of the Offer (or if the
Offer has been terminated pursuant to Section 1.1(e), prior to the Effective
Time):
(i) if the Company withdraws its recommendation of the Offer (unless
the Offer has been terminated pursuant to Section 1.1(e)) or the Merger pursuant
to Section 6.6(c)(iv)(1), or takes the actions described in Section
6.6(c)(iv)(2), and such action is taken pursuant to, and in compliance with,
such provision; or
(ii) Unless the Offer has been terminated pursuant to Section 1.1(e),
if the Offer shall not have been consummated by October 11, 1999 (and if the
Offer has been terminated pursuant to Section 1.1(e), if the Merger shall not
have been consummated by October 11, 1999) by reason of not having obtained all
required approvals under Antitrust Laws, PROVIDED, HOWEVER, that such date shall
be extended by each day that the Company is not in substantial compliance with
any second request issued on the transactions contemplated by this Agreement but
only if and to the extent that Parent and Purchaser are in substantial
compliance when the Company is not.
Notwithstanding the above, neither the Company nor Purchaser shall be
permitted to terminate this Agreement if the event which gave rise to such
termination right is a result of or arose in connection with any action or
inaction of the party seeking to terminate taken or not taken in breach of the
terms hereof.
8.2. AMENDMENT. Subject to applicable law, this Agreement may be
amended by an instrument signed by each of the parties hereto before or after
approval of the Merger
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by the stockholders of the Company, if required; PROVIDED, HOWEVER, that after
consummation of the Offer (or, if the Offer has been terminated pursuant to
Section 1.1(e), after the approval of the Merger by the stockholders of the
Company), no amendment may be made which decreases the amount of the Merger
Consideration or effects any change which would adversely affect the
stockholders of the Company (other than Purchaser and its affiliates) without
the approval of the stockholders of the Company (other than Purchaser and its
affiliates).
8.3. FEES UPON TERMINATION. The Company agrees that if this Agreement
is terminated pursuant to:
(a) Section 8.1(b)(i) and at the time of such termination any person,
entity or group (as defined in Section 13(d)(3) of the Exchange Act) (other than
Parent or any of its affiliates) shall have become the beneficial owner of more
than 30% of the outstanding Shares (with appropriate adjustments for
reclassifications of capital stock, stock dividends, stock splits, reverse stock
splits and similar events) and such person, entity or group (or any subsidiary
of such person, entity or group) thereafter shall enter into a definitive
written agreement with the Company to accept an Acquisition Proposal at any time
on or prior to the date which is six months after the termination of this
Agreement and such transaction is thereafter consummated;
(b) Sections 8.1(c)(i)(2) or Section 8.1(d)(i); or
(c) Sections 8.1(c)(i)(1), 8.1(c)(ii) or 8.1(c)(iii), and in each case,
prior to the time of termination of this Agreement, there shall exist a bona
fide Acquisition Proposal that has been made known to the Company or publicly
announced by a third party that is more favorable from a financial point of view
than the Offer and the Merger, the Company shall enter into a definitive written
agreement to accept an Acquisition Proposal from such party at any time on or
prior to the date which is six months after the termination of this Agreement
and such transaction shall thereafter be consummated;
(d) then the Company shall pay to Purchaser the Termination Amount (as
defined below). Such payment shall be made as promptly as practicable but in no
event later than (i) in the case of paragraph (b) of this Section, two business
days following termination of this Agreement, (ii) in the case of paragraph (a)
of this Section, upon consummation of such Acquisition Proposal, and (iii) in
the case of paragraph (c) of this Section, upon entering into a definitive
agreement to accept such Acquisition Proposal. Each such payment shall be made
by wire transfer of immediately available funds to an account designated by
Purchaser without set-off or deduction. The term "Termination Amount" as used
herein shall mean (i) if (A) any third party has on or prior to July 26, 1999,
and, at such time, the Company was not in violation of Section 6.6 hereof, (x)
made a bona fide Acquisition Proposal or (y) requested that the Company enter
into negotiations or discussions concerning an Acquisition Proposal or possible
Acquisition Proposal and has indicated a potential price or range of prices in
connection therewith, and (B) a payment is required to be made pursuant to this
Section
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8.3 by the Company to Purchaser as a result of the Company entering into a
written agreement to accept an Acquisition Proposal with any such third party or
such third party acquiring 50% or more of the outstanding Shares, $10,662,000
and (ii), in each other circumstance, $42,648,000.
8.4. EFFECT OF TERMINATION.
(a) The provisions of Sections 6.4 (expenses), 6.12 (indemnification)
and 8.3 (termination fees) shall survive the termination of this Agreement. The
provisions of the Confidentiality Agreement shall also survive the termination
of this Agreement.
(b) The rights of termination provided for in Section 8.1 shall not be
an exclusive remedy hereunder but shall be in addition to any other legal or
equitable remedies that may be available to any non-defaulting party hereto
arising out of any default hereunder by any other party hereto, and any party
hereto shall continue to have the right following termination hereof to all
legal and equitable remedies against any other party hereto for any breach of
any representation, warranty, covenant or agreement contained herein by such
other party prior to the termination hereof; PROVIDED, HOWEVER, that in the
event that the amount set forth in Section 8.3 shall have been paid to
Purchaser, there shall be no liability on the part of either the Company or its
respective officers or directors, except for a willful and intentional breach of
any representation, warranty, covenant or agreement contained herein.
8.5. WAIVER. At any time prior to the Effective Time and subject to the
provisions of this Agreement, any party hereto may (i) extend the time for the
performance of any of the obligations or other acts of any other party hereto or
(ii) waive compliance with any of the agreements of any other party or with any
conditions to its own obligations, in each case only to the extent such
obligations, agreements and conditions are intended for its benefit.
ARTICLE IX
GENERAL PROVISIONS
9.1. BROKERS. (a) The Company represents and warrants that no broker,
finder or investment banker is entitled to any brokerage, finder's or other fee
or commission, or to the reimbursement of any of its expenses, in connection
with the Offer or the Merger or any similar transaction based upon arrangements
made by or on behalf of the Company, except for the arrangements between the
Company and Morgan Stanley & Co.
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Incorporated and the arrangements between the Company and Kohlberg Kravis
Roberts & Co., L.P.
(c) Parent and Purchaser represent and warrant to the Company that no
broker, finder or investment banker is entitled to any brokerage, finder's or
other fee or commission, or to the reimbursement of any of its expenses, in
connection with the Offer or the Merger or any similar transaction based upon
arrangements made by or on behalf of Parent or Purchaser, except for the
arrangements between Parent and RBC Dominion Securities and Credit Suisse First
Boston Corporation.
9.2. PUBLIC STATEMENTS. Except as required by applicable law or stock
exchange regulation, none of Parent or Purchaser, on the one hand, or the
Company, on the other hand, shall make any public announcement or statement with
respect to the Offer, the Merger or this Agreement without the approval of the
Company or Purchaser, respectively, which approval shall not be unreasonably
withheld. Moreover, the parties hereto agree to consult with each other prior to
issuing each public announcement or statement with respect to the Offer, the
Merger or this Agreement.
9.3. NOTICES. All notices and other communications hereunder shall be
given by telephone and immediately confirmed in writing and shall be deemed
given if delivered personally or mailed by registered or certified mail (return
receipt requested) to the parties at the following addresses (or at such other
address for a party as shall be specified by like notice):
(a) if to Parent or Purchaser:
QUEBECOR PRINTING INC.
612 St. Jacques Street
Montreal, Quebec H3C 4M8
Attention: Vice President, Legal Affairs & Secretary
with copies to:
Arnold & Porter
399 Park Avenue
New York, New York 10022-4690
Attention: John A. Willett, Esq.
(b) if to the Company:
WORLD COLOR PRESS, INC.
The Mill
340 Pemberwick Road
Greenwich, CT 06831
Attention: General Counsel
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with copies to:
Simpson Thacher & Bartlett
425 Lexington Avenue
New York, NY 10017
Attention: David J. Sorkin, Esq.
9.4. INTERPRETATION. When a reference is made in this Agreement to a
subsidiary of Parent or the Company, the word "SUBSIDIARY" means any "MAJORITY-
OWNED SUBSIDIARY" (as defined in Rule 12b-2 promulgated under the Exchange Act)
of Parent or the Company, as the case may be; PROVIDED, HOWEVER, that the
Company shall in no event and at no time be considered a subsidiary of Purchaser
for purposes of this Agreement. "Affiliate" of a person means a person that,
directly or indirectly, through one or more intermediaries, controls, is
controlled by, or is under common control with, the first mentioned person. The
headings contained in this Agreement are for reference purposes only and shall
not affect in any way the meaning or interpretation of this Agreement.
References to Sections and Articles refer to sections and articles of this
Agreement unless otherwise stated. Any reference to dollars or "$" shall refer
to U.S. dollars.
9.5. REPRESENTATIONS AND WARRANTIES. Any matters disclosed in any of a
party's representations and warranties or the section of such party's disclosure
schedule with respect to such representations and warranties shall be deemed
disclosed for purposes of the other representations and warranties of such party
as long as the applicability of such matters to such representations and
warranties is reasonably apparent.
9.6. SEVERABILITY. If any term, provision, covenant or restriction of
this Agreement is held by a court of competent jurisdiction to be invalid, void
or unenforceable, the remainder of the terms, provisions, covenants, and
restrictions of this Agreement shall remain in full force and effect and shall
in no way be affected, impaired or invalidated and the parties shall negotiate
in good faith to modify the Agreement to preserve, to the extent legally
permitted, each party's anticipated benefits and obligations under this
Agreement.
9.7. MISCELLANEOUS. This Agreement (including the agreements that are
exhibits hereto) and the Confidentiality Agreement constitute the entire
agreement, and supersede all other prior agreements and undertakings, both
written and oral, among the parties with respect to the subject matter hereof.
This Agreement (a) is not intended to confer upon any other person any rights or
remedies hereunder, except as set forth in Section 9.10; and (b) shall not be
assigned by operation of law or otherwise, except that Parent and Purchaser may
assign all or any portion of their rights under this Agreement to any of their
subsidiaries (PROVIDED, however, that in the event of any such assignment,
Parent shall cause such assignee to execute and become a party to this agreement
and such assignee shall be vested with all the rights and obligations assigned
to it by the assignor as if it were named in this Agreement), but no such
assignment shall relieve Parent or Purchaser, as applicable, of their
obligations hereunder, and except that this Agreement
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<PAGE>
may be assigned by operation of law to any corporation with or into which
Purchaser may be merged as long as the surviving corporation in such merger
complies with the representations and warranties and covenants of Purchaser set
forth herein and (c) shall be governed in all respects, including validity,
interpretation and effect, by the internal laws of the State of Delaware,
without giving effect to the principles of conflict of laws thereof. The parties
hereto expressly consent to the personal jurisdiction of the courts of the
United States of America and of the courts of the State of Delaware, in each
case sitting in the State of Delaware. Each of the parties hereto irrevocably
waives and agrees not to assert, by way of motion, as a defense, counterclaim or
otherwise, in any action or proceeding with respect to this Agreement, (a) the
defense of sovereign immunity, (b) any claim that it is not personally subject
to the jurisdiction in any federal court located in the State of Delaware or
Chancery or other Courts of the State of Delaware for any reason other than the
failure to serve process in accordance with this Section 9.7, (c) that it or its
property is exempt or immune from jurisdiction of any such court or from any
legal process commenced in such courts (whether through service of notice,
attachment prior to judgement, attachment in aid of execution of judgement,
execution of judgement or otherwise), and (d) to the fullest extent permitted by
applicable law, that (i) the suit, action or proceeding in any such court is
brought in an inconvenient forum (ii) the venue of such suit, action or
proceeding is improper or (iii) this Agreement, or the subject matter hereof,
may not be enforced in or by such courts. Parent further designates Purchaser as
its duly appointed agent for the service of summonses and other legal processes
in the State of Delaware (a "Service Agent").
9.8. COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which shall constitute an original, but together shall be
construed as one document.
9.9. SURVIVAL. The representations, warranties, covenants and
agreements of the parties set forth herein shall terminate as of the Effective
Time, except as provided in Sections 6.11 and 6.12.
9.10. THIRD PARTY BENEFICIARIES. The parties entitled to the employee
benefits pursuant to the terms of Section 6.11 and indemnification pursuant to
the terms of Section 6.12 are expressly made third party beneficiaries solely of
Section 6.11 and Section 6.12, respectively, of this Agreement. In addition,
holders of Company Stock Options and Company Restricted Stock are expressly made
third party beneficiaries solely of Section 2.6 of this Agreement.
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<PAGE>
IN WITNESS WHEREOF, Parent, Purchaser and the Company have caused this
Agreement to be executed on the date first written above by their respective
officers thereunder duly authorized.
QUEBECOR PRINTING INC.
By: /s/ Charles G. Cavell
------------------------------------
Name: Charles G. Cavell
Title: President & Chief Executive Officer
By: /s/ Christian M. Paupe
------------------------------------
Name: Christian M. Paupe
Title: Executive Vice President
PRINTING ACQUISITION INC.
By: /s/ Charles G. Cavell
------------------------------------
Name: Charles G. Cavell
Title: President
By: /s/ Christian M. Paupe
------------------------------------
Name: Christian M. Paupe
Title: Treasurer
WORLD COLOR PRESS, INC.
By: /s/ Robert G. Burton
------------------------------------
Name: Robert G. Burton
Title: Chairman of the Board and
Chief Executive Officer
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<PAGE>
ANNEX I
CONDITIONS TO THE OFFER
The capitalized terms used in this Annex I have the meanings set forth
in the attached Agreement, except that the term "Merger Agreement" shall be
deemed to refer to the attached Agreement.
Purchaser shall not be required to accept for payment or, subject to
any applicable rules and regulations of the Commission, including Rule 14e-1(c)
under the Exchange Act (relating to Purchaser's obligation to pay for or return
tendered shares of Common Stock promptly after termination or withdrawal of the
Offer), pay for any Shares tendered pursuant to the Offer, and may postpone the
acceptance for payment, or, subject to the restriction referred to above,
payment for, Shares tendered pursuant to the Offer, and may terminate the Offer
(whether or not any Shares have theretofore been purchased or paid for) to the
extent permitted by the Merger Agreement, if (i) at the expiration of the Offer,
a number of Shares which, together with any Shares owned by Parent or Purchaser,
would constitute more than 50% of the voting power (determined on a
fully-diluted basis), of all the securities of the Company entitled to vote
generally in a merger shall not have been validly tendered and not withdrawn
prior to the expiration of the Offer (the "MINIMUM CONDITION"), or (ii) if, at
any time on or after July 12, 1999 and prior to the acceptance for payment for
any such Shares, any of the following conditions occurs or has occurred and
continues to exist (each of paragraphs (a) through (f) providing a separate and
independent condition to Purchaser's obligations pursuant to the Offer):
(a) there shall be in effect any preliminary or final injunction or
temporary restraining order or other order or decree issued by any Canadian or
United States federal, provincial or state court or United States federal or
administrative agency or authority, enjoining, restraining or otherwise
prohibiting the Offer, the Merger or the acquisition by Purchaser of Shares;
(b) any waiting periods under the H-S-R Act applicable to the purchase
of Shares pursuant to the Offer shall not have expired or been terminated;
(c) there shall have been any law, statute, rule or regulation in the
United States, Canada, the European Union or any member state of the European
Union, enacted, promulgated or proposed that has the effect of making the
acquisition of Shares illegal or otherwise prohibits consummation of the Merger;
(d) any representation or warranty of the Company in the Merger
Agreement shall not be true and correct in any respect that is reasonably likely
to have a Material Adverse Effect, in each case as if such representation or
warranty were made at
<PAGE>
the time of such determination (except for any representations or warranties
which by their terms are given as of a specified date, PROVIDED that such
representations or warranties shall have been true and correct on such date,
except for failures to be true and correct that would not be reasonably likely
to have a Material Adverse Effect);
(e) the Company shall fail to perform or comply in any material respect
with any covenant or agreement to be performed or complied with by the Company
under the Merger Agreement required to be performed or complied with by it prior
to the consummation of the Offer;
(f) The Merger Agreement shall have been terminated in accordance with
its terms;
(g) which, in the reasonable judgment of Purchaser with respect to each
and every matter referred to above and regardless of the circumstances giving
rise to any such condition (except for any action or inaction by Purchaser,
Parent or any of their respective affiliates constituting a breach of the Merger
Agreement), makes it inadvisable to proceed with the Offer or with such
acceptance for payment of or payment for Shares or to proceed with the Merger.
The foregoing conditions are for the sole benefit of Purchaser and (i)
may be asserted by Purchaser regardless of the circumstances giving rise to such
condition (except for any action or inaction by Purchaser, Parent or any of
their respective affiliates constituting a breach of the Merger Agreement) or
(ii) (other than the Minimum Condition) may be waived by Purchaser in whole at
any time or in part from time to time in its reasonable discretion. The failure
by Purchaser at any time to exercise any of the foregoing rights shall not be
deemed a waiver of any such right and each such right shall be deemed an ongoing
right and may be asserted at any time and from time to time.
<PAGE>
EXHIBIT A
AMENDED AND RESTATED
CERTIFICATE OF INCORPORATION
OF
QUEBECOR WORLD (USA) INC.
FIRST
The name of the corporation is Quebecor World (USA) Inc. (the
"Corporation"). The Corporation was originally incorporated under the name of
World Color Press, Inc. The original certificate of incorporation of the
Corporation was filed with the Delaware Secretary of State on September 24,
1984.
SECOND
The address of its registered office in the State of Delaware is
Corporation Trust Center, 1209 Orange Street, in the City of Wilmington, County
of New Castle. The name of its registered agent at such address is The
Corporation Trust Company.
THIRD
The nature of the business or purposes to be conducted or promoted is
to engage in any lawful act or activity for which corporations may be organized
under the General Corporation Law of the State of Delaware (the "DGCL").
FOURTH
The total number of shares of common stock which the Corporation shall
have the authority to issue is three thousand (3,000), par value $1.00 per
share, amounting in the aggregate to $3,000.
FIFTH
The Corporation is to have perpetual existence.
<PAGE>
SIXTH
In furtherance and not in limitation of the powers conferred by
statute, the Board of Directors is expressly authorized to make, alter or repeal
the by-laws of the Corporation.
SEVENTH
Elections of directors need not be by written ballot unless the by-laws
of the Corporation shall so provide. Meetings of stockholders may be held within
or without the State of Delaware, as the by-laws may provide. The books of the
Corporation may be kept (subject to any provision contained in the statutes)
outside the State of Delaware at such place or places as may be designated from
time to time by the Board of Directors or in the by-laws of the Corporation.
EIGHTH
The Corporation reserves the right to amend, alter, change or repeal
any provision contained in this Certificate of Incorporation, in the manner now
or hereafter prescribed by statute, and all rights conferred upon stockholders
herein are granted subject to this reservation.
NINTH
No director of the Corporation shall be personally liable to the
Corporation or its stockholders for monetary damages for breach of fiduciary
duty as director, except for liability (i) for any breach of the director's duty
of loyalty to the Corporation or its stockholders, (ii) for acts or omissions
not in good faith or which involve intentional misconduct or a knowing violation
of law, (iii) under Section 174 of the General Corporation Law of the State of
Delaware, or (iv) for any transaction from which the director derived an
improper personal benefit.
The undersigned hereby declare that this Amended and Restated
Certificate of Incorporation has been duly adopted in accordance with the
provisions of Sections 242 and 245 of the General Corporation Law of the State
of Delaware.
<PAGE>
IN WITNESS WHEREOF, under penalties of perjury, the undersigned have
examined this Amended and Restated Certificate of Incorporation, and to the best
of their knowledge it is true, correct and complete, and the undersigned further
declare that the undersigned have authority to sign this Amended and Restated
Certificate of Incorporation on behalf of Quebecor World (USA) Inc., all as of
this ____th day of __________.
Quebecor World (USA) Inc.
By:
------------------------------------
Name:
Title:
ATTEST:
- -----------------------------
Name:
Its Secretary
<PAGE>
EXHIBIT B
Form of Company Affiliate Letter
QUEBECOR PRINTING INC.
[Address]
Ladies and Gentlemen:
The undersigned, a holder of shares of common stock, par value $0.01
per share ("Company Common Stock"), of World Color Press, Inc., a Delaware
corporation (the "Company"), is entitled to receive in connection with the
merger (the "Merger") between the Company and a direct wholly owned subsidiary
of Quebecor Printing Inc. ("Parent") subordinate voting shares, no par value
("Parent Stock"), of Parent. The undersigned acknowledges that the undersigned
may be deemed an "affiliate" of the Company within the meaning of Rule 145
("Rule 145") promulgated under the Securities Act of 1933, as amended (the
"Act"), although nothing contained herein should be construed as an admission of
such fact.
If in fact the undersigned is an affiliate under the Act, the
undersigned's ability to sell, assign or transfer the shares received by the
undersigned pursuant to the Merger may be restricted unless such transaction is
registered under the Act or an exemption from such registration is available.
The undersigned understands that such exemptions are limited and the undersigned
has obtained advice of counsel as to the nature and conditions of such
exemptions, including information with respect to the applicability to the sale
of such securities of Rules 144 and 145(d) promulgated under the Act.
The undersigned hereby represents to and covenants with Parent that the
undersigned will not sell, assign or transfer any of the Parent Stock received
by the undersigned pursuant to the Merger except (i) pursuant to an effective
registration statement under the Act; (ii) in conformity with the limitations
specified by Rules 144 and Rule 145(d); or (iii) in a transaction that, in the
opinion of Simpson Thacher & Bartlett or other counsel reasonably satisfactory
to Parent or as described in a "no-action" or interpretive letter from the Staff
of the Securities and Exchange Commission (the "SEC"), is not required to be
registered under the Act.
In the event of a sale or other disposition by the undersigned of
Parent Stock pursuant to Rule 145(d)(1), the undersigned will supply Parent with
evidence of compliance with such Rule, in the form of a letter in the form of
Annex I hereto. The
<PAGE>
undersigned understands that Parent may instruct its transfer agent to withhold
the transfer of any Parent Stock disposed of by the undersigned, but that upon
receipt of such evidence of compliance including, without limitation, an opinion
of Simpson Thacher & Bartlett or another counsel reasonably satisfactory to
them, the transfer agent shall effectuate the transfer of the shares sold as
indicated in the letter,.
The undersigned acknowledges and agrees that the following legend will
be placed on certificates representing the Parent Stock received by the
undersigned pursuant to the Merger or held by a transferee thereof, which legend
will be removed by delivery of substitute certificates upon receipt of an
opinion in form and substance reasonably satisfactory to Parent from Simpson
Thacher & Bartlett or another independent counsel reasonably satisfactory to
Parent to the effect that such legends are no longer required for the purposes
of the Act or the fourth paragraph of this letter:
"The Securities represented by this certificate were
issued in a transaction to which Rule 145 under the United
States Securities Act of 1933 (the "Act") applies. The
securities represented by this certificate may be transferred
in the United States only in accordance with Rule 145(d) or
pursuant to an effective registration statement or exemption
from registration under the Act."
The undersigned acknowledges that (i) the undersigned has carefully
read this letter and understands the requirements hereof and the limitations
imposed upon the distribution, sale, transfer or other disposition of the Parent
Stock and (ii) the receipt by Parent of this letter is an inducement and a
condition to Parent's obligations to consummate the Merger.
Very truly yours,
<PAGE>
Annex I to Exhibit B
[Date]
Quebecor Printing Inc.
On _____________ the undersigned sold _____________ subordinate voting
shares, no par value, of Quebecor Printing Inc. ("Parent"). The shares were
received by the undersigned in connection with the merger of a direct wholly
owned subsidiary of Parent with and into World Color Press, Inc.
Based upon the most recent report or statement filed by Parent with the
Securities and Exchange Commission, the shares sold by the undersigned were
within the prescribed limitations set forth in paragraph (e) of Rule 144
promulgated under the Securities Act of 1933, as amended (the "Act").
The undersigned hereby represents that the shares were sold in
"brokers' transactions" within the meaning of Section 4(4) of the Act or in
transactions directly with a "market maker" as that term is defined in Section
3(a)(38) of the Securities Exchange Act of 1934, as amended. The undersigned
further represents that the undersigned has not solicited or arranged for the
solicitation of orders to buy the shares in anticipation or in connection with
such transactions, and that the undersigned has not made any payment in
connection with the offer or sale of the shares to any person other than to the
broker who executed the order in respect of such sale.
Very truly yours,
<PAGE>
Exhibit 10.1
TENDER, VOTING AND OPTION AGREEMENT
TENDER, VOTING AND OPTION AGREEMENT (this "AGREEMENT"), dated as of
July 12, 1999, by and among Quebecor Printing Inc., a company formed under the
laws of Canada ("PARENT") and each of the parties listed on the signature page
hereto (each, a "STOCKHOLDER" and collectively, the "STOCKHOLDERS").
WHEREAS, Parent, World Color Press, Inc., a company organized under
the laws of Delaware (the "COMPANY") and Printing Acquisition Inc., a Company
organized under the laws of Delaware and a wholly-owned subsidiary of Parent
("ACQUISITION SUB") are parties to that certain Agreement and Plan of Merger
dated as of the date hereof (the "MERGER AGREEMENT"; capitalized terms used and
not otherwise defined herein having the meaning set forth in the Merger
Agreement);
WHEREAS, Parent and the Company are parties to that certain Stock
Option Agreement dated as of the date hereof (the "STOCK OPTION AGREEMENT");
WHEREAS, pursuant to the Merger Agreement, Acquisition Sub will
commence a tender offer (the "OFFER") to acquire up to 23,500,000 shares of the
outstanding common stock, par value $0.01 per share, of the Company ("COMPANY
COMMON STOCK"), at a price of $35.69 per share in cash (the "PER SHARE AMOUNT")
upon the terms and subject to the conditions set forth in the Merger Agreement;
WHEREAS, as a condition to its willingness to enter into the Merger
Agreement and make the Offer, Parent has required that each of the Stockholders
enter into this Agreement; and
WHEREAS, each Stockholder has agreed that the number of shares of
Company Common Stock ("SHARES") set forth opposite the name of such Stockholder
on Schedule A hereto (the "SUBJECT SHARES") shall be subject to the terms and
conditions of this Agreement.
NOW, THEREFORE, in consideration of the foregoing and the mutual
covenants and agreements herein contained, and intending to be legally bound
hereby, the parties hereby agree as follows:
SECTION 1. AGREEMENTS OF THE STOCKHOLDERS
(a) AGREEMENT TO TENDER. Until the earlier of the termination of the
Merger Agreement and the termination of the Offer without the purchase of Shares
pursuant thereto, each Stockholder hereby agrees to validly tender pursuant to
the Offer and not to withdraw all of such Stockholder's Subject Shares. Each
Stockholder will receive the same Per Share Amount received by the other
stockholders of the Company in the Offer with respect to the Shares tendered by
it in the Offer. On the first business day after the date the Shares are
accepted
<PAGE>
2
for payment and purchased by Acquisition Sub pursuant to the Offer, Acquisition
Sub or Parent shall make payment by wire transfer of immediately available funds
to each Stockholder in an amount in cash equal to the aggregate purchase price
for such Stockholder's Subject Shares in the Offer to an account designated by
such Stockholder. Notwithstanding the foregoing, no Stockholder who is a natural
person will be required to tender any of such Stockholder's Shares if such
Stockholder would be subject to liability under Section 16 of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), as a result of any such
tender of Shares purchased prior to the date of this Agreement.
(b) VOTING. Subject to the receipt of proper notice and the absence
of a preliminary or permanent injunction or other final order by any court or
other administrative or judicial authority barring such action, each Stockholder
shall do the following:
(1) be present, in person or represented by proxy, at each meeting
(whether annual or special, and whether or not an adjourned or postponed
meeting) of the stockholders of the Company, however called, or in
connection with any written consent of the stockholders of the Company, so
that all Subject Shares then held by such Stockholder and entitled to vote
may be counted for the purposes of determining the presence of a quorum at
such meetings; and
(2) at each such meeting held before the Effective Time and with
respect to each such written consent, vote (or cause to be voted), or
deliver a written consent (or cause a consent to be delivered) covering,
all the Subject Shares then held by such Stockholder to approve the Merger
and the Merger Agreement and any action required in furtherance thereof
and against any action which would reasonably be expected to result in a
failure of the conditions described in Article VIII of the Merger
Agreement to be satisfied.
(c) NO INCONSISTENT AGREEMENTS. Each Stockholder shall not enter
into any voting agreement or grant a proxy or power of attorney with respect to
the Subject Shares which is inconsistent with this Agreement.
(d) WAIVER OF APPRAISAL RIGHTS. To the extent permitted by
applicable law, each Stockholder hereby agrees to waive any appraisal,
dissenters' or similar rights that such Stockholder may have under Delaware law
with respect to the Merger.
(e) TRANSFER OF SUBJECT SHARES. From the date hereof until the
earlier of the termination of the Merger Agreement and the consummation of the
Merger, each Stockholder agrees not to transfer (other than pursuant to the
Offer) record ownership or beneficial ownership, or both, of any Subject Shares
to any Person or "group" (as determined pursuant to Rule 13d-5 under the
Exchange Act) other than to an affiliate of such Stockholder that agrees to
comply with the requirements of Section 1 hereof with respect to the transferred
Shares. For the purposes of this Agreement, the term "transfer" means a sale, an
assignment, a grant, a transfer, a pledge, the creation of a lien or other
disposition of any Subject Shares or any
<PAGE>
3
interest of any nature in any Subject Shares, including, without limitation, the
"beneficial ownership" of such Subject Shares (as determined pursuant to
Regulation 13D-G under the Exchange Act).
SECTION 2. REPRESENTATIONS AND WARRANTIES OF STOCKHOLDERS. Each
Stockholder severally represents and warrants to Parent as follows:
(a) EXISTENCE AND POWER. Each Stockholder that is a partnership (1)
is a partnership duly formed, validly existing and in good standing under
the laws of the State of its formation and (2) has full partnership
authority to execute and deliver this Agreement.
(b) AUTHORIZATION; CONTRAVENTION. The execution and delivery by each
Stockholder of this Agreement and the performance by it of its obligations
under this Agreement have, (1) in the case of each Stockholder that is a
partnership, been duly authorized by all necessary action and (2) do not
and will not conflict with or result in a violation pursuant to, (A) in
the case of each Stockholder that is a partnership, any provision of its
organizational documents or partnership agreement, or (B) any loan or
credit agreement, note, mortgage, bond, indenture, lease, benefit plan or
other agreement, obligation, instrument, permit, concession, franchise,
license, judgment, order, decree, statute, law, ordinance, rule or
regulation applicable to such Stockholder, the Subject Shares or any of
such Stockholder's other material properties or assets.
(c) BINDING EFFECT. This Agreement constitutes a valid and binding
obligation of such Stockholder, enforceable against such Stockholder in
accordance with its terms, except as such enforceability may be limited by
bankruptcy, insolvency, reorganization, moratorium and similar laws
relating to or affecting creditors' rights generally, by general equity
principles (regardless of whether such enforceability is considered in a
proceeding in equity or at law), or by an implied covenant of good faith
and fair dealing.
(d) OWNERSHIP. As of the date hereof, each Stockholder is the record
owner or beneficial owner of the Subject Shares set forth opposite its
name on Schedule A, free and clear of liens (other than liens arising
hereunder). As of the date of this Agreement, each Stockholder does not
own beneficially or of record any Shares other than the Subject Shares,
Shares issuable upon the exercise of outstanding stock options and Shares
of Company Restricted Stock (as defined in the Merger Agreement). No
Stockholder has appointed or granted any proxy which is still effective
with respect to its Subject Shares. As of the date hereof, each
Stockholder has sole voting power or power to direct the vote of the
Subject Shares set forth opposite its name on Schedule A and on the record
date and the date of the Company's stockholders' meeting at which the
Merger shall be presented for approval, each Stockholder will have sole
voting power or power to direct the vote of such Stockholder's Subject
Shares then held by such Stockholder.
<PAGE>
4
(e) LITIGATION. There is no action, suit, investigation, complaint
or other proceeding pending against any Stockholder or, to the knowledge
of any Stockholder, threatened against any Stockholder or any other Person
that restricts in any material respect or prohibits (or, if successful,
would restrict or prohibit) the exercise by any party or beneficiary of
its rights under this Agreement or the performance by any party of its
obligations under this Agreement.
SECTION 3. REPRESENTATIONS AND WARRANTIES OF PARENT. Parent
represents and warrants to each Stockholder as follows:
(a) EXISTENCE AND POWER. Parent is a corporation duly organized,
validly existing and in good standing under the laws of Canada and (2) has
full corporate power and authority to execute and deliver this Agreement.
(b) AUTHORIZATION; CONTRAVENTION. The execution and delivery by the
Parent of this Agreement and the performance by it of its obligations
under this Agreement have been duly authorized by all necessary corporate
action and do not and will not conflict with or result in a violation
pursuant to (A) any provision of its organizational documents or (B) any
loan or credit agreement, note, mortgage, bond, indenture, lease, benefit
plan or other agreement, obligation, instrument, permit, concession,
franchise, license, judgment, order, decree, statute, law, ordinance, rule
or regulation applicable to the Parent or any of its material properties
or assets.
(c) BINDING EFFECT. This Agreement constitutes a valid and binding
obligation of Parent, enforceable against Parent in accordance with its
terms, except as such enforceability may be limited by bankruptcy,
insolvency, reorganization, moratorium and similar laws relating to or
affecting creditors' rights generally, by general equity principles
(regardless of whether such enforceability is considered in a proceeding
in equity or at law), or by an implied covenant of good faith and fair
dealing.
(d) LITIGATION. There is no action, suit, investigation, complaint
or other proceeding pending against Parent or any of its affiliates or, to
the knowledge of Parent, threatened against it or any other Person
(including its affiliates) that restricts in any material respect or
prohibits (or, if successful, would restrict or prohibit) the exercise by
any party or beneficiary of its rights under this Agreement or the
performance by any party of its obligations under this Agreement.
SECTION 4. OPTION OF PARENT. Each Stockholder hereby grants to
Parent an irrevocable option (collectively, with respect to all the
Stockholders' Subject Shares, the "OPTION") to purchase all, but not less than
all, of such Stockholder's Subject Shares, upon the following terms and
conditions:
<PAGE>
5
(1) The exercise price for each Share subject to the Option shall be
the Per Share Amount, payable in cash. Parent may exercise the Option if, but
only if, there has occurred a Triggering Event (as defined in the Stock Option
Agreement) and notice of such exercise is received prior to the occurrence of a
KKR Option Termination Event (as defined below); PROVIDED, HOWEVER, that a
Triggering Event will be deemed to occur if all of the conditions prerequisite
to the payment of the Termination Amount pursuant to Section 8.3(a) of the
Merger Agreement have been satisfied except for the consummation of the
transaction described in such Section 8.3(a). For purposes of clarification, the
date of a Triggering Event shall not be the date on which the Termination Amount
is paid, but the date on which the Termination Amount becomes payable.
Notwithstanding anything to the contrary, Parent may exercise the Option only
for all of the Stockholders' Subject Shares in the aggregate.
(2) Each of the following shall be a "KKR Option Termination Event":
(a) the Effective Time (as defined in the Merger Agreement); (b) termination of
the Merger Agreement in accordance with the provisions thereof if such
termination occurs prior to the occurrence of a Triggering Event and at the time
of such termination the conditions prerequisite to a Triggering Event occurring
in the future are incapable of being fulfilled; (c) the passage of nineteen
business days after the date of the Triggering Event; or (d) November 9, 1999,
if all governmental and regulatory approvals for Parent to exercise its rights
under this Section 4 shall not then have been obtained or if an injunction or
similar legal prohibition on exercise shall then be in effect.
(3) In the event of any change in the number or kind of such
Stockholder's Subject Shares by reason of stock dividends, stock splits,
recapitalizations, combinations, reclassifications, exchanges or changes of
shares, then the exercise price for such Stockholder's Subject Shares shall be
adjusted appropriately so that the total amount to be paid upon exercise in
whole of the Option with respect to such Stockholder's Subject Shares would
remain unchanged.
(4) In the event Parent wishes to exercise the Option, it shall send
a written notice (the "NOTICE") to each Stockholder specifying a date (not later
than October 10, 1999) for the closing (the "CLOSING") of such purchase of all
of such Stockholder's Subject Shares. The Closing will take place at such
location in New York City as Parent shall specify in the Notice. At the Closing,
payment for such Stockholder's Subject Shares then being purchased shall be made
to such Stockholder by wire transfer in immediately available funds in the
amount of the aggregate exercise price, against delivery to Parent of a
certificate or certificates registered in its name evidencing such Subject
Shares. Such Subject Shares will be imprinted with any legends required by
applicable securities laws. In the event that the Closing does not occur on or
prior to October 10, 1999 (the "END DATE"), and notwithstanding anything in this
Agreement to the contrary, the Option and the exercise of the Option shall
terminate and be void.
(5) Parent agrees that, in the event that the Option is exercised,
it will agree to purchase from any holder of Shares with tag-along or similar
rights granted by any Stockholder
<PAGE>
6
that wishes to sell its Shares to Parent, all shares of Company Common Stock of
such holder on the same terms of the purchase of the Subject Shares pursuant to
the exercise of the Option.
(6) Once the Option is exercised, Parent must pay to the
Stockholders the aggregate exercise price for all the Subject Shares not later
than the date specified for the Closing notwithstanding the existence of any
law, regulation, injunction, order or other impediment to the delivery to Parent
of the Subject Shares or the ownership by Parent of the Subject Shares.
(7) Notwithstanding anything to the contrary, in the event that
Parent or any affiliate of Parent receives any per share consideration in any
sale or other disposition of Shares purchased pursuant to exercise of the Option
that is in excess of the Per Share Amount (such amount in excess of the Per
Share Amount, the "EXCESS PER SHARE AMOUNT"), Parent shall immediately remit to
the Stockholders on a pro rata basis 50% of the Excess Per Share Amount with
respect to each share of Company Common Stock so sold or otherwise disposed of.
(8) Notwithstanding anything to the contrary, no Stockholder who is
a natural person shall be required to sell any of such Stockholder's Shares to
Parent upon exercise of the Option if such Stockholder would be subject to
liability under Section 16 of the Exchange Act as a result of any such sale of
Shares purchased prior to the date of this Agreement.
SECTION 5. NO SOLICITATIONS. Each Stockholder agrees that it will
not, directly or indirectly, make, solicit, initiate or encourage the submission
of proposals or offers from any persons relating to an Acquisition Proposal.
Each Stockholder will immediately cease and cause to be terminated all
discussions or negotiations with third parties with respect to any Acquisition
Proposal. Each Stockholder agrees that it will promptly notify Parent after
receipt of any bona fide Acquisition Proposal or any inquiry from any person
relating to an Acquisition Proposal. Nothing contained herein shall prevent a
Stockholder or a representative of a Stockholder from discharging its fiduciary
duties as a member of the board of directors of the Company.
SECTION 6. MISCELLANEOUS PROVISIONS.
(a) NOTICES. All notices and other communications hereunder shall be
in writing and shall be deemed duly given (1) on the date of delivery if
delivered personally, or by telecopy or telefacsimile, upon confirmation of
receipt, (2) on the first business day following the date of dispatch if
delivered by a recognized next-day courier service, or (3) on the tenth business
day following the date of mailing if delivered by registered or certified mail,
return receipt requested, postage prepaid. All notices hereunder shall be given
to Parent at its address stated in Section 9.3 of the Merger Agreement, and all
notices to any Stockholder shall be given to such Stockholder at the address
stated below:
<PAGE>
7
(1) if to any of:
KKR PARTNERS II, L.P.
APC ASSOCIATES, L.P.
GR ASSOCIATES, L.P.
WCP ASSOCIATES, L.P.
KKR ASSOCIATES, to:
c/o Kohlberg Kravis Roberts & Co.
9 West 57th Street
Suite 4250
New York, New York 10019
Attention: Scott Stuart
Telecopier No.: (212) 750-0003
Telephone No.: (212) 750-8300
(2) if to any of the other Stockholders, to:
c/o World Color Press, Inc.
The Mill
240 Pemberwick Road
Greenwich, CT 06831
Telecopier No.:
Telephone No.:
(b) NO WAIVERS; REMEDIES; SPECIFIC PERFORMANCE.
(1) No failure or delay by Parent in exercising any right, power or
privilege under this Agreement shall operate as a waiver of the right,
power or privilege. A single or partial exercise of any right, power or
privilege shall not preclude any other further exercise of the right,
power or privilege or the exercise of any other right, power or privilege.
The rights and remedies provided in this Agreement shall be cumulative and
not exclusive of any rights or remedies provided by law.
(2) In view of the uniqueness of the agreements contained in this
Agreement and the transactions contemplated hereby and thereby and the
fact that Parent would not have an adequate remedy at law for money
damages in the event that any obligation under this Agreement is not
performed in accordance with its terms, each of the Stockholders therefore
agrees that Parent shall be entitled to
<PAGE>
8
specific enforcement of the terms of this Agreement in addition to any
other remedy to which Parent may be entitled, at law or in equity.
(c) AMENDMENTS, ETC. No amendment, modification, termination, or
waiver of any provision of this Agreement, and no consent to any departure by
any of the Stockholders or Parent from any provision of this Agreement, shall be
effective unless it shall be in writing and signed and delivered by all the
Stockholders and Parent, and then it shall be effective only in the specific
instance and for the specific purpose for which it is given.
(d) SUCCESSORS AND ASSIGNS; THIRD PARTY BENEFICIARIES.
(1) No party shall assign any of its rights or delegate any of its
obligations under this Agreement; provided that Parent may assign its
rights under Section 4 of this Agreement to receive the Subject Shares at
the Closing; PROVIDED, FURTHER, that no such assignment shall in any way
relieve Parent of any of its obligations under Section 4 or any other
section of this Agreement. Any assignment or delegation in contravention
of this Section 6(d) shall be void AB INITIO and shall not relieve the
assigning or delegating party of any obligation under this Agreement.
(2) The provisions of this Agreement shall be binding upon and inure
solely to the benefit of the parties hereto, the express beneficiaries
thereof (to the extent provided therein) and their respective permitted
heirs, executors, legal representatives, successors and assigns, and no
other Person.
(e) GOVERNING LAW. This Agreement and all rights, remedies,
liabilities, powers and duties of the parties hereto and thereto, shall be
governed in accordance with the laws of the State of Delaware.
(f) STOCKHOLDER CAPACITY. No person executing this Agreement who is
or becomes during the term hereof a director or officer of the Company makes any
agreement or understanding herein in his capacity as such director or officer.
Each Stockholder signs solely in his capacity as the record holder and
beneficial owner of, or the trustee of a trust whose beneficiaries are the
beneficial owners of, such Stockholder's Subject Shares and nothing herein shall
limit or affect any actions taken by a Stockholder in his capacity as an officer
or director of the Company to the extent specifically permitted by the Merger
Agreement.
(g) SEVERABILITY OF PROVISION. If any term or other provision of
this Agreement is invalid, illegal or incapable of being enforced by any law or
public policy, all other terms and provisions of this Agreement shall
nevertheless remain in full force and effect so long as the economic or legal
substance of the transactions contemplated hereby is not affected in any manner
materially adverse to any party. Upon such determination that any term or other
provision is invalid, illegal or incapable of being enforced, the parties shall
negotiate in good faith to modify this Agreement so as to effect the original
intent of the parties as closely as
<PAGE>
9
possible in an acceptable manner in order that the transactions contemplated
hereby are consummated as originally contemplated to the greatest extent
possible.
(h) ENTIRE AGREEMENT. This Agreement embodies the entire agreement
and understanding of the Stockholders and Parent, and supersedes all prior
agreements or understandings, with respect to the subject matters of this
Agreement.
(i) SURVIVAL. Except as otherwise specifically provided in this
Agreement, each representation, warranty or covenant of a party contained in
this Agreement shall remain in full force and effect, notwithstanding any
investigation or notice to the contrary or any waiver by any other party or
beneficiary of a related condition precedent to the performance by the other
party or beneficiary of an obligation under this Agreement.
(j) SUBMISSION TO JURISDICTION; WAIVERS. Each Stockholder and Parent
irrevocably agrees that any legal action or proceeding with respect to any
voting document or for recognition and enforcement of any judgment in respect
hereto or thereof brought by the other party hereto or its successors or assigns
may be brought and determined in the courts of the State of New York, and each
Stockholder and Parent hereby irrevocably submit with regard to any such action
or proceeding for itself and in respect to its property, generally and
unconditionally, to the exclusive jurisdiction of the aforesaid courts. Each
Stockholder and Parent hereby irrevocably waives, and agrees not to assert, by
way of motion, as a defense, counterclaim or otherwise, in any action or
proceeding with respect to this Agreement, (a) any claim that it is not
personally subject to the jurisdiction of the above-named courts for any reason
other than the failure to serve process in accordance with this Section 6(i),
(b) that it or its property is exempt or immune from jurisdiction of any such
court or from any legal process commenced in such courts (whether through
service of notice, attachment prior to judgment, attachment in aid of execution
of judgment, execution of judgment or otherwise), and (c) to the fullest extent
permitted by applicable law, that (i) the suit, action or proceeding in any such
court is brought in an inconvenient forum, (ii) the venue of such suit, action
or proceeding is improper and (iii) this Agreement, or the subject matter
hereof, may not be enforced in or by such courts.
EACH PARTY ACKNOWLEDGES AND AGREES THAT ANY CONTROVERSY WHICH MAY ARISE
UNDER THIS AGREEMENT IS LIKELY TO INVOLVE COMPLICATED AND DIFFICULT
ISSUES, AND THEREFORE IT HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY
RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION DIRECTLY
OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT AND ANY OF THE
AGREEMENTS DELIVERED IN CONNECTION HEREWITH OR THE TRANSACTIONS
CONTEMPLATED HEREBY OR THEREBY. EACH PARTY CERTIFIES AND ACKNOWLEDGES THAT
(A) NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS
REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN
THE EVENT OF LITIGATION, SEEK TO ENFORCE SUCH WAIVERS, (B) IT UNDERSTANDS
AND HAS CONSIDERED THE IMPLICATIONS OF SUCH WAIVERS, (C) IT MAKES
<PAGE>
10
SUCH WAIVERS VOLUNTARILY, AND (D) IT HAS BEEN INDUCED TO ENTER INTO THIS
AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN
THIS SECTION 6(i).
(k) LIMITED LIABILITY OF PARTNERS. Notwithstanding any other
provision of this Agreement, no general partner or limited partner, nor any
future general or limited partner of any Stockholder, shall have any personal
liability for performance of any obligation of such stockholder under this
Agreement. Any liability of a Stockholder under this Agreement shall be
satisfied solely out of the assets of such Stockholder.
(l) TERMINATION. Unless terminated by mutual agreement of the
parties, the obligations of the Stockholders under Sections 1(b), 1(c), 1(d) and
1(e) of this Agreement shall terminate upon the first to occur of (i)
consummation of the Merger, (ii) the termination of the Merger Agreement, (iii)
the full and irrevocable satisfaction of the condition set forth in Section
7.1(c) of the Merger Agreement, and (iv) termination of the Offer (other than a
termination of the Offer pursuant to Section 1.1(e) of the Merger Agreement)
without the purchase of Shares pursuant thereto. The Option and the obligations
of the Stockholders under Section 4 hereof shall terminate on the earlier of the
date of a KKR Option Termination Event and the End Date. This Agreement (other
than the agreements set forth in Section 4 and Section 6(l) hereof, which shall
survive in accordance with their terms), shall automatically terminate at such
time as all of the obligations of the Stockholders pursuant to Sections 1 and 2
shall have terminated in accordance with their terms.
(m) ACCESS. After the consummation of the Offer, Stockholders who
own in the aggregate at least 1% of the outstanding subordinate voting shares of
Parent shall have the right, but only to the extent such right is required in
order for such Stockholders to treat their investment in the Company as a
"venture capital investment" (within the meaning of the plan asset regulations
of the Department of Labor Reg. ss. 25103-101), to (i) meet with officers and
directors of Parent at reasonable times and upon reasonable advance notice on a
quarterly basis to discuss their investment in Parent and be informed concerning
the nature or operation of the business of Parent; and (ii) be provided with
certain financial, operating and other data and information as such Stockholders
may reasonably request.
(n) EXPENSES. Whether or not the Option is exercised, all costs and
expenses incurred in connection with this Agreement and the transactions
contemplated hereby shall be paid by the party.
(o) UNITED STATES DOLLARS. All references herein to "$" or "dollars"
shall refer to United States Dollars.
(p) COUNTERPARTS. This Agreement may be signed in any number of
counterparts, each of which shall be an original, with the same effect as if all
signatures were on the same instrument.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the day and year first written above.
QUEBECOR PRINTING INC.
By: /s/ Charles G. Cavell
------------------------------------------
Name: Charles G. Cavell
Title: President & Chief Executive Officer
By: /s/ Christian M. Paupe
------------------------------------------
Name: Christian M. Paupe
Title: Executive Vice President
KKR PARTNERS II, L.P.
By: KKR Associates,
Its General Partner
By: /s/ Scott Stuart
------------------------------------------
Name: Scott Stuart
Title: General Partner
APC ASSOCIATES, L.P.
By: KKR Associates
Its General Partner
By: /s/ Scott Stuart
------------------------------------------
Name: Scott Stuart
Title: General Partner
GR ASSOCIATES, L.P.
By: KKR Associates
Its General Partner
By: /s/ Scott Stuart
------------------------------------------
Name: Scott Stuart
Title: General Partner
<PAGE>
WCP ASSOCIATES, L.P.
By: KKR Associates
Its General Partner
By: /s/ Scott Stuart
------------------------------------------
Name: Scott Stuart
Title: General Partner
KKR ASSOCIATES
By: /s/ Scott Stuart
------------------------------------------
Name: Scott Stuart
Title: General Partner
/s/ Robert G. Burton
---------------------------------------------
Robert G. Burton
/s/ Marc L. Reisch
---------------------------------------------
Marc L. Reisch
/s/ Jennifer L. Adams
---------------------------------------------
Jennifer L. Adams
/s/ Robert B. Lewis
---------------------------------------------
Robert B. Lewis
/s/ James E. Lillie
---------------------------------------------
James E. Lillie
<PAGE>
SCHEDULE A
<TABLE>
<CAPTION>
NAME OF STOCKHOLDER NUMBER OF SUBJECT SHARES
- ------------------- ------------------------
<S> <C>
KKR Partners II, L.P. 9,701 (excluding 5,000 shares of Restricted
Stock)
APC Associates, L.P. 2,201,379
GR Associates, L.P. 1,534,465
WCP Associates, L.P. 4,583,212
KKR Associates 692,107
Robert G. Burton 223,329.09 (excluding 101,356 shares of
Restricted Stock)
Marc L. Reisch 23,600.84 (excluding 73,177 shares of
Restricted Stock)
Jennifer L. Adams 19,508 (excluding 43,252 shares of
Restricted Stock)
Robert B. Lewis 9,209.23 (excluding 15,000 shares of
Restricted Stock)
James E. Lillie 10,761.63 (excluding 7,500 shares of
Restricted Stock)
</TABLE>
<PAGE>
Exhibit 10.2
STOCK OPTION AGREEMENT
STOCK OPTION AGREEMENT, dated as of July 12, 1999, between QUEBECOR
PRINTING INC., a corporation formed under the laws of Canada ("GRANTEE"), and
WORLD COLOR PRESS, INC., a corporation organized under the laws of Delaware
("ISSUER").
W I T N E S S E T H :
WHEREAS, concurrently herewith, Grantee and Issuer are entering into
an Agreement and Plan of Merger (the "MERGER AGREEMENT");
WHEREAS, as a condition and inducement to Grantee's execution of the
Merger Agreement and pursuant to the transactions contemplated thereby and in
consideration therefor, Issuer has agreed to grant Grantee the Option (as
hereinafter defined); and
WHEREAS, the Board of Directors of Issuer has approved the grant of
the Option and the Merger Agreement prior to the execution hereof.
NOW, THEREFORE, in consideration of the foregoing and the mutual
covenants and agreements set forth herein and in the Merger Agreement, the
parties hereto agree as follows:
1. THE OPTION. (a) Issuer hereby grants to Grantee an unconditional,
irrevocable option (the "OPTION") to purchase, subject to the terms hereof, up
to the Option Amount (as defined in Section 19 below) of fully paid and
nonassessable shares of the common stock, $0.01 par value per share, of Issuer
("COMMON STOCK") at a price per share in cash equal to $35.69 (such price, as
adjusted if applicable, the "OPTION PRICE"); PROVIDED, HOWEVER, that in no event
shall the number of shares for which this Option is exercisable exceed the
Option Percentage (as defined in Section 19 below) of the issued and outstanding
shares of Common Stock at the time of exercise without giving effect to the
shares of Common Stock issued or issuable under the Option. The number of shares
of Common Stock that may be received upon the exercise of the Option and the
Option Price are subject to adjustment as herein set forth.
(b) In the event that any additional shares of Common Stock are
issued or otherwise become outstanding after the date of this Agreement (other
than pursuant to this Agreement and other than pursuant to an event described in
Section 4(a) hereof), the number of shares of Common Stock subject to the Option
shall be increased so that, after such issuance, such number together with any
shares of Common Stock previously issued pursuant hereto, equals the Option
Percentage of the number of shares of Common Stock then issued and outstanding
without giving effect to any shares subject or issued pursuant to the Option.
Nothing contained in this Section 1(b) or elsewhere in this Agreement shall be
deemed to authorize Issuer or Grantee to breach any provision of the Merger
Agreement.
2. EXERCISE; CLOSING. (a) Grantee or any other person that shall
become a holder of the Option in accordance with the terms of this Agreement
(such person being referred to herein as
<PAGE>
2
the "HOLDER") may exercise the Option, in whole only, if, but only if, the
Termination Amount provided for in Section 8.3 of the Merger Agreement has
become payable (a "TRIGGERING EVENT") and notice of such exercise is received
prior to the occurrence of an Exercise Termination Event (as hereinafter
defined); PROVIDED, HOWEVER, that a Triggering Event will be deemed to occur if
all of the conditions prerequisite to the payment of the Termination Amount
pursuant to Section 8.3(a) of the Merger Agreement have been satisfied except
for the consummation of the transaction described in such Section 8.3(a). For
purposes of clarification, the date of a Triggering Event shall not be the date
on which the Termination Amount is paid, but the date on which the Termination
Amount becomes payable.
(b) Each of the following shall be an "EXERCISE TERMINATION EVENT":
(i) the Effective Time (as defined in the Merger Agreement); or
(ii) termination of the Merger Agreement in accordance with the
provisions thereof if such termination occurs prior to the occurrence of a
Triggering Event and at the time of such termination the conditions
prerequisite to a Triggering Event occurring in the future are incapable
of being fulfilled; or
(iii) the passage of 30 days after the date of the Triggering Event;
or
(iv) November 9, 1999, if all governmental and regulatory approvals
for Grantee to exercise its rights under this Section 2 shall not then
have been obtained or if an injunction or similar legal prohibition on
exercise shall then be in effect; or
(v) the receipt by Grantee of the Termination Amount.
(c) Issuer shall notify Grantee promptly in writing of the
occurrence of any Triggering Event, it being understood that the giving of such
notice by Issuer shall not be a condition to the right of the Holder to exercise
the Option.
(d) In the event the Holder is entitled to and wishes to exercise
the Option, it shall send to Issuer a written notice (the date of which being
herein referred to as the "NOTICE DATE") specifying a place and date not earlier
than two business days nor later than twenty business days from the Notice Date
for the closing of such purchase of the applicable Option Amount of Shares (the
"CLOSING DATE"); provided, that the Closing Date may be extended by the Holder
until November 9, 1999 to the extent provided in clauses (i) and (ii) of Section
7.
(e) At the closing referred to in subsection (d) of this Section 2,
the Holder shall (i) pay to Issuer the aggregate purchase price for the shares
of Common Stock purchased pursuant to the exercise of the Option in immediately
available funds by wire transfer to a bank account designated by Issuer,
PROVIDED that failure or refusal of Issuer to designate such a bank account
shall not preclude the Holder from exercising the Option by delivery of a
certified check or bank draft and (ii) present and surrender this Agreement to
Issuer.
<PAGE>
3
(f) At such closing, simultaneously with the delivery of immediately
available funds as provided in subsection (e) of this Section 2, Issuer shall
deliver to the Holder a certificate or certificates representing the number of
shares of Common Stock purchased by the Holder.
(g) Certificates for Common Stock delivered at a closing hereunder
may be endorsed with a restrictive legend that shall read substantially as
follows:
"The shares represented by this certificate have not been registered
under the U.S. Securities Act of 1933, as amended (the "Securities
Act"), or any state securities law, and such securities may not be
offered, sold, transferred, pledged, hypothecated or otherwise
disposed of except pursuant to an effective registration statement
or pursuant to an exemption from, or in a transaction not subject
to, the registration requirements of the Securities Act and
applicable state securities laws."
It is understood and agreed that the above legend shall be removed by delivery
of substitute certificate(s) without such reference if the Holder shall have
delivered to Issuer a copy of a letter from the staff of the Securities and
Exchange Commission, or an opinion of counsel, in form and substance reasonably
satisfactory to Issuer, to the effect that such legend is not required for
purposes of the Securities Act or other applicable securities laws.
(h) Upon the giving by the Holder to Issuer of the written notice of
exercise of the Option provided for under subsection (f) of this Section 2 and
the tender of the applicable purchase price in immediately available funds, the
Holder shall be deemed to be the holder of record of the shares of Common Stock
issuable upon such exercise, notwithstanding that the stock transfer books of
Issuer shall then be closed or that certificates representing such shares of
Common Stock shall not then be actually delivered to the Holder. Holder shall
pay all expenses, and any and all United States federal, state and local taxes
and other charges that may be payable in connection with the preparation, issue
and delivery of stock certificates under this Section 2 in the name of the
Holder or its assignee, transferee or designee.
3. COVENANTS OF ISSUER. In addition to its other agreements and
covenants herein, Issuer agrees:
(a) that it shall at all times maintain, free from any subscription
or preemptive rights, sufficient authorized but unissued or treasury shares of
Common Stock so that the Option may be exercised without additional
authorization of Common Stock after giving effect to all other options,
warrants, convertible securities and other rights of third parties to purchase
Common Stock from Issuer or to cause Issuer to issue shares of Common Stock;
(b) that it will not, by charter amendment or through
reorganization, consolidation, merger, dissolution or sale of assets, or by any
other voluntary act, avoid or seek to avoid the observance or performance of any
of the covenants, stipulations or conditions to be
<PAGE>
4
observed or performed hereunder by Issuer; and
(c) promptly to take all action as may from time to time be required
(including complying with all applicable notification, filing reporting and
waiting period requirements under the HSR Act or otherwise, and cooperating
fully with the Holder in preparing any applications or notices and providing
such information to any regulatory authority as it may require) in order to
permit the Holder to exercise the Option and Issuer duly and effectively to
issue shares of Common Stock pursuant hereto.
4. ADJUSTMENTS. In addition to the adjustment in the number of
shares of Common Stock that are purchasable upon exercise of the Option pursuant
to Section 1 of this Agreement, the number of shares of Common Stock purchasable
upon the exercise of the Option and the Option Price shall be subject to
adjustment from time to time as provided in this Section 4.
(a) In the event of any change in, or distributions in respect of,
the Common Stock by reason of stock dividends, split-ups, mergers,
recapitalizations, combinations, subdivisions, conversions, exchanges of
shares or the like, the type and number of shares of Common Stock
purchasable upon exercise hereof shall be appropriately adjusted and
proper provision shall be made so that, in the event that any additional
shares of Common Stock are to be issued or otherwise become outstanding as
a result of any such change (other than pursuant to an exercise of the
Option), the number of shares of Common Stock that remain subject to the
Option shall be increased so that, after such issuance and together with
shares of Common Stock previously issued pursuant to the exercise of the
Option (as adjusted on account of any of the foregoing changes in the
Common Stock), it equals the Option Percentage of the number of shares of
Common Stock then issued and outstanding.
(b) Whenever the number of shares of Common Stock purchasable upon
exercise hereof is adjusted as provided in this Section 4, the Option
Price shall be adjusted by multiplying the Option Price by a fraction, the
numerator of which shall be equal to the number of shares of Common Stock
purchasable prior to the adjustment and the denominator of which shall be
equal to the number of shares of Common Stock purchasable after the
adjustment.
5. REGISTRATION. (a) After the exercise of the Option, Issuer shall,
if requested by the Holder at any time and from time to time within one year of
the exercise of the Option, prepare and file up to two registration statements
under the Securities Act if such registration is necessary in order to permit
the sale or other disposition of any or all shares of Common Stock that have
been acquired by exercise of the Option and Issuer shall use all reasonable
efforts to qualify such shares under any applicable state securities laws.
Issuer shall use all reasonable efforts to cause each such registration
statement to become effective, to obtain all consents or waivers of other
parties which are required therefor and to keep such registration statement
effective for such period not in excess of 90 days from the day such
registration statement first becomes effective as may be reasonably necessary to
effect such sale or other disposition. The obligations of Issuer hereunder to
file a registration statement and to maintain its effectiveness may be suspended
for one or more periods
<PAGE>
5
of time not exceeding 90 days if the Board of Directors of Issuer shall have
determined that the filing of such registration statement or the maintenance of
its effectiveness would require disclosure of nonpublic information that would
materially affect Issuer. Any registration statement prepared and filed under
this Section 5, and any sale covered thereby, shall be at Issuer's expense
except for underwriting discounts or commissions and brokers' fees.
Notwithstanding the foregoing, Issuer shall pay the reasonable fees and
disbursements of one counsel selected by the Holder to represent the Holder in
connection with each such registration statement. The Holder shall provide all
information reasonably requested by Issuer for inclusion in any registration
statement to be filed hereunder. The Issuer shall not be obligated to file a
registration statement within a period of 180 days after the effective date of
any other registration statement relating to any registration request under this
Section 5. In connection with any registration pursuant to this Section 5,
Issuer and the Holder shall provide each other and any underwriter of the
offering with customary representations, warranties, covenants, indemnification
and contribution in connection with such registration.
(b) In connection with any registration pursuant to this Section 5,
Issuer shall enter into such customary arrangements and take such other actions,
including the use of its reasonable efforts to obtain a "cold comfort" letter or
similar letter from Issuer's independent public accounts, as the Holder or any
underwriter, if any, reasonably requests in order to expedite or facilitate the
disposition of the shares of Common Stock acquired by exercise of the Option.
(c) If shares to be acquired upon exercise of the Option are then
listed on the NYSE or any other securities exchange or market, Issuer, upon the
request of the Holder, will promptly file an application to list the shares to
be acquired upon exercise of the Option on the NYSE or such other securities
exchange or market and will use its reasonable best efforts to obtain approval
of such listing as soon as practicable.
6. SUBSTITUTE OPTION. (a) In the event that prior to an Exercise
Termination Event, Issuer shall enter into an agreement (i) to consolidate with
or merge into any person, other than Grantee or any of its subsidiaries
(collectively, "EXCLUDED PERSONS") and Issuer shall not be the continuing or
surviving corporation of such consolidation or merger, (ii) to permit any
person, other than an Excluded Person, to merge into Issuer and Issuer shall be
the continuing or surviving or acquiring corporation, but, in connection with
such merger, the then outstanding shares of Common Stock shall be changed into
or exchanged for stock or other securities of any other person or cash or any
other property or the then outstanding shares of Common Stock shall after such
merger represent less than 50% of the outstanding shares and share equivalents
of the merged or acquiring company, or (iii) to sell or otherwise transfer all
or substantially all of its assets to any person, other than an Excluded Person,
then, and in each such case, the agreement governing such transaction shall make
proper provision so that the Option shall, upon the consummation of any such
transaction and upon the terms and conditions set forth herein, be converted
into, or exchanged for, an option (the "SUBSTITUTE OPTION"), at the election of
the Holder, of either (x) the Acquiring Corporation (as hereinafter defined) or
(y) any person that controls the Acquiring Corporation.
(b) The following terms have the meanings indicated:
<PAGE>
6
(i) "ACQUIRING CORPORATION" shall mean (i) the continuing or
surviving person of a consolidation or merger with Issuer (if
other than Issuer), (ii) Issuer in a merger in which Issuer is
the continuing or surviving or acquiring person, and (iii) the
transferee of all or substantially all of Issuer's
consolidated assets.
(ii) "SUBSTITUTE SHARES" shall mean the shares of capital stock (or
similar equity interest) with the greatest voting power in
respect of the election of directors (or other persons
similarly responsible for direction of the business and
affairs) of the issuer of the Substitute Option.
(iii) "ASSIGNED VALUE" shall mean the highest of (i) the price per
share of Common Stock at which a tender or exchange offer
therefor has been made, (ii) the price per share of Common
Stock to be paid by any third party pursuant to an agreement
with Issuer, or (iii) in the event of a sale of all or
substantially all of Issuer's assets, the sum of the net price
paid in such sale for such assets and the current market value
of the remaining net assets of Issuer as determined by a
nationally recognized investment banking firm selected by the
Holder and reasonably acceptable to Issuer, divided by the
number of shares of Common Stock of Issuer outstanding at the
time of such sale, which determination, absent manifest error,
shall be conclusive for all purposes of this Agreement.
(iv) "AVERAGE PRICE" shall mean the average closing price per
Substitute Share, on the principal trading market on which
such shares are traded as reported by a recognized source, for
one year immediately preceding the consolidation, merger or
sale in question, but in no event higher than the closing
price of the Substitute Shares on such market on the day
preceding such consolidation, merger or sale; provided that if
Issuer is the issuer of the Substitute Option, the Average
Price shall be computed with respect to a share of common
stock issued by the person merging into Issuer or by any
company which controls or is controlled by such person, as the
Holder may elect.
(c) The Substitute Option shall have the same terms (including those
terms set forth in Section 5) as the Option, PROVIDED that if the terms of the
Substitute Option cannot, for legal reasons, be the same as the Option, such
terms shall be as similar as possible and in no event less advantageous to the
Holder. The issuer of the Substitute Option shall also enter into an agreement
with the Holder of the Substitute Option in substantially the same form as this
Agreement which agreement shall be applicable to the Substitute Option.
(d) The Substitute Option shall be exercisable for such number of
Substitute Shares as is equal to the Assigned Value multiplied by the number of
shares of Common Stock for which the Option was exercisable immediately prior to
the event described in the first sentence of
<PAGE>
7
this Section 6(a), divided by the Average Price. The exercise price of the
Substitute Option per Substitute Share shall then be equal to the Option Price
multiplied by a fraction, the numerator of which shall be the number of shares
of Common Stock for which the Option was exercisable immediately prior to the
event described in the first sentence of this Section 6(a) and the denominator
of which shall be the number of Substitute Shares for which the Substitute
Option is exercisable.
(e) In no event, pursuant to any of the foregoing paragraphs, shall
the number of shares purchasable upon exercise of the Substitute Option exceed
the Option Percentage of the Substitute Shares then issued and outstanding at
the time of exercise (without giving effect to Substitute Shares issued or
issuable under the Substitute Option). In the event that the Substitute Option
would be exercisable for more than the Option Percentage of the Substitute
Shares then issued and outstanding prior to exercise but for this clause (e),
the issuer of the Substitute Option (the "SUBSTITUTE OPTION ISSUER") shall make
a cash payment to the Holder equal to the excess of (i) the value of the
Substitute Option without giving effect to the limitation in this clause (e)
over (ii) the value of the Substitute Option after giving effect to the
limitation in this clause (e). This difference in value shall be determined by a
nationally recognized investment banking firm selected by the Holder, which
determination, absent manifest error, shall be conclusive for all purposes of
this Agreement.
7. EXTENSION. The periods for exercise of certain rights under
Sections 2 and 5 shall be extended until no later than November 9, 1999: (i) to
the extent necessary to obtain all governmental and regulatory approvals for the
exercise of such rights (for so long as the Holder is using reasonable efforts
to obtain such regulatory approvals), and for the expiration of all statutory
waiting periods; (ii) during any period for which an injunction or similar legal
prohibition on exercise shall be in effect and (iii) to the extent necessary to
avoid liability under Section 16(b) of the Securities Exchange Act of 1934, as
amended, by reason of such exercise.
8. REPRESENTATIONS AND WARRANTIES. (a) Issuer hereby represents and
warrants to Grantee as follows:
(i) Issuer has full corporate power and authority to execute and
deliver this Agreement and to consummate the transactions
contemplated hereby. The execution and delivery of this
Agreement and the consummation of the transactions
contemplated hereby have been duly and validly authorized by
the Board of Directors of Issuer and no other corporate
proceedings on the part of Issuer are necessary to authorize
this Agreement or to consummate the transactions so
contemplated. This Agreement has been duly and validly
executed and delivered by Issuer and constitutes a valid and
legally binding obligation of Issuer enforceable in accordance
with its terms.
(ii) Issuer has taken all necessary corporate action to authorize
and reserve and to permit it to issue, and at all times from
the date hereof through the termination of this Agreement in
accordance with its terms will have reserved
<PAGE>
8
for issuance upon the exercise of the Option, that number of
shares of Common Stock equal to the maximum number of shares
of Common Stock at any time and from time to time issuable
hereunder, and all such shares, upon issuance pursuant to the
Option, will be duly authorized, validly issued, fully paid,
nonassessable, and will be delivered free and clear of all
claims, liens, encumbrances and security interests (other than
those created by this Agreement) and not subject to any
preemptive rights.
(iii) The execution, delivery and performance of this Agreement does
not or will not, and the consummation by Issuer of any of the
transactions contemplated hereby will not, constitute or
result in (i) a breach or violation of or a default under, its
articles or certificate of incorporation or by-laws, or the
comparable governing instruments of any of its subsidiaries,
or (ii) a breach or violation of or a default under, any
agreement, lease, contract, note, mortgage, indenture,
arrangement or other obligation of it or any of its
subsidiaries (with or without the giving of notice, the lapse
of time or both) or under any law, rule, ordinance or
regulation or judgment, decree, order, award or governmental
or non-governmental permit or license to which it or any of
its subsidiaries is subject.
(b) Grantee hereby represents and warrants to Issuer that Grantee
has full corporate power and authority to enter into this Agreement and, subject
to obtaining the approvals referred to in this Agreement, to consummate the
transactions contemplated by this Agreement; the execution and delivery of this
Agreement and the consummation of the transactions contemplated hereby have been
duly authorized by all necessary corporate action on the part of Grantee; and
this Agreement has been duly executed and delivered by Grantee and constitutes a
valid and legally binding obligation of Grantee enforceable in accordance with
its terms.
9. ASSIGNMENT. Neither of the parties hereto may assign any of its
rights or obligations under this Agreement or the Option created hereunder to
any other person, without the express written consent of the other party, except
that in the event a Triggering Event shall have occurred prior to an Exercise
Termination Event, Grantee, subject to the express provisions hereof, may assign
in whole or in part its rights and obligations hereunder to an affiliate of
Grantee.
10. FILINGS; OTHER ACTIONS. Each of Grantee and Issuer will use its
best efforts to make all filings with, and to obtain consents of, all third
parties and regulatory and governmental authorities necessary to the
consummation of the transactions contemplated by this Agreement, including,
without limitation, notices and filings under the HSR Act.
11. TOTAL PROFIT. (a) Notwithstanding any other provision of this
Agreement, in no event shall the Grantee's Total Profit (as hereinafter defined)
exceed the Total Profit Amount (as defined in Section 19 below) less the amount
of any fee paid pursuant to the applicable provision of Section 8.3 of the
Merger Agreement and, if it otherwise would exceed such amount, the Grantee, at
its sole election, shall either (i) reduce the number of shares of Common Stock
subject to this
<PAGE>
9
Option, (ii) deliver to Issuer for cancellation Option Shares previously
purchased by Grantee, (iii) pay cash to Issuer, or (iv) any combination thereof,
so that Grantee's actually realized Total Profit shall not exceed such amount
after taking into account the foregoing actions. The Grantee's obligation
pursuant to this Section 11 shall exist whether the Option is exercised before
or after any fee is paid pursuant to Section 8.3 of the Merger Agreement.
(b) Notwithstanding any other provision of this Agreement, this
Option may not be exercised for a number of shares as would, as of the date of
exercise, result in a Notional Total Profit (as defined below) of more than the
Total Profit Amount less the amount of any fee paid pursuant to the applicable
provision of Section 8.3 of the Merger Agreement.
(c) As used herein, the term "TOTAL PROFIT" shall mean the aggregate
amount (before taxes) of the following: (i) (x) the net cash amounts received by
Grantee pursuant to the sale of Option Shares (or any other securities into
which such Option Shares are converted or exchanged) to any unaffiliated party,
less (y) the Grantee's purchase price of such Option Shares, (ii) any amounts
received by Grantee on the transfer of the Option (or any portion thereof) to
any unaffiliated party, and (iii) any amount equivalent to the foregoing with
respect to the Substitute Option.
(d) As used herein, the term "NOTIONAL TOTAL PROFIT" with respect to
any number of shares as to which Grantee may propose to exercise this Option
shall be the Total Profit determined as of the date of such proposed exercise
assuming that this Option were exercised on such date for such number of shares
and assuming that such shares, together with all other Option Shares (or any
other securities into which such Option Shares are converted or exchanged) held
by Grantee and its affiliates as of such date, were sold for cash at the closing
market price for the Common Stock as of the close of business on the preceding
trading day.
12. SPECIFIC PERFORMANCE. The parties hereto acknowledge that
damages would be an inadequate remedy for a breach of this Agreement by either
party hereto and that the obligations of the parties hereto shall be enforceable
by either party hereto through injunctive or other equitable relief.
13. SEVERABILITY. If any term, provision, covenant or restriction
contained in this Agreement is held by a court or a federal or state regulatory
agency of competent jurisdiction to be invalid, void or unenforceable, the
remainder of the terms, provisions and covenants and restrictions contained in
this Agreement shall remain in full force and effect, and shall in no way be
affected, impaired or invalidated.
14. NOTICES. All notices, requests, claims, demands and other
communications hereunder shall be deemed to have been duly given when delivered
in person, by fax, telecopy, or by registered or certified mail (postage
prepaid, return receipt requested) at the respective addresses of the parties
set forth in the Merger Agreement.
15. GOVERNING LAW. This Agreement shall be governed by and construed
in accordance with the laws of the State of Delaware.
<PAGE>
10
16. COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall be deemed to be an original, but all of which
shall constitute one and the same agreement.
17. EXPENSES. Except as otherwise expressly provided herein, each of
the parties hereto shall bear and pay all costs and expenses incurred by it or
on its behalf in connection with the transactions contemplated hereunder,
including fees and expenses of its own financial consultants, investment
bankers, accountants and counsel.
18. ENTIRE AGREEMENT. Except as otherwise expressly provided herein
or in the Merger Agreement, this Agreement contains the entire agreement between
the parties with respect to the transactions contemplated hereunder and
supersedes all prior arrangements or understandings with respect thereof,
written or oral. The terms and conditions of this Agreement shall inure to the
benefit of and be binding upon the parties hereto and their respective
successors and permitted assignees. Nothing in this Agreement, expressed or
implied, is intended to confer upon any party, other than the parties hereto,
and their respective successors except as assignees, any rights, remedies,
obligations or liabilities under or by reason of this Agreement, except as
expressly provided herein.
19. CAPTIONS; CERTAIN DEFINITIONS; CAPITALIZED TERMS. The Article,
Section and paragraph captions herein are for convenience of reference only, do
not constitute part of this Agreement and shall not be deemed to limit or
otherwise affect any of the provisions hereof. As used in this Agreement, the
following terms shall have the meanings set forth below:
"OPTION AMOUNT" shall mean (i) if the Triggering Event giving rise
to the exercise of the Option shall have occurred as a result of the $10,662,000
Termination Amount provided for in Section 8.3 of the Merger Agreement becoming
payable, 3,760,000 shares of Common Stock and, (ii) if the Triggering Event
giving rise to the exercise of the Option shall have occurred as a result of the
$42,648,000 Termination Amount provided for in Section 8.3 of the Merger
Agreement becoming payable, 7,558,300 shares of Common Stock.
"OPTION PERCENTAGE" shall mean (i) if the Triggering Event giving
rise to the exercise of the Option shall have occurred as a result of the
$10,662,000 Termination Amount provided for in Section 8.3 of the Merger
Agreement becoming payable, 9.9% and, (ii) if the Triggering Event giving rise
to the exercise of the Option shall have occurred as a result of the $42,648,000
Termination Amount provided for in Section 8.3 of the Merger Agreement becoming
payable, 19.9%
"TOTAL PROFIT AMOUNT" shall mean (i) if the Triggering Event giving
rise to the exercise of the Option shall have occurred as a result of the
$10,662,000 Termination Amount provided for in Section 8.3 of the Merger
Agreement becoming payable, 10,662,000 and, (ii) if the Triggering Event giving
rise to the exercise of the Option shall have occurred as a result of the
$42,648,000 Termination Amount provided for in Section 8.3 of the Merger
Agreement becoming payable, $42,648,000.
<PAGE>
11
Capitalized terms used in this Agreement and not defined herein shall have the
meanings assigned thereto in the Merger Agreement. All references herein to "$"
or "dollars" shall refer to United States Dollars.
<PAGE>
IN WITNESS WHEREOF, each of the parties has caused this Agreement to
be executed on its behalf by its officers thereunto duly authorized, all as of
the date first above written.
QUEBECOR PRINTING INC.
By: /s/ Charles G. Cavell
------------------------------------------
Name: Charles G. Cavell
Title: President & Chief Executive Officer
By: /s/ Christian M. Paupe
------------------------------------------
Name: Christian M. Paupe
Title: Executive Vice President
WORLD COLOR PRESS, INC.
By: /s/ Jennifer Adams
------------------------------------------
Name: Jennifer Adams
Title: Vice Chairman, Chief Legal and
Administrative Officer and
Secretary
<PAGE>
Exhibit 99.1
July 12, 1999
FOR IMMEDIATE RELEASE
QUEBECOR PRINTING AND WORLD COLOR TO MERGE
NEW YORK - Quebecor Printing Inc. and World Color Press, Inc. announced today
the signing of a definitive merger agreement pursuant to which Quebecor Printing
will acquire all of the shares of Greenwich, Connecticut-based World Color
Press, Inc., one of the United States' leading commercial printers, in a
transaction valued at approximately US $2.7 billion. The acquisition, the
largest in the history of the printing industry, makes the combined new Company,
to be known as Quebecor World Inc., the largest commercial printer in the world
serving customers in magazines, catalogs, books, retail inserts and circulars
and specialty/direct mail printing.
The definitive merger agreement provides for the acquisition by a subsidiary of
Quebecor Printing pursuant to a tender offer to purchase for cash up to 23.5
million shares of common stock representing approximately 62% of the outstanding
shares of World Color to be followed by a merger with World Color.
Quebecor Printing will pay approximately US $840 million in cash under the
tender offer, representing US $35.69 per share, and assume the debt of World
Color in the approximate amount of US $1.3 billion. In addition, Quebecor
Printing will issue approximately 23.8 million subordinate voting shares in the
merger, representing a fixed exchange ratio of 1.6455 subordinate voting shares
of Quebecor Printing per share of common stock of World Color. In addition,
approximately US $41 million in cash and 1.2 million Quebecor Printing
subordinate voting shares will be paid to World Color option holders.
The total consideration per share of World Color is equivalent to US $36.09 per
share and represents a premium of 30% on the basis of the weighted average
trading price of each of World Color common stock and Quebecor Printing
subordinate voting shares on the New York Stock Exchange for the 20 trading days
to July 9, 1999.
Quebecor Printing has entered into Lock-up Agreements with a number of World
Color management shareholders, affiliates of Kohlberg Kravis Roberts & Co. as
well as institutional shareholders pursuant to which such shareholders have
agreed to tender their common shares representing approximately 24.5% of all
outstanding common shares. The Board of Directors of World Color has determined
by a unanimous vote that the offer and the merger are fair and in the best
interests of World Color and its shareholders and recommended acceptance of the
offer. Morgan Stanley Dean Witter has acted as a financial advisor to World
Color and has rendered a fairness opinion.
<PAGE>
2
The offer is subject to 50.1% of World Color shares being tendered to the offer
and regulatory approvals including the expiration of the applicable waiting
period under the Hart-Scott-Rodino Antitrust Improvements Act. Both the tender
offer and the merger are expected to be completed within four months.
RBC Dominion Securities Inc. and Credit Suisse First Boston Corporation are
acting as financial advisors to Quebecor Printing.
"Two of the fastest growing commercial printers have joined to create a new
industry leader, committed to continued growth, sensitive to customer needs and
positioned to set new highs in shareholder expectations," said Charles Cavell,
President and Chief Executive Officer of Quebecor Printing. "The World Color
management team enjoys a stellar reputation in our industry. The fit of our two
companies couldn't be better from the point of view of customers and
shareholders," he said.
Robert G. Burton, Chairman and Chief Executive Officer of World Color, said,
"World Color has accomplished a tremendous amount over the last ten years. We
have committed to and delivered results to our customers and shareholders year
after year. This merger brings together two major league teams and positions us
well to continue to deliver results that benefit employees, customers and
shareholders. Quebecor Printing, with its global presence and World Color, with
its solid position in the US, will create a tremendous team capable of meeting
the needs of our customers through the millennium. Together, our commitment to
shareholders, customers and employees through strategic acquisitions, selective
technology upgrades, cost control and flawless execution becomes even stronger."
Pierre Karl Peladeau, Vice Chairman of Quebecor Printing and President and Chief
Executive Officer of Quebecor Inc., said, "Quebecor is proud to be at the
forefront of bringing together two of the most successful printing companies in
the world. No two companies are better suited to merge for the good of improved
customer service and increased shareholder value."
In the new management structure, Charles Cavell will be President and Chief
Executive Officer of Quebecor World. World Color President and Chief Operating
Officer, Marc Reisch, will become Chairman, President and Chief Executive
Officer of Quebecor Printing's and World Color's combined North American
operations.
Marc Reisch stated, "This is a merger of two very focused growth companies. I
look forward to pulling the talent together from both organizations to form the
strongest, most responsive management team in the industry. I am confident that
our customers will be significant winners when the deal is completed."
In addition, a committee of the Office of the President made up of Charles
Cavell, Pierre Karl Peladeau, Marc Reisch, Quebecor Printing Canada President
Christopher Rudge and Christian Paupe, Executive Vice President of Quebecor
Printing, will be created to deal with strategic issues in relation to the
Company's global operations.
<PAGE>
3
Robert G. Burton, Chairman and Chief Executive Officer of World Color, has
elected to pursue other business interests following the completion of the
tender offer. Mr, Burton will, however, become a member of the Quebecor World
Board of Directors and will be an active member of the integration team merging
the two companies.
BACKGROUND INFORMATION
THE PRINTING INDUSTRY
The United States is the largest print market in the world. With sales of over
US $150 billion annually, the industry remains highly fragmented and
competitive. Growth from 1992 to 1998 has been 3.8% annually. There are over
52,000 printing companies in the United States although there has been some
consolidation among the top 150 firms. The top ten printing companies have
revenues of over US $1 billion each, 56 companies have revenues in the range of
US $100 million to US $1 billion each and 120 firms revenues from US $36 million
to US $100 million each.
GLOBAL PRINT MARKET
(in millions of $US)
<TABLE>
<CAPTION>
MERGED COMPANY
MARKET SIZE SALES MERGED COMPANY RANK
-------------- ----------------- -----------------------
<S> <C> <C> <C>
United States 153,400 4681 #1
Europe 90,000 845 #1
Canada 10,500 614 #1
South America 8,000 98 #2
</TABLE>
Source: Print Forecasts, lnterGraf, QPI Management, Graphic Monthly
Company restructuring will continue as printers focus on core businesses and
adopt an increasingly disciplined approach to technology investment
concentrating on those technologies that customers demand and for which they are
willing to sign enabling contracts. While initially seen by some as a threat,
the Internet is increasingly regarded as an opportunity for printers and as a
complement to printed products such as magazines, catalogs and flyers.
The merger with World Color will double Quebecor Printing's annual revenues from
US customers to US $4.7 billion representing 75% of the Company's 1998 pro forma
worldwide consolidated revenues of US $6.2 billion. The merger will result in
increased liquidity of Quebecor Printing stock allowing easier investor access
on the New York Stock Exchange and the Toronto and Montreal exchanges. At the
close of the transaction, the US and Canadian portions of the Quebecor World
stock's free float will be at similar levels.
<PAGE>
4
QUEBECOR PRINTING
Quebecor Printing has grown twelve-fold over the past decade largely through
acquisitions. In 1990, the Company became the second largest printer in the
United States with the acquisition of Maxwell Graphics Holdings. It has
continued its growth in the United States through a number of key strategic
acquisitions including American Signature (catalogs); Eagle Lithographing,
Sayers Communications and the Petty Company (direct mail and specialty); and the
Franklin Division of Brown Printing (magazines and catalogs).
Quebecor Printing's growth has been marked by a strategy of geographic and
product line diversification. With 115 facilities in 14 countries on four
continents, Quebecor Printing is a global printer, able to serve national and
international customers from a base of networked and technologically advanced
printing facilities. Its North American network that services major retailers,
catalog and magazine customers is among the most modern in the industry. The
Company's 1998 annual revenues were US $3.8 billion and with 26,000 employees
world-wide, it ranked, prior to this transaction, as the largest printer in
Europe and the second largest in North America and South America. Its customers
include Sears, TIME, FORTUNE, PEOPLE, SPORTS ILLUSTRATED, USA WEEKEND, PARADE,
Simon & Schuster, Marks & Spencer, Christian Dior and Maclean Hunter.
WORLD COLOR
Founded in 1903, World Color operates 58 facilities in the United States and has
16,000 employees. With 1998 pro forma revenues of US $2.5 billion, the Company's
three largest business segments are commercial, inserts and circulars (29%),
magazines (26%), and catalogs (23%). Books (9%), direct mail (8%) and
directories (5%) make up the balance of its product mix.
With a highly regarded management team, World Color has also expanded and
diversified by taking advantage of the acquisition opportunities in the
fragmented US print market. Since 1993, the Company has completed 25 accretive
acquisitions. Its most recent acquisitions include Magna Graphics, a pre-press
operation servicing customers in the educational textbook market; Dittler
Brothers, a direct mail and commercial printing operation; Acme Printing, an
award-winning commercial printer; Century Graphics Corporation and Great Western
Publishing, both retail insert printers; and Downey Printing, a directory
printer.
STRATEGY
Quebecor Printing has successfully completed over 60 acquisitions for a value of
US $2.5 billion. World Color provides the best potential for synergies due to
the high degree of similarity with Quebecor Printing's product mix; a similar
shareholder, customer and employee-oriented management philosophy; and a strong
complementary technology asset base. The Company has superior operating margins
and low sales, general and administrative costs.
<PAGE>
5
A swift integration is planned upon the close of the transaction. Management
believes that the merger of the two companies will result in approximately US
$50 million in annual synergies, although there can be no assurance that these
savings will be realized. Printing facilities will be integrated in accordance
wilth client needs and commitments and will be linked to Quebecor Printing's
North American fiber-optic network to facilitate work transfer and improve
customer service and asset utilization. Sales force integration and the
elimination of duplicate head office and product group functions as well as
integration with Quebecor Printing's Switzerland-based world-wide procurement
center will be implemented.
World Color Press, Inc. (NYSE: WRC) headquartered in Greenwich, Connecticut, is
a leader in the management and distribution of print and digital media
information. The Company specializes in the production and distribution of
content for customers in the commercial, magazine, catalog, direct mail, book
and directory markets. Founded in 1903, World Color employs over 16,000
employees and operates 58 facilities with a network of sales offices nationwide.
Quebecor Printing Inc. (NYSE:PRW; ME:IQI; TSE:IQI), a diversified global
commercial printing company, is the largest commercial printer in Canada and
Europe and one of the largest in the United States and South America. The
Company is a market leader in most of its major product categories which include
magazines, inserts and circulars, books, catalogs, specialty printing,
directories, related services and CD-ROM mastering and replicating. The Company
has over 26,000 employees working in more than 115 printing and related
facilities in the United Stater, Canada, France, the United Kingdom, Spain,
Germany, Sweden, Finland, Chile, Argentina, Peru, Colombia, Mexico and India.
Quebecor Printing is a subsidiary of Quebecor Inc.
Quebecor Inc. (ME & TSE: QBR) is a communications holding company with revenues
of over $8 billion. With business activities spread throughout North America,
Europe, South America and Asia, the Company operates in five main sectors. The
Company has publishing (including distribution and retail), broadcasting and
multimedia activities through its subsidiaries Sun Media Corporation and
Quebecor Communications Inc. Through its subsidiary Quebecor Printing Inc., it
ranks as the largest commercial printer in Canada and Europe and one of the
largest in the United States and South America. Through its subsidiary Donohue
Inc., it is a major integrated forest products company engaged in forest
management to ensure its fiber supply, and in the manufacture and sale of
newsprint, specialty papers, market pulp and wood products. Quebecor employs
more than 43,000 people in 14 countries.
Except for historical information contained herein, the statements in this
release are forward-looking and made pursuant to the safe harbor provisions of
the Private Securities Litigation Reform Act of 1995. Forward-looking statements
involve known and unknown risks and uncertainties which may cause the Company's
actual results in future periods to differ materially from forecasted results.
Those risks include, among others, changes in customers' demand for the
Company's products, changes in raw material and equipment costs and
availability, seasonal changes in customer orders, pricing actions by the
Company's competitors, changes in estimates
<PAGE>
6
of the readiness of the Company or its vendors and customers with regard to Year
2000 issues and the significance of costs thereof, and general changes in
economic conditions. Those and other risks are more fully described in the
Company's filings with the Securities and Exchange Commission.
FOR FURTHER INFORMATION:
James E. Lillie John Paul Macdonald
Executive Vice President Director, Corporate Communications
Investor Relations and Corporate Quebecor Printing Inc.
Communications (514) 877-5317
World Color Press, Inc. (800) 567-7070
(203) 532-4242
